Annual report pursuant to Section 13 and 15(d)

Discontinued Operations

Discontinued Operations
12 Months Ended
Dec. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]  



In order to place increased focus on fishing business and pursue more effective growth opportunities, the Company decided to exit and sell the specialized dredging services currently operated by China Dredging to its affiliate, Hong Long, and the sale was completed on December 4, 2013 with payment in kind consideration of $543.8 million. Pursuant to ASC Topic 205-20, Presentation of Financial Statements-Discontinued Operations, the business of CDGC is considered as a discontinued operation because: (a) the operations and cash flows of CDGC were eliminated from the Company’s operations; and (b) the Company would not have ability to influence the operation or financial policies of CDGC subsequent to the sale.


The payment consideration for the sale consisted of following items:


(a) offset the Company's current $155.2 million promissory note payable to Hong Long which matures on June 19, 2015 and bears an interest rate of 4%;
(b) the fair value of a 25-year lease agreement for the operating rights to 20 fishing vessels, with such rights appraised by an independent third party at fair market value of $216.1 million; and
(c) offset of current accounts of $172.5 million made between the Company and CDGC.


The net assets of CDGC and its subsidiaries at the date of the sale of December 4, 2013 was $236.6 million (after offsetting current accounts of $172.5 million made between the Company and CDGC), the disposal resulted in a net gain of $117.5 million, which was presented as part of additional paid-in capital for the year ended December 31, 2013 as it was sold to a related party with common control.


The results of operation of CDGC and its subsidiaries have been presented as discontinued operations for the years ended December 31, 2013 and 2012. There were no discontinued operations in 2014. The following table provides the financial results included in net income from discontinued operations during the periods presented:


    Years Ended December 31,  
    2014     2013     2012  
 Revenue   $ -     $ 161,497,136     $ 209,619,489  
 Income from discontinued operations before income tax     -       67,251,697       110,805,122  
 Income tax     -       (15,341,035 )     (26,310,694 )
 Net income from discontinued operations   $ -     $ 51,910,662     $ 84,494,428  


The carrying amounts of the major classes of assets and liabilities as of December 4, 2013 (disposal date) were as follows:


    December 4, 2013  
 Cash   $ 84,917,899  
 Other current assets     28,821,788  
 Non-current assets     148,710,213  
 Total assets of discontinued operations   $ 262,449,900  
 Current liabilities   $ 25,873,709  
 Net assets disposed   $ 236,576,191