Sustainability Report

2011

Thinking about

tomorrow today

GEARBULK

GEARBULK

2 3

Our vision, our mission, our values | Contents

ContentsOur sustainability vision 4

Message from our Chairman Kristian Jebsen 5

Gearbulk and the Sustainable Shipping Initiative 6

The big picture 8

The dry bulk fleet 10

Shipping and the environment 12

Company profile

Gearbulk’s history 16

Gearbulk today 18

Governance 24

Our business 24

Our people 28

Our planet 36

Environmental initiatives 38

Environmental performance 2011 40

Environmental management system in action 41

GRI Indicators 42

The Gearbulk fleet 46

Glossary 49

Feedback and contact details 51

Our vision To be pioneers in developing reliable services that meet the evolving needs of our customers in a sustainable manner and thereby deliver enduring value and opportunities to all stakeholders.

Our mission To excel in operating a global network of industrial, innovative and competitive ocean transport services anchored in responsiveness, performance and sustainability.

Our values• Professionalism– We use

our expertise to develop long term value

• Teamwork – We cultivate lasting relationships through dialogue and shared goals

• Drive– We achieve our results through performance and commitment

• Creativity – We initiate and implement change to strengthen our business

54

Message from our Chairman, Kristian Jebsen

Our sustainability vision

To become an industry leader in creating enduring value by taking responsibility for the future through the choices we make today. This means:

•Clearandconsistentleadershipwhilst engaging our employees

•Transparencyandimprovingoureconomic,environmental and social contribution

•Developinghumanpotentialandcollaborating with those who share our vision locally and globally

Message from our Chairman, Kristian Jebsen

Welcome to Gearbulk’s first Sustainability Report.

Sustainability is an important priority for us and it is embedded into our long term strategic plan.

We believe that sustainability is fast becoming a key differentiator in the supplier selection process and it is our aim to be the supplier of choice in the sectors in which we operate.

It has been an active year for us in the sustainability field.

I was very pleased to attend the launch of the Sustainable Shipping Initiative’s Vision 2040 in London in October. As a founding member of this initiative, we believe that leadership and vision to shape our industry’s future must come from within. This is an important role for us to embrace and we are convinced it will positively impact our business.

To drive forward our sustainability ambitions, we established a Sustainable Steering Group made up of representatives from across the company, which held its inaugural meeting in November.

As part of our commitment to reduce the carbon footprint of the cargoes we carry, we continue to replace our older vessels with new, larger vessels that burn considerably less fuel and maintain a focus on our fleet energy efficiency improvement programme.

We are committed to responsible business engagement with our suppliers and customers and rolled out our Anti Bribery and Corruption policy in 2011. In 2012, we are strengthening our corporate business standards with an Ethics Policy and Code of Conduct.

‘To take responsibility for the future through the choices we make today’ is the vision we have. I hope that this report will give you an insight into what Gearbulk is doing to contribute positively in the areas where we do business and can make a difference and in doing so demonstrate our commitment to the future.

Enjoy your read.

Kristian Jebsen

7

Chapter | sub-section

In May 2011, the SSI launched its Case for Action which examines global trends which present key challenges but also opportunities for the shipping industry.

In November, Vision 2040 was launched. This vision of a successful sustainable industry means:

• Changingtoadiversemix of energy sources, using resources more efficiently and responsibly and dramatically reducing greenhouse gas intensity

• Providingsafe,healthyandsecure work environments so that people want to work in shipping, where they can enjoy rewarding careers and achieve their full potential

• Earningthereputationof being a trusted and responsible partner in the communities where we live, work and operate

• Developingfinancialsolutions that reward sustainable performance and enable large-scale uptake of innovation, technology, design and operational efficiencies

• Transparencyandaccountability drive performance improvements and enable better, sustainable business decision-making

• Proactivelycontributingtothe responsible governance of the oceans

This vision is backed up by commitments in the form of specific work streams which will demonstrate where and how there is the most potential to accelerate change. The first four work streams which are being launched in 2012 are:

1.Developingnewapproachesfor the financing of sustainable shipping

2. Reducing the lifecycle impact of ships by developing systems to radically improve the transparency and accountability of the impacts of all materials used in ship building. Establishingwaystofurtherimprove ship recycling and reducing the use of non-renewableresources

Gearbulk and the Sustainable Shipping Initiative

Gearbulk is a founding member of the Sustainable Shipping Initiative (SSI) which brings together leaders from across the shipping industry and respected Non-Governmental Organisations (NGOs) Forum for the Future and WWF who share a desire to create a more sustainable industry.

For more information, please visit www.forumforthefuture.org/project/sustainable-shipping-initiative

Gearbulk and the Sustainable Shipping Initiative

6

3.Producingcrediblebenchmarking to drive improved sustainability performance by helping the industry navigate the confusing array of ‘green’ standards whichcurrentlyexist

4.Promotingtheuptakeoflowenergytechnologyby developing robust business cases for eco-efficient technologies and operational techniques

Kiwi Arrow off Rio de Janeiro

9

The big picture

The big picture

The shipping industry faces a challenging and complex future which will be shaped by emerging global mega trends, transforming the way our industry operates.

8

The big picture

World population will reach seven billion in 2012 and is projected to reach nine or even ten billion by 2050. Developingnationsareexpanding their influence and economic activity. The global middle class is burgeoning. All of which will sharply increase demand for goods.

The culture of economic activity and growth is drifting to Asia. This, coupled with development in previously under-developed areas to bolster dwindling natural resources and sustain the growing population, will alter trade patterns. This will present risks but also new opportunities for the shipping industry.

Technology is advancing rapidly on all fronts, including ship design, keeping pace with increasing pressure to reduce use of non-renewable resources by building ever-more energy efficient ships using environmentally-friendly materials, both recycled and new.

Fossil fuels which enabled the industrial revolution and which still power most industry and transport, are not inexhaustible. As with other industries, shipping recognises the need to transition from total dependency on oil to a mix of renewable and other low-carbon energy sources.

Climate change is influencing weather patterns, which in turn is affecting food production, water availability and region habitability. The desire to manage climate change has led to the world’s first global legislation on CO2 – all ships built from 2013, will have their CO2 emissions regulated. More legislation will surely follow.

In our increasingly inter-connected world, there is a growing demand for transparency. Business success is becoming increasingly linked to a willingness to publicly share environmental, financial and social performance.

The recent global economic boom and bust has exacerbated shipping’s challenges.Decreasedglobaldemand for goods and an oversupply of vessels have seen freight rates in some sectors plummet. Falling earning potential has caused vessel values to follow the same path. This, coupled with reduced access to finance, rising bunker costs and increased regulatory pressure all combine to create a difficult operating environment for ship owners.

Piracy, with more than 400 recorded incidents worldwide in 2011, continues to present a major challenge for the shipping industry and particularly its seafarers. At any given time hundreds of seafarers are being held hostage in appalling conditions, often subject to psychological and physical abuse. In addition to the human cost, piracy costs the global economy several billions of dollars annually in additional fuel, security and insurance costs.

Source: Clarkson Research, July 2012. Refer to P48.

1110

The big picture | The dry bulk fleet

Growth in most sectors of the dry bulk fleet fell throughout 2011, although Panamax growth remained on an upward trend.

To limit the impact of poor rates, high fuel prices and vessel oversupply, slow-steaming became a significant factor and was helpful in removing some of the surplus capacity on a temporary basis.

Very limited newbuilding orders reflected the poor market conditions. Continued high scrap prices encouraged many owners to recycle older vessels – some earlier than their intended service life –making 2011 a record year for demolitions, totalling 23m dwt compared with a total of 23m dwt over the previous four years.

Since 2008, some 34% of newbuilding orders have been cancelled or rescheduled, a trend that is likely to continue in the short term.

End of 2011 Handysize Handymax Panamax Capesize Total

Fleet size (m dwt) 84 126.9 155 249.3 615.2

Annual fleet growth 3% 16% 14% 19% 15%

Orderbook (m dwt) 21.1 38 73.7 95.5 228.4

Orderbook (% of fleet) 25% 30% 48% 38% 37%

The dry bulk fleet

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0Q1 Q2 Q3 Q4

2011

Source: Gearbulk Research, Clarksons Intelligence Network

Baltic Dry Index

Quarterly average

2010

Source: Clarksons Research, July 2012. Refer to page 48

2007-01 2008-01 2009-01 2010-01 2011-01

Source: Clarkson’s Research July 2012. Refer to page 48

Handysize Handymax Panamax Capesize

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0

Dry bulk fleet demolitions by DWT

Total:0.6m dwt

Total:5.5m dwt

Total:10.6m dwt

Total:6.3m dwt

Total:23.0m dwt

2008-01 2009-01 2010-01 2011-01

Source: Gearbulk Research

Handysize Handymax Panamax Capesize

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Dry bulk fleet demolitions by DWT

Total:5.5m dwt

Total:10.7m dwt

Total:6.4m dwt

Total:23.0m dwt

25

20

15

10

5

0

Dry bulk fleet newbuilding orders by DWT

Total:169.5m dwt

Total:106.6m dwt

Total:37.1m dwt

Total:101.0m dwt

Total:38.9m dwt

2007-01 2008-01 2009-01 2010-01 2011-01

Source: Clarkson’s Research July 2012. Refer to page 48

Handysize Handymax Panamax Capesize

TheBalticDryIndex(BDI)began 2011 at almost half the rate compared to 2010. It remained weak through the first half of 2011, before rebounding in the second half of the year.

Despitetherebound,theaverageBDIin2011was44% lower compared with 2010 and average charter rates dropped 60% from $35,000 per day in 2010 to $14,000 per day in 2011.

Loading kraft linerboard

Toki Arrow loading potash

Source: Clarkson’s Research July 2012. Refer to page 48

Source: Clarkson’s Research July 2012. Refer to page 48

Source: Clarkson’s Research July 2012. Refer to page 48Source: Clarkson’s Research July 2012. Refer to page 48

1312

The big picture | Shipping and the environment

Shipping and the environment

Ships produce various pollutants from operational and, very occasionally, accidental discharges. These are regulated by the IMO’s International Convention for the Prevention of Pollution from Ships (Marpol) which covers oil, noxious liquid substances in bulk, harmful substances carried in packaged form, sewage, garbage, and air emissions.

The impact of air emissions from shipping on our environment and on human health has come into sharp focus in recent years.

Burning fossil fuel produces harmful emissions, principally CarbonDioxide(CO2) which

is the main Greenhouse Gas (GHG), Nitrogen Oxides (NOx), Sulphur Oxides (SOx) and Particulate Matter (PM). Other sources of GHG pollution from ships include gas leakage from refrigeration systems and volatile organic

compounds from paints and hydrocarbon fuels.

CO2 is the main contributor to global warming. But although shipping carries 90% of the world’s freight, it produces substantially less CO2 per unit distance when carrying a unit load than other transport modes.

However, shipping does contribute significantly to global emissions and if nothing

Air output

– CO2 – SOx– PMs – NOx– CFCs – VOCs

Water output

– Bilge water– Accidental discharges– Ballast water– Paint toxins – Sewage– Grey water

Inputs

– Fuel– Lube oil– Water/air– Ballast water– Paint– Chemicals– Food/paper– Spare parts

Land output

– Garbage– Sludge– Hazardous waste– Scrap

Main inputs and outputs associated with vessel operation

Activity Environmental Aspect Environmental Impact

Vessel build and maintenance Use of materials Use of non-renewable resources

Combustion – engines, boilers and incinerators

Fuel consumption Use of non-renewable resources

Combustion – engines, boilers and incinerators

Air emissions – CO2, SOx, NOx, PMs Global warming, acidification, eutrophication, health issues

Machinery operation Lube oil consumption Use of non-renewable resources

Machinery operation Oily water discharge Marine pollution

Refrigeration Air emissions – HFCs, HCFCs Ozone layer depletion, global warming

Coating maintenance Air emissions – volatile organic compounds (VOCs)

Ozone layer depletion, global warming

Ballast water operations Ballast water discharge Bio-diversity threat due to introduction of non-indigenous species

Vessel operation Release of toxins from anti-fouling paint

Marine pollution, threat to local ecosystem

Air output

– CO2 – SOx– PMs – NOx– CFCs – VOCs

Water output

– Bilge water– Accidental discharges– Ballast water– Paint toxins – Sewage– Grey water

Inputs

– Fuel– Lube oil– Water/air– Ballast water– Paint– Chemicals– Food/paper– Spare parts

Land output

– Garbage– Sludge– Hazardous waste– Scrap

Air output

– CO2 – SOx– PMs – NOx– CFCs – VOCs

Water output

– Bilge water– Accidental discharges– Ballast water– Paint toxins – Sewage– Grey water

Inputs

– Fuel– Lube oil– Water/air– Ballast water– Paint– Chemicals– Food/paper– Spare parts

Land output

– Garbage– Sludge– Hazardous waste– Scrap

Emissions of CO2 from shipping compared with global total emissions

Grams per tonne-km

0 100 200 300 400 500 600

Cargo vessel over 8,000 dwt 15Cargo vessel between 2,000 and 8,000 dwt 21

Air freight 747-400 1,200 km flight 540

Heavy truck with trailer 50

Source: Swedish Network for Transport and the Environment

is done, the industry’s share of the world’s total CO2 output will increase. In July 2011, the world’s first global regulation to reduce the GHG emissions of any industry was adopted by IMO to set progressively more stringent minimum energy efficiency levels for new ships (Energy Efficiency DesignIndex)andtointroducemandatory Ship Energy Efficiency Management Plans for all ships.

Air output

– CO2 – SOx– PMs – NOx– CFCs – VOCs

Water output

– Bilge water– Accidental discharges– Ballast water– Paint toxins – Sewage– Grey water

Inputs

– Fuel– Lube oil– Water/air– Ballast water– Paint– Chemicals– Food/paper– Spare parts

Land output

– Garbage– Sludge– Hazardous waste– Scrap

1514

The big picture | Shipping and the environment

EmissionsofCO2 from shipping compared with global total emissions

Electricity & heat production 35% Other 15.3% Other energy industries 4.6% Manufacturing & construction 18.2% Other transport (road) 21.3% Rail 0.5% International aviation 1.9% International shipping 2.7% Domesticshipping&fishing0.6%

Source: IMO GHG Study 2009

Domestic Shipping

Int. Shipping

Int. Aviation

Rail

Other Transport

Manufacturing

Other Energy

Other

Electricity

Shipping is estimated to cause about 15% of the NOx and SOx emitted globally from the combustion of oil.

The problems associated with SOx and NOx from shipping are of greater concern in high population density coastal regions. It is in these areas where efforts have been concentrated to reduce their impact.

NOx, which forms at high temperatures during the combustion process, causes acid rain, contributes to global warming and aggravates or even causes respiratory diseases.

SOx also causes acid rain and respiratory diseases. The amount of SOx emitted is directly proportional to the sulphur which occurs naturally in crude oil and which remains in fuel oils after the refining process. Particulate matters are small liquid or solid particles produced in the combustion process which can affect the heart and respiratory systems.

The International Maritime Organisation’s (IMO) Marpol Annex VI Emissions to Air Protocol has reduced the maximum sulphur content of fuels in Emission Control Areas (ECAs) to 1.0%. This currently applies to the North Sea and Baltic Sea, and, from August

2012, will also cover a 200 nautical mile zone off the North American coast including the Hawaiian Islands. From 1st January 2015 the sulphur limit in these ECAs will reduce to 0.1%. At a regional level the EU has a 0.1% sulphur limit for vessels alongside in EU ports.

Globally, the current sulphur limit is 4.5%, reducing to 3.5% in 2012 with a further reduction to 0.5% in 2020 or 2025, depending on the availability of alternative fuels.

Marpol Annex VI also imposes progressively more stringent limits on NOx emissions from engines. Engines built from 2016 must operate at approximately 20% of today’s NOx emission levels when in an ECA. This will require investment in expensive new technology.

Chlorofluorocarbons (CFCs) and Hydrochlorofluorocarbons (HCFCs)

CFCs and HCFCs are man-made chemicals commonly used in refrigerants which contribute to the deterioration of the earth’s protective ozone layer. HCFC-22 has been the predominant gas used in vessels’ domestic and

air conditioning systems but due to its high ozone depleting characteristics, its use and availability is slowly being reduced across the world.

Garbage Management

Activities onboard vessels produce significant amounts of garbage which can have a long lasting effect on the marine environment.

Disposalofthisgarbageisregulated by MARPOL Annex V Prevention of Pollution by Garbage from Ships which requires all garbage onboard to be segregated and the quantities and method of disposal to be recorded in a Garbage Management Plan.Disposalmaybebyincineration, landing ashore or discharge to sea in designated areas, depending on the type of garbage. Plastics are a particular danger to marine life and their disposal is prohibited anywhere in the sea.

An amendment adopted in July 2011, which is expected to enter into force in 2013, will limit garbage that may be disposed at sea to food waste in designated areas and cargo residues which are not harmful to the marine environment.

Ballast Water

The regulation of ballast water has come under scrutiny in recent years. To ensure stability and to achieve optimum trim and draft for minimum fuel consumption at sea, vessels regularly take on sea water ballast. This ballast is then discharged overboard when the vessel’s condition changes, usually when loading cargo.

Ballast water contains aquatic organisms which when discharged in another part of the world, can have a devastating effect on local ecosystems and as a consequence, cause massive economic and social impact.

There is no current global legislation to prevent this although IMO is expected to introduce an International Convention for the Control and Management of Ships’ Ballast

Water and Sediments within the next couple of years. Phase 1 of this legislation requires ballast water exchange in deep water and Phase 2 will require the treatment of ballast water to ensure the number and size of living organisms in the ballast water are within prescribed limits. This will require the installation of expensive new Ballast Water Systems.

Gearbulk is closely monitoring all environmental regulation developments. We will continue to comply with, or exceed, all legislation and follow best practices to minimise our impact on the environment.

Material Degradationtime

Paper 2-4 weeks

Cotton cloth 1-5 months

Rope 3-14 months

Woollen cloth 1 year

Painted wood 13 years

Tin can 100 years

Aluminium can 200-500 years

Plastic bottle 450 years

Source: Hellenic Marine Environment Protection Association (HELMEPA)

Shipping and the environment (continued)

1716

Company profile | Gearbulk’s history

MVRobertLD

CondorArrow

Gearbulk’s history

In 1968, Norway’s Kristian Gerhard Jebsen established Gearbulk with three partners:S.A.LouisDreyfus&CieofFrance,itsBritishsubsidiary,BuriesMarkes Ltd and A/S J. Ludwig Mowinkels Rederi, also of Norway. From the beginning, the new venture’s objective was much the same as it is today: to offer market-leading ocean transport services, especially for unitised cargoes, that are competitive and innovative and that add value for the customer.

Gearbulk’sfirsttwovessels,thenewbuildsAlainLDandRobertLD,wereearlyadoptersoftravellingcranesrather than fixed cranes and with their wide hatches and box shaped holds, offered more efficient loading and discharge. As a result, cargo was subjected to less handling and port turnarounds were faster and less costly. At almost 19,000 mt deadweight, these first two ships were just over one quarter of the capacity of Gearbulk’s latest ships today.

1968: Gearbulk established.

1969: DeliveryoffirstGearbulk newbuilds, AlainLDandRobertLDfromChantiersdel’Atlantique shipyard.

1974: Deliveryoffirstoftwelve 2nd Generation OHGC, Kiwi Arrow from Mitsui Shipbuilding & Engineering Co. Ltd, Osaka.

1977: The first of nine floating cement processing terminals comes into operation. By 1982 they were handling 8.5 million tonnes per year, mainly in the Middle East.

1977: Deliveryoffirstof163rd Generation OHGC, Falcon Arrow from Mitsui Shipbuilding & Engineering Co. Ltd, Chiba.

1984: Deliveryoffirst4thGeneration OHGC, Heina, from Sanoyasu, Mizushima.

1987: After 10 years in operation and having processed 45 million tonnes, declining demand for cement prompts Gearbulk to diversify its floating terminal operations to fertiliser, grain, rice and metal concentrates.

1991: The company is incorporated in Bermuda as Gearbulk Holding Ltd, the Kristian Gerhard Jebsen family acquires its partners vessels and shares. Mitsui O.S.K. Lines takes a 25% share of the restructured Gearbulk, and then increases its share to 40%.

1991: DeliveryoffirstofthreeTEFC, Grouse Arrow, from Mitsui Shipbuilding & Engineering Co. Ltd, Tamano.

1992: Gearbulk diversifies into shore terminals. The first of several terminals is established in a joint venture in Sinor Terminal, Port of Tianjin.

1994: Gearbulk enters the liquid pitch business with Alouette Arrow on the North West Europe to St. Lawrence trade.

1995: Gearbulk receives its first certification to the IS0 9002 quality standard.

1996: DeliveryoffirstoffiveFleximax, Pine Arrow, from Stocznia Gdansk Shipyard.

1997: Deliveryoffirstofnine5th Generation OHGC, Toucan Arrow from DalianNewShipyard.

1998: Rhone is first Gearbulk vessel to have hold tanks fitted to carry frozen concentrated orange juice.

2009: Mitsui O.S.K. Lines increases its shareholding from 40% to 49%.

2009: Deliveryoffirstoffour 6th Generation OHGC, Corella Arrow from Oshima Shipbuilding Co. Ltd.

2010: Deliveryoffirstofeight Fleximax II, Kiwi Arrow from Oshima Shipbuilding Co. Ltd.

2011: Gearbulk Norway AS established to assume technical management of the Gearbulk owned fleet.

Company profile |Gearbulktoday|Newbuildings

1918

Asof31stDecember2011,we owned or operated a fleet of 72 vessels (excluding vessels on short term time charter) totalling almost 3.5 million dwt. Of these, 40 are Open Hatch Gantry Crane (OHGC) vessels of between 23,000 dwt and 73,000 dwt.

OHGC vessels carry dry bulk and are designed with travelling gantry cranes and box-shaped cargo holds that are totally accessible, with no obstructions or deck overhangs. When used in conjunction with specialised lifting equipment these vessels are ideal for high value unitised loads which can be placed directly at the final stowage position, minimising handling and damage.

Four of our vessels are Totally Enclosed Forestry Carriers (TEFC), fully covered OHGC vessels for loading and discharging in all weather conditions.

A further 13 vessels have box-shaped holds with predominantly open hatches and are equipped with jib cranes (Fleximax vessels).

Our three high heat vessels are designed to transport high temperature liquid products, such as liquid pitch. Several of our vessels have tanks installed in some holds so they can carry liquids such as high heat liquid pitch or frozen orange juice.

We have seven vessels in the 50,000-57,000 mt dwt supramax range. These are designed to carry conventional

dry bulk cargo, rather than containerised or unitised cargo. Equipped with cranes and their own grabs, they are capable of self loading and discharge.

Our four semi-open hatch jib crane vessels have hatch openings that are slightly smaller than cargo holds, thereby causing minor deck overhangs. Our two tweendeckers have a deck dividing the upper and lower box-shaped holds.

Our fleet’s uniformity makes our vessels very interchangeable between trades. This provides scheduling flexibility, minimises ballast voyages and reduces costs. A full list of our owned and controlled vessels can be found on page 46.

 

Cross-section of

an open hatch gantry crane vessel

TEFC Jaeger Arrow

Gearbulk today

Since its formation in 1968 Gearbulk has set the standards for world-wide transportation of unitised cargoes and operates the world’s largest fleet of open hatch gantry and semi-open jib crane vessels.

Tenca Arrow at ScaldiaTerminal,

Flushing

Far left: Lowering main engine into position

Left: Accommodation block under construction

17 weeks before delivery – keel sections being positioned

Newbuildings Duringtheyearwecontinuedour extensive fleet renewal programme, introducing high capacity, high efficiency vessels from long established and reputable ship yards.

We took delivery of four Fleximax II vessels and one conventional vessel under long term time charters.

Vessels on order

Type Dwt(mt)

3 Semi-open 55,700

12 Fleximax 61,750-73,000

2 Pitch tanker 19,000

Asof31stDecember2011,we had 17 vessels on order for delivery over the period from 2012 to 2014. These vessels are being constructed by Oshima Shipbuilding Co., Ltd., Mitsui Engineering and Shipbuilding Co., Ltd. andHyundaiMipoDockyardCo., Ltd.

2120

Company profile | Cargo | Five-point business strategy | Contracts

Bulk Cargoes

Othr Unitised

Steel

Aluminium

Other Forest

Woodpulp

Woodpulp 35% Other forest products 4% Aluminium 11% Steel 10% Other unitised cargoes 3% Bulk cargoes 37%

Source: Gearbulk Research

Gearbulk cargoes 2011

Cargo Gearbulk primarily transports unitised cargoes, which comprised approximately 63% of cargo tonnes shipped in 2011. These unitised cargoes include forest products (principally woodpulp, lumber and other types of paper and paperboard) and other unitised cargoes (principally aluminium, steel and bagged products).

Humidity and temperature can be critical to forestry commodities like woodpulp, newsprint, paper and paperboard. To control temperature and prevent condensation, Gearbulk vessels are fitted with forced draught ventilation and dehumidification plants.

Since its inception, Gearbulk has focused on continuous development and investment in vessel design which, coupled with improvement of our cargo handling systems, has placed us as the leading global carrier of many unitised products.

Five-point business strategyOur five-point business strategy is to provide high quality, flexible and customised transportation services to international customers, particularly in the forest products sector and within industries involved in the transportation of unitised products. The principal elements of our strategy include:

•Buildingourorganisationalfoundation for long term growth

•Securingandbuildingonourstrong competitive position in pulp markets

•Growingbusinesswithtargetedkey accounts

•Optimisingfleetcomposition,capacity, deployment and ownership

•Developingnewgrowthplatforms

Gearbulk believes this strategy limits its exposure to any one customer or geographic region, reduces its exposure to fluctuations in freight rates and enables us to generate more stable cash flows than the bulk shipping market in general.

Contracts Unitised forest products and other unitised cargoes are generally shipped under Contracts of Affreightment (COAs). These cargoes are vulnerable to physical damage and therefore they require a higher level of care during handling and transportation.

Since these cargoes are usually of higher value than most bulk cargoes, their producers

Gearbulk today (continued)

typically require frequent and regularly scheduled transportation services in order to reduce inventory costs.

Our COAs are not typically linked to specific vessels in the fleet. We manage our vessels on a fleet basis in order to optimise utilisation and minimise ballast voyages. To the extent vessel capacity is not fully utilised with cargoes under COAs, Gearbulk seeks to

fill remaining capacity with spot market cargoes. We also carry spot market cargoes to cover for ballast voyages.

For 2011, approximately 70% of the volume carried by Gearbulk’s fleet was carried under COAs and the freight revenue generated accounted for approximately 70% of our total freight revenues.

Left: Kiwi Arrow loading woodpulp

Below: Windmill towers being shipped from Europe to Brazil.

Right: Discharging

woodpulp

Far right: Dischargingaluminium

T bars

ATI, Lake Charles

NST Terminais e Logistica SA, Santos

Paranagua Terminais (PFT)

ATI, Port Manatee

ATI, Pascagoula

Scaldia Logistics B.V., Flushing

Metal Terminals International (MTI), Antwerp

Arrow Terminals Malaysia (ATM)

VancouverWeybridge

Schiedam

Buenos Aires

Rio de Janeiro

Tampa

Bergen

Dubai

TokyoBusan

Shanghai

Melbourne

Singapore

Durban

Richards BaySantiago

Talcahuano

Bermuda HQ

Bangalore

Luxembourg Baar, Switzerland

23

Company profile | Trades, terminals and offices

Gearbulk trades, terminals and offices

To provide our customers with a more complete package of customer services, Gearbulk owns, or has interests in, certain terminal operations which are used to handle, store and distribute cargoes to final destinations.

22

Interchangeability across the entire fleet enables us to adapt cargoes, routes and timing to suit the customer.

Our competitive advantage lies in the size of our fleet and the enthusiasm, expertise and experience of our people based in our global network of offices.

This platform enables us to offer a service precisely tailored to each customer’s exacting requirements.

Gearbulk continues to invest in its people and in new technology to ensure our service remains in the vanguard of the ever changing world of transportation and logistics.

In 2011, on average a Gearbulk vesselmade a port call every two and a half hours

Key

ATI, Lake Charles

NST Terminais e Logistica SA, Santos

Paranagua Terminais (PFT)

ATI, Port Manatee

ATI, Pascagoula

Scaldia Logistics B.V., Flushing

Metal Terminals International (MTI), Antwerp

Arrow Terminals Malaysia (ATM)

VancouverWeybridge

Schiedam

Buenos Aires

Rio de Janeiro

Tampa

Bergen

Dubai

TokyoBusan

Shanghai

Melbourne

Singapore

Durban

Richards BaySantiago

Talcahuano

Bermuda HQ

Bangalore

Luxembourg Baar, Switzerland

Gearbulk Offices

ATI, Lake Charles

NST Terminais e Logistica SA, Santos

Paranagua Terminais (PFT)

ATI, Port Manatee

ATI, Pascagoula

Scaldia Logistics B.V., Flushing

Metal Terminals International (MTI), Antwerp

Arrow Terminals Malaysia (ATM)

VancouverWeybridge

Schiedam

Buenos Aires

Rio de Janeiro

Tampa

Bergen

Dubai

TokyoBusan

Shanghai

Melbourne

Singapore

Durban

Richards BaySantiago

Talcahuano

Bermuda HQ

Bangalore

Luxembourg Baar, Switzerland

Gearbulk Terminals

Our businessBoardofDirectors

The Gearbulk Group (of which Gearbulk Holding is the parent company) is managed by itsBoardofDirectorswhichmeets regularly. Members are appointed each year at the annual shareholders meeting. Our Board presently includes:

Audit Committee

The Audit Committee comprises non-executive directors who meet at least three times a year. It oversees our financial reporting, internal controls, risk management, audit processes, compliance monitoring and business conduct.

Governance

2524

Governance | Our business

Name Position

Kristian Jebsen DirectorandChairman

Hans Petter Aas Director

Jannik Lindbaek Director

Arthur E.M. Jones* DirectorandPresident

Makoto Yamaguchi Director

Yusuke Maruyama Director

DavidJ.Doyle,J.P* DirectorandVicePresident

ShelleyR.Durrant* Secretary

Gearbulk Leadership Team

Under Board mandate, our Chairman presides over the Gearbulk Leadership Team (GLT), which meets weekly, guides implementation of strategies and plans developed and approved by the Board, and coordinates activities across the group.

Risk management

We have adopted a risk management process to create and protect value and to ensure we achieve our long-term vision and mission.

Embedded in our Business Management system, this process is integral to all organisation processes, including strategic planning and project and change management. It is led by our Chief Risk Officer who reports to the Audit Committee.

Risk reviews are performed whenever required at all levels of the group. Results are reported to GLT and the Audit Committee.

Anti-Corruption & Bribery

As a member of the Maritime Anti-corruption Network

(MACN), we cooperate with like-minded industry companies to promote compliance with anti-corruption laws and eliminate corrupt practices.

Our Anti-Corruption and Anti-Bribery policies require all employees to be trained in relevant legislation and company procedures. To ensure their awareness and knowledge remains current, a training module has been developed on our intranet Voyager for all employees to undertake annually.

We have also developed other policies to protect employee rights and uphold best business practice, including Whistle Blowing, Equal Opportunities and Harassment policies.

In 2012, we plan to issue an Ethics Policy a Third Party Code of Conduct to encourage our supply chain partners to share our commitment.

International Standards

We operate to the ISO 9001:2008 – Quality Management and ISO 14001:2004 – Environmental Management

Standards and require all business processes to operate to international and national standards as a minimum, and where practical, exceed these standards.

Our Senior Manager, Quality and Environment, who reports to GLT, is responsible for developing and administering our Quality and Environmental Management systems.

Compliance is subject to annual audits by trained internal auditors whose reports are in turn subject to twice-yearly management review. External audits are also conducted by Lloyd’s Register Quality Assurance (LRQA).

Sustainability Governance

Gearbulk is committed to being a sustainability leader, which we strongly believe will improve our business performance.

Drivingforwardthisambitionisour Sustainability Steering Group (SSG). Led by a Senior Manager, Sustainability & Technical, SSG reports to GLT and is charged with managing delivery of our sustainability objectives. It is also responsible for ensuring

that sustainability is firmly embedded in all aspects of our Business Management System.

A matrix is being built to chart how we can apply the five areas of sustainable capital from which we derive the goods and services we need: natural, human, social, manufactured and financial.

Using this matrix we will develop a Strategic Action Plan for Sustainability. Key to its success is engaging our employees to ensure their enthusiastic support and our external stakeholders, particularly our customers, to identify ways to collaborate on innovative contributions to a more sustainable world.

Pipe stow on the Pine Arrow

* Executive officers

EBITDA Net income

$0

300

600

900

1200

1500 Revenue US $m

Revenue US $m

2007 2008 2009 2010 2011

2007 2008 2009 2010 2011$0

300

600

900

1,200

1,500

$0

50

100

150

200

250

300 EBITDA and Net Income US $m

EBITDA and Net Income US $m

2007 2008 2009 2010 2011

2007 2008 2009 2010 2011$0

50

100

150

200

250

300

NOT THIS ONE

Financialperformanceoverview

Despitedifficulttradingconditions,Gearbulkremainedprofitable in 2011.

Netincome,at$63.0million,wasdown35.4%from$97.5millionin2010.EBITDA,at$140.9millionin2011,declinedfrom$167.6millionin2010.EBITDAstandsforearningsbeforeinterest,taxes,depreciationandamortisation.

2726

Governance | Our people | Our employees

Our people

Our employeesAt the end of 2011, Gearbulk employed 591 shore staff in 21 offices and six terminals across six continents.

This workforce is made up of over 30 nationalities, reflecting the company’s strategy to employ local nationals at all levels of the organisational structure.

The most important assets in any organisation are its people and looking after them brings benefits to the individual and also to the organisation. Gearbulk recognises this and places high value in providing a safe, secure and healthy working environment for our employees and contractors working on company properties and activities.

In June 2011, Gearbulk held its first global employee survey to provide anonymous feedback to management.

The survey had a response rate of 94%. The overall tone of the responses were positive, providing valuable insight into what matters most to our staff, the main points being:

• Throughouttheorganisationthere is strong employee commitment to the company and levels of job satisfaction are high

• EmployeesbelievethatGearbulk’s developing strategy to improve the company’s sustainability is on the right track

• Staffarekeentobekeptmore abreast of company news, both business and personal. There is a case for improving internal

communications, up, down and across the organisation

• Careerdevelopmentopportunities could sometimes be better aligned with personal career progress

The survey results have been analysed and action is planned for those areas where improvements could be made.

Sho

re B

ased Worldwidegendersplit

(offices and terminals)

37%Female

Averageworldwideofficeand terminal staff tenure

5.4Years

Scaldia Logistics

Fleet technical management

Following the reorganisation of the Kristian Gerhard Jebsen family’s shipping and investment interests in 2010, Gearbulk took over the fleet management of Gearbulk vessels, previously managed by Kristian Gerhard.

Jebsen Skipsrederi AS. Gearbulk Norway AS was incorporated to fulfil this function, effective from 1st January 2011.

At the end of 2011 Gearbulk Norway A.S. employed 2,066 sea staff.

20

11

2928

Governance | Our people | Safety

Safety is Gearbulk’s prime concern. Through adherence and implementation of our health and safety policies and procedures, training, seminars and auditing, a strong focus on accident avoidance is maintained. The integration of ship management activities into the Gearbulk organisation at the beginning of 2011 can only improve the safety of our sea staff and shore contractors. Of course there is always room for improvement and our ultimate goal is to achieve a year without injury – and then maintain that standard.

The most objective measure of the safety of our seafarers on board our vessels

is Lost Time Injury Frequency (LTIF). This is a measure of the number of hours a seafarer is unable to work following an accident and is calculated per million working hours. There were no sea staff fatalities onboard Gearbulk owned vessels in 2011 or 2010. Regrettably one seafarer died after falling in a hold in 2009.

Safety

“Safety is the backbone within Gearbulk and no-one in the organisation should allow themselves to cut corners for personal, corporate or short term benefit.”

Kristian Jebsen, Chairman, 21st June 2011

We also record injuries to stevedores on our owned and time chartered vessels. As we generally do not have access to any statistical data on time off work as a result of stevedore accidents, we have limited our reporting to frequency and severity of injuries.

Although the trend in minor and serious injuries shows a significant reduction in 2011 from the previous two years, it was disappointing and tragic that two fatalities occurred – one involving a stevedore falling in a hold and the other when a stevedore was crushed by a cargo load being manoeuvred into position.

Year %

2011 1.76

2010 1.44

2009 2.49

LostTimeInjuryFrequency(LTIF)

Stevedoreinjuries

Year Minorinjuries Seriousinjuries Fatalinjuries

2011 22 1 2

2010 34 11 0

2009 32 6 3

Safeguarding our seafarers

Gearbulk minimises the threat by conducting a thorough risk assessment prior to each voyage through areas that are exposed to potential piracy. We provide additional safety equipment, razor wire and armed security teams for all our vessels transiting the Gulf of Aden/Indian Ocean area and offer the same service to our charter vessels.

We operate a Gearbulk Improvement and Safety System (GISS) which is a comprehensive system providing easy access to company policies, procedures and manuals for our shore staff and sea staff on our owned vessels. GISS also has an incident reporting function for recording and monitoring performance issues and incidents, including accidents, injuries and near misses.

CargoplanningonboardaGearbulkvessel

Far left: Jet sprays and razor wire are used to minimise the threat from piracy

Left: Dischargingpulp

One of our challenges will be to encourage the wider use of Near Miss reporting as another way to highlight potentially hazardous activities and engage the ‘human element’ to be more proactive in accident prevention.

3130

 

Did course meet predefined objectives

Improvement of job performance

Sca

le o

f 1

-5

Source: Gearbulk Research

Target score: 4

0

1

2

3

4

5

Gearbulk recognises that continual learning is key to the development of the organisation and the individual. To that end, we have invested considerable finance and resources to improve the working skills and knowledge of our staff, both at sea and ashore, to enable us to meet our business objectives and provide opportunities for career development.

Our sea staffWe strive to train our sea staff beyond the requirements of STCW. Some of the areas in which we invest additional training include:

• Bridgeteammanagement

• Shiphandling

• Engineroomsimulatortraining

• Cargopre-planning

• Marpolcompliance

• ComputerBasedTraining(CBT) for a variety of topics

We also run annual seminars for our officers in several geographical locations at which a range of training issues are reviewed. These seminars are always great opportunities for participants to give and experience feedback on a range of topics which impact on their work, such as safety, regulatory requirements and cargo care.

We maintain an active training programmeforourDeck,Engineering and Electrical cadets. As a rule, we have at least two and often three cadets on each of our owned vessels.

Gearbulk’s cargoes are very often high value commodities which are susceptible to damage. To ensure our long-term time charter vessel crews can provide the high level of cargo care our customers

Governance | Our people | Training and development

expect, we carry out a comprehensive knowledge sharing programme for officers of our long term time charter vessels. This is generally conducted for officers new to our trades at a seminar prior to joining a ship and includes topics such as cargo care and documentation, safety and bunkers. Regular follow-up discussions are then held during service onboard.

Our shore staffOur range of training techniques maximises the development potential of our shore staff using a combination of internal and external resources. Some of the training and development courses which have been carried out during 2011 included:

• EnduringLeadership,amulti-module residential course at Ashridge Business School in the UK, for 38 managers from our various offices

• Gearbulkonlinetrainingprogrammes, a bespoke online resource providing internal training in four areas – chartering, operations,

ThefocusfortheTrainingandDevelopmentteam will be to continually improve the application of learning to achieve our targets.

Survival training

Crewcoachingonboard the

vessel

marine accounts and anti-bribery and corruption

• Internalandexternalclassroom based training for subjects such as Performance Management, Time Management and CoachingforDevelopment

• Internalclassroomandvideo conferencing based training for subjects including our Environmental Management System and Time Charter training

• Variousjobspecifictechnical courses

• LunchtimeUniversity–avoluntary series of popular internal knowledge sharing sessions on subjects such as Bunkering and Bank Financing

• Shipvisits–afamiliarisationexercise to improve understanding of our vessels and how they operate

In 2011 an online information system to store and manage employee HR and Training

data was introduced. The system, called ‘My Gearbulk’, has been supplied and hosted by a leading software provider and tailored to meet the requirements of our global organisation. ‘My Gearbulk’ features a ‘self-service’ functionality providing employees with increased ownership of their own data.

TargetsTheTrainingandDevelopmentteam has a target of 35% of all Gearbulk shore staff achieving four training days per year.

During2011,74%ofGearbulkshore based office staff received training and 9.67 days training has been achieved by 35% of our staff.

The two other KPIs based on the application of learning after a minimum three month period are:

Training and development

How well the course met the predefined objectives, on a scale of 1 to 5:

Average score: 3.88 (target 4)

How much the job performance has been improved during the evaluation period:

Averagescore:3.53(target4)

3332

Governance | Our people | Communications

New WavesGearbulk produces a regular internal magazine, which aims to keep employees up to date with what is happening in the organisation – from a business and social point of view.

Each edition includes a message from Kristian Jebsen, a business news section, articles about our customers, their markets and cargoes and updates on sustainability.

Sustainability videoIn November 2011, Gearbulk participated in making a short film on sustainable shipping to be shown nationally in North America on Our Green World programmeontheDiscoveryChannel Paid Programme Block.

Broadband at seaAn internet connection is something most of us take for granted but this is a facility

that most merchant vessels currently don’t have access to. In 2012 Gearbulk will be rolling out a marine broadband solution across the owned fleet. This will greatly improve our communications and in particular will be a significant boost to the welfare of crew who will be able to keep in more regular contact with their families and friends.

Gearbulk VoyagerThe new Gearbulk Voyager intranet site was launched worldwide in the first week of January.

It is a global online portal launched initially in our Weybridge office in 2010, to provide a single web space for improved communication and information sharing between offices and departments. It also encourages a sense of community within the company by providing internal news and advertising social events and charity fund raising projects.

Communications

A Voyager Committee was established in 2011 and is made up of a number of employees across all of the Gearbulk offices. The purpose of this committee is to:

• Makethemostofthefunctionality Voyager provides

• Actasacommonvoiceforall Gearbulk employees

• Investigatefuturecontentand uses of the system

• PromoteVoyagerasatool that simplifies work processes and helps staff keep in better touch with the work being done by their colleagues around the world.

Leadership Blog

In 2011 the Voyager Leadership Blog was launched as a response to the results of the employee survey, suggesting the need for improved internal communication. This blog allows members of the Gearbulk Leadership team (GLT) to share their thoughts and insights on the current issues affecting the company and the wider industry.

Gearbulk InsightGearbulk Insight is a new function on Voyager which provides information on every Gearbulk trade including results, cargoes, customers, budgets and forecasts. This facilitates transparency and the internal transfer of information within the company.

EARBULKearbulkInsight

EARBULKearbulkVoyager

Inside this issue1 Chairman’s Column

A few words from Kristian Jebsen. Page 3

1 Business Spotlight on soda ash. How is soda ash made, some of its unusual uses and its importance to

Gearbulk. Page 4

1 Team Focus, GB Tampa We look at the dedicated team in the US and the roles they play. Page 6

1 Global Sustainability: Environmental Management System GB Weybridge is the first office to gain ISO 14001 certification. Page 9

1 Gearbulk Community Calendar caption competition winner. Page 14

1 Gearbulk Fleet: Building the Corella Arrow The birth of a 6th Gen in Oshima. Page 19

1 And finally... MV Penguin Arrow is the first Gearbulk vessel into Hachinohe after the tsunami. Page 20

News, features, community and more from Gearbulk Issue THREE, July 2011

GEARBULK

On 25 May all Gearbulk offices

joined together to show their

support for the Gearbulk

Global Coffee Morning.

From the first coffee break

of the day dawning in

GB Melbourne to the last in

GB Vancouver, each

office joined in with

the spirit of the idea.

In Melbourne,

there were lots of

home made goodies

and fun and games. A putting

competition for AUD 10 per entrant

was won by Ashraf Safari, pipping

both Geir and Glenda’s amazing

3 consecutive holes in one. Barry

Nelson’s highly coveted pink golf

ball was up for grabs at auction

and after heavy bidding, Barry

was the lucky winner purchasing

his ball back for AUD 45. Geir

Osland decided to take up the fad

of Planking and offered a donation

of AUD 50 for the photo. Although

it looks as if he is lying on the ship

model, he is in fact lying on the

cupboard behind it. In Bergen there

Gearbulk staff join together, raising $7,720 to support Japan

(Continued on page 3).

was even a cake

with the Gearbulk

G on it!

In Shanghai there were plenty of

cakes and calories to be consumed

and in Rio there was a delicious

breakfast table for all the team.

Although only 4 of the 6 staff in

Durban were in the office, they still

raised a splendid amount.

In Weybridge there was a mouth-

watering variety of cakes with some

baked by staff to support the effort

to raise funds. There was also a

“happy coat” donated by Imai-san

which was auctioned and won by

(Clockwise from top) A tastefully decorated cake from GB Bergen; Staff enjoying a tasty selection of cakes at GB Weybridge; GB Shanghai; Planking – Melbourne style!

GEARBULKNew Waves is a newsletter for the Gearbulk community written by the Gearbulk family. If you have anything you would like to be included please send this to: #NEWWAVES

We hope you enjoy reading New Waves.

 

 

 

 

Gearbulk sustainability video.

View on youtube: http://www.youtube.com/watch?v=CW9isV-aBkA

Screenshot of Gearbulk Voyager Sustainability page  

 

35

Chapter | sub-section

34

G-Pod for children’s play in AustraliaIn June 2011 Gearbulk launched the first G-Pod at Noble Park Primary school in Melbourne, a school of 260 students comprising over 40 different nationalities, of which 75% have a non-English speaking background.

Designedtoencouragecreativeplay, the G-Pod containers are loaded with an assortment safe unwanted industrial products such as left-over building materials and tyres. Children are encouraged to learn through play, promoting problem-solving skills and creative thought. The use of G-Pods also contributes to the development of vital skills such as cooperation, communication and social inclusion.

A total of 4 G-Pods were delivered in 2011, and another four are scheduled for delivery in 2012.

Packing “Gogo Bags” for the Robin Hood FoundationinDurbanFor six years the Robin Hood Foundation has been distributing food packages and clothing to new mothers and elderly who look after their orphaned grandchildren whose parentshavebeenlosttoAIDS.

The foundation works in and aroundtheDurbanareaanddistributes to those identified by community and church workers. Their aim is to distribute 2,000 “Gogo Bags” every year.

On 22nd October 2011 GearbulkDurbanstaffhelped to pack hundreds of “Gogo Bags”. The bags were packed with maize, sugar, tea, rice, canned food, biscuits, cereal, juice, soya and items of clothing which had been donated by corporate businesses and volunteers.

In 2011 a total of 66 charity days were taken by our shore based staff. Our target in 2012 is to raise this above 150.

Governance | Our planet | Give back

Social projects

As part of our sustainability strategy, we encourage our employees to ‘Give Back’ to society and the communities in which we work.

Give BackGearbulk encourages employees to spend one day every year working for a registered charity. We also support our staff involvement in charitable events by matching sponsorship raised, subject to certain conditions and limits.

In 2011 Gearbulk staff participated in a number of fundraising for many worthwhile charities, a sample of which include:

• Cancercharities

• WalkNowforAutism

• RedCross

• RoyalNationalLifeboatInstitution

• HearttoHeartFoundation

• MissiontoSeafarers

• HospitalsandHospices

• Scholarshipprogrammesforunder privileged children

In addition to individual charity days, Gearbulk staff have worked together on a number of community projects, including:

Japanese tsunamiStaff from our Tokyo office travelled 300 km to Ishinomaki City to help with the clean up operation after the devastating tsunami which struck Japan in March 2011.

Prompted by our long association with Japan and our partnership with Mitsui OSK Lines, Gearbulk donated six electronic whiteboards to Ishinomaki primary schools in 2011. This will be followed by a seven-year educational support programme.

Post tsunami clean up

Unveiling of a GearbulkG-Pod

Packing “Gogo” for the Robin Hood Foundation

Give Back

3736

Our planet|Environmentalmanagementoverview

– Management structure– Training/ awareness– Communication – Documentation– Emergency response

– Management review– Evaluate– Continually improve

– Aspects/ impacts– Legal requirements– Objectives/ targets

– Monitor & measure– Corrective action– EMS audit

Continualimprovement

Do

Plan

Act

Check

Climate change is a major challenge we all face today and we have already seen its impact through floods, droughts and extreme weather affecting our lives and businesses. Limiting the effects of climate change by reducing our carbon footprint will take a considerable effort and will require a change in the way we live and conduct our business. There will be risks to current business models but also new opportunities. There is a clear link between improved environmental performance and improved business performance through reduced energy consumption and

greater operational efficiency. This creates opportunities by attracting customers who value low carbon services.

As this report demonstrates, we have for some time been concentrating our efforts to reduce our environmental impact by making our fleet more energy efficient through technical innovation and operational improvements and developing our staff awareness on best environmental practices. We will build on the success of this work by using environmentally-friendly technologies and operational

techniques as well as through a process of information and training throughout and beyond our organisation.

EnvironmentalPolicy

Gearbulk is committed to the protection of the environment, preventing pollution and creating enduring value while providing industry leading and innovative ocean transport services. To achieve these aims Gearbulk will:

• UseanEnvironmentalManagement System to monitor and evaluate how our business activity impacts the environment, analyse the results and set improvement targets that are reviewed as part of our business management process

• Asaminimum,meetallenvironmental legislation and dedicate resources to finding innovative practical solutions which will exceed requirements

• Applyenvironmentally-friendly technologies and best practices to continually improve our operational efficiency and reduce Gearbulk’s impact on the environment

• Promoteawarenessofenvironmental protection, energy conservation and waste reduction within the organisation through our policies and procedures and the training and development of our employees

• Engageouremployees,customers and suppliers to achieve a shared commitment for responsible environmental stewardship

Environmental Management System (EMS) and ISO 14001

In 2010, Gearbulk introduced an Environmental Management System which is now an integral part of our Business Management System, providing a comprehensive and systematic process to ensure environmental compliance and continual improvement. It is based on thePlan,Do,Check,Actcycle.

All aspects of the business are considered in the process, some examples of environmental aspects include:

• Increasingrecyclingratesforcargo dunnage

• Identifyingalternativeusesfor withdrawn cargo slings

• Reducingdisposalofcargo-securing rubber airbag material

• Reducingofficeenergyand consumables consumption and increasing recycling rates

• Managingbusinesstravelby promoting alternative communication methods

Training was given to all Gearbulk employees in early 2011, raising individual awareness of environmental issues and the part we must all play to reduce our environmental impact. Following this training and a period of using the EMS, all branch offices except the newly opened Bergen office successfully underwent ISO 14001:2004 audits by Lloyd’s Register Quality Assurance (LRQA).

Storms on the horizon

Our planet

We recognise that Gearbulk’s activities are energy-intensive and that as a leader in our industry sector, we emit a significant amount of CO2 and other pollutants, which we are committed to minimising.

3938

Our planet | Environmental initiatives

Since this is Gearbulk’s first sustainability report, the following is a summary of initiatives taken to reduce the environmental impact of our fleet since 2009 rather than just the reported year.

• Fromtheoutset,weidentifiedthe need for improved vessel reporting and better monitoring of hull and main engine performance, using dedicated staff for this analysis

• Weintroducedaprogrammeto reduce hull resistance through the water (hence reduced fuel consumption and emissions) by regular full blasting of the underwater area in dry dock, the application of high performance anti-fouling systems and increasing the height to which they are applied (reduced boot top band)

• Beingabletoaccuratelymeasure vessel performance is crucial so more of our vessels are being equipped with additional performance and fuel consumption monitoring equipment. These include digital fuel flow meters which provide a continuous fuel consumption read out on the bridge, allowing the Master and the bridge team to evaluate and thus control the impact of changing settings such as engine speed and vessel course on the fuel consumption

• Weincreasedthefrequencyof propeller polishing from 12 to eight months

• Older,lessefficientvesselsare being phased out

• Greenpassportsareissuedto all vessels sold for recycling and only recycling yards with environmentally sound credentials are used

• Wedevelopedourpurchasingpolicy to exclude more environmentally unfriendly products and chemicals

• Thereisacorrelationbetween cylinder oil consumption and Particulate Matter (PM) emissions. A programme is in place to retrofit new cylinder lubrication systems to the main engines of suitable vessels to reduce cylinder oil consumption and hence PM emissions

• Anonboardvoyageweatherrouting system is standard on all Gearbulk owned vessels and weather routing is routinely used for our chartered vessels

• Apolicyisinplacetosupply only low sulphur marine gas oil for the majority of Gearbulk owned and long term time chartered vessels when bunkering distillate fuel

• Propellerbosscapfinswhichrecover some of the energy lost in the vortex created by the propeller have been fitted to several vessels and more are planned. These devices give up to 3% fuel saving

• AShipEnergyEfficiencyManagement Plan (SEEMP) which incorporates best practice for reducing fuel consumption and consequently CO2 emissions, is being developed and will be implemented in 2012

• Gearbulkparticipatesintheport of Long Beach voluntary speed reduction programme which encourages vessels to reduce emissions by keeping their speed below 12 knots in a zone which extends 40 nautical miles seaward. Our compliance rates have been: – 2009 - 90.0% – 2010 - 100.0% – 2011 - 97.5%

Newbuildings• Themainenginesofour

open hatch newbuildings are de-rated to improve fuel consumption. Electronically controlled main engines have been introduced into the fleet – a series of four vessels is already in service and ten more are on order. These main engines have optimised control particularly at low load operation, giving better combustion and higher fuel efficiency with smokeless exhaust

• Thepropellershaftsealsare fitted with an additional air seal to reduce the risk of oil pollution

• Ouropenhatchnewbuildingshave dedicated hold washing water tanks to reduce pollution risk and improve environmental disposal options

• Additionalmodeltestingis carried out to identify optimum trim for different vessel conditions

• OurnewvesselsbuiltintheOshima Shipbuilding yard feature a bow design which reduces the energy needed to propel the vessel through heavy weather. These vessels also feature flipper fins which improve the water flow into the propeller disc, thus improving propeller efficiency

Our latest vessels in service, our Fleximax II class have a carbon footprint per tonne mile of cargo carried about 40% less than the ships they are replacing, based on full speed and 80% deadweight. Our next series of eight vessels, the Fleximax IIIs which will be delivered from the end of 2012, will approach 50%. These vessels will carry 15% more cargo for 7% less fuel than the Fleximax IIs which equates to a saving in CO2 emissions for each vessel equivalent to taking 640 cars off the UK roads.

 

Far left: Painting in dry dock

Left: Propeller boss cap fin

Environmental initiatives

4140

Our planete | Environmental performance 2011 | EMS in action

CarbonDioxide(CO2) – for all vessels on Gearbulk trades

In 2010 we developed a Carbon Footprint report to capture the CO2 levels emitted by both owned and chartered-in vessels employed on Gearbulk trades. This report allows us to calculate both total CO2 emissions and the IMO CO2 Index for individual vessels, classes, fleet, trades, shipper, charterer or specific COA. The IMO CO2 Index may be defined as the ratio of mass of CO2 emitted per unit of transport work. It follows then that the index is dependant both on the fuel efficiency of the vessel and the quantity of cargo carried – ballasted or partly loaded vessels will have higher indexes.

This index excludes fuel used under pilot and in port and is based on port-to-port voyage periods. It also includes any ballast voyages.

Our target is to achieve a 20% reduction in our CO2 Index from 2010 levels by the end of 2015

SulphurOxides(SOx) – for all vessels on Gearbulk trades

The global sulphur limit of 4.5% reduced to 3.5% on 1st January 2012. It will not impact on our average sulphur content of fuel as very little fuel purchased within the last 12 months has been above 3.5%. What is expected to lower the average is the introduction of the North American ECA on 1st August 2012 when all fuel used while alongside and within 200nm of land must be no more than 1% sulphur content.

Further challenges lie ahead when the maximum sulphur content in the ECAs reduces to 0.1% in 2015, which effectively means that ships will be required to consume only low sulphur distillate fuel or install exhaust gas scrubbing systems which enable cheaper fuel oil of up to 3.5% to be used while still complying with the regulation. As the interchangeability of our vessels allows them to move

efficiently from one trade to another, it means they will not spend a significant amount of time trading in an ECA. So while we will continue to monitor the developments in scrubbing technology, on the basis of current and projected fuel costs, it is expected that use of low sulphur distillate fuel will be the more cost effective option for our vessels.

Oil Spills

Although we place a high emphasis on avoiding any spills, five of our vessels did experience a small number of very minor oil spills in 2011. Our target is zero spills.

Cargoliftingwebslings

Gearbulk uses large numbers of web slings for lifting cargoes. They are inspected prior to every use and withdrawn from service if damaged in any way. Rather than consign them to land fill or incineration, we have been exploring other uses for them. These include stitching several together to provide an alternative protective material for cargo stowage (dunnage) and re-cycling into insulation, see below.

Target – 25% re-use by end 2012

Actual – 12.8% achieved in 2011

Rubber air bags

Rubber air bags are regularly used to secure certain cargoes to prevent movement at sea. They naturally suffer from wear and tear and although they can be repaired, they do eventually reach a point when repair is no longer realistic. Various ideas to extend life and re-cycling opportunities of these air bags are now being assessed.

Target – reduce disposal by 25% by the end of 2012

Actual – 5% reduction in disposal achieved in 2011

AnovelusehasbeenfoundforthosewebslingswhicharewithdrawnandcanbesenttoChinaforrecycling.The web slings are broken down to their base fibrous state then rewoven to form light matting which has excellent insulation qualities and is used in clothing such as Gearbulk sea staff heavy weather gear.

Dunnage

Dunnageisusedtoprotectandsecure cargoes and is often timber which is disposed of after a single use. Through 2011, Gearbulk has conducted a drive to recycle the dunnage which it controls.

Target – achieving 30% recycling by 2012

Actual – estimated 51% recycled in 2011

During2011,emissionsdatafrom the business travel of our shore based staff has been collected and will form a basis for assessing our future efforts in reducing our emissions in this area.

2009 2010 2011

Total CO2 1,319,708 1,421,826 1,352,637

CO2 Index 10.33 9.62 8.81

CO2 emissions on Gearbulk trades 2009 to 2011

2009 2010 2011

Total SOx 13,305 12,434 12,811

Average SOx % 1.54 1.43 1.54

SOx emissions on Gearbulk trades 2009 to 2011

Pine Arrow off Iceland

Environmental performance 2011 Environmental Management system in action

1 2 3 4

42 43

GRI indicators

Page

Strategy and analysis1.1 Statement from the most senior decision maker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Organisational profile2.1 Name of organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

2.2 Primary brands, products and/or services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18,19,20

2.3 Operational structure of the organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

2.4 Locations of organisation’s headquarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

2.5 Countries where the organisation operates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,23

2.6 Nature of ownership and legal form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

2.7 Markets served . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-23

2.8 Scale of the reporting organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,26

2.9 Significant changes in structure, size or ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

2.10 Awards received in the reporting period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

Page

Report parameters3.1 Reporting period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

3.2 Dateofmostpreviousreport(ifany) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

3.3 Reporting cycle (annual, bi-annual etc) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

3.4 Contact point for questions regarding the report or its content . . . . . . . . . . . . . . . . . . . . . .51

3.5 Process for defining report content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries etc) . . . . . . . . . . . . . . . . . . .42

3.7 Limitations on the scope of boundary of the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

3.8 Basis for reporting on joint ventures, subsidiaries etc . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

3.10 Effect of any re-instatements of information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

3.11 Changes in the scope, boundary, or measurement methods . . . . . . . . . . . . . . . . . . . . . . . N/A

3.12 GRI Index table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43-45

3.13 External assurance for the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

Governance, commitments and engagement4.1 Governance structure of the organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,25

4.2 Whether the Chair or the highest governing body is also an executive officer . . . . . . . . . . . .24

4.3 For unitary board structure, state the number of members of the highest governance body that are independent and/or non executive members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

4.14 List of stakeholder groups engaged by the organisation . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

4.15 Basis for identification and selection of stakeholders with whom to engage . . . . . . . . . . . N/A

Economic Performance indicatorsManagement approach

EC1 Directeconomicsvaluegeneratedanddistributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

EC2 Financial implications and other risks and opportunities due to climate change . . . . . . . . . N/A

EC3 Coverage of the organisation’s defined benefit plan obligations . . . . . . . . . . . . . . . . . . . . N/A

EC4 Significant financial assistance received from government . . . . . . . . . . . . . . . . . . . . . . . . N/A

EC6 Spending on locally based suppliers at significant locations of operation . . . . . . . . . . . . . N/A

EC7 Procedures for local hiring proportion of senior management . . . . . . . . . . . . . . . . . . . . . . N/A

EC8 Infrastructure investments and services provided primarily for public benefit . . . . . . . . . . . N/A

Environmental Performance indicatorsManagement approach

EN1 Materials used by weight or volume

EN2 Percentage of materials used that are recycled input materials . . . . . . . . . . . . . . . . . . . . .41

EN3 Directenergyconsumptionbyprimaryenergysource . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

EN4 Indirect energy consumption by primary source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

EN5 Energy saved due to conservation and energy improvements . . . . . . . . . . . . . . . . . . . . . . N/A

EN8 Total water withdrawal by source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

Reporting scopeThe reporting period is from 1st January 2011 to 31st December2011andincludesinformation on activities for which Gearbulk has financial control. As all time chartered

vessels are subject to daily reporting formats similar to our owned vessels, emissions data contained in this report also includes these vessels when employed on Gearbulk trades,

unless specifically stated otherwise. It is our intention that future sustainability reports will be published on an annual basis.

GRI indicators

This report has been compiled in line with the Global Reporting Initiative (GRI) Level C Guidelines. Below is the index.

4544

GRI indicators

Page

N11 Location and size of land in area of high biodiversity value outside protected areas . . . . . . N/A

EN12 Impacts on biodiversity in protected areas and areas of high biodiversity . . . . . . . . . . . . . N/A

EN16 Total direct and indirect gas emissions by weight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

EN17 Other relevant indirect greenhouse gas emissions by weight . . . . . . . . . . . . . . . . . . . . . . N/A

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved . . . . . . . . . . . 37-39

EN19 Emissions of ozone-depleting substances by weight . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

EN20 NOx, SOx and other significant air emissions by type and weight . . . . . . . . . . . . . . . . . . . .40

EN21 Total water discharged by quality and destination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

EN22 Total weight of waste by type and disposal method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

EN23 Total number and volume of significant spills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

EN26 Environmental impacts of products and services and extent of impact mitigation. . . . . . . . N/A

EN27 Percentage of products sold and their packaging materials that are reclaimed by category . N/A

EN28 Significant fines and sanctions for non-compliance with environmental laws and regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

Social Performance indicatorsLabourpracticesanddecentwork Management approach

LA1 Total workforce by employment type, employment contract and region . . . . . . . . . . . . . . . . .26

LA2 Employee turnover by age group, gender and region. . . . . . . . . . . . . . . . . . . . . . . . . . . 26,27

LA4 Percentage of employees covered by collective bargaining agreements . . . . . . . . . . . . . . . N/A

LA5 Minimum notice period(s) regarding operational changed . . . . . . . . . . . . . . . . . . . . . . . . . N/A

LA6 Formal joint management-worker health and safety committees . . . . . . . . . . . . . . . . . . . . N/A

LA7 Injuries, occupational diseases, lost days, absenteeism and work related fatalities . . . . . . .28

LA8 Education, training, prevention and risk controlled programmes in place regarding serious diseases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

LA9 Health and safety topics covered in formal agreements with trade unions . . . . . . . . . . . . . N/A

LA10 Average hours of training each year per employee by employee category . . . . . . . . . . . . . . .31

LA13 Diversitywithingovernancebodiesandemployeecategories . . . . . . . . . . . . . . . . . . . . . . N/A

LA14 Ratio of basic salary of men to women by employee category . . . . . . . . . . . . . . . . . . . . . N/A

Mobile worker working patternLT9 Descriptionofpoliciesandprogrammestodetermineworkinghouseandresthours,restfacilities and leave for seafarers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

LT10 Approaches to provision of facilities to enable mobile workers to maintain personal communications while working . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

Page

Ship safety inspectionsLT13 List the accidents when ships have been detained by port inspectors . . . . . . . . . . . . . . . . N/A

Use of labour providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

Describehowthesecriteriarelatetoexistinginternationalstandardssuchasconventionstothe ILO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

Continuity of employment LT17 Describemeasuresinplacetoprovideincomesecurityandemploymentcontinuityfromworkers employed/contracted repeatedly but not continuously . . . . . . . . . . . . . . . . . . . . . . . . . N/A

Human rightsManagement approach

HR1 Human rights clauses or screening related to investment agreements . . . . . . . . . . . . . . . .24

HR2 Screening of suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

HR4 Total number of discrimination and actions taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

HR5 Freedom of association and collective bargaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

HR6 Child labour and measures taken to contribute to the elimination of child labour . . . . . . . . N/A

HR7 Forced or compulsory labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

SocietyManagement approach

SO1 Impacts of operation on communities, including entering, operating and exiting . . . . . . . . . N/A

SO2 Percentage and total number of business unit analysed for risks related to corruption . . . . N/A

SO3 Percentage of employees trained in organisation’s anti-corruption policies and procedures . .24

SO4 Actions taken in response to incidents of corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A

SO5 Public policy positions and participation in public policy development and lobbying . . . . . . N/A

SO7 Legal action for anti-competitive behaviour, anti-trust and monopoly practices . . . . . . . . . . N/A

SO8 Fines and non monetary sanctions for non-compliance with laws and regulations . . . . . . . N/A

GRI indicators (continued)

4746

The Gearbulk fleet

NameofVessel Type YearBuilt Dwt

Tuju Arrow OHGC 2010 72,863

Macuru Arrow OHGC 2010 71,460

Tenca Arrow OHGC 2009 72,863

Corella Arrow OHGC 2009 72,863

Sunbird Arrow Liquid Pitch 2006 15,002

Bulk Jupiter Conventional 2006 56,009

Poplar Arrow Fleximax 2005 47,852

Bulk Saturn Conventional 2003 52,408

Spruce Arrow Fleximax 2002 47,792

Cedar Arrow Fleximax 2001 47,818

Jaeger Arrow TEFC 2001 23,529

Merlin Arrow OHGC 1999 55,497

Weaver Arrow OHGC 1998 55,402

Rakiura Maru Liquid Pitch 1996 22,350

Canelo Arrow Fleximax 1997 48,077

Emu Arrow OHGC 1997 55,457

Grebe Arrow OHGC 1997 55,671

Kite Arrow OHGC 1997 55,531

Penguin Arrow OHGC 1997 55,506

Plover Arrow OHGC 1997 55,459

Rathboyne Liquid Pitch 1997 6,649

Mandarin Arrow OHGC 1996 55,770

Pine Arrow Fleximax 1996 48,041

Toucan Arrow OHGC 1992 55,918

Mozu Arrow TEFC 1992 42,276

Swift Arrow TEFC 1992 42,276

Aracari Arrow OHGC 1992 46,956

Quetzal Arrow OHGC 1992 46,908

Jacamar Arrow OHGC 1992 46,998

Grouse Arrow TEFC 1991 42,267

Swan Arrow OHGC 1987 45,206

Tsuru Arrow OHGC 1987 45,206

Tinamou Arrow OHGC 1987 45,252

Cotinga Arrow OHGC 1987 45,295

Cormorant Arrow OHGC 1986 42,996

Ibis Arrow OHGC 1986 42,977

The Gearbulk fleetAsof31stDecember2011

Vessels owned or controlled

NameofVessel Type YearBuilt Dwt

Falcon Arrow OHGC 1986 45,295

Tern Arrow OHGC 1986 41,077

Gannet Arrow OHGC 1985 39,260

Barbet Arrow OHGC 1985 39,218

Harefield OHGC 1985 41,651

Hawk Arrow OHGC 1985 40,269

Osprey Arrow OHGC 1985 40,563

Petersfield OHGC 1985 42,883

Petrel Arrow OHGC 1985 42,964

Siskin Arrow (renamed White Pearl) OHGC 1985 39,273

Westfield OHGC 1985 41,619

Wren Arrow OHGC 1985 43,003

Aspen Arrow Conventional 1985 28,030

Auk Arrow OHGC 1984 43,952

Crane Arrow OHGC 1984 42,913

Finch Arrow OHGC 1984 39,273

Teal Arrow OHGC 1984 44,010

Apalis Arrow OHGC 1983 42,149

Kestrel Arrow OHGC 1983 42,149

Vessels held under long-term time charter

NameofVessel Type YearBuilt Dwt

Birch Arrow Semi-open hatch 2007 50,273

Tawa Arrow Semi-open hatch 2008 54,276

Bulk Leo Conventional 2008 55,679

Kashi Arrow Semi-open hatch 2009 54,204

Bulk Neptune Conventional 2009 55,657

Bulk Pegasus Conventional 2009 58,736

Bulk Titan Conventional 2009 58,090

Megah Enam Tweendecker 2009 12,171

MegahDelapan Tweendecker 2009 12,160

Momi Arrow Semi-open hatch 2009 54,204

Kiwi Arrow Fleximax 2010 62,924

Toki Arrow Fleximax 2010 62,942

Pelican Arrow Fleximax 2011 62,942

Nandu Arrow Fleximax 2011 61,860

Eagle Arrow Fleximax 2011 61,860

Puffin Arrow Fleximax 2011 62,967

Bulk Orion Conventional 2011 56,155

Glossary

4948

The Gearbulk fleet I Glossary

The Gearbulk fleet (continued)Fleet changes – 2011

Vessels delivered

NameofVessel Type DateAcquired

Nandu Arrow Fleximax March 2011

Rakiura Arrow Liquid Pitch April 2011

Pelican Arrow Fleximax May 2011

Puffin Arrow Fleximax July 2011

Bulk Jupiter Conventional September 2011

Bulk Orion Conventional September 2011

Eagle Arrow Fleximax November 2011

Vessels sold

NameofVessel Dateofdisposal

Puffin Arrow February

Rathrowan February

Megah Cement April

DunlinArrow June

Bergen Arrow August

Rhone September

Frotargentina October

Megah Lima November

AvocetArrow December

ClarksonsResearchDatadisclaimer

The statistical and graphical information contained herein is drawn from the Clarkson Research Services Limited (“CRSL”) database and other sources. CRSL has advised that (i) some information in CRSL’s database is derived from estimates or subjective judgments; (ii) the information in the databases of other maritime data collection agencies may differ from the information in CRSL’s database; (iii) whilst CRSL has taken reasonable care in the compilation of the statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation procedures and may accordingly contain errors; (iv) CRSL, its agents, officers and employees cannot accept liability for any loss suffered in consequence of reliance on such information or in any other manner; (v) the provision of such information does not obviate any need to make appropriate further enquiries ; (vi) the provision of such information is not an endorsement of any commercial policies and/or any conclusions by CRSL; and (vii) shipping is a variable and cyclical business and any forecasting concerning it cannot be very accurate.

BDI BalticDryIndex.Anindexwhichprovidesadailyassessmentofthecostoftransporting freight on a time charter basis.

BRIC Acronym referring to Brazil, Russia, India, China.

Capesize Vessels which are too large to transit the Suez or Panama canals and thus have to pass Cape Horn or the Cape of Good Hope to travel between Atlantic/Pacific/Indian Oceans.

CFCs Chlorofluorocarbons, organic compounds used mainly as refrigerants now being phased out due to their damaging effect on the ozone layer in the upper atmosphere, contributing to global warming.

COA Contract of Affreightment, a contract requiring the carriage of a determined quantity of a specified cargo over a given period of time.

CO2 CarbonDioxide–amajorGreenhousegas,anatmosphericincreaseofapproximately 35% since pre-industrial levels has been attributed to burning of fossil fuels and deforestation, causing global warming. This increase in CO2 levels is also responsible for increased acidification of the oceans.

DWT Deadweighttonnageisameasureofthesumoftheweightsavesselcancarryincluding cargo, fuel, ballast, fresh water and stores.

EBITDA EarningsBeforeInterest,Taxes,DepreciationandAmortisation.

ECA Emission Control Area, areas with more stringent regulation of emissions such as SOx and NOx for environmental and/or human health issues.

Eutrophication An accumulation of nutrient in water which causes excessive plant growth and decay, leading to oxygen depletion which kills fish and other organisms.

Fleximax Vessels designed with the open hatch, box shaped hold concept but having fixed jib cranes rather than travelling gantry cranes.

GHG Greenhouse Gases, generic name for a range of gases which absorb and reflect thermal radiation back to the earth’s surface which would otherwise have escaped into space, thus leading to global warming.

GISS Gearbulk Improvement and Safety System, an electronic database featuring Gearbulk policies, procedures, manuals and general information.

GLT Gearbulk Leadership Team.

GRI Global Reporting Initiative - a non profit organisation promoting sustainability, producing one of the world’s most widely used standards for sustainability reporting.

Handysize Typically dry bulk/break bulk vessel in deadweight range of 15,000 – 35,000 mt.

Handymax A larger version of the Handysize, up to 60,000mt deadweight.

HCFCs Hydrochlorofluorocarbons, compounds used mainly as refrigerants now being phased out due to their damaging effect on the ozone layer in the upper atmosphere, contributing to global warming.

IMO International Maritime Organisation, United Nations agency responsible for the safety and security of shipping and the prevention of pollution from ships.

ISO9001:2008 Standard relating to quality management.

5150

GlossaryIWewelcomeyourfeedback

We welcome your feedback

If you have any comments, questions or suggestions about this report, please contact:

DavidRoberts,Senior Manager, Sustainability & Technical

Gearbulk (UK) Limited, 5 The Heights, Weybridge Surrey KT13 0NY UK Email: david.roberts@gearbulk.com

ISO 14001:2004 Standard relating to environmental management.

LRQA Lloyd’s Register Quality Assurance, a provider of management system certification, verification and training.

LTIF Lost Time Injury Frequency, the number of Lost Time Injuries per million man-hours worked during the reporting period.

MACN Maritime Anti-Corruption Network, a global network promoting good practice in the maritime industry by tackling bribes, facilitation payments and other forms of corruption.

MARPOL Abbreviation for marine pollution and refers to IMO’s International Convention for the Prevention of Pollution from Ships which covers pollution caused by oil, noxious liquids in bulk, pollutants carried in packaged form, sewage, garbage and air pollution.

NOx Generic term for nitric oxides and nitrogen dioxide formed during the combustion process. Forms acid rain and destroys the earth’s protective ozone layer. Inhalation can cause or worsen respiratory diseases such as bronchitis, emphysema and aggravate heart disease.

NGO Non Government Organisation, an organisation which operates independently from any form of government and is not a conventional for-profit business.

OHGC Open Hatch Gantry Crane

Panamax A dry cargo vessel the size of which is principally determined by the dimensions of the Panama Canal lock chambers. About 60,000 to 80,000mt dwt.

PM Particulate Matter, tiny solid and liquid particles suspended in the atmosphere. Can be naturally occurring (volcanoes, fires, dust storms) and from man made sources such as burning of fossil fuels.

SEEMP Ship Energy Efficiency Management Plan, a tool which incorporates best practices for the fuel efficient operation of a vessel. It is being introduced by IMO.

SOx Sulphur oxides, broad term referring to a range of sulphur and oxygen containing compounds which can be generated naturally (volcanoes) and from man made sources such as burning of fossil fuels.

SSI Sustainable Shipping Initiative, a four stage initiative comprising leading industry companies and NGOs designed to help the industry change to a more sustainable, successful long term future.

SSG Sustainability Steering Group, a group wide initiative within Gearbulk to develop and implement the company’s sustainability strategy.

STCW Standards of Training, Certification and Watchkeeping. The IMO Convention for STCW prescribes minimum standards relating to training, certification and watchkeeping for seafarers.

TEFC Totally Enclosed Forestry Carrier.

VOCs Volatile Organic Compounds. Organic compounds that easily enter the air due to their low boiling points. Solvent release from paints is a typical example.

Glossary (continued)

GEARBULK

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