Exhibit 99.1
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 31, 2007 and DECEMBER 31, 2006
(Expressed in thousands of U.S. Dollars – except share data)
2007 | 2006 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 181,447 | $ | 174,567 | ||||
Restricted cash | 6,889 | 4,347 | ||||||
Accounts receivable, net | 23,411 | 15,425 | ||||||
Insurance claims | 13,120 | 1,865 | ||||||
Due from related companies | 972 | — | ||||||
Advances and other | 5,359 | 5,480 | ||||||
Vessel held for sale | 27,535 | — | ||||||
Inventories | 12,099 | 8,431 | ||||||
Prepaid insurance and other | 4,030 | 3,020 | ||||||
Financial instruments-Fair value | 1,191 | 9,358 | ||||||
Total current assets | 276,053 | 222,493 | ||||||
INVESTMENTS | 1,000 | 14,045 | ||||||
FIXED ASSETS | ||||||||
Advances for vessels under construction | 169,739 | 261,242 | ||||||
Vessels | 2,127,704 | 1,649,928 | ||||||
Accumulated depreciation | (227,521 | ) | (191,281 | ) | ||||
Vessels’ Net Book Value | 1,900,183 | 1,458,647 | ||||||
Total fixed assets | 2,069,922 | 1,719,889 | ||||||
DEFERRED CHARGES, net | 15,801 | 13,448 | ||||||
Total assets | $ | 2,362,776 | $ | 1,969,875 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of long-term debt | $ | 44,363 | $ | 23,117 | ||||
Payables | 34,871 | 22,255 | ||||||
Due to related companies | 2,428 | 2,414 | ||||||
Accrued liabilities | 17,275 | 18,218 | ||||||
Accrued bank interest | 16,952 | 13,705 | ||||||
Unearned revenue | 11,939 | 12,075 | ||||||
Deferred income, current portion | 2,626 | 5,821 | ||||||
Financial instruments – Fair value | 28,811 | 3,825 | ||||||
Total current liabilities | 159,265 | 101,430 | ||||||
LONG-TERM DEBT, net of current portion | 1,345,580 | 1,110,544 | ||||||
DEFERRED INCOME, net of current portion | — | 2,626 | ||||||
MINORITY INTEREST | 3,391 | 2 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Common stock, $ 1.00 par value; 100,000,000 shares authorized; 38,059,142 and 38,079,742 issued and outstanding at December 31, 2007 and December 31, 2006, respectively | 38,059 | 19,040 | ||||||
Additional paid-in capital | 273,036 | 267,430 | ||||||
Accumulated other comprehensive income / (loss) | (23,775 | ) | 4,718 | |||||
Retained earnings | 567,220 | 464,085 | ||||||
Total stockholders’ equity | 854,540 | 755,273 | ||||||
Total liabilities and stockholders’ equity | $ | 2,362,776 | $ | 1,969,875 | ||||
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(Expressed in thousands of U.S. Dollars – except share and per share data)
2007 | 2006 | 2005 | ||||||||||
VOYAGE REVENUES: | $ | 500,617 | $ | 427,654 | $ | 295,623 | ||||||
EXPENSES: | ||||||||||||
Commissions | 17,976 | 15,441 | 11,604 | |||||||||
Voyage expenses | 72,075 | 69,065 | 35,970 | |||||||||
Charter hire expense | 15,330 | 24,461 | 24,317 | |||||||||
Vessel operating expenses | 108,356 | 76,095 | 52,945 | |||||||||
Depreciation | 81,567 | 59,058 | 35,697 | |||||||||
Amortization of deferred dry-docking costs | 3,217 | 4,857 | 6,583 | |||||||||
Provision for doubtful receivables | — | — | 40 | |||||||||
Management fees | 9,763 | 7,103 | 5,460 | |||||||||
General and administrative expenses | 4,382 | 3,510 | 3,631 | |||||||||
Management incentive award | 4,000 | 3,500 | 2,500 | |||||||||
Stock compensation expense | 5,670 | 216 | — | |||||||||
Foreign currency losses/(gains) | 691 | 279 | (181 | ) | ||||||||
Amortization of deferred gain on sale of vessels | (3,168 | ) | (3,168 | ) | (3,168 | ) | ||||||
Gain on sale of vessels | (68,944 | ) | (38,009 | ) | (34,540 | ) | ||||||
Total expenses | 250,915 | 222,408 | 140,858 | |||||||||
Operating income | 249,702 | 205,246 | 154,765 | |||||||||
OTHER INCOME (EXPENSES): | ||||||||||||
Gain on sale of non-operating vessels | — | — | 10,765 | |||||||||
Gain on sale of shares in subsidiary | — | 25,323 | — | |||||||||
Interest and finance costs, net | (77,382 | ) | (42,486 | ) | (11,247 | ) | ||||||
Interest and investment income | 13,316 | 7,164 | 7,360 | |||||||||
Other, net | 924 | 1,159 | 112 | |||||||||
Total other income (expenses), net | (63,142 | ) | (8,840 | ) | 6,990 | |||||||
MINORITY INTEREST | (3,389 | ) | (2 | ) | — | |||||||
Net Income | $ | 183,171 | $ | 196,404 | $ | 161,755 | ||||||
Earnings per share, basic | $ | 4.81 | $ | 5.15 | $ | 4.09 | ||||||
Earnings per share, diluted | $ | 4.79 | $ | 5.15 | $ | 4.09 | ||||||
Weighted average number of shares, basic | 38,075,859 | 38,127,692 | 39,544,540 | |||||||||
Weighted average number of shares, diluted | 38,234,079 | 38,141,052 | 39,573,692 | |||||||||
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(Expressed in thousands of U.S. Dollars – except share and per share data)
Three months ended December 31, | ||||||||
2007 | 2006 | |||||||
VOYAGE REVENUES: | $ | 130,891 | $ | 111,590 | ||||
EXPENSES: | ||||||||
Commissions | 4,686 | 3,822 | ||||||
Voyage expenses | 16,530 | 14,035 | ||||||
Charter hire expense | 3,507 | 6,149 | ||||||
Vessel operating expenses | 31,512 | 23,657 | ||||||
Depreciation | 21,601 | 16,980 | ||||||
Amortization of deferred dry-docking costs | 64 | 1,036 | ||||||
Management fees | 2,522 | 1,951 | ||||||
General and administrative expenses | 2,009 | 1,409 | ||||||
Management incentive award | 4,000 | 3,500 | ||||||
Stock compensation expense | 1,747 | 216 | ||||||
Foreign currency losses | 449 | 169 | ||||||
Amortization of deferred gain on sale of vessels | (792 | ) | (792 | ) | ||||
Gain on sale of vessels | (30,755 | ) | (24,688 | ) | ||||
Total expenses | 57,080 | 47,444 | ||||||
Operating income | 73,811 | 64,146 | ||||||
OTHER INCOME (EXPENSES): | ||||||||
Gain on sale of shares in subsidiary | — | 25,323 | ||||||
Interest and finance costs, net | (23,474 | ) | (14,759 | ) | ||||
Interest and investment income | 2,529 | 2,642 | ||||||
Other, net | 210 | (245 | ) | |||||
Total other income (expenses), net | (20,735 | ) | 12,961 | |||||
MINORITY INTEREST | (896 | ) | (2 | ) | ||||
Net Income | $ | 52,180 | $ | 77,105 | ||||
Earnings per share, basic | $ | 1.37 | $ | 2.02 | ||||
Earnings per share, diluted | $ | 1.36 | $ | 2.02 | ||||
Weighted average number of shares, basic | 38,059,142 | 38,079,828 | ||||||
Weighted average number of shares, diluted | 38,323,469 | 38,090,922 | ||||||
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
(Expressed in thousands of U.S. Dollars – except share and per share data)
Comprehensive Income (Loss) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stock- Holders’ Equity | |||||||||||||||||||
BALANCE, December 31, 2004 | $ | 20,176 | $ | 282,451 | $ | 1,136 | $ | 215,758 | $ | 519,521 | ||||||||||||||
Net income | 161,755 | 161,755 | 161,755 | |||||||||||||||||||||
– Exercise of stock options | 18 | 203 | 221 | |||||||||||||||||||||
– Repurchase and cancellation of common stock (2,033,580 shares) | (1,017 | ) | (13,417 | ) | (23,322 | ) | (37,756 | ) | ||||||||||||||||
– Cash dividends declared and paid ($0.975 per share) | (38,486 | ) | (38,486 | ) | ||||||||||||||||||||
– Fair value of financial instruments | 4,265 | 4,265 | 4,265 | |||||||||||||||||||||
– Reclassification of gains on undesignated cash flow hedges | (2,334 | ) | (2,334 | ) | (2,334 | ) | ||||||||||||||||||
Comprehensive income | $ | 163,686 | ||||||||||||||||||||||
BALANCE, December 31, 2005 | $ | 19,177 | $ | 269,237 | $ | 3,067 | $ | 315,705 | $ | 607,186 | ||||||||||||||
Net income | 196,404 | 196,404 | 196,404 | |||||||||||||||||||||
– Exercise of stock options | 6 | 65 | 71 | |||||||||||||||||||||
– Repurchase and cancellation of common stock (286,400 shares) | (143 | ) | (1,872 | ) | (3,246 | ) | (5,261 | ) | ||||||||||||||||
– Cash dividends declared and paid ($1.175 per share) | (44,778 | ) | (44,778 | ) | ||||||||||||||||||||
– Fair value of financial instruments | 3,666 | 3,666 | 3,666 | |||||||||||||||||||||
– Fair value of investments | 3,072 | 3,072 | 3,072 | |||||||||||||||||||||
– Reclassification of gains on undesignated cash flow hedges | (5,087 | ) | (5,087 | ) | (5,087 | ) | ||||||||||||||||||
Comprehensive income | $ | 198,055 | ||||||||||||||||||||||
BALANCE, December 31, 2006 | $ | 19,040 | $ | 267,430 | $ | 4,718 | $ | 464,085 | $ | 755,273 | ||||||||||||||
Net income | 183,171 | 183,171 | 183,171 | |||||||||||||||||||||
– Repurchase and cancellation of common stock (41,600 shares) | (21 | ) | (270 | ) | (1,047 | ) | (1,338 | ) | ||||||||||||||||
– Issuance of 21,000 shares of restricted share units | 10 | (10 | ) | — | ||||||||||||||||||||
– Cash dividends declared and paid ($1.575 per share) | (59,959 | ) | (59,959 | ) | ||||||||||||||||||||
– Two-for-one stock split | 19,030 | (19,030 | ) | — | ||||||||||||||||||||
– Fair value of financial instruments | (25,421 | ) | (25,421 | ) | (25,421 | ) | ||||||||||||||||||
– Fair value of investments | 953 | 953 | 953 | |||||||||||||||||||||
– Reclassification upon sale of investments | (4,025 | ) | (4,025 | ) | (4,025 | ) | ||||||||||||||||||
– Amortization of restricted share units | 5,886 | 5,886 | ||||||||||||||||||||||
Comprehensive income | $ | 154,678 | ||||||||||||||||||||||
BALANCE, December 31, 2007 | $ | 38,059 | $ | 273,036 | $ | (23,775 | ) | $ | 567,220 | $ | 854,540 | |||||||||||||
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE YEAR AND THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(Expressed in thousands of U.S. Dollars)
Year ended December 31, | Three months ended December 31, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net income | $ | 183,171 | $ | 196,404 | $ | 52,186 | $ | 77,114 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation | 81,567 | 59,058 | 21,600 | 16,980 | ||||||||||||
Amortization of deferred dry-docking costs | 3,217 | 4,857 | 64 | 1,036 | ||||||||||||
Amortization of loan fees | 921 | 1,495 | 232 | 640 | ||||||||||||
Amortization of deferred income | (3,168 | ) | (3,168 | ) | (793 | ) | (793 | ) | ||||||||
Amortization of restricted share units | 5,670 | 216 | 1,747 | 216 | ||||||||||||
Change in fair value of derivative instruments | 7,733 | 556 | 4,194 | 1,873 | ||||||||||||
Change in fair value of investments | — | (4,018 | ) | 3,072 | (3,490 | ) | ||||||||||
Gain on sale of vessels | (68,944 | ) | (38,009 | ) | (30,755 | ) | (24,688 | ) | ||||||||
Gain on sale of shares in subsidiary | — | (25,323 | ) | — | (25,323 | ) | ||||||||||
Minority interest | 3,389 | 2 | 896 | 2 | ||||||||||||
Gain on sale of investments | (4,230 | ) | (561 | ) | (3,072 | ) | (66 | ) | ||||||||
Payments for dry-docking | (9,691 | ) | (4,903 | ) | (1,135 | ) | (1,374 | ) | ||||||||
(Increase) Decrease in: | ||||||||||||||||
Receivables | (20,092 | ) | (12 | ) | (7,377 | ) | 3,913 | |||||||||
Inventories | (3,668 | ) | (3,025 | ) | (8 | ) | 906 | |||||||||
Prepaid insurance and other | (1,010 | ) | (657 | ) | 2,660 | 2,524 | ||||||||||
Increase (Decrease) in: | ||||||||||||||||
Accounts payable | 12,630 | 9,253 | (6,867 | ) | (6,092 | ) | ||||||||||
Accrued liabilities | 3,252 | 16,090 | (8,778 | ) | (369 | ) | ||||||||||
Unearned revenue | (136 | ) | 6,743 | 5,523 | 5,407 | |||||||||||
Net Cash provided by Operating Activities | 190,611 | 214,998 | 33,389 | 48,416 | ||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Advances for vessels under construction and acquisitions | (111,090 | ) | (152,767 | ) | (26,187 | ) | 5,036 | |||||||||
Vessel acquisitions and/or improvements | (421,187 | ) | (813,243 | ) | (3,371 | ) | (106,837 | ) | ||||||||
Investments | (1,000 | ) | (4,992 | ) | (1,000 | ) | (1 | ) | ||||||||
Proceeds from sale of investments | 15,203 | 27,647 | — | 11,545 | ||||||||||||
Proceeds from sale of shares in subsidiary | — | 25,323 | — | 25,323 | ||||||||||||
Proceeds from sale of vessels | 142,433 | 88,706 | 59,603 | 57,215 | ||||||||||||
Net Cash (used in)/provided by Investing Activities | (375,641 | ) | (829,326 | ) | 29,045 | (7,719 | ) | |||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Proceeds from long-term debt | 342,345 | 992,282 | — | 118,000 | ||||||||||||
Financing costs | (533 | ) | (2,972 | ) | (12 | ) | (692 | ) | ||||||||
Payments of long-term debt | (86,063 | ) | (292,140 | ) | (37,050 | ) | (96,301 | ) | ||||||||
Proceeds from exercise of stock options | — | 71 | — | 12 | ||||||||||||
Increase in restricted cash | (2,542 | ) | (4,076 | ) | (2,361 | ) | (3,216 | ) | ||||||||
Repurchase and cancellation of common stock | (1,338 | ) | (5,261 | ) | — | (528 | ) | |||||||||
Cash dividend | (59,959 | ) | (44,778 | ) | (31,400 | ) | (23,800 | ) | ||||||||
Net Cash from/(provided by) Financing Activities | 191,910 | 643,126 | (70,823 | ) | (6,525 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 6,880 | 28,798 | (8,389 | ) | 34,172 | |||||||||||
Cash and cash equivalents at beginning of period | 174,567 | 145,769 | 189,836 | 140,395 | ||||||||||||
Cash and cash equivalents at end of period | $ | 181,447 | $ | 174,567 | $ | 181,447 | $ | 174,567 | ||||||||
Interest paid | ||||||||||||||||
Cash paid for interest, net of amounts capitalized | 64,834 | 33,964 | 28,482 | 21,958 |
TSAKOS ENERGY NAVIGATION LIMITED AND SUBSIDIARIES
Selected Consolidated Financial and Other Data (Unaudited)
(In Thousands of U.S. Dollars, except share, per day and fleet data)
Three months ended December 31 | Year ended December 31 | |||||||||||||||
STATEMENT OF INCOME DATA | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Voyage revenues | $ | 130,891 | $ | 111,590 | $ | 500,617 | $ | 427,654 | ||||||||
Commissions | 4,686 | 3,822 | 17,976 | 15,441 | ||||||||||||
Voyage expenses | 16,530 | 14,035 | 72,075 | 69,065 | ||||||||||||
Charter hire expense | 3,507 | 6,149 | 15,330 | 24,461 | ||||||||||||
Vessel operating expenses | 31,512 | 23,657 | 108,356 | 76,095 | ||||||||||||
Depreciation | 21,601 | 16,980 | 81,567 | 59,058 | ||||||||||||
Amortization of deferred drydocking costs | 64 | 1,036 | 3,217 | 4,857 | ||||||||||||
Management fees | 2,522 | 1,951 | 9,763 | 7,103 | ||||||||||||
General and administrative expenses | 2,009 | 1,409 | 4,382 | 3,510 | ||||||||||||
Management incentive award | 4,000 | 3,500 | 4,000 | 3,500 | ||||||||||||
Staff compensation expense | 1,747 | 216 | 5,670 | 216 | ||||||||||||
Foreign currency losses | 449 | 169 | 691 | 279 | ||||||||||||
Amortization of deferred gain on sale of vessels | (792 | ) | (792 | ) | (3,168 | ) | (3,168 | ) | ||||||||
Gain on sale of vessels, net | (30,755 | ) | (24,688 | ) | (68,944 | ) | (38,009 | ) | ||||||||
Total expenses | 57,080 | 47,444 | 250,915 | 222,408 | ||||||||||||
Operating income | 73,811 | 64,146 | 249,702 | 205,246 | ||||||||||||
Gain on sale of shares in subsidiary | — | 25,323 | — | 25,323 | ||||||||||||
Interest and finance costs, net | (23,474 | ) | (14,759 | ) | (77,382 | ) | (42,486 | ) | ||||||||
Interest and investment income | 2,529 | 2,642 | 13,316 | 7,164 | ||||||||||||
Other income/(expense) | 210 | (245 | ) | 924 | 1,159 | |||||||||||
Total other income (expenses), net | (20,735 | ) | 12,961 | (63,142 | ) | (8,840 | ) | |||||||||
Minority interest | (896 | ) | (2 | ) | (3,389 | ) | (2 | ) | ||||||||
Net income | $ | 52,180 | $ | 77,105 | $ | 183,171 | $ | 196,404 | ||||||||
Earnings per share, basic | $ | 1.37 | $ | 2.02 | $ | 4.81 | $ | 5.15 | ||||||||
Earnings per share, diluted | $ | 1.36 | $ | 2.02 | $ | 4.79 | $ | 5.15 | ||||||||
Weighted average number of shares outstanding | ||||||||||||||||
Basic | 38,059,142 | 38,079,828 | 38,075,859 | 38,127,692 | ||||||||||||
Diluted | 38,323,469 | 38,090,922 | 38,234,079 | 38,141,052 | ||||||||||||
BALANCE SHEET DATA | December 31 2007 | December 31 2006 | ||||||||||||||
Cash and cash equivalents | 181,447 | 174,567 | ||||||||||||||
Current assets, including cash | 276,053 | 222,493 | ||||||||||||||
Investments | 1,000 | 14,045 | ||||||||||||||
Advances for vessels | 169,739 | 261,242 | ||||||||||||||
Vessels at cost | 2,127,704 | 1,649,928 | ||||||||||||||
Accumulated Depreciation | (227,521 | ) | (191,281 | ) | ||||||||||||
Vessels’ Net Book Value | 1,900,183 | 1,458,647 | ||||||||||||||
Deferred charges | 15,801 | 13,448 | ||||||||||||||
Total assets | $ | 2,362,776 | $ | 1,969,875 | ||||||||||||
Current portion of long-term debt | 44,363 | 23,117 | ||||||||||||||
Current liabilities, including current portion of long-term debt | 159,265 | 101,430 | ||||||||||||||
Long-term debt, net of current portion | 1,345,580 | 1,110,544 | ||||||||||||||
Deferred income, net of current portion | — | 2,626 | ||||||||||||||
Minority interest | 3,391 | 2 | ||||||||||||||
Total stockholders’ equity | 854,540 | 755,273 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,362,776 | $ | 1,969,875 | ||||||||||||
OTHER FINANCIAL DATA | Three months ended December 31 | Year ended December 31 | ||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net cash from operating activities | $ | 33,389 | $ | 48,416 | $ | 190,611 | $ | 214,998 | ||||||||
Net cash from/(used in) investing activities | $ | 29,045 | $ | (7,719 | ) | $ | (375,641 | ) | $ | (829,326 | ) | |||||
Net cash (used in)/from financing activities | $ | (70,823 | ) | $ | (6,525 | ) | $ | 191,910 | $ | 643,126 | ||||||
TCE per ship per day | $ | 29,935 | $ | 29,796 | $ | 29,421 | $ | 30,154 | ||||||||
Operating expenses per ship per day | $ | 8,542 | $ | 7,811 | $ | 7,669 | $ | 6,979 | ||||||||
Vessel overhead costs per ship per day | $ | 2,597 | $ | 2,081 | $ | 1,565 | $ | 1,162 | ||||||||
11,138 | 9,892 | 9,235 | 8,141 | |||||||||||||
FLEET DATA | ||||||||||||||||
Average number of vessels during period | 43.0 | 37.0 | 41.7 | 33.8 | ||||||||||||
Number of vessels at end of period | 43.0 | 37.0 | 43.0 | 37.0 | ||||||||||||
Average age of fleet at end of period | Years 5.6 | 5.9 | 5.6 | 5.9 | ||||||||||||
Dwt at end of period (in thousands) | 4,670.0 | 4,180.8 | 4,670.0 | 4,180.8 | ||||||||||||
Time charter employment – fixed rate | Days 991 | 688 | 3,959 | 2,606 | ||||||||||||
Time charter employment – variable rate | Days 2,062 | 1,535 | 7,205 | 3,848 | ||||||||||||
Period employment (pool and coa) at market rates | Days 336 | 622 | 1,283 | 3,060 | ||||||||||||
Spot voyage employment at market rates | Days 462 | 460 | 2,243 | 2,499 | ||||||||||||
Total operating days | 3,851 | 3,305 | 14,690 | 12,013 | ||||||||||||
Total available days | 3,958 | 3,401 | 15,213 | 12,335 | ||||||||||||
Utilization | 97.3 | % | 97.2 | % | 96.6 | % | 97.4 | % |
TCE represents voyage revenue less voyage expenses. Commission is not deducted.
Operating expenses per ship per day exclude the two chartered-in vessels and the vessel bare-boat chartered out.
Vessel overhead costs include Management fees, General & Administrative expenses, Staff compensation expense and Management incentive award.