Contentssamudera.listedcompany.com/misc/ar2008.pdfSamudera Shipping Line LT d 2 Contents rationale...
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Transcript of Contentssamudera.listedcompany.com/misc/ar2008.pdfSamudera Shipping Line LT d 2 Contents rationale...
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Contents
rationale
Corporate profile
Board of directors
Chairman’s message
Corporate information
group Structure
Operations review
Service network
Financial highlights
Fleet List
Financial Contents
03
04
07
10
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as new challenges arise, so will new opportunities. moving forward
in today’s economic climate requires the effort of a cohesive network
supported by a tenacious attitude to succeed. inspired by its
significance, the 2008 Samudera Shipping Line Ltd (Samudera) annual
report features a nautical theme that underpins the company’s focus
in the maritime industry.
in order to weather the storm and safely navigate turbulent waters,
one must be able to embrace change and thrive on new challenges.
Led by a dynamic team that charts a steady course for growth,
Samudera remains committed to deliver service excellence and ride
out the current economic storm, while at the same time capitalising
on emerging opportunities to create value for its staff, customers and
shareholders for the year ahead.
Vision
To become a leading and reputable integrated cargo transportation
company in the markets that we serve
Mission
To provide high quality cargo transportation and logistics services to
excellent customers
To enhance the welfare of employees and the values for shareholders
through sustainable business growth and optimum profit
Values
• We believe that our people are our most important resource
• We believe teamwork is very important, and value individual creativity
and innovation
• We believe in the importance of corporate growth and profit
• We value and provide our customers with high quality services
• We maintain prudence and good corporate governance in conducting
our business
• We care for and act to protect our environment
Building On Strong Foundations
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Corporate Profile
Samudera Shipping Line Ltd (“Samudera”) was incorporated in Singapore in 1993. The Company was converted into a public company on 2nd October 1997 when its shares got listed and quoted on SeSdaQ. Following an approval from the Singapore exchange Securities Trading Limited, its shares have been transferred from SeSdaQ to the mainBoard, where Samudera’s shares are now listed and quoted since July, 2000.
Samudera is a regional Container Shipping line serving the middle east and the indian Sub-continent in the west, South east asia and indo-China at the center and the Far east to the north. This extensive network of services is run from its headquarters in Singapore, with able support from its own offices in dubai and mumbai for the middle east and the indian Sub-continent operations, Bangkok, Klang and Jakarta for the South east asia and indo-China operations, and Shanghai for the Far east operations.
Samudera provides feeder services to main Line Operators between the deep-harbor “hub” ports and the outlying “spoke” ports. it also provides inter-region and intra-region Container Shipping services to the end users, i.e. the manufacturers, buyers, exporters, importers etc.
Singapore and dubai are the main “hub” ports that the Company serves. its regular and punctual services connect the ports of South east asia and the indian Sub-continent with Singapore, while from dubai hub it runs the intra-gulf service serving the “spoke” ports in the upper gulf region as well as regional services linking the gulf region with the indian Sub-continent. Serving several major ports in China, Samudera’s Far east service acts as a bridge
between South east asia and China reflecting the growing intra-asia trade.
in addition to Container Shipping, the group, through its wholly-owned subsidiary Foremost maritime pte Ltd (“Foremost”), is engaged in industrial Shipping. it positions itself as a reliable logistics partner to its industrial customers in distributing their bulk cargo – liquid, gas and dry. in order to provide a reliable and stable sea transportation solution, it invests in modern and young tonnage of size optimum to customer’s needs.
The vessels are then deployed primarily on dedicated basis against medium to long-term contracts, either on Time Charter basis or on the basis of Contract of affreightment. participation in this business segment has allowed the group to diversify and spread its business risks. The group is determined to develop logistics business through organic growth as well as through strategic partnership and alliances. it plans to leverage its regional connectivity and competence in integrated services to develop logistics business regionally.
Over the years, through professional and competent services to its valued customers, the group has been able to develop a well-respected and a well-recognized “Samudera” brand name. Through a combined application of management prudence and growth through diversification, the group is confident of continuing to provide quality services to its customers and value to its shareholders.
Over the years, through professional and competent services to its valued customers, the
group has been able to develop a well-respected and a well-recognized “Samudera” brand name.
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randy eFFendi (1)
executive Chairman mr randy effendi is responsible for the overall management, strategic planning and business development of the Company and its subsidiaries. he is also a member of the nomination Committee of the Company. mr randy effendi has been with the Samudera indonesia group since 1981 and had held several positions prior to becoming its president director. he holds a Bachelor of economics degree (majoring in accountancy) from the university of indonesia and a master in management degree from the asian institute of management, manila, the philippines.
hamdi adnan (2)
executive director and CFOmr hamdi adnan is responsible for the overall finance, administration and personnel functions of the Company and its subsidiaries. Since 1990, mr hamdi held the position of the Corporate managing director – Finance and administration of the Samudera indonesia group. prior to that, he was a principal in ernst & young (indonesia), an international public accounting firm. mr hamdi holds a Bachelor of economics degree (majoring in accountancy) from the university of indonesia.
maSLi muLia (3)
executive directormr masli mulia is responsible for logistics and forwarding business of the group. mr masli joined the Samudera indonesia group in 1971 and had held several positions prior to becoming its Corporate managing director - Forwarding & Warehousing group in 1990. he is also the president director of pT Silkargo indonesia and pT gaC Samudera Logistics which he held from 2003 until now. Beside that, mr masli is the Chairman of asean
Federation of Forwarders associations (aFFa). mr masli was the Chairman of indonesian Forwarders association (inFa) from 2003 to march 2009. in 1980, he obtained the certificate of Ocean-going Officer/master from the indonesian merchant marine academy.
anWarSyah (4)
executive directormr anwarsyah is responsible for the finance, administrative functions, human resources and information technology of the Company and its subsidiaries. he has been with the Samudera indonesia group since 1985 and has held various positions in internal audit, finance, marketing, forwarding and agency services. mr anwarsyah holds a Bachelor of economics degree (majoring in accountancy) from the gadjah mada university in Jogjakarta, indonesia and a master in management degree from the institut pendidikan dan pembinaan manajemen in indonesia.
dhruBaJyOTi daS (5)
executive directormr dhrubajyoti das is responsible for overall commercial activities of the Company. he leads the Company’s efforts in adding new routes and network in its container shipping business. mr das also oversees investor relations activities of the Company. as a director of Foremost and Lng east-West (Singapore), mr das oversees industrial shipping business of the group. he joined the Samudera indonesia group in 1992 and was head of its Corporate Business development prior to his present appointments. mr das holds a Bachelor of Technology (hons) degree from the indian institute of Technology, Kharagpur, india and a master in Business management degree from the asian institute of management, manila, the philippines.
Board of Directors
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aSmari herry prayiTnO (6)
executive directormr asmari herry prayitno is responsible for operations. he served on board the ships of Samudera indonesia group for seven years prior to assuming responsibilities in the office. he joined the Samudera indonesia group in 1979 and was a general manager of its feeder division since 1993. prior to that, he was the general manager of a shipping company engaged in Container Shipping in the region. mr asmari herry holds a Bachelor degree from the merchant marine College in indonesia.
Chng hee KOK (7)
Lead independent and non-executive directormr Chng hee Kok is the Chairman of the audit Committee as well as a member of the nomination and remuneration Committee of the Company. in addition, mr Chng was appointed as the Lead independent director of the Company in February 2008. he is CeO of hartawan holdings Ltd. he graduated with a Bachelor of engineering (First Class honours) degree from the university of Singapore in 1972 and a master of Business administration degree from the national university of Singapore in 1984. he was a member of parliament from 1984 to 2001. mr Chng is a director of a number of public listed companies including people’s Food holdings, pacific Century regional developments Ltd, Full apex holdings Ltd and ChT holdings Ltd.
david Lim TeCK LeOng (8)
independent and non-executive directormr david Lim Teck Leong is the Chairman of the remuneration Committee of the Company. he is also a member of the audit Committee and the nomination Committee of the Company. mr Lim has been in the legal practice since 1982 and is
the senior partner of a law firm in Singapore. he obtained his degree in law from King’s College, London university and qualified as a Barrister-at-Law at gray’s inn, London. mr Lim is a Fellow of the Singapore institute of directors.
anugerah peKerTi (9)
independent and non-executive directormr anugerah pekerti is a member of the audit Committee. he holds a ph.d. in Business administration from the university of Southern California, uSa. mr pekerti has over 30 years of experience in consulting, training and education in uSa, germany and indonesia. his expertise is in the fields of Business ethics and Corporate governance, Organisational development and entrepreneurship. presently, mr pekerti serves as a member of the Board of habitat for humanity international and two corporate boards in indonesia.
Lee Chee yeng (10)
independent and non-executive directormr Lee Chee yeng joined the Company as an independent and non-executive director in 2006. he is the Chairman of the nomination Committee as well as a member of the audit and remuneration Committee of the Company. he holds a degree in Business administration, First Class honours from the university of Singapore. mr Lee has many years of experience in container terminals, multi-purpose terminals, cargo logistics and airport services. as director (Operations)/director (information Systems), he was instrumental in the rapid growth of pSa Container Terminals and the development of strategic systems like CiTOS System and pOrTneT System. he was awarded the public administration medal (gold). he is presently the CeO of St Luke’s hospital.
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Staying On Course For greater Opportunities
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Chairman’s Message
oVerView2008 began on a strong note, with demand growth showing good promise. however, with the gathering of stormy clouds during the year, the strong cargo flow of 2007 and early 2008 soon became a distant memory. By end of 2008, global trade had dwindled, and governments around the world were working overtime in an attempt to stave off a major recession. Today, the important asia-europe trade route is experiencing a slow down and the world’s major ports are seeing a drop in throughput. Weighed down by a combination of capacity oversupply, falling demand, and a credit-tightening environment, the container shipping industry is facing one of its most challenging times.
FinanCial reViewall through the year, Samudera was doing what it does best - adapting and responding swiftly to ever-changing operating conditions, as well as being prudent in our cost management. as a result, we were able to deliver another set of profitable results for 2008. This is the 13th consecutive year of profitable performance since our listing on the Singapore exchange in 1997.
On the back of a 17.5% increase in revenue to uS$443.3 million, our net profit rose 29.1% to uS$26.7 million. The rise in revenue was driven by an increase in container volume handled and rates. The better freight rates were achieved primarily in our inter-island container shipping business in indonesia.
On the whole, revenue contribution from our container shipping business rose 19.4% to uS$391.8 million. meanwhile, industrial shipping revenue increased 6.7% to uS$44.5 million.
in line with the rise in revenue, our cost of services increased 16.6% to uS$390.3 million. This was due mainly to an increase in bunker expenses, as well as higher cargo expenses, higher charter hire rates, and an increase in depreciation cost from new vessels delivered during the year.
despite the higher cost of services, gross profit improved 24.6% to uS$52.9 million in 2008.
administrative expenses increased 34.7% to uS$11.6 million due mainly to the full year impact of its offices in Kolkata, madras and ho Chi minh City which were established in the previous year, as well as fees paid in relation to the acquisition of vessels delivered during the year. These acquisitions were paid for, partly by cash and partly by bank loans, and as a result, finance expenses in 2008 increased 9.7% over 2007, while cash balances and finance income declined.
as a result of overall good cost management, our profit after tax increased 29.1% to uS$26.8 million, as compared to uS$20.7 million achieved in 2007. earnings per share increased 27.4% to 4.83 uS cents in 2008, from 3.79 uS cents in the previous year. net asset value per share rose 5.4% to 42.25 uS cents in 2008, from 40.07 uS cents in 2007.
DiViDenDin line with our positive results, the Board has proposed a first and final tax-exempt dividend of 1.5 Singapore cents per share. This translates to returns of some S$8.1 million to our shareholders, and represents a payout ratio of about 20%.
all through the year, Samudera was doing what it does best - adapting and responding swiftly
to ever-changing operating conditions, as well as being prudent in our cost management
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Business reViewOur overall container volume handled grew 5.9% to 1.51 million Teus in 2008, from 1.42 million Teus handled in the previous year. This was mainly due to additional liftings from our new yangon express (ygX) service, an additional shuttle service between Bangkok and Singapore, as well as an increase in capacity for our indonesia services. Our throughput at pSa international’s (pSa) terminals in Singapore increased 5% to 1.3 million Teus, in tandem with the port operator’s 7% growth in containers handled to 29.0 million Teus, as compared to 2007. Once again, we were commended by pSa for being amongst the top 10 vessel operators in terms of container throughput, calling at its terminals in Singapore.
a new shuttle service, the yangon express (ygX) service was introduced in the course of the year. This new service enables us to provide connectivity from yangon to both the east and west coast of the indian Sub-continent, South east asia, as well as China.
as weak demand from the West took its toil on China export volumes in the second half of the year, the group made a prudent decision to withdraw our China Straits india service in december 2008. We, however, continued to meet our customer demands on this route via slot exchanges and nvOCC (non vessel operating common carrier) arrangements.
in line with our efforts to achieve better flexibility in fleet deployment and stability in overall vessel operating cost for our regional shipping operations, we acquired three container vessels with capacity ranging from 1,100 Teus to 1,740 Teus and also took delivery of five container vessels with capacity ranging from 1,050 Teus to 1,700 Teus under long term time charter contracts which were committed to in 2005. These vessels have been deployed on various regional services.
as for our inter-island container shipping in indonesia, we experienced a healthy demand and utilization rate throughout the year except for the last quarter. in support of the business growth, we demonstrated our strong commitment to the business by acquiring two additional container ships with capacity of about 200 Teus each, bringing our total number of owned ships in indonesia to six.
For industrial shipping, our strategy to acquire suitable vessels and to deploy them on medium to long-term contracts has thus far generated a stable source of income. Building on our existing fleet, we have placed orders for two bulk carriers of 57,700 dWT (deadweight tonnes) each, to be delivered in 2011.
meanwhile, Lng Tangguh Towuti, a 145,700 CBm Lng (liquefied natural gas) vessel, in which we hold a 25% stake, began operations in the fourth quarter of 2008. This vessel has been chartered out on a 20-year period and is engaged in the transportation of Lng from indonesia to north asia and north america.
outlook & strategyThe shipping landscape of 2009 is likely to be characterized by falling demand, excess capacity and credit tightening. economic indicators point to tough times ahead, with the World Bank predicting that world trade will shrink 2% this year, the first decline since 1982. The recession is very real, and we are bracing ourselves for a slowdown in demand for our regional transportation services.
To mitigate the effects of the market contraction, we will remain open to the possibilities of capacity rationalization on our various services. We are indeed well-positioned to pursue this rationalization as our combination of owned and leased container vessels in our fleet gives us the added flexibility to adapt quickly to changing market demand. in the first
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quarter of 2009, we terminated our Korea malaysia Straits (KmS) service and West india express (WiX) service, but continued to meet the needs of our customers on these rationalized trade routes via slot exchanges and nvOCC (non vessel operating common carrier) arrangements.
Being consistent with our stated strategy of balancing the ratio between the vessels we own, and those that are hired under long- and short-term charter arrangements, we will remain open to purchase opportunities of suitable container vessels. We believe this will enable us to better establish a clearer cost visibility, which is paramount in this volatile shipping environment.
price of bunker has fallen significantly in the last quarter of 2008, as compared to the first nine months of 2008, and this has led to the removal of bunker surcharges. as the bunker prices are expected to remain volatile, we have hedged part of our bunker requirement for 2009, so as to ensure some degree of stability in our vessel operating costs.
Several main-line container shipping companies, after having laid up excess capacity, have recently announced plans to increase asia-europe freight rates. We believe that any such increase in long-haul freight rate is expected to have a positive cascading effect on feeder operators like Samudera.
Our industrial shipping business should continue to enjoy a steady income stream as a significant proportion of the vessels have been chartered out on medium to long-term contracts. in addition, our 25%-owned Lng vessel should contribute positively to the industrial shipping income.
aCknowleDgeMentin spite of the tough operating conditions toward the end of 2008, Samudera was able to remain profitable for the full year 2008. We believe that this was only possible with the support of all our valued customers, agents, and business associates throughout the year, and would like to extend our deepest gratitude to all of you.
The group’s performance was also contributed by the hard work and tenacity of all our colleagues and staff. For that, i would like to thank our employees for their unwavering perseverance and immense contributions in 2008. To our shareholders, thank you for your continued belief and confidence in us. The outlook for the year ahead is challenging, but world population is increasing and markets move in cycles. Cargo has to move and trade will go on, and at some point there will be a cyclical upturn. With all our stakeholders journeying alongside us, we will do our very best to not only survive this downturn, but to also emerge stronger with the market turnaround.
randy effendiexecutive Chairman
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BOard OF direCTOrS executiverandy effendi (Chairman)hamdi adnanmasli muliaanwarsyahdhrubajyoti dasasmari herry prayitno
non-executiveChng hee Kok (Lead independent director)david Lim Teck Leonganugerah pekertiLee Chee yeng
audiT COmmiTTee Chng hee Kok (Chairman) david Lim Teck Leonganugerah pekertiLee Chee yeng
nOminaTiOn COmmiTTee Lee Chee yeng (Chairman)Chng hee Kokdavid Lim Teck Leongrandy effendi
remuneraTiOn COmmiTTee david Lim Teck Leong (Chairman)Chng hee KokLee Chee yeng
SeCreTary yeo poh noi Caroline
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partner-in-Chargenelson Chen Wee Teckappointed with effect from Financial year 2007
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Corporate information
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COnTainer Shipping
induSTriaL Shipping
OTherS
1. Samudera Shipping Line Ltd owns 16% of the issued capital and Foremost maritime pte Ltd owns 17% of the issued capital. however, the group has control over the management of Samudera emirates Shipping LLC.
2. Silkargo Logistics (Singapore) pte Ltd contributes 49% of issued share capital. The group has control over the financial and operating policies via majority representation on the board of directors of SiLKargo LLC.
3. Samudera Shipping Line Ltd owns 49% of the issued capital. however the group has control over the management of Samudera Traffic Co., Ltd.
* Lng east-West Shipping refers to Lng east-West Shipping Company (Singapore) pte Ltd
FOremOST mariTime pTe LTd100%
pT Samudera Shipping ServiCeS95%
Lng eaST-WeST Shippping *25%
Samudera Shipping Line(vieTnam) CO., LTd51%
Samudera indOneSiaSingapOre pTe LTd100%
Samudera emiraTeSShipping LLC 33%
Samudera Shipping Line(india) pvT LTd 100%
gaLaXy Shipping ServiCeSSdn Bhd60%
pT Jardine TangguhTranSpOrT ServiCeS40%
SiLKargO LOgiSTiCS(SingapOre) pTe LTd100%
SiLKargO LLC49%
Samudera TraFFiC CO., LTd49%
saMuDera sHiPPing line ltD
group structure
Strengthening Bonds Of partnership
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operations review
COnTainer ShippingSamudera’s container shipping business saw mixed results from its various trade areas in 2008. although there were significant volume increases in some trades, these were partially dragged down by smaller growth quantum in other areas. The net impact was a 5.9% growth in container shipping to 1,507,528 Teus in 2008, compared to 1,424,906 Teus in the previous year.
The group enjoyed an increase in volume from its indonesia trade, which together with its inter-island container shipping business within indonesia, contributed some 52% to total lifting. Contribution from South east asia (excluding indonesia) remained at 31%, contribution from the middle east / indian Sub-continent region was unchanged at 13% after considering the full year impact of Chittagong express service which was launched in march 2007. Far east contribution fell marginally from 5% in 2007 to 4% in 2008 owing to a reduction in capacity deployed in that trade lane in 2008 compared to 2007.
Container volume contribution from the group’s myanmar trade was a consequent of its introduction of the yangon express (ygX) service in July 2008. This service links myanmar directly with markets in the Southeast asia region, and is with the deployment of one 1,100–Teu vessel which calls at the ports of Singapore, port Klang and yangon, every 12 days.
The group added five container vessels to its books in 2008. Sinar Bima, a 1,100-Teu vessel is currently deployed on the Singapore-Kolkata-haldia service, while Sinar Sumba and Sinar Sabang, each with a carrying capacity of 1,740-Teu, have been
deployed on the Singapore-Jakarta service. Two 200-Teu vessels, Sinar ende and Sinar ambon, have been deployed on the group’s inter-island trade in indonesia.
in addition to the vessels acquired, the group also took delivery of five container vessels on long-term time-charter during the year. These comprised two 1,700–Teu vessels and three 1,060–Teu vessels, which have since been deployed on various other services.
in anticipation of a prolonged weakness in market conditions, the group has taken steps to rationalize its shipping services since december 2008. Services that have been terminated between then and march 2009 include the China-india (CSi) service, the Korea malaysia Straits (KmS) service and the West india express (WiX) service. in addition, the group has also reduced the number of vessels deployed on its Bangkok service from four to three.
as part of the service review and rationalization process, the group has also terminated its Singapore-Karachi shuttle service and in replacement, introduced a new service linking Singapore, nhava Sheva, Karachi, pipavav, Colombo, penang and port Klang in early 2009. This new service is being offered in cooperation with a partner, who has deployed two vessels of 2500 Teus each, while the group has contributed one vessel of the same capacity.
as of 31 december 2008, Samudera has a fleet of 28 container vessels with a total carrying capacity of 28,965 Teus. Of these, 9 vessels are owned and 19 are chartered-in. The group calls at 38 ports and
as of 31 december 2008, Samudera has a fleet of 29 container vessels with a total
carrying capacity of 28,965 Teus
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operates 31 main services, either by the deployment of its own vessels, chartered vessels or through slot exchange arrangements.
moving forward, the group will look out for opportunities to acquire container vessels of the 1,000-Teu range, in view that these vessels continue to be in demand on short-haul trade routes, and that prices are falling to relatively attractive levels.
induSTriaL ShippingSamudera is committed to being a reliable partner for high quality and safe transportation of bulk cargo in asia. The group makes it a point to invest in modern and young vessels with varying tonnages that best match the ongoing needs of Samudera’s customers. These vessels are primarily deployed on a dedicated basis, via medium- to long-term contracts, by way of time-charter, contracts of affreightment, and voyage-charter contracts. Thus far, these contracts for industrial shipping have provided a steady stream of income for the group.
Building on the group’s existing industrial shipping fleet, the group placed orders for two 57,700 dWT (deadweight tonnes) bulk carriers, from Korea-based STX Shipbuilding for uS$97.6 million. These bulk carriers have been scheduled for delivery in 2011 and will subsequently be deployed on time-charter contracts. meanwhile, Sinar Kintap, a 8,047 dWT (deadweight tonnes) coal deck ship was disposed off for uS$4.8 million during the year.
in response to cabotage regulations in indonesia, which from 1 January 2009, has restricted the transportation of chemical cargo within the country to indonesia-flagged tankers, the group has re-flagged some of its Singapore-flagged chemical tankers into indonesia-flag vessels. This will enable Samudera to continue
to serve its existing customers in indonesia, and yet have the flexibility to deploy them on international routes, depending on market needs.
Lng Tangguh Towuti, a 145,700 CBm membrane type liquefied natural gas (Lng) vessel, in which the group holds a 25% stake, began operations in the fourth quarter of 2008. This vessel was developed under a joint venture with nyK Line and Sovcomflot, and is currently being chartered out to Bp Berau Limited on a 20-year period, for the transportation of Lng from indonesia to north asia and north america.
The group’s industrial shipping fleet stands at 20 at the close of 2008. This comprises nine chemical tankers with capacities ranging from 2,700 dWT to 11,200 dWT; two oil tankers of 17,700 dWT each, two gas tankers, four coal / bulk carriers, two offshore service boats and one oil barge.
OTherSTo date, the group has subsidiaries situated throughout its entire container shipping service network, such as in dubai in the middle east, india, as well as Singapore, malaysia, indonesia, vietnam and Thailand in the South east asia region.
The group through its subsidiary offices provide agency services, inbound and outbound logistics, as well as third party logistics services including supply chain management.
These offices now handle a large part of the group’s container volumes and in general, help to better manage the group’s increasingly geographically diversified container shipping business.
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SOuTh eaST aSia We have 8 services covering main ports at Jakarta, Surabaya, Semarang, Belawan, palembang and panjang with sailing frequency ranging from 1 to 3 sailings per week. There are 8 services serving Singapore, malaysia, Thailand and vietnam with sailing frequency of 5 sailings per week.
indian SuB-COnTinenTWe operate 5 services with a weekly sailing covering india, Bangladesh, Sri Lanka and pakistan.
middLe eaSTWe have 1 sailing per week (every 9 days) connecting dubai hub in the middle east to Kandla in india.
Far eaSTThere are 2 services with a weekly sailing frequency serving hong Kong, Korea, South & north China ports; with direct calls from hong Kong, Shanghai, ningbo, Qingdao, Busan and inchon to malaysia and Singapore.
inTer-iSLand indOneSiaWe have 5 services covering main ports of Jakarta, Surabaya, pontianak, Banjarmasin and makassar with sailing frequency ranging from 1 to 2 sailings per week.
nvOCC in addition to the ports served by these services, where we deploy vessels, we also serve other ports on non-vessel Operating Common Carrier (nvOCC) basis.
service network by region (as at 31 december 2008)
maintaining value For Our Shareholders
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0
Financial Highlights
TurnOver (uS$mil) prOFiT BeFOre TaX (uS$mil)
neT prOFiT (uS$mil) TOTaL aSSeTS (uS$mil)
352.8
0 0
0
200.020.0
100.0
20.0
400.0
40.0
200.0
40.0
300.0
100.010.0
50.0
10.0
300.0
30.0
150.0
30.0
50.0
250.0
350.0
400.0
450.0
500.0 60.0
500.050.0
407.4
32.6
221.4
32.2
50.7
258.5
49.6
408.8
12.2
303.8
9.8
377.2
22.1
321.9
20.5
443.3
04 05 06 07 08
04 05 06 07 08
04 05 06 07 08
04 05 06 07 08
28.4
428.3
26.0
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Fleet list
induSTriaL Shipping (as at 1 march 2009)
name Of vessel Flag Capacity Control
Oil Tanker
01 Sinar emas Singapore 17,726 dWT Owned
02 Sinar Jogya Singapore 17,766 dWT Owned
Chemical Tanker
03 Sinar Busan Singapore 10,600 dWT Owned
04 Sinar agra Singapore 11,244 dWT Owned
05 Sinar Bontang indonesia 3,785 dWT Owned
06 Sinar Labuan indonesia 3,519 dWT Owned
07 Sinar Bunyu Singapore 3,426 dWT Owned
08 Sinar Johor indonesia 3,098 dWT Owned
09 Sinar Bukom indonesia 3,097 dWT Owned
10 Sinar Tokyo Singapore 2,949 dWT Owned
11 Sinar anyer indonesia 2,781 dWT Owned
gas Tanker
12 Lng Tangguh Towuti Singapore 145,700 CBm Owned
13 amanah indonesia 1,560 CBm Owned
marine Off Shore Support unit
14 aquatic Conserver indonesia 400 dWT Owned
15 Cumawis 110 indonesia 350 dWT Owned
16 nurhidayah indonesia 102 dWT Owned
dry Bulk
17 hull no. S-1334 ** Singapore 57,700 dWT Owned
18 hull no. S-1339 ** Singapore 57,700 dWT Owned
19 Sinar Tuban indonesia 5,500 dWT Owned
20 Sinar Barito indonesia 4,700 dWT Owned
21 Sinar Borneo indonesia 4,700 dWT Owned
22 Sinar Banjar indonesia 4,700 dWT Owned
Total 215,843 dWT
147,260 CBm
** Scheduled for delivery in the first half of 2011
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COnTainer Shipping (as at 1 march 2009)
name Of vessel Flag Capacity Control
01 Thomas mann Liberia 2,586 Teus Chartered
02 Sinar Sabang Singapore 1,740 Teus Owned
03 Sinar Sumba Singapore 1,740 Teus Owned
04 Sinar Subang panama 1,708 Teus Chartered
05 Sinar Sangir panama 1,700 Teus Chartered
06 Sinar Sunda panama 1,560 Teus Chartered
07 Sinar Biak panama 1,471 Teus Chartered
08 helmuth rambow antigua 1,118 Teus Chartered
09 Sinar Bima Singapore 1,118 Teus Owned
10 Sinar Buton panama 1,060 Teus Chartered
11 Sinar Bromo panama 1,060 Teus Chartered
12 Sinar Bintan panama 1,054 Teus Chartered
13 Sinar Bontang panama 1,054 Teus Chartered
14 Sinar Solo panama 1,054 Teus Chartered
15 Sinar Bandung panama 1,054 Teus Chartered
16 Sinar Banten panama 1,054 Teus Chartered
17 Sinar Bali Singapore 1,048 Teus Chartered
18 Sinar Bitung panama 1,032 Teus Chartered
19 Sinar padang Singapore 495 Teus Chartered
20 Sinar ambon indonesia 287 Teus Owned
21 Sinar demak indonesia 265 Teus Owned
22 Sinar Jambi indonesia 265 Teus Owned
23 Sinar Bintan indonesia 241 Teus Owned
24 Sinar padang indonesia 241 Teus Owned
25 Sinar ende indonesia 152 Teus Owned
Total 26,157 Teus
remark
Sinar demak (265 Teus), Sinar Jambi (265 Teus), Sinar Bintan (241 Teus), Sinar padang (241 Teus) and Sinar ende (152 Teus) with indonesia flag are deployed for inter-island container shipping within indonesia.
Corporate governance report 21
interested person Transactions 30
Key executives 31
risk management policies and processes 33
directors’ report 35
Statement by directors 38
independent auditors’ report 39
Balance Sheets 41
Consolidated profit and Loss account 43
Consolidated Statement of Changes in equity 44
Consolidated Statement of Cash Flows 46
note to the Financial Statements 48
Shareholdings Statistics 106
notice of annual general meeting 108
notice of Books Closure 112
proxy Form 115
FinanCiaLS
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Corporate Governance Report
Samudera Shipping Line Ltd (the “Company”) is committed to raising the standard of corporate governance to protect the interest of its shareholders and to promote investors’ confidence. This report describes the Company’s corporate governance processes and activities with specific reference to the Code of Corporate governance (the “Code”).
BoaRd of diReCtoRs (PRinCiPles 1, 2, 3 and 6)
The Company has an effective Board to lead and control its operations and affairs. The Board of directors (the “Board”) consists of ten directors, four of whom are independent and non-executive directors, making up more than one-third of the Board. The objective judgment of the independent and non-executive directors on corporate affairs and their collective experience and contributions are valued by the Company. The Board is of the view that the current board size is appropriate, taking into account the nature and scope of the Company’s operations.
The Board, as a whole, combines people with industry knowledge, general commercial experience, accounting, financial, legal and capital market background, all of whom as a group, provides the Board with a good mix of the necessary experience and expertise to direct and lead the group:
randy effendi (executive Chairman)hamdi adnan (executive director and CFO)masli mulia (executive director)anwarsyah (executive director)dhrubajyoti das (executive director)asmari herry prayitno (executive director)Chng hee Kok (Lead independent and non-executive director)david Lim Teck Leong (independent and non-executive director)anugerah pekerti (independent and non-executive director)Lee Chee Yeng (independent and non-executive director)
The Board met five times to approve the annual budget, review the quarterly performance, and full-year results. ad-hoc meetings are convened when circumstances require. The Company’s articles of association (the “articles”) allow a board meeting to be conducted by way of a tele-conference. Frequency of Board meetings and Committee meetings held during the financial year ended 31 december 2008 (“FY2008”) are set out in Table “a”.
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BoaRd of diReCtoRs (PRinCiPles 1, 2, 3 and 6) (Cont’d)
The principal functions of the Board are:
• To supervise the management of the business and affairs of the group and the performance of management;
• To review the financial performance of the group;
• To review and approve the broad policies, strategies and financial objectives of the Company;
• To oversee the processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance;
• To approve the nomination of board directors and appointment of key executives;
• To review and approve annual budgets, major funding proposals, potential investment and divestment proposals, including material capital investment; and
• To assume responsibility for corporate governance.
To enable the Board to fulfill its responsibilities, management provides the Board with a management report containing complete, adequate and timely information prior to Board meetings. Should the directors, whether as a group or individually, need independent professional advice, the Company will, upon direction by the Board, appoint a professional advisor selected by the group or the individual to render the advice. newly appointed directors are given orientation briefings by management on the business activities of the group and its strategic directions, so as to familiarise them with the group’s operations and encourage effective participation in Board discussions. all directors are updated on major milestones of the group.
The Company encourages all existing directors to attend seminars, conferences or any courses in connection to new laws, regulations and commercial risks conducted by professional bodies including active participation in the Singapore institute of directors.
mr randy effendi, as the executive Chairman of the Company, plays a pivotal role in steering the strategic direction and growth of the group’s business. Strategic decisions are made in consultation with the Board. Objectivity and independence of Board decisions are maintained through the independent non-executive directors who have demonstrated a high level of commitment in their role as directors.
as Chairman, mr randy effendi is also responsible for:
(a) the workings of the Board, ensures that board meetings are held when necessary and sets the agenda of the Board meetings in consultation with the other directors and management; and
(b) reviewing the Board papers before they are presented to the Board and ensures that the Board members are provided with complete, adequate and timely information.
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BoaRd of diReCtoRs (PRinCiPles 1, 2, 3 and 6) (Cont’d)
although the group does not have a designated Chief executive Officer (“CeO”), as the Chairman and the most senior executive, mr randy effendi performs the duties and responsibilities of a CeO and bears executive responsibility for the day-to-day operation of the group’s business which is carried out with the assistance of the other executive directors. To enhance the Company’s corporate governance processes, the nominating Committee (“nC”) had recommended and the Board had accepted, the appointment of Chng hee Kok as the Company’s lead independent director in February 2008.
in addition, the Board had appointed ms Shanti Lasminingsih poesposoetjipto (“ms Shanti”) as a Senior advisor to the group, as announced on 2 June 2008, to provide professional advice to the top management of the group. The Board was of the opinion that the group would benefit immensely from ms Shanti’s knowledge, professionalism and management experience in several private and governmental organisations.
management provides Board members with complete, adequate and timely information prior to Board meetings and on an on-going basis. in addition, all relevant information on the group’s annual budgets, financial statements, material events and transactions complete with background and explanations are circulated to directors as and when they arise.
The directors have separate and independent access to the Company’s senior management and the advice and services of the Company Secretary. The directors may, in appropriate circumstances, seek independent professional advice concerning the Company’s affairs.
The Company Secretary attends all meetings of the Board and Committees and ensures that Board procedures are followed. The Company Secretary also ensures that requirements of the Companies act and all other rules and regulations of the Singapore exchange Securities Trading Limited (“SgX-ST”) are complied with.
nominatinG Committee (“nC”) (PRinCiPles 4 and 5)
a majority of the members of the nC are independent and non-executive directors. The nC is chaired by mr Lee Chee Yeng, an independent and non-executive director, whilst the other members of the nC are messrs Chng hee Kok, david Lim Teck Leong, who are also independent and non-executive directors, and mr randy effendi.
The nC is regulated by a set of written Terms of reference and is responsible for making recommendations to the Board on all Board appointments and re-appointments through a formal and transparent process, which includes internal guidelines to address the conflict of competing time commitments that are faced by directors with multiple board representations. in respect of re-nominations, the nC will have regard to the individual director’s contribution and performance as an independent director and whether the director has adequate time and attention to devote to the Company, in the case of directors with multiple board representation.
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nominatinG Committee (“nC”) (PRinCiPles 4 and 5) (Cont’d)
its key functions include:
• To determine the independence of each director, namely the independent directors;
• To establish procedures for evaluation of the Board’s performance and propose objective performance criteria which shall be approved by the Board;
• To conduct a formal assessment on the effectiveness of the Board as a whole and to assess the contribution by each individual director to the effectiveness of the Board, particularly when a director serves on multiple Boards;
• To ensure that all Board appointees undergo an appropriate induction programme;
• To regularly review the Board structure, size and composition having regard to the scope and nature of the operations and the core competencies of the directors as a group; and
• To establish procedures for and make recommendations to the Board on the appointments of new directors, including making recommendations on the composition of the Board generally and the balance between executive and non-executive directors appointed to the Board and re-appointments.
The nC recommends all appointments of directors to the Board, after taking into account the following factors:
(a) the group’s strategic and business plans and operational requirements; and
(b) the suitability of candidates for Board appointment, based on their skills, expertise and experience.
under the Company’s articles of association, each director is required to retire at least once in every three years by rotation and all newly appointed directors will have to retire at the next annual general meeting following their appointment. The retiring directors are eligible to offer themselves for re-election.
during FY2008, the nC had met twice to review and recommend the re-election of directors retiring pursuant to the Company’s articles of association, and performing an annual evaluation of the Board’s performance as a whole.
The nC has recommended the re-election of three directors, messrs hamdi adnan, david Lim Teck Leong and Lee Chee Yeng, who are retiring under the Company’s articles of association and the re-appointment of mr anugerah pekerti, who is retiring pursuant to Section 153(6) of the Companies act, Cap. 50, at this forthcoming annual general meeting (“agm”). The Board has accepted the nC’s recommendation and the four retiring directors will be offering themselves for re-election.
The nC has established evaluation procedures and performance criteria for the assessment of the Board’s performance as a whole. The Board is of the view that the financial indicators set out in the Code as performance criteria for the evaluation of directors’ performance are more a measure of management’s performance and hence less appropriate for non-executive directors and the Board’s performance as a whole.
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RemuneRation Committee (PRinCiPle 7)
The remuneration Committee (“rC”) comprises three members, all of whom are independent and non-executive directors. The rC is chaired by mr david Lim Teck Leong and the other members of the rC are messrs Chng hee Kok and Lee Chee Yeng.
The rC is regulated by a set of written Terms of reference. its key functions include:
• To recommend to the Board a framework of remuneration for executive directors and key executives that are competitive and sufficient to attract, retain and motivate key executives of the required quality to run the Company successfully; and
• To review and determine the specific remuneration packages and terms of employment for each executive director and senior executives.
during FY2008, the rC met once to review and determine the remuneration packages of the executive directors and key executives, to ensure that directors are adequately but not excessively remunerated, and to review and recommend the non-executive directors’ fees, which are subject to the shareholders’ approval at the agm. The rC also considered, in consultation with the Chairman, amongst other things, their responsibilities, skills, expertise and contribution to the Company’s performance and whether the remuneration packages are competitive and sufficient to ensure that the Company is able to attract and retain the best available executive talent.
no individual director is involved in fixing his own remuneration. non-executive directors are paid directors’ fees annually on a standard fee basis.
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disClosuRe on RemuneRation (PRinCiPles 8 and 9)
RemuneRation of diReCtoRs and key exeCutives who aRe not diReCtoRs
The fees and remuneration paid to each of the directors of the Company and top five key executives who are not directors (“key executives”) for the financial year ended 31 december 2008 are set out below. a breakdown of the level and mix of the remuneration payable to each individual director and top 5 key executive for FY2008 are as follows:
Range of Remuneration name of Personnel salary Bonus Benefits fees
Below Key Executives
US$250,000 Cho Wee Keong 60% 6% 34% 0%
Hermawan Fridiana Herman 47% 14% 39% 0%
Lim Kee Hee 85% 8% 7% 0%
Patrick Ong Yaw Teh 45% 5% 50% 0%
Tan Meng Toon 78% 8% 14% 0%
Independent Non-Executive Directors
Anugerah Pekerti 0% 0% 0% 100%
Chng Hee Kok 0% 0% 0% 100%
Lee Chee Yeng 0% 0% 0% 100%
David Lim Teck Leong 0% 0% 0% 100%
US$250,001 Executive Directors
to Anwarsyah 34% 48% 18% 0%
US$500,000 Asmari Herry Prayitno 29% 71% 0% 0%
Dhrubajyoti Das 36% 46% 18% 0%
Above Executive Directors
US$500,000 Hamdi Adnan 18% 82% 0% 0%
Masli Mulia 18% 82% 0% 0%
Randy Effendi 17% 83% 0% 0%
There are no employees who are immediate family members of the directors and CeO who earn in excess of S$150,000 per year.
The Board is of the view that it is not necessary to present the remuneration policy at the annual general meeting for shareholders’ approval.
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audit Committee (PRinCiPle 11)
The audit Committee (“aC”) comprises four members, all of whom are independent and non-executive. The Chairman of the aC is mr Chng hee Kok and the other members of the aC are messrs david Lim Teck Leong, anugerah pekerti and Lee Chee Yeng.
The Board is of the opinion that the aC members are appropriately qualified to discharge their responsibilities. Two of the members, messrs Chng and anugerah pekerti, have accounting or related financial management background, while mr Lim has a legal background and mr Lee’s expertise is in container terminals and cargo logistics. all members are familiar with financial statements.
The aC met five times during FY2008 to review the budget for the year, the audit plan/report, the audit findings, the report on interested person transactions, the quarterly report on internal audit activities for the year, including updates on the findings in relation thereto and the announcements of the quarterly and full-year results before being approved by the Board for release to the SgX-ST.
The aC is authorised by the Board to investigate any matters within its terms of reference. it has unrestricted access to information pertaining to the group, to both internal and external auditors, and to all employees of the group. reasonable resources have been made available to the aC to enable it to discharge its duties properly.
The key responsibilities of the aC include the following:
• To review the external and internal audit plans, including the nature and scope of the audit before the audit commences, the internal auditors’ evaluation of the Company’s system of internal controls, the external and internal audit reports and management letter issued by the external auditors (if any) and management’s response to the letter;
• To review the announcements of the quarterly and annual results prior to their submission to the Board for approval for release to the SgX-ST;
• To review interested person transactions in accordance with the requirements of the Listing rules of the SgX-ST;
• To review all non-audit services provided by the external auditors to determine if the provision of such services would affect the independence of the external auditors; and
• To review and recommend the re-appointment of the external auditors.
The aC has met with the external auditors, without the presence of the Company’s management. it also examined any other aspects of the Company’s affairs, as it deems necessary where such matters relate to exposures or risks of regulatory or legal nature, and monitor the Company’s compliance with its legal, regulatory and contractual obligations.
The aC has reviewed the non-audit services provided by the external auditors, messrs ernst & Young LLp, and is of the opinion that the provision of such services does not affect their independence. The aC has recommended the re-appointment of messrs ernst & Young LLp as external auditors at the forthcoming annual general meeting.
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inteRnal ContRols and inteRnal audit (PRinCiPles 12 and 13)
The Board believes in the importance of maintaining a sound system of internal controls, including financial, operational and compliance controls, and risk management systems to safeguard the interests of the shareholders and the group’s assets. To achieve this, internal reviews are constantly being undertaken to ensure that the system of internal controls maintained by the group is sufficient to provide reasonable assurance that the group’s assets are safeguarded against loss from unauthorised use or disposition, transactions are properly authorised and proper financial records are being maintained.
The aC has reviewed the group’s financial controls and risk management policies and processes, based on the reports of the external auditors, and is assured that adequate internal controls are in place.
as for the operational and compliance controls, the group has periodically reviewed these control areas through the various heads of department, and has continuously made improvements with the assistance of the internal audit department. The internal auditor reports to the aC on audit matters. The internal auditor has adopted the Standards for professional practice of internal auditing set by The institute of internal auditors.
To ensure the adequacy of the internal audit function and that it is adequately resourced, the aC reviews the internal audit activities on a yearly basis.
CommuniCation with shaReholdeRs (PRinCiPles 10, 14 and 15)
The Board is mindful of the obligation to provide timely and fair disclosure of material information. The Board is accountable to the shareholders while the management is accountable to the Board.
results and other material information are released through the SgXnet system on a timely basis for the dissemination to shareholders and the public in accordance with the requirements of the SgX-ST. a copy of the annual report and notice of the annual general meeting (“agm”) are sent to every shareholder of the Company. The notice is also advertised in the newspapers, released via SgXnet and made available on the Company’s website. during agms, shareholders are given opportunities to speak and seek clarifications concerning the Company.
The Chairmen of the various sub-committees and the external auditors are or would be present at every agm to address any relevant questions that may be raised by the shareholders.
dealinGs in the ComPany’s seCuRities
The Company has adopted a Code of Conduct (the “Code”) to provide guidance to directors and key officers of both the Company and its subsidiaries (the “group”) with regard to dealings in the Company’s securities.
The Code prohibits the officers of the group from dealing in the Company’s securities during the period commencing one month before the announcement of the Company’s full year financial results and two weeks before the announcements of each of the Company’s quarterly financial results, and ending on one day after the announcement.
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taBle “a”
diReCtoRs’ attendanCe at BoaRd and Committee meetinGs
meetings of Board audit Committeenominating Committee
Remuneration Committee
total held in fy2008 5 5 2 1
Randy Effendi 5 2
Hamdi Adnan 5
Masli Mulia 5
Anwarsyah 5
Dhrubajyoti Das 5
Asmari Herry Prayitno 4
Chng Hee Kok 5 5 2 1
David Lim Teck Leong 5 4 2 1
Anugerah Pekerti 5 5
Lee Chee Yeng 5 5 2 1
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interested Person transactions
interested Person
aggregate value of all
transactions excluding
transactions conducted
under shareholders’
mandate pursuant to
Rule 920 of the sGx-st
listing manual
aggregate value of all
transactions conducted
under a shareholders’
mandate pursuant to
Rule 920 of the sGx-st
listing manual
2008 2007 2008 2007
us$’000 us$’000 us$’000 us$’000
expenses
immediate holding Company
PT Samudera Indonesia Tbk
Management fee - - - 188
Agency commissions 116 154 3,230 3,181
Office rental 43 91 91 -
Related Company
PT Samudera Indonesia Ship Management
Ship management fees - - 741 588
PT Panurjwan
Building rental 9 24 16 -
Vessel charter hire 424 973 809 -
PT Masaji Tatanan Container
Container depot storage / repair 155 136 306 -
PT Prima Nur Panurjwan
Stevedorage 762 2,643 2,075 -
1,509 4,021 7,268 3,957
There were no other interested person transactions during the financial year under review in relation to Rule 920 of the SGX-ST Listing Manual except those stated above.
The Group had subsisting service agreements with the holding company and related companies relating to shipping agency services, ship management services, office rental, vessel charter hire, stevedorage and container depot storage and repair at the end of the financial year.
No other material contracts to which the Company or any subsidiary is a party and which involve directors’ interests subsisted at the end of the financial year, or have been entered into since the end of the previous financial year.
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mr lim kee hee, Senior General Manager of the Company is responsible for the trade and marketing functions. He has over 20 years of experience in the shipping industry where he had served in various senior management positions prior to joining the Company. Mr Lim holds a Bachelor of Science from the then University of Singapore and a Graduate Diploma in Financial Management from the Singapore Institute of Management.
Captain Choo eng Chye, Royce held various senior positions in the shipping industry for the past 12 years prior to joining the Company in 1999. At present, he holds the position as an Operations General Manager and is responsible for the fleet management of the Company. Captain Royce obtained a Certificate of Competency in Master of Foreign-Going Ship from Auckland Nautical Institute, New Zealand in 1986.
mr Chan ngok Chuin joined the Company in 2002 as MIS General Manager to oversee the management information systems of the Group. He holds a Bachelor of Science major in Computer Science and Mathematics from Brandon University, Canada and a Master of Business Administration major in Strategic Management from the Nanyang Technological University, Singapore. Mr Chan has more than 17 years of experience in the IT field such as system implementation, Portnet interfaces, designing and developing real time applications system, providing management and leadership in all computerization projects in the South East Asia region, Hong Kong, Taiwan, China, Europe and America.
Captain Chan Cheow Chan joined the Company in 1996. He holds a position of General Manager who is responsible for the Liner Business. Prior to his current appointment, he was a Deputy General Manager responsible for the Business Development of the Company. Before joining Samudera, Captain Chan had many years of experience in various aspects of shipping business. He obtained a Certificate of Competency in Master of Foreign-Going Ship from the Singapore Marine Department since 1988.
mr hermawan fridiana herman is the Finance & Administration General Manager of the Company, who is responsible for the Group’s finance & administration. He started his career with KPMG Indonesia as an auditor, thereafter he moved on to accounting and finance position with PT Samudera Indonesia Tbk as a Group Accountant in 1992. Mr Hermawan holds a Bachelor of Economics degree (majoring in Accountancy) from the University of Indonesia.
mr oh kian Beng joined the Company in 1992. He holds the position of General Manager who is responsible for the Sales & Marketing as well as Customer Service functions. Prior to joining the Company, Mr Oh had many years of marketing experience in the shipping industry.
Captain tan meng toon is the General Manager of the Company and is in charge of the trade function in controlling and managing the service routes within the Company’s network. Captain Tan had hands-on experience as an officer in several local-owned and foreign-owned ship management companies, as a Ship Master and as a technical superintendent and operations manager of a foreign-owned ship management company. Captain Tan holds a Foreign Ocean Going Master (Class I) Certificate.
Captain shaktidhar menon is our Regional Representative in Indian Sub-Continent region and stationed in Mumbai. Captain Shakti has many years of shipping experience and obtained a Certificate of Competency as Master of Foreign-Going Ship in 1990. He is also a member of The Chartered Institute of Logistics and Transport, The Institute of Marine Technologists, The Institute of Insurance Surveyors and Adjusters and The Company of Master Mariners.
key executives
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mr Patrick ong yaw teh is our Country Representative in Shanghai and China. He joined the Company in March 2000 and is responsible for promoting Samudera’s brand name in the region as well as managing the day-to-day operational matter. Besides, he is also involved in marketing, exploring business opportunity and customers’ networking in China. He holds a Bachelor of Arts & Social Sciences from the National University of Singapore in 1991.
mr Cho wee keong is our Country Representative posted to Hong Kong since June 2000 to oversee the performance and managing the day-to-day business routine over there. He is also responsible for marketing and customers’ networking in Hong Kong. Mr Cho obtained a Bachelor of Science (Economics), University of London through Singapore Institute of Management in 1995.
Captain Jimmy wong hong tim is our Country Representative in Vietnam. He is stationed in Vietnam to oversee the day-to-day operational matter as well as promoting trade and marketing activities. He has successfully gained support from the local customers in Vietnam. Captain Jimmy obtained a Certificate of Competency in Master of Foreign-Going Ship from Singapore Polytechnic in 1992 and a Master of Business Administration from the University of Dubuque, Iowa, USA in 1996.
mr agus supriadi is our Country Representative who is responsible for the operation in the Indian Sub-Continent since July 2008. Prior to his current position, he was a Country Representative for the business operation in the Middle East region from 2004 to June 2008. Mr Agus joined the Samudera Indonesia Group in 1995 as Branch Manager and had been assigned to various branches in Indonesia. He graduated from the Faculty of Economics, University of Jenderal Soedirman, Purwokerto, Indonesia, in 1987.
mr amursjah agustiar is our Country Representative for Thailand as well as Vietnam since April 2008. He is responsible for the day-to-day operational matters as well as to promote trade and marketing activities. Prior to the existing assignment, Mr Amursjah Agustiar was the Country Representative in Malaysia for 6 years, to promote Samudera’s presence and gain local support for the Group. Mr Amursjah Agustiar is experienced in the operations of shipping agency as he had been with PT Samudera Indonesia Tbk since 1982, as General Manager of the General Agency Division, acting as shipping agent for various main line operators. He graduated from the Merchant Marine Academy in Jakarta and PPM Institute of Management, Jakarta.
mr Gunawan fatahillah, our Regional Representative in the Middle East region since July 2008, is responsible for the daily operational matters which includes promoting trade and marketing. Prior to his current position, he was our Country Representative in Thailand from June 2001 to July 2008, as well as a Managing Director of Samudera Vietnam at Ho Chi Minh from June 2007 to July 2008. Mr Gunawan started as a Finance Manager in our Jakarta office from 1999 to May 2001 and he holds a Bachelor of Economics degree (majoring in Accounting) from University of Indonesia, Jakarta and a Master of Business Administration (majoring in International Business) from the University of Technology, Sydney, Australia.
mr muhammad willy is our Country Representative in Malaysia who is responsible for day-to-day marketing, operation and finance matters as well as exploring business opportunity and customers’ networking in Malaysia. Prior to his current position, he was a General Manager in Samudera Indonesia, Samudera Division, Jakarta office. He holds a Bachelor of Science from Gunadarma University in 1997 and a Master in Management from PPM Graduate School of Management, Jakarta, Indonesia in 2000.
key executives
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The risk management policies and processes are set by the Board. These are regularly reviewed and updated as necessary.
The risk management issues are mainly in the following areas:
• StrategicDirection• Investment• Operation• Financial
stRateGiC diReCtion
1. The Board proactively engages strategy specialists to participate in its periodic strategy evaluation exercise. The Board sets the strategic direction, which essentially is a combination of three components viz. EXPAND, SYNERGIZE, EXCELL. The Strategy of Expansion is to develop markets and capacities. The Strategy of Synergy is sharing and collaboration of activities, network and resources of other Group companies. The Strategy of Excellence is to improve capabilities and competencies.
2. The Group adopts a portfolio approach in terms of business lines. Within shipping industry, it participates in two different areas: regional container shipping and industrial shipping, each having its own characteristics, unique risk and profitability patterns.
investment
1. Written approval from Board is necessary prior to implementation of any new investment. The relevant business unit submits the proposal complete with a detailed feasibility study. The approval process involves a rigorous review of various aspects, including but not limited to:a) competition and marketb) demand – supplyc) pre-operating project management risks, including risks of delay and cost overrun d) operational risks and expertise necessary e) valuation risksf) currency risksg) level of borrowing h) interest rate riski) cash flow and returnsj) country riskk) legal issues
2. The Group adopts a prudent approach in managing the funding of investments. In particular special attention is paid in managing the level of gearing on a consolidated basis. Although it covenants a gearing ratio of not higher than 2:1 (being the ratio of interest bearing debt over net worth) to its lenders, it consistently maintains a gearing level, which is lower than its covenants.
Risk management Policies and Processes
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investment (Cont’d)
3. For external borrowings, it ensures that it works with a bank or a financial institution who is financially sound and who understands the Group’s business and its risk characteristics. The Group believes that by choosing its lenders properly, it can expect a continuing support from the financing community at attractive terms.
oPeRation
1. The Group relies on proper Organization Structures to ensure a smooth running of operations in relation to Group’s goals and the industry environments and various geographical areas that it operates in.
2. Being in the service industry, it places high emphasis on its quality of human resources. Through placement of the right people at the right place and appropriate management control tools, the Group achieves the required delegation of authority.
3. The Group engages PT Samudera Indonesia Ship Management, a related company, for ship management of the majority of its owned vessels. PT Samudera Indonesia Ship Management is an ISO 9001 accredited company and has system and procedures in place, which are in compliance with the requirements of the ISM Code. The ship management agreements are entered into on arms length basis. In addition, the Group also engages other ship management company, a non-related company, to handle two of its chemical tankers. The third party ship management company, being a specialized company in that industry, ensures that the Group’s vessels are in compliance with various regulations e.g. IMO regulations including ISM Code, Classification Society’s rules, Oil Major Terminal vetting inspections, CDI inspections etc.
4. The Group takes necessary insurance covers for example Hull & Machinery, Protection & Indemnity, Time Charterers’ Liability and War Risk cover as and when necessary.
5. When entering an entirely new market, the Group usually seeks assistance from suitable consultant(s) or resource persons who are knowledgeable about local market condition.
finanCial
Please refer to Note 38 to the financial statements of the Annual Report.
Risk management Policies and Processes
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The directors are pleased to present their report to the members together with the audited consolidated financial statements of Samudera Shipping Line Ltd (the “Company”) and its subsidiaries (collectively, the “Group”) for the financial year ended 31 December 2008 and balance sheet of the Company as at 31 December 2008.
diReCtoRs
The directors of the Company in office at the date of this report are:
Randy EffendiHamdi AdnanMasli MuliaAnwarsyahDhrubajyoti DasAsmari Herry PrayitnoChng Hee KokDavid Lim Teck LeongAnugerah PekertiLee Chee Yeng
aRRanGements to enaBle diReCtoRs to aCquiRe shaRes and deBentuRes
Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.
diReCtoRs’ inteRests in shaRes and deBentuRes
The following directors, who held office at the end of the financial year, had, according to the register of directors’ shareholdings required to be kept under section 164 of the Singapore Companies Act, Cap. 50, an interest in shares of the Company and related corporations (other than wholly-owned subsidiaries) as stated below:
direct interest deemed interest
as at 1 January
2008
as at 31 december
2008
as at 21 January
2009
as at 1 January
2008
as at 31 december
2008
as at 21 January
2009
ultimate holding company
PT Samudera Indonesia Tangguh
Ordinary shares of Rp 1,000 each
Randy Effendi 2,000 2,000 2,000 - - -
directors’ Report
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diReCtoRs’ inteRests in shaRes and deBentuRes (Cont’d)
direct interest deemed interest
as at 1 January
2008
as at 31 december
2008
as at 21 January
2009
as at 1 January
2008
as at 31 december
2008
as at 21 January
2009
immediate holding company
PT Samudera Indonesia Tbk
Ordinary shares of Rp 500 each
Randy Effendi 1,604,852 1,604,852 1,604,852 - - -
Hamdi Adnan 800,500 851,500 851,500 - - -
Masli Mulia 658,500 658,500 658,500 - - -
Asmari Herry Prayitno 500 500 500 - - -
the Company
Samudera Shipping Line Ltd
Ordinary shares
Randy Effendi 1,200,000 1,200,000 1,200,000 - - -
Hamdi Adnan 960,000 960,000 960,000 - - -
Anwarsyah 12,000 12,000 12,000 - - -
Dhrubajyoti Das 486,000 486,000 486,000 - - -
Asmari Herry Prayitno 60,000 60,000 60,000 - - -
David Lim Teck Leong - - - 60,000 60,000 60,000
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the Company, or of related corporations, either at the beginning of the financial year, at the end of the financial year or on 21 January 2009.
diReCtoRs’ ContRaCtual Benefits
Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member or with a company in which the director has a substantial financial interest except that certain directors have employment relationships with related corporations of the immediate holding company and received remuneration in those capacity.
audit Committee
The Audit Committee performed the functions specified in accordance with section 201B(5) of the Singapore Companies Act, Cap. 50. The functions performed are disclosed in the Corporate Governance Report.
directors’ Report
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auditoRs
Ernst & Young LLP have expressed their willingness to accept reappointment as auditors.
On behalf of the board of directors,
hamdi adnanDirector
anwarsyahDirector
Singapore19 March 2009
directors’ Report
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We, Hamdi Adnan and Anwarsyah, being two of the directors of Samudera Shipping Line Ltd, do hereby state that, in the opinion of the directors:
(a) the accompanying balance sheets, consolidated profit and loss account, consolidated statement of changes in equity and consolidated statement of cash flows together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results of the business, changes in equity and cash flows of the Group for the financial year then ended; and
(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
On behalf of the board of directors,
hamdi adnanDirector
anwarsyahDirector
Singapore19 March 2009
statement by directors
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We have audited the accompanying financial statements of the Samudera Shipping Line Ltd (the “Company”) and its subsidiaries (collectively, “the Group”), which comprise the balance sheets of the Group and the Company as at 31 December 2008, the statement of changes in equity, profit and loss account and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes.
manaGement’s ResPonsiBility foR the finanCial statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
auditoRs’ ResPonsiBility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
independent auditors’ Report to the members of samudera shipping line ltd
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oPinion
In our opinion,
(a) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group for the year ended on that date; and
(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
Ernst & Young LLPPublic Accountants and Certified Public AccountantsSingapore19 March 2009
independent auditors’ Report to the members of samudera shipping line ltd
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note Group Company
2008 2007 2008 2007
us$ us$ us$ us$
share capital and reserves
Share capital 3 68,761,230 68,761,230 68,761,230 68,761,230
Accumulated profits 4 179,469,044 158,532,547 129,285,391 119,159,862
Other reserves 5 (8,874,121) (1,734,695) - -
Foreign currency translation reserve 6 (11,577,411) (9,534,778) - -
227,778,742 216,024,304 198,046,621 187,921,092
minority interests 2,795,525 1,575,351 - -
230,574,267 217,599,655 198,046,621 187,921,092
subsidiaries 7 - - 54,893,502 54,910,009
associated companies 8 1,912,610 10,866,994 12,311,988 12,311,988
fixed assets 9 258,561,363 150,459,518 132,682,746 21,374,492
deferred taxation 31(c) 80,811 231,852 - -
Cash and bank balances 19 1,024 4,700,000 - 4,700,000
Current assets
Stocks 1,651,899 1,914,693 - -
Trade debtors 10 49,407,852 53,856,718 37,896,490 44,328,582
Advance payments for vessels purchase 11 33,250,581 8,700,690 - 8,700,690
Prepaid operating expenses 10,922,890 10,246,000 6,199,668 6,869,895
Other debtors and deposits 12 2,115,550 3,670,364 630,040 1,315,378
Due from immediate holding company (trade) 13 674,640 - - -
Due from subsidiaries (trade) 14 - - 2,594,032 4,407,689
Due from subsidiaries (non-trade) 15 - - 17,995,634 6,727,649
Due from related companies (trade) 16 - 23,733 - 1,379
Due from associated company (non-trade) 17 1,519,485 - 1,519,485 -
Due from minority shareholder of a subsidiary (non-trade) 48,100 51,703 48,100 51,703
Investment securities 18 902,200 3,988,795 902,200 3,988,795
Cash and bank balances 19 67,227,945 73,153,907 51,513,203 59,044,807
167,721,142 155,606,603 119,298,852 135,436,567
Balance sheets as at 31 december 2008
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note Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Current liabilities
Trade creditors 20 20,139,712 20,523,476 15,761,129 16,248,984
Other creditors and liabilities 21 17,941,984 13,980,495 8,271,882 7,424,499
Due to subsidiary (non-trade) 22 - - 350,997 352,387
Due to immediate holding company (trade) 13 383,187 199,990 153,520 191,876
Due to related companies (trade) 483,825 834,617 46,895 -
Hire purchase creditors 23 202,312 60,989 45,330 23,429
Bank term loans (secured) 24 17,359,637 10,711,576 7,985,887 886,397
Provision for tax 1,501,203 2,143,697 405,522 1,278,106
58,011,860 48,454,840 33,021,162 26,405,678
net current assets 109,709,282 107,151,763 86,277,690 109,030,889
non-current liabilities
Hire purchase creditors 23 1,106,611 109,632 145,862 77,902
Bank term loans (secured) 24 138,584,212 55,700,840 87,973,443 14,328,384
230,574,267 217,599,655 198,046,621 187,921,092
Balance sheets as at 31 december 2008
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
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note Group
2008 2007
us$ us$
turnover 25 443,252,404 377,226,023
Cost of services (390,341,983) (334,774,218)
Gross profit 52,910,421 42,451,805
Other operating income 26 1,013,778 377,809
Marketing expenses (8,679,677) (7,719,185)
Administrative expenses (11,572,261) (8,591,928)
Other operating expenses 27 (1,024,365) (2,694,682)
Profit from operations 28 32,647,896 23,823,819
Financial income 30(a) 1,156,272 2,402,242
Financial expense 30(b) (4,726,377) (4,307,311)
operating profit 29,077,791 21,918,750
Share of results of associated companies (631,913) 159,915
Profit before tax 28,445,878 22,078,665
Income tax expense 31 (1,697,318) (1,355,992)
Profit after tax 26,748,560 20,722,673
attributable to:
Equity holders of the Company 26,037,073 20,453,360
Minority interests 711,487 269,313
26,748,560 20,722,673
earnings per share (us cents)
- Basic and diluted 32 4.83 3.79
Consolidated Profit and loss account for the year ended 31 december 2008
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
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attributable to equity holders of the Group
share capital
(note 3) Capital reserve
accumulated profits
(note 4)
foreign currency translation
reserve(note 6)
other reserves(note 5) total
minority interests total
us$ us$ us$ us$ us$ us$ us$ us$
Balance as at 1 January 2007 68,761,230 184,217 141,628,121 (5,476,230) (363,349) 204,733,989 1,544,613 206,278,602
Net unrealized loss on revaluation of cash flow hedge (Note 5(b)) - - - - (39,110) (39,110) - (39,110)
Share of net change in associated company’s hedging reserve (Note 5(b)) - - - - (1,347,241) (1,347,241) - (1,347,241)
Investment in subsidiary - - - - - - 50,670 50,670
Currency translation - - - (4,058,548) - (4,058,548) (63,197) (4,121,745)
Net expenses recognised directly in equity - - - (4,058,548) (1,386,351) (5,444,899) (12,527) (5,457,426)
Net profit for the year - - 20,453,360 - - 20,453,360 269,313 20,722,673
Total recognised income and expenses for the year - - 20,453,360 (4,058,548) (1,386,351) 15,008,461 256,786 15,265,247
Dividend paid (Note 33) - - (3,718,146) - - (3,718,146) (226,048) (3,944,194)
Transfer of capital reserve to accumulated profits - (184,217) 184,217 - - - - -
Transfer to statutory reserves fund - - (15,005) - 15,005 - - -
Balance as at 31 december 2007 68,761,230 - 158,532,547 (9,534,778) (1,734,695) 216,024,304 1,575,351 217,599,655
Balance as at 1 January 2008 68,761,230 - 158,532,547 (9,534,778) (1,734,695) 216,024,304 1,575,351 217,599,655
-
Translation effect due to change in functional currency - - 846,346 (857,490) - (11,144) 11,144 -
Net unrealised loss on revaluation of cash flow hedge (Note 5(b)) - - - - 11,608 11,608 - 11,608
Share of net change in associated company’s hedging reserve (Note 5(b)) - - - - (7,151,656) (7,151,656) - (7,151,656)
Additional investment in subsidiary - - - - - - 674,500 674,500
Currency translation - - - (1,185,143) - (1,185,143) (63,702) (1,248,845)
Net expenses recognised directly in equity - - - (1,185,143) (7,140,048) (8,325,191) 610,798 (7,714,393)
Net profit for the year - - 26,037,073 - - 26,037,073 711,487 26,748,560
Total recognised income and expenses for the year - - 26,037,073 (1,185,143) (7,140,048) 17,711,882 1,322,285 19,034,167
Dividend paid (Note 33) - - (5,946,300) - - (5,946,300) (113,255) (6,059,555)
Transfer to statutory reserves fund - - (622) - 622 - - -
Balance as at 31 december 2008 68,761,230 - 179,469,044 (11,577,411) (8,874,121) 227,778,742 2,795,525 230,574,267
Consolidated statement of Changes in equity for the year ended 31 december 2008
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attributable to equity holders of the Group
share capital
(note 3) Capital reserve
accumulated profits
(note 4)
foreign currency translation
reserve(note 6)
other reserves(note 5) total
minority interests total
us$ us$ us$ us$ us$ us$ us$ us$
Balance as at 1 January 2007 68,761,230 184,217 141,628,121 (5,476,230) (363,349) 204,733,989 1,544,613 206,278,602
Net unrealized loss on revaluation of cash flow hedge (Note 5(b)) - - - - (39,110) (39,110) - (39,110)
Share of net change in associated company’s hedging reserve (Note 5(b)) - - - - (1,347,241) (1,347,241) - (1,347,241)
Investment in subsidiary - - - - - - 50,670 50,670
Currency translation - - - (4,058,548) - (4,058,548) (63,197) (4,121,745)
Net expenses recognised directly in equity - - - (4,058,548) (1,386,351) (5,444,899) (12,527) (5,457,426)
Net profit for the year - - 20,453,360 - - 20,453,360 269,313 20,722,673
Total recognised income and expenses for the year - - 20,453,360 (4,058,548) (1,386,351) 15,008,461 256,786 15,265,247
Dividend paid (Note 33) - - (3,718,146) - - (3,718,146) (226,048) (3,944,194)
Transfer of capital reserve to accumulated profits - (184,217) 184,217 - - - - -
Transfer to statutory reserves fund - - (15,005) - 15,005 - - -
Balance as at 31 december 2007 68,761,230 - 158,532,547 (9,534,778) (1,734,695) 216,024,304 1,575,351 217,599,655
Balance as at 1 January 2008 68,761,230 - 158,532,547 (9,534,778) (1,734,695) 216,024,304 1,575,351 217,599,655
-
Translation effect due to change in functional currency - - 846,346 (857,490) - (11,144) 11,144 -
Net unrealised loss on revaluation of cash flow hedge (Note 5(b)) - - - - 11,608 11,608 - 11,608
Share of net change in associated company’s hedging reserve (Note 5(b)) - - - - (7,151,656) (7,151,656) - (7,151,656)
Additional investment in subsidiary - - - - - - 674,500 674,500
Currency translation - - - (1,185,143) - (1,185,143) (63,702) (1,248,845)
Net expenses recognised directly in equity - - - (1,185,143) (7,140,048) (8,325,191) 610,798 (7,714,393)
Net profit for the year - - 26,037,073 - - 26,037,073 711,487 26,748,560
Total recognised income and expenses for the year - - 26,037,073 (1,185,143) (7,140,048) 17,711,882 1,322,285 19,034,167
Dividend paid (Note 33) - - (5,946,300) - - (5,946,300) (113,255) (6,059,555)
Transfer to statutory reserves fund - - (622) - 622 - - -
Balance as at 31 december 2008 68,761,230 - 179,469,044 (11,577,411) (8,874,121) 227,778,742 2,795,525 230,574,267
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
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note 2008 2007
us$ us$
Cash flows from operating activities
Profit before tax 28,445,878 22,078,665
Adjustments for:
Depreciation of fixed assets 14,314,844 11,063,900
Gain on disposal of fixed assets (416,903) (11,472)
Gain on disposal of investment securities (3,880) (16,078)
Interest expense 4,726,377 4,307,311
Interest income (1,156,272) (2,402,242)
Allowance for doubtful trade debts 1,258,589 397,621
Allowance for doubtful non-trade debts 32 -
Share of results of associated companies 631,913 (159,915)
Unrealised gain on investment securities (135,825) (258,169)
Write back of allowance for doubtful trade debts (143,163) (102,781)
Write back of allowance for doubtful non-trade debts - (258)
Fixed assets written off 1,322 827
Currency realignment 116,965 2,468,760
operating cash flows before working capital changes 47,639,877 37,366,169
(Increase)/ decrease in:
Stocks 262,794 (283,673)
Trade debtors 3,333,376 (8,089,099)
Other debtors and deposits 1,554,779 (1,776,441)
Prepaid operating expenses and advance paid (25,222,467) (4,637,715)
Due from immediate holding company (674,640) -
Due from related companies 23,733 14,533
Due from associated company (1,519,485) -
Due from minority shareholder of a subsidiary 3,603 (51,703)
Increase/ (decrease) in:
Trade creditors (383,764) 2,685,586
Other creditors and liabilities 3,973,097 1,804,153
Due to related companies (350,792) (276,332)
Due to immediate holding company 183,197 (597,975)
Cash flows from operations 28,823,308 26,157,503
Interest paid (4,726,377) (4,307,311)
Income tax paid (2,131,318) (1,720,313)
net cash flows from operating activities 21,965,613 20,129,879
Consolidated statement of Cash flows for the year ended 31 december 2008
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note 2008 2007
us$ us$
Cash flows from investing activities
Interest income received 1,156,272 2,402,242
Proceeds from disposal of fixed assets 4,308,973 52,350
Proceeds from disposal of investment securities 3,726,300 1,824,155
Purchase of fixed assets (125,242,088) (10,497,822)
Purchase of investment securities (500,000) -
Dividend received from an associated company 327,148 141,491
Dividend paid to minority shareholders (113,255) (226,048)
Additional investment in subsidiaries 674,500 50,670
net cash flows used in investing activities (115,662,150) (6,252,962)
Cash flows from financing activities
Repayment of hire purchase liabilities (89,368) (62,484)
Proceeds from bank term loans 105,613,150 1,359,437
Repayment of bank term loans (16,204,752) (10,991,396)
Dividend paid (5,946,300) (3,718,146)
Decrease in pledged deposits 355,082 91,986
Decrease in call and fixed deposits (non-current) 4,698,976 2,150,345
net cash flows from/(used in) financing activities 88,426,788 (11,170,258)
Net (decrease)/increase in cash and cash equivalents (5,269,749) 2,706,659
Net effect of exchange rate changes on cash and cash equivalents (301,131) 4,049,254
Cash and cash equivalents at beginning of year 70,331,553 63,575,640
Cash and cash equivalents at end of year 34(a) 64,760,673 70,331,553
Consolidated statement of Cash flows for the year ended 31 december 2008
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
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1. CoRPoRate infoRmation
The Company, incorporated and domiciled in Singapore, is a public limited company listed on the Official List of the Singapore Exchange Securities Trading Limited. The address of the Company’s registered office and its principal place of business is 6 Raffles Quay, #25-01, Singapore 048580.
The Company is a subsidiary of PT Samudera Indonesia Tbk, incorporated in Indonesia, which is a public limited company listed on the Jakarta Stock Exchange. The ultimate holding company is PT Samudera Indonesia Tangguh, also incorporated in Indonesia. Related companies in these financial statements refer to members of the ultimate holding company’s group of companies.
The principal activities of the Company are the owning and operating of ocean-going ships and the provision of containerised feeder shipping services. The principal activities of its subsidiaries are disclosed in Note 7 to the financial statements.
There have been no significant changes in the nature of the activities of the Company and its subsidiaries during the financial year.
The Group operates in South East Asia, Far East, Indian Sub-continent and the Middle East.
2. summaRy of siGnifiCant aCCountinG PoliCies
2.1 Basis of preparation
The consolidated financial statements of the Group and the balance sheet of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).
Prior to 1 January 2008, all transactions in currencies other than Singapore dollars (SGD) were treated as transactions in foreign currencies and were recorded, on initial recognition, in SGD using the exchange rate at the transaction date by the Company.
To better reflect the underlying transactions of the Company’s business environment and its net asset value, the Company has adopted United States dollars (USD or US$) as its functional currency with effect from 1 January 2008.
The adoption of USD as the Company’s functional currency resulted from the significant increase in the proportion of revenue collection in USD experienced by the Company.
Pursuant to FRS21, The Effects of Changes in Foreign Exchange Rates, the Company changed its measurement currency from SGD to USD and the financial statements were measured prospectively in USD with effect from 1 January 2008. With the adoption of USD, the financial statements of the Group and Company are presented in USD.
The financial statements, which are presented in USD (unless otherwise stated), have been prepared on a historical cost basis, except as disclosed in the accounting policies below.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.2 future changes in accounting policies
Reference description
effective for annual periods beginning
on or after
FRS 1 : Presentation of Financial Statements– Revised presentation 1 January 2009– Amendments relating to Puttable Financial Instruments
and Obligations Arising on Liquidation 1 January 2009
FRS 23 : Borrowing Costs 1 January 2009FRS 27 : Consolidated and Separate Financial Statements
– Amendments Relating to Cost of an Investment in a Subsidiary, Jointly-controlled Entity or Associate
1 January 2009
FRS 32 : Financial Instruments: Presentation– Amendments relating to Puttable Financial Instruments
and Obligations Arising on Liquidation
1 January 2009
FRS 39 : Financial Instruments: Recognition and Measurement– Amendments relating to Eligible Hedged Items
1 July 2009
FRS 101 : First-time Adoption of Financial Reporting Standards– Amendments Relating to Cost of an Investment in a
Subsidiary, Jointly-controlled Entity or Associate
1 January 2009
FRS 102 : Share-based payment – Vesting conditions and cancellations 1 January 2009FRS 108 : Operating Segments 1 January 2009INT FRS 113 : Customer Loyalty Programmes 1 July 2008INT FRS 116 : Hegdes of a Net Investment in a Foreign Operation 1 October 2008INT FRS 117 : Distributions of Non-cash Assets to Owners 1 July 2009FRS : Improvement to FRSs 1 January 2009 unless
otherwise stated
The directors expect that the adoption of the above pronouncements will have no material impact to the financial statements in the period of initial application, except for FRS 1 and FRS 108 as indicated below.
fRs 1 Presentation of financial statements – Revised Presentation
The revised FRS 1 requires owner and non-owner changes in equity to be presented separately. The statement of changes in equity will include only details of transactions with owners, with all non-owner changes in equity presented as a single line item. In addition, the revised standard introduces the statement of comprehensive income: it presents all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense not reported in profit and loss, either in one single statement, or in two linked statements. The Group is currently evaluating the format to adopt.
fRs 108 operating segments
FRS 108 requires entities to disclose segment information based on the information reviewed by the entity’s chief operating decision maker. The impact of this standard on the other segment disclosures is still to be determined. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Group when implemented in 2009.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.3 significant accounting judgements and estimates
The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
(a) Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements:
(i) income taxes
The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computation for which the ultimate tax determination is uncertain during the course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s tax payables at the balance sheet date was US$1,501,203 (2007: US$2,143,697).
(ii) determination of functional currency
The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies of the entities in the Group, judgement is required to determine the currency that mainly influences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the Group are determined based on management’s assessment of the economic environment in which the entities operate and the entities’ process of determining sales prices.
(iii) operating lease commitments – as lessor
The Group has entered into charter hire leases on its vessels. The Group has determined that it retains all the significant risks and rewards of ownership of these vessels which are leased out on operating leases.
(b) key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.3 significant accounting judgements and estimates (cont’d)
(b) key sources of estimation uncertainty (cont’d)
(i) investments in subsidiaries and associated companies
The Company determines whether investments in subsidiaries and associated companies are impaired at least on an annual basis and measures the recoverable amount of the investments whenever there is an indication that the investments may be impaired. This requires an estimation of the value in use of the investments. Estimating the value in use requires the Company to make an estimate of the expected future cash flow from the subsidiaries and associated companies and also to choose a suitable discount rate in order to calculate the present value of those cash flows. As at 31 December 2008, except for SILkargo Logistics (Singapore) Pte Ltd and Samudera Emirates Shipping (LLC), for which allowance for impairment loss on the investments have been made, there is no evidence of impairment on investments in other subsidiaries and associated companies. The carrying amount of investments in subsidiaries and associated companies at balance sheet date is US$54,893,502 and US$12,311,988 (2007: US$54,910,009 and US$12,311,988) respectively.
(ii) depreciation of vessels and vessel improvements
The cost of vessels and vessel improvements of the Group and the Company is depreciated on a straight-line basis over the useful life of the vessels. Management estimates the useful life of these vessels to be within 4 – 25 years. The carrying amount of the Group’s vessels and vessel improvements at balance sheet date is US$229,225,040 and US$288,138 (2007: US$125,369,382 and US$739,176) respectively. Changes in the expected level of usage could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
(iii) impairment of loans and receivables
The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
2.4 foreign currency
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the closing rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.4 foreign currency (cont’d)
Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet date are recognised in the profit and loss account except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign subsidiaries, which are recognised initially in a separate component of equity as foreign currency translation reserve in the consolidated balance sheet and recognised in the consolidated profit and loss account on disposal of the subsidiary.
The assets and liabilities of foreign operations are translated into USD at the rate of exchange ruling at the balance sheet date and their profit and loss accounts are translated at the average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity as foreign currency translation reserve. On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the profit and loss account.
2.5 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.
All intra-group balances, transactions, income and expenses and unrealised profits and losses resulting from intra-group transactions are eliminated in full.
Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the balance sheet. Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in the profit and loss account on the date of acquisition.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
2.6 transactions with minority interests
Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in the consolidated profit and loss account and within equity in the consolidated balance sheet, separately from parent shareholders’ equity. Transactions with minority interests are accounted for using the entity concept method, whereby, transactions with minority interests are accounted for as transactions with equity holders. On acquisition of minority interests, the difference between the consideration and book value of the share of the net assets acquired is reflected as being a transaction between owners and recognised directly in equity. Gain or loss on disposal to minority interests is recognised directly in equity.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.7 subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.
In the Company’s financial statements, investments in subsidiaries are accounted for at cost less any impairment losses.
2.8 associated companies
An associated company is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. The associated company is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associated company.
The Group’s investments in associated companies are accounted for using the equity method. Under the equity method, the investment in associated companies is measured in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associated company. Goodwill relating to an associated company is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associated company’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is deducted from the carrying amount of the investment and is recognised as income as part of the Group’s share of profit or loss of the associated company in the period in which the investment is acquired.
When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associated company.
The financial statements of the associated company are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
In the Company’s financial statements, investments in associated companies are accounted for at cost less any impairment losses.
2.9 impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.9 impairment of non-financial assets (cont’d)
Impairment losses are recognised in the profit and loss account except for assets that are previously revalued where the revaluation was taken to equity. In this case the impairment is also recognised in equity up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profit and loss account unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.
2.10 financial assets
Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.
A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that has been recognised directly in equity is recognised in the profit and loss account.
All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e. the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.
(a) financial assets at fair value through profit or loss
Financial assets held for trading are classified as financial assets at fair value through profit or loss. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial assets are recognised in the profit and loss account. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.10 financial assets (cont’d)
(b) loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in the profit and loss account when the loans and receivables are derecognised or impaired, and through the amortisation process.
2.11 fixed assets
All items of fixed assets are initially recorded at cost. The cost of an item of fixed assets is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, fixed assets and fixtures are measured at cost less accumulated depreciation and accumulated impairment losses.
The initial cost of the fixed asset comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use, any trade discounts and rebates are deducted in arriving at the purchase price. Expenditure incurred after the fixed asset has been put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the profit and loss account in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of fixed asset beyond its originally assessed standard of performance, the expenditure is capitalised as an additional cost of fixed asset.
Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:
Vessels - 15 - 25 years
Vessel improvements - 4 - 10 years
Deferred charges - 2 ½ years
Motor vehicles - 5 years
Equipment - 3 - 5 years
Furniture and fittings - 5 years
Renovation - 3 years
Freehold properties - 15 - 50 years
Deferred charges represent drydocking expenditure incurred for major overhauls of vessels, which is deferred when incurred and depreciated over a period from the current drydocking date to the next estimated drydocking date (normally 2½ years). When significant drydocking expenditures recur prior to the expiry of the depreciation period, the remaining carrying value of the previous drydocking is expensed in the month of the subsequent drydocking.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.11 fixed assets (cont’d)
Vessels and property under construction are stated at cost, which includes the progress billings paid in accordance with the construction contracts and interest charges arising from borrowings used to finance the construction or installation during the construction periods. Assets under construction are not depreciated as these assets are not yet available for use. Depreciation will be provided for when these assets are put into use.
The carrying values of fixed assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of fixed assets.
An item of fixed assets is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit and loss account in the year the asset is derecognised.
2.12 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits.
2.13 impairment of financial assets
The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired.
(a) assets carried at amortised cost
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in the profit and loss account.
When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.13 impairment of financial assets (cont’d)
(a) assets carried at amortised cost (cont’d)
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the profit and loss account.
(b) assets carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.
2.14 stocks
Stocks, comprising oil and spare parts on board of the vessels for consumption purposes, are stated at cost (determined on a first-in, first-out basis). Allowance is made for deteriorated, damaged, obsolete and slow-moving stocks.
2.15 financial liabilities
Financial liabilities are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.
Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transaction costs.
Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest method, except for derivatives, which are measured at fair value.
A financial liability is derecognised when the obligation under the liability is extinguished. For financial liabilities other than derivatives, gains and losses are recognised in the profit and loss account when the liabilities are derecognised or impaired, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are recognised in the profit and loss account. Net gains or losses on derivatives include exchange differences.
2.16 financial guarantee
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.
notes to the financial statements – 31 december 2008
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2.16 financial guarantee (cont’d)
Financial guarantees are recognised initially at fair value. Subsequent to initial recognition, financial guarantees are recognised as income in the profit and loss account over the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the liability is recorded at the higher amount with the difference charged to the profit and loss account.
2.17 Borrowing costs
Borrowing costs are recognised in the profit and loss account as incurred except to the extent that they are capitalised. Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are ready for their intended use or sale.
2.18 Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.19 leases
(a) as lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the profit and loss account. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.19 leases (cont’d)
(b) as lessor
Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases.
2.20 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.
(a) Rendering of services
Revenue and operating costs on freight operations are recognised as income and expenses respectively, by reference to the percentage of completion of the voyage as at balance sheet date. Unearned revenue received is recognised as deferred income.
Revenue from rendering sea freight forwarding services is recognised based on the completion of voyage.
Time charter revenue is recognised evenly over the lives of the time charter agreements and is stated net of withholding taxes and commission paid. Voyage freight is recognised evenly over the duration of each voyage.
(b) interest income
Interest income is recognised using the effective interest method.
(c) dividend income
Dividend income is recognised when the Group’s right to receive payment is established.
(d) Rental income
Rental income arising on properties is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.
2.21 income taxes
(a) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the balance sheet date.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.21 income taxes (cont’d)
(a) Current tax (cont’d)
Current taxes are recognised in the profit and loss account except that tax relating to items recognised directly in equity is recognised directly in equity.
(b) deferred tax
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets and liabilities are recognised for all temporary differences, except:
– Where the deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction affects neither the accounting profit nor taxable profit or loss;
– In respect of temporary differences associated with investments in subsidiary, associated company and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future; and
– In respect of deductible temporary differences and carry-forward of unused tax credits and unused tax losses, if it is not probable that taxable profit will be available against which the deductible temporary differences and carry-forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.
Deferred taxes are recognised in the profit and loss account except that deferred tax relating to items recognised directly in equity is recognised directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.
notes to the financial statements – 31 december 2008
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2.21 income taxes (cont’d)
(c) sales tax
Revenue, expenses and assets are recognised net of the amount of sales tax except:
– Where the sales tax incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
– Receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
2.22 employee benefits
The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.
2.23 share buyback
Shares purchased in connection with the share buyback programme approved by the Company’s shareholders may only be funded out of surplus available for dividend or distribution. When share capital recognised as equity is reacquired, the amount of consideration paid or received is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in the profit and loss account on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
2.24 hedge accounting
The Group applies hedge accounting for certain hedging relationships which qualify for hedge accounting.
For the purpose of hedge accounting, hedges are classified as:
– Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment; or
– Cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognised firm commitment; or
– Hedges of a net investment in a foreign operation.
notes to the financial statements – 31 december 2008
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2. summaRy of siGnifiCant aCCountinG PoliCies (Cont’d)
2.24 hedge accounting (cont’d)
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges which meet the strict criteria for hedge accounting are accounted for as follows:
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while any ineffective portion is recognised immediately in the profit and loss account.
Amounts taken to equity are transferred to the profit and loss account when the hedged transaction affects the profit and loss account, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. Where the hedged item is the cost of a non-financial asset or non-financial liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognised in equity are transferred to the profit and loss account. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction or firm commitment occurs.
2.25 segment reporting
A business segment is a distinguishable component of the Group that is engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of the Group that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.
2.26 Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.
Contingent liabilities and assets are not recognised on the balance sheet of the Group.
notes to the financial statements – 31 december 2008
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3. shaRe CaPital
Group and Company
2008 2007
no. of shares us$ no. of shares us$
Issued and fully paid:
Balance at beginning and end of year 539,131,199 68,761,230 539,131,199 68,761,230
4. aCCumulated PRofits
Company
2008 2007
us$ us$
Balance at beginning of year 119,159,862 107,574,901
Dividend paid (Note 33) (5,946,300) (3,718,146)
Net profit for the year 16,071,829 15,303,107
Balance at end of year 129,285,391 119,159,862
5. otheR ReseRves
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Statutory reserves 63,668 63,046 - -
Hedging reserve (8,937,789) (1,797,741) - -
(8,874,121) (1,734,695) - -
(a) statutory reserves
For subsidiaries in the United Arab Emirates (“UAE”), 10% of their profit for the year is required to be transferred to the statutory reserves account according to their Articles of Association and UAE Commercial Companies Law. The subsidiaries may resolve to discontinue such annual transfer when the reserves reach 50% of their issued share capital. The statutory reserves are not available for distribution except in circumstances permitted by the law.
The subsidiary in Thailand is also required to set aside a statutory reserve equal to the least 5% of its net profit each time the subsidiary pays out a dividend, until such reserve reaches 10% of the subsidiary’s registered share capital. The statutory reserve cannot be used to offset any deficit and dividend payment.
notes to the financial statements – 31 december 2008
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5. otheR ReseRves (Cont’d)
(b) hedging reserve
Hedging reserve records the portion of the fair value changes on derivative financial instruments designated as hedging instruments in cash flow hedges that is determined to be an effective hedge.
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Balance at beginning of year (1,797,741) (411,390) - -
Net change in the hedging reserve 11,608 (39,110 ) - -
Share of net change in associated company’s hedging reserve (7,151,656) (1,347,241) - -
Balance at end of year (8,937,789) (1,797,741) - -
6. foReiGn CuRRenCy tRanslation ReseRve
The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Balance at beginning of year (9,534,778) (5,476,230) - -
Translation effect due to change in functional currency (857,490) - - -
Currency translation (1,185,143) (4,058,548) - -
Balance at end of year (11,577,411) (9,534,778) - -
7. suBsidiaRies
Company
2008 2007
us$ us$
Unquoted equity shares, at cost
Balance at beginning of year 55,254,837 55,201,727
Additions during the year - 53,110
55,254,837 55,254,837
Less: Impairment loss (361,335) (344,828)
Balance at end of year 54,893,502 54,910,009
notes to the financial statements – 31 december 2008
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7. suBsidiaRies (Cont’d)
Details of the subsidiaries as at 31 December are as follows:
name Principal activitiesCountry of
incorporation equity interest
heldCost of investment held
by the Company
2008 2007 2008 2007
% % us$ us$
held by the Company
Foremost Maritime Pte Ltd (“Foremost”)
Owning and chartering of vessels
Singapore 100 100 54,163,180 54,163,180
SILkargo Logistics (Singapore) Pte Ltd (“SILkargo”)
Sea freight forwarding, shipping agency and container freight station services
Singapore 100 100 344,828 344,828
Samudera Indonesia Singapore Pte Ltd (“SISIN”)
Investment holding Singapore 100 100 344,828 344,828
Samudera Emirates Shipping (LLC) (“SES”) ** 1
Shipping agency United Arab Emirates
16 16 16,507 16,507
Galaxy Shipping Services Sdn Bhd *
Shipping agency Malaysia 60 60 190,690 190,690
Samudera Shipping Line (India) Pvt Ltd *
Shipping agency India 100 100 27,676 27,676
Samudera Traffic Co. Ltd (“STC”)*** 2
Shipping agency Thailand 49 49 114,018 114,018
Samudera Shipping Line (Vietnam) Co., Ltd***
Shipping agency Vietnam 51 51 53,110 53,110
held through subsidiaries
PT Samudera Shipping Services *
Owning and chartering of vessels
Indonesia 95 95 - -
Samudera Emirates Shipping (LLC) (“SES”) ** 1
Shipping agency United Arab Emirates
17 17 - -
SILkargo (LLC)(“SIL”) ** 3
Freight forwarding, cargo handling, packaging and clearing agent
United Arab Emirates
49 49 - -
55,254,837 55,254,837
notes to the financial statements – 31 december 2008
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7. suBsidiaRies (Cont’d)
All Singapore incorporated subsidiaries above are audited by Ernst & Young LLP, Singapore.
* Audited by member firms of Ernst & Young Global in respective countries** Audited by UHY Saxena, Dubai*** Audited by member firms of Grant Thornton in respective countries
1 The Company and a subsidiary, Foremost, contributed 16% and 17% of the issued share capital of SES respectively. Hence, the Group’s total effective interest in SES is 33%. As the Group has control over the financial and operating policies via majority representation on the board of directors of SES, the latter is deemed to be a subsidiary of the Group.
2 As the Group has control over the financial and operating policies via majority representation on the board of directors of STC, the latter is deemed to be a subsidiary of the Group. The Company entered into an agreement where it is entitled to a 60% share of the net profits of the subsidiary.
3 SILkargo contributed 49% of the issued share capital of SIL. As the Group has control over the financial and operating policies via majority representation on the board of directors of SIL, the latter is deemed to be a subsidiary of the Group.
8. assoCiated ComPanies
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Unquoted equity shares, at cost 12,311,988 12,311,988 12,311,988 12,311,988
Dividend received (327,148) (141,491) - -
Share of post acquisition (losses)/ profits (284,730) 494,528 - -
Share of hedging reserve (8,778,022) (1,626,366) - -
Translation difference (1,009,478) (171,665) - -
1,912,610 10,866,994 12,311,988 12,311,988
notes to the financial statements – 31 december 2008
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8. assoCiated ComPanies (Cont’d)
Details of the associated companies as at 31 December are as follows:
name Principal activitiesCountry of
incorporation equity interest
heldCost of investment
held by the Company
2008 2007 2008 2007
% % us$ us$
held by the Company
PT Jardine Tangguh Transport Services # 1
Shipping agency Indonesia 40 40 195,310 195,310
LNG East-West Shipping Company (Singapore) Pte. Limited ##
Owning, managing and chartering of vessels and ship brokering
Singapore 25 25 12,116,678 12,116,678
12,311,988 12,311,988
# Audited by PricewaterhouseCoopers, Indonesia## Audited by Moore Stephens, Singapore
1 The Company entered into an agreement where it is only entitled to a 32% share of net profits of the associated company.
The summarised financial information of the associated companies, not adjusted for the proportion of ownership interests held by the Group is as follows:
Group
2008 2007
us$’000 us$’000
assets and liabilities:
Current assets 15,883 6,623
Non-current assets 177,122 101,881
Total assets 193,005 108,504
Current liabilities 20,180 6,527
Non-current liabilities 176,582 73,026
Total liabilities 196,762 79,553
Results:
Revenue 8,497 3,323
Net (loss)/profit for the year (2,851) 472
notes to the financial statements – 31 december 2008
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9. fixed assets
Group vesselsvessel
improvements
vesselsunder
constructiondeferred charges
Property under
constructionmotor
vehicles equipment
furnitureand
fittings Renovationfreehold
landfreehold
properties total
us$ us$ us$ us$ us$ us$ us$ us$ us$ us$ us$ us$
Cost
As at 1 January 2007 145,578,488 1,896,642 3,882,355 12,117,341 - 733,887 3,593,904 399,573 1,140,892 13,833,387 4,954,562 188,131,031
Additions 390,361 822,647 5,999,942 1,030,660 - 146,491 295,563 88,730 62,810 973,510 739,617 10,550,331
Disposals - - - (1,447,153) - (107,345) (11,889) (1,818) - - - (1,568,205)
Transfer to vessels 9,882,297 - (9,882,297) - - - - - - - - -
Written off - (339,877) - - - - (21,061) - - - - (360,938)
Translation difference 45,519 - - - - 10,203 36,969 9,561 4,921 - - 107,173
As at 31 December 2007 and 1 January 2008 155,896,665 2,379,412 - 11,700,848 - 783,236 3,893,486 496,046 1,208,623 14,806,897 5,694,179 196,859,392
Additions 117,421,223 34,233 - 4,631,552 1,078,024 291,984 3,002,396 18,156 - - - 126,477,568
Disposals (4,043,900) (161,252) - - - (127,394) (1,307) - - - - (4,333,853)
Written off - - - - - - (3,890) (65) (28,448) - - (32,403)
Translation difference - - - - (120,927) (22,896) (41,412) (16,211) (804) - - (202,250)
As at 31 December 2008 269,273,988 2,252,393 - 16,332,400 957,097 924,930 6,849,273 497,926 1,179,371 14,806,897 5,694,179 318,768,454
accumulated depreciation
As at 1 January 2007 23,298,999 1,605,441 - 8,422,561 - 350,420 2,710,313 230,136 446,305 - 12,860 37,077,035
Charge for the year 7,113,742 374,672 - 2,525,102 - 143,123 482,497 61,652 250,664 - 112,448 11,063,900
Disposals - - - (1,447,153) - (67,136) (11,889) (1,149) - - - (1,527,327)
Written off - (339,877) - - - - (20,234) - - - - (360,111)
Translation difference 114,542 - - - - 2,900 21,059 5,265 2,611 - - 146,377
As at 31 December 2007 and 1 January 2008 30,527,283 1,640,236 - 9,500,510 - 429,307 3,181,746 295,904 699,580 - 125,308 46,399,874
Charge for the year 9,841,807 326,794 - 2,832,698 - 149,454 697,430 66,505 250,329 - 149,827 14,314,844
Disposals (320,142) (2,775) - - - (117,559) (1,307) - - - - (441,783)
Written off - - - - - - (2,575) (58) (28,448) - - (31,081)
Translation difference - - - - - (7,054) (20,944) (6,749) (16) - - (34,763)
As at 31 December 2008 40,048,948 1,964,255 - 12,333,208 - 454,148 3,854,350 355,602 921,445 - 275,135 60,207,091
net book value
As at 31 December 2008 229,225,040 288,138 - 3,999,192 957,097 470,782 2,994,923 142,324 257,926 14,806,897 5,419,044 258,561,363
As at 31 December 2007 125,369,382 739,176 - 2,200,338 - 353,929 711,740 200,142 509,043 14,806,897 5,568,871 150,459,518
notes to the financial statements – 31 december 2008
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9. fixed assets
Group vesselsvessel
improvements
vesselsunder
constructiondeferred charges
Property under
constructionmotor
vehicles equipment
furnitureand
fittings Renovationfreehold
landfreehold
properties total
us$ us$ us$ us$ us$ us$ us$ us$ us$ us$ us$ us$
Cost
As at 1 January 2007 145,578,488 1,896,642 3,882,355 12,117,341 - 733,887 3,593,904 399,573 1,140,892 13,833,387 4,954,562 188,131,031
Additions 390,361 822,647 5,999,942 1,030,660 - 146,491 295,563 88,730 62,810 973,510 739,617 10,550,331
Disposals - - - (1,447,153) - (107,345) (11,889) (1,818) - - - (1,568,205)
Transfer to vessels 9,882,297 - (9,882,297) - - - - - - - - -
Written off - (339,877) - - - - (21,061) - - - - (360,938)
Translation difference 45,519 - - - - 10,203 36,969 9,561 4,921 - - 107,173
As at 31 December 2007 and 1 January 2008 155,896,665 2,379,412 - 11,700,848 - 783,236 3,893,486 496,046 1,208,623 14,806,897 5,694,179 196,859,392
Additions 117,421,223 34,233 - 4,631,552 1,078,024 291,984 3,002,396 18,156 - - - 126,477,568
Disposals (4,043,900) (161,252) - - - (127,394) (1,307) - - - - (4,333,853)
Written off - - - - - - (3,890) (65) (28,448) - - (32,403)
Translation difference - - - - (120,927) (22,896) (41,412) (16,211) (804) - - (202,250)
As at 31 December 2008 269,273,988 2,252,393 - 16,332,400 957,097 924,930 6,849,273 497,926 1,179,371 14,806,897 5,694,179 318,768,454
accumulated depreciation
As at 1 January 2007 23,298,999 1,605,441 - 8,422,561 - 350,420 2,710,313 230,136 446,305 - 12,860 37,077,035
Charge for the year 7,113,742 374,672 - 2,525,102 - 143,123 482,497 61,652 250,664 - 112,448 11,063,900
Disposals - - - (1,447,153) - (67,136) (11,889) (1,149) - - - (1,527,327)
Written off - (339,877) - - - - (20,234) - - - - (360,111)
Translation difference 114,542 - - - - 2,900 21,059 5,265 2,611 - - 146,377
As at 31 December 2007 and 1 January 2008 30,527,283 1,640,236 - 9,500,510 - 429,307 3,181,746 295,904 699,580 - 125,308 46,399,874
Charge for the year 9,841,807 326,794 - 2,832,698 - 149,454 697,430 66,505 250,329 - 149,827 14,314,844
Disposals (320,142) (2,775) - - - (117,559) (1,307) - - - - (441,783)
Written off - - - - - - (2,575) (58) (28,448) - - (31,081)
Translation difference - - - - - (7,054) (20,944) (6,749) (16) - - (34,763)
As at 31 December 2008 40,048,948 1,964,255 - 12,333,208 - 454,148 3,854,350 355,602 921,445 - 275,135 60,207,091
net book value
As at 31 December 2008 229,225,040 288,138 - 3,999,192 957,097 470,782 2,994,923 142,324 257,926 14,806,897 5,419,044 258,561,363
As at 31 December 2007 125,369,382 739,176 - 2,200,338 - 353,929 711,740 200,142 509,043 14,806,897 5,568,871 150,459,518
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9. fixed assets (Cont’d)
Company vesselsmotor
vehicles equipmentfurniture and
fittings Renovationfreehold
landfreehold
properties total
us$ us$ us$ us$ us$ us$ us$ us$
Cost
As at 1 January 2007 - 303,938 2,593,678 189,437 1,062,528 13,833,387 4,954,562 22,937,530
Additions - 32,159 72,031 13,943 16,740 973,510 739,617 1,848,000
Disposals - (50,662) - - - - - (50,662)
As at 31 December 2007 and 1 January 2008 - 285,435 2,665,709 203,380 1,079,268 14,806,897 5,694,179 24,734,868
Additions 113,316,247 168,978 1,179,852 760 - - - 114,665,837
Disposals - (32,782) - - - - - (32,782)
As at 31 December 2008 113,316,247 421,631 3,845,561 204,140 1,079,268 14,806,897 5,694,179 139,367,923
accumulated depreciation
As at 1 January 2007 - 125,608 2,036,081 61,012 406,822 - 12,860 2,642,383
Charge for the year - 49,942 320,178 27,085 233,671 - 112,448 743,324
Disposals - (25,331) - - - - - (25,331)
As at 31 December 2007 and 1 January 2008 - 150,219 2,356,259 88,097 640,493 - 125,308 3,360,376
Charge for the year 2,470,400 66,811 402,018 29,281 229,411 - 149,827 3,347,748
Disposals - (22,947) - - - - - (22,947)
As at 31 December 2008 2,470,400 194,083 2,758,277 117,378 869,904 - 275,135 6,685,177
net book value
As at 31 December 2008 110,845,847 227,548 1,087,284 86,762 209,364 14,806,897 5,419,044 132,682,746
As at 31 December 2007 - 135,216 309,450 115,283 438,775 14,806,897 5,568,871 21,374,492
notes to the financial statements – 31 december 2008
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9. fixed assets (Cont’d)
Company vesselsmotor
vehicles equipmentfurniture and
fittings Renovationfreehold
landfreehold
properties total
us$ us$ us$ us$ us$ us$ us$ us$
Cost
As at 1 January 2007 - 303,938 2,593,678 189,437 1,062,528 13,833,387 4,954,562 22,937,530
Additions - 32,159 72,031 13,943 16,740 973,510 739,617 1,848,000
Disposals - (50,662) - - - - - (50,662)
As at 31 December 2007 and 1 January 2008 - 285,435 2,665,709 203,380 1,079,268 14,806,897 5,694,179 24,734,868
Additions 113,316,247 168,978 1,179,852 760 - - - 114,665,837
Disposals - (32,782) - - - - - (32,782)
As at 31 December 2008 113,316,247 421,631 3,845,561 204,140 1,079,268 14,806,897 5,694,179 139,367,923
accumulated depreciation
As at 1 January 2007 - 125,608 2,036,081 61,012 406,822 - 12,860 2,642,383
Charge for the year - 49,942 320,178 27,085 233,671 - 112,448 743,324
Disposals - (25,331) - - - - - (25,331)
As at 31 December 2007 and 1 January 2008 - 150,219 2,356,259 88,097 640,493 - 125,308 3,360,376
Charge for the year 2,470,400 66,811 402,018 29,281 229,411 - 149,827 3,347,748
Disposals - (22,947) - - - - - (22,947)
As at 31 December 2008 2,470,400 194,083 2,758,277 117,378 869,904 - 275,135 6,685,177
net book value
As at 31 December 2008 110,845,847 227,548 1,087,284 86,762 209,364 14,806,897 5,419,044 132,682,746
As at 31 December 2007 - 135,216 309,450 115,283 438,775 14,806,897 5,568,871 21,374,492
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9. fixed assets (Cont’d)
(a) The net book value of motor vehicles of the Group and Company as at 31 December 2008 under hire purchase contracts amounted to US$291,021 and US$184,547 (2007: US$233,185 and US$120,162) respectively.
(b) The Group’s and the Company’s vessels with net book value of US$210,569,707 and US$110,845,847 (2007: US$121,798,654 and US$Nil) respectively have also been placed under legal mortgage to secure the Company’s and subsidiaries’ bank term loans (Note 24).
(c) The following shows the net book value of vessels of the Group that are chartered out to third parties under operating leases:
Group
2008 2007
us$ us$
Cost 93,645,405 92,213,400
Accumulated depreciation (18,879,415) (14,756,100)
Net book value 74,765,990 77,457,300
The depreciation charge for vessels chartered out under operating leases in 2008 is US$3,909,366 (2007: US$3,895,452).
10. tRade deBtoRs
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Trade debtors 50,900,044 54,733,963 39,272,488 44,919,650
Less: Allowance for doubtful debts (1,492,192) (877,245) (1,375,998) (591,068)
49,407,852 53,856,718 37,896,490 44,328,582
Movements in allowance for doubtful debts during the financial year were as follows:
Balance at beginning of year (877,245) (858,187) (591,068) (679,914)
Allowance for the year (1,258,589) (397,621) (1,231,946) (276,605)
Write back of allowance 143,163 102,781 143,127 95,568
Written off against allowance 500,543 275,977 303,889 269,883
Translation difference (64) (195) - -
Balance at end of year (1,492,192) (877,245) (1,375,998) (591,068)
notes to the financial statements – 31 december 2008
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10. tRade deBtoRs (Cont’d)
Trade debtors are non-interest bearing and are generally on 30 to 60 days terms. They are recognised at their original invoiced amounts which represent their fair values on initial recognition.
trade debtors that are past due but not impaired
The Group has trade debtors amounting to US$5,166,122 (2007: US$7,452,614) that are past due at the balance sheet date but not impaired. These trade debtors are unsecured and the analysis of their aging at the balance sheet date is as follows:
Group
2008 2007
us$ us$
Trade debtors past due:
Lesser than 31 days 3,277,022 6,181,206
31 to 60 days 575,452 647,241
61 to 90 days 467,987 254,148
More than 91 days 845,661 370,019
5,166,122 7,452,614
trade debtors that are impaired
The Group’s trade debtors that are impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows:
Group
individually impaired
2008 2007
us$ us$
Trade debtors – nominal amounts 6,077,759 10,020,907
Less: Allowance for impairment (1,492,192) (877,245)
4,585,567 9,143,662
Movement in allowance accounts:
Balance at beginning of year (877,245) (858,187)
Allowance for the year (1,258,589) (397,621)
Written back of allowance 143,163 102,781
Written off against allowance 500,543 275,977
Translation difference (64) (195)
Balance at end of year (1,492,192) (877,245)
notes to the financial statements – 31 december 2008
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10. tRade deBtoRs (Cont’d)
Trade debtors that are individually determined to be impaired at the balance sheet date relate to debtors who have delay in payments and indication of default on payments. These trade debtors are not secured by any collateral or credit enhancements.
Trade debtors are denominated in the following currencies:
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
United States dollar 33,563,343 25,560,592 29,027,344 18,766,997
Singapore dollar 8,794,268 25,147,829 8,729,136 25,084,854
Others 7,050,241 3,148,297 140,010 476,731
49,407,852 53,856,718 37,896,490 44,328,582
11. advanCe Payments foR vessels PuRChase
These balances are advance payments made to the shipyards relating to vessels purchase. The balance as at 31 December 2008 was for vessels scheduled to be delivered in 2011. The balance as at 31 December 2007 was transferred to fixed assets when the vessels were delivered in 2008.
During the financial year, borrowing costs of approximately US$280,000 (2007: US$Nil), arising from borrowings obtained specifically for the vessels purchase, were capitalised under advance payments.
12. otheR deBtoRs and dePosits
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Other debtors 771,424 1,857,470 250,524 1,099,818
Less: Allowance for doubtful debts (32) - - -
771,392 1,857,470 250,524 1,099,818
Deposits 982,984 1,613,451 38,307 50,320
Loans to employees 45,867 68,017 25,902 33,814
Insurance claims receivable 315,307 131,426 315,307 131,426
2,115,550 3,670,364 630,040 1,315,378
notes to the financial statements – 31 december 2008
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12. otheR deBtoRs and dePosits (Cont’d)
Movements in allowance for doubtful debts during the financial year were as follows:
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Balance at beginning of year - (251) - -
Allowance for the year (32) - - -
Write back of allowance - 258 - -
Translation difference - (7) - -
Balance at end of year (32) - - -
Other debtors and deposits are denominated in the following currencies:
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
United States dollar 1,385,499 1,059,513 539,280 537,738
Singapore dollar 66,019 779,019 64,630 777,640
Indian Rupee 339,087 1,589,739 - -
Others 324,945 242,093 26,130 -
2,115,550 3,670,364 630,040 1,315,378
13. due fRom/to immediate holdinG ComPany (tRade)
The amounts due from/to immediate holding company are unsecured, interest-free and are to be settled in cash within the next twelve months.
14. due fRom suBsidiaRies (tRade)
Company
2008 2007
us$ us$
Due from subsidiaries 3,278,613 5,050,737
Less: Allowance for doubtful debts (684,581) (643,048)
2,594,032 4,407,689
notes to the financial statements – 31 december 2008
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14. due fRom suBsidiaRies (tRade) (Cont’d)
Movement in allowance for doubtful debts during the financial year were as follows:
Company
2008 2007
us$ us$
Balance at beginning of year (643,048) (690,939)
Allowance for the year (41,533) -
Write back of allowance - 47,891
Balance at end of year (684,581) (643,048)
These balances are unsecured, interest-free and are to be settled in cash within the next twelve months.
15. due fRom suBsidiaRies (non-tRade)
These balances are unsecured, interest-free and are expected to be settled in cash within the next twelve months.
16. due fRom Related ComPanies (tRade)
These balances are unsecured, interest-free and are to be settled in cash within the next twelve months.
17. due fRom assoCiated ComPany (non-tRade)
These balances are unsecured and interest bearing at rate of 0.50% above 6-month LIBOR (2007: Nil%) per annum. The amount is expected to be settled in cash within the next twelve months.
18. investment seCuRities
Group and Company
2008 2007
us$ us$
Quoted debt and note securities 902,200 3,988,795
Investment securities are stated at market value which approximates the fair value.
The quoted debt and note securities have maturities between 2 and 4 years (2007: 1 and 8 years). The weighted average effective interest rate is 1.87% (2007: 2.81%) per annum.
notes to the financial statements – 31 december 2008
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19. Cash and Bank BalanCes
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Non-current
Call and fixed deposits 1,024 4,700,000 - 4,700,000
Current
Call and fixed deposits 43,352,760 55,733,016 38,635,402 49,431,954
Cash at bank and in hand 23,875,185 17,420,891 12,877,801 9,612,853
Cash and bank balances 67,227,945 73,153,907 51,513,203 59,044,807
Total cash and bank balances 67,228,969 77,853,907 51,513,203 63,744,807
Cash and bank balances are denominated in the following currencies:
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
United States dollar 49,488,775 25,719,563 40,603,448 18,576,084
Singapore dollar 8,374,606 40,261,119 8,176,312 39,359,286
Indonesian Rupiah 3,151,084 729,996 14,137 17,509
Thai Baht 2,111,538 5,432,961 784,121 3,705,018
Indian Rupee 1,948,699 3,314,020 393,747 1,043,384
Others 2,154,267 2,396,248 1,541,438 1,043,526
67,228,969 77,853,907 51,513,203 63,744,807
Fixed deposits are made for varying period of between 1 week to 3 years (2007: 1 week to 5 years) depending on the immediate cash requirements of the Group. These current portion of fixed deposits can be withdrawn anytime at the discretion of management. Non-current portion of cash and bank balances represents a deposit with maturity date of more than a year. They earn interests at the respective deposit rates. Interest rates range from 0.03% to 12.50% (2007: 1.41% to 12.00%) per annum.
Cash at banks earns interest at floating rates based on daily bank deposit rates ranging from 0.00% to 2.50% (2007: 0.00% to 2.80%) per annum.
notes to the financial statements – 31 december 2008
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20. tRade CReditoRs
Trade creditors are denominated in the following currencies:
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
United States dollar 8,755,358 10,322,891 7,270,443 8,463,690
Singapore dollar 8,278,855 7,732,206 8,176,859 7,556,554
Others 3,105,499 2,468,379 313,827 228,740
20,139,712 20,523,476 15,761,129 16,248,984
21. otheR CReditoRs and liaBilities
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Accrued operating expenses 15,345,645 10,759,283 6,635,742 5,411,622
Other creditors 673,936 589,468 395,596 144,834
Deferred income 1,762,635 2,460,368 1,240,544 1,868,043
Derivative financial instruments (Note 39) 159,768 171,376 - -
17,941,984 13,980,495 8,271,882 7,424,499
22. due to suBsidiaRy (non-tRade)
The amount due to subsidiary is unsecured, interest-free and is expected to be settled in cash within the next twelve months.
notes to the financial statements – 31 december 2008
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23. hiRe PuRChase CReditoRs
Group
minimum lease
payments interestPresent value of payments
2008 us$ us$ us$
Later than five years 294,998 14,936 280,062
Later than one year but not later than five years 1,027,633 201,084 826,549
1,322,631 216,020 1,106,611
Not later than one year 282,071 79,759 202,312
1,604,702 295,779 1,308,923
2007
Later than five years 8,842 1,541 7,301
Later than one year but not later than five years 117,559 15,228 102,331
126,401 16,769 109,632
Not later than one year 69,422 8,433 60,989
195,823 25,202 170,621
Company
2008
Later than five years 878 147 731
Later than one year but not later than five years 166,948 21,817 145,131
167,826 21,964 145,862
Not later than one year 52,152 6,822 45,330
219,978 28,786 191,192
2007
Later than five years 8,842 1,541 7,301
Later than one year but not later than five years 84,324 13,723 70,601
93,166 15,264 77,902
Not later than one year 27,602 4,173 23,429
120,768 19,437 101,331
notes to the financial statements – 31 december 2008
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23. hiRe PuRChase CReditoRs (Cont’d)
Hire purchases bear interest ranging from 2.20% to 15.0% (2007: 2.20% to 15.0%) per annum.
All assets acquired under hire purchases are secured against the assets under lease. The net book value of assets under hire purchases is disclosed in Note 9.
The hire purchases do not contain any escalation clauses and do not provide for contingent rents. Lease terms do not contain restrictions concerning dividend, additional debts or further leasing.
24. Bank teRm loans (seCuRed)
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
Not later than one year 17,359,637 10,711,576 7,985,887 886,397
Later than one year but not later than five years 70,004,133 31,272,418 31,502,489 3,545,586
Later than five years 68,580,079 24,428,422 56,470,954 10,782,798
138,584,212 55,700,840 87,973,443 14,328,384
155,943,849 66,412,416 95,959,330 15,214,781
The details of bank term loans are as follows:
loans outstandingas at 31 december
2008 2007
us$ us$
(a) the Company
(i) SGD21,590,000 repayable in 120 monthly instalments commencing September 2006 with a certain remaining amount to be paid at the end of the term with an option to extend for a further 10 years. Interest is payable at 0.95% above Swap Offer Rate per annum. 13,180,556 13,834,484
(ii) SGD2,052,750 repayable in 120 monthly instalments commencing October 2007. Interest is payable at 0.95% above Swap Offer Rate per annum. 1,247,331 1,380,297
(iii) USD23,120,000 repayable in 40 quarterly instalments commencing May 2008. Interest is payable at 1.22% above LIBOR per annum. 22,010,699 -
notes to the financial statements – 31 december 2008
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24. Bank teRm loans (seCuRed) (Cont’d)
loans outstandingas at 31 december
2008 2007
us$ us$
(a) the Company (cont’d)
(iv) USD33,600,000 repayable in 40 quarterly instalments commencing June 2008. Interest is payable at 1.35% above LIBOR per annum. 31,963,210 -
(v) USD28,400,000 repayable in 40 quarterly instalments commencing October 2008. Interest is payable at 1.35% above LIBOR per annum. 27,557,534 -
95,959,330 15,214,781
(b) subsidiaries
(i) USD11,550,000 repayable in 40 quarterly instalments commencing August 2000 and a final instalment for the remaining outstanding amount. Interest is payable at 1.20% above LIBOR per annum. 1,732,500 2,887,500
On 4 April 2001 and 19 April 2001, the subsidiary entered into two interest rate swap agreements, each on a notional principal of USD5,197,500, with a bank to hedge against the USD LIBOR. Under these agreements which end on 5 May 2010, the subsidiary will pay a fixed interest rate of 5.80% and 5.65% per annum respectively. In return it will receive interest at USD 3-month LIBOR per annum.
(ii) USD12,100,000 repayable in 40 quarterly instalments commencing January 2001 and a final instalment for the remaining outstanding amount. Interest is payable at 1.20% above LIBOR per annum. 2,722,500 3,932,500
On 4 April 2001 and 19 April 2001, the subsidiary entered into two interest rate swap agreements, each on a notional principal of USD5,898,750, with a bank to hedge against the USD LIBOR. Under these agreements which end on 31 January 2011, the subsidiary will pay a fixed interest rate of 5.85% and 5.70% per annum respectively. In return it will receive interest at USD 3-month LIBOR per annum.
notes to the financial statements – 31 december 2008
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24. Bank teRm loans (seCuRed) (Cont’d)
loans outstandingas at 31 december
2008 2007
us$ us$
(b) subsidiaries (cont’d)
(iii) USD2,250,000 repayable in 28 quarterly instalments commencing July 2003 and a final instalment for the remaining outstanding amount. Interest is payable at 1.50% above LIBOR per annum. - 803,572
(iv) USD3,650,000 repayable in 32 equal quarterly instalments commencing October 2003. Interest is payable at 1.30% above LIBOR per annum. 1,254,688 1,710,938
(v) USD1,400,000 repayable in 20 equal quarterly instalments commencing October 2003. Interest is payable at 1.30% above LIBOR per annum. - 210,000
(vi) USD5,125,000 repayable in 40 equal quarterly instalments commencing July 2004. Interest is payable at 1.30% above LIBOR per annum. 2,946,875 3,459,375
(vii) USD11,600,000 repayable in 20 equal quarterly instalments commencing August 2006. Interest is payable at 1.25% above SIBOR per annum. 4,524,000 8,120,000
(viii) USD1,400,000 repayable in 16 equal quarterly instalments commencing August 2006. Interest is payable at 1.25% above SIBOR per annum. 612,500 875,000
(ix) USD16,450,000 repayable in 40 equal quarterly instalments commencing October 2006. Interest is payable at 1.05% above LIBOR per annum. 12,748,750 14,393,750
(x) USD16,450,000 repayable in 40 equal quarterly instalments commencing January 2007. Interest is payable at 1.05% above LIBOR per annum. 13,160,000 14,805,000
(xi) USD8,150,000 repayable in 24 equal quarterly instalments commencing January 2008. Interest is payable at 1.25% above SIBOR per annum. 7,306,000 -
notes to the financial statements – 31 december 2008
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24. Bank teRm loans (seCuRed) (Cont’d)
loans outstandingas at 31 december
2008 2007
us$ us$
(b) subsidiaries (cont’d)
(xii) USD12,976,000, part of a facility amounting to USD84,000,000 repayable in 48 equal quarterly instalments commencing after delivery of the vessels. Interest is payable at 0.55% above LIBOR per annum. 12,976,706 -
59,984,519 51,197,635
Total 155,943,849 66,412,416
The bank term loans are secured as follows:
1. Bank term loans (a)(i) and (a)(ii)
– legal mortgage over freehold properties of the Company; – assignment of insurance; and – assignment of income or proceeds of sale if any.
2. Bank term loans (a)(iii) to (a)(v)
– corporate guarantees from the Company; – legal mortgages over vessels of the Company (Note 9); – assignment of income derived from charter hire contracts; and – assignment of insurance of the vessels.
3. Bank term loans (b)(i) to (b)(xii) except (b)(vii)
– corporate guarantees from the Company; – legal mortgages over certain vessels of the subsidiaries (Note 9); – assignment of income derived from charter hire contracts; and – assignment of insurance of the vessels.
4. Bank term loans (b)(vii)
– corporate guarantee from the Company and a subsidiary; – legal mortgages over vessel of the subsidiary (Note 9); – assignment of income derived from charter hire contracts; and – assignment of insurance of the vessel.
notes to the financial statements – 31 december 2008
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24. Bank teRm loans (seCuRed) (Cont’d)
The carrying amounts of bank loans are denominated in the following currencies:
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
United States dollar 141,515,962 51,197,635 81,531,443 -
Singapore dollar 14,427,887 15,214,781 14,427,887 15,214,781
155,943,849 66,412,416 95,959,330 15,214,781
25. tuRnoveR
Turnover of the Group represents revenue from freight operations, charter hire income and freight forwarding service income. Intra-group transactions and turnover from associated companies have been excluded from the Group’s turnover.
26. otheR oPeRatinG inCome
Group
2008 2007
us$ us$
Gain on disposal of fixed assets 416,903 11,472
Gain on disposal of investment securities 3,880 16,078
Unrealised gain on investment securities 135,825 258,169
Rental income 324,210 19,536
Claim income 79,231 18,155
Others 53,729 54,399
1,013,778 377,809
notes to the financial statements – 31 december 2008
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27. otheR oPeRatinG exPenses
Group
2008 2007
us$ us$
Claim expenses 510,265 -
Foreign exchange loss 452,058 2,639,548
Others 62,042 55,134
1,024,365 2,694,682
28. PRofit fRom oPeRations
This is determined after charging the following:
Group
2008 2007
us$ us$
Directors’ fees 115,914 107,285
Non-audit fees paid/payable to the auditors of the Company 47,455 16,589
Operating lease expenses 89,872,818 82,689,745
Personnel expenses (Note 29) 14,781,152 12,636,574
29. PeRsonnel exPenses
Group
2008 2007
us$ us$
Wages, salaries and bonuses 13,614,315 11,759,349
Central Provident Fund and other pension costs 1,166,837 877,225
14,781,152 12,636,574
The above note includes directors’ and key executives’ remuneration as disclosed in Note 35.
notes to the financial statements – 31 december 2008
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30. finanCial inCome/(exPense)
Group
2008 2007
us $ us$
(a) financial income
Interest income
– call and fixed deposits 1,111,893 2,263,201
– quoted debt and note securities 44,379 139,041
1,156,272 2,402,242
(b) financial expense
Interest expense
– bank term loans (4,706,136) (4,294,103)
– hire purchase creditors (20,241) (13,208)
(4,726,377) (4,307,311)
(3,570,105) (1,905,069)
31. inCome tax exPense
(a) major components of income tax expense
Major components of income tax expense for the years ended 31 December are:
Group
2008 2007
us$ us$
Profit and loss account
Current income tax:
Current income taxation 1,542,835 1,339,572
Under provision in respect of previous years 3,442 63,991
Deferred income tax:
Current year 151,041 (47,915)
Effects of reduction in tax rate - (54)
Under provision in respect of previous years - 398
Income tax expense recognised in the profit and loss account 1,697,318 1,355,992
notes to the financial statements – 31 december 2008
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31. inCome tax exPense (Cont’d)
(a) major components of income tax expense (cont’d)
The Company has been granted an extension of the status of the Approved International Shipping Enterprise (“AIS”) with effect from 15 September 2005 for a period of 10 years. The AIS incentive exempts certain income derived by the Company from Singapore Income Tax, subject to compliance with the relevant conditions under the scheme and those income not qualifying for incentive will be taxable at the existing corporate income tax rate.
The income of Foremost Maritime Pte Ltd, a subsidiary, which arises from shipping activities, is exempted from income tax in accordance with section 13A of the Singapore Income Tax Act, Cap. 134.
(b) Relationship between tax expense and accounting profit
The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 31 December 2008 and 2007 is as follows:
Group
2008 2007
us$ us$
Profit before tax 28,445,878 22,078,665
Tax at statutory tax rate at 18% (2007: 18%) 5,120,258 3,974,160
Adjustments:
Non-deductible expenses 13,717 62,698
Income not subject to taxation (826,047) (1,120,707)
Effect of AIS status (2,622,926) (2,341,509)
Effect of different applicable tax rates for foreign subsidiaries 44,953 756,877
Effect of deferred tax asset not recognised - 1,750
Effect of operating losses not allowed to be carried forward - 604
Under provision in respect of previous years 3,442 64,389
Share of taxes of associates 7,242 (96,184)
Others (43,321) 53,914
Income tax expense recognised in the profit and loss account 1,697,318 1,355,992
The corporate income tax rate applicable to Singapore companies of the Group was 18% for the year of assessment 2009 and year of assessment 2008. The corporate income tax rate applicable to Malaysian company of the Group was reduced from 28% to 27% and 26% for the year of assessment 2007 and the year of assessment 2008 onwards respectively.
The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
notes to the financial statements – 31 december 2008
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31. inCome tax exPense (Cont’d)
(c) deferred taxation
Deferred income tax asset as at 31 December relates to the following:
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
An excess of tax written down value over net book value of fixed assets 2,042 116,730 - -
Provisions 77,832 108,626 - -
Others 937 6,496 - -
80,811 231,852 - -
(d) unrecognised tax losses
The Group has tax losses of approximately US$226,000 (2007: US$254,000) that are available for offset against future taxable profits of the company in which the losses arose for which no deferred tax asset is recognised due to uncertainty of its recoverability. The use of these tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate.
32. eaRninGs PeR shaRe
The earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Company of US$26,037,073 (2007: US$20,453,360) by the number of shares in issue during the financial year of 539,131,199 (2007: 539,131,199). The basic and diluted earnings per share are the same as there are no potential dilutive shares.
notes to the financial statements – 31 december 2008
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33. dividends
Company
2008 2007
us$ us$
declared and paid during the year:
Dividends on ordinary shares:
Final dividend paid – 1.50 Singapore cents per ordinary share (tax exempt) in respect of previous financial year (2007: 1.00 Singapore cent per ordinary share, tax exempt) 5,946,300 3,718,146
Proposed but not recognised as a liability as at 31 december:
Dividends on ordinary shares subject to shareholders’ approval at the AGM:
Final tax exempt dividend for financial year ended 31 December 2008 of 1.50 Singapore cents per share, total dividend payable amounting to SGD8,086,968 (2007: 1.50 Singapore cents per share, total dividend payable amounting to SGD8,086,968) 5,615,950 5,946,300
34. notes to Cash flow statement
(a) Cash and cash equivalents
Cash and cash equivalents included in the consolidated statement of cash flows comprise the following:
Group
2008 2007
us$ us$
Total cash and bank balances (Note 19) 67,228,969 77,853,907
Less: Pledged deposits (2,467,272) (2,822,354)
64,761,697 75,031,553
Less: Call and fixed deposits (non-current) (Note 19) (1,024) (4,700,000)
64,760,673 70,331,553
Call and fixed deposits
The Company’s fixed deposits totalling US$1,078,364 (2007: US$1,042,187) have been pledged to a bank to secure bankers’ guarantee facilities of US$1,639,930 (2007: US$1,632,535) given to suppliers of goods and services in the ordinary course of business.
Fixed deposits of subsidiaries totalling US$83,806 (2007: US$303,130) have been pledged to certain banks to secure bankers’ guarantee facilities of US$456,433 (2007: US$1,030,991) given to suppliers of goods and services in ordinary course of business.
notes to the financial statements – 31 december 2008
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34. notes to Cash flow statement (Cont’d)
(a) Cash and cash equivalents (cont’d)
Cash at bank and in hand
Included in cash at bank and in hand of the Group is an amount of US$1,305,102 (2007: US$1,477,037) pledged to certain banks to secure loans of the Group amounting to US$111,895,193 (2007: US$42,202,635) (Note 24).
(b) Purchase of fixed assets
During the financial year, the Group acquired fixed assets with aggregate cost of US$126,477,568 (2007: US$10,550,331) of which US$1,235,480 (2007: US$52,509) was acquired by means of hire purchase. Cash payment of US$125,242,088 (2007: US$10,497,822) was made to purchase fixed assets of the Group.
35. Related PaRty tRansaCtions
An entity or individual is considered a related party of the Group for the purposes of the financial statements if:
(i) it possesses the ability (directly or indirectly) to control or exercise significant influence over the operating and financial decisions of the Group or vice versa; or
(ii) it is subject to common control or common significant influence.
In addition to those related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties who are not members of the Group took place during the year at terms agreed between the parties.
Group
2008 2007
us$’000 us$’000
expenses
Immediate holding company
Management fee - 188
Agency commissions 3,346 3,335
Office rental 134 91
Related companies
Ship management fees 741 588
Building rental 25 24
Vessel charter hire 1,233 973
Container depot storage/repair 461 136
Stevedorage charges 2,837 2,643
Others
Fees paid to a firm of which a director of the Company is a member 19 8
notes to the financial statements – 31 december 2008
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35. Related PaRty tRansaCtions (Cont’d)
Compensation of key management personnel
Group
2008 2007
us$000 us$000
Short-term employee benefits 5,119 4,027
Pension contributions 83 52
Total compensation paid to key management personnel 5,202 4,079
Comprise amounts paid to:
• DirectorsoftheCompany 3,475 2,744
• Keyexecutives 1,727 1,335
5,202 4,079
36. ContinGent liaBilities and Commitments
(a) non-cancellable operating lease commitments – Group as lessee
The Group has various operating lease agreements for rental of office, residential premises and charter hire of vessels. Most leases contain renewable options. Lease terms do not contain escalation clauses or contingent rentals and do not contain restrictions on the Group’s activities concerning dividends, additional debt or further leasing.
2008 2007
us$’000 us$’000
Future minimum lease payments
– not later than one year 57,515 59,886
– later than one year but not later than five years 95,641 113,713
– later than five years 65 12,856
153,221 186,455
Operating lease commitments in respect of the Group’s charter hire of vessels are calculated based on the charter hire rates applicable as at the end of the financial year. These lease contracts contain provisions for renegotiation of the charter hire rates on a 3 monthly, 6 monthly or annual basis.
(b) operating lease commitments – Group as lessor
The Group has various operating lease agreements with third parties relating to the rental of office, residential premises and charter hire of vessels. These non-cancellable leases have remaining non-cancellable lease terms of between one and five years. Some leases include a clause to enable the charterer to extend the charter hire contract at the charterer’s option for a specified period.
notes to the financial statements – 31 december 2008
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36. ContinGent liaBilities and Commitments (Cont’d)
(b) operating lease commitments – Group as lessor (cont’d)
Future minimum lease receivables under non-cancellable operating leases as at 31 December are as follows:
2008 2007
us$’000 US$’000
Future minimum lease receivables
– not later than one year 17,172 21,095
– later than one year but not later than five years 6,994 18,200
24,166 39,295
(c) Capital commitments
Capital expenditure contracted for as at the balance sheet date but not recognised in the financial statements are as follows:
Group Company
2008 2007 2008 2007
us$’000 US$’000 us$’000 US$’000
Capital commitment in respect of fixed assets 69,123 75,932 - 74,700
37. seGment infoRmation
Reporting format
For management purposes, the Group is organised on a world-wide basis into these major operating businesses. The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that serves different markets.
Business segments
The Group is organised into three main operating divisions, namely:
– Container Shipping– Industrial Shipping– Others
Others include forwarding, agency and other services.
notes to the financial statements – 31 december 2008
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37. seGment infoRmation (Cont’d)
Business segments (cont’d)
2008Container shipping
industrial shipping others eliminations Group
us$’000 us$’000 us$’000 us$’000 us$’000
Turnover
– External customers 390,396 43,492 9,364 - 443,252
– Inter-segment 1,399 974 3,679 (6,052) -
391,795 44,466 13,043 (6,052) 443,252
Segment results 23,816 8,280 1,680 (1,128) 32,648
Financial income 875 152 129 - 1,156
Financial expense (2,744) (1,976) (6) - (4,726)
Share of results of associated companies - (1,002) 370 - (632)
Profit before tax 21,947 5,454 2,173 (1,128) 28,446
Income tax expense (1,697)
Profit after tax 26,749
Segment assets 262,986 153,504 11,706 - 428,196
Unallocated assets 81
428,277
Segment liabilities 124,479 67,143 4,579 - 196,201
Unallocated liabilities 1,501
197,702
Capital expenditure 120,068 5,218 1,192 - 126,478
Depreciation 5,191 8,921 202 - 14,314
Allowance for doubtful debts 1,232 27 - - 1,259
notes to the financial statements – 31 december 2008
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37. seGment infoRmation (Cont’d)
Business segments (cont’d)
2007Container shipping
industrial shipping others eliminations Group
us$’000 us$’000 us$’000 us$’000 us$’000
Turnover
– External customers 326,919 41,643 8,664 - 377,226
– Inter-segment 988 - 2,881 (3,869) -
327,907 41,643 11,545 (3,869) 377,226
Segment results 14,170 9,432 869 (647) 23,824
Financial income 2,001 246 155 - 2,402
Financial expense (870) (3,435) (2) - (4,307)
Share of results of associated companies - (32) 192 - 160
Profit before tax 15,301 6,211 1,214 (647) 22,079
Income tax expense (1,356)
Profit after tax 20,723
Segment assets 182,911 127,047 11,675 - 321,633
Unallocated assets 232
321,865
Segment liabilities 42,797 55,927 3,397 - 102,121
Unallocated liabilities 2,144
104,265
Capital expenditure 8,587 1,559 404 - 10,550
Depreciation 1,792 9,086 186 - 11,064
Allowance for doubtful debts 276 122 - - 398
notes to the financial statements – 31 december 2008
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37. seGment infoRmation (Cont’d)
Geographical segments
Container Shipping and Logistics and Others. See (i) below.
turnover
2008 2007
us$’000 us$’000
Indonesia 212,099 172,948
South East Asia (excluding Indonesia) 105,091 89,474
Middle East and Indian Sub-continent 51,337 44,058
Far East 14,867 13,433
Others 16,366 15,670
Total turnover for Container Shipping and Others 399,760 335,583
(i) Revenue is allocated to each geographical segment based on the origination of the shipment. The directors believe it could be inaccurate to analyse assets and capital expenditure by geographical segment because these cannot be meaningfully allocated to the different routes as the vessels do not operate on fixed routes. For Industrial Shipping, charterers of the Group’s vessels have the discretion to operate within a wide trading area and are not constrained by a specific sea-route. As such, no geographical segment information is presented.
allocation basis and transfer pricing
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise income tax.
Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.
38. finanCial Risk manaGement oBJeCtives and PoliCies
The Group and the Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and bunker price risk. The Board of Directors reviews and agrees policies and procedures for the management of these risks. The Audit Committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient.
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.
notes to the financial statements – 31 december 2008
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38. finanCial Risk manaGement oBJeCtives and PoliCies (Cont’d)
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other debtors. For other financial assets (including investment securities and cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The Group and the Company may request bankers’ guarantee from its customers if it is necessary. In addition, debtors balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
Credit risk concentration profileThe Group determines concentrations of credit risk by monitoring the country and customer profile of its trade debtors on an on-going basis. The credit risk concentration profile of the Group’s trade debtors at the balance sheet date is as follows:
Group
2008 2007
us$’000 % of total us$’000 % of total
By country:
Singapore 29,939 60.6 36,897 68.5
Indonesia 7,323 14.8 8,670 16.1
United Arab Emirates 5,136 10.4 2,604 4.8
Myanmar 1,139 2.3 - 0.0
China 976 2.0 1,548 2.9
Other countries 4,895 9.9 4,138 7.7
49,408 100.0 53,857 100.0
By customers:
Main line operators 36,417 73.7 38,774 72.0
Agents 2,355 4.8 3,756 7.0
Others 10,636 21.5 11,327 21.0
49,408 100.0 53,857 100.0
notes to the financial statements – 31 december 2008
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38. finanCial Risk manaGement oBJeCtives and PoliCies (Cont’d)
(a) Credit risk (cont’d)
At the balance sheets date, approximately 32% (2007: 40%) of the Group’s trade debtors were due from 5 major customers who are main line operators located in Singapore.
Financial assets that are neither past due nor impairedTrade and other debtors that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and cash equivalents and investment securities that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings.
Financial assets that are either past due or impairedInformation regarding financial assets that are either past due or impaired is disclosed in Note 10 and Note 12 (trade debtors and other debtors and deposits) and Note 18 (investment securities).
(b) liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.
The Group and the Company monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operation and mitigate the effects of fluctuation of cash flows.
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities at the balance sheet date based on contractual undiscounted payments.
2008less than
1 year 1 to 5 years over 5 years total
Group us$’000 us$’000 us$’000 us$’000
Trade creditors 20,140 - - 20,140
Other creditors and liabilities 17,942 - - 17,942
Loans and borrowings 17,562 70,830 68,860 157,252
55,644 70,830 68,860 195,334
notes to the financial statements – 31 december 2008
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38. finanCial Risk manaGement oBJeCtives and PoliCies (Cont’d)
(b) liquidity risk (cont’d)
2008less than
1 year 1 to 5 years over 5 years total
Company us$’000 us$’000 us$’000 us$’000
Trade creditors 15,761 - - 15,761
Other creditors and liabilities 8,272 - - 8,272
Loans and borrowings 8,031 31,648 56,472 96,151
32,064 31,648 56,472 120,184
2007
Group
Trade creditors 20,523 - - 20,523
Other creditors and liabilities 13,980 - - 13,980
Loans and borrowings 10,773 31,375 24,435 66,583
45,276 31,375 24,435 101,086
Company
Trade creditors 16,249 - - 16,249
Other creditors and liabilities 7,424 - - 7,424
Loans and borrowings 910 3,616 10,790 15,316
24,583 3,616 10,790 38,989
(c) interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings, fixed deposits and investments in debt securities. The Group does not hedge its investment in fixed rate debt securities as they have active secondary or resale markets to ensure liquidity.
The Group obtains additional financing through bank borrowings. The Group’s policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure.
The Group enters into various interest rate swap contracts to hedge its interest rate risk, where appropriate, over the duration of its borrowings. The contracts limit the Group’s exposure to both favourable and unfavourable interest rate fluctuations. It is the Group’s policy not to trade in derivative contracts.
notes to the financial statements – 31 december 2008
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38. finanCial Risk manaGement oBJeCtives and PoliCies (Cont’d)
(c) interest rate risk (cont’d)
Surplus funds are placed with reputable banks and financial institutions which generate interest income for the Group.
Information relating to the Group’s interest rate exposure is disclosed in Note 18, Note 19, Note 23 and Note 24.
Sensitivity analysis for interest rate riskThe following table demonstrates the sensitivity to a reasonably possible change in the SGD and USD interest rates, with all other variables held constant, of the Group’s profit net of tax (through the net impact of interest expense on floating loans and borrowings and interest income on fixed deposits and investment securities).
Group
increase/(decrease) in basis points
effect on profit net of
tax
us$’000
2008
- Singapore dollar 100 (77)
(100) 77
- US dollar 100 (829)
(100) 829
2007
- Singapore dollar 100 179
(100) (179)
- US dollar 100 (175)
(100) 175
notes to the financial statements – 31 december 2008
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38. finanCial Risk manaGement oBJeCtives and PoliCies (Cont’d)
(d) foreign currency risk
The Group has transactional currency exposures arising from sales or cost of services that are denominated in a currency other than the respective functional currencies of Group entities, primarily SGD, Indian Rupee (INR) and Thai Baht (THB). The foreign currencies in which these transactions are denominated are mainly SGD.
The Group and the Company also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At the balance sheet date, such foreign currency balances (mainly in SGD) approximately amount to US$17,740,000 and US$10,910,000 for the Group and the Company respectively.
The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Malaysia, Thailand, Indonesia, Vietnam and United Arab Emirates.
The Group manages its foreign exchange exposure by a policy of matching, as far as possible, receipts and payments in each individual currency. Surpluses of convertible currencies are converted, as soon as possible, to SGD or USD.
Sensitivity analysis for foreign currency riskThe following table demonstrates the sensitivity to a reasonably possible change in the exchange rate of SGD against USD, with all other variables held constant, of the Group’s profit net of tax.
Group
strengthen/(weaken) inexchange
effect onprofit net of
tax
us$’000
2008 5.00% (466)
- Singapore dollar (5.00%) 466
2007 5.00% 1,559
- Singapore dollar (5.00%) (1,559)
(e) Bunker price risk
The Group’s earnings are affected by changes in bunker prices. The Group manages this risk by monitoring the bunker prices and entering into forward contracts to hedge against fluctuations of bunker price if considered appropriate.
As at 31 December 2008, there were no outstanding bunker price hedging contracts. Therefore there are no assets and liabilities impacts on bunker prices as at 31 December 2008.
notes to the financial statements – 31 december 2008
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notes to the financial statements – 31 december 2008
39. finanCial instRuments
(a) fair value of financial instruments
The fair value of financial liabilities that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows:
Group Company
Carrying amount fair value Carrying amount fair value
2008 2007 2008 2007 2008 2007 2008 2007
us$ us$ us$ us$ us$ us$ us$ us$
Hire purchase creditors 1,308,923 170,621 1,073,551 161,068 191,192 101,331 196,110 104,081
Determination of fair value
Lease obligations
The fair values as disclosed in the table above are estimated by discounting expected future cash flows using the current interest rate of similar type of instruments at the balance sheet date.
Due from/ to immediate holding company/ subsidiaries/ related companies
The fair value of these financial assets and liabilities is based on the current rates available for debt with the same maturity profile.
Current trade debtors, other debtors and deposits, trade creditors, other creditors and liabilities, cash and cash equivalents, and bank term loans at floating rate
The carrying amount of these financial assets and liabilities are reasonable approximation of fair values, either due to their relatively short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the balance sheet date.
Investment securities
Fair value is determined directly by reference to the market bid price obtained from the bank/ portfolio manager at the balance sheet date.
Interest rate swap contracts
The fair value is based upon valuations provided by the swap counter-party banks.
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notes to the financial statements – 31 december 2008
39. finanCial instRuments (Cont’d)
(a) fair value of financial instruments (cont’d)
Derivative financial instruments and hedging activities
Derivative financial instruments included in the balance sheets at 31 December are as follows:
Group
2008 2007
assets liabilities assets liabilities
us$ us$ us$ us$
Interest rate swaps - 159,768 - 171,376
Forward currency contracts 2,764 - 19 -
2,764 159,768 19 171,376
Interest rate swap contracts entered by the Group are cash flow hedges which were assessed to be highly effective. As at 31 December 2008, the net fair value loss of US$159,768 (2007: US$171,376) was recognised as a liability with a corresponding loss recognised in the hedging reserve. The details of the interest rate swap contracts are disclosed in Note 24(b).
During the year, a gain of US$2,764 (2007: US$19) has been recognised in the profit and loss account in relation to the change in fair value of various forward contracts that the Group has entered into, based on valuations provided by banks.
The terms of these contracts and the fair value adjustments of these derivative financial instruments are as follows:
forward currency contracts maturity dates
Contract or notional
amountfair value adjustments
assets
us$ us$
2008
Forward currencycontracts
9/6/2009 to 24/6/2009 319,685 2,764
2007
Forward currency contracts
18/6/2008 to 25/6/2008 200,000 19
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39. finanCial instRuments (Cont’d)
(b) Categories of financial assets and financial liabilities
Group Company
2008 2007 2008 2007
us$ us$ us$ us$
financial assets at fair value through profit and loss:
Investment securities 902,200 3,988,795 902,200 3,988,795
loan and receivables:Trade debtors 49,407,852 53,856,718 37,896,490 44,328,582
Other debtors and deposits 2,115,550 3,670,364 630,040 1,315,378
Due from related companies 2,194,125 23,733 22,109,151 11,136,717
Due from related party 48,100 51,703 48,100 51,703
Cash and bank balances 67,228,969 77,853,907 51,513,203 63,744,807
120,994,596 135,456,425 112,196,984 120,577,187
financial liabilities carried at amortised cost:
Trade creditors 20,139,712 20,523,476 15,761,129 16,248,984
Other creditors and liabilities 17,941,984 13,980,495 8,271,882 7,424,499
Due to related companies 867,012 1,034,607 551,412 544,263
Loans and borrowings 157,252,772 66,583,037 96,150,522 15,316,112
196,201,480 102,121,615 120,734,945 39,533,858
40. CaPital manaGement
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2008 and 31 December 2007.
notes to the financial statements – 31 december 2008
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41. events afteR the BalanCe sheet date
(a) Revision of singapore tax Rate
On 22 January 2009, the Minister of Finance announced the revision in the Singapore tax rate from 18% to 17% with effect from Year of Assessment 2010. In accordance with FRS 21, Income Taxes, and FRS 10, Events After Balance Sheet Date, this is a non-adjusting subsequent event and the financial effect of the reduced tax rate will be reflected in the financial year ending 31 December 2009.
(b) Jobs Credit scheme
The Singapore Finance Minister announced the jobs credit scheme to encourage businesses to preserve jobs in the downturn.
Details of the scheme are as follows:
• Employerswill receivea12%cashgranton thefirst$2,500ofeachmonth’swages foreachemployee on their CPF payroll.
• TheJobsCreditisforoneyear,andemployerswillreceivetheJobsCreditin4payments:March,June, September and December 2009.
• For each payment, employers will receive Jobs Credits on the employees that are on theirCPF payrolls at the start of the quarter in which payment is made. The wages paid to these employees in the previous quarter will be the qualifying wages used to calculate the 12 % cash credit that employers will receive.
In accordance with FRS 20, Accounting for Government Grants and Disclosure of Government Assistance and FRS 10, Events After the Balance Sheet Date, this is a non-adjusting subsequent event and the financial effect of the jobs credit scheme will be reflected in the financial year ending 31 December 2009.
The Group’s staff costs have been computed in the year end without adjusting for the effect of the grant under the jobs credit scheme. Adjusting for the grant to be received under the jobs credit scheme will not result in any significant reduction in staff costs.
notes to the financial statements – 31 december 2008
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42. ComPaRative fiGuRes
For comparability, the comparative assets and liabilities figures of the corresponding year are translated into USD at the exchange rate ruling at the year-end date and the profit and loss account figures of the corresponding year are translated at the average exchange rate applicable for that year.
In addition, certain comparative figures have been reclassified to conform with current year’s presentation so as to better reflect the nature of the balances.
Group Company
2007 2007 2007 2007as restated as previously
statedas restated as previously
statedus$ us$ us$ us$
Advance payments for vessels purchase 8,700,690 - 8,700,690 -Prepaid operating expenses 10,246,000 18,946,690 6,869,895 15,570,585
43. authoRisation of finanCial statements
The financial statements for the year ended 31 December 2008 were authorised for issue in accordance with a directors’ resolution dated 19 March 2009.
notes to the financial statements – 31 december 2008
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shareholdings statistics as at 16 march 2009
Class of equity securities number of equity securities voting Rights
Ordinary shares 539,131,199 One vote per share
There are no treasury shares held in the issued share capital of the Company.
Range of shareholdings no. of shareholders % no. of shares %
1 - 999 90 1.60 36,415 0.01
1,000 - 10,000 3,299 58.87 14,270,263 2.65
10,001 - 1,000,000 2,190 39.08 78,279,900 14.52
1,000,001 and above 25 0.45 446,544,621 82.82
5,604 100.00 539,131,199 100.00
shareholdings held in hands of Public
Based on information available to the Company as at 16 March 2009, approximately 33.54% of the issued ordinary shares of the Company is held by the public and therefore, Rule 723 of the Listing Manual issued by SGX-ST is complied with.
toP 20 shaReholdeRs
no. name of shareholder no. of shares %
1 PT. Samudera Indonesia Tbk 209,250,000 38.81
2 DBS Nominees Pte Ltd 111,526,200 20.69
3 UOB Nominees (2006) Pte Ltd 38,980,000 7.23
4 United Overseas Bank Nominees Pte Ltd 22,742,071 4.22
5 DB Nominees (S) Pte Ltd 11,468,000 2.13
6 Mitsui and Co Ltd 9,600,000 1.78
7 CIMB-GK Securities Pte. Ltd. 6,762,239 1.25
8 Phillip Securities Pte Ltd 5,705,800 1.06
9 Kim Eng Securities Pte. Ltd. 5,024,600 0.93
10 Tskline (S) Pte Ltd 2,400,000 0.45
11 Ang Ah Beng 2,390,000 0.44
12 NBU International Limited 2,220,000 0.41
13 OCBC Nominees Singapore Pte Ltd 2,162,000 0.40
14 HSBC (Singapore) Nominees Pte Ltd 2,054,000 0.38
15 UOB Kay Hian Pte Ltd 1,823,400 0.34
16 Teo Cheng Tuan Donald 1,680,000 0.31
17 Poh Boh Sim 1,472,000 0.27
18 Citibank Nominees Singapore Pte Ltd 1,325,000 0.25
19 OCBC Securities Private Ltd 1,259,400 0.23
20 Randy Effendi 1,200,000 0.22
441,044,710 81.80
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shareholdings statistics as at 16 march 2009
suBstantial shaReholdeRs
name direct interest % deemed interest %
PT Samudera Indonesia Tbk (note 1) 351,180,000 65.14 - -
PT Samudera Indonesia Tangguh (note 2) - - 351,180,000 65.14
PT Ngrumat Bondo Utomo (note 3) - - 351,180,000 65.14
note:
1. 38,680,000 shares are held by UOB Nominees (2006) Pte Ltd and 103,250,000 shares are held by DBS Nominees Pte Ltd.
2. PT Samudera Indonesia Tangguh’s deemed interest arises from its interest of 57.98% in PT Samudera Indonesia Tbk.
3. PT Ngrumat Bondo Utomo’s deemed interest arises from its interest of 9.51% and 25.83% in PT Samudera Indonesia Tbk and PT Samudera Indonesia Tangguh respectively.
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NOTICE IS HEREBY GIVEN that the Annual General Meeting of Samudera Shipping Line Ltd (“the Company”) will be held at M Hotel Singapore, 81 Anson Road, Singapore 079908, Function Room Anson III, Level 2, on 29 April 2009 at 10.00 a.m. for the following purposes:
as oRdinaRy Business
1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended 31 December 2008 together with the Auditors’ Report thereon. (Resolution 1)
2. To declare a final tax exempt dividend of 1.50 Singapore cents per share for the year ended 31 December 2008 (2007: Final tax exempt dividend of 1.50 Singapore cents per share). (Resolution 2)
3. To re-elect the following Directors retiring pursuant to Article 91 of the Company’s Articles of Association:
Mr Hamdi Adnan (Resolution 3) Mr David Lim Teck Leong (Resolution 4) Mr Lee Chee Yeng (Resolution 5)
Mr David Lim Teck Leong will, upon re-election as a Director of the Company, remain as Chairman of the Remuneration Committee, a member of the Audit and Nominating Committees and will be considered independent.
Mr Lee Chee Yeng will, upon re-election as a Director of the Company, remain as Chairman of the Nominating Committee, a member of the Audit and Remuneration Committees and will be considered independent.
4. To re-appoint Mr Anugerah Pekerti, a director of the Company retiring under Section 153(6) of the Companies Act, Cap. 50, to hold office from the date of this Annual General Meeting until the next Annual General Meeting of the Company. [See Explanatory Note (i)] (Resolution 6)
Mr Anugerah Pekerti will, upon re-appointment as a Director of the Company, remain as a member of the Audit Committee and will be considered independent.
5. To approve the payment of Directors’ fees of S$162,000 for the year ended 31 December 2008 (2007: S$162,000). (Resolution 7)
6. To re-appoint Messrs Ernst & Young LLP as the Company’s Auditors and to authorise the Directors to fix their remuneration. (Resolution 8)
7. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
notice of annual General meeting
samudera shipping line ltd(Company Registration No: 199308462C)(Incorporated in Singapore with Limited Liability)
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as sPeCial Business
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:
8. authority to issue shares up to 50 per centum (50%) of the issued shares in the capital of the Company
That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors of the Company be authorised and empowered to:
(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or
(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares,
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors of the Company may in their absolute discretion deem fit; and
(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors of the Company while this Resolution was in force,
provided that:
(1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution) and Instruments to be issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares and Instruments to be issued other than on a pro rata basis to existing shareholders of the Company shall not exceed twenty per centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with sub-paragraph (2) below);
(2) (subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for the purpose of determining the aggregate number of shares and Instruments that may be issued under sub-paragraph (1) above, the percentage of issued shares and Instruments shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after adjusting for:
(a) new shares arising from the conversion or exercise of the Instruments or any convertible securities;
(b) new shares arising from exercising share options or vesting of share awards outstanding and subsisting at the time of the passing of this Resolution; and
(c) any subsequent bonus issue, consolidation or subdivision of shares;
notice of annual General meeting
samudera shipping line ltd(Company Registration No: 199308462C)(Incorporated in Singapore with Limited Liability)
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(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless such compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Articles of Association of the Company; and
(4) unless revoked or varied by the Company in a general meeting, such authority shall continue in force (i) until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier or (ii) in the case of shares to be issued in pursuance of the Instruments, made or granted pursuant to this Resolution, until the issuance of such shares in accordance with the terms of the Instruments. [See Explanatory Note (ii)] (Resolution 9)
9. Renewal of shareholders’ mandate for interested Person transactions
That for the purposes of Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited:
(a) approval be given for the renewal of the mandate for the Company, its subsidiaries and target associated companies or any of them to enter into any of the transactions falling within the types of Interested Person Transactions as set out on page 5 to page 6 of the Company’s Appendix dated 13 April 2009 (the “Appendix”) with any party who is of the class of Interested Persons described in the Appendix, provided that such transactions are carried out in the normal course of business, at arm’s length and on commercial terms and in accordance with the guidelines of the Company for Interested Person Transactions as set out in the Appendix (the “Shareholders’ Mandate”);
(b) the Shareholders’ Mandate shall, unless revoked or varied by the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier; and
(c) authority be given to the Directors to complete and do all such acts and things (including executing all such documents as may be required) as they may consider necessary, desirable or expedient to give effect to the Shareholders’ Mandate as they may think fit. [See Explanatory Note (iii)] (Resolution 10)
By Order of the Board
Yeo Poh Noi CarolineSecretary
Singapore 13 April 2009
notice of annual General meeting
samudera shipping line ltd(Company Registration No: 199308462C)(Incorporated in Singapore with Limited Liability)
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explanatory notes:
(i) The effect of the Ordinary Resolution 6 proposed in item 4 above, is to re-appoint a director of the Company who is over 70 years of age.
(ii) The Ordinary Resolution 9 in item 8 above, if passed, will empower the Directors of the Company from the date of this Meeting until the date of the next Annual General Meeting of the Company, or the date by which the next Annual General Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a general meeting, whichever is the earlier, to issue shares, make or grant instruments convertible into shares and to issue shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a pro-rata basis to existing shareholders of the Company
For determining the aggregate number of shares that may be issued, the percentage of issued shares in the capital of the Company will be calculated based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise of the Instruments or any convertible securities, the exercise of share options or the vesting of share awards outstanding or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or subdivision of shares.
(iii) The Ordinary Resolution 10 proposed in item 9 above, if passed, will authorise the Interested Person Transactions as described in the Appendix and recurring in the year and will empower the Directors to do all acts necessary to give effect to the Shareholders’ Mandate. This authority will, unless previously revoked or varied by the Company in a general meeting, expire at the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting is required by law to be held whichever is the earlier.
notes:
1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a Member of the Company.
2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 6 Raffles Quay #25-01, Singapore 048580 not less than forty-eight (48) hours before the time appointed for holding the Meeting.
notice of annual General meeting
samudera shipping line ltd(Company Registration No: 199308462C)(Incorporated in Singapore with Limited Liability)
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notice of Books Closure
notiCe is heReBy Given that the Share Transfer Books and Register of Members Of Samudera Shipping Line Ltd (the “Company”) will be closed on 12 May 2009 for the preparation of dividend warrants.
Duly completed registrable transfers received by the Company’s Share Registrar, M & C Services Private Limited, 138 Robinson Road #17-00, The Corporate Office, Singapore 068906 up to 5.00 p.m. on 11 May 2009 will be registered to determine shareholders’ entitlements to the said dividend. Members whose Securities Accounts with The Central Depository (Pte) Limited are credited with shares at 5.00 p.m. on 11 May 2009 will be entitled to the proposed dividend.
Payment of the dividend, if approved by the members at the Annual General Meeting to be held on 29 April 2009 will be made on 26 May 2009.
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samudeRa shiPPinG line ltd Company Registration no. 199308462C(Incorporated In The Republic of Singapore)
PRoxy foRm(Please see notes overleaf before completing this Form)
I/We,
of
being a member/members of Samudera Shipping Line Ltd (the “Company”), hereby appoint:
name nRiC/Passport no. Proportion of shareholdings
no. of shares %
address
and/or (delete as appropriate)
name nRiC/Passport no. Proportion of shareholdings
no. of shares %
address
or failing the person, or either or both of the persons, referred to above , the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting (the “Meeting”) of the Company to be held on 29 April 2009 at 10.00 a.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote on a poll.
(Please indicate your vote “for” or “against” with a tick [ ] within the box provided.)
no. Resolutions relating to: for against
1 Directors’ Report and Audited Accounts for the year ended 31 December 2008
2 Payment of proposed final dividend
3 Re-election of Mr Hamdi Adnan as a Director
4 Re-election of Mr David Lim Teck Leong as a Director
5 Re-election of Mr Lee Chee Yeng as a Director
6 Re-appointment of Mr Anugerah Pekerti as a Director
7 Approval of Directors’ fees amounting to S$162,000
8 Re-appointment of Messrs Ernst & Young LLP as Auditors
9 Authority to allot and issue new shares
10 Renewal of Shareholders’ Mandate for Interested Person Transactions
Dated this day of 2009
total number of shares in: no. of shares
(a) CDP Register
(b) Register of Members
Signature of Shareholder(s)or, Common Seal of Corporate Shareholder
imPoRtant:
1. For investors who have used their CPF monies to buy Samudera Shipping Line Ltd’s shares, this Report is forwarded to them at the request of the CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.
3. CPF investors who wish to attend the Meeting as an observer must submit their requests through their CPF Approved Nominees within the time frame specified. If they also wish to vote, they must submit their voting instructions to the CPF Approved Nominees within the time frame specified to enable them to vote on their behalf.
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notes :
1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.
2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.
3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.
4. Completion and return of this instrument appointing a proxy shall not preclude a member from attending and voting at the Meeting. Any appointment of a proxy or proxies shall be deemed to be revoked if a member attends the meeting in person, and in such event, the Company reserves the right to refuse to admit any person or persons appointed under the instrument of proxy to the Meeting.
5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 6 Raffles Quay #25-01, Singapore 048580 not less than 48 hours before the time appointed for the Meeting.
6. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.
7. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.
General:
The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.
Samudera Shipping Line LTdCo. reg. no. : 199308462C
6 raffles Quay, #25-01, Singapore 048580 t: 65 6403 1687
