Union Bulk A/S

Ledelsesberetning

Key activitiesThe principal activities are shipping activities, primarily as dry cargo operator, and also as owner of MV Hinase though the 100% owned subsidiary Hinase ApS Development in the yearThe income statement of the Company for 2023/24 shows a profit of USD.t 1,059, and at 30 June 2024 the balance sheet of the Company shows a positive equity of USD.t 16,869.After landing the company’s exposure after the very high freight market in 2021/2022, we started this financial year with losses in the first quarter, which we were able to turn around towards the end of 2023, and we enjoyed some very good months in January and February 2024.The last part of the financial year was marked by significant disruption in the personnel in the company’s chartering department, and management has focused their efforts on regrouping the team and building a new foundation for the company’s business influx. In the time of writing (December 2024), the plan has been forged and is ready to be rolled out. A new CEO has already joined in Copenhagen and a new head of the Singapore office is working to grow our presence in the Pacific market, just as new hires will join us in the new year.This does not change the fact that the last part of the year was loss giving, and the result, even if it is a positive one, is less than anticipated. On the encouraging side, the positive result further consolidates Union Bulk's financial strength and ability to roll out our ambitions for the company, which remains strong. The company has offices and employees in both Denmark and Singapore. The past year and follow-up on development expectations from last yearAs predicted in last year’s report, the year has been a transitional year – in more ways than we had foreseen. The Baltic Handysize Index has remained fairly stable, with fluctuations, and has moved in a band between 8.000 at the beginning of the financial year and 16.000 as the highest. Period rates have been out of sync with the spot market, and entering into new period contracts has proven difficult. Use of financial instrumentsThe company uses derivative financial elements to hedge freight price risks and bunker price risk. Forward Freight Agreement (FFA) is used to hedge cash flow risk from freight prices. Bunker hedge is used to hedge future bunker expenses and redelivery commitments related to timechartered vessels. Operating risks and financial risksThe foreign exchange risks are limited as most income and expenses from shipping are in US dollars. Market risksRevenues from the shipping operations are linked to global market trends, which through demand fluctuations affect freight rates as well as prices of e.g. tonnage and fuel. Management continuously assesses the extent to which it is relevant to take measures against these market fluctuations. Foreign exchange risksMost of the income from shipping activities is in USD, with a small amount of income in EUR. With most operational expenses being in USD and administrative expenses being in USD and DKK, the company have only limited foreign exchange risk. Targets and expectations for the year aheadAs stated above under follow-up from last year, the new financial year 2024/2025 has started at fairly stable freight market, however imbalanced between Atlantic and Pacific. We see the next financial year as another transitional year, where we will rebuild the company’s organization and start the foundation for a coming surge in market, albeit no one knows when this will materialize. We expect a positive net operating income, but doubt it will suffice to cover overhead costs. Research and developmentThe Company is not involved in research and development activities. External environmentThe EEXI- and the CII-regulations regulations entered into force in January 2023, reducing the carbon footprint of all vessels in the world fleet. Union Bulk welcomes this development and supports the industry´s transition to more environmentally friendly maritime transportation.We are also fully accustomed to operating within the EU ETS (emission trading system) that entered into force in January 2024. As from January 2025, the first stages of FuelEU are rolled out, and we are ready to handle this as well. Union Bulk works daily with external advisors to reduce our marine fuel consumption and emissions. Uncertainty relating to recognition and measurement.Recognition and measurement in the Annual Report have not been subject to any uncertainty. Subsequent eventsNo events materially affecting the assessment of the Annual Report occurred after the balance sheet date.