OFFSHORE SUPPORT AT ANY wATER DEPTH - Ezra

Transcription

EZRA Holdings Limited
Annual Report 2008
OFFSHORE
SUPPORT
AT ANY
water
DEPTH
annual report
2008
0
E Z R A H O L D I N G S
A leading provider
of integrated
offshore support
and marine services
solutions with
a fleet of young
and sophisticated
vessels
CONTENTS
02 03 05 08 11 15 16
18 Guiding Principles
Financial Highlights
Letter to Shareholders
Board of Directors
Key Management
Corporate Structure
Corporate Directory
Corporate Milestones
22
35
40
148 150 Corporate Governance
Operations Review
Financials
Statistics of Shareholdings
Notice of Annual
General Meeting
Proxy Form
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annual report
2008
GUIDING PRINCIPLES
“In becoming a truly great company through prudent
growth, creating value for our stakeholders and the
relentless investment in our people”
Our Philosophy
At Ezra, we are customer-driven and
focused, striving:
• To be the preferred provider of global
marine support and logistics services,
with a focus on the offshore oil and gas
support activities;
• To provide efficient, timely, quality,
consistent and cost effective services to
our customers;
• To pursue our aim of maintaining one
of the youngest and most advanced
offshore support fleet and logistics
facilities;
• To maintain our distinctiveness; and
• To deliver long-term value and growth to
all our stakeholders.
Our Profile
Ezra is an offshore support and marine
services specialist, unique in the provision
of integrated offshore support service
solutions to our clients in the oil and
gas industry. Playing an integral role in
the increasingly sophisticated offshore
support industry, we operate in increasingly
challenging environments to provide our
clients with effective, efficient and reliable
service solutions. We have established
ourselves in the industry with our wellrespected track record and expertise in the
areas we work in. The Group enjoys a good
business network that has been built over
the years on strong customer relationships,
allowing us to retain our existing clients
and secure new businesses.
annual report
2008
0
The Group’s revenue has
increased by US$124.8 million
(87%) to US$268.3 million
for the financial year ended
31 August 2008 (“FY2008”).
During this financial year,
we took delivery of two (2)
additional Anchor Handling Tug
(“AHT”) vessels, as well as three
(3) Anchor Handling Towing and
Supply (“AHTS”) vessels.
Ezra’s Offshore Support
Services Division, contributed
US$175.0 million in revenue.
Our new Energy Services
Division pumped in a maiden
contribution of US$29.2 million
in revenue. The Marine Services
Division, nearly doubled its
sales to US$64.2 million.
The Group’s interest cover has
improved to 29.0x, against 14.8x
in the corresponding period
(“FY2007”). Ezra’s net gearing
has also fallen from 77.0% in
FY2007 to 11.7% in FY2008.
for FY2008 when compared
to FY2007. This was due to an
increase in revenue of US$64.6
million from Offshore Support
Services Division and US$31.0
million from the Marine
Services Division.
The increase in Marine Services
Division was due mainly to
an increase in procurement
and equipment supply and
engineering activities in
Vietnam.
The new Energy Services
Division also contributed
US$29.2 million to current
year’s revenue.
Gross Profit
As a result of the increase in
sales, gross profit increased by
US$29.4 million (59%) from
US$50.2 million in FY2007 to
US$79.6 million in FY2008.
Financial expenses
Financial expenses increased
by US$1.1 million due mainly
to the increase in term loan
financing from the delivery of
certain vessels in FY2007 and
the issuance of S$50 million
Medium Term Notes (“MTN”)
in FY2008.
Other income, net
The significant increase in
other income from US$50.1
million (FY2007) to US$137.9
million (FY2008) was due
mainly to the gain on disposal
of interest in a subsidiary of
US$146.3 million, which is
partially offset by the increase
in unrealised exchange loss
of US$11.8 million, loss on
disposal of assets held for
sale of US$2.2 million and
provision for foreseeable losses
of US$3.1 million in FY2008.
The Group’s net attributable
profit rose sharply to
US$175.4 million, an increase
of 157% year-on-year.
Strong offshore chartering
and fabrication engineering
markets were the main factors
behind the Group’s improved
performance.
Revenue
The Group’s revenue increased
by US$124.8 million (87%)
US$
268.3
million revenue
US$
79.6
million gross profit
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annual report
2008
Profit before tax
Tax
Profit before tax increased by
US$108.5 million to US$184.1
million (FY2008). This was due
mainly to higher gross profit
and other income which is
offset by higher administrative
expenses for the financial year.
Current period tax of US$7.7
million relates mainly to the
corporate tax expense of the
Company and its subsidiaries
and withholding tax expense
incurred by vessels operating
in certain jurisdiction.
Charter income derived from
Singapore and foreign flagged
vessels which operate in
international waters continue
to remain tax exempt under
Section 13 of the Singapore
Income Tax Act and Approved
International Shipping
Enterprise Scheme.
Utilisation of MTN funds
US$1.6m
4%
Newbuild
US$5.3m
15%
US$17.7m
50%
Energy Division
Yard development
Operating activities
US$10.7m
31%
FY 2004FY 2005FY 2006FY 2007FY 2008
US$’000US$’000US$’000US$’000US$’000
Revenue
25,868 43,107 70,138 143,546 268,346
Net Profit attributable
to shareholders
6,755 16,054 39,248 68,208 175,435
Shareholders’ fund
41,227 82,622 119,896 268,456 370,086
Earnings per share (US Cents)
1.53 3.45 7.20 11.98 30.25
Net asset value
per ordinary share (US Cents)
8.95 15.51 21.57 46.30 63.81
400,000
350,000
70
Revenue
Net asset value per ordinary
60
Shareholders’ fund
50
250,000
US Cents
US $’000
300,000
200,000
150,000
40
30
20
100,000
10
50,000
0
Earnings per share
Net Profit attributable to shareholders
*FY2004
*FY2005
*FY2006
*FY2007
*FY2008
0
*FY2004
* Numbers translated from SGD to USD at the following rates:
FY2004 – 1.7102
FY2005 – 1.6830
FY2006 – 1.5730
FY2007 – 1.5244
*FY2005
*FY2006
*FY2007
*FY2008
annual report
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LETTER TO SHAREHOLDERS
Dear Shareholders,
We enjoyed an exciting year with outstanding
results over the financial year ended 31 August
2008 (“FY2008”). We have begun to see the
results of our integrated offshore services
approach as well as our strategic focus in
expanding into the deepwater segment of
the offshore support service sector since its
inception and execution in year 2005. We
still see specific signs of a healthy deepwater
market that will continue to drive the demand
for our services and assets in the future.
Financial Performance and Growth
Our 2008 earnings growth was broad-based,
spurred by all our four business divisions
enjoying exceptional growth. We attribute the
growth in these divisions to our young and
advanced fleet offering, recognised expertise
and operational excellence in each division, as
well as the timely execution of our well planned
growth strategy. We also saw the renewal of
some of our long term charters in accordance
with our directive of achieving visible revenue
streams via long term charters.
Net profit attributable to shareholders was
US$175 million, a 157 per cent increase from
US$68 million for the previous financial year.
The Group’s turnover was up 87 per cent at
US$268 million compared to US$144 million for
the previous corresponding period.
Revenue from the Offshore Support Services
segment rose 58 per cent to US$175 million
from US$110 million in the financial year ended
31 August 2007 (“FY 2007”). Operating profit
was 38 per cent higher at US$62 million.
175
US$
Our Energy Services Division reported its maiden
contribution of US$29 million. This marks our
first steps into providing a more integrated
offshore services approach as a Group.
Marine Services Division reported a 94 per cent
increase in sales and a 26 per cent increase in
operating profit to US$9 million.
Awards and Achievements
Today, we have a total fleet of 32 vessels (at the
latest practical date) with operations in South
East Asia, India, West Africa, Australia, and New
Zealand. We also have a global sales office in
Aberdeen where we have greater access to the
flourishing oil and gas exploration and production
markets in the North Sea, Africa and the Americas.
Our associated company EOC Limited has also
performed well, with the completion of its first
offshore construction and pipe-lay project,
as well as taking delivery of its first Floating
Production Supply and Offloading (“FPSO”)
vessel. As we continue on this extended oil and
gas cycle, we are positive that EOC Limited will
benefit likewise in its own growth path.
During this year, our Marine Services Division
managed to secure major fabrication and
assembly contracts, bringing the order book to
in excess of US$200 million. As we continue
to enhance the yards, we remain focused on
executing these orders in a professional and
timely fashion.
In recognition of the importance of talented
individuals in the ever dynamic landscape which
million
Net profit attributable to
shareholders
87
%
increase in Group’s
revenue
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2008
I recognise the
commitment and
dedication of
our employees
to provide high
quality solutions
that have led
to our solid
foundation to
which we owe the
success we enjoy
today
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LETTER TO SHAREHOLDERS
Ezra operates in, the Group earmarked US$10
million for staff incentive schemes to attract
and retain talents. This initiative also moves in
line with Ezra’s fleet expansion plan, where we
understand the need to increase our talent pool
whilst broadening our fleet size.
Our Team
We are pleased to welcome onboard Mr Soon
Hong Teck as our new Independent Director.
Mr Soon is currently the Senior Director
of Finance of Chartered Semiconductor
Manufacturing Ltd, with more than 20 years of
manufacturing industry experience as Financial
Controller, overseeing the financial operations,
management reporting and internal control
systems.
The Group acknowledges the need to
constantly attract and retain talented individuals
in the ever dynamic landscape which we
operate in, and we are constantly reviewing
our human resource policy to cater to the
changing demand. We have also taken the
initiative to strengthen our middle management
team as well as recruiting cadets directly with
the tertiary institution through our scholarship
scheme.
Prospects
The recent turmoil in the financial markets has
resulted in a general sense of uncertainty with
regards to the outlook of the global economy
going forward. While we acknowledge that this
uncertainty can pose as a possible concern for
us, we remain optimistic that the oil and gas
activities will continue with the current trend
for the next 12 months, albeit slightly more
cautiously. We still expect the requirements for
medium to large sized offshore support vessels
to remain strong as offshore exploration and
production activities continue to venture further
into deeper waters.
Ezra’s business model is one that has been
built on securing long term charter contracts,
with national oil companies as well as leading
international oil majors as our clients. With this,
Ezra enjoys a visible and long term revenue
stream which has enabled us to effectively
and efficiently chart and pace our growth. We
have also built up a very strong branding and
relationship with our bankers over the years,
and we are proud to say that they are still very
supportive of our business.
The Group remains committed to its strategy
of maintaining a young and ultra-modern fleet
of vessels, with a strong emphasis on deep
water operations to support a wide range
of deep-water oil and gas exploration and
production work. We also remain focused on
executing our fleet expansion plan. Our Marine
Services Division also remains committed to
expand its capabilities to better support the
shipping and offshore industries. Such services
can include design and fabrication, equipment
and replacement parts and complete turnkey
projects.
As we continue to strive towards the goal
of making Ezra the preferred offshore
solutions provider for the offshore oil and gas
industry, we believe that 2009 will hold more
opportunities for us to do so. This coming
year would be an extremely exciting time for
Ezra, and we believe we have what it takes to
brace against the relative uncertainty of the
global economy. I recognise the commitment
and dedication of our employees to provide
high quality solutions that have led to our solid
foundation to which we owe the success we
enjoy today.
Together we deliver.
Mr Lee Kian Soo
Executive Chairman
19 November 2008
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BOARD OF DIRECTORS
Mr. Lee Kian Soo
Executive Chairman
Mr. Lee Chye Tek Lionel
Managing Director
(Appointed as Director on
1 August 2000 and re-elected
on 22 December 2006)
23 March 1999 and re-elected on
24 December 2007)
Mr. Lee, 63, is one of the
founders of the Group and
is instrumental in bringing
the Group to where it is
today. With more than
30 years of experience in
the shipping and offshore
support services industry,
Mr. Lee has been responsible
for the strategic planning,
business development and
marketing of the Group since
its inception in 1992. He
currently oversees the Group’s
business development and
marketing functions. Prior
to founding the Group, Mr.
Lee has worked in various
organisations including
Jurong Shipyard, Sembawang
Shipyard and the Offshore
Supply Association. He holds
a Second Mate Certificate of
Competency.
Mr. Lee, 35, is responsible
for the overall management
and operations of the Group,
including the formulation and
implementation of its business
strategies and policies,
marketing and chartering its
growth. Previously Mr. Lee
spearheaded the formation
and growth of Ezra Marine
Services Pte Ltd and ensured
its continued success, and
in recent years, has been
the driving force behind the
growth of the Group. Mr.
Lee has more than 10 years
of experience in the industry.
He holds a Graduate Diploma
in Business Administration
from the Western Sydney
International College.
Capt. Adarash Kumar A/L
Chranji Lal Amarnath
Executive Director
24 March 2003 and re-elected on
20 December 2005)
Capt. Kumar, 47, is responsible
for the day-to-day operations
of the Group’s Offshore
Support Services. He has more
than 25 years of experience
in the marine industry. Prior
to joining the Group, he was
an assistant general manager
of Bumi Armada Navigation
Sdn Bhd, an offshore support
services provider based in
Malaysia, and was responsible
for its operations. He also held
various positions on board
vessels while working for
the Malaysian International
Shipping Corporation. Capt.
Kumar is a qualified Master
Mariner and holds a Certificate
of Competency as Master of
a Foreign Going Ship issued
by the Malaysian Marine
Department.
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Mr. Wong Bheet Huan
Executive Director
Mr. Tay Chin Kwang
Finance Director
26 January 2006 and re-elected
on 22 December 2006)
(Appointed as Finance Director on
12 July 2007 and re-elected on
24 December 2007)
Mr. Wong, 64, joined the
Group in 2004 and was
tasked with designing and
building the floating assets
of the Group. Mr. Wong
is a registered Professional
Engineer, Singapore, and
a Fellow of the Institute of
Marine Engineers, London. He
is a non-executive director of
STET Maritime Bureau Board.
Prior to joining the Group,
Mr. Wong was the Country
Manager of Lloyds Register
Asia, Singapore where he
had worked for 32 years.
He is experienced in Marine,
Offshore, FPSO Classification,
Statutory IMO surveys and
Machinery Plan Approval.
Mr. Wong received tertiary
education in Liverpool College
of Technology and is a certified
Chief Engineer by the British
Board of Trade. He has an
honours Law degree from the
University of London.
Mr. Tay, 43, is responsible
for the financial operations
of the Group. He is a fellow
member of the Institute of
Certified Public Accountants
of Singapore. Mr. Tay has
over 17 years of experience in
various accounting, finance
management and business
advisory functions across a
broad spectrum of industries.
Mr. Tay has vast experience
in corporate and business
structuring, merger and
acquisition and corporate
finance. He was also previously
the Chief Financial Officer
of a Singapore Exchange
Main Board-listed company.
Mr. Tay holds a Bachelor
of Accountancy from the
National University of
Singapore.
Ms. Lee Cheow Ming
Doris Damaris
Independent Director
(Appointed as Independent
Director on 3 May 2004 and reelected on 22 December 2006)
Ms. Lee, 39, is presently an
independent legal consultant
for various legal, corporate
and financial institutions. She
was previously the Senior Vice
President, Legal of the Pontiac
Land Group where she advised
the Pontiac Land Group on
all legal issues arising ranging
from syndicated loans, leases,
agreements, claims etc.
Ms. Lee was also a senior
litigation lawyer in private
practice for more than a
decade advising multinational
clients on diverse corporate
litigious issues. She has
experience with a range
of arbitration as well as
mediation cases. Ms. Lee holds
a Bachelor of Laws, second
upper honours degree from
the National University
of Singapore.
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BOARD OF DIRECTORS
Dr. Ngo Get Ping
Mr. Soon Hong Teck
Director on 18 July 2007 and reelected on 24 December 2007)
Director on 16 May 2008)
Dr. Ngo, 50, is presently an
Independent Director of Tiong
Nam Logistics Holding Bhd,
OSK Holding Bhd, Medi-Flex
Limited, First DCS Pte Ltd and
OSK Asset Management Sdn
Bhd. From 1985 to1986, Dr.
Ngo was the contract manager
for Intraco (S) Pte Ltd, a
soil specialist construction
company, from 1986 to 1987
the Investment Officer for
Government of Singapore
Investment Corporation Pte
Ltd, from 1988 to 1993 the
Associate Director for James
Capel Asia Pte Ltd and from
1994 to 2006 the Senior
Vice President with Nomura
Securities (S) Pte Ltd. Dr. Ngo’s
last employment with CLSA
(S) Pte Ltd from 1996 to 2006
was where he held several
positions as Institutional Sales,
Head of Sales and Deputy
Country Head. Dr. Ngo holds
a (PhD) in Metallurgy from the
University of Oxford (UK).
Mr. Soon Hong Teck, 50, is
currently the Senior Director,
Finance of Chartered
Semiconductor Manufacturing
Ltd. He has over 20 years
of manufacturing industry
experience as Financial
Controller, overseeing
the financial operations,
management reporting and
internal control system.
He began his finance/
accounting career with United
Industrial Corporation Limited,
a public listed company with
its core business in property
development, investment and
detergent manufacturing and
distribution, as Senior Accounts
Executive/ Internal Auditor in
1984. From 1987 to 1996 he
held various positions at a French
multinational corporation for its
Singapore and Southeast Asia
operations. Mr. Soon received his
Bachelor Degree in Accountancy
from the National University of
Singapore. He is a certified public
accountant of the Institute of
of Singapore and a member of
the Association of Chartered
Certified Accountants.
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KEY MANAGEMENT
MR. STUART COX
Technical Director
– Emas Energy Services
MR. BOB DAVIDSON
Operations Manager
– Emas Energy Services
MR. STEVE ENGEL
Director Business Solutions
- Emas Energy Services
Mr. Cox has extensive experience
which he gained while working
in the oil and gas service sector
during the last 3 decades. In
2004, he took up the position
of Technical Services Manager
in Asia Pacific Region for a small
independent service company,
PSL. Mr. Cox’s engineering
background and experience is
as broad as it is diverse, ranging
from heavy well intervention
with drilling equipment through
hydraulic workover, snubbing,
coiled tubing, slick line, fluid and
nitrogen pumping services.
Originally from Scotland,
Mr. Cox has travelled extensively
on business and he has been
responsible for engineering and
operational groups in Norway,
Venezuela, United Kingdom and
South East Asia. His specialty
is delivering high quality cost
effective innovative solutions
based on sound engineering
techniques and practices to the
market. He is a self starter who
is motivated and well organised
individual who relishes new
challenges and is driven to
deliver results.
Mr. Davidson has joined the
Group in November 2007 and
is responsible for overseeing
the Energy Services division’s
operations. He has over 20 years
operational experience in the oil
and gas well service and drilling
industry. His first 10 years was
spent working up through the
ranks to assistant Driller in the
North Sea for a major drilling
contractor. He then ventured
into the hydraulic workover and
snubbing service line for the
past 10 years. He has led and
managed a series of Well Blow
Out campaigns with Halliburton
in Iraq prior to relocating to
Thailand to run their Well Services
Business. He joined PSL in 2005
and was instrumental in securing
the HWO contract for Chevron
and establishing PSL in country.
Originally from Scotland, Mr.
Davidson has lived and worked in
Thailand for the last 31/2 years and
has built up a network of contacts
of both clients and vendors. Mr.
Davidson is highly driven and
respected and brings with him
a proven track and wealth of
experience.
Mr. Engel has 33 years of well
service and well intervention
experience. Disciplines include
wire line, cementing, stimulation,
nitrogen and coiled tubing. He
has predominantly held technical
and management positions in
the North Sea and especially
in South East Asia. He has
managed Norwegian, Bruneian
and Malaysian well intervention
operations for several years and
has extensive knowledge and
living experience of several South
East Asia countries also including
Singapore, China and Russia.
Initially, he worked with
Schlumberger in cementing and
stimulation and subsequently
with Nowsco Well Services
(acquired by BJ Services in 1996).
Later, he has worked with PSL
(acquired by Halliburton in
2007). Mr. Engel is now part of
the core team of EMAS Energy
Services. He has been involved
with the development of new
technologies, enhancing existing
operations and internal and client
training. He has authored multiple
SPE publications relating to well
servicing and brings with him
international recognition in the
well services industry. Mr. Engel
holds a Bachelor of Science in
Engineering.
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KEY MANAGEMENT
MR. ROBIN KIRKPATRICK
Chief Operating Officer, Emas
Marine Division and Managing
Director of EMAS Offshore
Limited
Mr. Kirkpatrick is a Mariner by
profession, having the rank of
Master at the age of 26, a position
he held for 10 years out of a total
of 20 years serving on a range
of specialised offshore support
vessels. He moved from this senior
marine position into a number
of key management and director
appointments in the international
marine and upstream arenas. He
was involved in broad spectrum
activities, which includes Operations,
Commercial, Chartering, Sale
and Purchase, HSES, Marketing
and Business Development. He
has worked in companies such as
Tidewater Marine and Halliburton.
Mr. Kirkpatrick brings to the Group
a wealth of experience covering
diverse geographical regions as
the North Sea, North West Europe,
Mediterranean, North and West
Africa, Latin America, the Middle
East and India.
Mr. Kirkpatrick joined the Group in
April 2007 to set up the UK entity
of the company, Emas Offshore
Limited, based in Aberdeen,
Scotland and then to introduce
the group brand to clients active in
Europe, Africa and the Americas.
In December 2007, coincident
with the adoption of the new
group divisional structure, he took
up the role of Chief Operating
Officer for the Marine Services
Division and is based in Singapore
where he maintains his global role
and responsibilities.
COLONEL (NS) ANDRE KOH
General Manager –
CAPT. VINCENT STEPHEN
Fleet Safety Manager
Corporate Services
Colonel (NS) Andre Koh is
responsible for corporate services,
which include human resources
and administration. He joined the
Group in September 2005. Prior
to his appointment at Ezra, Col.
(NS) Koh was with the Singapore
Army for 25 years where he held
senior appointments such as
commander of 27th Singapore
Infantry Brigade (1997 – 2002)
and Head of the General Staff
Branch in HQ Infantry (1995
– 1998). Before retiring in 2005,
he was the Chief of Staff, 9th
Singapore Division/Infantry.
Col. (NS) Koh completed his
professional studies at the Royal
Military Academy, Sandhurst
(UK), where he earned the
Communications Prize and the
Prince Saud Abdullah Faisal
Prize for Strategic Studies. He
also holds a Master of Defense
Studies from the University of
New South Wales, Australia and
holds two graduate diplomas
in Organisational Learning and
Human Resource Management
from the Singapore Institute
of Public Administration and
Management and the Singapore
Institute of Management
respectively.
Capt. Vincent Stephen is the
Group’s Fleet Safety Manager,
Designated Person Ashore
(DPA), Company Security
Officer (CSO) and Management
Representative (MR) of the
companies in the Group. He is
responsible for and oversees
the appraisal, development,
execution and monitoring of
safe and environmentally friendly
and secure working practices
onboard the Group’s offshore
support vessels. He has more
than 23 years of experience in the
Marine industry. Prior to joining
the Group in 2006, he served a
short stint with Bumi Armada
Navigation Sdn. Bhd., an offshore
support services provider based
in Malaysia serving them in the
same capacity as above. He
had also held various positions
onboard vessels while working
for Singapore’s Premier Shipping
lines – NOL/APL. Capt. Vincent is
a qualified Master Mariner and
holds a Certificate of Competency
as Master of FG vessels issued by
Marine Department of Malaysia.
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KEY MANAGEMENT
MR. DAVID TAN YEW BENG
Company Secretary, General
Counsel
CAPT. TAY PENG CHAY
Crew Training & Development
Manager
Mr. David Tan is the Group’s
General Counsel and secretary of
the companies in the Group. He
is responsible for and oversees
the Group’s legal, company
secretarial and marine insurance
matters. He joined Ezra Holdings
in 2004, after having been in
practice for six years with two of
the largest premier law practices
in Singapore, Drew & Napier and
Rajah & Tann. His areas of practice
were in maritime, admiralty,
shipping, banking, trade finance,
land and air carriage, insurance
and international trade laws,
leading him to handle matters
like ship arrest, shipbuilding and
repair, collision, salvage, bills of
lading, charterparties, carriage of
goods, bunker supply, loss of or
damage to cargo or ship, freight
forwarding, loans, ship finance,
mortgage enforcement, letters
of credit, security instruments, oil
and commodities trading as well
as sale of goods. Besides advisory
and drafting work, his practice
also encompassed domestic and
international dispute resolution,
litigation and arbitration. He has
appeared as counsel in numerous
disputes both in arbitrations
and in court. He has acted for a
variety of clients like shipowners,
P&I Clubs, underwriters, banks
and financial institutions as well
as trading companies. Mr. David
Tan graduated in 1997 from the
National University of Singapore
with an LLB (Hons) degree and
was called to the Singapore Bar
in 1998.
Capt. Tay is responsible for the
Group’s crew development and
training. He has over 15 years of
experience in the management
of operations and crew in the
offshore support industries.
Between 1978 and 1989, Capt.
Tay has more than 10 years
of sailing experience as deck
officer on general cargo vessels,
container ships, oil-bulk-and-ore
carriers, ultra large crude carriers,
super bulk carriers, drill-ships and
semi-submersible rigs. Prior to
joining the Group in 2002, he was
in-charge of crew management
and operational matters for
offshore operations in Chuan
Hup Agencies Pte Ltd. Capt. Tay
holds a Class 1 Master Mariner
Certificate.
MS. ROSALIND TEO
Head of Treasury
Ms. Rosalind Teo is responsible for
the treasury functions of investment
and risk management in the Group.
She joined on 1st September
2005 from the banking & finance
industry where she has had
experience in the area of corporate
finance as well as specializing in
providing advisory and structural
solutions to a portfolio of major
SE Asian corporates in treasury risk
management. She has worked
substantially in European and Asia
Pacific banks. Ms. Teo holds a
Masters of Applied Finance from
Macquarie University, Sydney,
Australia.
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2008
KEY MANAGEMENT
MR. WISAN WATANIYAKUN
Senior Technical Manager
Mr. Wataniyakun joined the
Group in 2001 and is responsible
for all technical matters pertaining
to the Group’s operations. He
is also in charge of the Group’s
new vessel construction program
and has successfully delivered
18 vessels to date. He has over
16 years of experience in the
shipping and offshore support
services industry. Between 1987
and 1992, Mr. Wataniyakun was
employed by Regional Container
Lines Public Company Limited
in various technical positions
on board vessels and was
promoted to a Chief Engineer.
He joined Thoresen (Bangkok)
Co., Ltd in 1992 as its Chief
Engineer and was then promoted
to the position of Technical
Superintendent. Mr. Wataniyakun
was the General Manager of
Sahathai Marine Engineering
Co., Ltd for two years. He holds
a Marine Engineering Certificate
awarded by the Thai Harbour
Department.
Mr. Yan Naing Aung
Deputy General Director,
Vietnam
Mr. Yan is a Fellow Member of
Association of Chartered Certified
Accountants, U.K (FCCA) and
also a member of Certified
Public Accountants, Singapore.
He has more than 14 years of
experience in Management
Accounting, Taxation, Statutory
and Internal Audit in various
industries such as manufacturing,
hotel and transportation. Mr.
Yan joined the Group in 2001.
With Ezra, he has contributed
in the IPO process, evaluation of
new projects, implementation of
new Accounting Standards and
implementation of IT projects.
In late 2005, he was seconded
to Vietnam to assume the role
of a resident Director. In his new
position, Mr. Yan is overall
in-charge of financial, regulatory,
procurement and administrative
matters, including internal
controls of the entire operation of
the two subsidiaries in Vietnam.
MS. CHERYL YAP
Financial Controller
Ms. Cheryl Yap is responsible for
and oversees the accounting,
financial and taxation matters of
the Group. She joined the Group
in July 2007 and brings with her
more than 10 years of experience
in finance and accounting
gained from various industries.
Prior to her appointment in
Ezra, she had served in finance
managerial positions in US
MNCs – Arrow Electronics Inc.
and Maxtor Peripherals Inc., and
in a Singapore Exchange Main
Board listed company. Her past
experience included handling
statutory and management
reporting for a group of entities
in the Asia Pacific region,
financial planning and analysis,
group consolidation, cash flow
management and tax planning.
She was also actively involved in
business process re-engineering
initiatives and implementation
of ERP systems such as SAP
and Oracle. Ms. Cheryl Yap is a
Fellow of ACCA and a member
of the Institute of Certified Public
Accountants of Singapore.
annual report
2008
15
CORPORATE STRUCTURE
Ezra Holdings Limited
Ezra Marine
Services Pte Ltd
100%
Emas Offshore
Pte Ltd
100%
Emas Offshore
Services Pte Ltd
100%
Emas Offshore Services
(Australia) Pty Ltd
100%
Emas Offshore
Limited
100%
Lewek Shipping
Pte Ltd (1)
100%
Lewek Ivory
Shipping Pte Ltd (2)
100%
Lewek Ebony
100%
Lewek Robin
100%
LMC Asia Pacific
Pte Ltd
100%
Lewek Ruby
Shipping Pte Ltd
100%
Lewek Sapphire
Shipping Pte Ltd
100%
Lewek Scarlet
Shipping Pte Ltd
100%
Lewek LB 1 Shipping
Pte Ltd (5)
100%
Sarah Gold Shipping
Pte Ltd (6)
100%
Asian Drilling
Services Pte Ltd
100%
49%
100%
Emas Offshore (M)
Sdn Bhd
100%
Intan Offshore
Sdn Bhd (7)
Bayu Emas
Maritime Sdn Bhd
Saigon Shipyard
Limited
100%
100%
HCM Logistics
Limited
100%
Asian Technical
Maritime Services Ltd
100%
Gulfstream
Management Limited
100%
100%
66.7%
48.9%
Ezra Energy
Services Pte Ltd
Telemark Limited
EOC Limited (8)
49%
S.E. Mariam
Sdn Bhd (9)
50%
New Strong Group
Limited
50%
United Oilfield
Services Pte Ltd
50%
Casadilla Group
Pte Ltd
50%
Eminent Offshore
Logistics Pte Ltd (10)
NotesCompany
(1)
Lewek Shipping Pte Ltd
(2)
Lewek Ivory Shipping Pte Ltd
(3)
Lewek Ebony Shipping Pte Ltd
(4)
Lewek Robin Shipping Pte Ltd
(5)
Lewek LB 1 Shipping Pte Ltd
(6)
Sarah Gold Shipping Pte Ltd
(7)
Intan Offshore Sdn Bhd and its subsidiaries
(8)
EOC Limited and its subsidiaries
(9)
S.E. Mariam Sdn Bhd
(10)
Eminent Offshore Logistics Pte Ltd
Saigon Offshore
Fabrication and
Engineering Limited
Owner of
Lewek Harrier, Lewek Ruby, Lewek Sapphire and Lewek Roller
Lewek Ivory
Lewek Ebony
Lewek Robin
Lewek LB 1
Lewek Emas
Lewek Emerald, Lewek Eagle, Bayu Intan, Sarah Jade, Lewek Swift, Sarah Gold, Lewek Mallard and Sarah Pearl
Lewek Conqueror, Lewek Champion, Lewek Chancellor and Lewek Arunothai
Mariam 281
Armoured 7, Armoured 8, Hako 15, Hako 17, Hako 19, Hako 21 and Labroy 237
16
annual report
2008
corporate directory
Directors
Mr. Lee Kian Soo, Executive Chairman
Mr. Lee Chye Tek Lionel, Managing Director
Capt. Adarash Kumar A/L Chranji Lal Amarnath, Executive Director
Mr. Wong Bheet Huan, Executive Director
Mr. Tay Chin Kwang, Executive Director
Ms. Lee Cheow Ming Doris Damaris, Independent Director
Dr. Ngo Get Ping, Independent Director
Mr. Soon Hong Teck, Independent Director
Audit committee
Mr. Soon Hong Teck (Chairperson)
Ms. Lee Cheow Ming Doris Damaris
Dr. Ngo Get Ping
nominating committee
Ms. Lee Cheow Ming Doris Damaris (Chairperson)
Dr. Ngo Get Ping
Mr. Soon Hong Teck
remuneration committee
Dr. Ngo Get Ping (Chairperson)
Mr. Soon Hong Teck
company Secretary
Mr. David Tan Yew Beng
Registered Office
15 Hoe Chiang Road
#15-01 Tower Fifteen
Singapore 089316
20 Ubi Crescent
#01-02 Ubi Techpark
Singapore 449269
Telephone: (65) 6349 8535
Facsimile: (65) 6345 0139
Website address: www.ezraholdings.com
Email: [email protected]
annual report
2008
17
Auditors
Ernst & Young LLP
One Raffles Quay
North Tower, Level 18
Singapore 048583
Mr. Shekaran Krishnan, Partner (appointed since financial year ended 31 August 2005)
share registrar
Boardroom Corporate & Advisory Services Pte Ltd
3 Church Street
#08-01 Samsung Hub
Singapore 049483
Principal Bankers
Bangkok Bank Public Company Limited
180 Cecil Street, Bangkok Bank Building
Singapore 069546
DBS Bank Ltd
6 Shenton Way
DBS Building
Singapore 068809
DVB Group Merchant Bank (Asia) Ltd
77 Robinson Road #06-03A
SIA Building
Singapore 068896
Malayan Banking Berhad
2 Battery Road
MayBank Tower
Singapore 049907
Overseas Chinese Banking Corporation Limited
65 Chulia Street
OCBC Centre
Singapore 049513
United Overseas Bank Limited
80 Raffles Place UOB Plaza
Singapore 048624
18
annual report
2008
corporate MILESTONEs
November 2007
•Ezra’s associated company, EOC Limited, has
clinched the Group’s maiden major regional
contract worth US$148 million to jointly
provide transportation and installation services
for the Malaysian - Thailand Joint Development
Area.
January 2008
•US$10 million for staff incentive scheme to
attract talents.
•Executed share buyback of 455,000 treasury
shares via market acquisition at a consideration
of S$0.97 million.
•Completion of the first offshore construction
and pipelay project by EOC Limited, Ezra’s
associated company.
February 2008
•Secured fabrication and assembly contract and
charter contracts worth US$55.4 million.
•Incorporation of a wholly-owned subsidiary, Emas Offshore Services (Australia) Pty Ltd.
March 2008
•Resignation of Ms. Goh Gaik Choo from the Board of Directors.
•Secured charter contracts for new vessels and renewal of contracts for 7 existing vessels, which
are worth US$77.6 million in total.
April 2008
•Acquisition of 66.7% equity interest in Telemark Limited.
May 2008
•Awarded S$69 million shipbuilding contract to Keppel Singmarine Pte Ltd to construct one (1)
large 30,000 brake horsepower Multi-Functional Support Vessel.
•Awarded S$26 million shipbuilding contract to Singapore Technologies Marine Ltd for one (1)
new twin-screw 12,000 brake horsepower Anchor Handling Tug Supply vessel.
•Secured fabrication and assembly contract worth US$55.4 million which brings order book to
US$214 million.
•Appointment of Mr. Soon Hong Teck as Independent Director (Non-Executive).
55.4
US$
million
fabrication and assembly
contract secured
US$
26
million
shipbuilding contract
for new twin-screw
12,000 bhp AHTS
annual report
2008
19
corporate MILESTONEs
June 2008
•
•
Ezra’s associated company, EOC Limited
delivered their first FPSO on schedule for
delivery to client.
Established a S$500 million Multicurrency
Medium Term Note Programme.
July 2008
•
•
Acquisition of 100% equity interest in the
newly incorporated subsidiary, Emas Energy
Services Pte Ltd.
Resignation of Mr. Teo Peng Huat from the
Board of Directors.
August 2008
•
Issuance of S$50 million Fixed Rate Notes
under the Multicurrency Medium Term Note
Programme, which is listed on Singapore Exchange Securities Trading Limited.
October 2008
•Secured charter contracts for new vessels and renewal of contracts for 4 AHTS vessels which
are worth US$104 million in total with contract periods 1 – 7 years.
•Lift boat Titan 1, owned by joint venture company, Casadilla Group Pte Ltd, was lost at sea during
its carriage to Liverpool.
100
%
equity interest in the
newly incorporated
subsidiary
104
US$
million
worth of new and renewed
contracts for 4 AHTS
20
annual report
2008
Our Energy Services
Division reported its maiden
contribution of US$29.2
million. This marks
our first step into
providing a more
integrated
offshore
services
approach
as a
Group.
annual report
2008
21
22
annual report
2008
Corporate Governance
The Board of Directors (the “Board”) of Ezra Holdings Limited (the “Company”) is committed
to maintain high standard of corporate governance and transparency within the Company and
its subsidiaries (collectively, the “Group”). The Board believes that good corporate governance
inculcates an ethical environment and enhances the interest of all shareholders.
This report describes the Group’s corporate governance framework and practices that were in
place throughout the financial year, with specific reference made to the Code of Corporate
Governance 2005 (the “Code”) issued by the Ministry of Finance in July 2005 which forms part of
the Continuing Obligations of the Singapore Exchange Securities Trading Limited (“SGX-ST”) Listing
Manual.
(A) BOARD MATTERS
Principle 1: Board’s Conduct of its Affairs
The Board assumes responsibility for stewardship of the Group and Company and is primarily
responsible for the protection and enhancement of long-term value and returns for the
shareholders. The Board works with management to achieve this and the management is
accountable to the Board.
The current Board comprises eight directors and its role is to:
(a) set, review and approve corporate strategic aims which involves financial objectives and
directions of the Group and ensure that the necessary financial and human resources are in
place for the Company to meet its objectives;
(b) establish goals for management and review and monitor the performance and achievement of
these goals;
(c) provide entrepreneurial leadership and ensure management leadership of high quality,
effectiveness and integrity;
annual report
2008
23
(d) set the Company’s values and standards, and
ensure that the obligations to shareholders
and others are understood and met; and
(e) establish a framework of prudent and
effective controls which enables risk to be
assessed and managed.
The Company has adopted internal guidelines
setting forth matters that require board approval.
The types of material transactions that require
board approval under such guidelines are listed
below:
(a) approve quarterly and annual results
announcements and audited accounts;
(b) approve material announcements;
(c) approve annual budget;
(d) approve major transactions proposal which
include funding, merger, acquisition and
disposal transactions;
(e) declaration of interim dividends and proposed
final dividends; and
(f) convene shareholders’ meeting.
To assist in the execution of its responsibilities, the Board has established a number of Board
committees which includes an Audit Committee (“AC”), a Nominating Committee (“NC”) and a
Remuneration Committee (“RC”), each of which functions within clearly defined terms of reference
and operating procedures which are reviewed on a regular basis.
When new Directors are appointed to the Board, they would be provided a formal letter setting
out the director’s duties and responsibilities. They are briefed on the Group’s business activities,
its strategic direction and regulatory environment in which the Group operates. In addition, newly
appointed Directors are also introduced to the senior management team.
On an ongoing basis, the Company updates the Directors regarding new legislation and/or
regulations which are relevant to the Group. Further, when there are events on updates, seminar
or training in various areas such as accounting, legal and industry specific knowledge which are
relevant to the Group, the Directors were requested to attend at Company’s cost.
The Board meets regularly to review and deliberate on the corporate strategies, key activities and
major issues of the Group. Adhoc Board meetings are arranged whenever appropriate. The Board
ensures that effective management is in place to oversee the proper conduct of the Group’s business.
24
annual report
2008
Principle 2: Board Composition and Guidance
The Board comprises eight (8) directors, three of whom are independent. Their collective experience
and contributions are valuable to the Group. The Directors as at the date of this report are listed as
follows:
Executive Directors
Mr. Lee Kian Soo
(Executive Chairman)
Mr. Lee Chye Tek Lionel (Managing Director)
Capt. Adarash Kumar A/L Chranji Lal Amarnath
(Executive Director)
Mr. Wong Bheet Huan
Mr. Tay Chin Kwang
Non-Executive Directors
Dr. Ngo Get Ping
Mr. Soon Hong Teck
(Independent Director)
The Board has examined its size and is of the view that the current arrangement is adequate given
that the Independent Directors form at least one-third of the Board composition. The Independent
Directors consist of respected individuals from different backgrounds whose core competencies,
qualifications, skills and experience are extensive and complementary.
The independence of each Director is reviewed by the Nominating Committee on an annual basis. The
Nominating Committee adopts the definition of what constitutes an Independent Director from the
Code. The Nominating Committee is of the view that the Non-Executive Directors are independent.
annual report
2008
25
The Non-Executive Directors constructively challenge and help develop proposals on strategy and
also review the performance of management in meeting agreed goals and objectives, and monitor
the reporting of performance.
The profile of each Director and other relevant information are set out on page 8 of this Annual
Report. The Board is of the view that its composition of the Board of Directors as a whole provides
core competencies necessary to meet the Group’s requirements, taking into account the nature and
scope of the Group’s operations.
Principle 3: Role of Chairman and Chief Executive Officer
The Board subscribes to the principle set out in the Code on the separation of the roles of the
Chairman and the Chief Executive Officer, which in our case is the Managing Director (“MD”).
The MD, Mr. Lee Chye Tek Lionel, is the son of the Chairman, Mr. Lee Kian Soo. Our Chairman is
responsible for:
(i) leading the Board to ensure its effectiveness on all aspects of its role and set its agenda;
(ii) ensure that the directors receive accurate, timely and clear information;
(iii) ensure effective communications with shareholders;
(iv) encourage constructive relations between the Board and management;
(v) facilitate the effective contribution of Non-Executive Directors;
(vi) encourage constructive relations between Executive Directors and Non-Executive Directors; and
(vii)promote high standard of corporate governance.
Our Chairman ensures that Board meetings are held
regularly in accordance with an agreed schedule
of meetings. Our MD is responsible for strategic
planning, business development and generally
charting the growth of our Group.
The Company is in the process of evaluating the
requirement to appoint a Lead Independent
Non-Executive Director and also its role and
responsibility. If appointed, the Lead Independent
Non-Executive Director would be available to
shareholders where they have concerns when
contact through the normal channel of the
Chairman, MD or Finance Director has failed to
resolve or for which such contact is inappropriate.
Prior to each board meeting, the management
provides the Directors with information relevant to
the matters on the agenda in advance in order for
Directors to be adequately prepared for the meeting.
26
annual report
2008
Principle 5: Board Performance
The performance of the individual director is assessed on the basis of each director’s contribution
to the Company and/or the levels of participation in various Board committees and attendance at
Board meetings.
In assessing the Board’s performance as a whole, both quantitative and qualitative criteria are
considered. Such criteria include return on equity and the achievement of strategic objectives.
BOARD COMMITTEES
Certain functions have been delegated to various Board committees, namely, the Nominating
Committee, Remuneration Committee and Audit Committee. The members of these committees
are set out below:
Nominating Committee (“NC”)
Ms. Lee Cheow Ming Doris Damaris (Chairperson)
Dr. Ngo Get Ping
Mr. Soon Hong Teck
Remuneration Committee (“RC”)
Mr. Soon Hong Teck
Audit Committee (“AC”)
Mr. Soon Hong Teck (Chairperson)
Dr. Ngo Get Ping
The number of meetings held during the financial year under review and the attendance of the
Directors are set out in the table below:
Name of DirectorsNominatingRemunerationAudit
Board*Committee*Committee*Committee*
HeldAttendedHeldAttendedHeldAttendedHeldAttended
Mr. Lee Kian Soo
4
3
NA
NA
NA
NA
NA
NA
Mr. Lee Chye Tek Lionel
4
4
NA
NA
NA
NA
NA
NA
4
4
NA
NA
NA
NA
NA
NA
Mr. Wong Bheet Huan
4
4
NA
NA
NA
NA
NA
NA
Mr. Tay Chin Kwang
4
4
NA
NA
NA
NA
NA
NA
Ms. Lee Cheow Ming Doris Damaris 4
4
1
1
2
2
4
4
Dr. Ngo Get Ping
4
4
1
1
2
2
4
4
Ms. Goh Gaik Choo1
2
1
NA
NA
NA
NA
NA
NA
Mr. Teo Peng Huat2
3
3
1
1
1
1
3
3
Mr. Soon Hong Teck3
1
1
-
-
1
1
1
1
Note:1
Ms. Goh Gaik Choo has resigned from the Board on 12 March 2008.
2
Mr. Teo Peng Huat has resigned from the Board on 2 July 2008.
3
Mr. Soon Hong Teck was appointed to the Board on 16 May 2008.
* Refers to meetings held/attended while each Director was in office.
NA Not applicable.
annual report
2008
27
In place of physical meetings, the Board and Board committees also circulate written resolutions for
approval by the relevant members of the Board and Board committees.
Principle 6: Access to Information
To assist the Board in fulfilling its responsibilities, the Board is provided with management reports
containing complete, adequate and timely information, and papers containing relevant background
or explanatory information required to support the decision-making process. The Board is also
provided with updates on the relevant new laws, regulations and changing commercial risks in
the Company’s operating environment through regular meetings. Orientation to the Company’s
business strategies and operations is conducted as and when required.
All Directors have separate and independent access to senior management and to the Company
Secretary. The Company Secretary administers, attends and prepares minutes of Board meetings,
and assists the Chairman in ensuring that Board procedures are followed and reviewed so that
the Board functions effectively, and the Company’s Articles of Association and relevant rules and
regulations, including requirements of the Companies Act and the SGX-ST, are complied with.
In the event that the Directors, whether as a group or individually, require independent professional
advice in the furtherance of their duties, the cost of such professional advice will be borne by the
Company. The appointment of such professional advisor is subject to approval by the Board.
(B) BOARD COMMITTEES
Nominating Committee (“NC”)
Principle 4: Board Membership
The NC comprises Ms. Lee Cheow Ming Doris Damaris as Chairperson, Dr. Ngo Get Ping and
Mr. Soon Hong Teck as members.
The Board had approved written terms of reference of the NC. The NC is responsible for:
(a) making recommendations to the Board on the appointment of new Executive and
Non-Executive Directors;
(b) recommending directors who are retiring by rotation to be put forward for re-election;
(c) regularly reviewing the Board structure, size and composition and make recommendations to
the Board with regards to any adjustment that are deemed to be necessary;
(d) determining annually whether or not a director is independent;
(e)deciding whether or not a director is able to and has been adequately carrying out his duties as
a director, particularly when the director has multiple board representations; and
(f) assessing the effectiveness of the Board as a whole and for assessing the contribution of each
individual director to the effectiveness of the Board.
Our NC will decide how our Board’s performance is to be evaluated and propose an objective
performance criterion, subject to the approval of our Board, which addresses how our Board
has enhanced long-term shareholders’ value. The performance evaluation will also include
consideration of our Company’s share price performance over a five-year period vis-à-vis the
Singapore Straits Times Index and a benchmark index of its industry peers.
28
annual report
2008
Each member of our NC shall abstain from voting on any
resolution in respect of the assessment of his performance
or re-nomination as director.
In the nomination and selection process for new directors,
the NC identifies the key attributes that an incoming
director should have, based on a matrix of the attributes
of the existing board and the requirements of the Group.
After endorsement of the Board and of the key attributes,
the NC taps on the resources of director’s personal contacts
and recommendations of potential candidates. The
curriculum vitae received goes through short listing process.
Informal interview conducted before decision is reached.
Our directors are appointed by our shareholders at a
general meeting and an election of directors is held
annually. One third, or if their number is not a multiple of
three, the number nearest to but not lesser than one-third
of our directors, shall retire from office by rotation once in every three years. A retiring director is
eligible for re-election at the meeting at which he retires.
It is proposed that the NC meet at least once every financial year and the NC has held one (1)
meeting as at 31 August 2008.
Remuneration Committee (“RC”)
Principle 7: Procedures for Developing Remuneration Policies
The RC comprises Dr. Ngo Get Ping as Chairperson and Ms. Lee Cheow Ming Doris Damaris and
Mr. Soon Hong Teck as members.
The Board has approved written terms of reference of the RC. The RC is responsible for:
(a) recommending to the Board a framework of remuneration for the Board and the key executives
of the Group covering all aspects of remuneration including but not limited to Director’s fees,
salaries, allowances, bonuses, options and benefits-in-kind;
(b)proposing to the Board, appropriate and meaningful measures for assessing the performance of
the Executive Directors;
(c) determining the specific remuneration package for each Executive Director;
(d)to administer the Ezra Employees’ Share Option Scheme (“ESOS”) for Directors, senior
management and senior executives; and
(e)considering and recommending to the Board the disclosure of details of the Company’s
remuneration policy, level and mix of remuneration and procedure for setting remuneration
and details of the specific remuneration packages of the Directors and key executives of the
Company as required by law or by the Code.
annual report
2008
29
The members of the RC do not participate in any decisions concerning their own remuneration and
the remuneration packages of persons related to them.
Principle 8: Level and Mix of Remuneration
In setting remuneration packages, the RC takes into consideration the pay and employment
conditions within the industry and in comparable companies. External remuneration specialists
are being engaged to study and recommend a comprehensive reward system for the Executive
Directors based on suitable market benchmarks and practices to ensure external competitiveness
and alignment with the Company’s strategy and longer terms plan. As part of its review, the RC
ensures that the performance related elements of remuneration form a significant part of the total
remuneration package of Executive Directors and is designed to align the Directors’ interest with
those of shareholders and link rewards to corporate and individual performance. Recommendations
are then being put forward to the Board by RC. The last review was completed in 2006 and the
next review is expected to be in 2009.
In addition, the RC also reviews all matters concerning the remuneration of Non-Executive Directors to
ensure that the remuneration is commensurate with the contribution and responsibilities of the Directors.
Directors’ fees are also reviewed on a regular basis with a study being done in the current year. This is
to ensure that directors’ fees paid remains to be competitive. The Company submits the quantum of
directors’ fees for each year to the shareholders for approval at each Annual General Meeting (“AGM”).
The RC will meet at least once every financial year and during the financial year, the RC has held
two (2) meetings.
Principle 9: Disclosure on Remuneration
The following tables show a breakdown of the remuneration of Directors and the Key Executives
for the financial year ended 31 August 2008.
Breakdown of the Directors’ remuneration
Salary
Other
Name of Director
& CPFFee5
BonusBenefitsTotal
Above S$500,000
%
%
%
%
%
Mr. Lee Kian Soo1
6.7
0.6
91.6
1.1
100
Mr. Lee Chye Tek Lionel1
7.8
0.6
91.5
0.1
100
15.8
1.5
81.1
1.6
100
Mr. Wong Bheet Huan
24.8
2.5
69.0
3.7
100
Mr. Tay Chin Kwang
25.2
2.5
69.1
3.2
100
Ms. Goh Gaik Choo1,2
18.7
2.8
69.7
8.8
100
Up to S$250,000
Ms. Lee Cheow Ming Doris
Damaris –
100
–
–
100
Dr. Ngo Get Ping
–
100
–
–
100
Mr. Soon Hong Teck3
–
100
–
–
100
Mr. Teo Peng Huat4
–
100
–
–
100
Note:1 Mr. Lee Kian Soo is the husband of Ms. Goh Gaik Choo. Mr. Lee Chye Tek Lionel is the son of Mr. Lee Kian Soo and Ms. Goh Gaik Choo.
2
Ms. Goh Gaik Choo has resigned from the Board on 12 March 2008.
3
Mr. Soon Hong Teck was appointed to the Board on 16 May 2008.
4
Mr. Teo Peng Huat has resigned from the Board on 2 July 2008.
5
These fees are subject to approval by shareholders as a lump sum at the AGM for FY2008.
30
annual report
2008
Principle 9: Disclosure on Remuneration
Breakdown of the Executives’ remuneration
Salary
Other
Name of Executive
& CPF
BonusBenefitsTotal
S$250,001 to S$500,000 %
%
%
%
Mr. Stuart Cox
61.3
–
38.7
100
Mr. Robin Kirkpatrick
67.3
16.9
15.8
100
Col. Andre Koh
63.2
27.4
9.4
100
Up to S$250,000
Mr. Bob Davidson
65.8
–
34.2
100
Mr. Steve Engel
64.1
–
35.9
100
Capt. Vincent Stephen
55.3
25.8
18.9
100
Mr. David Tan Yew Beng
63.1
27.8
9.1
100
Capt. Tay Peng Chay
63.9
24.4
11.7
100
Ms. Rosalind Teo
62.4
29.2
8.4
100
Mr. Wisan Wataniyakun
51.4
29.2
19.4
100
Mr. Yan Naing Aung
55.2
20.5 24.3
100
Ms. Cheryl Yap
73.9
18.0
8.1
100
Audit Committee (“AC”)
Principle 11: Audit Committee
The AC comprises Independent Directors, namely Mr. Soon Hong Teck, Ms. Lee Cheow Ming Doris
Damaris and Dr. Ngo Get Ping. The Chairperson of the AC is Mr. Soon Hong Teck.
All members of the AC have many years of experience in senior management positions in financial, legal
and industrial sectors. The Board is of the view that the AC members, having accounting and related
financial management expertise or experience, are appropriately qualified to discharge their responsibilities.
annual report
2008
31
The Group has adopted the Best Practices Guide and the Code in relation to the roles and
responsibilities of the AC. The AC will perform the following functions:
(a)review the audit plan of our internal and external auditors;
(b)review the internal and external auditors’ reports;
(c) review the co-operation given by our Company’s officers to the internal and external auditors;
(d)review the independence and objectivity of the external auditors and nominate external auditors
for re-appointment or recommend for removal and approving the remuneration and terms of
engagement of the external auditors;
(e)review significant financial reporting issues and judgments so as to ensure the integrity of the
financial statements of the Group and Company and any formal announcement relating to the
Group’s financial performance before the submission to the Board of Directors;
(f) review adequacy and effectiveness of the Group’s internal controls, including financial,
operational and compliance controls and risk management policies;
(g)review the effectiveness of internal audit function;
(h)review all interested person transactions, if any, to ensure that they comply with the approved
internal control procedures and have been conducted on an arms’ length basis;
(i) perform such other functions and duties as may be required by the relevant laws or provisions of
the Listing Manual of the SGX-ST (as may be amended from time to time);
(j) meet with the external auditors and without the presence of management, at least annually, to
discuss any problems and concerns they may have; and
(k)undertake such other reviews and projects as may be requested by the Board of Directors.
Apart from the above functions, our AC will
commission and review the findings of internal
investigations into matters where there is
suspicion of fraud or irregularity, or failure
of internal controls or infringement of any
Singapore law, rule or regulation, which has
or is likely to have a material impact on our
operating results and/or financial position.
In the event that a member of our AC is
interested in any matter being considered by
our AC, he will abstain from reviewing that
particular transaction or voting on that particular resolution.
During the past financial year, the AC held four (4) meetings with the management. The AC has
been given full access to and obtained the co-operation of the Company’s management. The AC
has reasonable resources to enable it to discharge its functions properly.
The AC has met with the external auditors without the presence of the management. The AC also
met with the external auditors to discuss the results of their examinations and their evaluation of the
system of internal accounting controls.
32
annual report
2008
The AC has reviewed the volume of non-audit services to the Group by the external auditors, and
being satisfied that the nature and extent of such services will not prejudice the independence and
objectivity of the external auditors, is pleased to recommend their re-appointment.
Principle 12: Internal Controls
Principle 13: Internal Audit
The Board believes in the importance of
maintaining a sound system of internal
controls to safeguard the interests of the
shareholders and the Group’s assets. The AC
has met with the management and external
auditors once as at the date of this Annual
Report to review the external auditors’ audit
plans. Also, as part of the annual statutory
audit on financial statements, the external
auditors report to the AC and the appropriate
level of management any material
weaknesses in financial internal controls over
the areas which are significant to the audit.
Based on the discussion with the auditors and
the management, the Board is satisfied that
the internal controls of the Group throughout
the financial year and up to and as of the
date of this Annual Report are adequate to
safeguard its assets and ensure the integrity
of its financial statements.
The system of internal controls provides
reasonable, but not absolute assurance that the Company will not be adversely affected by any
event that could be reasonably foreseen as it strives to achieve its business objectives.
However, the Board notes that no system of internal controls could provide absolute assurance
in this regard, or absolute assurance against the occurrence of material errors, poor judgment in
decision-making, human errors, losses, fraud or other irregularities.
During the financial year, the Group has outsourced its internal audit function to an international
public accounting firm, KPMG, to review the effectiveness of the key internal controls, including
financial, operational and compliance controls, and risk management on an on-going basis.
Procedures are in place for internal auditors to report independently their findings and
recommendations to the AC. Management will update the AC on the status of the remedial
action plans.
annual report
2008
33
The Group is in the process of fine-tuning its whistle-blowing policy and procedures with an objective
of providing a process for staff to rise in confidence and without fear of retaliation, to report incidents
of possible wrongdoing or breach of applicable laws, regulations or policies to the AC.
(C) COMMUNICATION WITH SHAREHOLDERS
Principle 10: Accountability and Audit
The Board is accountable to the shareholders and other stakeholders while the management is
accountable to the Board.
The Board’s primary role is to protect and enhance long-term value and returns for the shareholders.
In the discharge of its duties to the shareholders, the Board, when presenting annual financial
statements and announcements, seek to provide the shareholders with a detailed analysis,
explanation and assessment of the Group’s financial position and prospects. Management currently
provides the Board with appropriately detailed management accounts of the Group’s performance,
position and prospects on a regular basis.
Principles 14 & 15: Communications with Shareholders
The Group believes that a high standard of disclosure is crucial to raising the level of corporate
governance. All information relating to the Group’s new initiatives are first disseminated via
MASNET/SGXNET followed by a news release (if appropriate), which is also available on the
SGX-ST’s website.
The Group does not practise selective disclosure. Information on any new initiatives is disseminated
via MASNET/SGXNET, news releases and the Company’s website. Price-sensitive information is publicly
released, and is announced within the mandatory period and is available on the Company’s website.
The AGM of the Company is a principal forum for dialogue and interaction with all shareholders.
All shareholders will receive the Annual Report and the notice of AGM. At the AGM, shareholders
will be given the opportunity to voice their views and to direct questions regarding the Group to
the Directors including the chairpersons of each of the Board committees. The Company ensures
that there are separate resolutions at general meetings on each distinct issue. The external auditors
are also present to address the shareholders’ queries about the conduct of the audit and the
preparation and content of the auditors’ report. Minutes of the AGM are prepared and available
upon request, which include substantial comments or queries from the shareholders and responses
from the Board and management.
The Articles of Association allows a member of the Company to appoint up to two (2) proxies to
attend and vote instead of the member. Notwithstanding the Commentary 15.4 of the Code, the
Company have not amended its Articles of Association to lift the limit on the number of proxies
for nominees companies which are the shareholders to enable the shareholders who hold shares
through nominees to attend AGMs as proxies. This is because it will not be possible to make
such amendment to apply only to nominee company shareholders and not to all shareholders.
In addition, the Board views that it would not promote greater efficiency or effective decision
34
annual report
2008
making nor would it be cost-effective to lift the limit on the number of proxies completely; instead
as a compromise, the Board is presently considering to increase the number of proxies any one
member may appoint. The Board is studying the matter and may make a proposal in due course to
shareholders regarding amendment of the relevant Article for their approval.
The Company is not implementing absentia-voting methods such as by mail, e-mail or fax until
security, integrity and other pertinent issues are satisfactorily resolved.
(D) RISK MANAGEMENT (Listing Manual Rule 1207(4)(d))
The Group is continually reviewing and improving the business and operational activities to
take into account the risk management perspective. This includes reviewing management and
manpower resources, updating work flows, processes and procedures to meet the current and
future market conditions. The Group has also considered the various financial risks, details of which
are found on page 136 of the Annual Report.
(E) SECURITIES TRANSACTIONS (Listing Manual Rule 710(2)(b))
The Group has adopted the SGX-ST’s Best Practices Guide with respect to dealings in securities
by the Directors and its Executive Officers. Directors, management and officers of the Group who
have access to price-sensitive, financial or confidential information are not permitted to deal in the
Company’s shares during the periods commencing one month before the announcement of the
Company’s results and ending on the date of announcements of relevant results, or when they are
in possession of unpublished price-sensitive information on the Group. To provide further guidance
to employees on dealings in the Company’s shares, the Company has adopted a code of conduct
on transactions in the Company’s shares. The code of conduct is modeled after the Best Practices
Guide with some modifications.
(F) MATERIAL CONTRACTS (Listing Manual Rule 1207(8))
There were no material contracts of the Company or its subsidiaries involving the interest of any
Director or controlling shareholders subsisting as at the financial year ended 31 August 2008.
(G) INTERESTED PARTY TRANSACTIONS (Listing Manual Rule 907 and 920(1))
The Company has put in place an internal procedure to track interested person transactions
(“IPTs”) of the Company. The aggregate value of interested person transactions entered into for the
financial year under review is as follows:
Name of interested persons
Aggregate value of all interested person transactions during
the financial year excluding transactions less than S$100,000 and transactions conducted under shareholder’s mandate pursuant to Rule 920 (US$’000)
Jit Sun Investments Pte Ltd and its associated company
2,420
annual report
2008
35
OperationS Review
Introduction
Ezra is an integrated offshore support and
marine services provider, with a focus in
supporting our clients in the entire oil field life
cycle with our fleet of young and sophisticated
support vessels. Coupled with our wide range
of expertise, we provide our clients with
efficient and effective services, catered to
their every need. We strive towards being the
premier name in offshore support solutions
by servicing our clients in two main business
segments, the offshore support services
segment and the marine services segment.
Offshore Support Services
Our Offshore Support Division is segmented
into three divisions, namely the Offshore
Support Vessels Division, the Construction and
Production Division, and the newly established
Energy Services Division. All three Divisions
complement each other in providing offshore
support solutions, focused on the production
phases of the oil field life cycle. The Offshore
Support Vessels Division currently manages
and operates a wide array of vessels, ranging
from medium and large-sized Anchor Handling,
Towing and Supply (“AHTS”), Anchor Handling
Tugs (“AHT”), Fast Crew and Utility vessels and
Diving Support vessels. The Construction and
Production Division (also known as EOC Limited,
listed separately on the Oslo Børs) manages
and operates a fleet of vessels which provide
heavy lift construction and floating production
services, such as Dynamic Positioned heavy
lift accommodation pipe lay crane barges and
Floating Production Storage and Offloading
(“FPSO”) vessels. Our Energy Services Division
provides well engineering and maintenance
services which are an essential part of the
upstream oil and gas industry.
Marine Services
The Marine Services Division provides valueadded services such as marine supplies,
fabrication, engineering and design work to
the same set of clients serviced by our Offshore
Support Services Division. This Division includes
our fabrication yard in Vietnam where we carry
out our fabrication work of various types of
offshore platform modules.
36
annual report
2008
OperationS Review
Offshore Support Vessels
In FY2008, the Group’s revenue rose by
87% to US$268.3 million, whilst profits rose
an impressive 157% to US$175.4 million.
Shareholder’s funds increased by 38% to
US$370.1 million. In 3Q FY2008, the Group
started reporting its figures in USD, given that
Ezra’s functional currency is USD.
The Offshore Support Division continues to
contribute to the growth of the Group, with
and increase in revenue of US$64.6 million. In
FY 2008, we enjoyed the full-year operations
of one (1) AHTS vessel Lewek Penguin and one
(1) launch barge Lewek LB1. There was also
the inclusion of full-year operations of six (6)
AHTS vessels Lewek Harrier, Lewek Mallard,
Lewek Martin, Lewek Pelican, Lewek Roller and
Lewek Ebony, one (1) crewboat, Sarah Gold, as
compared to 4 – 10 months operations of these
vessels in FY2007.
The Group has taken delivery of two (2)
additional AHT vessels Lewek Kea and Lewek
Kestrel, as well as three (3) AHTS vessels, Lewek
Toucan, Lewek Trogon and Lewek Petrel this
financial year. These vessels have contributed to
2 – 8 months of operations.
This year, with the extended growth cycle of in
the offshore oil and gas industry, we saw the
continued trend of higher long term charter
rates, moving in tandem with higher spot
market rates. This general increase in rates has
helped boost the overall offshore profit margin
and its corresponding contributions to the
Group’s revenue.
Construction and Production
EOC Limited, the separately listed entity on
the Oslo Børs, represents the Construction and
Production Division of the Group. It currently
owns two (2) Heavy Lift Accommodation
Crane Barges, one (1) Dynamically Positioned
Heavy Lift Accommodation and Pipe-laying
vessel, as well as one (1) Floating Production
Storage and Offloading vessel. The diverse
operational capabilities of these construction
and production vessels see them involved in a
multitude of activities offshore and are deployed
predominantly at the post exploration stages of
the oilfield life cycle. As this Division continues
to execute its own growth plan, it also helps
to enhance the Group’s positioning as an
integrated offshore services provider to the deep
water segment of the industry.
Energy Services
The Energy Services Division has been recently
established as part of Ezra’s integrated solutions
package. This division has the expertise to
provide a range of oilfield engineering services
which complements the existing range of
services provided by the Group. Together with
the leasing of two (2) self propelled jack-up rigs
due for delivery in 2009, this division would be
able to fulfil the requirements of the upstream oil
and gas industry through the provision of wellintervention work. We see this as a value add
to our existing customers, as well as an avenue
annual report
2008
37
OperationS Review
in Singapore. This brings the total number
of MFSVs to be added to Ezra’s sophisticated
fleet to five (5). Being amongst the most
sophisticated vessels available to the industry
at the time of delivery, we believe that these
new orders would enable the Group to further
widen its range of offshore support capabilities
and services to our clients.
to reach out to new clients. This division also
has the expertise to help maintain and manage
drilling programmes for smaller oil companies.
This year, the Energy Services Division made its
maiden revenue contribution of US$29.2 million.
Marine Services
Our Marine Services Division generated revenue
of US$64.2 million, a 94% growth from
FY2007. Increased activities in the offshore oil
and gas industry over the year led to a rise in
equipment procurement and supply. There was
also an increase in engineering and fabrication
work even as the yard in Ho Chi Minh City
continues to be further developed. The second
facility in Vung Tau City is currently still on
target for expected completion by 2010.
Strategy for Future Growth
Sophisticated Fleet
Ezra continues to maintain and operate one
of the youngest fleets of sophisticated vessels
serving the global offshore oil and gas industry,
with an increasing focus on deepwater and
harsh environments.
In the course of this financial year, Ezra has
contracted to acquire one (1) additional new
Multi-Functional Support Vessel (“MFSV”)
and one (1) additional AHTS with two yards
As part of the Group’s continued commitment
to its fleet expansion programme, these new
orders would help fulfil part of the increasing
demand for offshore support vessels in the
deep water segment. These new builds will be
capable of providing ultra-deepwater support
services in harsh environments, and can be
integrated with our Marine Services Division
to perform subsea construction, equipment
installation and well intervention services.
In the course of FY2008, Ezra took delivery of
three (3) AHTS vessels, Lewek Toucan, Lewek
Trogon and Lewek Petrel as well as two (2)
additional AHT vessels, Lewek Kea and Lewek
Kestrel. These vessels are expected to contribute
a full year’s charter revenue for FY2009. With
the above mentioned five (5) new vessels,
Ezra’s current fleet capacity stands at 234,600
break horse power (“bhp”). Together with the
additional AHTS and five (5) MFSVs, we would
boost the Group’s total fleet capacity to an
impressive 402,600 bhp by FY2011.
A rigorous Health, Safety, Environment and
Safety (“HSES”) policy
The success of any provider of offshore
support services depends to a large extent on
the degree of specialisation and skills of its
onshore and offshore employees. Ezra adopts
the International Safety Management Code
(“ISM” Code) which is the basis of the Safety
Management System within Ezra and its
fleet. Ezra applies the highest HSES standards
through rigorous quality control checks and
38
annual report
2008
OperationS Review
service training. Ezra also actively seeks and
implements the industry’s best practices in
ensuring operational and safety excellence.
Our HSES policy has been constantly updated in
tandem with the best practices of the industry
and oil majors. Ezra underwent audits carried
out from time to time by oil majors and have
always achieved satisfactory results. In the
dynamic environment that it operates in, Ezra’s
continued commitment to proactively improve
the Group’s HSES policy, procedures and
practices places it in a good position to develop
further opportunities with existing, as well as
new clients.
Regarding the safety of our crew, Ezra has
a Health Risk Assessment (“HRA”) in place,
highlighting the potential health hazards which
could affect both their competency and health
on an immediate and prolonged basis. Our HRA
is recognised by the oil majors and is widely
enforced onboard all our vessels and
audited both internally and externally on a
periodic basis.
Investing in Human Capital
As the Group’s fleet continues to grow,
ensuring high standards of professionalism and
safe operations continues to be its top priority.
Since 2006, the Group has implemented various
measures to ensure that there will be a stable
pool of trained personnel who are able to join
the Group in the future. Till date, the Group has
awarded many scholarships in Nautical Studies
and Marine Engineering Studies to a group
of specially selected and deserving students.
Ezra recognises the potential in them to be
molded into Ezra’s future fleet officers. This is
only the beginning of the Group’s long-term
commitment to the development of talent to
ensure a continuous stream of capable officers
to manage its modern and expanding fleet. The
Group looks to continue increasing the number
of such scholarships in order to accelerate
the development of a team of dedicated,
professional and committed officers within
its fleet.
annual report
2008
39
OperationS Review
In seeking to upgrade and develop the Group’s
existing base of talent and to tie in with its
continued expansion in Vietnam, the Group
has invested in the establishment of a training
academy in Vietnam dedicated to offshore
and marine personnel. As Ezra’s new builds
become more technologically advanced, its
crew too needs to be trained sufficiently to
handle these vessels. The training academy is
aimed at achieving improvements in technical
and operational knowledge of the Group’s crew
by providing realistic and practical training in
various areas of offshore and marine work,
including safety and emergency management.
Plans are under way to include a training
simulator in the academy to enhance the
realism of Ezra’s training exercises. This will
enable the Group to consistently provide highly
skilled and certified crew for its expanding fleet
of vessels for many years to come.
40
annual report
2008
financial CONTENTS
41
42 47 48 50 General Information
Directors’ Report
Statement by Directors
Independent Auditors’ Report
Balance Sheets
52 Profit and Loss Accounts
53 Statements of Changes in Equity
57 Consolidated Cash Flows Statement
62Notes to the Financial Statements
annual report
2008
41
GENERAL INFORMATION
Ezra Holdings Limited and Subsidiaries
(Co. Reg. No.: 199901411N)
Directors
Lee Kian Soo
Lee Chye Tek Lionel
Wong Bheet Huan
Tay Chin Kwang
Lee Cheow Ming Doris Damaris
Dr. Ngo Get Ping
Soon Hong Teck
Goh Gaik Choo
Teo Peng Huat
(appointed on 16 May 2008)
(resigned on 12 March 2008)
(resigned on 2 July 2008)
Secretary
David Tan Yew Beng
Registered Office
15 Hoe Chiang Road
#15-01 Tower Fifteen
Singapore 089316
Auditors
Ernst & Young LLP
Partner-in-charge: Shekaran Krishnan
Principal Bankers
Bangkok Bank Public Company Limited
DBS Bank Ltd
DVB Group Merchant Bank (Asia) Ltd
Malayan Banking Berhad
Overseas Chinese Banking Corporation Limited
United Overseas Bank Limited
(appointed since financial year
ended 31 August 2005)
42
annual report
2008
Directors’ Report
The directors are pleased to present their report to the members together with the audited
consolidated financial statements of Ezra Holdings Limited (the “Company”) and its subsidiaries
(collectively, the “Group”) and the balance sheet, profit and loss account and statement of changes
in equity of the Company for the financial year ended 31 August 2008.
Directors
The directors of the Company in office at the date of this report are:
Lee Kian Soo
Lee Chye Tek Lionel
Wong Bheet Huan
Tay Chin Kwang
Dr. Ngo Get Ping
Soon Hong Teck
(appointed on 16 May 2008)
In accordance with Articles 90 or 106 of the Company’s Articles of Association, Mr. Lee Kian Soo, Capt.
Adarash Kumar A/L Chranji Lal Amarnath, Ms. Lee Cheow Ming Doris Damaris and Mr. Soon Hong
Teck retire. The directors being eligible offer themselves for re-election.
Arrangements to enable directors to acquire shares and debentures
Except as described below, 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 object is to enable the
directors of the Company to acquire benefits by means of the acquisition of shares in or debentures
of the Company or any other body corporate.
Directors’ contractual benefits
Except as disclosed in Note 34, since the end of the previous financial year, no director of the Company
has received or become entitled to receive a benefit (other than a benefit included in the aggregate
amount of emoluments shown in the financial statements or any emoluments received from related
corporations) 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.
annual report
2008
43
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, as stated below:
Direct interest
Deemed interest
At
At end
At
At end
beginning
of
At 21
beginning
of
At 21
of financial financial September of financial financial September
year
year*
2008*
year
year*
2008*
The Company
Ordinary shares Lee Kian Soo
38,832,000 77,664,000 77,664,000 23,628,960 47,457,920 47,457,920
Lee Chye Tek Lionel
41,771,000 83,542,000 83,542,000 18,132,960 36,465,920 36,465,920
Capt. Adarash Kumar
A/L Chranji Lal
Amarnath
3,600,000 7,200,000 7,200,000
–
–
–
On 15 November 2007, the Company issued 292,919,995 new ordinary shares in the capital of the Company, on the basis of
one (1) bonus share for every one (1) existing share held by the shareholders of the Company as at 7 November 2007.
*
By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Mr. Lee Kian Soo and Mr. Lee Chye Tek
Lionel are deemed to be interested in the shares held by the Company in its subsidiaries.
Except as disclosed in this report, no other director who held office at the end of financial year had
interests in shares, share options or debentures of the Company or related corporations, either at the
beginning of the financial year, or date of appointment if later, or at the end of the financial year.
Options
The Company has an employee share incentive plan, the Ezra Employees’ Share Option Scheme (the
“Scheme”), which was implemented in 2003. Except for controlling shareholders or their associates,
the employees, executive directors and independent directors of the Company and its subsidiaries
shall, subject to certain conditions, be eligible to participate in the Scheme.
The total number of ordinary shares over which the Company may grant options under the Scheme
shall not exceed 15% of the issued share capital of the Company on the day preceding the relevant
date of grant.
As at the date of this report, the Company may grant to its employees, executive directors and
independent directors options to subscribe for an aggregate of 87,875,998 (2007: 87,875,998)
(adjusted for bonus issue as described in Note 29(b)) of its ordinary shares. Such options, of which
the exercise price is determined by the Remuneration Committee on the date of the grant, subject to
certain conditions and approval, are exercisable at:
(i)
(ii)
a price equal to the market price (“Market Price Options”), or
a price which is set at a discount to the market price (“Incentive Options”).
44
annual report
2008
Options (cont’d)
The rights to exercise the above options are as follows:
Market Price Options
(a)
Up to 50% of the Market Price Options (or such other percentage as may be determined by
the Remuneration Committee) may be exercisable after the first anniversary of the date of
the grant; and
(b)
the remaining balance of the Market Price Options may be exercised at any time after the
second anniversary of the date of the grant.
Incentive Options
(a)
Up to 50% of the Incentive Options (or such other percentage as may be determined by the
Remuneration Committee) may be exercisable after the second anniversary of the date of the
grant; and
(b)
the remaining balance of the Incentive Options may be exercised at any time after the third
anniversary of the date of the grant.
The above options shall be exercised before the end of the tenth anniversary of the date of the
grant.
Members of the Remuneration Committee administering the Scheme are as follows:
Soon Hong Teck
As at 31 August 2008, no options have been granted under the Scheme.
Audit Committee
The Audit Committee (“AC”) comprises three board members, all of whom are independent nonexecutive directors. The members of the AC during the financial year and at the date of this report
are:
Soon Hong Teck (Chairperson)
Dr. Ngo Get Ping
annual report
2008
45
Audit Committee (cont’d)
The AC carried out its functions in accordance with section 201B(5) of the Singapore Companies Act,
Cap. 50, including the following:
(a)
review the audit plan of our internal and external auditors;
(b)
review the internal and external auditors’ reports;
(c) review the co-operation given by our Company’s officers to the internal and external
auditors;
(d)
review the independence and objectivity of the external auditors and nominate external
auditors for re-appointment or recommend for removal and approving the remuneration
and terms of engagement of the external auditors;
(e)
review significant financial reporting issues and judgments so as to ensure the integrity of the
financial statements of the Group and Company and any formal announcement relating to
the Group’s financial performance before the submission to the Board of Directors;
(f)
review adequacy and effectiveness of the Group’s internal controls, including financial,
operational and compliance controls and risk management policies;
(g)
review the effectiveness of internal audit function;
(h)
review all interested person transactions, if any, to ensure that they comply with the approved
internal control procedures and have been conducted on an arms’ length basis;
(i)
perform such other functions and duties as may be required by the relevant laws or provisions
of the Listing Manual of the SGX-ST (as may be amended from time to time);
(j)
meet with the external auditors without the presence of management, at least annually, to
discuss any problems and concerns they may have; and
(k)
undertake such other reviews and projects as may be requested by the Board of Directors.
Apart from the above functions, the AC will commission and review the findings of internal
investigations into matters where there is suspicion of fraud or irregularity, or failure of internal
controls or infringement of any Singapore law, rule or regulation, which has or is likely to have a
material impact on our operating results and/or financial position.
In the event that a member of the AC is interested in any matter being considered by our AC, he will
abstain from reviewing that particular transaction or voting on that particular resolution.
During the past financial year, the AC held four (4) meetings with the management. The AC has
been given full access to and obtained the co-operation of the Company's management. The AC has
reasonable resources to enable it to discharge its functions properly.
The AC has met with the external auditors without the presence of the management. The AC also
met with the external auditors to discuss the results of their examinations and their evaluation of the
system of internal accounting controls.
The AC has reviewed the volume of non-audit services to the Group by the external auditors, and
being satisfied that the nature and extent of such services will not prejudice the independence and
objectivity of the external auditors, is pleased to recommend their re-appointment.
46
annual report
2008
Auditors
Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.
On behalf of the Board of Directors,
Lee Kian Soo
Director
Lee Chye Tek Lionel
Director
Singapore
19 November 2008
annual report
2008
47
Statement by Directors Pursuant to Section
201(15)
We, Lee Kian Soo and Lee Chye Tek Lionel, being two of the directors of Ezra Holdings Limited, do
hereby state that, in the opinion of the directors,
(i)
(ii)
the accompanying balance sheets, profit and loss accounts, statements of changes in equity
and consolidated cash flows statement together with 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 August 2008, and of the results of the business and changes in equity of the Group and the
Company, and the cash flows of the Group for the financial year ended on that date; and
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,
Lee Kian Soo
Director
Lee Chye Tek Lionel
Director
Singapore
19 November 2008
48
annual report
2008
INDEPENDENT AUDITORS’ REPORT
For The Financial Year Ended 31 August 2008
To the members of Ezra Holdings Limited
We have audited the accompanying financial statements of Ezra Holdings Limited (the “Company”)
and its subsidiaries (collectively, the “Group”) set out on pages 50 to 147 which comprise the balance
sheets of the Group and the Company as at 31 August 2008, the profit and loss accounts and the
statements of changes in equity of the Group and the Company, and consolidated 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, 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.
annual report
2008
49
Opinion
In our opinion,
(i)
the consolidated financial statements of the Group and the balance sheet, profit and loss
account and statement of changes in equity 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
August 2008 and the results and changes in equity of the Group and the Company and cash
flows of the Group for the year ended on that date; and
(ii)
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 LLP
Public Accountants and
Singapore
19 November 2008
50
annual report
2008
Balance Sheets as at 31 August 2008
(Amounts expressed in United States dollars)
Note
2008
$’000
Group
2007
$’000
Company
2008
2007
$’000
$’000
ASSETS LESS LIABILITIES
Non-current assets
Fixed assets
3
182,598
122,065
334
77
Goodwill
4a
8,087
732
–
–
Other intangible assets
4b
1,814
2,124
–
–
Investments in subsidiaries
5
–
–
17,415
40,026
Investments in associated companies
6
77,419
17,879
31,804
–
Investments in joint venture companies
7
14,727
10,243
11,594
8,397
Available-for-sale (“AFS”) investments
8
24,199
66,976
21,667
63,830
Other investment
9
20,544
–
–
–
Other receivable
16
465
–
–
–
Long term receivable from a subsidiary
10
–
–
12,313
32,800
Long term receivable from an
associated company
11
32,800
– 32,800
–
Deferred tax assets
28
436
–
–
–
Current assets
Assets held for sale
12
37,197
68,700
–
23,279
Disposal group assets classified
as held for sale (excluding
intragroup balances)
13
–
255,691
–
–
Inventories and work-in-progress
14
13,618
9,013
–
–
Trade receivables
15
87,004
38,045
–
–
Other receivables
16
26,429
8,134
16,715
1,179
Other current assets
17
16,391
987
133
5
Non-trade balances due from
- subsidiaries
18
–
–
161,214
46,313
- associated companies
18
14,952
10,333
4
–
- a joint venture company
18
190
1,589
–
678
Derivative financial instruments
41
–
270
–
–
Fixed deposits
19
121,158
13,544
106,295
–
Cash and bank balances
20
31,901
11,399
535
516
348,840
417,705
284,896
71,970
annual report
2008
51
Balance Sheets as at 31 August 2008 (CONT’D)
Group
Company
Note
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Current liabilities
Trade payables
21
22,894
9,898
–
–
Other payables and accruals
22
83,143
62,606
20,757
5,981
Disposal group liabilities
classified as held for sale
(excluding intragroup balances)
13
–
148,940
–
–
Bills payable to banks
23
25,753
27,395
4,000
13,778
Deferred income
24
642
363
–
–
Progress billings in excess
of work-in-progress
14
1,371
–
–
–
Non-trade balances due to
- subsidiaries
18
–
–
19,992
2
18
16,024
270
–
–
- a joint venture company
18
267
–
–
–
Derivative financial obligations
41
311
–
30
–
Lease obligations
25
65
43
–
–
Bank term loans
26
81,836
39,294
55,770
–
Provision for tax
7,200
4,052
1,493
222
239,506
292,861
102,042
19,983
Net current assets
109,334
124,844
182,854
51,987
Non-current liabilities
Deferred income
24
(13,586)
(7,603)
–
–
Lease obligations
25
(221)
(107)
–
–
Premium payable
(368)
(515)
–
–
Bank term loans
26
(52,170)
(58,414)
–
–
Notes payable
27
(35,301)
–
(35,301)
–
Deferred tax liabilities
28
(345)
(169)
–
–
NET ASSETS
370,432
278,055
275,480
197,117
EQUITY
Share capital
29
125,330
114,583
125,330
114,583
Accumulated profits
249,338
117,791
152,190
40,003
Capital reserve
30
2,535
243
2,535
243
Fair value adjustment reserve
30
8,242
52,253
9,588
52,632
Hedging reserve
30
(18)
226
–
–
Translation reserve
30
(1,178)
(6,296)
–
–
Treasury shares
31
(14,163)
(10,344)
(14,163) (10,344)
370,086
268,456
275,480
197,117
Minority interests
346
9,599
–
–
TOTAL EQUITY
370,432
278,055
275,480
197,117
The accompanying accounting policies and explanatory notes form an integral part of the financial
statements.
52
annual report
2008
Profit and Loss Accounts for the financial
year ended 31 August 2008
Group
Company
Note
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Revenue
32
268,346
143,546
25,840
11,275
Cost of sales
(188,769)
(93,395)
–
–
Gross profit
79,577
50,151
25,840
11,275
Other income, net
33
137,942
50,129
139,150
37,288
Administrative expenses
(46,356)
(21,266)
(25,059) (10,180)
Profit from operations
34
171,163
79,014
139,931
38,383
Financial income
36
6,828
1,034
6,888
759
Financial expenses
37
(6,565)
(5,493)
(1,138)
(425)
Share of profit of associated companies
11,712
902
–
–
Share of profit of joint venture companies
934
76
–
–
Profit before tax
184,072
75,533
145,681
38,717
Tax
28
(7,726)
(6,481)
(1,176)
(253)
Profit after tax
176,346
69,052
144,505
38,464
Attributable to:
Shareholders of the Company
175,435
68,208
144,505
38,464
Minority interests
911
844
–
–
176,346
69,052
144,505
38,464
Earnings per share (cents)
38
- basic
30.25
11.98
- diluted
30.25
11.98
statements.
Attributable to equity holders of the Group –
–
–
–
(7,657)
–
–
–
–
–
117,791
–
50,238
114,583
68,208
–
243
30
–
–
–
213
–
–
52,253
–
–
–
–
–
–
46,341
226
–
–
–
–
–
–
(135)
(6,296)
–
–
–
–
–
–
(2,155)
–
–
–
164,217
(10,344)
30
–
– (11,078)
–
734
(7,657)
–
213
–
112,259
9,599
–
–
–
–
–
–
9,599
278,055
30
(11,078)
734
(7,657)
213
50,238
121,858
2008
Balance at 31 August 2007
Total recognised income and
expenses for the financial year
Advance proceeds received by way of
a placement of shares
Contribution from a substantial
shareholder
Excess of proceeds over cost of
treasury shares
Treasury shares purchased
Treasury shares disposed
Exempt dividends (Note 45)
Fair value
Share
Accumulated
Capital
adjustment
Hedging
Translation
Total
Treasury Minority
Total
capital
profits
reserve
reserve
reserve
reserve
reserves shares
Interests Equity
Group
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 1 September 2006
62,357
55,472
–
5,730
350
(4,013)
57,539
–
–
119,896
- Effects of exchange due to FRS 21
1,988
1,768
–
182
11
(128)
1,833
–
–
3,821
- As restated
64,345 57,240
–
5,912
361
(4,141)
59,372
–
–
123,717
Fair value gains transferred to profit
and loss on sale of AFS investments
–
–
–
(6,968)
–
–
(6,968)
–
–
(6,968)
Net change in fair value adjustment
reserve
–
–
–
53,309
–
–
53,309
–
–
53,309
Net change in hedging reserve
–
–
–
–
(135)
–
(135)
–
(5)
(140)
Net change in translation reserve
–
–
–
–
–
(2,155)
(2,155)
–
10
(2,145)
Dilution of interest in a subsidiary
by the Company
–
–
–
–
–
–
–
–
8,750
8,750
Total income and expenses
recognised directly in equity
–
–
–
46,341
(135)
(2,155)
44,051
–
8,755
52,806
Net profit for the financial year
–
68,208
–
–
–
–
68,208
–
844
69,052
Statements of Changes in Equity for the financial year
ended 31 August 2008
annual report
53
Attributable to equity holders of the Group The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
Acquisition of shares in a subsidiary –
–
–
–
–
–
–
–
20
Disposal of interest in a subsidiary
by the Company
–
–
–
–
(63)
–
(63)
–
(10,151)
–
–
2,269
–
–
–
2,269
11,251
–
–
–
–
–
–
–
– (14,100)
–
–
(36,068)
–
–
–
–
(36,068)
–
–
125,330
249,338
2,535
8,242
(18)
(1,178)
258,919 (14,163)
346
(10,214)
13,520
(14,100)
(36,068)
370,432
20
Fair value
Share
Accumulated
Capital
adjustment
Hedging
Translation
Total
Treasury Minority
Total
capital
profits
reserve
reserve
reserve
reserve
reserves shares
Interests Equity
Group (cont’d)
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
114,583
117,791 243
52,253
226
(6,296)
164,217 (10,344)
9,599
278,055
10,747
(7,820)
23
4,940
(23)
6,849
3,969
(970)
–
13,746
- As restated
125,330
109,971
266
57,193
203
553
168,186 (11,314)
9,599
291,801
and loss on sale of
AFS investments
–
–
–
(45)
–
–
(45)
–
–
(45)
Net change in fair value
adjustment reserve
–
–
–
(48,906)
–
–
(48,906)
–
–
(48,906)
Net change in hedging reserve
–
–
–
–
(158)
–
(158)
–
–
(158)
Net change in translation reserve
–
–
–
–
–
(1,731)
(1,731)
–
(33)
(1,764)
Total income and expenses
recognised directly in equity
–
–
–
(48,951)
(158)
(1,731)
(50,840)
–
(33) (50,873)
–
175,435
–
–
–
–
175,435
–
911
176,346
Total recognised income and
expenses for the financial year
–
175,435
–
(48,951)
(158)
(1,731)
124,595
–
878
125,473
ended 31 August 2008 (cont’d)
54
2008
annual report
15,108
5,912
–
–
–
Treasury
shares
$’000
79,453
76,999
2,454
Total
Equity
$’000
50,238
–
–
–
–
–
114,583
Advance proceeds received by way of a
placement of shares
Contribution from a substantial shareholder
Excess of proceeds over cost of treasury shares
–
213
30
–
–
–
–
–
–
–
–
–
–
213
30
–
–
(7,657)
40,003 243
52,632
92,878
–
–
–
–
–
(7,657)
50,238
213
30
(11,078)
734
(7,657)
(10,344)
197,117
–
–
–
(11,078)
734
–
–
–
–
(6,968)
(6,968)
–
(6,968)
Net change in fair value adjustment
reserve
–
–
–
53,688
53,688
–
53,688
Total income and expenses recognised
directly in equity
–
–
–
46,720
46,720
–
46,720
–
38,464
–
–
38,464
–
38,464
Total recognised income and expenses for
the financial year
–
38,464
–
46,720
85,184
–
85,184
14,642
466 Total
reserves
$’000
5,730
182 Fair value
adjustment
reserve
$’000
Attributable to equity holders of the Company Share
Accumulated
Capital
capital
profits
reserve
Company
$’000
$’000
$’000
62,357
8,912 –
1,988
284
–
- As restated
64,345
9,196
–
annual report
2008
55
Attributable to equity holders of the Company –
–
–
2,269
–
–
–
–
–
2,269
–
(36,068)
152,190 2,535
9,588
164,313
–
–
(36,068)
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
125,330
13,520
(14,100)
(36,068)
(14,163)
275,480
11,251
(14,100)
–
Total income and expenses recognised
directly in equity
–
–
–
(47,980)
(47,980)
–
(47,980)
–
144,505
–
–
144,505
–
144,505
Total recognised income and expenses for
the financial year
–
144,505
–
(47,980)
96,525
–
96,525
- As restated
125,330
43,753
266
57,568
101,587
(11,314)
215,603
–
–
–
(45)
(45)
–
(45)
Net change in fair value adjustment reserve
–
–
–
(47,935)
(47,935)
–
(47,935)
Fair value
Share
Accumulated
Capital
adjustment
Total
Treasury
Total
capital
profits
reserve
reserve
reserves
shares
Equity
Company (cont’d)
$’000
$’000
$’000
$’000
$’000
$’000
$’000
114,583
40,003 243
52,632
92,878
(10,344)
197,117
10,747
3,750
23
4,936
8,709
(970)
18,486
56
annual report
2008
annual report
2008
57
Consolidated Cash Flows Statement for the
financial year ended 31 August 2008
Group
Note
2008
2007
$’000
$’000
Cash flows from operating activities
Profit before tax and minority interests
184,072
75,533
Adjustments:
Depreciation of fixed assets
5,513
6,047
Fixed assets written off
–
8
Amortisation of other intangible assets
79
88
Gain on disposal of fixed assets
(1,822)
(678)
Allowance for stocks obsolescence
–
31
Loss/(gain) on disposal of assets held for sale
2,152
(3,773)
Share of profit of associated companies
(11,712)
(902)
Share of profit of joint venture companies
(934)
(76)
Gain on disposal of interest in a subsidiary
D
(146,333)
–
Gain on dilution of interest in a subsidiary
–
(32,176)
Gain on disposal of AFS investments
(21)
(6,968)
Realised gain on derivative instruments
(1,948)
–
Fair value changes in respect of
derivative instruments, net
502
(265)
Bad debts written off
32
20
Unrealised exchange loss/(gain)
11,894
(95)
Interest expense
6,565
5,493
Interest income
(6,828)
(1,034)
Gross dividend income from an associated company
(2,894)
(2,913)
Gross dividend income from AFS investments
(14)
(35)
Gross dividend income from other investment
(887)
–
Contribution by a substantial shareholder for
share based payment
–
218
Provision for foreseeable losses
3,117
–
Allowance for doubtful debts
7,239
–
Operating profit before working capital changes
47,772
38,523
(Increase)/decrease in:
(5,462)
(5,584)
Trade receivables
(59,638)
(31,475)
Other receivables and current assets
(14,720)
12,341
Due from an associated company, net
8,293
(2,692)
Due from joint venture companies, net
1,667
(2,837)
Increase/(decrease) in:
Trade payables
12,584
11,569
27,857
8,672
Progress billings in excess of work-in-progress
1,371
(292)
Cash generated from operations
19,724
28,225
Interest paid
(6,565)
(5,493)
Interest income received
6,828
1,034
Tax paid
(2,565)
(1,752)
Net cash from operating activities
17,422
22,014
58
annual report
2008
financial year ended 31 August 2008 (cont’d)
Group
Note
2008
2007
$’000
$’000
Cash flows from investing activities
Purchase of assets held for sale
(57,763)
(60,668)
Purchase of fixed assets B
(129,032)
(196,807)
Purchase of AFS investments
(341)
(14,492)
Purchase of other investment
(20,544)
–
Proceeds from disposal of fixed assets
12,852
5,226
Proceeds from disposal of assets held for sale
105,456
60,121
Proceeds from disposal of AFS investments
119
7,582
Dividend received (net) from AFS investments
14
35
Dividend received (net) from an associated company
1,140
–
Investment in a joint venture company
(533)
–
Loan to joint venture companies
(2,410)
–
Decrease/(increase) in fixed deposits and cash pledged 50
(98)
Acquisition of a subsidiary, net of cash paid
C
(11,427)
–
Interest paid and capitalised as fixed assets
and assets held for sale
(2,319)
(7,351)
Net cash used in investing activities
(104,738)
(206,452)
Cash flows from financing activities
Proceeds from/(repayment of) bills payables, net
15,887
(3,905)
Repayment of lease obligations, net
(16)
(58)
Proceeds from bank term loans and note payable, net
79,846
146,759
Proceeds from dilution of interest in a subsidiary
–
40,800
Gross proceeds from disposal of interest in a subsidiary
D
177,901
–
Other adjustments relating to disposal of interest
in a subsidiary
(16,714)
–
Cash and cash equivalents of subsidiaries deconsolidated
D
(20,578)
–
Payment of dividends
(36,068)
(7,657)
Receipt of premium for derivative instruments, net
1,539
24
Proceeds from placement of new shares
–
50,238
Sale of treasury shares
14,355
–
Purchase of treasury shares
(14,100)
(10,344)
Net cash from financing activities
Net increase in cash and cash equivalents
Effects of exchange due to FRS 21
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
A
202,052
215,857
114,736
(1,700)
39,923
31,419
262
8,242
152,959
39,923
statements.
annual report
2008
59
Notes to the consolidated cash flows statement
A.
Cash and cash equivalents
Cash and cash equivalents included in the consolidated cash flows statement comprise the following
balance sheet amounts:
Fixed deposits
Fixed deposits included in disposal group (Note 13)
Cash and bank balances included in disposal group (Note 13)
Less: Cash pledged (Note 20)
B.
Purchase of fixed assets
Group
2008
$’000
2007
$’000
121,158
31,901
–
–
13,544
11,399
12,000
3,130
153,059
(100)
40,073
(150)
152,959
39,923
Group
2008
2007
$’000
$’000
Aggregate cost of fixed assets acquired
99,371
243,109
(Increase)/decrease:
- Lease obligations
(152)
(37)
- Bills payable
17,529
(5,453)
Amount payable to a third party shipbuilder
(included in other creditors and accruals)
- remaining unpaid at the financial year end
(10,076)
(42,930)
- opening balance paid during the financial year
22,665
7,083
Interest capitalised
(305)
(4,965)
Purchase of fixed assets in cash
129,032
196,807
60
annual report
2008
Notes to the consolidated cash flows statement (cont’d)
C.
Acquisition of a subsidiary, net of cash paid
The Company has acquired 66.7% equity interest in Telemark Limited (“Telemark”) in April 2008.
The adjustments to the assets and liabilities of Telemark acquired are provisional and the value
adjustments are based on management’s best estimate. The fair value adjustments relating to the
acquisition will be finalised in the financial statements for financial year ending 31 August 2009.
The net cash outflow on acquisition were:
Non-current assets
Current assets
Current liabilities
Minority interests
Net assets acquired
Provisional goodwill on acquisition
Total cash consideration
Less: Cash in subsidiary company acquired Net cash outflow 2008
$’000
801
3,925
(791)
(46)
(20)
3,869
8,097
11,966
(539)
11,427
annual report
2008
61
Notes to the consolidated cash flows statement (cont’d)
D.
Disposal of interest in a subsidiary, net of cash disposed
On 4 October 2007, the Group disposed 39.1% equity interest in EOC Limited (“EOC”). Consequently
EOC ceased to be a subsidiary of the Group during the financial year.
The carrying amount of net assets deconsolidated and their cash flow effects were as follows:
Non-current assets
Current assets (excluding cash and cash equivalents)
Current liabilities
Net assets deconsolidated
Less: Minority interests
Reclass to “Investment in associated companies”
Release of “Hedging reserve”
Less: Gross proceeds from disposal of interest in a subsidiary
2008
$’000
226,204
47,029
20,578
(53,107)
(153,878)
86,826
(10,151)
(45,044)
(63)
31,568
(177,901)
(146,333)
62
annual report
2008
NOTEs to the financial statements
– 31 August 2008
(Amounts expressed in United States dollars unless otherwise stated)
1.
Corporate information
Ezra Holdings Limited (the “Company”) is a limited company which is incorporated in
Singapore.
The registered office and principal place of business of the Company is located at 15 Hoe Chiang
Road, #15-01 Tower Fifteen, Singapore 089316.
The principal activities of the Company are those of investment holding and provision of
management services. The principal activities of the subsidiaries are as shown in Note 5 to the
financial statements. There have been no significant changes in the nature of these activities
during the financial year.
The Group operates in Singapore, South East Asia, Australia, India, United Kingdom, New
Zealand, Korea and United Arab Emirates.
2.
Summary of significant accounting policies
2.1
Basis of preparation
The financial statements have been prepared in accordance with Singapore Financial Reporting
Standards (“FRS”) as required by the Companies Act.
The financial statements have been prepared on a historical cost basis, except as disclosed in the
accounting policies below.
The preparation of financial statements in conformity with FRS requires management to
exercise its judgement in the process of applying the Group’s accounting policies. It also requires
the use of accounting estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the financial year.
Although these estimates are based on management’s best knowledge of current events and
actions, actual results may ultimately differ from those estimates. Critical accounting estimates
and judgements used that are significant to the financial statements, areas involving a higher
degree of judgement are disclosed in Note 2.3.
The financial statements for the financial year ended 31 August 2007 were previously measured
and presented in Singapore dollars (SGD or S$). With the change in functional currency as
disclosed in Note 2.4, the financial statements for the financial year ended 31 August 2008
are presented in United States Dollars (USD or US$) and all values are rounded to the nearest
thousand ($’000) except when otherwise indicated.
annual report
2008
63
2.
Summary of significant accounting policies (cont’d)
2.2
Change in accounting policies
The accounting policies have been consistently applied by the Group and the Company, and are
consistent with those used in the previous financial year except for the changes in accounting
policies discussed below.
(a)
Adoption of revised FRS and INT FRS
The Group and the Company have adopted the following revised FRS and INT FRS that
became mandatory from 1 September 2007 for the Group and the Company:
(i) (ii)
(iii)
(iv)
(v)
The adoption of the revised FRS and INT FRS does not result in any significant change in
accounting policies of the Group and the Company.
FRS and INT FRS not yet effective
(b)
FRS 1, Amendment to FRS 1 (revised), Presentation of Financial Statements (Capital
Disclosures);
FRS 40, Investment Property;
FRS 107, Financial Instruments: Disclosures;
INT FRS 109, Reassessment of Embedded Derivatives; and
INT FRS 111: Group and Treasury Transactions
The Group and the Company have not applied the following FRS and INT FRS that have
been issued but not yet effective:
Effective date
(Annual periods
beginning on
or after)
FRS 1 : Presentation of Financial Statements
– Revised Presentation
1 January 2009
FRS 1
: Presentation of Financial Statements
– Amendments relating to Puttable
Financial Instruments and Obligations
Arising on Liquidation
1 January 2009
FRS 23 : Borrowing Costs 1 January 2009
FRS 32 : Financial Instruments: Presentation
– Amendments relating to Puttable Financial
Instruments and Obligations Arising on Liquidation 1 January 2009
FRS 102 : Share-based Payment – Vesting Conditions
and Cancellations
1 January 2009
FRS 108 : Operating Segments
1 January 2009
INT FRS 112 : Service Concession Arrangements
1 January 2008
INT FRS 113 : Customer Loyalty Programmes
1 July 2008
64
annual report
2008
2.
2.2
Change in accounting policies (cont’d)
(b)
FRS and INT FRS not yet effective (cont’d)
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 Instruments – 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 and loss, together with all
other items of recognised income and expense, 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.
2.3
Significant accounting estimates and judgements
Estimates, assumptions concerning the future and judgements are made in the preparation of
the financial statements. They affect the application of the Group and the Company’s accounting
policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They
are assessed on an on-going basis and are based on experience and relevant factors, including
expectations of future events that are believed to be reasonable under the circumstances.
(a)
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.
annual report
2008
65
2.
2.3
Significant accounting estimates and judgements (cont’d)
(a)
Key sources of estimation uncertainty (cont’d)
(i) Estimated useful lives of vessels
Vessels are depreciated on a straight-line basis over their estimated useful lives.
The estimated useful life reflects the management’s estimate of the periods that
the Group intends to derive future economic benefits from the use of vessels.
Changes in the business plans and strategies, expected level of usage and future
technological developments could impact the economic useful lives and the
residual values of these assets, therefore future depreciation charges could be
revised. A 4% (2007: 4%) difference in the expected useful lives of the vessels from
management’s estimates would result in approximately 0.1% (2007: 0.4%) variance
in profit for the financial year.
Impairment of receivables
(ii)
The Group assesses at each balance sheet whether there is objective evidence that
receivables have been impaired. Impairment loss is calculated based on a review of
the current status of existing receivables and historical collections experience. Such
allowances are adjusted periodically to reflect the actual and past experience. As at
31 August 2008, the carrying amount of trade and other receivables of the Group
amounted to $87,004,000 and $26,429,000 (2007: $38,045,000 and $8,134,000)
respectively.
Income taxes
(iii)
The Group has exposure to income taxes in numerous jurisdictions. It also enjoys
tax incentives in Singapore. Significant judgement is involved in determining
the Group-wide provision for income taxes. There are certain transactions and
computations for which the ultimate tax determination is uncertain during the
ordinary 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. As at 31 August 2008, the
carrying amount of the Group’s tax payable was $7,200,000 (2007: $4,052,000).
66
annual report
2008
2.
2.3
Significant accounting estimates and judgements (cont’d)
(b)
Critical judgements made in applying accounting policies
The following are the judgements made by management in the process of applying
the Group’s accounting policies that have the most significant effect on the amounts
recognised in the financial statements:
Accounting for sale and leaseback arrangements
The Group completed the sale and leaseback arrangements involving 5 (2007: 3) vessels
during the financial year and is party to sale and leaseback arrangements for 1 (2007: 6)
other vessel which is still under construction. At the inception of the respective sale and
leaseback arrangements, the Group has evaluated the substance of the transactions in
accordance with the requirements of FRS 17 (revised), Leases, and concluded that the sales
should be recognised upon completion of the respective transactions and the leasebacks
should be accounted for as operating leases.
Accordingly, the Group recognised loss amounting to $2,152,000 (2007: gain of $3,773,000)
in the profit and loss account, relating to the disposal of the 5 (2007: 3) vessels during
the financial year. Lease payments for the 12 (2007: 7) vessels amounting to $23,395,000
(2007: $13,327,000) were recognised as expenses in the profit and loss account during the
financial year.
Classification of investment in Ezion Holdings Limited (“Ezion”)
In 2007, the Company completed the acquisition of 50,000,000 shares representing
20.34% equity interest in Ezion (formerly known as Nylect Technology Ltd). Subsequently,
the Company’s Chairman was appointed as Non-Executive Director and Non-Executive
Chairman of Ezion. Thereafter, pursuant to a share placement exercise completed by
Ezion in 2007, the Company’s equity interest was further diluted and as at 31 August
2008, the equity interest held is at 15.5% (2007: 18.2%).
The Group has evaluated the classification and treatment of the investment in Ezion
in accordance with FRS 28, Investment in Associates, and FRS 39, Financial Instruments:
Recognition and Measurement, and concluded that the investment in Ezion should be
classified as available-for-sale investments.
Accordingly, on initial recognition, the available-for-sale investments were measured
at fair value plus directly attributable transaction costs. Subsequently, any changes in
fair value are recognised in the fair value adjustment reserve until the investment is
derecognised or until the investment is determined to be impaired at which time the
cumulative gain or loss previously reported in equity is included in the profit and loss
account.
annual report
2008
67
2.
2.4
Foreign currencies
(a)
Change in functional and presentation currency
Items included in the financial statements of each entity in the Group are measured using
the currency of the primary economic environment in which the entity operates (“the
functional currency”).
Prior to 1 March 2008, all transactions in currencies other than 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 and one of its subsidiaries,
Ezra Marine Services Pte Ltd (“the subsidiary”).
On 1 March 2008, the Company and its subsidiary changed their functional currencies
from SGD to USD. The change in functional currencies were as a result of increasing
influence of USD over the Company’s and the subsidiary’s economic environment.
Pursuant to FRS 21, The Effects of Changes in Foreign Exchange Rates, the Company
and the subsidiary changed their measurement currency from SGD to USD and the
financial statements were measured prospectively in USD with effect from 1 March 2008.
Consequently, the Group has changed its presentation currency from SGD to USD.
For comparability, the comparatives have been translated and presented in USD using the
following rates:
Closing rates
6 months ended 29 February 2008
1.3937
Financial year ended 31 August 2007
1.5244
Financial year ended 31 August 2006
1.5730
(b)
Foreign currency transactions and balances
Transactions in a currency other than the respective functional currencies (“foreign
currency”) of the Company and its subsidiaries are recorded on initial recognition in the
functional currencies at foreign exchange rates approximating those ruling at the dates
of the transactions. Foreign currency monetary items are translated into the functional
currency using foreign exchange rate ruling at the balance sheet date. Non-monetary
assets and liabilities measured at historical cost in foreign currencies are translated into
the functional currency using foreign exchange rates at the dates of the transactions.
Non-monetary assets and liabilities measured at fair value in foreign currencies are
translated into the functional currency at foreign exchange rates ruling at the dates the
fair value was determined.
Foreign exchange differences arising on the settlement or from translation of monetary
items are recognised in the profit and loss account.
68
annual report
2008
2.
2.4
Foreign currencies (cont’d)
(c)
Foreign operations
In the preparation of the consolidated financial statements, the assets and liabilities of
operations with functional currencies other than USD are translated to USD at exchange
rates ruling at the balance sheet date except for share capital and reserves which are
translated at historical rates of exchange (see Note 2.4(d) for translation of goodwill and
fair value adjustments). Income and expenses in the profit and loss account are translated
using the average exchange rates for the financial year, which approximate the exchange
rates at the dates of the transactions. All resulting translation differences are taken
directly to the translation reserve within equity. On disposal of a foreign operation, the
accumulated translation differences deferred in the translation reserve relating to that
operation are recognised in the consolidated profit and loss account as part of the gain
or loss on disposal.
Translation of goodwill and fair value adjustments
(d)
Goodwill and fair value adjustments arising on the acquisition of foreign entities completed
on or after 1 September 2005 are treated as assets and liabilities of the foreign entities
and are recorded in the functional currencies of the foreign entities and translated at the
exchange rates prevailing at the balance sheet date. However, for acquisitions of foreign
entities completed prior to 1 September 2005, goodwill and fair value adjustments
arising on the acquisition of foreign entities are deemed to be assets and liabilities of the
Company and continue to be recorded at the exchange rates at the respective dates of
the acquisition.
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 are
prepared for the same reporting date as the parent company.
All intra-group balances, transactions, income and expenses and profits and losses resulting
from intra-group transactions are eliminated in full.
Subsidiaries are fully 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.
Acquisitions of subsidiaries are accounted for using the purchase method. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and
liabilities incurred or assumed at the date of exchange, plus costs directly attributable to
the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest.
Any excess of the cost of the business combination over the Group’s interest in the fair value of
the net identifiable assets, liabilities and contingent liabilities represents goodwill. The goodwill
is accounted for in accordance with the accounting policy for goodwill stated in Note 2.10(a)
below.
annual report
2008
69
2.
2.5
Basis of consolidation (cont’d)
Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and
contingent liabilities over the cost of business combination is recognised in the profit and loss
account on the date of acquisition.
The consolidated financial statements are prepared using uniform accounting policies for like
transactions and other events of similar circumstances.
Minority interests represent the portion of the profit or loss and the net assets in subsidiaries
not held by the Group. They are presented in the consolidated balance sheet within equity,
separately from the parent shareholders’ equity, and are separately disclosed in the consolidated
profit and loss account.
2.6
A subsidiary is a company, in which the Group has the power to govern the financial and
operating policies so as to obtain benefits from its activities. The Group generally has such
power when it directly or indirectly, holds more than half of the issued share capital, or controls
more than half of the voting power, or controls the composition of the board of directors.
Investments in subsidiaries are stated in the financial statements of the Company at cost less
impairment losses. Where an indication of impairment exists, the carrying amount of the
investment is assessed and written down immediately to its recoverable amount.
A component of the investment in subsidiaries is classified as assets held for sale when criteria
to be classified as held for sale have been met. The component is deemed to be held for sale
if its carrying amount will be recovered principally through a sale transaction as stated in Note
2.13 below.
2.7
Investments in associated companies and joint venture companies
An associated company is an entity, not being a subsidiary or a joint venture, in which the Group
has significant influence. This generally coincides with the Group having long term interest of
not less than 20% and not more than 50% of the equity or has representation on the board of
directors.
A joint venture company is an entity, whereby there is a contractual arrangement between the
Group with one or more parties to establish joint control over the economic activities of the
entity.
Investments in associated companies and joint venture companies are stated in the financial
statements of the Company at cost less impairment losses.
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annual report
2008
2.
2.7
Investments in associated companies and joint venture companies (cont’d)
The Group’s investments in associated companies and joint venture companies are accounted
for using the equity method. Investments in associated companies and joint venture companies
are carried in the consolidated balance sheet at cost plus post-acquisition changes in the
Group’s share of net assets of the associated companies and joint venture companies, less any
impairment loss. The Group’s share of the profit or loss of the associated companies and joint
venture companies is recognised in the consolidated profit and loss account. Where there has
been a change recognised directly in the equity of the associated companies and joint venture
companies, the Group recognises its share of such changes. After application of the equity
method, the Group determines whether it is necessary to recognise any impairment loss with
respect to the Group’s net investment in the associated companies and joint venture companies.
The associated companies and joint venture companies are equity accounted for from the date
the Group obtains significant influence until the date the Group ceases to have significant
influence or joint control over the associated companies and joint venture companies.
Goodwill relating to the associated and joint venture companies is included in the carrying
amount of the investment. Any excess of the Group’s share of the fair value of the net identifiable
assets, liabilities and contingent liabilities over the cost of the investment is excluded from the
carrying amount of the investment and is instead included as income in the determination of the
Group’s share of the associated company’s profit or loss in the period in which the investment
is acquired.
When the Group’s share of losses exceeds the carrying amount of the investments, the
investments are reported at nil value and recognition of the losses is discontinued except to the
extent of the Group’s commitment.
Unrealised gains arising from transactions with the associated companies and joint venture
companies are eliminated to the extent of the Group’s interest in the associated companies and
joint venture companies.
The Group’s share of the results of associated companies and joint venture companies are
included in the consolidated profit and loss account. Where the financial year end of the
associated or joint venture company is not co-terminous with those of the Group, the share
of results is arrived at from the last audited financial statements available and unaudited
management financial statements to the end of the accounting period.
2.8
Related parties
A related party is defined as a company, not being a subsidiary, an associated company or a
joint venture company, in which the directors and shareholders of the Company have an equity
interest or exercise significant influence over.
annual report
2008
71
2.
2.9
Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation and any impairment loss. The
cost of an asset comprises its purchase price and any directly attributable costs of bringing the
asset to working condition for its intended use. Expenditure for additions, improvements and
renewals are capitalised and expenditure for maintenance and repairs are charged to the profit
and loss account.
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.
A fixed asset is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. The cost and accumulated depreciation are removed from the financial
statements and any gain or loss resulting from derecognition of the asset is included in the
profit and loss account in the financial year the asset is derecognised.
Depreciation is calculated on the straight-line method to write off the cost of fixed assets over
their estimated useful lives. The estimated useful lives of fixed assets are as follows:
Vessels
Assets on board the vessels
Drydocking expenditure
Motor vehicles
Leasehold building
Plant and machinery
Yard improvements and renovation
Office equipment, furniture and fittings
Computers
Vessels and other assets under construction are stated at cost. These costs include all progress
billings received in accordance with the construction contracts, interest charges arising from
borrowings used to finance the construction and other direct costs. Vessels and other assets
under construction are not depreciated until such time they are completed and available for
operational use.
Drydocking expenses, when incurred, will be deferred and amortised on a straight-line basis
over the period to the next drydocking date.
Fully depreciated assets are retained in the financial statements until they are no longer in use
and no further charge for depreciation is made in respect of these assets.
The useful life and depreciation method are reviewed annually to ensure that the 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.
-
-
-
-
-
-
-
-
-
20 – 25 years
3 – 10 years
5 years
5 – 6 years
56 years
5 – 10 years
5 – 15 years
5 – 10 years
3 years
72
annual report
2008
2.
2.10 Intangible assets
(a)
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition of
subsidiaries, associated or joint venture companies over the net fair value of the Group’s
share of their identifiable assets, liabilities and contingent liabilities at the date of
acquisition. The cost of an acquisition is measured at the fair value of the assets given,
equity instruments issued or liabilities incurred or assumed at the date of the acquisition,
plus costs directly attributable to the acquisition.
Goodwill on acquisitions of subsidiary companies is shown on the face of the consolidated
balance sheet whereas goodwill on acquisitions of associated and joint venture companies
are recorded as part of the carrying value of the related investment.
Goodwill is stated at cost less impairment losses. Any impairment is recognised immediately
in profit and loss and is not subsequently reversed. On disposal of a subsidiary, associated
company or jointly controlled entity, the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
For the purpose of impairment testing, goodwill acquired in a business combination
is, from the acquisition date, allocated to each of the Group’s cash-generating units or
groups of cash-generating units that are expected to benefit from the synergies of the
combination.
Each unit or group of units to which the goodwill is allocated:
•
•
Represents the lowest level within the Group at which the goodwill is monitored
for internal management purposes; and
Is not larger than a segment based on either the Group’s primary or the Group’s
secondary reporting format.
Cash-generating units to which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the unit may be impaired.
If the recoverable amount of the cash-generating unit is less than the carrying amount
of the unit, the impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit pro-rata on the
basis of the carrying amount of each unit. An impairment loss recognised for goodwill is
not reversed in the subsequent period.
Where goodwill forms part of a cash-generating unit (or group of cash-generating units)
and part of the operation within that unit is disposed off, the goodwill associated with
the operation disposed off is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed off in this
circumstance is measured based on the relative values of the operation disposed off and
the portion of the cash-generating unit retained.
annual report
2008
73
2.
2.10 Intangible assets (cont’d)
(b)
Intangible assets acquired separately are measured on initial recognition at cost. The cost
of intangible assets acquired in a business combination is their fair values as at the date
of acquisition. Following initial recognition, intangible assets are carried at cost less any
accumulated amortisation and any accumulated impairment losses.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible
assets with finite lives are amortised on a straight-line basis over the estimated economic
useful lives and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation method
for an intangible asset with a finite useful life are reviewed at least at each financial yearend. The amortisation expense on intangible assets with finite lives is recognised in the
profit and loss account through the ‘amortisation of other intangible assets’ line item.
Intangible assets with indefinite useful lives are tested for impairment annually or more
frequently if the events or changes in circumstances indicate that the carrying value may
be impaired either individually or at the cash-generating unit level. Such intangibles are
not amortised. The useful life of an intangible asset with an indefinite life is reviewed
annually to determine whether the useful life assessment continues to be supportable.
Land lease rights
Land lease contract is a contract with the Vietnamese government to lease 97,069 square
metre of land located in Thanh My Loi Precinct, District 2, Ho Chi Minh City at a rate lower
than prevailing market rate. The future economic benefits arising from the land lease
rights at preferential rates are capitalised and amortised on a straight line basis over its
remaining useful life or lease term of 25 years. The land lease rights is stated at carrying
value less accumulated amortisation and any impairment losses.
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annual report
2008
2.
2.11 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 testing for an asset (i.e. an
intangible asset with an indefinite useful life, an intangible asset not yet available for use, or
goodwill acquired in a business combination) 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 or
groups of assets. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. Where the carrying amount of an asset
exceeds its recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. Impairment losses of continuing operations are recognised in the profit
and loss account as ‘impairment losses’.
An assessment is made at each reporting date as to whether there is any indication that
previously recognised impairment losses recognised for an asset other than goodwill 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 increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset in prior years. Reversal of an impairment loss is recognised in the profit
and loss account. After such a reversal, the depreciation charge is adjusted in future periods to
allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over
its remaining useful life.
The Group does not reverse in a subsequent period, any impairment loss recognised for
goodwill.
2.12 Financial assets
Financial assets within the scope of FRS 39 are classified as either financial assets at fair value
through profit or loss, loans and receivables, or available-for-sale financial assets, as appropriate.
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.
The Group determines the classification of its financial assets after initial recognition and,
where allowed and appropriate, re-evaluates this designation at each financial year-end.
All regular way purchases and sales of financial assets are recognised on the trade date i.e.
the date that the Group commits to purchase 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.
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2008
75
2.
2.12 Financial assets (cont’d)
(a)
Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets
at fair value through profit or loss’. Derivative financial instruments whose fair value is
positive are classified as held for trading unless they are designated as effective hedging
instruments. The accounting policy for derivative financial instruments is included in
Note 2.17.
Loans and receivables
(b)
Non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market are classified as loans and receivables. Such assets are carried at
amortised cost using the effective interest method. Gains and losses are recognised in
profit and loss account when the loans and receivables are derecognised or impaired, as
well as through the amortisation process.
Available-for-sale financial assets
(c)
The Group classifies its investment securities as available-for-sale financial assets.
Available-for-sale financial assets are those non-derivative financial assets that are
designated as available-for-sale or are not classified in any of the other categories. After
initial recognition, available-for-sale financial assets are measured at fair value with gains
or losses being recognised in the fair value adjustment reserve until the investment is
derecognised or until the investment is determined to be impaired at which time the
cumulative gain or loss previously reported in equity is included in the profit and loss
account.
The fair value of investments that are actively traded in organised financial markets is
determined by reference to the relevant Exchange’s quoted market bid prices at the
close of business on the balance sheet date. For investments where there is no active
market, fair value is determined using valuation techniques. Such techniques include
using recent arm’s length market transactions; reference to the current market value of
another instrument, which is substantially the same; discounted cash flow analysis and
option pricing models.
76
annual report
2008
2.
2.13 Assets held for sale and disposal group assets/liabilities classified as held for sale
An asset (or disposal group) is deemed to be held for sale if its carrying amount will be recovered
principally through a sale transaction rather than through continuing use.
The assets of the disposal group are separately classified from other assets in the balance sheet
and the liabilities of the disposal group are separately classified from other liabilities in the
balance sheet.
Immediately before the initial classification of the asset (or disposal group) as held for sale,
the carrying amounts of the asset (or all the assets and liabilities in the group) are measured in
accordance with the applicable FRS. Upon classification as held for sale, non-current assets and
disposal groups are measured at the lower of carrying amount and fair value less costs to sell.
Any differences are recognised in the profit and loss account.
2.14 Inventories and work-in-progress
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a
specific identification basis. Net realisable value represents the estimated selling price in the
ordinary course of business, less anticipated cost of disposal and after making allowance for any
damaged and obsolete inventories.
Inventories comprise mainly inventories held for the Marine Services Division.
Work-in-progress comprises uncompleted engineering and equipment supply contracts. It is
stated at cost less progress billings. Cost comprises direct material, direct labour and other
directly attributable expenses. Allowance is made for anticipated losses, if any, on work-inprogress when the possibility of loss is ascertained.
2.15 Trade and other receivables
Trade and other receivables, including amounts due from subsidiaries, associated companies
and joint venture companies are classified and accounted for as loans and receivables under FRS
39. The accounting policy for this category of financial assets is stated in Note 2.12.
An allowance is made for uncollectible amounts when there is objective evidence that the Group
will not be able to collect the debt. Bad debts are written off when identified. Further details
on the accounting policy for impairment of financial assets are stated in Note 2.16 below.
annual report
2008
77
2.
2.16 Impairment of financial assets
The Group assesses at each balance sheet date whether there is any objective evidence that a
financial asset or group of financial assets is impaired.
(a)
Assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables 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 (excluding future credit losses that have not been incurred) discounted at the
financial asset’s original effective interest rate (i.e. the effective interest rate computed
at initial recognition). The carrying amount of the asset is reduced through the use of an
allowance account. The amount of the loss is recognised in the profit and loss account.
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.
Any subsequent reversal of an impairment loss is recognised in the profit and loss account,
to the extent that the carrying value of the asset does not exceed its amortised cost at the
reversal date.
Assets carried at cost
(b)
If there is objective evidence that an impairment loss on an unquoted equity instrument
that is not carried at fair value because its fair value cannot be reliably measured, 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.
Available-for-sale financial assets
(c)
If an available-for-sale financial asset is impaired, an amount comprising the difference
between its cost (net of any principal payment and amortisation) and its current fair
value, less any impairment loss previously recognised in the profit and loss account, is
transferred from equity to the profit and loss account. Reversals in respect of equity
instruments classified as available-for-sale are not recognised in the profit and loss
account.
78
annual report
2008
2.
2.17 Derivative financial instruments and hedging activities
The Group uses derivative financial instruments such as forward currency contracts and interest
rate derivative contracts to hedge its risks associated with foreign currency and interest rate
fluctuations. Such derivative financial instruments are initially recognised at fair value on the
date on which a derivative contract is entered into and are subsequently remeasured at fair
value. Derivative financial instruments are carried as assets when the fair value is positive and
as liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value on derivative financial instruments
that do not qualify for hedge accounting are taken to the profit and loss account for the
financial year.
The fair value of forward currency contracts is calculated by reference to current forward
exchange rates for contracts with similar maturity profiles. The fair value of interest rate
derivative contracts is determined by reference to market values for similar instruments.
Hedge accounting
The Group designates certain derivatives as cash flow hedges when there is 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 and could affect profit
or loss.
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. The documentation includes
identification of the hedging instrument, the hedged item or transaction, the nature of the
risk being hedged and how the entity will assess the hedging instrument’s effectiveness in
offsetting the exposure to changes in the hedged item’s cash flows attributable to the hedged
risk. Such hedges are expected to be highly effective in achieving offsetting changes in 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.
The effective portion of the gain or loss on the derivative financial instruments that qualify as
cash flow hedges are recognised in hedging reserve within equity. The gain or loss relating to
the ineffective portion is recognised immediately in the profit and loss account.
Amounts accumulated in the hedging reserve are transferred to the profit and loss account in
the periods when the hedged items affect profit and loss account, such as when the hedged
financial expense is recognised.
annual report
2008
79
2.
2.17 Derivative financial instruments and hedging activities (cont’d)
If the forecast transaction is no longer expected to occur, amounts previously recognised in
hedging reserve 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 hedging reserve remain in equity until
the forecast transaction occurs. If the related transaction is not expected to occur, the amount
is taken to the profit and loss account.
2.18 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and at banks, fixed deposits maturing within
three months and short-term, highly liquid investments readily convertible to known amounts
of cash and subject to an insignificant risk of changes in value.
Fixed deposits and cash and bank balances carried in the balance sheets are classified and
accounted for as loans and receivables under FRS 39. The accounting policy for this category of
financial assets is stated in Note 2.12.
2.19 Trade and other payables
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.
Liabilities for trade and other payables, including payables to subsidiaries, associated companies
and joint venture companies, on normal trade terms, are initially recognised at fair value and
subsequently measured at amortised cost using the effective interest method.
Gains and losses are recognised in the profit and loss account when the liabilities are derecognised
as well as through the amortisation process.
2.20 Derecognition of financial assets and liabilities
(a)
Financial assets
A financial asset is derecognised where the contractual rights to receive cash flows from
the asset have expired.
On derecognition of a financial asset, the difference between the carrying amount and
the sum of (i) the consideration received and (ii) any cumulative gain or loss that has been
recognised directly in equity is recognised in the profit and loss account.
80
annual report
2008
2.
2.20 Derecognition of financial assets and liabilities (cont’d)
(b)
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged
or cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified,
such an exchange or modification is treated as a derecognition of the original liability and
the recognition of a new liability, and the difference in the respective carrying amounts
is recognised in the profit and loss account.
2.21 Borrowing costs
Borrowings are generally expensed as incurred. 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 being incurred. Borrowing
costs are capitalised until the assets are ready for their intended use. If the resulting carrying
amount of the asset exceeds its recoverable amount, an impairment loss is recorded.
2.22 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as
a result of a past event and it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
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 resources embodying economic benefits
will be required to settle the obligation, the provision is reversed.
annual report
2008
81
2.
2.23 Leases
(a)
Finance lease – when the Group is a lessee
Finance leases, which effectively transfer to the Group substantially all the risks and
benefits incidental to ownership of the leased item, are capitalised at the fair value of
the leased asset or, if lower, at the present value of the minimum lease payments at the
inception of the lease term and disclosed as leased fixed assets. 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 directly to the profit and loss account.
Capitalised leased assets are depreciated over the shorter of estimated useful life of the
asset as outline in Note 2.9 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 – when the Group is a lessee
(b)
Leases where the lessor effectively retains substantially all the risks and benefits of
ownership of the leased assets are classified as operating leases. 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.
Operating lease – when the Group is a lessor
(c)
Leases where the Group retains substantially all the risks and rewards of ownership
of the asset are classified as operating leases. Assets leased out under operating lease
are included in fixed assets and are stated at cost less accumulated depreciation and
impairment loss.
82
annual report
2008
2.
2.24 Loans and borrowings
All loans and borrowings are initially recognised at fair value of the consideration received net
of issue costs associated with the borrowings.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using effective interest method.
Gains and losses are recognised in the profit and loss account when the liabilities are derecognised
as well as through the amortisation process.
2.25 Income taxes
(a)
Current tax
Current tax assets and liabilities for the current and prior periods 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 substantively
enacted by the balance sheet date.
Deferred tax
(b)
Deferred income tax is provided, using the liability method, on all 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 liabilities are recognised for all taxable temporary differences, except:
•
Where the deferred tax liability arises from the initial recognition of goodwill or of
an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither accounting profit nor taxable profit or loss;
and
•
In respect of taxable temporary differences associated with investments in
subsidiaries, associated companies and interests in joint ventures, where the timing
of the reversal of the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, and
the carry-forward of unused tax credits and unused tax losses can be utilised.
annual report
2008
83
2.
2.25 Income taxes (cont’d)
(b)
Deferred tax (cont’d)
The carrying amount of deferred income tax assets 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 income tax asset to be utilised.
Unrecognised deferred income 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 recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected
to apply to the financial 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.
Income tax relating to items recognised directly in equity is recognised in equity.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred taxes
relate to the same taxable entity and the same taxation authority.
Sales tax
(c)
Revenues, expenses and assets are recognised net of the amount of sales tax except:
•
Where the sales tax incurred on 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.
2.26 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of
new equity shares are taken to equity as a deduction, net of tax, from the proceeds.
When the Company purchases its own equity share capital, the consideration paid, including
any directly attributable costs, is taken against “Treasury Shares” within equity. When the
shares are subsequently disposed, the realised gains or losses on disposal of the treasury shares
are included in “Capital Reserve” of the Company.
84
annual report
2008
2.
2.27 Revenue recognition
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. The following specific recognition
criteria must also be met before revenue is recognised.
(a) Vessel charter income is calculated on a time apportionment basis in accordance to the
terms and conditions of the charter agreement. Charter income is deferred to the extent
that conditions necessary for its realisation have yet to be fulfilled.
(b) In respect of engineering works, when the outcome of a contract can be measured reliably,
revenue from a fixed price contract is recognised using the percentage of completion
method. The percentage of completion is measured by the proportion of costs incurred
to-date to estimated total costs to complete the contract. When the outcome of a contract
cannot be estimated reliably, revenue is recognised only to the extent of contract costs
incurred that is probably recoverable.
When it is probable that total contract costs will exceed total revenue, the expected loss
is recognised as an expense immediately. When the outcome of a contract cannot be
estimated reliably, contract costs are recognised as an expense in the period in which they
are incurred.
(c) Agency fees and fees in respect of ship management are recognised when services are
rendered.
(d) Trading sales is recognised upon the passing of title to the customer which generally
coincides with delivery and acceptance of the goods sold.
(e) Interest income is recognised on a time-proportionate basis (taking into account the
effective yield period).
(f) Dividend income is recognised when the shareholders’ rights to receive the payment are
established.
annual report
2008
85
2.
2.28 Employee benefits
(a)
Pensions and other post employment benefits
As required by law, the Group’s companies make contributions to state pension schemes.
In particular, the Singapore companies in the Group make contributions to the Central
Provident Fund in Singapore, a defined contribution pension scheme. Contributions to
pension schemes are recognised as an expense in the same period as the employment
that gives rise to the contribution.
Employee leave entitlement
(b)
Employee entitlements to annual leave are recognised when they accrue to employees.
A provision is made for the estimated liability for leave as a result of services rendered by
employees up to balance sheet date.
2.29 Contingent liabilities
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.
2.30 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.
Fixed assets
Office
equipment,
furniture
and fittings
$’000
Computers
$’000
3,741
117,381
Total
$’000
As restated
65,320
48,787
1,513
–
766
1,289
612
1,871
311
653
121,122
Additions
218,690
21,568
134
384
210
–
16
1,209
540
358
243,109
Disposals
–
(3,830)
(134)
–
–
–
–
(168)
(33)
(2)
(4,167)
Write off
–
–
–
–
(2)
–
(5)
(14)
(16)
–
(37)
Reclassification
- Fixed assets
(193,860)
192,386
–
–
–
–
1,454
(3)
23
–
–
- Assets held for sale
–
(787)
–
–
–
–
–
–
–
–
(787)
- Disposal group assets
classified as held for
sale (Note 3(d))
(57,615)
(165,953)
–
–
(82)
–
–
–
(10)
(26)
(223,686)
Translation difference (5,466)
(390)
–
–
–
–
–
–
–
–
(5,856)
At 31 August 2007
27,069
91,781
1,513
384
892
1,289
2,077
2,895
815
983
129,698
Cost
At 1 September 2006
63,303
47,280
1,466
–
742
1,249
594
1,813
301
633
Effects of exchange
due to FRS 21
2,017
1,507
47
–
24
40
18
58
10
20
Yard
Vessels and
Assets on
improvements
assets under
board the Drydocking
Motor Leasehold Plant and
and
Group
construction
Vessels
vessels
expenditure vehicles building
machinery
renovation
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
3.
86
annual report
2008
Fixed assets (cont’d)
Office
equipment,
furniture
and fittings
$’000
Computers
$’000
538
129,698
Total
$’000
As restated
31,790
87,295
1,410
380
1,013
1,413
2,012
2,934
897
1,092
130,236
Additions
87,154
9,000
61
–
294
–
754
1,127
243
738
99,371
Acquisition of subsidiary
–
–
–
–
–
–
–
–
357
–
357
Disposals
–
(13,476)
–
–
(188)
–
(113)
–
–
–
(13,777)
Write off
–
–
–
–
–
–
–
–
(4)
–
(4)
Reclassification
- Fixed assets
(94)
–
–
–
–
–
86
–
(114)
122
–
–
(20,616)
–
–
–
–
–
–
–
–
(20,616)
sale
(2,284)
–
–
–
–
–
–
–
–
–
(2,284)
Translation difference
(4,868)
5,800
–
–
(68)
(123)
(1)
(153)
(68)
(90)
429
At 31 August 2008
111,698
68,003
1,471
380
1,051
1,290
2,738
3,908
1,311
1,862
193,712
Cost (cont’d)
At 1 September 2007
27,069
91,781
1,513
384
892
1,289
2,077
2,895
815
983
Effects of exchange
due to FRS 21
4,721
(4,486)
(103)
(4)
121
124
(65)
39
82
109
Yard
Vessels and
Assets on
improvements
assets under
and
Group
construction
Vessels
vessels
machinery
renovation
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
3.
annual report
2008
87
Office
equipment,
furniture
and fittings
$’000
Computers
$’000
–
–
–
–
–
–
156
–
252
94
(4,290)
(216)
–
–
–
–
(4)
–
–
–
4,673
142
51
151
24
(113)
–
–
–
–
–
–
–
–
–
4,771
550
–
–
–
–
212
455
–
(79)
(4)
(9)
116
286
–
–
(1)
–
96
243
(32)
(3)
(16)
–
128
(4,295)
(216)
6,047
(227)
(29)
6,353
197
6,156
Total
$’000
At 31 August 2007 –
4,825
298
51
399
118
324
917
176
525
7,633
Charge for the
financial year
Disposals
Write off
Reclassification
sale (Note 3(d))
Translation difference As restated
Accumulated depreciation
At 1 September 2006
–
4,624
151
–
244
91
112
533
124
277
Effects of exchange
due to FRS 21
–
147
5
–
8
3
4
17
4
9
Yard
Vessels and
Assets on
improvements
assets under
and
Group
construction
Vessels
vessels
machinery
renovation
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
3.
88
annual report
2008
Office
equipment,
furniture
and fittings
$’000
Computers
$’000
–
4,790
285
51
453
131
317
950
198
583
7,758
125
7,633
Total
$’000
–
6,515
432
127
429
143
546
1,357
661
904
11,114
Net book value
At 31 August 2008
111,698
61,488
1,039
253
622
1,147
2,192
2,551
650
958
182,598
At 31 August 2007 27,069
86,956
1,215
333
493
1,171
1,753
1,978
639
458
122,065
At 31 August 2008
Charge for the
financial year
–
3,755
147
76
156
25
343
455
182
374
5,513
Acquisition of subsidiary
–
–
–
–
–
–
–
–
292
–
292
Disposals
–
(530)
–
–
(144)
–
(112)
–
–
–
(786)
Write off
–
–
–
–
–
–
–
–
(4)
–
(4)
Reclassification
- Fixed assets
–
–
–
–
–
–
–
–
9
(9)
–
–
(1,169)
–
–
–
–
–
–
–
–
(1,169)
sale
–
(576)
–
–
(1)
–
–
–
–
–
(577)
Translation difference –
245
–
–
(35)
(13)
(2)
(48)
(16)
(44)
87
As restated
(cont’d)
At 1 September 2007
–
4,825
298
51
399
118
324
917
176
525
Effects of exchange due
to FRS 21
–
(35)
(13)
–
54
13
(7)
33
22
58
Yard
Vessels and
Assets on
improvements
assets under
and
Group
construction
Vessels
vessels
machinery
renovation
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
3.
annual report
2008
89
90
annual report
2008
3.
Company
Computers
$’000
Cost
At 1 September 2006
63
Additions
58
At 31 August 2007 and 1 September 2007
121
12
As restated
133
Additions
320
At 31 August 2008
453
At 1 September 2006
18
Charge for the financial year
26
At 31 August 2007 and 1 September 2007
44
5
As restated
49
Charge for the financial year
70
At 31 August 2008
119
Net book value
At 31 August 2008
334
At 31 August 2007
77
(a) Vessels under construction are not depreciated until such time they are completed and
are ready for their intended use. Included in the cost of vessels under construction were
borrowing costs arising from borrowings used to finance their construction amounting
to approximately $305,000 (2007: $4,965,000). The capitalisation rates varied from 1.89%
to 6.50% (2007: 3.57% to 7.56%) representing the borrowing costs to finance the vessels
under construction.
(b) The vessels under construction and vessels are pledged in connection with the bills payable
and term loan facilities granted by financial institutions (Notes 23 and 26).
(c) (d) As disclosed in Note 13, the Group has reclassified the fixed assets under the disposal
group from fixed assets to disposal group assets classified as held for sale as at 31 August
2007. The net book value relating to the reclassification amounted to $219,391,000.
The leasehold building is pledged in connection with bills payable and term loan facilities
granted by a financial institution (Notes 23 and 26).
annual report
2008
91
3.
(e) Fixed assets purchased under finance leases stated at net book values were as follows:
Group
2008
2007
$’000
$’000
Motor vehicles
393
227
(f) The Group’s major properties as at 31 August 2008 were as follows:
Location
Gross Floor Area
20 Ubi Crescent 836 sq m
#01-02 Ubi Techpark
Singapore 408565
Thanh My Loi Precinct, 97,069 sq m
District 2,
Ho Chi Minh City,
Vietnam
Dong Xuyen Industrial 88,726 sq m
Zone, Rach Dua Ward, Vung Tau City, Vietnam
4.
Tenure
Usage
60-year lease
Office and
commencing from
warehouse
5 July 1997
35-year lease
commencing from
5 December 1996
Fabrication yard
39-year lease
commencing from
1 July 2007
Ship building
and ship repair
Intangibles assets
a) Goodwill
Cost
At 1 September 2006 Effects of exchange due to FRS 21
As restated and at 31 August 2007
Group
$’000
709
23
732
As restated
(67)
665
Acquisition of subsidiaries
At 31 August 2008
8,097
(675)
8,087
Carrying amount
At 31 August 2008
At 31 August 2007
8,087
732
92
annual report
2008
4.
Intangibles assets (cont’d)
a) Goodwill (cont’d)
Impairment testing of goodwill
Goodwill acquired through business combination is allocated to the Group’s cash
generating units (“CGU”). The recoverable amount of a CGU is determined based on
discounted cash flow projections. These calculations are based on financial budgets
approved by management covering a one-year period. Cash flows beyond the one-year
period are extrapolated using an estimated growth rate in the table below. Management
determined the estimated growth rates based on past market performance and its
expectation of recent market developments. The growth rate does not exceed the long
term average growth rate for the business activities. Actual results may differ from
management’s estimated growth rate as operating environment changes.
Carrying value
Pre-tax
of goodwill Growth rate
discount rate
CGUs
2008
2007
2008
2007
2008
2007
$’000 $’000
Subsidiary companies:
- Saigon Shipyard Limited
665
732
5%
5%
14%
12%
- Telemark Limited*
7,422
–
25%
–
14%
–
8,087
732
* In April 2008, the Company has acquired Telemark Limited (“Telemark”). In accordance
with FRS 103, Business Combinations, the management is required to identify the
fair value of the identifiable assets, liabilities and contingent liabilities at date of
acquisition. Purchase price allocation in accordance with FRS 103 is in progress as at
31 August 2008. Accordingly, a provisional goodwill is recorded based on the difference
between the purchase consideration and the provisional fair value of the identifiable
assets, liabilities and contingent liabilities at the date of acquisition.
b)
Group
Land lease rights
$’000
Cost
At 1 September 2006 2,214
71
As restated and at 31 August 2007
2,285
(231)
At 31 August 2008
2,054
annual report
2008
93
4.
Intangibles assets (cont’d)
b)
Other intangible assets (cont’d)
Group
Land lease rights
$’000
Accumulated amortisation
At 1 September 2006
(71)
(2)
As restated
(73)
Amortisation for the financial year
(88)
At 31 August 2007 (161)
Amortisation for the financial year
(79)
At 31 August 2008
(240)
Carrying amount
At 31 August 2008
1,814
At 31 August 2007
2,124
5.
Company
2008
2007
$’000
$’000
Unquoted equity shares, at cost
17,415
63,305
Reclassification to assets held for sale (Note 12)
–
(23,279)
17,415
40,026
94
annual report
2008
5.
Investments in subsidiaries (cont’d)
Details of the subsidiaries as at 31 August were as follows:
Country of
Percentage of
incorporation
effective
and place
interest held
Cost of
Name of company
Principal activities
of business
by the Group
investment
2008 2007
2008 2007
%
%
$’000 $’000
Held by the Company
Lewek Shipping Ship owner and provision
Singapore
100 100
2,514 2,514
Pte Ltd*
of ship chartering services
Lewek Ivory Ship owner and provision
Singapore
100 100
2,870 2,870
Shipping Pte Ltd*
Lewek Ebony Ship owner and provision
Singapore
100 100
2,870 2,870
Shipping Pte Ltd*
Ezra Marine Services Supply of marine gas and oil, Singapore
100 100
3,588 3,588
Pte Ltd*
ship building, engineering
works and provision of
management services
Emas Offshore Pte Ltd* Shipping agent and provision Singapore
100 100
80
80
of ship chartering, ship
management services and
engineering works
Emas Offshore Services Ship management services
Singapore
100 100
72
–#
Pte Ltd*
Emas Offshore (M) Provision of ship chartering Malaysia
100 100
–# –#
Sdn Bhd**
and ship management
services and investment
holding
Ezra Energy Services Petroleum, mining and
Singapore
100 100
102
–#
Pte Ltd*
prospecting services and
investment holding
Asian Drilling Services Petroleum, mining and
Singapore
100 100
100
–#
Pte Ltd*
prospecting services
HCM Logistics Limited* Investment holding
British Virgin
100 100
–#
–#
Islands
Lewek LB1 Shipping Ship owner and provision Singapore
100 100
3,312
55
Pte Ltd*
Lewek Robin Shipping Ship owner and provision
Singapore
100 100
1,867
–#
Pte Ltd*
Lewek Ruby Shipping Ship owner and provision
Singapore
100 100
–#
–#
Pte Ltd@
annual report
2008
95
5.
Country of
Percentage of
incorporation
effective
and place
interest held
Name of company
of business
by the Group
2008 2007
% %
Held by the Company (cont’d)
Cost of
investment
2008 2007
$’000 $’000
Lewek Roller Shipping Ship owner and provision
Singapore
100 100
–#
–#
Pte Ltd@
Lewek Sapphire Shipping Ship owner and provision
Singapore
100 100
–#
–#
@
Pte Ltd of ship chartering services
Lewek Scarlet Shipping Ship owner and provision
Singapore
100 100
–#
–#
Pte Ltd*
Sarah Gold Shipping Ship owner and provision
Singapore
100 100
–#
–#
Pte Ltd*
Emas Offshore Ship management and
United
100 100
–#
–#
Limited****
management support
Kingdom
services
EOC Limited*
Investment holding
Singapore
– 88
– 57,267
Telemark Limited@
Investment holding Jersey,
67
–
40
–
(Note 5(a))
Channel Islands
Emas Offshore Services Ship management
Australia
100
–
–#
–
@
(Australia) Pty Ltd services
17,415 69,244
Effects of exchange due
to FRS 21
– (5,939)
17,415 63,305
Primary subsidiaries held by subsidiaries
Bayu Emas Maritime Ship brokerage and
Malaysia
100 100
Sdn Bhd^
agency services
Asian Technical Maritime Investment holding and
Isle of Man
100 100
Services Ltd@
management services
Saigon Shipyard Limited Provision for engineering
Vietnam
100 100
(Note 5(c)) ***
services and repair of vessel
Saigon Offshore Ship building and repair
Vietnam
100 100
Fabrication and
Engineering Limited ***
96
annual report
2008
5.
Country of
incorporation
Name of company
and place of business
Primary subsidiaries held by subsidiaries (cont’d)
Percentage of
effective interest
held by the Group
2008
2007
%
%
Gulfstream Management Investment holding
Limited@
Lewek Emerald Shipping Ship owner and provision
Singapore
–
88
Pte Ltd*∞
Lewek Champion Shipping Ship owner and provision
Singapore
–
88
Pte Ltd *∞
Lewek Conqueror (BVI) Limited*∞ Ship owner and provision
British Virgin
100
100
Islands
British Virgin
–
Islands
88
Emas Offshore Ship management
Singapore
–
88
Construction and services
Production Pte Ltd*∞
Lewek Chancellor Ship owner and provision
Singapore
–
88
Shipping Pte Ltd*∞
Note:
#
: Less than $1,000
*
: Audited by Ernst & Young LLP, Singapore
** : Audited by Ernst & Young, Malaysia
*** : Audited by Ernst & Young Limited, Vietnam
**** : Audited by Ernst & Young LLP, Aberdeen, United Kingdom
^
: Audited by Y.L. Chee & Co., Chartered Accountants (Malaysia)
@
: Not required to be audited under the laws of the country of incorporation
∞ : Transfered to EOC Limited during 2007
annual report
2008
97
5.
(a)
In April 2008, the Company acquired 66.7% equity interest in Telemark Limited for a cash
consideration of $40,000.
From the date of acquisition, Telemark has contributed $1,075,000 to the Group’s
profit net of tax. If the combination had taken place at the beginning of the financial
year, the Group’s profit from continuing operations, net of tax would have increased
by approximately $878,000 and revenue from continuing operations would have been
$2,193,000.
The Company will acquire the remaining 33.3% over a period of 4 years at each
anniversary date of the acquisition. Subject to the achievement of the profit targets, the
total consideration expected for the acquisition of the remaining shares will range from
$1,819,000 to $5,457,000.
As disclosed in Note 13, the shareholders had approved the proposed disposal of 43%
equity interest in EOC Limited and subsequently on 4 October 2007, the Company has
completed the disposal of 39.1% equity interest in EOC Limited.
(b)
In accordance with FRS 105, Non-current Assets Held for Sale and Discontinued Operations,
the Company has reclassified the cost of investment in EOC Limited in respect of the
disposed portion to asset held for sale in 2007.
(c)
The shares are pledged in connection with banking facilities granted by a financial
institution (Note 26(i)).
6.
Investments in associated companies
Group
2008
2007
$’000
$’000
Company
2008
2007
$’000
$’000
- ordinary shares
351
351
–
–
- conditional convertible cumulative
redeemable preference shares
19,566 15,863
–
–
Quoted equity shares, at cost
31,804
–
31,804
–
51,721 16,214
31,804
–
Share of post-acquisition reserves
12,183
1,298
–
–
Addition during the financial year
13,240
–
–
–
Share of translation reserve
313
340
–
–
Share of hedging reserve
(38)
27
–
–
77,419 17,879
31,804
–
98
annual report
2008
6.
Investments in associated companies (cont’d)
Movement of share of post-acquisition reserves is as follows:
Group
2008
2007
$’000
$’000
At beginning of financial year
1,298
470
901
–
2,199
470
Share of reserves of associated companies
9,984
551
Disposal of loss of an associated company
–
277
At end of financial year
12,183
1,298
Details of the associated companies as at 31 August were as follows:
Country of
incorporation
and place
Name of company
of business
Held by the Company
EOC Limited*
Investment holding
Singapore
Percentage of
effective
interest held
by the Group
2008 2007
%
%
49
–
Cost of
investment by the Group
2008 2007
$’000 $’000
31,804
–
Held by a subsidiary
Intan Offshore Ship owning and provision Malaysia
49
49
19,917 16,214
Sdn Bhd **
51,721 16,214
Note:
* : Audited by Ernst & Young LLP, Singapore
** : Audited by Ernst & Young, Malaysia
Intan Offshore Sdn Bhd (“Intan Offshore”)
Part of the investment in Intan Offshore is in the form of Conditional Convertible Cumulative
Redeemable Preference Shares (“CCCRPS”).
During the current financial year, additional CCCRPS were issued to Emas Offshore (M) Sdn Bhd
as part consideration upon completion of the sale of 1 (2007: 1) additional vessel by the Group
to Intan Offshore. The remaining cash consideration remains unpaid as at balance sheet date
and is included in amounts due from associated companies as at the end of financial year.
The CCCRPS has the following features:
(a) the right to fixed cumulative preferential dividend at the rate of 60% on the audited net
profit of Intan Offshore or such other percentage as may agreed between the parties;
(b) first preference on return of assets in the event of liquidation;
annual report
2008
99
6.
Investments in associated companies (cont’d)
(c) (d) may be redeemed at its nominal value of RM1 per preference share;
(e) may be converted into ordinary shares of RM1 each at the ratio of 1 ordinary share for
every 1 CCCRPS held by the holder upon occurrence of transfer of shares and sale of
default shares as defined in the shareholders’ agreement; and
(f) may be redeemed at any time wholly or partly for the time being issued and outstanding
at any time so long as, such redemption is on a pro-rata basis among the holders, by
giving not less than one (1) year notice in writing of the intention from Intan Offshore to
the holder of CCCRPS;
entitled to one voting right for each CCCRPS held at general meetings of Intan Offshore
in respect of a proposed winding-up of Intan Offshore or variation or amendment of the
rights attached to the CCCRPS.
The summarised financial information of the associated companies were as follows:
Group
2008
2007
$’000
$’000
Total assets
531,457
58,538
Total liabilities
394,887
38,562
Revenue
122,471
9,484
Profit after tax
30,111
3,118
As at 31 August 2008, the market value of the quoted equity shares in an associated company
held by the Group and the Company was $139,915,000.
7.
Investments in joint venture companies
Group
2008
2007
$’000
$’000
Company
2008
2007
$’000
$’000
2,712
255
2,712
255
2,531
181
2,531
181
As restated
2,967
2,712
2,967
2,712
533
–
533
–
3,500
2,712
3,500
2,712
Share of post-acquisition reserves
2,965
1,846
–
–
Share of translation reserve
168
–
–
–
Shareholders’ loans
8,094
5,685
8,094
5,685
14,727 10,243
11,594
8,397
The shareholders’ loans to joint venture companies are unsecured, bear interest at 0% (2007:
8%) per annum and have no fixed terms of repayment. The loans are not expected to be repaid
within twelve months from the end of the financial year.
100 2008
annual report
7.
Investments in joint venture companies (cont’d)
Movement of share of post-acquisition reserves is as follows:
Group
2008
$’000
1,846
185
As restated
2,031
Share of reserves of joint ventures companies
934
2,965
Details of the joint venture companies as at 31 August were as follows:
2007
$’000
1,716
54
1,770
76
1,846
Country of
Percentage of
incorporation
effective
and place
interest held
Cost of
Name of company
of business
by the Group
investment
2008 2007
2008 2007
% %
$’000 $’000
S.E. Mariam Sdn Bhd*
Ship owning and provision Malaysia
49
49
786
786
New Strong Group Investment holding and
British Virgin
50
50
2,088 2,088
Limited @
provision for offshore Islands
rig services
United Oilfield Services Provision for offshore
Singapore
50
50
36
36
Pte Ltd #
rig services
Casadilla Group Rig owning and provision
Singapore
50
50
57
57
Pte Ltd #
for offshore rig services
Eminent Offshore Investment holding
Singapore
50
–
533
–
Logistics Pte Ltd#
3,500
–
3,500
Note:
* : Audited by Afrizan Tarmili Khairul Azhar, Chartered Accountants, Malaysia
@ : Not required to be audited under the laws of the country of incorporation
# : Audited by KPMG, Singapore
2,967
(255)
2,712
2008 101
annual report
7.
Investments in joint venture companies (cont’d)
The Group’s share of the assets, liabilities, revenue and expenses of the joint venture companies
were as follows:
Group
2008
2007
$’000
$’000
Current assets
5,827
9,610
Non-current assets
36,415
11,975
Total assets
42,242
21,585
Current liabilities
(5,641)
(3,425)
(31,997) (13,376)
Net assets
4,604
Revenue
8,982
Expenditure
(8,048)
Profit after tax
934
8.
4,784
5,629
(5,553)
76
Available-for-sale investments
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Quoted available-for-sale
investments, at fair value
24,199 66,976
21,667 63,830
9.
Other investment
Other investment refers to investment in unquoted preference shares with a dividend yield and
is classified as loans and receivables.
The rights attaching to the preference shares are as follows:
(a) the right to fixed cumulative preferential dividend at the rate of 9% per annum based on
the nominal value of each preference share calculated from the time of issuance;
(b) first preference on return of assets in the event of liquidation;
(c) may be redeemed 18 months from the date of issuance and any time thereafter, to redeem
any outstanding portion so long as, such redemption is on a pro-rata basis among the
holders;
102 2008
annual report
9.
Other investment (cont’d)
(d) entitled to one voting right for each preference shares held at general meetings of the
issuer in respect of a variation or amendment of the rights attached to the preference
shares, and winding up of the issuer; and
(e) shall rank pari passu among themselves.
The Group is committed to subscribe the preference shares from the issuer of up to $39,376,000
over 18 months. As at 31 August 2008, the Group can subscribe for preference shares up to
$18,832,000 over the next twelve months.
The cost of other investment is denominated in Australian Dollars.
10.
Long term receivable from a subsidiary
As at 31 August 2008, the long term receivable from a subsidiary is non-trade in nature,
unsecured, bears interest rate at 1.5% above London Inter Bank Offer Rate (“LIBOR”) of 5.87%
to 5.95%, commencing from 7 April 2008, with no fixed repayment terms.
In 2007, the long term receivable from EOC Limited and its subsidiaries is non-trade in nature,
unsecured, bears interest rate at 1.5% above LIBOR of 3.88%, commencing from 1 June 2007.
Following the disposal of EOC Limited on 4 October 2007 (Note 13), the amount is being
reclassified to long term receivable from an associated company (Note 11).
11.
Long term receivable from an associated company
Following the disposal of EOC Limited on 4 October 2007 (Note 13), the long term receivable from
a subsidiary (Note 10) was reclassified to long term receivable from an associated company.
As at 31 August 2008, the long term receivable from an associated company is non-trade in
nature, unsecured, bears interest rate at 1.5% above LIBOR of 2.68% to 3.88%. The balance is
denominated in United States Dollars. The long term receivable is not expected to be repaid
within the next twelve months.
2008 103
annual report
12.
Assets held for sale
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Vessels under construction
40,314 68,700
–
–
(3,117)
–
–
–
Reclassification from
investment in subsidiaries (Note 5)
–
–
–
23,279
37,197 68,700
–
23,279
(a)
Included in the cost of vessels under construction were borrowing costs arising from
borrowings used to finance their construction amounting to approximately $2,014,000
(2007: $2,387,000). The capitalisation rates varied from 3.36% to 6.71% (2007: 6.34% to
6.62%) representing the borrowing costs to finance the vessels under construction.
(b)
The vessels under construction are pledged in connection with the bills payable and term
loan facilities granted by financial institutions (Notes 23 and 26).
13. Disposal group assets/liabilities classified as held for sale (excluding intragroup balances)
On 29 August 2007, the shareholders approved the proposed disposal of up to 43% of the
issued and paid-up share capital of EOC Limited owned by the Company. EOC Limited and its
subsidiaries are included in the offshore support services business segment. In accordance with
FRS 105, Non-current Assets Held for Sale and Discontinued Operations, the Group is required
to present the assets and liabilities of EOC Limited and its subsidiaries (“EOC Group”) separately
from other assets and liabilities in the balance sheet of the Group.
Accordingly, the assets and liabilities of EOC Group as at 31 August 2007 have been classified as
“Disposal group assets/liabilities classified as held for sale” and presented separately from other
assets and liabilities of the Group.
104 2008
annual report
13. Disposal group assets/liabilities classified as held for sale (excluding intragroup balances)
(cont’d)
The assets and liabilities of EOC Group as at 31 August are as follows:
Group
2008
2007
$’000
$’000
Assets
Fixed assets
– 219,391
–
16
Trade receivables
–
20,243
Other receivables
–
545
–
115
Non-trade balances due from the Group
–
3,136
Derivative financial instruments
–
251
Fixed deposits
–
12,000
–
3,130
Total assets of EOC Group
– 258,827
Less: Non-trade balances due to the EOC Group
–
(3,136)
Disposal group assets classified as held for sale
– 255,691
Liabilities
Trade payables
–
5,526
–
19,948
Premium payable
–
527
Long term payable to the Group
–
32,800
Bank term loans
– 121,305
Provision for tax
–
1,400
–
234
Total liabilities of EOC Group
– 181,740
Less: Long term receivable from the EOC Group
–
(32,800)
Disposal group liabilities classified as held for sale
– 148,940
Net assets of EOC Group
–
77,087
The respective equity interests in the net assets of EOC Group are as follows:
48.9% equity interest owned by the Group
–
39.1% equity interest held for subsequent disposal
–
12.0% equity interest owned by minority interests
–
37,674
29,814
9,599
Net assets of EOC Group
–
77,087
On 4 October 2007, the Group disposed 39.1% equity interest in EOC Limited for a gross
consideration of US$177,901,000. Consequently EOC Limited ceased to be a subsidiary of the
Group during the financial year.
2008 105
annual report
14.
Group
2008
2007
$’000
$’000
Inventories, at net realisable value
2,970
1,001
Work-in-progress
10,648
8,028
Total inventories at lower of cost and net realisable value
13,618
9,029
Reclassification to Disposal group assets classified
as held for sale (Note 13)
–
(16)
13,618
9,013
Work-in-progress, at cost
85,256
15,313
Attributable profits
12,564
–
Less: Progress billings
(88,543)
(7,285)
9,277
8,028
Represented by :
Work-in-progress less progress billings
10,648
8,028
Progress billings in excess of work-in-progress
(1,371)
–
9,277
8,028
During the financial year, the Group has not made a provision for stock obsolescence while in
the prior year, the Group has made a provision for stock obsolescence of $31,000.
15.
Trade receivables
Group
2008
2007
$’000
$’000
Trade receivables
- Billed
65,399
58,341
- Unbilled
29,233
–
94,632
58,341
Less: Allowance for doubtful debts (7,628)
(53)
87,004
Reclassification to Disposal group assets classified
– 87,004
58,288
(20,243)
38,045
106 2008
annual report
15.
Trade receivables (cont’d)
Analysis of allowance for doubtful debts:
Group
2008
2007
$’000
$’000
53
93
4
–
As restated
57
93
Acquisition of a subsidiary
364
–
Provision for the financial year
7,239
–
Written back
(32)
(39)
–
(1)
7,628
53
Bad debts written off directly to profit and loss account
32
20
Significant trade receivables denominated in foreign currencies (with reference to the respective
functional currencies of the Company and the respective subsidiaries) as at 31 August are as
follows:
Group
2008
2007
$’000
$’000
United States Dollars
5,068
1,490
Singapore Dollars
1,667
474
Australian Dollars
4,480
–
The age analysis of trade receivables is as follows:
2008
2007
Gross
Allowance
Gross Allowance
$’000
$’000
$’000
$’000
Not past due or less than 60 days overdue 78,473
–
53,727
–
Past due
- 61 to 180 days
8,636
(1,362)
2,002
–
- More than 180 days
7,523
(6,266)
2,612
(53)
94,632
(7,628)
58,341
(53)
2008 107
annual report
16. Other receivables
Group
2008
2007
$’000
$’000
Company
2008
2007
$’000
$’000
Other receivables
- Non-current
465
–
–
–
- Current
26,429
8,679
16,715
1,179
26,894
8,679
16,715
1,179
Reclassification to Disposal
group assets classified as
held for sale (Note 13)
–
(545)
–
–
26,894
8,134
16,715
1,179
Significant other receivables denominated in foreign currencies (with reference to the respective
follows:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Singapore Dollars
491
1,148
2
–
–
4
–
–
Norwegian Kroners
16,713
–
16,713
–
17.
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Deposits 3,563
670
133
5
Prepayments 2,532
432
–
–
Advance payments
10,296
–
–
–
16,391
1,102
133
5
–
(115)
–
–
16,391
987
133
5
108 2008
annual report
18.
Non-trade balances due from/(to) subsidiaries, associated companies and a joint venture
company
These amounts are non-trade in nature, unsecured, interest-free and repayable in cash on
demand. All balances are denominated in United States Dollars.
19.
Fixed deposits
The fixed deposits are made for varying periods of between one day and three months
depending on the cash requirement of the Group and the Company and earn effective interest
rates ranging from 0% to 19.5% (2007: 1.66% to 5.99%) per annum.
Certain fixed deposits of the Company with balances amounting to $102,334,000 are pledged
to financial institutions for banking facilities granted to the Company (Note 26(j)).
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Fixed deposits
121,158 25,544
106,295
–
– (12,000)
–
–
121,158 13,544
106,295
–
Significant fixed deposits denominated in foreign currency (with reference to the respective
follows:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Singapore Dollars
7,253
664
4,065
–
Norwegian Kroners
71,945
–
71,945
–
Australian Dollars
10,467
–
9,641
–
2008 109
annual report
20.
Certain operating bank accounts of the subsidiaries with balances amounting to $786,000
(2007: $876,000) are pledged to financial institutions for banking facilities granted to the
Group. Except for an amount of $100,000 (2007: $150,000), there is no restriction on the use of
the remaining bank balances.
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
31,901
14,529
535
516
–
(3,130)
–
–
31,901
11,399
535
516
Significant cash and bank balances denominated in foreign currencies (with reference to the
respective functional currencies of the Company and the respective subsidiaries) as at 31 August
are as follows:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
10
2,154
–
270
Australian Dollars
6,340
2,104
–
–
Singapore Dollars
6,124
781
408
–
Norwegian Kroners
4
216
–
–
Malaysia Ringgit
75
91
–
5
110 2008
annual report
21.
Trade payables
Trade payables are non-interest bearing and are normally settled on 30 to 90 day terms.
Group
2008
2007
$’000
$’000
Trade payables
22,894
15,424
group liabilities classified as
–
(5,526)
22,894
9,898
Significant trade payables denominated in foreign currencies (with reference to the respective
follows:
Group
2008
2007
$’000
$’000
–
427
Singapore Dollars
3,284
371
Australian Dollars
2,845
–
Malaysia Ringgit
212
87
New Zealand Dollars
2,346
–
22.
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Other creditors
15,227
7,743
124
Payable to a shipbuilder
10,076
17,036
–
Advance billing made to customers
75
3,710
–
Accrued operating expenses
39,128
48,697
2,209
Amounts due to directors
18,007
4,818
18,007
Accrued interest payable
483
407
417
Premium payable
147
143
–
83,143
82,554
20,757
group liabilities classified
–
(19,948)
–
83,143
62,606
20,757
The amounts due to directors are non-trade in nature, unsecured, interest-free and
on demand.
448
–
–
715
4,818
–
–
5,981
–
5,981
repayable
2008 111
annual report
22.
Other payables and accruals (cont’d)
Significant other payables and accruals denominated in foreign currencies (with reference to
the respective functional currencies of the Company and the respective subsidiaries) as at 31
August are as follows:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Norwegian Kroners
14,990 13,911
–
–
Singapore Dollars
10,418
5,006
3,024
–
Euro
3,303
3,499
–
–
7
161
–
9
23.
Bills payable to banks
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Bills payable
- secured
2,560 14,762
–
13,778
- unsecured
23,193 12,633
4,000
–
25,753 27,395
4,000
13,778
Significant bills payable denominated in foreign currencies (with reference to the respective
follows:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
–
18,755
–
4,017
Singapore Dollars
2,869
1,246
–
–
Norwegian Kroners
–
665
–
–
Certain bills payable of the subsidiaries are secured by:
(a) a first legal mortgage over the Group’s leasehold building;
(b) first mortgage in the name of a vessel under financing;
(c) assignment of charter income, charter contracts and vessel insurance in favour of the
financial institution; and
112 2008
annual report
23.
Bills payable to banks (cont’d)
(d) corporate guarantees from the Company and certain subsidiaries.
The bills payable bear interest at 0% to 2% (2007: 0% to 2%) per annum above the bank’s
prevailing cost of funds (“COF”), Prime Rate or Singapore Inter Bank Offer Rate (“SIBOR”) of
0.6% to 5.26% (2007: 2.01% to 5.26%) per annum.
During the financial year, the effective interest rates of the bills payable of the Group ranged
from 1.89% to 6.89% (2007:3.57% to 7.56%) per annum.
24.
Deferred income
Group
2008
2007
$’000
$’000
Current
642
363
Non-current
13,586
7,603
14,228
7,966
The deferred income refers to the Group’s share of the unrealised profit resulting from the sale
of vessels to associated companies. The deferred income will be amortised over the remaining
useful lives of the vessels and taken against the share of results of associated companies in the
consolidated profit and loss account.
Movement in deferred income is as follows:
Group
2008
2007
$’000
$’000
7,966
8,684
Amortisation during the financial year
(588)
(351)
6,850
610
Recognition of unrealised gain on the sale
of vessels arising from the disposal of an associated company
–
(977)
14,228
7,966
2008 113
annual report
25.
Lease obligations
Group
Present
Present
Minimum value of Minimum value of
payments payments payments payments
2008
2008
2007
2007
$’000
$’000
$’000
$’000
Not later than one year
77
65
49
43
Later than one year but not later
than five years
237
199
129
107
More than five years
26
22
–
–
263
221
129
107
Total minimum lease payments
340
286
178
150
Less: Amounts representing
finance charges
(54)
–
(28)
–
Present value of minimum lease payments
286
286
150
150
Lease terms are for 5 to 7 years with options to purchase at the end of the lease term. Lease
terms do not contain restrictions concerning dividends, additional debt or further leasing.
Lease obligations bear interest at flat rates ranging from 2.00% to 3.50% (2007: 2.00% to
3.30%) per annum. The effective interest rates ranged from 3.82% to 6.54% (2007: 3.82% to
6.10%) per annum.
26.
Bank term loans
Group
2008
2007
$’000
$’000
Due within 1 year
81,836
39,294
Due within 2 to 5 years
32,738
26,472
Due after 5 years
19,432
31,942
52,170
58,414
134,006
97,708
Company
2008
2007
$’000
$’000
55,770
–
–
–
–
–
–
–
55,770
–
114 2008
annual report
26.
Bank term loans (cont’d)
The balance comprises:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Secured
(a) Term loan with principal of US$8,100,000,
bears interest at 1.6% (2007: 1.6%) per
annum above LIBOR of 2.19% to 4.88%
(2007: 4.86% to 5.40%) per annum. The
loan is repayable in 32 quarterly instalments
commencing 3 calendar months after the
date of drawdown on 13 February 2004.
This term loan is secured by way of a first
legal mortgage on the vessel, pledged over
the earnings account, assignment of vessel
insurances, earnings, charter and requisition
compensation and corporate guarantees
from the Company. 3,384
4,350
–
–
(b) Term loan with principal of US$7,500,000
bears interest at 2.25% (2007: 2.25% per
(2007: 5.32% to 5.54%) per annum. The
loan is repayable in 63 monthly instalments
of US$59,524 and a final instalment of
US$3,750,000 commencing on 20 July
2005. This term loan is secured by way of
a first legal mortgage on the vessel under
financing, assignment of ship-building
contract, assignment of charter income
and charter contracts, assignment of vessel
insurances, charge over all monies held
in operating account of the vessel and
corporate guarantee from the Company.
5,238
5,952
–
–
2008 115
annual report
26.
Secured (cont’d)
(c) Term loan with principal of US$5,350,000
annum above SIBOR of 2.87% to 5.36%
(2007: 5.18% to 5.43%) per annum. The loan
is repayable over 10 years in equal monthly
instalments commencing 28 February 2007.
This term loan is secured by way of a statutory
mortgage over the vessel under financing,
assignment of charter income of the vessel
and charter contracts, vessel insurance and
Term loan with principal of US$4,680,000
bears interest at 0.8% to 1.2% (2007: 1.2%)
per annum above LIBOR of 2.68% to 5.51%
(2007: 5.36% to 5.51%) per annum. The
loan is repayable over 23 equal quarterly
instalments of US$117,000 each and a final
instalment of US$1,989,000 commencing 3
months after the drawdown on 28 February
2006. The term loan is secured by way of a
first statutory mortgage over the vessel,
assignment of vessel insurances, charter
income, charter contract, charge over
operating and retention account and
unconditional corporate guarantee from
the Company.
(e) Term loan with principal of S$1,200,000
bears interest at the bank’s prime lending
rate of 6% (2007: 6%) per annum. The
loan is repayable in 120 equal monthly
instalments of S$10,000 commencing 3
September 2002. This term loan is secured
by way of a first legal mortgage over the
terrace office factory at 20 Ubi Crescent,
#01-02 Ubi Techpark, Singapore 408565 and
unconditional corporate guarantees from
the Company and certain subsidiaries.
Group
2008
2007
$’000
$’000
Company
2008
2007
$’000
$’000
4,730
5,166
–
–
3,393
3,861
–
–
346
400
–
–
(d)
116 2008
annual report
26.
Group
2008
2007
$’000
$’000
Secured (cont’d)
(f)
(2007: 5.36% to 5.37%) per annum. The
instalments and a final instalment of
US$4,813,000 commencing 3 calendar
months after date of drawdown on 19
October 2006. This term loan is secured by
way of a first priority cross-collaterised legal
mortgage on the vessel under financing
together with another vessel under
mortgage as described in Note 26(o) below,
assignment of charter income and charter
contracts more than 13 months, insurance
policies, requisition compensation in respect
of the vessel, pledge over the earnings and
retention account of the vessel and
9,396
10,312
(g) Term loan with principal of US$9,600,000,
annum above the bank’s LIBOR of 2.38%
to 5.51% (2007: 5.30% to 5.51%) per
annum. The loan is repayable over 83 equal
quarterly instalments of US$80,000 and final
instalment of US$2,960,000 commencing 1
calendar month after date of drawdown on
30 August 2007. This term loan is secured
by way of a first legal mortgage on the
vessel under financing, first and third party
assignment of charter income and charter
contracts and any other cash in-flows of
the vessel, assignment of vessel insurances,
charge over all monies held in the operating
account of the vessel and corporate
guarantee from the Company.
8,720
9,600
Company
2008
2007
$’000
$’000
–
–
–
–
2008 117
annual report
26.
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Secured (cont’d)
(h) Pre-delivery term loan with principal limit of
US$150,000,000 to finance the construction
cost of 9 vessels, bears interest at 1.04%
(2007: 1.04%) per annum above 3 months
bank’s LIBOR of 2.31% to 5.67% (2007:
5.30% to 5.58%) per annum. The loan is
repaid upon delivery of each vessel or fully
repaid by 30 November 2008, whichever is
earlier. This term loan is secured by way of a
first assignment of all shipbuilding contracts,
sale agreements and sale proceeds of the
vessels, charge over all equipment and
machinery of the vessels financed, pledge
of escrow account, first priority statutory
mortgage on all the shares of vessels,
insurances and earnings of the vessels and
14,203
33,687
–
–
(i)
Term loan with principal limit of
US$5,000,000, bears interest at 1.25%
(2007: 1.25%) per annum over 3 months
bank’s LIBOR of 2.75% to 5.50% (2007:
5.11% to 5.15%). The loan is repayable by
30 December 2008. This term loan is secured
by way of pledge of 100% equity interest in
a subsidiary and corporate guarantee from
the Company.
4,981
924
–
–
(j)
Short term loan with principal limit of
US$100,000,000 bears interest at 0.3% above
COF rate of 0.67% to 7.54%. The term loan
is secured by cash and cash equivalents that
are deposited with the bank (Note 19).
55,770
–
55,770
–
118 2008
annual report
26.
Group
2008
2007
$’000
$’000
Secured (cont’d)
(k) Term loan with principal of US$7,231,000
bears interest at 1.0% per annum above
LIBOR of 2.70% to 4.86% per annum. The
instalments of US$180,775 commencing
on 1 Jan 2008. The term loan is secured by
way of a first preferred ship mortgage on
the vessel, assignment of vessel insurances,
charter income, charter contract for charters
with terms of more than 6 months and
6,869
–
(l)
bears interest at 1.1% per annum above
LIBOR of 2.65% to 4.87% per annum. The
instalments of US$311,425 commencing
on 1 December 2007. The term loan is
secured by way of a first preferred ship
mortgage on the vessel, assignment of
vessel insurances, charter income, charter
contract for charters with terms of more
than 6 months and corporate guarantee
from the Company.
11,523
–
Company
2008
2007
$’000
$’000
–
–
–
–
2008 119
annual report
26.
Group
2008
2007
$’000
$’000
Secured (cont’d)
(m) Pre-delivery term loan with principal of up
to US$80,000,000 bears interest at 1.3%
(2007: 1.3%) per annum above LIBOR
rate of 5.2% (2007: 5.32% to 5.51%) per
annum. Pursuant to the disposal of 39.1%
of EOC Limited as disclosed in Note 13, the
term loan has been reclassified to disposal
group liabilities classified as held for sale.
This loan is repayable in 32 quarterly
instalments of US$2,031,250 commencing 3
months after the final drawdown date on
28 September 2007 and a final instalment
of US$15,000,000. The term loan is secured
by first priority mortgage on the vessel,
first priority charter assignment relating to
rights and earnings, insurances, requisition
compensation,
warranty
guarantees,
charge over project bank account including
pledge over minimum liquidity account and
unconditional corporate guarantee from
the Company.
–
67,272
(n) Term loan with principal of US$20,000,000
annum above SIBOR rate of 5.33% (2007:
5.33% to 5.34%). Pursuant to the disposal
of 39.1% of EOC Limited as disclosed in
Note 13, the term loan has been reclassified
to disposal group liabilities classified as
held for sale. The loan principal is repayable
in 66 monthly instalments of US$238,000
commencing on 5 months after the date of
facility agreement dated on 1 February 2007,
and a final instalment of US$4,292,000. The
loan is secured by first party legal mortgage
over the vessel and all equipment and fixture
on the vessel, assignment of insurance
policies, first and third party assignment
of all revenue, contract proceeds, charter
income, lease agreement and any other cash
flow charge over operating account and
–
19,286
Company
2008
2007
$’000
$’000
–
–
–
–
120 2008
annual report
26.
Group
2008
2007
$’000
$’000
Secured (cont’d)
(o) Term loan with principal of $11,840,000
(2007: 5.36%) per annum. The loan was
fully repaid during the financial year. This
term loan was secured by way of a first legal
priority cross-collaterised legal mortgage
on the vessel under financing together with
another vessel under mortgage as described
in Note 26(f) above, assignment of charter
income and charter contracts more than
13 months, insurance policies, requisition
compensation in respect of the vessel, pledge
over the earnings and retention account of
the vessel and corporate guarantee from
the Company.
–
11,347
(p)
annum over LIBOR of 5.36% (2007: 4.93% to
5.07%) per annum. Pursuant to the disposal
of 39.1% of EOC Limited as disclosed in Note
13, the loan has been reclassified to disposal
This loan is repayable over 27 quarterly
instalments of US$625,000 each which
commenced on 12 October 2004 and a final
instalment of US$3,375,000. The term loan
is secured by way of a legal mortgage on the
vessel and all equipment and fixture added
on it, assignment of the vessel’s insurance,
revenue, contract proceeds, charter income
and contract, lease agreements and any
other cash flow in respect of the vessel, fixed
and floating charge over all monies held
in the operating account of the vessel and
corporate guarantees from the Company
and a subsidiary.
–
12,750
Company
2008
2007
$’000
$’000
–
–
–
–
2008 121
annual report
26.
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Unsecured
(q) Short term loan with principal limit of
US$5,500,000, bears interest at 2% per
annum over USD SIBOR of 2.48% to 5.16%.
This term loan is secured by way of corporate
guarantee from the Company. 5,453
–
–
–
(r) Short term loan with principal limit of
US$12,000,000 bears interest at mutually
agreed rate of 7.05% (2007: 7.05%) per
annum. Pursuant to the disposal of 39.1%
The loan principal was refinanced on 23
November 2007. The term loan was secured
by a corporate guarantee from a subsidiary
company.
–
12,000
–
(s)Short term loan with principal of
US$10,000,000 bears interest at 1.05% (2007:
1.05%) above LIBOR rate of 5.36% (2007:
5.36%). Pursuant to the disposal of 39.1%
The loan is expected to be refinanced under
an existing term loan facility. The term loan
is secured by a corporate guarantee from
the Company.
–
9,997
–
(t)
Non-revolving short-term loan with principal
limit of US$15,000,000 bears interest at
1.25% (2007: 1.25%) per annum above 3
month’s bank’s SIBOR of 3.95% to 5.80%
(2007: 5.33% to 5.37%) per annum. This
term loan was fully repaid during the year.
This term loan was secured by corporate
guarantee from the Company.
–
12,109
–
134,006 219,013
55,770
Reclassification to disposal group
liabilities classified as held for
sale (Note 13)
– (121,305)
–
134,006
97,708
55,770
–
–
–
–
–
–
122 2008
annual report
27.
Notes payable
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
SGD 50 million
35,301
–
35,301
–
Notes payable relates to S$50 million fixed rate notes due on 1 August 2011. The notes bear
fixed interest rate of 5.285% (2007: Nil) per annum, which approximates the effective interest
rate, payable semi-annually.
The fixed rate note is listed on Singapore Exchange Securities Trading Limited.
28.
Tax
Major components of tax expense for the financial year ended 31 August were:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Current tax
2,968
5,549
1,176
253
Withholding tax
5,033
584
–
–
Deferred tax
(235)
345
–
–
(Over)/under provision in respect of prior years
- current tax
(40)
3
–
–
7,726
6,481
1,176
253
2008 123
annual report
28.
Tax (cont’d)
A reconciliation of the tax expense and the product of profit before tax multiplied by the
applicable tax rate for the financial year ended 31 August was as follows:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Profit before tax
184,072 75,533
145,681 38,717
Tax at statutory tax rate of 18% (2007: 18%)
33,133 13,596
26,223
6,969
Adjustments for tax effect of:
Difference in overseas tax rate
591
886
–
–
Expenses not deductible for tax purposes
6,011
3,472
2,622
–
Income not taxable
(32,139) (7,488)
(27,612) (6,734)
Tax exempt income under Section 13
of the Singapore Income Tax Act and
rebates available
(4,614) (5,287)
–
–
Tax rebates
(137)
(59)
(19)
(18)
Utilisation of unutilised capital
allowance brought forward
(69)
–
–
–
Current year deferred tax benefit not recognised
235
95
17
5
(Over)/under provision in prior years
(40)
3
–
–
Tax deducted at source
10
699
10
31
Withholding tax *
5,033
584
–
–
Others
(288)
(20)
(65)
–
Income tax expense
7,726
6,481
1,176
253
* Note: Withholding tax relates to tax withheld on certain overseas revenue for which no
tax relief is available in Singapore as the income is tax exempt under Section 13A of the
Singapore Income Tax Act.
The above reconciliation is prepared by aggregating separate reconciliations for each national
jurisdiction.
The corporate income tax applicable to Singapore companies of the Group was reduced to 18%
for the year of assessment 2008 onwards from 20% for year of assessment 2007. The corporate
income tax applicable to Malaysian companies 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 Group’s subsidiaries in Vietnam are entitled to tax incentives under Vietnam’s investment
scheme which entitles these subsidiaries to exemptions from income tax for periods ranging
from 2 to 3 years from the first profitable year and thereafter, varying income tax rates ranging
from 15% to 28%.
124 2008
annual report
28.
Tax (cont’d)
Movements in deferred tax (assets)/liabilities were as follows:
Group
2008
2007
$’000
$’000
169
53
7
5
As restated
176
58
Acquisition of a subsidiary
(65)
–
Charge to profit and loss account
(235)
345
33
–
(91)
403
Reclassification to disposal group liabilities
classified as held for sale (Note 13)
–
(234)
Deferred tax (assets)/liabilities
(91)
169
Deferred tax (assets)/liabilities relate to the following:
Excess of capital allowances over depreciation
180
362
Other deferred tax liabilities
200
67
380
429
Deferred tax assets
Other deferred tax assets
(471)
(26)
Net deferred tax (assets)/liabilities
(91)
403
2008 125
annual report
29.
Share capital
Group and Company
2008
2007
No of shares
$’000
No of shares
$’000
Ordinary shares issued
and fully paid
At beginning of
financial year
292,919,995
114,583
277,919,995
62,357
Effects of exchange
due to FRS 21
–
10,747
–
1,988
As restated
292,919,995
125,330
277,919,995
64,345
Ordinary shares issued
during the financial year
–
–
15,000,000
50,238
Bonus shares issued during
the financial year
292,919,995
–
–
–
585,839,990
125,330
292,919,995
114,583
(a) Issuance of shares
On 26 March 2007, the Company allotted and issued 15,000,000 new ordinary shares at
S$5.18 each pursuant to a placement exercise that was completed on 16 February 2007.
(b) Bonus issue
On 15 November 2007, the Company issued 292,919,995 new ordinary shares (“Bonus
Issue”) in the capital of the Company on the basis of one (1) bonus share for every one (1)
existing ordinary share held by the shareholders of the Company as at 7 November 2007.
The Company’s share capital after the Bonus Issue comprises of 585,839,990 issued and
fully paid ordinary shares. All new ordinary shares will rank pari passu in all respects with
the existing ordinary shares of the Company.
30.
Reserves
(a)
Capital reserve
Capital reserve arises from the following:
i. Equity contribution by a director who is a substantial shareholder. The contribution
relates to shares awarded to certain employees for recognition of their service and
loyalty to the Group; and
ii. The excess of proceeds over cost of the treasury shares due to the sale of treasury
shares during the financial year.
126 2008
annual report
30.
Reserves (cont’d)
(b)
Fair value adjustment reserve (cont’d)
Net change in the fair value adjustment reserve during the financial year arises from:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Net gain on fair value changes during
the financial year
(48,906) 53,309
(47,935) 53,688
(45) (6,968)
(45) (6,968)
4,940
182
4,936
182
(44,011) 46,523
(43,044) 46,902
(c) 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.
Net change in the reserve arose from net gain on fair value changes on derivative financial
instruments during the financial year.
Translation reserve
(d)
31.
The translation reserve is used to record exchange differences arising from the translation
of the financial statements of operations whose functional currencies are different from
that of the Group’s presentation currency.
Treasury shares
Group and Company
2008
2007
$’000
$’000
(10,344)
–
(970)
–
(14,100)
(11,078)
11,251
734
(14,163)
(10,344)
2008 127
annual report
31.
Treasury shares (cont’d)
On 3 May 2007, the Company made a market acquisition of 3,000,000 ordinary shares of S$5.60
each, for an aggregate consideration of S$16,800,000, on the view that the approval granted by
Shareholders on 9 February 2007 to amend the Articles of Association of the Company, which
included an article providing for share buybacks, was sufficient. The 3,000,000 shares bought
by the Company on 3 May 2007 were held as treasury shares, and not cancelled shares, of the
Company. Subsequently, on 8 May 2007, the Company was advised that the share buyback was
done in contravention of section 76A (1)(a) of the Companies Act as there was no mandate
obtained from the Shareholders for a share buyback.
However, Division 7A of the Companies Act which deals with the Central Depository System
(book-entry or scripless system), provides (under section 130M) for an application by the
Company to the courts for an order to transfer the shares acquired in contravention of section
76A(1)(a). An application was thus made to the High Court in accordance with section 130M of
the Companies Act and an order was granted on 24 July 2007 by the High Court of Singapore
for the Company to sell or transfer the assets pursuant to a void transaction, in this case, the
book-entry securities acquired in the share buyback, to the open market on the SGX-ST for a
consideration of at least S$5.60 per share (the “Court Order”).
Subsequently, pursuant to the Bonus Issue as described above, an application was made to the
High Court for an order to adjust the minimum consideration from S$5.60 to S$2.80 for the
remaining unsold treasury shares. The order was granted on 11 October 2007.
The Company has, as of date, sold off all the shares to the open market at a minimum
consideration of S$2.80 per share. The net consideration received, including brokerage fees,
totalled US$12.8 million and was included in the shareholder’s equity.
Shares Buyback
Under the Share Buyback Mandate (first approved by the Shareholders on 29 August 2007 and
subsequently renewed at the Annual General Meeting on 24 December 2007), the Company
bought back 5,891,000 ordinary shares for the financial year ended 31 August 2008. The
amount paid, including brokerage fees, totalled US$14.1 million and was deducted against
shareholder’s equity. The shares are intended to be held as treasury shares.
As of date, the Company has 5,891,000 (2007: 3,000,000) shares being held as treasury shares.
128 2008
annual report
32.
Revenue
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
176,502 110,411
–
–
Marine Services
64,159 33,135
–
–
Energy Services
29,215
–
–
–
Dividend income from
- unquoted subsidiaries
–
–
–
2,335
- quoted associated company
–
–
1,140
–
- AFS investments
–
–
14
–
Management fee income from a subsidiary
–
–
24,686
8,940
269,876 143,546
25,840 11,275
Less: Inter-segment sales
(1,530)
–
–
–
268,346 143,546
25,840 11,275
33.
Other income, net
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
(Loss)/gain on disposal of assets held for sale
(2,152) 3,773
–
–
Gain on disposal of AFS investments
21
6,968
21 6,968
Gain on dilution of interest in a subsidiary
– 32,176
– 30,440
146,333
–
152,438
–
Sale of exclusive use rights of a vessel
875
2,650
–
–
Gain on disposal of fixed assets
1,822
678
–
–
Fair value changes in respect of
derivative instruments, net
(502)
265
(30)
–
Realised gain on derivative instruments
1,948
31
963
31
Exchange (loss)/gain
- realised
(595)
(47)
325
(16)
- unrealised
(11,894)
95
(14,567)
(135)
Gross dividend income from AFS investments
14
35
–
–
Gross dividend income from other investment
887
–
–
–
Gross dividend income from an
associated company
2,894
2,913
–
–
Management fee income from
an associated company
1,214
565
–
–
Other miscellaneous income
194
27
–
–
(3,117)
–
–
–
137,942 50,129
139,150 37,288
2008 129
annual report
34.
This is determined after charging the following:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Non-audit fees to auditors of the Company
45
256
45
256
Depreciation of fixed assets
5,513
6,047
70
26
Directors’ remuneration*
- Salaries and bonuses
11,033
6,011
10,383
5,804
- Contributions to defined contribution plans
20
24
18
14
- Benefits-in-kind
158
148
132
148
Directors’ fees
237
169
237
169
Key executive officers’ remuneration
- Salaries and bonuses
1,370
709
1,080
641
- Contributions to defined contribution plans
85
47
65
47
- Share based payment
–
46
–
46
- Other personnel expenses
364
96
186
96
Fixed assets written off
–
8
–
–
Bad debts written off
32
20
–
–
Allowance for doubtful debts
7,239
– –
–
Allowance for stock obsolescence
–
31
–
–
Amortisation of other intangible assets
79
88
–
–
Operating lease expenses
49,296 16,016
–
–
* Refers to directors of the Company.
35.
Personnel expenses
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Salaries and bonuses
58,203
30,110
22,587
7,352
Contributions to defined contribution plans
1,193
578
258
205
Share based payment
–
217
–
217
Other personnel expenses
4,008
1,614
667
301
Less: Reallocation of personnel expenses
directly attributable to work-in-progress
(2,309) (1,185)
–
–
61,095
31,334
23,512
8,075
Personnel expenses include amounts shown as directors’ remuneration and fees and key
executive officers’ remuneration in Note 34.
130 2008
annual report
36.
Financial income
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Interest income
- Bank deposits
5,369
726
4,937
9
- Loan to joint venture companies
–
308
–
308
- Loan to an associated company
1,459
–
1,459
–
- Loan to a subsidiary
–
–
492
442
6,828
1,034
6,888
759
37.
Financial expenses
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Interest expense
- bank overdrafts
–
10
–
5
- term loans
7,302
10,644
581
–
- letters of credit, trust receipts and
money market line
812
533
64
402
- finance leases
12
7
–
–
Bank charges
758
1,651
493
18
8,884
12,845
1,138
425
Included in cost of vessels
under construction*
- Fixed assets
(305)
(4,965)
–
–
(2,014)
(2,387)
–
–
6,565
5,493
1,138
425
* The capitalisation rate used to determine the amount eligible for capitalisation varied from
1.89% to 6.50% (2007: 3.57% to 7.56%), representing the borrowing costs to finance the
vessels under construction.
2008 131
annual report
38.
Earnings per share
Earnings per ordinary share (“EPS”) is calculated by dividing the Group’s net profit attributable
to shareholders by the weighted average number of ordinary shares outstanding during the
financial year, after adjusting for the Bonus Issue. The calculation of the basic and fully diluted
earnings per share of the Group is based on the following:
Group
2008
2007
$’000
$’000
Net profit attributable to shareholders of the Company
175,435
68,208
Number of weighted average ordinary shares (‘000) 579,951
569,402@
EPS (US cents)
30.25
11.98#
@
Weighted average ordinary shares has been computed based on the assumption that the
bonus issue of one (1) bonus share for every one (1) existing ordinary shares of the Company
has been issued and allotted during the financial year ended 31 August 2007.
#
EPS has been computed based on the assumption that the bonus issue of one (1) bonus
share for every one (1) existing ordinary shares of the Company has been issued and allotted
during the financial year ended 31 August 2007.
As there was no share options and warrants granted during the financial year or outstanding
as at the end of the financial year, the basic and fully diluted earnings per share are the same.
132 2008
annual report
39.
Related party transactions
During the financial year, the Group and the Company entered into transactions with related
parties on terms agreed between the parties as shown below:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Income
Dividend income - subsidiaries
–
–
–
2,335
2,894
2,913
1,140
–
Interest income
- a subsidiary
–
–
492
442
- an associated company
1,459
–
1,459
–
- joint venture companies
–
308
–
308
Management fee income from a subsidiary
–
–
24,686
8,940
Management fee income from associated
companies
1,214
565
–
–
Ship management fee income - associated company
201
848
–
–
- joint venture company
–
10
–
–
Technical consultation fee income
from an associated company 1,286
–
–
–
Sales to an associated company
1,533
–
–
–
Time charter to an associated company
9,333
–
–
–
Interest expense recharged to subsidiaries
–
–
848
–
Recharge of expenses to an associated company
4,011
–
–
–
Expenses
Bareboat charter from an associated company 12,489
9,160
–
–
Time charter from an associated company
12,492
–
–
–
Purchases from an associated company
645
–
–
–
Ship management fees paid to an
associated company
4,820
–
–
–
Rental expense to a substantial shareholder
1,194
640
–
640
Catering expense paid to an associated
company of a substantial shareholder
1,226
–
–
–
2008 133
annual report
39.
Related party transactions (cont’d)
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Others
Sale of vessel to an associated company
16,500
4,942
–
–
Sale of equity interest in subsidiaries to a subsidiary
–
–
–
35,047
Directors’ remuneration and fees and key executive officers’ remuneration has been disclosed
in Note 34.
40.
Contingent liabilities and commitments
(a)
Contingent liabilities
As at 31 August 2008, the Company had issued corporate guarantees to banks for
granting banking facilities to certain subsidiaries, an associated company and joint
venture companies.
Unsecured contingent liabilities not provided for in the financial statements are as
follows:
Group
2008
2007
$’000
$’000
Company
2008
2007
$’000
$’000
Corporate guarantees given for the
borrowings of:
- Subsidiaries
–
–
98,332 220,630
- Associated companies
132,920 27,680
132,920 27,680
- Joint venture companies
22,339 10,581
22,339 10,581
- An associated company
of a joint venture company
–
5,000
–
5,000
155,259 43,261
253,591 263,891
The Company had also issued corporate guarantees in respect of the leaseback
commitments for the 12 (2007: 7) vessels under the sale and leaseback arrangements
entered into by the Group.
134 2008
annual report
40.
Contingent liabilities and commitments (cont’d)
(b)
Financial support
The Company had given undertaking to provide financial support to certain subsidiaries
to enable these subsidiaries to operate as going concerns and to meet their obligations
for at least twelve months from the dates of the respective directors’ report.
Capital expenditure commitments
(c)
Group
2008
2007
$’000
$’000
Capital expenditure not provided for in
the financial statements:
- Approved and contracted for
in respect of construction of vessels
562,318
314,803
- Approved but not contracted for in
respect of construction of vessels
53,871
160,433
616,189
475,236
As disclosed in Note 5(a), the Group will acquire the remaining 33.3% of Telemark
Limited over a period of 4 years at each anniversary date of the acquisition. Subject to
the achievement of profit targets, the total consideration expected for the acquisition of
the remaining shares will range from $1,819,000 to $5,457,000.
In addition, as disclosed in Note 9, the Group is committed to subscribe the preference
shares from the issuer of up to $39,376,000 over 18 months. As at 31 August 2008,
the Group can subscribe for preference shares up to $18,832,000 over the next twelve
months.
2008 135
annual report
40.
Contingent liabilities and commitments (cont’d)
(d)
Lease commitments – Group as lessee
The Group had various operating lease agreements for bareboat charter of vessels, leasing
of land, rental of machinery, office premises and shipyard workers’ accommodation.
Except for the land lease rate which may increase up to 15% every 5 years, until the end
of the lease term, the other lease arrangements do not contain any escalation clauses,
do not provide for contingent rents and do not contain restrictions on the Group’s
activities concerning dividends, additional debts and further leasing. Future minimum
lease payments payable under non-cancellable operating leases were as follows as of
31 August:
Group
2008
2007
$’000
$’000
33,783
20,205
Later than one year but not later than five years
127,763
72,326
Later than five years
53,024
35,366
214,570
127,897
These leases have remaining lease terms of between 1 to 24 (2007: 1 to 25) years.
(e)
Lease commitments – Group as lessor
The Group has entered into various operating lease agreements for time charter of
vessels. These non-cancellable leases have remaining lease terms of up to 5 years.
Future minimum lease payments receivable under non-cancellable operating leases as at
31 August are as follows:
Group
2008
2007
$’000
$’000
51,906
25,729
Later than one year but not later than five years
40,073
14,746
91,979
40,475
136 2008
annual report
41.
Financial risk management objectives and policies
The Group is exposed to financial risks including interest rate risk, credit risk, liquidity risk,
foreign currency risk and equity price risk. The Group’s principal financial instruments, other
than derivative financial instruments and investment securities, comprise bills payable, notes
payable, bank loans, finance leases and cash and fixed deposits. The main purpose of these
financial instruments is to finance the Group’s operations. The Group has various other financial
assets and liabilities such as trade receivables and trade payables, which arise directly from its
operations.
The Group uses derivative financial instruments such as foreign exchange contracts and interest
rate derivative contracts to hedge underlying risk exposures and the transactions are not
entered into for speculative purposes.
The Group’s overall risk policy is to minimise potential adverse effects on the Group’s financial
performance.
The management reviews and agrees policies for managing these risks and they are summarised
below:
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 interest rate exposure relates primarily to its long-term debt obligations. The Group’s
policy is to manage its interest cost using a mix of fixed and variable rate debt. To maintain this
mix in a cost efficient manner, the Group uses interest rate cap contracts that have the effect of
capping specific debt obligations of the Group. In negotiation for favourable pricing of these
contracts, the Group may sell interest rate floor contracts to the counter party.
Additional information relating to the Group’s interest rate exposure is also disclosed in the
notes relating to its borrowings, long term receivable from an associated company and fixed
deposits. The other financial instruments of the Group and the Company are not subject to
interest rate risks.
Sensitivity analysis of interest rate risk
It is estimated that a one percentage point increase/decrease in interest rate would increase/
decrease the Group’s profit before tax by approximately $580,000 (2007: $1,525,000). In
computing the effect of changes in interest rates, the effect of interest rate swaps has been
considered. The analysis is performed on the same basis for 2007.
2008 137
annual report
41.
Financial risk management objectives and policies (cont’d)
Credit risk
Credit risk is the potential financial loss resulting from the failure of a customer or a counterparty
to settle its financial and contractual obligations when due.
The carrying amounts of trade and other receivables, amounts due from associated companies
and joint venture companies, fixed deposits and cash and bank balances represent the Group’s
maximum exposure to credit risk. No other financial assets carry a significant exposure to
credit risk.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due
to increased credit risk exposure.
The Group has established credit limits for creditworthy customers. These debts are continually
monitored and therefore, the Group does not expect to incur material credit losses.
Fixed deposits and cash and bank balances are placed with reputable financial institutions.
Management believes that the financial institutions that hold the Group’s assets are financially
sound and accordingly, minimal credit risk exists with respect to these assets.
Credit risk concentration profile
The Group determine concentrations of credit risk by monitoring the country and industry
sector profile of its trade receivables on an on-going basis. The credit risk concentration profile
of the Group’s trade receivables at the balance sheet date is as follows:
Group
2008
2007
$’000
% of total
$’000
% of total
By country:
Singapore
34,152
36
5,453
9
Southeast Asia
24,737
26
23,141
40
Other countries
35,743
38
29,747
51
94,632
100
58,341
100
By industry sectors:
44,190
47
43,573
75
Marine Services
20,907
22
14,768
25
Energy Services
29,535
31
–
–
94,632
100
58,341
100
As at 31 August 2008, the Group had 10 (2007: 7) major customers that account for approximately
49% (2007: 76%) of the Group’s gross trade receivables.
138 2008
annual report
41.
Credit risk (cont’d)
Financial assets that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy
debtors with good payment record with the Group. Cash and cash equivalents are placed with
reputable banks.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in
Note 15.
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.
In the management of liquidity risk, the Group monitors and maintains a level of cash and
bank balances deemed adequate to finance the Group’s operations and mitigate the effects of
fluctuations in cash flows.
The Group’s funding is obtained from funds generated from operations, issuance of medium
term notes, bills payables, bank term loans and finance leases.
The table below analyses the Group’s and the Company’s financial liabilities into relevant
maturity groupings based on the remaining period at the balance sheet date to the contractual
maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Balances due within 12 months equal their carrying balances as the impact of discounting is not
expected to be significant.
Group
More than 1
1 year or
but not later
Over 5
less
than 5 years
years
Total
$’000
$’000
$’000
$’000
Year ended 31 August 2008
Trade payables
22,894
–
–
22,894
82,996
–
–
82,996
Premium payable
147
368
–
515
Bills payable
25,753
–
–
25,753
Lease obligations
65
199
22
286
Bank term loans
81,836
32,738
19,432
134,006
Notes payable
–
35,301
–
35,301
213,691
68,606
19,454
301,751
2008 139
annual report
41.
Group (cont’d)
More than 1
1 year or
but not later
Over 5
less
than 5 years
years
Total
$’000
$’000
$’000
$’000
Trade payables
15,424
–
–
15,424
82,411
–
–
82,411
Premium payable
143
515
–
658
Bills payable
27,395
–
–
27,395
Lease obligations
43
107
–
150
Bank term loans
44,650
92,646
81,717
219,013
170,066
93,268
81,717
345,051
Company
20,757
–
–
20,757
Bills payable
4,000
–
–
4,000
Bank term loans
55,770
–
–
55,770
Notes payable
–
35,301
–
35,301
80,527
35,301
–
115,828
5,981
–
–
5,981
Bills payable
13,778
–
–
13,778
19,759
–
–
19,759
Foreign currency risk
The Group has exposure to foreign exchange risk as a result of transactions denominated in
a currency other than the respective functional currencies, arising from charter hire income,
foreign crew’s salary expenses and term loans and interest expenses. It is the Group’s policy
to hedge these risks through foreign currency forward exchange contracts, if material. The
primary purpose of the Group’s foreign currency hedging activities is to protect against the
volatility associated with foreign currency liabilities created in the normal course of business.
In addition, the Group requires the use of foreign currency forward exchange contracts to
minimise the currency exposures on payments of major capital commitments. It is the Group’s
policy not to enter into forward contracts until a firm commitment is in place.
As at 31 August 2008, the Group had significant foreign currency exposure in Singapore dollars
(“SGD”), Euro Dollars (“EUR”), Norwegian Kroner (“NOK”) and Australian Dollars (“AUD”) in its
cash and bank balances, fixed deposits, trade and other receivables, trade and other payables,
term loans and bill payables as disclosed in the respective notes.
140 2008
annual report
41.
Foreign currency risk (cont’d)
Sensitivity analysis for foreign currency risk
A 10% strengthening/weakening of foreign currencies against USD and SGD at the balance
sheet would have increased/(decreased) profit before tax by the amounts as shown below.
The analysis assumes that all other variables, in particular interest rates, remain constant. The
analysis is performed on the same basis for 2007.
2008
2007
Profit before tax Profit before tax
$’000
$’000
Group
Foreign currencies against USD
- SGD
239
(359)
- EUR
(329)
(1)
- NOK
7,368
–
- AUD
3,932
–
Foreign currencies against SGD
- USD
–
(1,145)
- EUR
–
(348)
- NOK
–
(1,345)
- AUD
–
37
Company
Foreign currencies against USD
- SGD
158
–
- NOK
8,867
–
- AUD
962
–
Foreign currencies against SGD
- USD
–
(175)
- NOK
–
22
Equity price risk
Equity price risk is the risk that the fair value or future cash flows of the Group’s financial
instruments will fluctuate because of changes in market prices (other than interest or exchange
rates). The Group is exposed to equity price risk arising from its investments in quoted
investments. These equity instruments are classified as available-for-sale financial assets. The
Group does not have exposure to commodity price risk.
Sensitivity analysis for equity price risk
If prices for equity securities increase/decrease by 30% with all other variables held constant,
the equity of the Group will be $11,785,000 (2007: $19,910,000) higher/lower and the equity of
the Company will be $10,959,000 (2007: $19,149,000) higher/lower.
2008 141
annual report
41.
Derivative financial instruments and hedging activities
Derivative financial instruments included in the balance sheets as at 31 August are as follows:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Forward currency option contracts
(12)
(4)
(30)
–
Interest rate cap contracts
(254)
538
–
–
Interest rate floor contracts
(45)
(13)
–
–
(311)
521
(30)
–
Reclassification to disposal group
assets classified as held for sale (Note 13)
–
(251)
–
–
(311)
270
(30)
–
The table below sets out the notional principal amount of the outstanding interest rate
derivative contracts and the notional amount of net forward currency option contracts of the
Group and the Company as at 31 August:
Group
Company
2008
2007
2008
2007
$’000
$’000
$’000
$’000
Remaining notional principal of interest
rate derivative contracts
28,270 41,046
–
–
Notional amount of net foreign currency
option contracts (2008: AUD; 2007:AUD)
11,818
816
11,818
–
Cash flow hedges
As at 31 August 2008, the Group held 1 (2007: 2) interest rate derivative contract that has been
designated as hedge of the Group’s interest rate exposures in respect of one (2007: two) bank
term loan with a remaining combined notional value of US$5,238,000 (2007: US$18,702,000),
undertaken by the Group.
The interest rate derivative contract covers the respective cash flows of interest charges payable
to the banks from October 2004 to September 2010 (2007: October 2004 to July 2011).
The terms of these contracts have been negotiated to match the terms of the bank term
loans.
142 2008
annual report
42.
Fair value of financial instruments
Fair value is defined as the amount at which the financial instrument could be exchanged in
a current transaction between knowledgeable willing parties in an arm’s length transaction,
other than in a forced or liquidation sale. Fair values are obtained from quoted market prices,
discounted cash flow models and option pricing models where practical.
The following methods and assumptions are used to estimate the fair value of each class of
financial instruments:
(a)
Cash and bank balances, fixed deposits, trade and other receivables, trade and other
payables, non-trade balances from/(to) subsidiaries, associated companies and joint
ventures companies and bills payable
The carrying amounts of these balances approximate fair values due to their short-term
nature.
Other investments, term loans, lease obligations and notes payable
(b)
The carrying values of finance lease creditors approximate their fair values as the current
lending rates for similar types of lending arrangements are not materially different from
the rates obtained by the Group.
The carrying value of long term floating interest rate term loans approximate fair values
as these borrowings are of variable interest rate with repricing features.
Long term receivable from subsidiary/associated company
(c)
The carrying value of this balance approximates its fair value as this balance is of variable
interest rate with repricing features.
Available-for-sale investments and derivative financial instruments
(d)
Fair value has been determined by reference to published market prices or bankers’
quotes at the balance sheet date without factoring in transaction costs.
Non-current other receivable
(e)
The fair values are estimated by discounting expected future cash flows at market
incremental lending rate for similar types of lending, borrowing or leasing arrangements
at the balance sheet date.
2008 143
annual report
43.
Capital Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as
a going concern in order to provide returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of capital. The Group’s policy is
to ensure that gearing ratio does not exceed 250%. In order to maintain or adjust the capital
structure, the Group may issue new shares, buy back issued shares, obtain new borrowings or
reduce its borrowings.
The Group defines net debt as loans and borrowings, less cash and cash equivalents. Capital
includes equity attributable to equity holders of the Company and reserves.
Group
2008
2007
$’000
$’000
Loans and borrowings
195,346
246,558
Less: Cash and cash equivalents, net of cash pledged
(152,959)
(39,923)
Net debt
42,387
206,635
Equity attributable to equity holders of the Company
370,086
268,456
Gearing ratio (times)
0.1
0.8
44. Segment information
The Group’s primary format for reporting segment information is business segments, with each
segment representing a strategic business segment that offers different products and services.
In presenting information on the basis of geographical segments, segment revenue is based on
the billing location of customers.
Segment accounting policies are the same as the policies described in Note 2. The primary
format, business segments, is based on the Group’s management and internal reporting
structure.
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 mainly corporate
assets, liabilities and expenses.
Inter-segment pricing, if any, is determined on an arms’ length basis.
The Group is organised into three main operating divisions, namely Offshore Support Services,
Marine Services and Energy Services.
The Offshore Support Services division is mainly engaged in the owning, chartering and the
management of offshore support vessels in serving the oil and gas industry. The Marine Services
division is mainly engaged in the provision of management services, supply of marine gas and
oil, provision of engineering, design and fabrication works. The Energy Services division is
mainly engaged in providing drilling and well intervention related works.
144 2008
annual report
44.
Segment information (cont’d)
Business segments
Offshore
Financial year ended
Support
Marine
Energy
31 August 2008
Services
Services
Services
$’000
$’000
$’000
Revenue
Sales
176,502
64,159
29,215
Inter-segment sales
(1,530)
–
–
Sales to external customers
174,972
64,159
29,215
61,894
9,175
3,489
Share of profit of associated
companies
11,712
–
–
Share of profit of joint
venture companies
934
–
–
Financial income
Financial expenses
Tax Unallocated other operating income
Unallocated expenses
Assets
Segment assets
295,320
77,690
37,239
Unallocated assets
Total assets
Liabilities
Segment liabilities
118,520
65,524
20,087
Unallocated liabilities
Total liabilities
Other information
Capital expenditure
87,193
11,789
11
Unallocated capital expenditure
Total capital expenditure
Depreciation and amortisation
3,976
1,410
1
Unallocated depreciation
and amortisation
Total depreciation and amortisation
Group
$’000
269,876
(1,530)
268,346
74,558
11,712
934
6,828
(6,565)
(7,726)
137,461
(40,856)
176,346
410,249
301,680
711,929
204,131
137,366
341,497
98,993
378
99,371
5,387
205
5,592
2008 145
annual report
44.
Business segments (cont’d)
Offshore
Financial year ended
Support
Marine
Energy
31 August 2007
Services
Services
Services
$’000
$’000
$’000
Revenue
110,411
33,135
–
44,928
7,264
–
Share of profit of associated
companies
902
–
–
Share of profit of joint venture
companies
76
–
–
Financial income
Financial expenses
Tax Unallocated other operating income
Unallocated expenses
Assets
Segment assets
476,354
29,964
–
Unallocated assets
Total assets
Liabilities
Segment liabilities
320,750
19,829
–
Unallocated liabilities
Total liabilities
Other information
Capital expenditure
238,311
375
–
Unallocated capital expenditure
Total capital expenditure
Depreciation and amortisation
4,866
457
–
Unallocated depreciation
and amortisation
Total depreciation and amortisation
Group
$’000
143,546
52,192
902
76
1,034
(5,493)
(6,481)
46,902
(20,080)
69,052
506,318
131,406
637,724
340,579
19,090
359,669
238,686
4,423
243,109
5,323
812
6,135
146 2008
annual report
44.
Geographical segments
Group
2008
2007
$’000
$’000
Revenue(1)
Singapore
30,182
12,114
South East Asia(2)
135,665
123,064
Other countries(3)
102,499
8,368
268,346
143,546
Note:
(1)
Revenue is based on the location of customers.
(2)
South East Asia includes Thailand, Brunei, Malaysia, Philippines and Vietnam and excludes
Singapore.
(3)
Other countries include Australia, New Zealand, India, Korea, United Arab Emirates and the
United Kingdom.
Assets and capital expenditure are based on the location of the companies that own those
assets.
Group
2008
Assets
$’000
Singapore
589,328
South East Asia(4)
109,595
Other countries(5)
13,006
711,929
Group
2008
Capital expenditure
$’000
Singapore
89,405
South East Asia(4)
9,945
Other countries(5)
21
99,371
Note:
(4)
South East Asia includes Malaysia and Vietnam and excludes Singapore.
(5)
Other countries include United Kingdom.
2007
$’000
454,332
159,645
23,747
637,724
2007
$’000
240,480
2,629
–
243,109
2008 147
annual report
45.
Dividends paid and proposed
Group and Company
2008
2007
Ordinary dividends paid
$’000
$’000
Special tax exempt ordinary dividend for
financial year (“FY”) FY2008 of S$0.05
per ordinary share paid on 18 June 2008
21,298
–
Final tax exempt ordinary dividend for
FY2007 of S$0.0355 per ordinary share
paid on 16 January 2008
14,770
–
Final tax exempt ordinary dividend for
FY2006 of S$0.026 per ordinary share
paid on 16 January 2007
–
4,740
Special tax exempt ordinary dividend for FY2006 of
S$0.016 per ordinary share paid on 16 January 2007
–
2,917
36,068
7,657
46.
Subsequent events
(a) Liftboat – Titan 1
The Titan 1 is owned by Casadilla Group Pte Ltd, a joint venture company between the
Company and KS Energy Services Limited (“KS Energy”).
Titan 1 was lost at sea during the night from October 26 to 27, 2008, while transported
by the semi-submersible heavy lift vessel, ‘M/V Ancora’.
The Titan 1 was in the process of being mobilized to the North Sea to execute a contract
for a major Operator for installation, servicing and maintenance work of wind turbines,
offshore Denmark and the UK.
No injuries or casualties have been reported to any of the crew.
There will be no material financial impact on the Group as the Titan 1 was fully insured
by KS Energy’s insurance group.
Change of name of subsidiary
(b)
On 18 November 2008, one of the subsidiary of the Group, Lewek Roller Shipping Pte Ltd,
has been renamed to LMC Asia Pacific Pte Ltd.
47.
Authorisation of financial statements
The financial statements for the financial year ended 31 August 2008 were authorised for issue
in accordance with a resolution of the directors on 19 November 2008.
148 2008
annual report
STATISTICS OF SHAREHOLDINGS AS AT
19 NOVEMBER 2008
DISTRIBUTION OF SHAREHOLDINGS
Size of shareholdings
1 - 999
1,000 - 10,000
10,001 - 1,000,000
1,000,001 AND ABOVE
No. of shareholders
55
4,359
1,723
29
%
No. of Shares
%
0.89
70.70
27.94
0.47
23,603
22,102,125
75,858,431
481,964,831
0.00
3.81
13.08
83.11
TOTAL
6,166
100.00
579,948,990
100.00
TWENTY LARGEST SHAREHOLDERS
NO. NAME
NO. OF SHARES
%
1 CITIBANK NOMINEES SINGAPORE PTE LTD 2HSBC (SINGAPORE) NOMINEES PTE LTD
3UNITED OVERSEAS BANK NOMINEES PTE LTD
4DBS NOMINEES PTE LTD 5LEE CHYE TEK LIONEL 6WATERWORTH PTE LTD
7ABN AMRO NOMINEES SINGAPORE PTE LTD 8MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD
9RAFFLES NOMINEES PTE LTD
10JIT SUN INVESTMENTS PTE LTD 11LEE KIAN SOO
12HONG LEONG FINANCE NOMINEES PTE LTD
13 MERRILL LYNCH (SINGAPORE) PTE LTD 14 DBSN SERVICES PTE LTD
15SUNFIELD PTE LTD
16UOB KAY HIAN PTE LTD
17BNP PARIBAS NOMINEES SINGAPORE PTE LTD 18DBS VICKERS SECURITIES (S) PTE LTD 19KS ENERGY SERVICES LIMITED 20HL BANK NOMINEES (S) PTE LTD 123,752,800 66,755,694 55,558,960 43,829,099 36,142,000
24,500,000 17,483,800 16,049,000 15,106,600 14,065,920 12,524,000 9,809,040
5,699,040 5,044,400 5,032,000 4,216,200 3,557,000 2,708,200 2,554,000 2,448,000 21.34
11.51
9.58
7.56
6.23
4.22
3.01
2.77
2.60
2.43
2.16
1.69
0.98
0.87
0.87
0.73
0.61
0.47
0.44
0.42
TOTAL
466,835,753
80.49
2008 149
annual report
STATISTICS OF SHAREHOLDINGS AS AT
19 NOVEMBER 2008
SUBSTANTIAL SHAREHOLDERS AS AT 19 NOVEMBER 2008
Direct Interest
Name of Substantial Shareholder
No. of Shares %
Lee Kian Soo(1,2)
Lee Chye Tek Lionel(1,2)
Jit Sun Investments Pte Ltd
Goh Gaik Choo(2)
UBS AG
Moon Capital Management LP
JWM Capital LLC
John W. Moon
Fortis Obam N.V.
77,664,000(3)
83,542,000(4)
36,465,920(5)
10,992,000(6) 983,000 - - - 31,000,000 13.39 14.41 6.29 1.89 0.17 -
-
-
5.35 Deemed Interest
No. of Shares
%
47,457,920
36,465,920
- 114,129,920 41,987,200
41,254,000
41,254,000
41,254,000
- 8.18
6.29
19.68
7.24
7.11
7.11
7.11
-
(1) Mr Lee Kian Soo and Lee Chye Tek Lionel are deemed to be interested in the shares held by
Jit Sun Investments Pte Ltd by virtue of their shareholdings of 66.7% and 33.3% respectively, in
Jit Sun Investments Pte Ltd. (2) Mr Lee Kian Soo is the husband of Ms Goh Gaik Choo. They are deemed interested in each
other’s shareholding in the Company. Mr Lee Chye Tek Lionel is the son of Mr Lee Kian Soo and
Ms Goh Gaik Choo.
(3) The shares are being held under the name of the following nominees:
Citibank Nominees Singapore Pte Ltd
United Overseas Bank Nominees Pte Ltd
DBS Nominees Pte Ltd Hong Leong Finance Nominees Pte Ltd
No. of Shares 28,000,000 17,050,000 14,880,000 5,210,000 (4) The shares are being held under the name of the following nominees:
United Overseas Bank Nominees Pte Ltd DBS Nominees Pte Ltd
Citibank Nominees Singapore Pte Ltd
Hong Leong Finance Nominees Pte Ltd
No. of Shares 20,950,000 14,880,000 7,200,000 4,370,000 (5) The shares are being held under the name of the following nominees:
United Overseas Bank Nominees Pte Ltd HSBC (Singapore) Nominees Pte Ltd
Merill Lynch (Singapore) Pte Ltd
HL Bank Nominees (S) Pte Ltd
No. of Shares 10,000,000 6,000,000 4,000,000 2,400,000
(6) The shares are being held under the name of Citibank Nominees Singapore Pte Ltd.
Shareholding by the Public
Based on information available to the Company as at 19 November 2008, approximately 64.02% of
the issued ordinary shares of the Company is held by the public, and therefore, Rule 723 of the Listing
Manual issued by the SGX-ST is complied with.
150 2008
annual report
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Ezra Holdings Limited (“the Company”)
will be held at 15 Hoe Chiang Road #19-01/02 Tower Fifteen Singapore 089316 on Tuesday,
23 December 2008 at 10 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
financial year ended 31 August 2008 together with the Auditors’ Report thereon.
(Resolution 1)
2.
To re-elect the following Directors retiring pursuant to Articles 106 and 90 of the Company’s
Articles of Association: -
Mr Lee Kian Soo
(Retiring under Article 106) (Resolution 2)
Capt Adarash Kumar A/L Chranji Lal Amarnath (Retiring under Article 106) (Resolution 3)
Ms Lee Cheow Ming Doris Damaris
Mr Soon Hong Teck
4.
Mr Soon Hong Teck will, upon re-election as Director of the Company, remain as Chairman of
the Audit Committee and member of the Remuneration Committee as well as the Nominating
Committee and will be considered independent for the purposes of Rule 704(8) of the Listing
Manual of the Singapore Exchange Securities Trading Limited.
To approve the payment of Directors’ fees of S$336,000 for the financial year ended 31 August
2008.
(Resolution 6)
5.
To re-appoint Ernst & Young as the Company’s Auditors and to authorise the Directors to fix
their remuneration.
(Resolution 7)
6.
To transact any other ordinary business which may properly be transacted at an Annual General
Meeting.
2008 151
annual report
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or
without any modifications:
7.
Authority to allot and issue shares up to 50 per centum (50%) of issued share capital
That pursuant to Section 161 of the Companies Act, Cap. 50 and the provisions (including Rule
806) of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors
be empowered to allot and issue shares and convertible securities in the capital of the Company
at any time and upon such terms and conditions and for such purposes as the Directors may,
in their absolute discretion, deem fit provided that the aggregate number of shares (including
shares to be issued in accordance with the terms of convertible securities issued, made or
granted pursuant to this Resolution) to be allotted and issued pursuant to this Resolution shall
not exceed fifty per centum (50%) of the issued share capital of the Company at the time
of the passing of this Resolution, of which the aggregate number of shares and convertible
securities to be issued other than on a pro rata basis to all shareholders of the Company shall
not exceed twenty per centum (20%) of the issued share capital of the Company and that such
authority shall, unless revoked or varied by the Company in general meeting, continue in force
(i) until the conclusion of the Company’s next Annual General Meeting 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 accordance with the terms of convertible
securities issued, made or granted pursuant to this Resolution, until the issuance of such shares
in accordance with the terms of such convertible securities.
(Resolution 8)
8.
Authority to allot and issue shares under the Ezra Employees’ Share Option Scheme
That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be authorised and
empowered to allot and issue shares in the capital of the Company to all the holders of options
granted by the Company, whether granted during the subsistence of this authority or otherwise,
under the Ezra Employees’ Share Option Scheme (“the Scheme”) upon the exercise of such
options and in accordance with the terms and conditions of the Scheme, provided always that
the aggregate number of additional ordinary shares to be allotted and issued pursuant to the
Scheme shall not exceed fifteen per centum (15%) of the issued share capital of the Company
from time to time. (Resolution 9)
By Order of the Board
David Tan Yew Beng
Company Secretary
Singapore, 5 December 2008
152 2008
annual report
Notes:
1.
2.
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.
The instrument appointing a proxy must be deposited at the office of the Company’s Secretary,
Mr David Tan Yew Beng, at 15 Hoe Chiang Road, #15-01 Tower Fifteen, Singapore 089316 not
less than 48 hours before the time appointed for holding the Meeting.
IMPORTANT:
1. For investors who have used their CPF monies to buy
annual report
shares in the capital of Ezra Holdings Limited, this Report
is forwarded to them at the request of their CPF Approved
Nominees and is sent solely FOR INFORMATION ONLY.
EZRA HOLDINGS LIMITED
Co. Reg. No. 199901411N
(Incorporated In The Republic of Singapore with limited liability)
2008 153
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.
PROXY FORM
(Please see notes overleaf before completing this Form)
I/We,
Of
being a member/members of Ezra Holdings Limited (the “Company”), hereby appoint:
Name
NRIC/Passport No.
Address
Proportion of Shareholdings
No. of Shares
%
and/or (delete as appropriate)
Name
NRIC/Passport No.
Address
Proportion of Shareholdings
No. of Shares
%
or failing him/her, 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 Tuesday,
23 December 2008 at 10 a.m. at 15 Hoe Chiang Road #19-01/02 Tower Fifteen Singapore 089316 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 [4] within the box provided.)
No.
1
2
3 4
5
6
7
8
9
Resolutions relating to:
For
Directors’ Report and Audited Accounts for the financial year
ended 31 August 2008.
Re-election of Mr Lee Kian Soo as Director
Re-election of Capt Adarash Kumar A/L Chranji Lal Amarnath as Director Re-election of Ms Lee Cheow Ming Doris Damaris as Director
Re-election of Mr Soon Hong Teck as Director
Approval of Directors’ fees amounting to S$336,000
Re-appointment of Ernst & Young as Auditors
Authority to allot and issue new shares
Authority to allot and issue new shares under the Ezra Holdings
Employees’ Share Option Scheme
Against
Total number Dated this
day of
2008
of Shares in: No. of Shares
(a) CDP Register
(b) Register of Members
Signature of Shareholder(s)
or, Common Seal of Corporate Shareholder
154 2008
annual report
Notes :
1.
Please insert the total number of Shares held by you. If you have Shares entered against your
name in the Depository Register, 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 may appoint not more than two proxies to attend and vote at the
same meeting of the Company. A proxy need not be a member of the Company.
3.
If a member of the Company shall nominate two proxies, then the member shall specify the
proportion of his shares to be represented by each such proxy, failing which the first named
proxy shall be treated as representing one hundred percent (100%) of the shareholding and
any second named proxy as an alternate to the first named.
4.
An instrument appointing a proxy or proxies and, where the instrument of proxy is signed on
behalf of the appointer (which shall include a Depositor) by an attorney, the power of attorney
or other authority, if any, under which it is signed, or a notarially certified copy of that power
of authority (failing previous registration of the Company), shall be deposited at the office of
the Company Secretary, Mr David Tan Yew Beng, at 15 Hoe Chiang Road, #15-01, Tower Fifteen,
Singapore 089316 not less than forty-eight (48) hours before the time appointed for the time
of holding the meeting at which it is to be used, failing which the instrument may be treated
as invalid.
5.
An instrument appointing a proxy or proxies, in the case of an individual, shall be signed by the
appointor or of his attorney and in the case of a corporation, shall be either given under common
seal or signed on its behalf by an attorney or a duly authorised officer of the corporation.
6.
Any corporation which is a member of the Company may by resolution of its directors or other
governing body authorise such person as it thinks fit to act as its representative at any meeting
of the Company or of any class of members of the Company, and the person so authorised shall
be entitled to exercise the same powers on behalf of such corporation as the corporation could
exercise if it were an individual member of the Company.
7.
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 shall be entitled to reject an instrument of proxy lodged by
any Depositor whose name does not appear on the Depository Register as at 48 hours before
the meeting at which the proxy is to act as certified by The Central Depository (Pte) Limited to
the Company.
2008 155
annual report
THIS PAGE IS INTENTIONALLY LEFT BLANK
156 2008
annual report
THIS PAGE IS INTENTIONALLY LEFT BLANK
15 Hoe Chiang Road #15-01 Tower Fifteen Singapore 089316 Tel: +65 6349 8535 Fax: +65 6345 0139
Email: [email protected] Website: www.ezraholdings.com

OFFSHORE SUPPORT AT ANY wATER DEPTH - Ezra

Transcription

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