ANNUAL
REPORT
2022
Himalaya Shipping Ltd.
3
Annual Report 2022
Himalaya Shipping Ltd. (together with
its subsidiaries, the “Company” or the
“Group” or “Himalaya Shipping”) is a
limited liability company incorporat-
ed in Bermuda on March 17, 2021.
The Company’s shares are traded on
Euronext Expand and New York Stock
Exchange (“NYSE”) under the ticker
“HSHP”.
Himalaya Shipping Ltd. is an indepen-
dent bulk carrier company, incorpo-
rated in Bermuda. Himalaya Shipping
has three vessels in operation and
nine Newcastlemax dry bulk vessels
under construction at New Times
Shipyard in China. The remaining
newbuildings are expected to be
delivered by July 2024.
MANAGEMENT DISCUSSION
ANDANALYSIS
Consolidated Statements
ofOperations
General and administrative expenses
were US$2.0 million for the year end-
ed December 31, 2022, compared
to US$1.0 million for the period
ended December 31, 2021. Our G&A
expenses for both periods reect
the startup nature of our operations
and mainly relate to listing expenses
in Euronext Growth and Euronext
Expand, legal fees, share based com-
pensation expenses and fees payable
under our Management Agreement
with 2020 Bulkers Management AS.
Consolidated Balance Sheets
The Company had total assets of
US$177.8 million as of December 31,
2022, (December 31, 2021: US$95.2
million). The increase is primarily due
to instalments paid on the newbuild-
ings.
Total shareholders’ equity was
US$90.3 million and US$91.9 million
as of December 31, 2022 and Decem-
ber 31, 2021, respectively.
Total liabilities as of December 31,
2022, were US$87.5 million (Decem-
ber 31, 2021: US$3.3 million). The
increase is primarily due to draw
downs on the sale leaseback nanc-
ing.
Consolidated Statements of Cash Flows
Net cash used in operating activities
was US$1.4 million for the twelve
KEY EVENTS DURING 2022
Ї In February the Company completed the sale leaseback nancing with Avic
International Leasing Co., Ltd. (“AVIC”) for the rst four newbuildings to be
delivered from New Times Shipyard.
Ї In April the Company entered into sale leaseback arrangements with CCB
Financial Leasing Co., Ltd. (“CCBFL”) for the last eight newbuildings to be
delivered from New Times Shipyard securing nancing for its complete
newbuilding program of 12 dual fuel Newcastlemax vessels.
Ї On April 29 the Company was listed on the Euronext Expand.
Ї On August 31 the Company signed amendments to the shipbuilding con-
tracts to install Sulphur oxide (Sox) scrubbers on all twelve vessels prior to
delivery.
Ї In October the Company entered into 32-38 month time charter agree-
ments, plus option for 11-13 months for two vessels with one of the major
commodity companies. The vessels will earn an index linked rate, reect-
ing a signicant premium compared to a standard Capesize vessel. The
time charters also include a prot sharing of any economic benet derived
from operating the vessel´s scrubber or running on LNG.
Ї In October the Company entered into 24 month time charter agreements
with an evergreen structure for four vessels with Koch Shipping Pte. Ltd..
The vessels will earn an index-linked rate, reecting a signicant premium
compared to a standard Capesize vessel. The time charters also include a
prot sharing of any economic benet derived from operating the vessel´s
scrubber or running on LNG.
Ї In December the Company entered into a two-year time charter agree-
ment for Mount Norefjell with a major Japanese counterpart. The vessel
will earn a xed rate of US$30,000 per day, gross.
Board
of Directors’ Report
4
Annual Report 2022
months ended December 31, 2022
(US$0.5 million for the period from
March 17 to December 31, 2021). The
increase compared to the period
from March 17 to December 31,
2021 is due to increased general and
administrative expenses.
Net cash used in investing activities
was US$78.3 million for the twelve
months ended December 31, 2022
reecting capitalized interest, su-
pervision cost and pre-delivery cost
on our vessels under construction
(US$68.8 million used in investing ac-
tivities for the period from March 17
to December 31, 2021). The Company
paid instalments of US$74.9 million
during the twelve months ended
December 31, 2022 (including non-
cash additions of US$13.7 million)
compared to US$68.5 million during
the period from March 17 to Decem-
ber 31, 2021 (in addition to US$13.6
million considered non-cash) on the
newbuildings.
Net cash provided by nancing
activities was US$68.7 million during
the twelve months ended December
31, 2022 (US$80.6 million provided
by nancing activities during the
period from March 17 to December
31, 2021). The Company received
US$69.6 million, net of deferred
loan costs paid to lender, from draw
downs on the sale leaseback nanc-
ing as well as 1.0 million from the
proceeds from issuance of long-term
debt from related parties, oset by
$1.9 million relating to deferred loan
and equity issuance costs during
the twelve months ended December
31, 2022. The Company received net
proceeds from private placements of
US$80.6 million (in addition US$13.6
million was classied as non-cash in
the Consolidated Statements of Cash
Flows) during the period from March
17 to December 31, 2021.
As of December 31, 2022, the Com-
pany’s cash and cash equivalents and
restricted cash amounted to US$0.3
million (December 31, 2021: US$11.3
million).
HEALTH, SAFETY AND ENVIRONMENT
Himalaya Shipping is fully committed
to health, safety, quality and envi-
ronmental protection and identies
these as being essential to long-term
nancial and reputational success.
Himalaya Shipping has outsourced
ship management to third party con-
tractors. A structured due diligence
and audit process have been carried
out to ensure the highest ship man-
agement standards are applied.
Safety is at the core of our activities,
both in the oce and onboard our
ships when delivered, and we have a
commitment to safeguard persons
from harm or injury and prevent
damage to property. Himalaya’s
contracted employees are expected
to identify operational risks and im-
plement safe work practices.
Himalaya Shipping experienced no
Loss Time Accidents (LTA) or other
personnel injuries in 2022.
The Himalaya eet will consist of
twelve modern, dual fuel 210,000
DWT Newcastlemax dry bulk vessels.
The dual-fuel Himalaya ships are
designed to burn LNG as primary fuel
and are built with the latest genera-
tion MAN high pressure engine and
in-line shaft generator. The ships are
estimated to reduce Green House
Gas emission by approximately 60
% per ton mile compared to a stan-
dard BIMCO described 20134 built
180,000 tdw Capesize vessel due to
higher cargo carrying capacity, LNG
fuel, energy optimized ship hull de-
sign including wake duct and propel-
ler hub vortex ns, high thermal and
mechanical eciency of main and
auxiliary engines, permanent magnet
shaft generator and optimization of
other energy consuming systems
onboard.
The preliminary calculated attained
EEDI score for our ships is 1.4651 for
operation with LNG as primary fuel
(*) which is approx. 60% lower than
the IMO requirement for phase 1
vessels contracted during the period
2015-19 and meets the phase 3 re-
quirement of 1.95 for ships delivered
after 2025 with good margin.
We are committed to make use of
any proven and economically viable
means to reduce our environmental
footprint.
(*) In operation with HFO as primary fuel
the attained EEDI is 1,85.
Board
of Directors’ Report
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Annual Report 2022
Board
of Directors’ Report
HUMAN RESOURCES AND DIVERSITY
The Company prohibits discrim-
ination against any employee or
prospective employee on the basis
of sex, race, color, age, religion,
sexual preference, marital status,
national origin, disability, ancestry,
political opinion, or any other basis
prohibited by the laws that govern its
operations. This is embedded in the
Company’s Code of Conduct.
The Company will not engage in or
support discrimination and has ad-
opted a non-discriminating practice
that strives to ensure equal treat-
ment in recruitment, hiring, compen-
sation, access to training, employee
benets and services, promotion,
termination and retirement, irre-
spective of age, gender, race, color,
disability, religion or belief, language,
national or social origin, trade union
membership, or any other status
recognized by international law. This
is embedded in the Company’s Code
of Conduct.
The Company has no employees but
have contracted management ser-
vices from 2020 Bulkers Management
AS of which one is female and four
are male employees. The Board of
Directors consists of ve members of
which three are female and two are
male.
The absence due to sickness was
approximately zero % in 2022.
GOING CONCERN
In accordance with section 3-3a of
the Norwegian Accounting Act, the
Board conrms that the prerequisites
for the going concern assumption
exist and that the consolidated nan-
cial statements have been prepared
based on a going concern basis.
The Group is dependent on debt
nancing to nance the scrubber
installation under the current new-
building contracts for the vessels
which raises substantial doubt about
the Company’s ability to continue as
a going concern. The Consolidated
nancial statements do not include
any adjustments that might result
from the outcome of this uncertainty.
Subsequent to year-end the Com-
pany has raised additional nancing
through an equity oering, taken
delivery of three vessels as well as se-
cured scrubber nancing for the rst
four newbuildings to be delivered
from the yard.
Given that management expects to
complete the planned debt nanc-
ing with respect to the scrubber
installation we believe we will be
able to meet our anticipated liquidity
requirements for our business for
at least the next twelve months as
of the date of these consolidated
nancial statements. There is no
assurance that the Himalaya Shipping
group will be able to execute this
nancing.
CORPORATE DEVELOPMENTS AND
FINANCING
In February 2022, the Company
entered into sale leaseback arrange-
ments with AVIC for the rst four
newbuildings to be delivered from
New Times Shipyard. Pursuant to
the lease nancing, the Company
shall receive nancing for the third
and fourth pre-delivery instalments.
In addition, upon delivery of the
relevant vessels from New Times
Shipyard, the vessels will be sold to
SPVs owned and designated by the
leasing company. The vessels will be
chartered back on seven year bare-
boat charters which include purchase
options during the respective charter
periods.
In April 2022, the Company entered
into sale lease back arrangements
with CCBFL for the last eight new-
buildings to be delivered from New
Times Shipyard. Pursuant to the lease
nancing, the Company shall receive
nancing for the third and fourth
pre-delivery instalments. In addition,
upon delivery of the relevant vessels
from New Times Shipyard, the ves-
sels will be sold to SPVs owned and
designated by the leasing company.
The vessels will be chartered back on
seven year bareboat charters which
include purchase options during the
respective charter periods.
In December 2022, the Company
signed an agreement to transfer
the sale leaseback arrangement for
newbuildings “Mount Bandeira” and
“Mount Hua” from CCBFL to Jiangsu
Financial Leasing. The transfer
was eective in March, 2023. The
terms under the sale leaseback
arrangement remain unchanged. The
Company drew on the sale leaseback
nancing in March, 2023, to pay the
third instalments on both newbuild-
ings.
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Annual Report 2022
In February 2023, the Company
entered into agreements with AVIC
to nance the scrubber installation
on the rst four newbuildings “Mount
Norefjell”, “Mount Ita”, “Mount Etna”,
and “Mount Blanc” to be delivered
from New Times Shipyard. In respect
of each Vessel, the nancing amount
is 90% of the cost of US$2.4 million
for the scrubbers provided that the
aggregate of the contract price under
the sale leaseback contracts and the
scrubber nancing shall not exceed
US$64.5 million. The nancing carries
an interest rate of Libor plus 450bps
and has a three year repayment
prole
In December 2022 and February
2023, the Company drew a total of
US$2.02 million on a revolving credit
facility with Drew Holdings Ltd. The
drawn amount was repaid in March
2023.
In March 2023, the Company entered
into a US$15 million bridge facility
with DNB for general corporate
purposes. The Company drew US$7.5
million on the bridge facility in March
2023 and was repaid in full in April
2023 with proceeds received from
the equity oering.
On April 4, 2023, the Company com-
pleted an equity oering and was list-
ed on the New York Stock Exchange.
The Company issued 7,720,000 com-
mon shares at par value US$1.0 per
share for a price of US$5.8 per share
raising net proceeds of approximate-
ly US$40.5 million. The new share
capital is US$39,872,857 consisting
of 39,872,857 common shares of par
value US$1.0 per share.
NEWBUILDING PROGRAM
The newbuilding program is pro-
gressing according to schedule, the
rst vessel Mount Norefjell was deliv-
ered on March 2, the second vessel
Mount Ita was delivered on March 9
and the third vessel Mount Etna was
delivered on April 13, 2023. Mount
Norefjell commenced a two-year time
charter contract at $30,000 per day
gross, while Mount Ita commenced
an index-linked charter for a period
of 32 to 38 months with charterers
option to extend the charter for an
additional period of 11 to 13 months.
Mount Ita will earn a premium of
42 per cent against the Baltic Cape
Index (BCI). In addition it has been
agreed a scrubber benet of 75 per
cent of the spread between LSFO
and HFO in favor of the Company.
A similar benet will apply when
the vessel is burning LNG. Mount
Etna will commence an index-linked
charter earning a signicant premium
compared to a standard Capesize
vessel as well a premium related to
the fuel cost savings from the scrub-
bers.
Board
of Directors’ Report
The remaining nine newbuildings are scheduled to be delivered as follows:
(numbers in USD million)
Ship name Price Target
delivery date
Remaining
instalments
Mount Blanc
Mount Matterhorn
Mount Neblina
Mount Bandeira
Mount Hua
Mount Elbrus
Mount Denali
Mount Aconcagua
Mount Emai
SUM
49.9
51.6
51.6
58.4
58.4
58.8
65.7
65.7
65.7
525.8
May 23
July 23
August 23
January 24
January 24
January 24
May 24
July 24
July 24
70.2
72.1
72.1
72.1
72.1
72.6
72.6
72.6
72.6
649.0
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Annual Report 2022
In spite of lockdowns in China, New
Times Shipyard has been able to
maintain its productivity and the re-
maining vessels are scheduled to be
delivered slightly ahead of contractu-
al delivery dates. Another three ves-
sels will be delivered between May
and August 2023. The six remaining
vessels are expected to be delivered
between January and July 2024.
In addition to the three vessels
already delivered another three ves-
sels have been xed on index-linked
charters to major commodity compa-
nies with premiums between 40 and
42 per cent compared to the Baltic
Capesize Index and scrubber / LNG
premiums similar to Mount Ita.
MARKET COMMENTARY
The favorable supply dynamics with
a Capesize order book at record low
levels should be supportive for the
utilization of the dry bulk eet going
forward. The Capesize order book
stands at 20 million DWT against a
total Capesize eet of 387 million
DWT. This is about 5.5 per cent both
measured in number of vessels
and in DWT according to Clarksons.
Shipyard capacity is limited with a
current lead time of 3.6 years, the
highest since 2009. The number of
active shipyards able to deliver large
dry bulk vessels constrains supply of
new vessels at least through second
half of 2026.
Demand growth is expected to be
moderate according to most analysts
over the next two years. Tonne-miles
is expected to grow by 3.5 per cent
according to Maritime Analytics. This
is mainly supported by the reopening
of China and decent growth outlook
for India and other emerging econ-
omies in Asia. Analysts are however
pointing at more uncertainty given
the recent turbulence among some
US and European banks.
Regulations will have an impact
on eet eciency. Slow steaming
is seen as a likely consequence of
EEXI (“Energy Eciency Existing Ship
Index”) and CII (“Carbon Intensity
Indicator”). It might be challenging for
older vessels to increase speed in a
strengthening market. 15 per cent of
the Capesize eet or more than 300
vessels are built before 2009. Vessels
of this vintage are not equipped
with a electronically controlled main
engine and could potentially face
challenges already within the next
two to three years.
OUTLOOK
Himalaya Shipping has with its three
vessels in operation and nine dual
fuel newcastlemax vessels for deliv-
ery in 2023 and 2024 a unique eet
of modern dry bulk tonnage, enabling
the Company to benet from what we
believe is going to be an improving
market going forward. The orderbook
for new Capesize vessels is at a multi
decade low – at 5.5%. The last time
the orderbook was at a similar level
was in 2002. In the years 2002-2009,
the Capesize index rate averaged
$69k/day.
We have seen a signicant reduction
in shipyard capacity from 2012
until today. Production capacity is
estimated to be down 40% and the
number of yards taking orders are
estimated to be down 60%. With the
recent urry of containership orders,
this has booked up a large part of
the shipyard capacity until late 2026.
This means if you are going to order
a large dry bulk vessel today, it will be
dicult to get signicant newbuilding
orders delivered before 2027.
In the years 2009-2012 there were
~750 Capesize vessels delivered.
Towards the end of this decade, all
of these vessels are becoming 20
years and approaching end of their
useful life. Given the aging eet and
the limited yard capacity, it is not
clear how the supply situation will be
sorted out, leading to what could be
a prolonged upcycle.
The new EEXI and CII regulation,
which came into eect on 1 January
2023, will impact the performance of
older vessels, and hence likely lead to
less eective supply. Some analysts
estimate a potential reduction in sup-
ply of 1-3% per year going forward
from this. Himalaya’s modern vessels
will not need to take any corrective
action for the foreseeable future,
hence benetting from these new
regulations.
The Company intends to charter
out the 5 remaining vessels still not
committed, on index-linked char-
ters, likely to achieve a signicant
premium to the Capesize index rate
and benet from fuel savings from
Board
of Directors’ Report
8
Annual Report 2022
Board
of Directors’ Report
using scrubber or running on LNG.
Himalaya has an option to convert its
index-linked charters to xed rates
against the prevailing FFA market and
may take some cover in seasonally
weak periods to protect downside.
With the limited order book, environ-
mental regulation driving less e-
ciency for the older part of the eet,
and with tonne-mile demand which
normally grows in line with global
GDP, it seems likely that utilization
should improve going forward lead-
ing to improving day-rates. The FFA
market for the rest of the year indi-
cates a Capesize index rate of $21.5k/
day, well above the Capesize equiva-
lent cash breakeven for the Himalaya
eet with all vessels delivered.
Management has a constructive
market outlook for the coming years
mainly due an unprecedented supply
situation and believes that Himalaya
Shipping with its modern eet will be
in a strong position for the benet of
its shareholders. Himalaya Shipping
have no intention to grow its current
eet and intends to pay out monthly
dividends as soon as the liquidity
permits.
CORPORORATE GOVERNANCE REPORT
AND ENVIRONMENTAL, SOCIAL AND
GOVERNANCE REPORT
The Company has prepared a Cor-
porate Governance Report which is
included as a separate section of this
Annual report. The Environmental
Social and Governance Report can be
found on the Company’s website. The
Company has based its corporate
governance principles on the Norwe-
gian Code of Practice for Corporate
Governance published on October
14, 2021 (the “Code”). There are,
however, some areas where the Com-
pany’s governance principles dier
from those of the Code, primarily due
to dierences between the Bermuda
Companies Act and/or the Company’s
Bye-laws and the Norwegian Public
Limited Companies Act.
RISK FACTORS
The Company is exposed to a variety
of risks, including but not limited to,
market, operational, nancial, legal,
regulatory and tax risks.
The charter hire rates for dry bulk
vessels are volatile, have uctuated
signicantly over the past years, and
may continue to decrease below our
cash break-even rates in the future,
which may adversely aect our
business, operations and nancial
condition. The dry bulk shipping
industry is cyclical and charter hire
rates and protability are volatile.
Time charter and spot market rates
for dry bulk vessels have in the past
declined below operating costs of
vessels. When we charter our vessels
pursuant to time charters, we will be
exposed to changes in charter rates
for dry bulk carriers and such chang-
es may adversely aect our earnings
and the value of our dry bulk carriers
at any given time.
Fluctuations in charter rates result
from changes in the supply of and
demand for vessel capacity for the
major commodities carried on water
internationally and the degree of
charter hire rate volatility among dif-
ferent types of dry bulk vessels have
varied widely. Volatility in charter
rates in the dry bulk market aects
our earnings and results of opera-
tions and also aects the value of our
dry bulk vessels, which follows the
trends of dry bulk charter rates.
Other key risks are outlined below,
which are not meant to be exhaus-
tive:
The Company’s vessels will be sub-
ject to perils particular to marine
operations, including capsizing,
grounding, collision and loss and
damage from severe weather or
storms. The vessels may also be sub-
ject to other unintended accidents.
Such circumstances may result in
loss of or damage to the relevant
vessel, damage to property (including
other vessels) and damage to the en-
vironment or persons or for actions
for damages connected with existing
and future contracts which cannot
be fullled. Such events may lead
to the Group being held liable for
substantial amounts by contractual
counterparties, injured parties, their
insurer and public governments. In
the event of pollution, the Group
may be subject to strict liability.
Environmental laws and regulations
applicable in the countries in which
the Group operates have become
more stringent in recent years. Such
laws and regulations may expose the
Group to liability for the conduct of
or conditions caused by others, or
for acts by the Group that were in
9
Annual Report 2022
Board
of Directors’ Report
compliance with all applicable laws at
the time such actions were taken.
The occurrence of the abovemen-
tioned events may have a material
adverse eect on the Group’s
business, nancial condition, results
of operation and liquidity, and there
can be no assurance that the Group’s
insurance will fully compensate any
such potential losses and/or expens-
es. Further, the Company’s manage-
ment will monitor the performance
of each investment, however, the
Company will rely upon third party
technical and day-to-day manage-
ment of the assets, and there can be
no assurance that such management
will operate successfully.
The international shipping industry
is an inherently risky business involv-
ing global operations. Our vessels
and their cargoes will be at risk of
being damaged or lost because of
events such as marine disasters, bad
weather, mechanical failures, human
error, environmental accidents,
war, terrorism, piracy and other
circumstances or events. In addition,
transporting cargoes across a wide
variety of international jurisdictions
creates a risk of business interrup-
tions due to political circumstances
in foreign countries, hostilities, labor
strikes and boycotts, the potential for
changes in tax rates or policies, and
the potential for government expro-
priation of our vessels. Any of these
events may result in loss of revenues,
increased costs and decreased cash
ows to our customers, which could
impair their ability to make payments
to us under our charters.
Furthermore, the operation of cer-
tain vessels, such as dry bulk carriers,
has certain unique risks. With a dry
bulk carrier, the cargo itself and its
interaction with the vessel can be
an operational risk. By their nature,
dry bulk cargoes are often heavy,
dense, easily shifted, and react badly
to water exposure. In addition, dry
bulk carriers are often subjected to
battering treatment during unloading
operations with grabs, jackhammers
(to pry encrusted cargoes out of
the hold) and small bulldozers. This
treatment may cause damage to the
vessel. Vessels damaged due to treat-
ment during unloading procedures
may be more susceptible to breach
at sea. Hull breaches in dry bulk car-
riers may lead to the ooding of the
vessels’ holds.
If a dry bulk carrier suers ooding in
its forward holds, the bulk cargo may
become so dense and waterlogged
that its pressure may buckle the
vessel’s bulkheads, leading to the
loss of a vessel. If we are unable to
adequately repair our vessels after
such damages, we may be unable to
prevent these events. Any of these
circumstances or events may have a
material adverse eect on our busi-
ness, results of operations and nan-
cial condition, if any, in the future, on
our common shares. In addition, the
loss of any of our vessels could harm
our reputation as a safe and reliable
shipping company.
Newbuilding projects are subject to
risks that could cause delays, cost
overruns or cancellation of the Ship-
building Contracts.
We are party to the Shipbuilding
Contracts with New Times for the
construction of 12 newbuilding dry
bulk carriers, which are estimated to
be delivered between May 2023 and
July 2024, of which three vessels were
delivered on March 2, March 9 and
April 13, 2023, respectively. Risks of
delays and failure of New Times to
deliver exist until the vessels are de-
livered. Vessel construction projects
are generally subject to risks of delay
or cost overruns inherent in any large
construction project from numer-
ous factors, including shortages of
equipment, materials or skilled labor,
unscheduled delays in the delivery
of ordered materials and equipment
or shipyard construction, failure of
equipment to meet quality and/or
performance standards, nancial or
operating diculties experienced by
equipment vendors or the shipyard,
unanticipated actual or purported
change orders, inability to obtain re-
quired permits or approvals, unantic-
ipated cost increases between order
and delivery, design or engineering
changes and work stoppages and
other labor disputes, adverse weath-
er conditions or any other events of
force majeure. Many of these factors,
including, for example, movement
of equipment, materials and labor
forces, have been increasingly rele-
vant during the COVID-19 pandemic,
with border and travel restrictions
10
Annual Report 2022
Board
of Directors’ Report
and lock-downs. The lock-downs,
shortage of personnel, quarantine
restrictions and other issues caused
by the COVID-19 pandemic may also
cause delays and challenges for the
newbuilding program for New Times.
Although there has been no impact
on the construction of our newbuild-
ings to date, it remains possible that
the impact of COVID-19 could aect
the construction and therefore the
delivery of our vessels and could also
impact the expected trade of our
vessels with China following delivery.
The Chinese government has recent-
ly announced an easing of COVID-19
related restrictions, but we remain
subject to risks of the impact of strict
containment measures.
Signicant cost overruns or delays
could adversely aect our results of
operations, cash ows and nancial
condition. Additionally, failure to
complete a project on time may
result in the delay of revenue from
that vessel, and we may continue to
incur costs and expenses related to
delayed vessels, such as supervision
expense and interest expense on the
Company’s pre-delivery Financing
Arrangements. Failure by New Times
to complete and deliver the vessels
to us will impact our ability to achieve
our ambitions or result in increased
costs in connection with relocation
and completion of the construction
elsewhere. Our rights to claim a
refund of pre-delivery installments
are guaranteed by reputable nancial
institutions, but failure of any guar-
antor to make payment to us of any
claim made under these refund guar-
antees would result in a nancial loss
to the Company or us losing all or
part of our investment, which would
adversely aect our overall nancial
position and have a material adverse
eect on our business, results of
operations and nancial condition.
Relatedly, a refund guarantor and/
or New Times may dispute our enti-
tlement to a refund, and the refund
guarantor’s obligation to pay may
become subject to lengthy arbitral or
court proceedings, which could have
a material adverse impact on our
business and our nancial conditions.
The Group’s success depends, to a
signicant extent, upon the abilities
and eorts of a small number of key
personnel, employed in 2020 Bulkers
Management AS and providing ser-
vices to the Group under the terms
of the Management Agreement,
and there can be no assurance that
such individuals will continue to be
employed by the Group and involved
in the management of the Group in
the future, or that their continued
involvement will guarantee the future
success of the Group. If the Group
does not retain such key compe-
tence, and/or if it is unable to attract
new talent or competencies relevant
for the future development of the
Group, this may have a negative
eect on the success of the Group,
and the Group’s ability to expand its
business and/or to maintain and de-
velop its competitive skill set, which
will correspondingly have an adverse
eect on the Group’s competitive
position and nancial performance.
Liquidity risk could impair our ability
to fund operations and jeopardize
our nancial condition, growth and
prospects.
We are largely dependent on cash
generated by our future operations,
cash on hand, borrowings under our
Financing Arrangements and the
proceeds from the equity oering
to cover our operating expenses,
service our indebtedness and fund
our other liquidity needs. The level
of cash available to us depends on
numerous factors, including the rates
we are paid by our customers, the
price of oil, current global economic
conditions, rising bunker prices, de-
mand for our services, our ability to
control and reduce costs, our access
to capital markets and amounts
available to us under our Financing
Arrangements. One or more of such
factors could be negatively impacted
and our sources of liquidity could be
insucient to fund our operations
and service our obligations such that
we may require capital in excess of
the amount available from those
sources. Our access to funding sourc-
es in amounts adequate to nance
our operations and planned capital
expenditures and repay our indebt-
edness on terms that are acceptable
could be impaired by factors such
as negative views and expectations
about us, the oil and gas industry or
the economy in general and disrup-
tions in the nancial markets.
Our nancial exibility will be severe-
ly constrained if we experience a sig-
11
Annual Report 2022
Board
of Directors’ Report
nicant decrease in cash generated
from our operations once we start
chartering our vessels upon delivery,
or are unable to maintain our access
to or secure new sources of nanc-
ing. If additional nancing sources
are unavailable, or not available
on reasonable terms, our nancial
condition, results of operations,
growth and future prospects could
be materially adversely aected, and
we may be unable to continue as a
going concern. As such, we cannot
assure you that cash ow generated
from our business and other sources
of cash, including future borrowings
under Financing Arrangements and
debt nancings and new debt and
equity nancings, will be sucient to
enable us to pay our indebtedness
and to fund our other liquidity needs.
The Company generates revenues
and incurs operating expenses in
U.S. dollars and the majority of the
general and administrative expenses
are denominated in NOK. The Com-
pany has not hedged any foreign
currency exposure.
The interest rates on the sale lease-
back nancing is xed for seven
years. The Company is exposed to
interest rate uctuations on the
scrubber nancing where the terms
are LIBOR plus a margin with a three
year amortization period.
The Company has chartered out
seven vessels to three counterparts.
The three customers are large inter-
national companies and Himalaya
Shipping assess the companies as
reputable counterparties with low
credit risk.
There is a concentration of credit
risk with respect to cash and cash
equivalents to the extent that nearly
all of the amounts are carried with
DNB. However, we believe this risk
is remote, as DNB is an established
nancial institution.
The availability of nancing al-
ternatives for future investment
opportunities may be unavailable
at suciently attractive terms. The
Company is also exposed to general
movements on the Oslo Stock Ex-
change and NYSE, which may limit
the possibility of raising new equity at
attractive prices.
With the increased use of technolo-
gies such as the internet to conduct
business, the Group, service pro-
viders to the Group, Oslo Børs and
NYSE are susceptible to operational,
information security and related
“cyber” risks both directly and indi-
rectly, which could result in material
adverse consequences for the Group
and the shareholders, such as caus-
ing disruptions and impacting busi-
ness operations, potentially resulting
in nancial losses. Unlike many other
types of risks faced by the Group,
these risks are typically not covered
by any insurance. In general, cyber
incidents can result from deliberate
attacks or unintentional events.
Cyber incidents include, but are not
limited to, gaining unauthorized ac-
cess to digital systems (e.g., through
“hacking” or malicious software cod-
ing) for purposes of misappropriating
assets or sensitive information, cor-
rupting data, or causing operational
disruption. Cyberattacks may also be
carried out in a manner that does not
require gaining unauthorized access,
such as causing denial-of-service
attacks on websites (i.e., eorts to
make network services unavailable to
intended users).
A change in tax laws in any country
in which we operate or loss of a
major tax dispute or a successful tax
challenge to our operating structure,
intercompany pricing policies or the
taxable presence of our subsidiaries
in certain countries could adversely
aect us.
Tax laws, treaties and regulations are
highly complex and subject to inter-
pretation. Consequently, we and our
subsidiaries are subject to changing
laws, treaties and regulations in and
between the countries in which we
operate. Our tax expense is based
on our interpretation of the tax laws
in eect at the time the expense
was incurred. A change in tax laws,
treaties or regulations, or in the
interpretation thereof, could result
in a materially higher tax expense
or a higher eective tax rate on our
earnings. Such changes may include
measures enacted in response to
the ongoing initiatives in relation to
scal legislation at an international
level such as the Action Plan on Base
Erosion and Prot Shifting of the
Organization for Economic Co-Oper-
ation and Development.
12
Annual Report 2022
Board
of Directors’ Report
April 13, 2023
/s/ Carl Erik Steen /s/ Georgina Sousa
Carl Erik Steen Georgina Sousa
Director Director
/s/ Bjørn Isaksen /s/ Mi Hong Yoon /s/ Jehan Mawjee
Bjørn Isaksen Mi Hong Yoon Jehan Mawjee
Director Director Director
In addition, if any tax authority suc-
cessfully challenges positions we may
take in tax lings, our operational
structure, intercompany pricing
policies, the taxable presence of our
subsidiaries in certain countries or
any other situation, or if the terms of
certain income tax treaties are inter-
preted in a manner that is adverse
to our structure, or if we lose a ma-
terial tax dispute in any country, our
eective tax rate on our worldwide
earnings could increase substantially
and our earnings and cash ows
from operations could be materially
adversely aected.
Himalaya Shipping maintains a Di-
rectors & Ocers liability insurance
against liabilities incurred in their
capacity as Director or Ocer. The
insurance is capped at US$15 million.
FORWARD-LOOKING STATEMENTS
This announcement includes forward
looking statements. Forward looking
statements are, typically, statements
that do not reect historical facts
and may be identied by words such
as “anticipate”, “believe”, “continue”,
“estimate”, “expect”, “intends”,
“may”, “should”, “will” and similar
expressions. The forward-looking
statements in this announcement
are based upon various assumptions,
many of which are based, in turn,
upon further assumptions. Although
Himalaya Shipping Ltd. believes that
these assumptions are reasonable,
they are, by their nature, uncertain
and subject to signicant known
and unknown risks, contingencies
and other factors which are dicult
or impossible to predict and which
are beyond our control. Such risks,
uncertainties, contingencies and
other factors could cause actual
events to dier materially from the
expectations expressed or implied
by the forward-looking statements
included herein.
The information, opinions and for-
ward-looking statements contained
in this announcement speak only as
of the date hereof and are subject to
change without notice.
ABOUT HIMALAYA SHIPPING LTD.:
Himalaya Shipping Ltd. is an indepen-
dent bulk carrier company, incorpo-
rated in Bermuda. Himalaya Shipping
has three vessels in operation and
nine Newcastlemax dry bulk vessels
under construction at New Times
Shipyard in China. The remaining
newbuildings are expected to be
delivered by July 2024.
13
Annual Report 2022
We conrm that, to the best of our
knowledge, that the consolidated
nancial statements for 2022, which
have been prepared in accordance
with US GAAP gives a true and fair
view of the Company’s consolidated
assets, liabilities, nancial position
and result of operations, and that the
2022 report includes a fair review of
the information required under the
Norwegian Securities Trading Act
section 5-6 fourth paragraph.
Responsibility
Statement
April 13, 2023
/s/ Carl Erik Steen /s/ Georgina Sousa
Carl Erik Steen Georgina Sousa
Director Director
/s/ Bjørn Isaksen /s/ Mi Hong Yoon /s/ Jehan Mawjee
Bjørn Isaksen Mi Hong Yoon Jehan Mawjee
Director Director Director
14
Annual Report 2022
Corporate
Governance Report
Himalaya Shipping Ltd. (“Himalaya
Shipping” or “the Company”) is a com-
pany organized and existing under the
laws of the Islands of Bermuda. The
corporate governance principles appli-
cable to it are set out in the Bermuda
Companies Act 1981, its bye-laws (the
“Bye-Laws”) and its memorandum of
association.
As a consequence of the listing of the
Company’s shares on the Euronext
markets in Norway, certain aspects of
Norwegian law, notably the Norwegian
Public Companies Act, the Norwegian
Accounting Act, Norwegian Securities
Trading Act and the Norwegian
Stock Exchange Regulations and the
Continuing Obligations of Listed Com-
panies as approved by Oslo Børs ASA,
which are available at www.oslobors.
no are also relevant for its corporate
governance guidelines. Following
the listing of the Company’s shares
on the New York Stock Exchange
(“NYSE”) in 2023, the Company is also
subject to the corporate governance
requirements of NYSE to the extent
applicable to the Company in light of
its status as a “foreign private issuer,”
as dened under US securities laws.
1. HIMALAYA SHIPPING CORPORATE
GOVERNANCE
The overall corporate governance pol-
icy or guidelines of Himalaya Shipping
is the responsibility of its board of
directors (the “Board”).
In dening these guidelines, the Board
will observe the requirements set out
in applicable laws, applicable stock
exchange rules, regulations and secu-
rities laws, relevant recommendations
and the specic requirements arising
from Himalaya Shipping’s business
activities, including, but not limited to,
the Norwegian Code of Practice for
Corporate Governance as amended
from time to time (the “Code”), and
the NYSE standard on corporate
governance.
The Board recognizes that the Code
represents an important standard for
corporate governance for companies
whose shares are listed on public
markets. Most of the principles and
recommendations in the Code are
included in the Company’s Corporate
Governance Guidelines. There are,
however, some areas where the
Company’s governance principles
dier from those of the Code and the
standards of NYSE, primarily due to
dierences between the Bermuda
Companies Act and/or the Bye-Laws
and the Norwegian Public Limited
Companies Act.
The Board has codied certain corpo-
rate governance principles in a “Cor-
porate Code of Business Ethics and
Conduct” (the “Code of Conduct”)
applicable to the Board, all ocers,
and employees including contracted
employees of the Company and its
subsidiaries (the “Himalaya Shipping
Group”).
The Code of Conduct can be found on
the Company’s website (www.himala-
ya-shipping.com).
The Board has formulated the Com-
pany’s overall mission and the core
values on which all of the activities
of the Himalaya Shipping Group shall
be based. These can be found on the
Company’s website.
The Board has, in line with the Code’s
recommendations, prepared this
report in order to disclose those of its
corporate governance principles which
do not comply with the recommenda-
tions of the Code.
2. THE BUSINESS
Himalaya Shipping’s memorandum of
association describes the Company’s
objects and purposes as unrestricted.
This deviates from the recommen-
dation in the Code but is in line with
the requirements of the Bermuda
Companies Act.
Himalaya Shipping has clear objectives
and strategies for its business, and the
Board will consider nancial, social and
environmental considerations in its
business plan.
The Board has put in place guidelines
for ethical conduct and social respon-
sibility. These are described in the
Company’s annual report and on its
website.
The Board evaluates its objectives,
risks and strategies annually.
3. EQUITY AND DIVIDENDS
The Board strives to identify and
pursue clear business goals and
strategies for the Company, to assess
and manage the risks associated
with these, and to maintain an equity
capital and liquidity position which are
sucient to match the same.
Under the Bye-Laws, the Board may
declare dividends and distributions
15
Annual Report 2022
without the approval of the sharehold-
ers in general meetings. This diers
from the recommendation in the
Code.
The Company’s aim is to provide
its shareholders with a competitive
return on their investment through a
positive development in the price of
the Company’s shares and dividends
to its shareholders.
The Company’s shareholders may, by
way of a resolution in a general meet-
ing of all shareholders (a “General
Meeting”) increase the Company’s
authorized share capital, reduce the
authorized share capital (by reducing
the number of unissued but autho-
rized shares) and increase or reduce
the issued share capital. The proce-
dures and ratications of this are set
out in the Bye-Laws and the Bermuda
Companies Act.
The Board has, under Bermuda law,
wide powers to issue authorized but
unissued shares in the Company.
The Board is also authorized in the
Bye-Laws to purchase the Company’s
shares and hold these in treasury.
These powers are not restricted to
any specic purposes nor to a specic
period as the Code recommends.
4. EQUITABLE TREATMENT OF
SHAREHOLDERS AND TRANSACTIONS
WITH CLOSE ASSOCIATES
Himalaya Shipping has one class of
shares only. Each share carries one
vote. All shares have equal rights. All
shares give a right to participate in
General Meetings.
Under the Bermuda Companies Act,
no shareholder has a pre-emptive
right to subscribe for new shares in a
limited company unless (and only to
the extent that) the right is expressly
granted to the shareholder under the
bye-laws of such company or under
any contract between the shareholder
and such company. The Bye-Laws do
not provide for pre-emptive rights.
Members of the Board will only trans-
act in the Company’s shares at their
market value (as reected in the share
price quoted on such market places as
the Company is admitted to/listed on)
from time to time.
Members of the Board (each a “Direc-
tor”) and the Company’s senior man-
agement including contracted senior
employees shall notify the Board if
they have any material interest, wheth-
er direct or indirect, in any transaction
which the Himalaya Shipping Group
intends to conclude.
Following these guidelines, any Direc-
tors and/or member of the Company’s
senior management including con-
tracted senior employees who have
an interest in any such transaction
shall, as a general matter, refrain from
participating in the discussions on
whether to conclude such transaction
or not in the relevant corporate bodies
in the Himalaya Shipping Group.
5. FREELY NEGOTIABLE SHARES
The Company’s shares are, subject to
restrictions under applicable securi-
ties laws, freely tradable.
6. GENERAL MEETINGS
The Code requires that notice of
General Meetings, (including any sup-
porting documents for the resolutions
to be considered therein) is made
available on the Company’s website no
later than 21 days prior to the date of
the General Meeting.
The Bye-Laws allows, in accordance
with Bermuda law, for notice to be giv-
en no less than 7 days (excluding the
day on which the notice is served and
the day on which the General Meeting
to which it relates is to be held) prior
to a General Meeting. This diers from
the recommendation of the Code.
The Board aspires to maintain good
relations with its shareholders and
possible investors in its shares, and to
have an investor relation policy which
complies with the relevant code of
practice for investor relations on the
market places which the Company is
trading on from time to time.
The Board shall ensure that as many
shareholders as reasonably possible
are able to participate in the General
Meetings. To achieve a high rate of
shareholder attendance therein the
Company shall:
Ї provide, on its website, the date of
and, if possible, further informa-
tion on each General Meeting as
early as possible, and at the latest
7 days in advance thereof;
Ї provide, together with or before
the notice is given, sucient
supporting documentation for any
resolution proposed to be made
therein in order for the sharehold-
ers to prepare;
Corporate
Governance Report
16
Annual Report 2022
Ї ensure that any registration dead-
line is set as close to the General
Meeting as possible; and
Ї ensure that the shareholders may
vote for each and all of the candi-
dates for the Board.
7. NOMINATION AND CORPORATE
GOVERNANCE COMMITTEE
The Code recommends that the Com-
pany has a nomination committee.
Although the Company is not, under
Bermuda law, obliged to establish a
nomination committee, the Board has
established a nomination committee.
The Board and the nomination com-
mitee will consult with the Company’s
main shareholders prior to proposing
candidates for Directors and will
ensure that the Board consists of
Directors with the expertise and
competence as shall be required by
the Company from time to time and as
required by applicable law and stock
exchange rules.
8. BOARD OF DIRECTORS,
COMPOSITION AND INDEPENDENCE
The Company does not have a corpo-
rate assembly.
According to the Bye-Laws the Board
shall consist of not less than two Di-
rectors. Currently the Board consists
of ve Directors.
It is the view of the Board that at least
two of its Directors are independent
of the Company’s main shareholders.
Further, it is the view of the Board that
a majority of the Directors are inde-
pendent of the Company’s executive
management and material business
contacts. No Director is employed by
the Himalaya Shipping Group.
The Board will, in accordance with nor-
mal procedures for Bermuda compa-
nies, elect its chairperson. This diers
from the recommendation in the Code
that the General Meeting shall elect
their chairperson of the Board.
The Directors shall, subject to ap-
plicable law and the Bye-Laws, hold
oce until the rst General Meeting
following such Director’s election. The
Directors may be re-elected.
A short description of the current
Directors is available on Himalaya
Shipping’s website (www.himala-
ya-shipping.com).
9. THE WORK OF THE BOARD
The Code recommends that the
Board develops and approves written
guidelines for its own work as well as
the work of the Himalaya Shipping
Group’s senior managers including the
contracted senior employees with par-
ticular emphasis on establishing clear
internal allocation of responsibilities
and duties.
The Bermuda Companies Act does
not require the Board to prepare such
guidelines. The Board is of the opinion
that there are no reasons to issue
such guidelines at present.
The Code recommends that the Board
establishes an audit committee and a
remuneration committee.
The Bermuda Companies Act does not
require the Company to establish such
committees. The Company has estab-
lished an audit committee comprised
of three directors, in accordance with
requirements under US securities
laws and the requirements of NYSE as
applicable to “foreign private issuers.
The Board is of the opinion that there
are no reasons to establish a remuner-
ation or compensation committee at
present.
The Board will consider whether it is
appropriate to obtain an independent
third-party valuation of the object of
any material transaction between the
Company and any of its close associ-
ates.
10. RISK MANAGEMENT AND INTERNAL
CONTROL
The Board is focused on ensuring
that the Himalaya Shipping business
practices are sound and that adequate
internal control routines are in place.
The Board continuously assesses the
possible consequences of, and the
risks related to the Himalaya Shipping
operations.
Himalaya Shipping is committed to
protecting the health and safety of all
of the Himalaya Shipping employees
and contractors in all their activities
for Himalaya Shipping and is com-
mitted to ensure generally accepted
QHSE principles are integrated in
everything Himalaya Shipping does.
The Board supervises the Company’s
internal control systems. These cover
both the Himalaya Shipping oper-
ations and its guidelines for ethical
Corporate
Governance Report
17
Annual Report 2022
conduct and social responsibility as
well as internal control requirements
under applicable securities laws.
11. REMUNERATION OF THE DIRECTORS
The remuneration of the Directors is
set by the General Meeting. The Com-
pany may, on occasion, pay Directors
their fee in the Company’s shares and/
or grant Directors under the Compa-
ny’s share option scheme.
Section 11 of the Code requires that
Directors should not take on specic
assignments for the Company in addi-
tion to their appointment as Directors.
The Company will not refrain from
engaging Directors for specic as-
signments for the Company if such
engagement is considered benecial
to the Company. This diers from the
recommendation in the Code. Howev-
er, such assignments will be disclosed
to the Board and the Board shall
approve the assignment, as well as the
remuneration.
12. REMUNERATION OF THE EXECUTIVE
MANAGEMENT
The Board has not put in place
guidelines on the salary and other
remuneration for executive personnel.
However the Board is of the opinion
that the remuneration structure of
the executive management is aligned
with the shareholders’ interests, is
clear and easily understandable, and
contributes to the company’s commer-
cial strategy, long-term interests and
nancial viability.
There is no absolute limit on the per-
formance-related remuneration. Parts
of the performance-related remuner-
ation is equity instruments, where the
upside is in theory uncapped.
13. INFORMATION AND
COMMUNICATION
The Company is committed to provide
information on its nancial situation,
ongoing projects, and other circum-
stances relevant for the valuation of
the Company’s shares to the nancial
markets on a regular basis.
The Company is also committed to
disclose all information necessary to
assess the value of its share on its
web site as required by applicable law
and stock exchange rules. Interested
parties will nd the Company’s latest
news releases, nancial calendar,
company presentations, share and
shareholder information, information
about analyst coverage and other rel-
evant information on the Company’s
website (https://himalaya-shipping.
com/investor-relations/).
Such information may also be found
on the website of Oslo Børs (www.
euronext.com/nb/markets/oslo).
Information to the Company’s major
shareholders shall be published on
the Company’s website at the same
time as it is sent to the shareholders.
14. TAKEOVER OFFER
The Board has prepared guidelines
applicable in the event a general oer
is made for its shares.
The Board will seek to ensure that the
Company’s business activities, in such
event, are not disrupted unnecessarily.
The Board will, furthermore, strive to
ensure that shareholders are given
sucient information and time to form
a view of the terms of such oer.
The Board will not pass any resolu-
tions with the intention of obstructing
the completion of any take-over oer
in violation of applicable law or if not
deemed by the Board to be in the best
interest of shareholders, unless this
is approved by the General Meeting
following the announcement of such
oer.
If a take-over oer is made, the Board
will issue a statement on its merits in
accordance with statutory require-
ments and the recommendations in
the Code.
The Board will consider obtaining a
valuation of the Company’s equity
capital from an independent expert if
a take-over oer is made in order to
provide guidance to its shareholders
as to whether to accept such oer or
not.
Any transaction that is in eect a
disposal of all of the Company’s activ-
ities will be submitted to the General
Meeting for its approval.
15. AUDITOR
The Board through the Audit Com-
mittee will, each year, agree a plan for
the audit of the Himalaya Shipping
accounts with its auditor. The Board
through the Audit Committee will
furthermore interact regularly with the
auditor within the scope of this plan.
Corporate
Governance Report
For the year ended December 31, 2022
and for the period from March 17, 2021
(inception) to December 31, 2021
Consolidated
Financial
Statements
19
Annual Report 2022
(In $ millions, except share and per share data)
Opearating expenses
General and administrative expenses (2.0) (1.0)
Total operating expenses (2.0) (1.0)
Operating loss (2.0) (1.0)
Interest expense, net of capitalized interest — —
Net loss attributable to shareholders’ of Himalaya Shipping Ltd. (2.0) (1.0)
Loss per share:
Basic and diluted loss per share (0.06) (0.06)
Weighted average shares outstanding 32,152,857 18,316,970
The accompanying notes are an integral part of these Consolidated Financial Statements.
Consolidated
Statement of Operations
Year ended
December 31,
2022
Period from
March 17 to
December 31,
2021
20
Annual Report 2022
(In $ millions, except share data)
ASSETS
Current assets
Cash and cash equivalents 0.3 11.3
Other current assets 1.4 -
Total current assets 1.7 11.3
Non-current assets
Newbuildings 176.1 83.5
Other non-current assets - 0.4
Total non-current assets 176.1 83.9
Total assets 177.8 95.2
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt 7.0 -
Accounts payable 14.9 0.8
Amounts due to related parties 2.7 -
Accrued expenses 1.1 -
Other current liabilities 0.3 -
Total current liabilities 26.0 0.8
Non-current liabilities
Long-term debt 60.5 -
Amounts due to related parties 1.0 2.5
Total non-current liabilities 61.5 2.5
Total liabilities 87.5 3.3
Commitments and contingencies
Shareholders’ equity
Common shares of par value $1.0 per share: authorized at December 31, 2022
and 2021: 140,010,000 shares, issued and outstanding at December 31, 2022
and 2021: 32,152,857 shares 32.2 32.2
Additional paid-in capital 61.1 60.7
Retained loss (3.0) (1.0)
Total shareholders’ equity 90.3 91.9
Total liabilities and shareholders’ equity 177.8 95.2
Consolidated
Balance Sheet
The accompanying notes are an integral part of these Consolidated Financial Statements
December 31,
2022
December 31,
2021
/s/ Carl Erik Steen April 13, 2023 /s/ Georgina Sousa
Carl Erik Steen Georgina Sousa
Director Director
/s/ Bjørn Isaksen /s/ Mi Hong Yoon /s/ Jehan Mawjee
Bjørn Isaksen Mi Hong Yoon Jehan Mawjee
Director Director Director
21
Annual Report 2022
(In $ millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period (2.0) (1.0)
Adjustments to reconcile net loss to net cash used in operating activities:
Share based compensation 0.4 —
Changes in assets and liabilities:
Other current assets (0.5) —
Accounts payable 0.4 0.4
Other current liabilities 0.3 0.1
Net cash used in operating activities (1.4) (0.5)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to newbuildings (78.3) (68.8)
Net cash used in investing activities (78.3) (68.8)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds, net of deferred loan costs paid to lender, from issuance of long-term debt 69.6 —
Other deferred loan costs paid (1.4) —
Proceeds from issuance of long-term debt from related parties 1.0 —
Proceeds from the issuance of common shares, net of paid issuance costs (0.5) 80.6
Netcashprovidedbynancingactivities 68.7 80.6
Net increase in cash and cash equivalents and restricted cash (11.0) 11.3
Cash and cash equivalents and restricted cash at the beginning of the period 11.3 —
Cash and cash equivalents and restricted cash at the end of the period 0.3 11.3
Supplementaldisclosureofcashowinformation
Non-cash settlement of debt — (13.6)
Non-cash share issuance — 13.6
Non-cash additions in respect of newbuildings (13.7) (13.6)
Issuance of liabilities for newbuilding instalments 13.7 13.6
Interest paid, net of capitalized interest (0.4) —
Consolidated
Statement of Cash Flows
The accompanying notes are an integral part of these Consolidated Financial Statements.
Year ended
December 31,
2022
Period from
March 17 to
December 31,
2021
22
Annual Report 2022
(In $ millions, except share data)
Incorporation March 17, 2021 10,000 — —
Issue of common shares 32,142,857 32.2 62.8 — 95.0
Equity issuance costs — — (2.1) — (2.1)
Total loss for the period — — — (1.0) (1.0)
Balance as of December 31, 2021 32,152,857 32.2 60.7 (1.0) 91.9
Share based compensation — — 0.4 — 0.4
Total loss for the period — — — (2.0) (2.0)
Balance as of December 31, 2022 32,152,857 32.2 61.1 (3.0) 90.3
Consolidated
Statement of Changes
in Shareholders’ Equity
The accompanying notes are an integral part of these Consolidated Financial Statements.
Total
Retained
earnings
(decit)
Additional
paid-in
capital
Share
capital
Number of
shares
23
Annual Report 2022
1. GENERAL INFORMATION
Himalaya Shipping Ltd. was incorporated in Bermuda on March 17, 2021. The Company has been listed on the Euronext
Expand since April 2022 under the ticker “HSHIP”. The Company was founded for the purpose of owning high-quality dry
bulk vessels in the range of 210,000 dead weight tonnes (“dwt”) and has agreements to acquire twelve dual fueled Newcas-
tlemax dry bulk vessels, which are currently under construction. The twelve vessels are expected to be delivered between
March 2023 and July 2024. The Company has entered into sale leaseback nancing arrangements for its newbuildings as
described in Note 10.
As used herein, and unless otherwise required by the context, the term “Himalaya Shipping” refers to Himalaya Shipping
Ltd. and the terms “Company”, “we”, “Group”, “our” and words of similar import refer to Himalaya Shipping and its consoli-
dated companies. The use herein of such terms as “group”, “organization”, “we”, “us”, “our” and “its” or references to specic
entities, is not intended to be a precise description of corporate relationships.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The consolidated nancial statements are prepared in accordance with accounting principles generally accepted in the Unit-
ed States of America (U.S. GAAP). Amounts are presented in United States Dollar (“US dollar or $”) rounded to the nearest
million, unless otherwise stated.
The accounting policies set out below have been applied consistently to all periods in these consolidated nancial state-
ments.
The principal accounting policies are set out below.
Principle of Consolidation
The consolidated nancial statements include the assets and liabilities of us and our wholly owned subsidiaries. All inter-
company balances and transactions have been eliminated upon consolidation.
Use of estimates
The preparation of nancial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that
aect the amounts reported in our nancial statements and accompanying notes. Actual results could dier from those
estimates.
Going concern
The nancial statements have been prepared on a going concern basis. The Group is dependent on debt nancing to
nance the scrubber installation under the current newbuilding contracts for the vessels which raises substantial doubt
about the Company’s ability to continue as a going concern. As of December 31, 2022, the Company has not commenced
operations, has cash and cash equivalents of US$0.3 million and a working capital decit of US$24.3 million. The Consolidat-
ed nancial statements do not include any adjustments that might result from the outcome of this uncertainty.
Notes to the
Consolidated
Financial Statements
Notes
24
Annual Report 2022
Subsequent to year-end the Company has raised additional nancing through an equity oering and has taken delivery of
three vessels. Please see note 17 to the consolidated nancial statements for information on the completion of the scrub-
ber nancing for the rst four newbuildings to be delivered from the yard and the completed public oering on the New
York Stock Exchange.
Given that management expects to complete the planned debt nancing with respect to the scrubber installation, we be-
lieve we will be able to meet our anticipated liquidity requirements for our business for at least the next twelve months as
of the date of these consolidated nancial statements. There is no assurance that the Himalaya Shipping group will be able
to execute this nancing.
Fair value measurement
We have determined the estimated fair value amounts presented in these consolidated nancial statements using available
market information and appropriate methodologies. However, considerable judgment is required in interpreting market
data to develop the estimates of fair value. The estimates presented in these consolidated nancial statements are not
necessarily indicative of the amounts that we could realize in a current market exchange. The use of dierent market as-
sumptions and/or estimation methodologies may have a material eect on the estimated fair value amounts.
We account for fair value measurement in accordance with the accounting standards guidance using fair value to measure
assets and liabilities. The guidance provides a single denition for fair value, together with a framework for measuring it,
and requires additional disclosure about the use of fair value to measure assets and liabilities
Reporting and functional currency
The Company and its subsidiaries use the U.S dollar as their functional currency as the majority of their expenses and
nancing are denominated in U.S. dollars. Accordingly, the Company’s reporting currency is also U.S. dollars. Transactions
in foreign currencies are translated into U.S dollars at the rates of exchange in eect at the date of transaction. Gains and
losses on foreign currency transactions are included in “Other nancial expenses” in the Consolidated Statements of Oper-
ations.
Revenue recognition
Our shipping revenues will primarily be generated from time charters. In a time charter voyage, the vessel is hired by the
charterer for a specied period of time in exchange for consideration which is based on a daily hire rate. The charterer has
the full discretion over the ports visited, shipping routes and vessel speed. In a time charter contract, we are responsible
for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubes.
Costs incurred by the Company in connection with time charters are recognized on an accruals basis. The charterer bears
the voyage related costs such as bunker expenses, port charges and canal tolls during the hire period. The performance
obligations in a time charter contract will be satised over the term of the contract beginning when the vessel is delivered
to the charterer until it is redelivered back to the Group. The time charter contracts will be considered operating leases
and therefore will not fall under the scope of ASC 606 Revenue from Contracts with Customers because (i) the vessel is an
identiable asset (ii) we do not have substantive substitution rights and (iii) the charterer has the right to control the use of
the vessel during the term of the contract and derives the economic benets from such use. Time charter contracts will be
accounted for as operating leases in accordance with ASC 842 Leases and related interpretations. For arrangements where
the Company is the lessor, we intend to elect the practical expedient which allows the Company to treat the lease and non-
lease components as a single lease component for the leases where the timing and pattern of transfer for the non-lease
component and the associated lease component to the lessees are the same and the lease component, if accounted for
separately, would be classied as an operating lease.
Notes
25
Annual Report 2022
Income from time charter voyages will be recognized on a straight-line basis over the period of the time charter contract
(or lease contract) and at the prevailing rate for the relevant assessment period for variable or index-linked time charter
contracts.
As of December 31, 2022 Himalaya Shipping has entered into six index-linked time charters and one xed time charter for
the rst seven newbuildings to be delivered from New Times Shipyard.
Share-based compensation
The cost of equity settled transactions is measured by reference to the fair value at the date on which the share options are
granted. The fair value of the share options issued under the Company’s employee share option plans is determined at the
grant date taking into account the terms and conditions upon which the options are granted, and using a valuation tech-
nique that is consistent with generally accepted valuation methodologies for pricing nancial instruments, and that incorpo-
rates all factors and assumptions that knowledgeable, willing market participants would consider in determining fair value.
The fair value of the share options is recognized in General and administrative expense in the Consolidated Statements of
Operations, with a corresponding increase in equity over the period during which the employees become unconditionally
entitled to the options. Compensation cost is initially recognized based upon options expected to vest, excluding forfei-
tures, with appropriate adjustments to reect actual forfeitures.
Newbuildings
The carrying value of the vessels under construction (“Newbuildings”) represents the accumulated costs to the balance
sheet date which we have had to pay by way of purchase installments and other capital expenditures plus capitalized inter-
est. Capitalization ceases and depreciation commences once the asset is completed and available for its intended use.
Impairment of newbuildings
The carrying values of the Company’s newbuildings may not represent their fair market value at any point in time since
the market prices of second-hand vessels and the cost of newbuildings tend to uctuate with changes in charter rates.
Historically, both charter rates and vessel values tend to be cyclical. The carrying amounts of newbuildings under con-
struction are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying
amount of a particular vessel or newbuilding may not be fully recoverable. Such indicators may include depressed spot
rates and depressed second-hand vessel values. The Company assesses recoverability of the carrying value of each asset
or newbuilding on an individual basis by estimating the future undiscounted cash ows expected to result from the asset,
including any remaining construction costs for newbuildings and disposal. If the future net undiscounted cash ows are less
than the carrying value of the asset, or the current carrying value plus future newbuilding commitments, an impairment
loss is recorded equal to the dierence between the asset’s or newbuildings carrying value and fair value. The Company be-
lieves that the estimated future undiscounted cash ows expected to be earned by each of its vessels over their remaining
estimated useful life will exceed the vessels’ carrying value as of December 31, 2022, plus estimated costs to complete the
vessels and accordingly, has not recorded an impairment charge.
Interest cost capitalized
Interest costs are capitalized on all qualifying assets that require a period of time to get them ready for their intended use.
Qualifying assets consist of Newcastlemax dry bulk vessels under construction. The interest capitalized is calculated using
our weighted average cost of borrowings, from commencement of the asset development until substantially all the activi-
ties necessary to prepare the asset for its intended use are complete. The Company does not capitalize amounts beyond
the actual interest expense incurred in the period.
Notes
26
Annual Report 2022
Sale lease-back transactions
When a sale and leaseback transaction does not qualify for sale accounting, the transaction is accounted for as a nancing
transaction by the seller-lessee. To account for a failed sale and leaseback transaction as a nancing arrangement, the sell-
er-lessee does not derecognize the underlying asset; the seller-lessee continues depreciating the asset as if it was the legal
owner. The sales proceeds received from the buyer-lessor are recognized as a nancial liability. A seller-lessee will make
rental payments under the leaseback. These payments are allocated between interest expense and principal repayment of
the nancial liability. The amount allocated to interest expense is determined by the incremental borrowing rate or imputed
interest rate.
Deferred charges
Costs associated with long-term nancing, including debt arrangement fees, are deferred and amortized over the term of
the relevant loan using the straight-line method as this approximates the eective interest method. Amortization of loan
costs will be included in “Other nancial expenses” in the Consolidated Statements of Operations. If a loan is repaid early,
any unamortized portion of the related deferred charge is charged against “Other nancial expenses” in the period in which
the loan is repaid. Deferred charges are presented as either a gross asset or as a deduction from the corresponding liability
in the Consolidated Balance Sheet.
Drydocking
Maintenance of class certication requires expenditure and can require taking a vessel out of service from time to time for
survey, repairs or modications to meet class requirements. When delivered, the Group’s vessels can generally be expected
to have to undergo a class survey once every ve years. The Group’s vessels are being built to the classication require-
ments of ABS and the Liberian Ship Register. Normal vessel repair and maintenance costs will be expensed when incurred.
We will recognize the cost of a drydocking at the time the drydocking takes place. The Group will capitalize a substantial
portion of the costs incurred during drydocking, including the survey costs and depreciates those costs on a straight-line
basis from the time of completion of a drydocking or intermediate survey until the next scheduled drydocking or intermedi-
ate survey.
Earnings per share
Basic earnings per share (“EPS”) is computed based on the income available to common stockholders and the weighted av-
erage number of shares outstanding. Diluted earnings per share includes the eect of the assumed conversion of potential-
ly dilutive instruments, which for the Company includes share options. The determination of dilutive EPS may require us to
make adjustments to net loss and the weighted average shares outstanding used to compute basic EPS unless anti-dilutive.
Cash and cash equivalents
All demand and time deposits and highly liquid, low risk investments with original maturities of three months or less at the
date of purchase are considered equivalent to cash.
Current and long-term classification
Assets and liabilities are classied as current assets and liabilities respectively, if their maturity is within one year of the
balance sheet date. Otherwise, they are classied as non-current assets and liabilities.
Related parties
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise signicant inu-
ence over the other party in making nancial and operating decisions. Parties are also related if they are subject to common
control or common signicant inuence.
Notes
27
Annual Report 2022
Equity issuance costs
Equity issuance costs are recorded as a reduction of additional paid-in-capital when the equity oering is eective. Prior to
the eective date of an equity oering, specic incremental costs directly attributable to a proposed or actual oering of
securities are deferred and recorded as “Other current assets” in the Consolidated balance sheets. Should the Company
cancel the planned equity oering, these costs will be charged to the Consolidated statements of operations as an ex-
pense. US$0.9 million has been deferred as of December 31, 2022 to the proposed equity oering.
3. RECENTLY ISSUED ACCOUNTING STANDARDS
Adoption of new accounting standards
In May 2021, the FASB issued ASU 2021-04 Earnings Per Share (Topic 260), Debt— Modications and Extinguishments (Sub-
topic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging —Contracts in Entity’s Own
Equity (Subtopic 815-40).
The amendments clarify the issuer’s recognition and measurement considerations resulting from exchanges or modica-
tions to freestanding instruments (written call options) classied in equity. Such exchanges or modications are treated as
adjustments to the cost to raise debt, to the cost to raise equity or as share based payments (ASC 718) when issued to com-
pensate for goods or services. If not treated as costs of debt funding, equity funding or share-based payments, it results in
an adjustment to EPS/net income (loss). These amendments are eective from January 1, 2022. The amendments did not
have a material impact on the consolidated nancial statements.
ASU 2020-04 (ASC 848 Reference Rate Reform)
In March 2020, the FASB issued ASU 2020-04 (ASC 848 Reference Rate Reform), which provides optional expedients and
exceptions for applying GAAP to contracts, hedging relationships, and other transactions aected by reference rate reform
if certain criteria are met. In January 2021, the FASB issued ASU 2021-01, which claried the scope of Topic 848 in relation
to derivative instruments and contract modications. The amendments in these updates are elective and apply to all en-
tities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference
LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments in these
updates are eective for all entities as of March 12, 2020 through December 31, 2022. The Company has determined that
reference rate reforms will potentially impact any outstanding amount under the revolving credit facility to which it is a par-
ty. Based on the latest guidance from the applicable LIBOR administrator, the reference rates currently in use are expected
to be available until June 30, 2023. The Company expects to agree alternative reference rates with its counterparties before
the applicable discontinuation date. We expect to take advantage of the expedients and exceptions for applying GAAP
provided by the updates to the extent reference rates currently in use are replaced with alternative reference rates before
December 31, 2022. In December 2022, the FASB issued ASU 2022-06 Reference Rate Reform (Topic 848) which defer the
sunset date of Topic 848 from December 31 2022 to December 31, 2024, after which entities will no longer be permitted to
apply the relief of Topic 848.
Notes
28
Annual Report 2022
4. INCOME TAXES
Bermuda
Himalaya Shipping Ltd. is incorporated in Bermuda. Under current Bermuda law, the Company is not required to pay taxes
in Bermuda on either income or capital gains. Himalaya Shipping Ltd. has received written assurance from the Minister of
Finance in Bermuda that, in the event of any such taxes being imposed, the Company will be exempted from taxation until
March 31, 2035.
Liberia
The vessel owning companies are not subject to tax on international shipping income.
5. SEGMENT INFORMATION
Our chief operating decision maker, or the CODM, being our Board of Directors, measures performance based on our over-
all return to shareholders based on consolidated net income. The CODM does not review a measure of operating result at a
lower level than the consolidated group and we only have one reportable segment. Himalaya Shipping currently has twelve
newbuildings under construction at New Times Shipyard in China.
6. LOSS PER SHARE
Period from
Year ended March 17 to
December 31, December 31,
2022 2021
(In US$, except share numbers)
Net loss available to common shareholders (2.0) (1.0)
Weighted average number of shares, basic and diluted 32,152,857 18,316,970
Loss per share in U.S. Dollars, basic and diluted (0.06) (0.06)
Diluted loss per share excludes the potential eect of conversion of 620,000 of share options outstanding issued to man-
agement resources and directors as the share options are anti-dilutive.
7. INTEREST EXPENSE
Period from
Year ended March 17 to
December 31, December 31,
2022 2021
Interest expense, gross (1.8) -
Capitalized interest on newbuildings 1.8 -
Interest expense, net - -
Notes
29
Annual Report 2022
8. LEASES
Lessor
The Company has entered into time charter contracts for seven of its vessels that will commence upon their respective
deliveries to the Company under the sale and leaseback arrangements. One of the charters is a xed rate contract, while
the remaining six are variable rates as set out in the following table of operating lease contracts:
Ship name Targeted delivery Rate US$ (3) Charter period
Mount Norefjell Mar. 2023 30,000 24 months
Mount Ita Mar. 2023 BCI 5TC plus premium, scrubber benet 32-38 months (1)
Mount Etna Apr. 2023 BCI 5TC plus premium, scrubber benet 32-38 months (2)
Mount Blanc June 2023 BCI 5TC plus premium, scrubber benet 24 months
Mount Matterhorn July 2023 BCI 5TC plus premium, scrubber benet 24 months
Mount Neblina Sep. 2023 BCI 5TC plus premium, scrubber benet 24 months
Mount Bandeira Jan. 2024 BCI 5TC plus premium, scrubber benet 24 months
(1) Option for 11-13 months
(2) Option for 11-13 months
(3) The Company will earn revenues based on the Capesize Index published by the Baltic Exchange plus a premium which
will vary depending on contract terms. In addition, the Company will earn a scrubber benet based on the spread between
high sulphur fuel oil and very low sulphur fuel oil or the spread between liquied natural gas and very low sulphur fuel oil.
The minimum future undiscounted minimum lease payments to be received under our xed rate contract as of December
31, 2022 are as follows:
2023 8.7
2024 10.6
2025 1.8
Total 21.1
Notes
30
Annual Report 2022
9. NEWBUILDINGS
Movements in the period ended December 31, 2021 and year ended December 31, 2022 are summarized below:
Balance at March 17, 2021 -
Installment payments 82.1
Other capitalized costs including newbuilding supervision costs 1.4
Balance at December 31, 2021 83.5
Installment payments 88.6
Capitalized interest 1.8
Other capitalized costs including newbuilding supervision costs 2.2
Balance at December 31, 2022 176.1
2021
Installment payments in the period ended December 31, 2021 include expenditures associated with the rst and second
installment payments to New Times Shipyard for the 12 dual fueled Newcastlemax dry bulk carriers including the non-cash
payment of US$13.6 million paid by Magni on behalf of the Company, see note 13.
Other capitalized costs in the period ended December 31, 2021 include US$1.1 million in fees to Magni under the Corporate
support agreement which was not paid as of December 31, 2022 and 2021 (see note 13) and expenditures associated with
supervision of the newbuilding program.
2022
Installment payments in the year ended December 31, 2022 include US$74.9 million of payments associated with the third
and fourth installment payments to New Times Shipyard for newbuildings “Mount Norefjell”, “Mount Ita”, “Mount Etna”,
“Mount Blanc” and “Mount Matterhorn”, and the third instalment for newbuilding “Mount Neblina”. The Company has drawn
US$74.9 million on the sale leaseback nancing to fund these instalments and the instalment payments were executed by
AVIC and CCBFL on behalf of the Company during 2022. In December 2022, the Company agreed with New Times Shipyard
to defer payments of the third instalment on newbuildings “Mount Hua” and “Mount Bandeira” of US$13.7 million from
December 2022 until March 31, 2023. This amount has been capitalized as “Installment payments” as progress was made
as agreed under the newbuilding contracts and recorded as “Accounts payable” in the “Consolidated balance sheets”.
Other capitalized costs in the year ended December 31, 2022 include US$0.8 million in pre-delivery cost of which US$0.5
million was not paid as of December 31, 2022, and US$1.4 million in expenditures associated with supervision of the new-
building program of which US$0.1 million was not paid as of December 31, 2022.
There were no indications of impairment of newbuildings as of December 31, 2022 and 2021.
Notes
31
Annual Report 2022
10. LONG-TERM DEBT
December 31, December 31,
2022 2021
Other long-term debt
Vessel nancing (Mount Norefjell) 13.6 -
Vessel nancing (Mount Ita) 13.6 -
Vessel nancing (Mount Etna) 13.6 -
Vessel nancing (Mount Blanc) 13.6 -
Vessel nancing (Mount Matterhorn) 13.7 -
Vessel nancing (Mount Neblina) 6.8 -
Total long-term debt, gross 74.9 -
Less current portion (7.0) -
Less deferred loan costs (7.4) -
Total long-term debt 60.5 -
The outstanding debt as of December 31, 2022, is repayable as follows:
2023 7.0
2024 11.0
2025 11.7
2026 12.4
2027 13.4
Thereafter 19.4
Total 74.9
Avic International Leasing Co., Ltd. (“AVIC”) – Sale leaseback financing
The Company has entered into sale lease back transactions accounted for as nancing transactions. In February 2022, the
Company entered into sale lease back arrangements with AVIC for the rst four newbuildings “Mount Norefjell”, “Mount
Ita”, “Mount Etna” and “Mount Blanc” to be delivered from New Times Shipyard. Pursuant to the lease nancing, Himalaya
Shipping shall receive pre-delivery nancing at a xed interest rate of 5% per annum for the third and fourth pre-delivery
instalments ($6,791,700 to be paid for each of the third and fourth instalment). As security for the pre-delivery nancing,
the Company has entered into an agreement to assign in favor of AVIC the rst four newbuilding contracts (Carrying value
of Newbuildings nanced by AVIC is US$84.8 million as of December 31, 2022) and the related refund Guarantees, as well
as a parent company guarantee from the Company, share pledges over the related Subsidiaries, account pledges over the
related subsidiaries’ bank accounts and a share pledge over the shares in each related Subsidiary. In addition, upon delivery
of the relevant vessels from New Times Shipyard, the vessels will be sold to companies owned and designated by AVIC. The
nancing amount is the lower of 90% of the newbuilding contract price and US$63.0 million. The vessels will be chartered
back on seven-year bareboat charters which include purchase options each year from year 3 until the end of the bareboat
period. The rst purchase option in year 3 is US$56,934,360 and then declining to US$47,166,840 after year 7.
Notes
32
Annual Report 2022
Payment of dividends or making of other distributions from each subsidiary to the Company will only be allowed if imme-
diately following such payment or distribution there will be maintained in the bank account an amount no less than the
higher of (a) US$3.6 million and (b) the aggregate of the hire and the operating expenses for the vessel that are payable
within the next six months.
During 2022, the Company has drawn US$54.4 million on the nancing to pay scheduled pre-delivery instalments for the
rst four newbuildings. The xed price purchase options and a cash penalty of US$25 million per vessel for not exercising
any of the purchase options under the sale leaseback transaction results in a failed sale leaseback and the transaction is
accounted for as a nancing transaction.
CCB Financial Leasing Co., Ltd. (“CCBFL”) – Sale leaseback financing
In April 2022, the Company entered into sale lease back arrangements with CCBFL for newbuildings “Mount Matterhorn”,
“Mount Neblina”, “Mount Bandeira”, “Mount Hua”, “Mount Elbrus”, “Mount Denali”, “Mount Aconcagua” and “Mount Emai”
to be delivered from New Times Shipyard. Pursuant to the lease nancing, Himalaya Shipping shall receive pre-delivery
nancing at a xed interest rate of 5% per annum for the third and fourth pre-delivery instalments (US$6,841,700 and
US$6,891,700 to be paid for each of the third and fourth instalment for newbuildings “Mount Matterhorn”, “Mount Neblina”,
“Mount Bandeira”, “Mount Hua” and “Mount Elbrus”, “Mount Denali”, “Mount Aconcagua” and “Mount Emai”, respectively.
As security for the pre-delivery nancing, the Company has entered into an agreement to assign in favor of CCBFL the rst
four newbuilding contracts (Carrying value of Newbuildings nanced by CCBFL is US$91.3 million as of December 31, 2022)
and the related refund guarantees, as well as a parent company guarantee from the Company, share pledges over the
related subsidiaries, account pledges over the related subsidiaries’ bank accounts and a share pledge over the shares in
each related subsidiary. In addition, upon delivery of the relevant vessels from New Times Shipyard, the vessels will be sold
to companies owned and designated by CCBFL. The nancing amount is the lower of 90% of the newbuilding contract price
and US$63.0 million. The vessels will be chartered back on seven-year bareboat charters which include purchase options
each year from year 3 until the end of the bareboat period. The rst purchase option in year 3 is US$56.0 million declining
to US$46.0 million after year 7.
During 2022, the Company has drawn US$20.5 million on the nancing to pay scheduled pre-delivery instalments. The
xed price purchase options under the sale leaseback transaction results in a failed sale leaseback and the transaction is
accounted for as a nancing transaction.
Each subsidiary under the CCBFL sale leaseback arrangement shall procure that at any time during the period from the
date falling 180 days from the delivery of each newbuilding, there is maintained in the bank account an amount not less
than the bareboat hire that will accrue within the next three months which amounts to approximately US$1.5 million.
The bareboat rate per day under both sale leaseback arrangements is xed for the bareboat period and the average bare-
boat rate per day for the sale leaseback arrangements with AVIC and CCBFL is US$16,567. The Company has classied the
estimated amortization of the bareboat payments due in 2023 as “Current portion of long-term debt” on the “Consolidated
Balance sheet”.
In December 2022, the Company signed an agreement to transfer the sale leaseback arrangement for newbuildings “Mount
Bandeira” and “Mount Hua” from CCBFL to Jiangsu Financial Leasing. The transfer will be eective in March, 2023. The terms
under the sale leaseback arrangement remain unchanged.
Notes
33
Annual Report 2022
Drew Holdings Ltd. (“Drew”) – Revolving Credit facility
In December 2022, the Company drew US$1.0 million on the Revolving Credit Facility with Drew. The amount is recorded as
“Amounts due to related parties” in the consolidated balance sheets, see note 13.
11. FINANCIAL INSTRUMENTS
Foreign exchange risk management
The majority of our transactions, assets and liabilities are denominated in United States dollars. However, we incur expen-
diture in currencies other than United States dollars, mainly in Norwegian Kroner. There is a risk that currency uctuations
in transactions incurred in currencies other than the functional currency will have a negative eect on the value of our cash
ows. We are then exposed to currency uctuations and we may enter into foreign currency swaps to mitigate such risk
exposures. The company has not entered into derivative agreements to mitigate the risk of these uctuations.
Concentrations of risk
There is a concentration of credit risk with respect to cash and cash equivalents to the extent that all of the amounts are
carried with DNB. However, we believe this risk is remote, as DNB is an established nancial institution.
There is a concentration of supplier risk with respect to our newbuilding as all newbuildings are being built by New Times
Shipyard. However, we believe the risk is remote, as New Times Shipyard is an established shipyard.
Guarantees
The Bank of China Limited, Jiangsu Branch, has given letters of guarantee to two, and the Agricultural Bank of China, Jiangsu
Branch to ten, of the twelve Liberian subsidiaries of the group for all installment payments made prior to delivery of the ves-
sels under each of their respective newbuilding contracts.
The Company has issued guarantees to New Times Shipyard for payment of instalments on all the newbuilding contracts.
Fair values
The carrying value and estimated fair value of the Company’s nancial instruments were as follows:
Level 1: Quoted market prices in active markets for identical assets or liabilities;
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;
Level 3: Unobservable inputs that are not corroborated by market data
Notes
34
Annual Report 2022
December 31, December 31,
2022 2021
Assets Hierarchy Fair value Carrying value Fair value Carrying value
Cash and cash equivalents 1 0.3 0.3 11.3 11.3
Liabilities
Current portion of long-term debt (1) 2 7.0 7.0 - -
Related party liabilities - current (2) 1 2.7 2.7 - -
Long term debt (1) 2 66.9 60.5 - -
Related party liabilities – non-current (3) 1 1.0 1.0 2.5 2.5
(1) Fair value of long-term debt is estimated at US$66.9 million and have been corroborated using discounted cash ow
model and market interest rate as of December 31, 2022.
(2) The carrying value approximates the fair value due to their near term expected payment of cash, see description of
Corporate Support Agreement in note 12.
(3) The carrying value approximates the fair value due to their near term expected payment of cash, see description of
Revolving Credit Facility in note 12.
There have been no transfers between dierent levels in the fair value hierarchy during the periods presented.
12. COMMITMENTS AND CONTINGENCIES
As of December 31, 2022, the Company had twelve vessels under construction. In addition, in August 2022, the Company
entered into agreements with New Times Shipyard to install exhaust gas cleaning systems on the twelve vessels under
construction for a total cost of $28.8 million payable at delivery of the vessels. As of December 31, 2022, the outstanding
commitments under the twelve newbuilding contracts, including the installation of the exhaust gas cleaning systems, are as
follows:
2023 377.8
2024 324.1
Total 701.9
To the best of our knowledge, there are no legal or arbitration proceedings existing or pending which have had or may
have signicant eects on our nancial position or protability and no such proceedings are pending or known to be con-
templated.
Notes
35
Annual Report 2022
13. RELATED PARTY TRANSACTIONS
Drew Holdings Ltd (“Drew”) and Magni Partners (Bermuda) Ltd.(“Magni”)
Drew is considered a related party due to its signicant ownership in the Company and Magni is considered a related party
since it is an aliate of Drew.
In May 2021, Magni paid a total of US$13,583,400 in instalment payments to New Times Shipyard, on the Company’s behalf,
which was structured as a loan. The loan was interest free. On June 15, 2021, the loan from Magni was converted and a
payment of US$1,416,600 was made for issuance of 15,000,000 shares at par value US$1 to Magni.
In March 2022, the Company entered into a US$15.0 million revolving credit facility agreement with Magni. The facility is
an unsecured revolving credit facility, which is interest-bearing at a rate of LIBOR for the applicable interest periods under
the facility, plus a margin of 8% p.a. The Magni Facility is available to the Company until December 31, 2023 and must be
repaid latest on December 31, 2024. In December 2022 the revolving credit facility was cancelled and a new revolving credit
facility with Drew was entered into on same terms. US$1.0 million was drawn on December 19, 2022 and US$1.0 million was
outstanding as of December 31, 2022.
Drew subscribed for 1,000,000 shares and 714,285 shares at a price of US$3 per share and US$7 per share in the private
placements in July 2021 and October 2021, respectively. Both subscriptions were paid in cash.
Management agreement
In October 2021, the Company signed an agreement with 2020 Bulkers Management AS to purchase certain management
services (this agreement replaced the agreement signed in June 2021). The contracted management of Himalaya Shipping
are all employees of 2020 Bulkers Management AS. 2020 Bulkers Management AS was considered a related party at the
time of the transaction. For the period from incorporation on March 17, 2021, until December 31, 2021, 2020 Bulkers Man-
agement AS charged Himalaya Shipping Ltd. and its subsidiaries US$0.3 million (US$0.1 million was recorded as general and
administrative expenses in the Consolidated statements of operations and US$0.2 million was capitalized to “Newbuildings”
on the Consolidated balance sheets) and US$0.09 million (included in Trade payables in the Consolidated balance sheet)
was outstanding as of December 31, 2021. As of December 31, 2022, 2020 Bulkers Management AS is no longer considered
a related party due to Drew’s reduced ownership in 2020 Bulkers Ltd.
Corporate support agreement
The Company’s incorporator and initial, sole shareholder, Magni has been the key initiator of the Himalaya project and has
provided corporate and nancial assistance throughout the process, including extensive assistance in connection with the
nancing of the instalments to date as well as the private placements. The Company has entered into a corporate support
agreement with Magni whereby Magni is compensated for its services to the Group since the inception of the Company,
and for its key role in identifying and pursuing business opportunities for the Group (the “Corporate Support Agreement”).
As Magni indirectly held a controlling interest at the time the Corporate Support Agreement was entered into, the Com-
pany has treated the Corporate Support Agreement as a related party agreement. Pursuant to the Corporate Support
Agreement, Magni shall continue to support the Company’s business development through assisting with the pre-nancing
and post-nancing of the Company’s newbuilding program, in nding employment for the vessels, in recruiting suitable
individuals to the Company’s organization and with general high-level administrative support. The parties agreed in 2021 a
compensation in the amount of US$2.7 million which shall be paid by the Company in four equal tranches.
Notes
36
Annual Report 2022
The tranches will be split equally on each of the rst four newbuildings to be delivered from New Times Shipyard in 2023, so
that US$0.674 million is payable on each such delivery. Such amount equals the address commission to be received on the
rst 4 vessels, which was agreed with the yard before the project opened to external investors.
As of December 31, 2022, the Company has recorded the total fee of US$2.7 million (US$2.5 million as of December 31,
2021) as related party liabilities for services provided since inception of the Company. The fee has been allocated to services
provided in relation to the newbuilding contracts: US$1.1 million (2021:US$1.1 million) capitalized to “Newbuildings” in the
consolidated balance sheets, the private placements: US$0.9 million (2021: US$0.9 million) recorded as a reduction in Addi-
tional paid-in capital in the Consolidated Statements of Changes in Shareholders’ Equity), the sale and leaseback arrange-
ments: US$0.6 million (2021: US$0.4 million recorded as “Other non-current assets” which was transferred to deferred
loan cost under “Long term debt” in 2022 when the Company drew on the sale leaseback nancing) recorded as deferred
loan cost to “Long term debt” in the Consolidated balance sheets) and other administration support: US$0.1 million (2021:
US$0.1 million) recorded as “General and administrative expenses in the Consolidated Statements of Operations.
Affinity Shipholdings I LLP and affiliated companies (“Affinity”)
Anity is considered a related party due to being a principal shareholder.
Anity is the broker between New Times Shipyard and Himalaya Shipping for the twelve newbuilding contracts. No consid-
eration has or will be paid from Himalaya Shipping to Anity.
Anity subscribed for 166,667 shares and 71,429 shares at a price of US$3 per share and US$7 per share in the private
placements in July 2021 and October 2021, respectively. Both subscriptions were paid in cash.
Anity is the broker on the xed time charter agreement the Company has entered into. Anity will receive 1.25% of the
charter hire of US$30,000 per day.
14. SHARE BASED COMPENSATION
In September 2021, the Board of Directors established a long-term incentive plan and 800,000 of the Company’s authorized
but unissued share capital was allocated for this purpose. In December 2021, the Board approved a grant of 500,000 share
options to management resources (employees from 2020 Bulkers Management AS providing management services) and
directors. In March 2022 the Board approved a further grant of 120,000 share options to management resources with the
same terms. The share options granted to date have a ve-year term and cli vest three years from the date of grant. The
exercise price is US$8.0 and will be reduced by any dividends and cash distributions paid. Stock compensation expense of
US$0.4 million was expensed in 2022 (2021: US$0.03 million). and is recognized in “General and administrative expenses” in
the Consolidated Statements of Operations.
The table below sets forth the number of share options, weighted average remaining life, weighted average exercise price
and weighted average grant date fair value price for the years ended December 31, 2021 and 2022, respectively:
Notes
37
Annual Report 2022
Weighted Weighted Weighted
average Average Average grant
Outstanding remaining exercise price date fair value
share options life (in US$) (in US$)
Outstanding at March 17, 2021 - - - -
Granted 500,000 4.0 8.0 2.2
Exercisable - - - -
Forfeited - - - -
Outstanding at December 31, 2021 – unvested 500,000 4.0 8.0 2.2
Outstanding at December 31, 2021 - exercisable - - - -
Granted 120,000 4.0 8.0 1.95
Exercisable - - - -
Forfeited - - - -
Outstanding at December 31, 2022 – unvested 620,000 3.0 8.0 2.15
Outstanding at December 31, 2022 - exercisable - - - -
The fair value of the share options granted in March 2022 and December 2021 was calculated using the Black-Scholes op-
tion pricing model using the following inputs:
2022 2021
Grant date March 10 December 8
Risk-free rate 2% 1.52%
Expected life 4 years 4 years
Expected future volatility 56% 57%
In 2022 and 2021 the expected future volatility was based on peer group volatility due to the short lifetime of the Company.
As of December 31, 2022 and 2021, there was no intrinsic value for both vested and unvested outstanding awards.
15. SHARE CAPITAL
The authorized share capital of the Company as of December 31, 2022 and 2021 is $140,010,000 represented by
140,010,000 authorized common shares of par value $1.00 each.
Notes
38
Annual Report 2022
The Company’s issued and outstanding share capital is as follows:
(number of shares of US$1.00 each) 2022 2021
Balance at the start of the year/period 32,152,857 -
Shares issued
March 17, 2021 — 10,000
June 15, 2021 — 15,000,000
July 16, 2021 — 10,000,000
October 11, 2021 - 7,142,857
Balance at the end of the year/period 32,152,857 32,152,857
Changes in the Company’s issued and outstanding share capital are described below:
Ї Issuance of 10,000 common shares at inception at a purchase price of US$1.00 per common share;
Ї Issuance of 15,000,000 common shares at US$1.00 per share on June 15, 2021 in a conversion of debt of US$13,583,400
and payment cash of US$1,416,600;
Ї Issuance of 10,000,000 common shares at US$3.00 per share on July 16, 2021 in a private placement, for gross pro-
ceeds of US$30.0 million before issuance costs of US$0.8 million. US$0.4 million of the issuance costs relate to the
Corporate support agreement and was not paid as of December 31, 2021 and 2022, respectively, see note 13.
Ї Issuance of 7,142,857 common shares at US$7.00 per share on October 11, 2021 in a private placement, for gross
proceeds of US$50.0 million before issuance costs of US$1.3 million. US$0.5 million of the issuance costs was paid in
2022. US$0.5 million of the issuance costs relating to the Corporate support agreement (see note 13) was not paid as of
December 31, 2021 and 2022, respectively.
Notes
39
Annual Report 2022
Largest shareholders as of December 31, 2022:
Name Holding of shares In %
Drew Holdings Ltd 12 446 185 38,71
Anity Shipholdings I LLP 3 228 096 10,04
Citibank, N.A. (nominee) 2 488 623 7,74
J.P. Morgan Securities LLC (nominee) 2 095 238 6,52
Verdipapirfondet DNB SMB 1 451 150 4,51
Celina Midelfart 1 000 000 3,11
DZ Privatbank S.A. (nominee) 795 486 2,47
J.P.Morgan SE (nominee) 630 952 1,96
Klaveness Marine Finance AS 595 441 1,85
HI Capital AS 488 096 1,52
Stavanger Forvaltning AS 401 591 1,25
MH Capital AS 329 333 1,02
Bjørn Isaksen 300 000 0,93
Songa Capital AS 300 000 0,93
Spesialfondet KLP Alfa Global Ener 285 714 0,89
Skattum Invest AS 285 714 0,89
Credit Suisse (Switzerland) Ltd. (nominee) 238 096 0,74
SES AS 200 762 0,62
Kontrari AS 200 000 0,62
Niels Stolt-Nielsen 192 381 0,60
Total 27 952 858 86,94
Other shareholders 4 199 999 13,06
Total 32 152 857 100,00
Notes
40
Annual Report 2022
16. COMPENSATION
The Company has no employees as of December 31, 2022. Please see note 13 for information on the Company’s manage-
ment agreement with 2020 Bulkers Management AS.
As of December 31, 2022, the Directors and contracted management that hold share and share options of the Company are
set out below:
Name Position Shares Share options
Bjørn Isaksen* Director 320,000 150,000
Carl Erik Steen** Director 95,238 75,000
Mi Hong Yoon Director - -
Georgina Sousa Director - 50,000
Jehan Mawjee Director - -
Herman Billung Contracted CEO 20,000 100,000
Vidar Hasund Contracted CFO 10,000 100,000
* 20,000 shares of the total shares are held through Mr. Isaksen’s controlled company Freng Invest AS and 300,000 shares
are held privately.
** All shares are held through Mr. Steen’s controlled company Capreca AS.
Auditors fee:
Period from
Year ended March 17 to
December 31, December 31,
2022 2021
(In thousands of US$)
Statutory audit fee 215.1 31.8
Other assurance services 62.2 35.4
Total fees 277.3 67.2
Notes
41
Annual Report 2022
17. SUBSEQUENT EVENTS
Scrubber financing
In February 2023 the Company entered into agreements with AVIC to nance the scrubber installation on the rst four new-
buildings “Mount Norefjell”, “Mount Ita”, “Mount Etna”, “Mount Blanc” to be delivered from New Times Shipyard. In respect of
each Vessel, the nancing amount is 90% of the cost of US$2.4 million for the scrubbers provided that the aggregate of the
contract price under the sale leaseback contracts and the scrubber nancing shall not exceed US$64.5 million. The nanc-
ing carries an interest rate of Libor plus 450bps and has a three year repayment prole.
Bridge Facility
In March 2023 the Company entered into a US$15 million bridge facility with DNB for general corporate purposes. The Com-
pany drew US$7.5 million on the bridge facility in March 2023 and was repaid in full in April 2023 with proceeds received
from the equity oering.
Delivery of vessels
In March and April 2023 the Company took delivery of Mount Norefjell, Mount Ita and Mount Etna from New Times Ship-
yard. The vessels were immediately after delivery from the shipyard, sold to AVIC and chartered back to the Company on
seven years bareboat contracts
Public Offering in the United States
On April 4, 2023, the Company completed a public oering and was listed on the New York Stock Exchange. The Company
issued 7,720,000 common shares at par value US$1.0 per share for a price of US$5.8 per share raising net proceeds of ap-
proximately US$40.5 million. The new share capital is US$ 39,872,857 consisting of 39,872,857 common shares of par value
US$1.0 per share.
Revolving Credit Facility with Drew Holdings
In February 2023, the Company drew 1.02 million on the revolving credit facility with Drew Holdings Ltd. The loan balance of
US$2.02 million was fully repaid in March 2023.
Subsequent events have been evaluated through April 13, 2023, the date these consolidated nancial statements were
available to be issued.
42
Annual Report 2022
Auditors’
Report
PricewaterhouseCoopers AS, Kanalsletta 8, Postboks 8017, NO-4068 Stavanger
T: 02316, org. no.: 987 009 713 MVA, www.pwc.no
Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap
To the shareholders and Board of Directors of Himalaya Shipping Ltd.
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the consolidated financial statements of Himalaya Shipping Ltd. and its subsidiaries
(“the Group”), which comprise the consolidated balance sheet as at December 31, 2022, consolidated
statements of operations, consolidated statements of cash flows and the consolidated statements of
changes in shareholders’ equity for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies.
In our opinion the accompanying consolidated financial statements give a fair presentation of the
financial position of the Group as at December 31, 2022, and its financial performance and its cash
flows for the year then ended in accordance with the accounting principles generally accepted in the
United States of America (USGAAP).
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Group as required
by relevant laws and regulations in Norway and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Group for 2 years from the incorporation of the Group on March 17,
2021, with our first audit being for the accounting year 2021.
Material Uncertainty Related to Going Concern
We draw attention to Note 2 in the financial statements, which indicates that the Company is
dependent on obtaining new debt financing to finance the scrubber installation under the current
newbuilding contracts for eight of the twelve Newbuildings. As stated in Note 2, these conditions
indicate that a material uncertainty exists that may cast substantial doubt on the Company’s ability to
continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. This matter was addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on this matter.
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Report
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Key Audit Matters
How our audit addressed the Key Audit Matter
Impairment assessment for Newbuildings
Refer to note 2 (Accounting policies) and
note 9 (Newbuildings) where management
explains how they assess the value of the
N
ewbuildings.
The Group has
entered into agreements to
acquire twelve dual fueled Newcastlemax
dry bulk vessels, which
were under
construction
as of December 31, 2022.
The vessels have a combined carrying
amount of USD 176.1 million. The Group
has not recognized an impairment on the
Newbuildings in 2022.
Indicators for the Newbuildings were
assessed and not considered present
during 2022. As explaine
d in the notes,
management considered among others the
conditions in dry bulk freight market,
estimated fair value less cost of sale of the
Newbuildings, and market capitalization
versus net book value of the Group, which
gave no indication of impairment.
As a
result of the above factors, management
has not performed an impairment test.
We focused on this area due to the
significant carrying value of the
Newbuildings and the judgement inherent
in the assessment of indicators of
impairment.
We evaluated and challenged management’s
assessment of indicators of impairment and the
process by which this was performed. Management
considers each vessel to be a cash generating unit
(“CGU”) in their assessment of impairment
indicators, consequently we assessed for impairment
indicators on the same basis. We assessed
management’s accounting policy against US GAAP
and obtained explanations from management as to
how the specific requirements of the standards, in
particular ASC 360, were met. We also assessed the
consistency year on year of the application of the
accounting policy.
To assess the estimates for fair value less costs of
disposal as an indicator of impairment, management
compiled broker valuation certificates for the
Newbuildings. We satisfied ourselves that the
external brokers had both the objectivity and the
competence to provide the estimate. To assess this,
we corroborated that the specific brokers are
identified as being approved for use by lenders to
similar companies as Himalaya Shipping for
purposes of minimum value clause covenant
reporting. Management used brokers from such
approved lists. We interviewed selected brokers to
understand how the estimates for fair value were
compiled. We also satisfied ourselves that the
brokers were provided with relevant facts to
determine such an estimate, by testing key inputs
such as build date, build location and certain key
specifications back to the ships register. We
concluded that management sufficiently understood
the valuations from third party brokers, including
having obtained an understanding of the
methodology used in arriving at the valuations and
performing sensitivity analysis and performing
comparisons to other available market data where
possible.
To assess each of the assumptions in the
impairment indicator assessment, we interviewed
management and challenged their assumptions. For
certain key assumptions we specifically used current
and historical external market data to corroborate the
freight rates assessed by management. We
challenged management on their assessment of
current market rates. We also corroborated
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Annual Report 2022
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management’s assessment with external market
reports where possible. We considered that freight
rates used by management were within an
appropriate range.
We read note 9 (Newbuildings) and assessed this to
be in line with the requirements.
No matters of consequence arose from the
procedures above.
Other Information
The Board of Directors and the Contracted Managing Director (management) are responsible for the
information in the Board of Directors’ report and the other information accompanying the financial
statements. The other information comprises information in the annual report, but does not include the
financial statements and our auditor’s report thereon. Our opinion on the financial statements does not
cover the information in the Board of Directors’ report nor the other information accompanying the
financial statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other information
accompanying the financial statements otherwise appear to be materially misstated. We are required
to report if there is a material misstatement in the Board of Directors’ report or the other information
accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
• is consistent with the financial statements and
• contains the information required by applicable statutory requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Corporate Social Responsibility.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a fair presentation in
accordance with the accounting principles generally accepted in the United States of America, and for
such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless liquidation of the Group becomes imminent.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
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Annual Report 2022
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they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group's internal control.
• evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast substantial doubt on the Group's ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
• evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves a fair presentation.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
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Annual Report 2022
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Report
5 / 5
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Himalaya Shipping Ltd., we have performed an
assurance engagement to obtain reasonable assurance about whether the financial statements
included in the annual report, with the file name Himalaya Shipping Ltd. Annual Report 2022.xhtml,
have been prepared, in all material respects, in compliance with the requirements of the Commission
Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation)
and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes
requirements related to the preparation of the annual report in XHTML format.
In our opinion, the financial statements, included in the annual report, have been prepared, in all
material respects, in compliance with the ESEF regulation.
Management’s Responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
regulation. This responsibility comprises an adequate process and such internal control as
management determines is necessary.
Auditor’s Responsibilities
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all
material respects, the financial statements included in the annual report have been prepared in
compliance with ESEF. We conduct our work in compliance with the International Standard for
Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of
historical financial information”. The standard requires us to plan and perform procedures to obtain
reasonable assurance about whether the financial statements included in the annual report have been
prepared in compliance with the ESEF Regulation.
As part of our work, we have performed procedures to obtain an understanding of the Group’s
processes for preparing the financial statements in compliance with the ESEF Regulation. We
examine whether the financial statements are presented in XHTML-format. We believe that the
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Stavanger, April 13, 2023
PricewaterhouseCoopers AS
Gunnar Slettebø
State Authorised Public Accountant
Bermuda Office
Himalaya Shipping Ltd.
19 Par-la-Ville Road, 1st Floor,
Hamilton HM 11,
Bermuda
www.himalaya-shipping.com
Offices