annual report - ASL Marine Holdings Ltd

2010report

annual

2

Content01 CorporateProfile

02 BusinessOverview

04 FinancialHighlights

06 FiveYearFinancialSummary

07 Founder’sMessage

08 Chairman’sStatement

10 OperationsandFinancialReview

14 BoardofDirectors

17 SeniorManagement

18 GroupStructure

19 CorporateGovernanceReport

30 RiskManagementStrategies

31 FinancialStatements

121 AnalysisofShareholdings

123 NoticeofAnnualGeneralMeeting

ProxyForm

CorporateInformation

01ASL Marine Holdings Ltd. Annual Report 2010

Corporate Profile

The Group started operations as a trader of scrapped steel material in 1974, and subsequently rode on the 1980s construction sector boom by undertaking building construction works.

Guided by its vision to be a leading player in the marine sector, the Group undertook ship-breaking activities in 1986 before venturing into shipbuilding and shiprepair. It successfully constructed its first barge and tug in 1988 and 1990 respectively. In 1989, the Group extended its vertically integrated capabilities by providing charter of tugs and barges and other marine logistics services.

Headquartered and listed in Singapore on 17 March 2003, the Group currently owns and operates three shipyards in Singapore, Indonesia (Batam) and China (Guangdong) providing a comprehensive range of shipbuilding and shiprepair and conversion services spanning myriad sectors and industries. ASL Marine specialises in building Offshore Support Vessels, tugs, barges work vessels and tankers. The Group also undertakes repairs and conversions of all types of vessels.

During the year, the Group has expanded its docking facilities at Batam by lengthening its graving dry dock from 260 to 340 metres and adding two new medium-sized dry docks of 60,000 dwt and 20,000 dwt each. The newly lengthened 300,000 dwt graving dry dock is capable of accommodating larger vessels such as Capesize Bulk Carriers, Long Range Product Tankers, Container Vessels,


Heavy-lift Ships, Floating Storage and Offloading (“FSO”) and Floating Production, Storage and Offloading (“FPSO”) vessel. The two newly built medium-sized dry docks have further increased the Group’s capacity for repair of medium-sized vessels such as Panamax and Handymax Bulk Carriers and Medium Range Products Tankers.

Equipped with a young fleet of 177 vessels consisting of Towing Tugs, Anchor Handling Tugs, Barges and other vessels, the Group has carved a niche in providing shipchartering services to various industries including offshore oil and gas, marine infrastructure, dredging, land reclamation & marine construction works and cargoes transportation.

ASL Marine Holdings Ltd. is a vertically-integrated marine services group

principally engaged in shipbuilding, shiprepair and conversion,

shipchartering and other marine related services, catering to customers

mainly from Asia Pacific, South Asia, the Middle East, Europe and Australia.

02

Shiprepair and Conversion

The Group provides a comprehensive range of repair and conversion services including retro-fittings, life-extensions and repair of various types of vessels such as:

• Tanker, Container Vessel, Bulk Carrier

• Offshore Support Vessel, Dredging Vessel, Pipe Laying Vessel

• Jack-up Rig, Semi-submersible Rig

• FSO and FPSO

The Group’s Batam yard is equipped with the following dry docking facilities:

• A graving dry dock measuring 340 x 60 metres to accommodate larger vessels up to 300,000 dwt such as Capesize bulker, FSO and FPSO

• Two newly built medium-sized dry docks of 230 metres and 180 metres length each to accommodate medium-sized vessels up to 60,000 dwt and 20,000 dwt respectively such as Panamax, Handymax and medium range tankers

Shipbuilding

The Group operates three shipyards in Singapore, Batam, Indonesia and Guangdong, China.

The Group has established a track record of building specialised niche vessels for customers from Asia, Europe, Middle East, America, India and Australia such as:

• Offshore Support Vessels including Heavy-Lift cum Pipelay Vessel, Subsea Operation Vessel, Anchor Handling Towing Supply Vessel, Platform Supply Vessel, Offshore Maintenance/ Accommodation Vessel, Rescue and Standby Vessel

• Cutter Suction Dredger and Water Injection Dredger

• Accommodation Barge, Pipe Laying Barge and Work Barge

• Commercial Vessels including Chemical Tanker (IMOII/III), Bunkering Tanker, Product Tanker

Business Overview

02


Shipchartering

The Group owns a young fleet of 177 vessels consisting mainly Towing Tugs, Barges, Anchor Handling Tugs and other vessels.

The Group charters its fleet to customers from diverse industries including:

• Offshore oil & gas

• Marine infrastructure

• Dredging, land reclamation & marine construction works

• Marine transportation of cargoes such as coal, aggregates and heavy equipment

The Group’s vessels are mainly deployed by customers in Singapore, Indonesia, Australia and other South East Asia countries.

Yard Facilities

SingaporeCapitalising on Singapore’s strengths in infra- channels, the Group’s Singapore yard also acts as a headquarter to provide technical, engineering, logistics and procurement supports to the Batam yard with respect to the sourcing of raw material, equipment and parts for its operations.

Batam, IndonesiaThe Group’s Batam yard, with a naturally sheltered deep waterfront, has a land size of over thirty hectares. The yard is located in a free trade zone at Batam with industrial areas designated specifically for shipyards and developed infra-structure such as roads, telecommunications, utilities and supporting services. Equipped with a 300,000 dwt graving dry dock and two newly built medium-sized graving dry docks of 60,000 dwt and 20,000 dwt each, the Batam yard is capable of repairing vessels up to Capesize.

Guangdong, ChinaThis is a eight-hectare yard in Guangdong engaging in the building of smaller and less sophisticated vessels. It is owned by the Group’s 60% held subsidiary Jiang Men Hongda Shipyard Ltd.


FinancialHighlights

Net Assets ($ million)

Revenue ($ million)

119.5

152.9

236.5

288.6

315.3

2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

197.7

318.4

400.4

435.4

468.4

2006

2007

2008

2009

2010

47.91

59.68

78.60

96.32

105.25

Net Assets Per Share (cents)

Basic Earnings Per Share (cents)

10.02

16.01

21.09

23.68

12.45

2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

23.1

40.2

60.3

71.1

37.3

Net Profit ($ million)

Number of Vessels

2006

2007

2008

2009

2010

97 160

115 461

118 467

111 4

73 53

04

62

Tugs and Other Vessels

Barges

AHT

Revenue by Operations ($ million)

Gross Profit by Operations ($ million)

2009 2010

20102009

Shipbuilding 269.9 62.0% 306.3 65.4%

Shiprepair and conversion 69.3 15.9% 89.1 19.0%

Shipchartering and rental 96.2 22.1% 73.0 15.6%

Shipbuilding 26.3 33.7% 25.6 42.1%

Shiprepair and conversion 21.5 27.6% 18.1 29.8%

Shipchartering and rental 30.2 38.7% 17.1 28.1%


Five Year Financial Summary

FY2010 FY2009 FY2008 FY2007 FY2006

Profit and Loss Accounts ($’000)

Revenue 468,372 435,442 400,440 318,402 197,658

Earnings before interests, tax, depreciation and amortisation 87,307 115,622 93,525 63,712 39,873

Profit before tax 48,070 83,949 69,857 45,133 26,385

Profit attributable to owners of the parent 37,286 71,070 60,296 40,248 23,066

Balance Sheet ($’000)

Total assets 738,612 702,689 608,805 444,172 315,151

Total liabilities 414,495 407,646 368,609 287,427 193,464

Total equity 324,117 295,043 240,196 156,745 121,687

Property, plant & equipment 437,660 397,305 255,458 216,391 161,416

Bank balances, deposits and cash 90,090 96,012 102,995 47,668 28,629

Borrowings (Net of cash) 119,173 97,300 33,636 77,820 49,084

Per Share (cents)

Basic earnings per share 12.45 23.68 21.09 16.01 10.02

Diluted earnings per share 12.44 23.68 20.41 14.66 9.71

Net assets per share 105.25 96.32 78.60 59.68 47.91

Dividend per share 3.00 4.00 4.00 2.80 2.20

Financial Ratios

Net profit margin (%) 8.0 16.3 15.1 12.6 11.7

Return on shareholders’ fund (%) 11.8 24.6 25.5 26.3 19.3

Return on total assets (%) 5.0 10.1 9.9 9.1 7.3

Debt equity ratio (times) 0.65 0.66 0.57 0.80 0.64

Net debt equity ratio (times) 0.37 0.33 0.14 0.50 0.40

06

Founder’s Message

Dear Shareholders,

The marine industry continued to be affected by sluggish recovery of the global economy. The Group posted a 7.6% increase in revenue to $468.4 million for FY2010, it however recorded a lower earnings of $37.3 million mainly due to pricing pressures, weak market demand as well as lower other operating income.

The Group has undertaken major enhancements at its Batam yard and now we have three dry docks ready and operational. The expanded docking facilities have further enhanced the Group’s competitive edge in terms of capability and capacity.

I would like to take this opportunity to sincerely thank you for your continuous support to the Group in a trying year. I would also like to thank all our business partners, customers, bankers and employees for your continued support and belief in us.

Ang Sin LiuFounder and Advisor

“The Group has undertaken major enhancements at its Batam yard and now we have three dry docks ready and operational.”


Chairman’s Statement

“The Group is well positioned to leverage on its expanded docking facilities at Batam yard to enlarge its customer base for future growth.”

08

Dear Shareholders,

Through the entire FY2010, the operating environment of the marine industry remained challenged by the global economic conditions pertained to the Eurozone debt crisis and uncertain pace of global economy recovery.

For FY2010, the Group recorded a 7.6% growth in revenue to $468.4 million due to higher revenue contributions from the shipbuilding, shiprepair and conversion operations despite lower revenue from shipchartering operations. The Group’s gross profit however declined by 22.2% to $60.8 million in FY2010 with lower gross profits recorded by all three segments of shipbuilding, shiprepair and conversion and shipchartering. Other operating income declined by $20.7 million due to lower gain on vessels disposal and absence of one-off gain of $12.2 million on disposal of a jointly-controlled entity in FY2009. Net profit attributable to equity holders declined from $71.1 million in FY2009 to $37.3 million in FY2010.

The Group recorded a 11.5% return on equity for FY2010. The net gearing ratio for the Group increased marginally from 0.34 as at 30 June 2009 to 0.38 as at 30 June 2010.

Based on weighted average number of shares, the Group’s fully diluted earnings per share reduced from 23.68 cents in FY2009 to 12.44 cents in FY2010 while the net assets per share increased from 96.32 cents in FY2009 to 105.25 cents in FY2010.

Shipbuilding operations continued to be the largest revenue contributor to the Group; constituted approxi-mately 65% of the total revenue. Revenue from shipbuilding operations increased by 13.5% to $306.3 million in FY2010 mainly due to progressive recognition of larger projects undertaken. During the financial year, the Group completed a wide variety of vessel types including Anchor Handling Towing Supply vessels, a heavy lift and pipe-lay vessel and a subsea operation vessel. New shipbuilding orders secured since the beginning of 2010 include a $38.5 million contract for a diving support vessel with fire fighting, standby and rescue capabilities and $55 million worth of contracts for 30 vessels including 2 units Azimuth Stern Drive tugs, 1 pipe-lay barge and 27 cargo barges.

Following the Group’s focus on the less cyclical shiprepair segment, revenue from the shiprepair and conversion operations increased significantly by 28.4% to $89.1 million in FY2010. During the financial year, the Group undertook increased number of larger shiprepair and conversion projects including fabrication and outfitting works to a Heavy Transport Vessel, conversion of a tanker into floating storage and offloading unit as well as conversion of a container feeder ship to Offshore Support & Maintenance Vessel.

For the shipchartering operations, the Group’s fleet size has been rationised from 189 vessels as at 30 June 2009 to 177 vessels as at 30 June 2010, comprising towing tugs, Anchor Handling Tugs, barges and other vessels. Revenue from shipchartering operations declined by 24.1% to $73.0 million in FY2010 mainly due to weak


The Group’s shipchartering operations have an outstanding order book of approximately $6 million as at 30 June 2010 with respect to long term chartering contracts. To continually enhance and renew our shipchartering fleet to better meet customers’ needs, the Group is in the process of building 12 vessels comprising of towing tugs, barges, ROV support vessel, Anchor Handling Towing/ Supply vessel and Anchor Handling Tugs worth approximately $84 million for adding onto its current fleet of 177 vessels as at 30 June 2010. The Group expects the demand for shipchartering be supported by domestic land reclamation and construction projects such as the port expansion and construction of new international cruise terminal, transportation of aggregates and coal in the South East Asian region, offshore oil and gas activities, marine infrastructure, harbour and terminal services in Singapore, South East Asia and Australia.

A Note of Thanks

In appreciation of the support shown by our shareholders and to reward them, the Board has proposed a final one-tier tax-exempt dividend of 3 cents per ordinary share for FY2010. This represents a payout of approximately 24% of the Group’s FY2010 earnings. If approved at our upcoming Annual General Meeting, the dividends will be paid on 10 November 2010.

To our shareholders, business partners and associates; who have played an important role in the Group’s progress, and continue to do so, I would like to extend my heartfelt gratitude and appreciation. At the same time, I also wish to thank the board of directors for their guidance and direction, the management and staff for their efforts and commitment towards ASL Marine.

Ang Kok TianChairman and Managing Director

market demand during the year which affected the vessel utilisation rates and charter pricing.

The Group invested $89 million capital expenditure in FY2010 which included $12 million for acquisition of vessels, $8 million for purchase of plant and machinery and $69 million for assets under construction including yard infrastructure development and construction of new vessels.

With respect to the expansion works at Batam yard started since 2008, during the year the Group has completed the lengthening of the graving dry dock from 260 to 340 metres as well as the building of two new medium-sized dry docks of 60,000 dwt and 20,000 dwt each. With an enlarged capacity of 300,000 dwt, the graving dock is now capable of accommodating larger vessels such as Capesize Bulk Carrier, Long Range Product Tankers, Container Vessels, Heavy-lift ship, Floating Storage and Offloading (“FSO”) and Floating Production, Storage and Offloading (“FPSO”). The two newly completed medium sized docks would cater more towards Panamax and Handymax Bulk Carriers and Medium Range Product Tankers, Feeder Container Vessel and Offshore Support Vessel.

Outlook

The operating environment of the marine industry continued to be challenging. Demand for new ship-building is expected to remain subdued due to uncertainty in global economic outlook and over-supply in some important sub-sectors of the shipping industry.

The Group’s total outstanding shipbuilding order book from external customers stood at approximately $327 million, comprising of 47 vessels (4 Offshore Support vessels, 12 tugs, 2 dredgers and 29 barges and other vessels) with progressive deliveries scheduled up to the first quarter of 2012.

Despite pricing pressure, the Group remains positive of the long term outlook of the shiprepair segment. The Group is well positioned to leverage on its expanded docking facilities at Batam yard to enlarge its customer base for future growth.


Operations and Financial Review

Revenue and Profitability

For the 12 months ended 30 June 2010 (“FY2010”), the Group’s revenue increased by 7.6% to $468.4 million. This was primarily due to higher revenue from shipbuilding and shiprepair and conversion operations despite lower revenue from shipchartering operations.

Impacted by the decrease in earnings recorded by all three segments, the Group’s gross profit was $17.3 million lower at $60.8 million for FY2010, representing a gross profit margin of 13.0% as compared to 17.9% in FY2009.

Other operating income declined by $20.7 million to $9.3 million in FY2010. Other operating income in FY2009 was higher mainly because it included a one-off gain of $12.2 million on disposal of a jointly-controlled entity, ASL Energy Pte. Ltd. and foreign exchange gain of $0.5 million. Other operating income in FY2010 included a gain on disposal of plant and equipment of $4.2 million from the sale of 20 vessels (FY2009: $7.3 million for 24 vessels) to third parties and a gain from disposal of vessels held for sale of $2.5 million (FY2009: $7.8 million).

Administrative expenses decreased by 14.7% to $9.8 million in FY2010 as a result of lower manpower costs. Other operating expenses decreased by 55.0% to $3.4 million in FY2010, which comprised a net provision for doubtful receivables of $0.6 million (FY2009: $3.6 million), impairment loss on vessels of $2.3 million (FY2009: $4.0 million); and foreign exchange loss of $0.5 million (FY2009: net foreign exchange gain of $0.5 million shown under other operating income).

Finance costs of $8.1 million were $1.6 million higher due to increased borrowings including bonds issuance during the year under its $300 million Multi-currency Debt Issuance Programme. The Group mainly hedges against interest rate fluctuations on its long-term borrowings by way of “plain vanilla” interest rate swaps.

Shipbuilding

Shipbuilding revenue increased by 13.5% to $306.3 million in FY2010 mainly due to the progressive recognition of larger projects undertaken including a self-propelled cutter suction dredger, a heavy lift and pipe-lay vessel and a subsea operation vessel. Shipbuilding operations recorded a lower gross profit margin of 8.4% in FY2010 (FY2009: 9.8%) mainly due to technical complexities encountered for certain projects completed during the year.

Including the recently secured new shipbuilding orders of approximately $55 million for 30 vessels, the Group had a total outstanding shipbuilding order book from external customers of approximately $327 million for 47 vessels with progressive deliveries up to first quarter of 2012. The order book comprised Anchor Handling Towing Supply vessels, tugs, self-propelled cutter suction dredgers, barges and other vessels. Barring any unforeseen circumstances, approximately 78% of the order book is expected to be recognised in the financial year ending 30 June 2011.

12

Shiprepair and Conversion

Shiprepair and conversion revenue grew significantly by 28.4% to $89.1 million in FY2010. The increase was mainly attributed to increased number of larger shiprepair and conversion jobs undertaken including fabrication and outfitting works to a Heavy Transport Vessel, conversion of a tanker into floating storage and offloading unit as well as conversion of a container feeder ship to Offshore Support & Maintenance Vessel. As a result of pricing pressure and change in business mix, shiprepair and conversion operations recorded a lower gross profit margin of 20.3% (FY2009: 31.0%). The Group undertook more large ship conversion jobs which generally has lower profit margins.

During the year, the Group has expanded its docking facilities at Batam yard by lengthening its graving dry dock from 260 to 340 metres (300,000 dwt) and adding two medium-sized dry docks of 60,000 dwt and 20,000 dwt each.

Shipchartering

Shipchartering revenue declined by 24.1% to $73.0 million due to lower vessel utilisation rates and reduced charter pricing impacted by weaker market demand during the financial year. As at 30 June 2010, the Group had a fleet size of 177 vessels as compared to 189 vessels as at 30 June 2009, comprising towing tugs, Anchor Handling Tugs, barges and other vessels. The segment reported a lower gross profit margin of 23.4% (FY2009: 31.4%) mainly due to lower vessel utilisation rate and continued pricing pressure.

The Group’s shipchartering revenue consists of mainly short-term and ad-hoc contracts. For the year under review, approximately and only 21% of shipchartering revenue was contributed by long term chartering contracts with duration of more than one year. As at 30 June 2010, the Group had an outstanding order book of approximately $6 million with respect to long term shipchartering contracts.

Besides maximising deployment of its fleet, the Group remains strategically committed to enhancing and renewing its fleet to better meet customers’ needs. Despite utilisation pressures, the Group’s shipchartering operations have a total outstanding delivery order of 12 vessels worth approximately $84 million as at the end of FY2010 comprising towing tugs, barges, ROV support vessel, Anchor Handling Towing/ Supply vessel and Anchor Handling Tugs. These vessels are being built internally by the Group.

Share of Results of Jointly-Controlled Entity and Associate

The Group’s share of results of jointly-controlled entity and associate comprised of the share of $0.2 million loss (FY2009: $1.9 million share of profit) incurred by HKR-ASL Joint Venture Limited and share of $0.5 million loss (FY2009: $0.4 million) incurred by associated companies, Fastcoat Industries Pte. Ltd. and its subsidiary. HKR-ASL Joint Venture Limited has been dormant since the completion of a shipchartering project in FY2009.


Interest-bearing Loans and Borrowings

The Group’s interest–bearing loans and borrowings are set out as follows:

The Group’s total interest-bearing loans and borrowings increased by $16.0 million to $209.3 million as at 30 June 2010. The increase was mainly due to bonds issuance of $65 million and bank loans of $48.8 million partially offset by redemption and repayment made of $90.0 million during the year.

The bonds issuance of $65 million comprised of $44 million Fixed Rate Notes and $21 million Floating Rate Notes issued during the year under the Company’s $300 million Multi-currency Debt Issuance Programme established in May 2008. The Company had issued an aggregate of $115 million notes as at 30 June 2010.

30 June 2010 $’000

30 June 2009 $’000

Due within one year:

Trust receipts (Unsecured) 25,033 32,944

Obligations under finance leases (Secured) 2,954 1,510

Short term bank loans (Secured) 1,030 1,694

Short term bank loans (Unsecured) 1,000 4,000

Long term bank loans (Secured) 35,086 30,363

Notes issued under Multicurrency Debt Issuance Programme (Unsecured) 11,000 39,000

76,103 109,511

Due after one year:

Obligations under finance leases (Secured) 5,781 3,807

Long term bank loans (Secured) 62,379 68,994

Notes issued under Multicurrency Debt Issuance Programme (Unsecured) 65,000 11,000

133,160 83,801

Interest-bearing loans and borrowings 209,263 193,312

Gearing ratio 0.66 0.67

Gearing ratio (Net of cash) 0.38 0.34

Operating Cash Flows

The Group’s net cash inflow from operating activities of $63.9 million in FY2010 was $7.0 million higher as compared to FY2009. The increase was mainly attributed to higher progress billings receipts on shipbuilding projects partially offset by lower receipts on trade receivables, higher payments for inventories and trade payables.

The Group funded its working capital, capital expenditure and repayment of borrowings through retained earnings, proceeds from borrowings including bonds issuance, bank loans and trust receipts as well as proceeds from disposal of plant and equipment and assets held for sale.

Board of Directors

01 03

02 04

05

14

01. Ang Kok Tian, age 49Chairman and Managing Director

Mr K T Ang was appointed an Executive Director of the Company in October 2000, and Chairman of the Board and Managing Director in January 2003.

Mr K T Ang has been with the Group for more than 20 years and has extensive knowledge and experience in the industry and is instrumental in developing the shipbuilding, shiprepair and conversion and shipchartering business of the Group. Mr K T Ang is in charge of the Group’s business strategies and direction, corporate plans and policies as well as the general management of the Group. In particular, he is in charge of the shipbuilding and shiprepair divisions and is responsible for all aspects of the shipyard’s operations, including estimations, negotiations and contract finalisation. Mr K T Ang began his career at Ang Sin Liu Hardware, handling administration, purchasing and marketing for the company. He graduated from the National University of Singapore in 1986 where he received his Bachelor’s Degree in Science.

02. Ang Ah Nui, age 46 Deputy Managing Director

Mr A N Ang was appointed an Executive Director of the Company in October 2000 and Deputy Managing Director in January 2003.

Mr A N Ang, having been with the Group for more than 20 years, has extensive industry knowledge and experience and is instrumental in seeking new markets for the business. Mr A N Ang is jointly responsible for the Group’s business strategies and direction, corporate plans and policies, and for the general management of the Group’s shiprepair and conversion and shipchartering operations, including business development and operations.

03. Ang Kok Eng, age 43 Executive Director

Mr K E Ang was appointed an Executive Director of the Company in October 2002.

Mr K E Ang is responsible for developing marketing strategies, identifying new businesses and markets and customers for Asia. Mr K E Ang joined the Group on


1 December 1994 and was responsible for the operations of the shipyards in Batam, Indonesia and Guangdong, China. He is also in charge of the Group’s management information systems. Prior to joining the Group, Mr K E Ang was the Product Manager of Navystar Industrial Co. Ltd, a toy manufacturing company based in Hong Kong and China. He graduated from the University of Michigan, USA in 1992 with a Bachelor of Science Degree in Electrical Engineering.

04. Ang Kok Leong, age 41 Executive Director

Mr K L Ang was appointed an Executive Director of the Company in October 2002. Mr K L Ang is responsible for developing marketing strategies, identifying new businesses and markets and customers for Europe, Middle East, Australia, South America and East Malaysia. Mr K L Ang joined the Group on 1 January 1995 as a Marketing Executive in the shipbuilding division. He graduated from Carnegie Mellon University in 1994 with a Bachelor of Science Degree in Industrial Management.

05. Andre Yeap Poh Leong, age 49Independent Director

Mr Yeap joined the Board in January 2003.

Mr Yeap is currently a Senior Counsel at Rajah & Tann LLP. Prior to joining Rajah & Tann LLP in 2004, he ran his own practice under the name “Andre Yeap & Co”. Mr Yeap had worked in various law firms in Singapore. He was a Senior Litigation Partner at Allen & Gledhill (now known as Allen and Gledhill LLP) where he had worked from 1987 to 2000, before joining the partnership of Lee & Lee in 2001. His practice focuses on banking, commercial and corporate litigation with special emphasis on securities and stockbroking-related litigation as well as construction litigation, including ship and oil-rig matters, both in Court and in arbitration. He was appointed Senior Counsel on 4 January 2003. He graduated from the National University of Singapore with a Bachelor’s Degree in Law and is a member of the Singapore International Arbitration Centre.

16

06. Christopher Chong Meng Tak, age 51Independent Director

Mr Chong joined the Board in January 2006.

Mr Chong is a partner and co-founder of ACH Investments Pte Ltd, a specialist corporate advisory firm in Singapore. He is currently an independent director of several listed companies including Koda Ltd, Lorenzo International Limited, Xpress Holdings Ltd & Ying Li International Real Estate Limited on the SGX-ST and Koon Holdings Limited & GLG Corp Ltd on the Australian Stock Exchange. Mr Chong is also a director/trustee of several private companies, trusts and funds.

Mr Chong has significant experience in corporate governance and corporate affairs. He was a multi-award winning analyst and the managing director of HSBC Securities (Singapore) Pte Ltd, formerly known as HSBC James Capel Securities (Singapore) Pte Ltd, and prior to this was an executive director of UOB Kay Hian Holdings Ltd, formerly known as Kay Hian James Capel Ltd. Mr Chong holds a Bachelor of Science degree in Economics (1st Honours) from the University College of Wales and a Master of Business Administration degree from the London Business School. He is a member of the Institute of Chartered Accountants of Scotland, a Fellow of the Australian CPAs, a Fellow of the Hong Kong

Board of Directors

06 07

Institute of Certified Public Accountants, a Fellow of the Singapore Institute of Directors, a Fellow of the Australian Institute of Company Directors and a Master Stockbroker of the Securities and Derivatives Industry Association of Australia.

07. Damian Hong Chin Fock, age 62Independent Director

Mr Hong joined the Board in May 2003.

Mr Hong is also the independent director of listed companies, Riverstone Holdings Limited and Financial One Corp and the executive director of Shared Services for Charities Ltd. He is a part time lecturer at the Singapore Management University and is an Examiner of the Taxation Paper for the Association of Chartered Certified Accountants.

Mr Hong was employed by the Inland Revenue Authority of Singapore before joining KPMG in 1979. He retired from KPMG as Tax Principal in 1997 and acted as Tax Consultant in KPMG until 2004. Mr Hong was also formerly a Tax Consultant in Allen & Gledhill between 1994 to 2008. He graduated from University of Singapore with a Bachelor of Social Science Degree (Upper Class II Honours in Economics).


Senior Management

Tay Kes SiongGeneral Manager (Shipchartering)

Capt. Tay joined the Group in October 2002 and is responsible for managing the shipping operations of the Group, including marketing, overall fleet scheduling, maintenance, crew management, shipping agencies, freight forwarding and freight documentation.

Capt. Tay has more than 30 years of experience in the shipping and marine industry. Prior to joining the Group, Capt. Tay was a Marine Surveyor and a Director of Marine Management Surveyors and Services Pte Ltd which engaged in marine and cargo surveys, consultancy, sea trials, compass adjustments, pre-purchase inspections, shipping agencies, forwarding and crew management.

S.ThillainathanGroup Legal Manager and Company Secretary

Thillainathan joined the Group in July 2004 and is responsible for the legal, secretarial and insurance matters of the Group.

Thillainathan has more than 30 years experience practicing and handling legal and insurance matters in the marine industry. Before joining the Group, he was employed as Senior Manager, Legal, by Labroy Marine Limited for more than 7 years. Prior to that he worked as Vice President, Legal and Secretariat of Sembawang group of companies for more than 16 years.

Thillainathan holds a Bachelor of Laws Degree from University of Singapore and was admitted as an Advocate & Solicitor of the High Court of Singapore in 1975.


Lilian Tan Yin YenGroup Financial Controller and Company Secretary

Lilian joined the Group in July 2006 and is responsible for the Group’s accounting, finance, treasury, secretarial, human resource and administrative functions.

Lilian has more than 25 years experience in the finance related fields. Her work experience includes construction, manufacturing and trading industries. Prior to joining the Group, she was the Group Financial Controller of SP Corporation Ltd which she held various managerial positions from 1992 to 2006 responsible for finance, treasury, human resource and administrative functions. Her earlier work experience included commercial and CPA firms. Lilian holds a Bachelor of Accountancy Degree from the National University of Singapore in 1984. She is a fellow member of the Institute of Certified Public Accountants of Singapore.

18

Group Structure

Fastcoat Industries Pte. Ltd.

PT. Fastcoat Industries

Jointly-controlled Entity/Associates

HKR-ASL Joint Venture Limited

50%

100%

44.5%

Shipbuilding and Shiprepair

ASL Shipyard Pte Ltd

PT. Cemara Intan Shipyard

Intan Overseas Investments Pte. Ltd.

100%

PT. ASL Shipyard Indonesia

Jiang Men Hongda Shipyard Ltd.

100%

Hongda Investment Pte. Ltd.

100%

100%

10%

60%

90%

Shipchartering

ASL Offshore & Marine Pte. Ltd.

100%

100%

60%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Capitol Marine Pte Ltd

Capitol Offshore Pte Ltd

Capitol Shipping Pte Ltd

Capitol Tug & Barge Pte Ltd

Lightmode Pte Ltd

Capitol Logistics Pte. Ltd.

Capitol Navigation Pte. Ltd.

Capitol Aquaria Pte. Ltd.

Capitol Oceans Pte. Ltd.

ASL Maritime Services Pte. Ltd.

Intan Maritime Investments Pte. Ltd.

Intan Synergy Pte. Ltd.

Intan Offshore Pte. Ltd.

ASL Triaksa Offshore Pte. Ltd.

PT. Capitol Nusantara Indonesia

PT. Awak Samudera Transportasi

PT. Cipta Nusantara Abadi

75%

100%

PT. Bina Kontinental Lestari

100%

80%


Corporate Governance Report

The board of directors (the “Board”) of ASL Marine Holdings Ltd. (the “Company”) is committed to maintaining a high standard of corporate governance by complying with the principles and guidelines of the Code of Corporate Governance 2005 (the “Code”) issued by the Ministry of Finance.

This report outlines the Company’s corporate governance practices with specific reference made to the Code. The Board is pleased to confirm that the Company has complied with the Code, save for deviation with reference to Guideline 3.1 (Chairman and CEO should be separate persons) which is explained in this report.

BOARD MATTERS

The Board’s Conduct of Affairs

Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with management to achieve this and the management remains accountable to the Board.

The primary function of the Board is to protect the assets and to enhance the long-term value of the Company for its shareholders. Besides carrying out its statutory responsibilities, the Board oversees the businesses and affairs of the Group. It reviews and advises on overall strategies, policies and objectives, sets goals, supervises management, monitors business performance and goals achievement. The Board also oversees the processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance and assumes responsibility for overall corporate governance of the Group. Each director is expected, in the course of carrying out his duties, to exercise independent judgment and act in good faith in the best interests of the Company.

The Board’s approval is required for matters such as the Group’s financial plans and annual budget, key operational initiatives, acceptances of bank facilities, major investments and divestments proposals, material acquisitions and disposals of assets, interested person transactions of a material nature and release of the Group’s quarterly and full year financial results to the Singapore Exchange Securities Trading Limited (“SGX-ST”). Apart from matters that specifically require the Board’s approval, the Board approves transactions exceeding certain threshold limits and delegates authority for transactions below those limits to management so as to optimise operational efficiency.

To assist the Board in the execution of its responsibilities and to provide independent oversight of management, various Board Committees, namely the Audit Committee (“AC”), Nominating Committee (“NC”) and Remuneration Committee (“RC”), have been constituted with clear written terms of reference. These Committees are made up solely of independent non-executive directors and the effectiveness of each Committee is constantly monitored by the Board.

No new director was appointed by the Company during the financial year ended 30 June 2010. Newly-appointed director will be given a formal letter setting out his duties and obligations upon his appointment and he will undergo an orientation program to be familiar with the Group’s businesses and governance practices. Directors are also invited to yards visit and meet with management to gain a better understanding of the Group’s business operations. To keep pace with regulatory changes, the director’s own initiatives are supplemented from time to time with information, updates and sponsored seminars conducted by external professionals, including any changes in legislation and financial reporting standards, government policies and regulations and guidelines from SGX-ST that affect the Company and/or the directors in discharging their duties. During the year, the independent non-executive directors have attended seminars conducted by SGX-ST on updates concerning guidance to the best practice of director and the regulatory environment in Singapore.

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The Board conducts regular scheduled meetings and ad-hoc Board meetings are convened when warranted by circumstances relating to matters that are material to the Group. The Board meets at least six times a year. Telephonic attendance and video conferencing at Board meetings are allowed under the Company’s articles of association. The number of meetings held and the attendance of each director at every Board and Board Committee meetings during the financial year ended 30 June 2010 are as follows:

Attendance at Board and Board Committee meetings Board

Audit Committee

Nominating Committee

Remuneration Committee

Number of meetings held 6 6 2 2Number of meetings attended

Executive directorsAng Kok Tian (Managing Director)

6 6* 2* 2*

Ang Ah Nui (Deputy Managing Director)

6 6* 2* 2*

Ang Kok Eng 5 - - -Ang Kok Leong 5 - - -

Independent non-executive directorsAndre Yeap Poh Leong(Chairman of NC)

6 6 2 2

Christopher Chong Meng Tak 6 6 2 2

Damian Hong Chin Fock(Chairman of AC and RC)

6 6 2 2

* By invitation of the Committee

Board Composition and Guidance

Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from management. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

The Board comprises seven directors, three of whom are independent non-executive directors. The independent non-executive directors make up more than one-third of the Board thus providing an independent element on the Board capable of exercising independent judgment on corporate affairs of the Group and provide management with a diverse and objective perspective to enable balanced and well-considered decisions to be made. The NC determines, on an annual basis, the independence of each independent non-executive director based on the guidelines provided in the Code as one who has no relationship with any of the substantial shareholders of the Company, the Company, its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgment in the conduct of the Company’s affairs.

The Board considers the current Board size and composition appropriate for the nature and scope of the Group’s operations. Among the directors are business leaders, financial, tax and legal professionals who possess the relevant expertise and skill sets for effective decision-making. The profiles of the directors are set out on pages 14 to 16 of this Annual Report. The combined business, management, finance, strategic planning and professional experience, knowledge and expertise of the directors provide the necessary core competencies for the Board to effectively lead and manage the Group’s businesses and operations.

The independent non-executive directors participate actively during Board meetings. In addition to providing constructive advice to management on pertinent issues affecting the affairs and business of the Group, they also review management’s performance in meeting goals and objectives of the Group’s business segments. The Company has benefited from management’s access to its directors for guidance and exchange of views both within and outside of the meetings of the Board and Board Committees. The independent non-executive directors communicate amongst themselves and with the Company’s auditors and senior managers. Where necessary, the Company also co-ordinates informal meetings for independent non-executive directors to meet without the presence of the executive directors and/or management.



Chairman and Chief Executive Officer

Principle 3: There should be a clear division of responsibilities at the top of the company - the working of the Board and the executive responsibility of the company’s business - which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

Mr Ang Kok Tian is both the Chairman of the Board and the Managing Director of the Company. Mr Ang Kok Tian is involved in the day-to-day running of the Group; he leads management in setting marketing strategies and objectives and ensures accurate, adequate and timely flow of information between the Board, management and shareholders of the Company. He facilitates constructive discussions between the Board and management and encourages their effective contributions. Whilst the independent non-executive directors of the Company possess the relevant expertise and experience in their respective professional fields, none have had significant hands-on experience in the marine industry. Consequently, and given the current volatility and challenges of the marine industry, they are of the view that it is in the best interests of the Group to continue to have an Executive Chairman so that the Board can have the benefit of a Chairman who is knowledgeable about the marine industry and the businesses of the Group and is thereby better able to guide discussions and ensures that the Board is properly briefed in a timely manner on pertinent issues and developments. The Executive Chairman takes a leading role in ensuring the Company’s compliance with corporate governance guidelines with the full support of the directors, Company Secretaries and management.

Mr Ang Kok Tian is supported by Mr Ang Ah Nui, the Deputy Managing Director on the setting of business strategies and managing the day to day operations of the Group. In the absence of Mr Ang Kok Tian, Mr Ang Ah Nui would stand in as the acting Managing Director to ensure continuity of the business operations of the Company.

To enhance the independence of the Board, an independent non-executive director, Mr Damian Hong Chin Fock has been appointed as lead independent director to coordinate the activities of the independent non-executive directors and act as principal liaison between the independent non-executive directors and Chairman on sensitive issues. The lead independent director is also available to shareholders where they have concerns, for which contact through the normal channels of the Chairman and Managing Director has failed to resolve or for which such contact is inappropriate.

All major decisions made by the Board are subject to majority approval of the Board members and are reviewed by the AC, whose members comprise only independent non-executive directors of the Company. Mr Ang Kok Tian’s performance and remuneration are reviewed annually by the NC and RC respectively, whose members comprise only independent non-executive directors of the Company. The Board believes that there are adequate safeguards in place to ensure an appropriate balance of power and authority within the spirit of good corporate governance.

Board Membership

Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board.

The Board established the NC in March 2003 which currently consists of three independent non-executive directors, namely, Mr Andre Yeap Poh Leong, Mr Damian Hong Chin Fock and Mr Christopher Chong Meng Tak. Mr Andre Yeap is the Chairman of the NC and he is not associated in any way with the substantial shareholders of the Company.

The operations of the NC are regulated by its terms of reference, which were approved and are subject to periodic review by the Board. The functions of the NC include making recommendations to the Board on all appointments and re-appointments/re-elections of directors taking into consideration the mix of expertise, skills and attributes of the directors for meeting the business and governance needs of the Group. The NC is also tasked to assess the independence of the directors annually.

For appointment of new directors to the Board if a vacancy arises, the NC will, in consultation with the Board, evaluate and determine the selection criteria with due consideration to the mix of skills, knowledge and experience of the existing Board. The selection criterion includes integrity, diversity of competencies, expertise and financial literacy. The NC’s selection process involves the evaluation of the existing strength and capabilities of the Board, assessment as to whether the likely future needs of the Board can be fulfilled by the appointment of one person and if not, consult the Board in respect to the appointment of two persons, seek suitably qualified candidates widely, review and undertake background checks on the resumes received, short-list and interview candidates including a briefing of the duties required to ensure that there are no expectations gap. The NC will seek candidates widely and beyond persons directly known to the directors and is empowered to engage professional search firms and also give due consideration to candidates identified by any person. The NC will interview all potential candidates in frank and detailed meetings and make recommendations to the Board for approval.

Every year, the NC reviewed and affirmed the independence of the Company’s independent non-executive directors. Each director is required to complete a Director’s Independence Checklist on an annual basis to confirm his independence. The checklist is drawn up based on the guidelines provided in the Code and requires each director to assess whether he considers himself independent despite not being involved in any of the relationships identified in the Code. The checklist requires each director to disclose any relationship which would interfere or be reasonably perceived to interfere with the exercise of independent judgment in carrying out the functions as an independent non-executive director of the Company. Amongst the items included in the checklist are disclosure

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pertaining to any employment including compensation received from the Company or any of its related corporations, relationship to an executive director of the Company or its related corporations, immediate family member employed by the Company or any of its related corporations as senior executive officer whose remuneration is determined by the RC, shareholding or partnership or directorship (including those held by immediate family members) in an organisation to which the Company or any of its subsidiaries made, or from which the Company or its subsidiaries received, significant payments in the current or immediate past financial year. The NC will then review the checklist completed by each director to determine whether the director is independent. For the period under review, the NC has ascertained and is satisfied that all non-executive directors are independent.

The NC has also reviewed directors with multiple directorships. With the exception of Mr Christopher Chong Meng Tak who holds five concurrent directorships in companies that have a primary listing on SGX-ST, the remaining six directors hold fewer than three concurrent directorships in other listed companies in SGX-ST. The NC has been informed by Mr Christopher Chong Meng Tak that he will able to meet his obligations to the Company and in the event that any extraordinary duties are being required by other companies he has or will be inviting an alternative director to share the responsibilities. For the period under review, the NC is satisfied that the majority of the directors held not more than three concurrent directorships in companies listed in SGX-ST and the directors with multiple directorships have given adequate time and attention to the affairs of the Group through attendance at meetings of the Board and Board Committees, including electronic and telephone communications.

Pursuant to Article 91 of the Company’s articles of association, every director (other than the Managing or Joint Managing Director) shall retire from office once every three years and for this purpose, one-third of the Board are to retire from office by rotation and be subject to re-election at the Company’s annual general meeting (“AGM”). In addition, Article 97 of the Company’s articles of association provides that a newly appointed director must retire and submit himself for re-election at the next AGM following his appointment. Thereafter, he is subject to re-election at least once in every three years.

At the forthcoming AGM, Mr Ang Kok Leong and Mr Andre Yeap Poh Leong will be retiring by rotation pursuant to Article 91 of the Company’s articles of association. Both of them, being eligible for re-election, have offered themselves for re-election.

The dates of first appointment and last re-election of each director, together with their existing directorships in listed companies as well as past directorships in other listed companies in the last three years are set out below:

Name of directorDate of

first appointment/ last re-election

Current directorships in listed companies

Past directorships in other listed companies

(from 1 July 2007 to 30 June 2010)

Ang Kok Tian(Chairman and ManagingDirector)

4 October 2000/ 12 November 2002

ASL Marine Holdings Ltd. Nil

Ang Ah Nui(Deputy Managing Director)

4 October 2000/ 17 October 2008


Ang Kok Eng(Executive Director)



Ang Kok Leong(Executive Director)



Andre Yeap Poh Leong(Independent Non-executiveDirector)

17 January 2003/ 19 October 2007


Damian Hong Chin Fock(Independent Non-executiveDirector)

16 May 2003/ 17 October 2008

ASL Marine Holdings Ltd. Financial One Corp. Riverstone Holdings Limited

Eng Wah Organisation Limited.

Christopher Chong Meng Tak(Independent Non-executiveDirector)

3 January 2006/ 21 October 2009

ASL Marine Holdings Ltd.Koda Ltd Lorenzo International Limited Xpress Holdings LtdYing Li International Real Estate Limited GLG Corp Ltd1 Koon Holdings Limited1

SKY China Petroleum Services Ltd Win Fund2

1 Listed in Australian Stock Exchange2 Listed in Luxembourg Stock Exchange



Board Performance

Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.

The NC assesses the performance and effectiveness of the Board as a whole as well as the contribution of individual directors to the effectiveness of the entire Board. The assessment process involves evaluation against a set of objective, quantitative and qualitative performance criteria proposed by the NC and approved by the Board.

The performance criteria includes the evaluation of the size and composition of the Board, the Board’s access to information, the Board’s accountability and performance in relation to discharging its principal functions and responsibilities, the directors’ standards of conduct and financial targets such as return on assets, return on equity and the Company’s share price performance vis-à-vis the Singapore Straits Times Index and a benchmark index of its industry peers. The Board, however, notes that the financial indicators provide only a snapshot of the Company’s performance, and do not fully reflect on-going risk or measure the sustainable long-term wealth and value creation of the Company.

In assessing the individual director’s performance and the effectiveness of the Board, the NC takes into consideration the individual director’s industry knowledge and/or functional expertise, contribution, attendance at meetings of the Board or Board Committees and workload requirements.

Access to Information

Principle 6: In order to fulfill their responsibilities, Board members should be provided with complete, adequate and timely information prior to Board meetings and on an on-going basis.

All directors have unrestricted access to the Company’s records and information. The Board members receive quarterly management reports and budget variance reports to enable them to oversee the Group’s financial and operational performance. The Board members also receive relevant information and comprehensive analysis furnished by management pertaining to matters to be brought before the Board for discussion and decision. The independent non-executive directors also, on an ad hoc basis, speak directly and privately to the CFO of the Company concerning financial matters of the Group.

The Board and the Board Committees are furnished with complete and adequate information in a timely manner to enable full deliberation on the issues to be considered at the respective meetings. Board papers with sufficient background and explanatory information are circulated at least three days before each meeting. From time to time, managerial staff, lawyers, the Company’s auditors or external consultants engaged on specific projects are invited to attend the Board and Board Committee meetings so as to provide additional insight into the matters for discussions.

The Board has separate and independent access to management and the Company Secretaries at all times in carrying out their duties. The directors, in furtherance of their duties, are entitled to take independent professional advice at the expense of the Company when necessary. The Company Secretary assists the Chairman to ensure good information flows within the Board and its Committees as well as the information flows between management and the independent non-executive directors. The Company Secretary also assists the Board on compliance with regulatory requirements as well as professional development as required.

The Company Secretary attends all Board and Board Committee meetings of the Company and ensures that Board procedures are followed and that applicable statutory and regulatory rules and regulations are complied with. Directors are also invited from time to time to attend seminars pertaining to corporate governance and strategic business affairs.

REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

The Board established the RC in March 2003 which currently consists of three independent non-executive directors, namely, Mr Damian Hong Chin Fock, Mr Andre Yeap Poh Leong and Mr Christopher Chong Meng Tak. Mr Damian Hong is the Chairman of the RC. In discharging their duties, the members have access to advice from the internal human resources personnel, and if required, advice from external experts. The operations of the RC are regulated by its terms of reference, which were approved and are subject to periodic review by the Board.

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The RC recommends, in consultation with the Chairman of the Board, a framework of remuneration policies for key executives and directors serving on the Board and Board Committees, and determines specifically the remuneration package for each executive director of the Company. The RC covers all aspects of remuneration including but not limited to directors’ fees, salaries, allowances, bonuses, share options, performance shares and benefits in kind. In addition, the RC also reviews the remuneration of senior management. The RC’s recommendations are submitted for endorsement by the entire Board. No director is involved in deciding his own remuneration.

The RC administers both the ASL Employee Share Option Scheme (“ESOS”) approved on 23 January 2003 and the ASL Marine Performance Shares Scheme (“PSS”) adopted at the Extraordinary General Meeting held on 20 July 2007, in accordance with the rules of the ESOS and PSS.

The RC determines and approves the allocation of the share options, the date of grant and the price thereof under the ESOS. There were no share options granted during the financial year under ESOS and the executive directors did not participate in the ESOS. Details of the ESOS are set out on pages 34 and 35 of this Annual Report.

As at the end of the financial year, there were no shares issued under the PSS. Details of the PSS are set out on page 35 of this Annual Report.

Level and Mix of Remuneration

Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance.

The Group’s remuneration policy is to provide remuneration packages which will reward performance and attract, retain and motivate directors and key executives to run the Group successfully. In setting the remuneration packages, the RC takes into consideration the remuneration and employment conditions within the same industry and in comparable companies, and takes into account the Group’s and the individual’s performance.

The executive directors do not receive directors’ fees. The remuneration for the executive directors and the key executives comprises primarily a basic salary component and a variable component which is the bonuses, based on the performance of the Group as a whole and their individual performance. The service agreements entered into with the four executive directors, namely, Mr Ang Kok Tian, Mr Ang Ah Nui, Mr Ang Kok Eng and Mr Ang Kok Leong, are automatically renewable on a yearly basis unless terminated by either party giving written notice of not less than three months.

The non-executive directors receive directors’ fees, in accordance with their contributions, taking into account factors such as responsibilities, effort and time spent for serving on the Board and Board Committees. The non-executive directors’ fees were derived using the fee structure as follows:

Audit Committee

Chairman $30,000 per annum

Member $20,000 per annum

Nominating and Remuneration Committee

Chairman $21,000 per annum

Member $16,000 per annum

The Company does not have service contracts with non-executive directors. Directors’ fees are recommended by the Board and are subject to the approval of shareholders at the Company’s AGM.

The Company encourages independent non-executive directors to invest in the Company and has taken steps in the past to ensure that this happened. The shareholdings of the individual directors of the Company are set out on page 32 of this Annual Report. None of the directors hold shares in the subsidiaries of the Company.



Disclosure on Remuneration

Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance.

The remuneration of the directors of the Company for the financial year ended 30 June 2010 is summarised below:

Remuneration bandsNumber of directors

2010 2009

$500,000 to below $700,000 2 2

$300,000 to below $500,000 2 2

Below $100,000 3 3

Total 7 7

Remuneration of executive directors and key executives

The following table shows the breakdown of the remuneration (in percentage terms) of the executive directors of the Company and the top five executives of the Group for the financial year ended 30 June 2010:

Salary1

%Bonus2

%

Other Benefits3

%Total

%Executive directors$500,000 to below $700,000Ang Kok Tian 64 24 12 100Ang Ah Nui 64 22 14 100

$300,000 to below $500,000Ang Kok Eng 68 23 9 100Ang Kok Leong 64 24 12 100

Key executives $200,000 to below $400,000Leow Ban Tat4 64 26 10 100Tay Kes Siong 73 27 - 100Lilian Tan Yin Yen 74 26 - 100

Below $200,000Lim Soon Teck 75 25 - 100S. Thillainathan 85 15 - 100

1 Salary includes CPF2 Bonus includes CPF3 Other benefits refer to car benefits 4 Leow Ban Tat resigned during the financial year

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The following table shows the remuneration payable to the independent non-executive directors for the financial year ended 30 June 2010:

Directors’ Fees$

Independent non-executive directorsAndre Yeap Poh Leong 57,000Damian Hong Chin Fock 67,000Christopher Chong Meng Tak 52,000

Total 176,000

Remuneration of employees who are immediate family members of a director or the chief executive officer

For the financial year ended 30 June 2010, saved as disclosed in the following table which shows the breakdown of the remuneration (in percentage terms) of the Group Advisor who is the father of the executive directors, Mr Ang Kok Tian, Mr Ang Ah Nui, Mr Ang Kok Eng and Mr Ang Kok Leong, the Company and its subsidiary companies do not have any other employee who is an immediate family member of a director and whose remuneration exceeds $150,000.

Salary1

%Bonus2

%

Other Benefits3

%Total

%Group Advisor$300,000 to below $500,000Ang Sin Liu 60 22 18 100

1 Salary includes CPF2 Bonus includes CPF3 Other benefits refer to car benefits

ACCOUNTABILITY AND AUDIT

Accountability

Principle 10: The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.

The Board endeavors to provide shareholders with a balanced and understandable assessment of the Group’s performance, position and prospects on a regular basis. In presenting the quarterly financial statements announcements and annual report to shareholders, the Board aims to provide the shareholders with detailed analysis, explanation and assessment of the financial performance, position and prospects of the Group. The Board also requires, and management provides a powerpoint presentation, of the quarterly results and briefings of the same.

In line with the requirements of SGX-ST, negative assurance confirmations on interim financial results were issued by the Board confirming that to the best of its knowledge, nothing had come to the attention of the Board which may render the Company’s quarterly results to be false or misleading in any material aspect.



Audit Committee

Principle 11: The Board should establish an AC with written terms of reference which clearly set out its authority and duties.

The Board established the AC in March 2003 which currently consists of three independent non-executive directors, namely, Mr Damian Hong Chin Fock, Mr Christopher Chong Meng Tak and Mr Andre Yeap Poh Leong. Mr Damian Hong is the Chairman of the AC. The Board is of the opinion that the members of the AC have considerable experience in legal, tax and financial management expertise and business experience with which to discharge their duties. The operations of the AC are regulated by its terms of reference, which were approved and are subject to periodic review by the Board. The AC meets at least six times a year.

The duties of the AC include reviewing with the internal auditor, external auditors and management, the Group’s policies and control procedures, interested person transactions, as well as any financial information presented to shareholders. Specifically, the AC:

• reviews the scope and results of external audit, the cost effectiveness of the audit, the independence and objectivity of the external auditors and the nature and extent of non-audit services provided by the external auditors;

• reviews the quarterly results announcements before submission to the Board for adoption; • reviews the financial statements of the Group, accounting principles and policies thereto and management of financial matters

before endorsement by the Board; • reviews the scope and results of the internal audit procedures, the adequacy of the internal control procedures and effectiveness

of the internal audit function;• reviews the audit plans and reports of the internal and external auditors and evaluation of the internal control systems of the

Group and management’s responses and actions to correct any deficiencies;• reviews the co-operation given by the Company’s officers to the internal and external auditors;• recommends to the Board on the appointment or re-appointment of external auditors and their fees for shareholders’ approval;

and• reviews interested person transactions in accordance with the requirements of the SGX-ST Listing Manual.

The AC has explicit authority to investigate any matter within the scope of its duties and is authorised to obtain independent professional advice. It has full access to and co-operation of the management and reasonable resources to enable it to discharge its duties properly. It also has full discretion to invite any executive director or executive officer or any other person to attend its meetings. The AC meets with the external and internal auditors separately, at least once a year, without the presence of management to review any areas of audit concern. Individual members of the AC also engage the external and internal auditors separately in ad hoc meetings.

For the financial year under review, given the volatility of the markets including the marine and offshore services market, the AC had the half year results of the Company audited. In other words, the Company undertook two audits this year, one for the first half of the year and the other for the whole of the year.

For the financial year under review, the AC has reviewed the non-audit services provided by the Company’s external auditors, which comprised attestation services required under the Approved International Shipping Enterprise Scheme. The AC is satisfied that their independence and objectivity have not been impaired by the provision of those services. The fees that are charged to the Group by the external auditors for non-audit services were $21,000 and $21,000 for the financial years ended 30 June 2010 and 30 June 2009 respectively.

The AC has recommended to the Board the re-appointment of Ernst & Young LLP as the Company’s external auditors at the forthcoming AGM.

WHISTLE-BLOWING POLICY

The Company has put in place a whistle-blowing policy and procedures duly endorsed by the AC, where employees of the Group may, in confidence, raise concerns about possible corporate improprieties in matters of financial reporting or other matters such as suspected fraud, corruption, dishonest practices etc. All reports including unsigned reports, reports weak in details and verbal reports are considered. To ensure independent investigation into such matters and for appropriate follow up action, all whistle-blowing reports are reviewed by the AC and the Board. In the event that the report is about a director, that director shall not be involved in the review and any decisions with respect to that report. The policy aims to encourage the reporting of such matters in good faith, with the confidence that any employees making such reports will be treated fairly and be protected from reprisals. Details of the whistle-blowing policy have been made available to all employees.

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INTERNAL CONTROLS AND AUDIT

Internal Controls

Principle 12: The Board should ensure that the management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets.

The Group has a system of internal control designed to provide reasonable assurance with respect to the safeguarding of assets and maintaining proper accounting records to ensure that financial information used for financial reporting are reliable. The Board recognises that no internal control system could provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human errors, losses, fraud or other irregularities. The internal control system is designed to manage rather than eliminate the risk of failure to achieve the business objectives.

Internal and external audit reports on any material non-compliance or internal control weaknesses, including financial, operational and compliance controls and recommendations for improvements are submitted to the AC for review semi-annually. The AC reviews the effectiveness of the actions taken by management based on the recommendations made by the internal and external auditors to the AC. The AC is satisfied that there are adequate internal controls within the Group taking into account the nature and size of the Group’s business and operations.

The Group’s approach to risk management with a brief description of the nature and extent of its risk exposures are set out on page 30 of this Annual Report.

Internal Audit

Principle 13: The company should establish an internal audit function that is independent of the activities it audits.

The role of the internal auditor is to assist the AC to ensure that the Group maintains a sound system of controls by regular monitoring of key controls and procedures and ensuring their effectiveness, undertaking investigations as directed by the AC. The Company’s internal audit function is housed within the corporate services office.

The AC is responsible for the adequacy of the internal audit function, its resources and its standing and is satisfied that the internal audit function is independent of the activities which it audits and has appropriate standing within the Group to perform its role effectively. The internal auditor reports functionally to the Chairman of the AC and administratively to the Group Financial Controller.

The internal auditor has unrestricted access to all records, properties, functions and co-operation from management and staff necessary to effectively discharge his responsibilities. The internal auditor has adopted the standards for the professional practice of internal auditing developed by the Institute of Internal Audit to carry out internal audit review in accordance with the annual audit plan which is formulated through the risk assessment in consultation with and approved by the AC. The internal auditor performs checks and compliance tests on the systems of internal control including financial and operational controls and risk management.

The AC reviews the internal audit reports and management controls in place on a semi-annual basis and is satisfied with the adequacy of the internal controls in the Group.

COMMUNICATION WITH SHAREHOLDERS

Communication with Shareholders

Principle 14: Companies should engage in regular, effective and fair communication with shareholders.

The Board is mindful of its obligations to provide timely disclosure of material information presented in a fair and objective manner to shareholders and investors. The communications with shareholders and investors are carried out through various channels including the annual report, quarterly financial statements announcements including powerpoint presentations, press releases, online management Q & A at Shareinvestor.com, announcements on important developments and material information released through SGX-ST website which are also accessible at the Company’s website, www.aslmarine.com.

The Company discloses the date of the release of its quarterly results at least one week prior to the date of announcement through SGX-ST website. On the day of results announcement, the accompanying press release and/or presentation slides are released onto the SGX-ST website, in addition, results briefing by management is also held for media and analysts in conjunction with the release of the first half and full year financial statements announcements. From time to time, the management participates in roadshows and holds meetings with investors and analysts to explain the financial results and provide insight to the development and outlook of the industry.



The Company also engages external investor relation consultant firm to support the Group in promoting communication with shareholders and investment community.

All shareholders will receive the annual report of the Company and notice of AGM by post and through notices published in the newspapers within the mandatory period. The shareholders can also access information on the Group at the Company’s website at www.aslmarine.com. The website provides, inter alia, all publicly disclosed financial information, corporate announcements, press releases, annual reports and profiles of the Group.

Greater Shareholder Participation

Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

All registered shareholders are invited to participate and given the right to vote on resolutions at general meetings. Every matter requiring shareholders’ approval is proposed as a separate resolution. Each item of special business included in the notice of the meeting is accompanied, where appropriate, by an explanation for the proposed resolution. Proxy form is sent with notice of general meeting to all shareholders. If any shareholder is unable to attend the general meeting in person, he is allowed to appoint up to two proxies to attend and vote on his behalf. The Company also allows CPF investors to attend general meetings as observers. Voting in absentia by mail, facsimile or e-mail is currently not allowed as such voting methods would need to be cautiously evaluated for feasibility to ensure that there is no compromise to the integrity of the information and the authentication of the shareholders’ identity.

The Board, Chairman of the AC, NC, RC and management are present at general meetings to address questions that shareholders may have concerning the Group. The Company’s external auditors are also present to address any relevant queries relating to the conduct of audit and the preparation and content of the auditors’ report.

INTERESTED PERSON TRANSACTIONS

The Company has adopted an internal policy in respect of any transactions with interested persons and has set out the procedures for review and approval of the interested person transactions to be entered into by the Group. In accordance with Chapter 9 of the Listing Manual of SGX-ST, there were no material interested person transactions entered into by the Group for the financial year ended 30 June 2010.

MATERIAL CONTRACTS

During the financial year, the Company and its subsidiary companies did not enter into any material contracts involving the interests of any directors or any controlling shareholders of the Company or its associates.

DEALINGS IN SECURITIES

The Company has complied with the best practices on dealings in the Company’s securities. The Company has adopted an internal compliance code which provides guidance to its officers and employees with regard to dealings in the Company’s securities. The Group’s officers and employees are prohibited from dealing in the Company’s securities while in possession of unpublished price-sensitive information of the Group, as well as during the periods commencing two weeks before the announcement of the Company’s quarterly results and one month before the announcement of the Company’s full year results and ending on the date of the announcement of the relevant results. The Group’s officers and employees are also discouraged from dealing in the Company’s securities on short-term considerations.

SGX CHECKLISTS

The Company submits the following compliance checklists to SGX-ST when required:• Acquisitions and Realisations• Announcement of Financial Statements of SGX-ST Listed Companies • Annual Report • Bonus Issue of Shares and Warrants• Circular Disclosure in relation to Employee Share Option Scheme• Circular Disclosure in relation to Share Buy-Back Mandate• Placement of Shares or Convertibles For Cash• Rights Issue• Share Split

30

Risk Management Strategies

The Group has established a framework for risk management to identify, assess and manage potential risks and opportunities and to assist management in making informed decisions. The Group adopts a proactive approach to managing risk of financial losses, breaches in legal and regulatory requirements, negative impact to customers and loss of business opportunities.

The Group regularly reviews the level of risk exposure in the following key risk areas which the Group operates in:

• Legal and Country Risk

The Group has established subsidiaries operating in different countries. These overseas subsidiaries are exposed to changes in governmental regulations and unfavourable political developments, which may limit the realisation of business opportunities and investments in those countries.

Risks arising from non compliance with applicable laws and regulations are managed with the assistance of the Group’s in-house legal counsel as well as external legal advisers when necessary. Where the Group is active or has an operating presence in a foreign jurisdiction, legal counsel from that foreign jurisdiction is sought where appropriate. The operating head of the business unit is responsible for compliance with the applicable laws in the country of operations.

The Group’s business operations are also exposed to uncertainties of the global economy and international capital markets. To prepare for the fluctuations in external environment, the Board and the management consistently keep themselves up-to-date on the changes in political and industry regulations so as to implement appropriate measures against any adverse changes in market conditions in an efficient and timely manner.

• Operational Risk

Operational risk is the potential loss caused by a breakdown in internal process, deficiencies in people and management, or operational failure arising from external events. The Group’s operational risk is managed at each operating unit and monitored at the Group level. Whilst operational risk cannot be eliminated completely, the Group evaluates the options available by weighing the cost and effectiveness of each measure taken to minimise risk exposure. Where appropriate, the Group maintains sufficient insurance coverage for those areas exposed to risks, taking into account the risk profile of the business in which it operates.

• Financial Risk

The Group’s financial risk management objectives and policies are set out on pages 100 to 111 of this Annual Report. Financial risk includes market risk such as interest rate risk and foreign exchange rate risk, as well as credit risk and liquidity risk.

• Investment Risk

The Group evaluates any investment proposals for potential ventures and business acquisitions by conducting due diligence exercises and comparing to benchmarked rate of return taking into consideration the Group’s level of risk exposure. All investment proposals are subject to the Board’s approval with post-investment reviews being conducted to monitor and mitigate the risk of non-performing investments.


Directors

Ang Kok TianAng Ah NuiAng Kok EngAng Kok LeongAndre Yeap Poh LeongHong Chin FockChristopher Chong Meng Tak

Secretaries

Lilian Tan Yin YenS. Thillainathan

Registered Office

No. 19 Pandan RoadSingapore 609271

Auditors

Ernst & Young LLP

Principal Bankers

United Overseas Bank LimitedThe Development Bank of SingaporeOversea-Chinese Banking Corporation LimitedStandard Chartered BankThe Royal Bank of Scotland N.V.

Content32 Directors’ Report

38 Statement by Directors

39 Independent Auditors’ Report

40 Statements of Financial Position

42 Consolidated Income Statement

43 Consolidated Statement of Comprehensive Income

44 Statements of Changes in Equity

46 Consolidated Statement of Cash Flow

48 Notes to the Financial Statements

Financial Statements

32

Directors’ Report

The Directors are pleased to present their report to the members together with the audited consolidated financial statements of ASL Marine Holdings Ltd. (the “Company”) and its subsidiaries (collectively, the “Group”) and the statement of financial position and statement of changes in equity of the Company for the financial year ended 30 June 2010.

Directors

The Directors of the Company in office at the date of this report are:

Ang Kok TianAng Ah NuiAng Kok EngAng Kok LeongAndre Yeap Poh LeongHong Chin FockChristopher Chong Meng Tak

Arrangements to enable Directors to acquire Shares and Debentures

Except as disclosed in this report, 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 or debentures of the Company or any other body corporate.

Directors’ Interests in Shares and Debentures

The following Directors, who held office at the end of the financial year, had, according to the Register of Directors’ Shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares and share options of the Company and related corporations (other than wholly-owned subsidiaries) as stated below:

Direct interest Deemed interest

Name of Director

At the beginning of financial year

At theend of

financial year


At theend of

financial year

The CompanyASL Marine Holdings Ltd.(Ordinary shares)

Ang Kok Tian 41,427,000 41,427,000 149,842,000* 154,172,000*Ang Ah Nui 39,600,000 39,600,000 151,669,000* 155,999,000*Ang Kok Eng 34,750,000 34,750,000 156,519,000* 160,849,000*Ang Kok Leong 34,650,000 34,650,000 156,619,000* 160,949,000*Andre Yeap Poh Leong 250,000 250,000 – –Hong Chin Fock 250,000 250,000 – –

* Ang Kok Tian, Ang Ah Nui, Ang Kok Eng and Ang Kok Leong are brothers. Each of the brothers is deemed to be interested in the shares held by the other and their father and sister.


Directors’ Report

Directors’ Interests in Shares and Debentures (cont’d)

Direct interest Deemed interest

Name of Director


At theend of

financial year


At theend of

financial year

Subsidiaries

ASL Triaksa Offshore Pte. Ltd.(Ordinary shares)

Ang Kok Tian – – 60,000 60,000Ang Ah Nui – – 60,000 60,000Ang Kok Eng – – 60,000 60,000Ang Kok Leong – – 60,000 60,000

PT. Cipta Nusantara Abadi(Ordinary shares of Rp. 50,000 each)


PT. Capitol Nusantara Indonesia(Ordinary shares of Rp. 1,000,000 each)


Hongda Investment Pte. Ltd. (Ordinary shares)

Ang Kok Tian – – 2,280,000 2,280,000Ang Ah Nui – – 2,280,000 2,280,000Ang Kok Eng – – 2,280,000 2,280,000Ang Kok Leong – – 2,280,000 2,280,000

There was no change in any of the above-mentioned interests between the end of the financial year and 21 July 2010.

By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Ang Kok Tian, Ang Ah Nui, Ang Kok Eng and Ang Kok Leong are deemed to have interests in the shares of the subsidiaries of the Company.

Except as disclosed in this report, no Director who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the Company, or of related corporations, either at the beginning or at the end of the financial year.

34

Directors’ Report

Directors’ Contractual Benefits

Except as disclosed in the financial statements, since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the Director, or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

Share Options

The ASL Employee Share Option Scheme (the “Scheme”) was approved and adopted by the shareholders of the Company at an Extraordinary General Meeting held on 23 January 2003. The Scheme is administered by the Remuneration Committee (the “RC”) of the Company comprising three independent Directors, Hong Chin Fock (Chairman), Christopher Chong Meng Tak and Andre Yeap Poh Leong.

Details of the Scheme were set out in the Directors’ Report for the year ended 30 June 2003.

Other statutory information regarding the Scheme is set out below:

(i) Exercise Price

The exercise price to be paid upon the exercise of the options are as follows:

• the options were granted at the exercise price of $0.55 per share and no options were granted at a discount to the then prevailing Market Price; and

• the “Market Price”, defined as the average of the last dealt price for a share, is determined by reference to the daily Official List published by Singapore Exchange Securities Trading Limited (“SGX-ST”) for five consecutive market days immediately prior to the date an offer to grant an option is made (“Offer Date”), rounded up to the nearest whole cent.

(ii) Option Exercise Period

The options which were granted shall be exercisable during the option exercise period commencing after the first anniversary of the Offer Date and expiring on, in the case of options granted to non-executive Directors and/or associated company employees, the day preceding the fifth anniversary of the Offer Date and, in the case of options granted to other than non-executive Directors and/or associated company employees, the day preceding the tenth anniversary of the Offer Date.

At the end of the financial year, details of the options granted under the Scheme on the unissued ordinary shares of the Company are as follows:

Date of grant of options

Exercise price per

share

Options outstanding at 1/7/2009

Options exercised

Options outstanding at 30/6/2010

Number of option holders at 30/6/2010

Exercise period

18/12/2003 $0.55 62,000 (15,000) 47,000* 2

18/12/2004to

17/12/2013

* These were granted to the employees of the Company and are exercisable on or after 18 December 2006.

Except as disclosed in this report, there were no unissued shares of the Company or its subsidiaries under options granted by the Company or its subsidiaries at the end of the financial year.


Share Options (cont’d)

Details of options granted to non-executive Directors of the Company under the Scheme are as follows:

Name of director

Options granted for financial year ended 30/6/2010

Aggregate options

granted since commencement

of Scheme to 30/6/2010

Aggregate options

lapsed since commencement


Aggregate options

exercised since commencement


Aggregate options

outstanding as at 30/6/2010

Andre Yeap Poh Leong – 250,000 – (250,000) – Hong Chin Fock – 250,000 – (250,000) –

Since the commencement of the Scheme till the end of the financial year:

• No options have been granted to the controlling shareholders of the Company and their associates;

• No participant has been granted 5% or more of the total options available under the Scheme;

• No options entitle the holders of the options to participate, by virtue of such holding, in any share issue of any other company; and

• No options have been granted at a discount.

ASL Marine Performance Shares Scheme

The ASL Marine Performance Shares Scheme (the “PSS”) was approved and adopted by the shareholders of the Company at an Extraordinary General Meeting held on 20 July 2007. The PSS is administered by the RC of the Company.

Details of the Scheme were set out in the circular dated 4 July 2007 which is available for inspection at the registered office of the Company.

As at the end of financial year, no award of shares have been granted by the Company under the PSS.

Directors’ Report

36

Directors’ Report

Audit Committee

The Audit Committee (“AC”) carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50, including the following:

• Reviews the audit plans of the external auditors and ensures the adequacy of the Group’s system of accounting controls and the co-operation given by the management to the external auditors;

• Reviews the quarterly and annual financial statements and the auditors’ report on the annual financial statements of the Group before their submission to the Board of Directors;

• Reviews effectiveness of the Group’s material internal controls, including financial, operational and compliance controls and risk management via reviews carried out by the internal auditors;

• Meets with the external auditors, other committees, and management in separate executive sessions to discuss any matters that these groups believe should be discussed privately with the AC;

• Reviews legal and regulatory matters that may have a material impact on the financial statements, related compliance policies and programmes and any reports received from regulators;

• Reviews the cost effectiveness and the independence and objectivity of the external auditors;

• Reviews the nature and extent of non-audit services provided by the external auditors;

• Recommends to the Board of Directors the external auditors to be nominated, approves the compensation of the external auditors and reviews the scope and results of the audit;

• Reports actions and minutes of the AC to the Board of Directors with such recommendations as the AC considers appropriate; and

• Reviews interested person transactions in accordance with the requirements of the SGX-ST’s Listing Manual.

The AC, having reviewed all non-audit services provided by the external auditors to the Group, is satisfied that the nature and extent of such services would not affect the independence of the external auditors. The AC has also conducted a review of interested person transactions.

The AC convened six meetings during the year with full attendance from all members. The AC has also met with internal and external auditors, without the presence of the Company’s management, at least once a year.

Further details regarding the AC are disclosed in the Report on Corporate Governance.


Auditors

Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.

On behalf of the Board of Directors:

............................................................Ang Kok TianDirector

............................................................Ang Ah NuiDirector

Singapore8 September 2010

Directors’ Report

38

We, Ang Kok Tian and Ang Ah Nui, being two of the Directors of ASL Marine Holdings Ltd., do hereby state that, in the opinion of the Directors,

(i) the accompanying statements of financial position, consolidated income statement, consolidated statement of comprehensive income, statements of changes in equity, and consolidated statement of cash flow 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 30 June 2010 and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date; and

(ii) 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:

............................................................Ang Kok TianDirector

............................................................Ang Ah NuiDirector


Statement by Directors


Independent Auditors’ Report

To the members of ASL Marine Holdings Ltd.

We have audited the accompanying financial statements of ASL Marine Holdings Ltd. (the “Company”) and its subsidiaries (collectively, the “Group”), set out on pages 40 to 120, which comprise the statements of financial position of the Group and the Company as at 30 June 2010, the statements of changes in equity of the Group and the Company, the consolidated income statement, consolidated statement of comprehensive income and consolidated statement of cash flow of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets 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 judgement, 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.

Opinion

In our opinion,

(i) the consolidated financial statements of the Group and the statement of financial position 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 the Company as at 30 June 2010 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company 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 LLPPublic Accountants and Certified Public Accountants


40

The Group The CompanyNote 2010 2009 2010 2009

$’000 $’000 $’000 $’000

Non-Current Assets

Property, plant and equipment 4 437,660 397,305 100 124Lease prepayments 5 3,892 4,124 – –Subsidiaries 6 – – 33,573 31,370Interest in jointly-controlled entity

and associate 7 1,825 3,350 1,558 1,558Other receivable 11 – – 2,203 2,212

443,377 404,779 37,434 35,264

Current Assets

Inventories 9 13,151 12,409 – –Construction work-in-progress 10 67,734 108,375 – –Trade and other receivables 11 108,593 70,981 165,437 130,134Deposits and prepayments 12 7,048 6,090 3,133 2,560Finance lease receivables 8 – 1,717 – –Derivative financial instruments 13 1,350 1,481 – –Bank balances, deposits and cash 14 90,090 96,012 510 17,984Assets held for sale 15 7,269 845 – –

295,235 297,910 169,080 150,678

Current Liabilities

Trade and other payables 16 134,552 128,167 30,009 36,416Other liabilities 17 3,345 2,065 – –Progress billings in excess of construction work-in-progress 10 40,548 60,020 – –Trust receipts 18 25,033 32,944 – –Interest-bearing loans and borrowings 19 51,070 76,567 11,025 39,024Provision for warranty claims 20 – 257 – –Derivative financial instruments 13 3,564 4,246 368 822Current tax payable 12,007 8,796 – 46

270,119 313,062 41,402 76,308

Net Current Assets/(Liabilities) 25,116 (15,152) 127,678 74,370

Statements of Financial Position as at 30 June 2010


The Group The CompanyNote 2010 2009 2010 2009

$’000 $’000 $’000 $’000

Non-Current Liabilities

Interest-bearing loans and borrowings 19 133,160 83,801 65,020 11,045Amount due to non-controlling

interests of subsidiaries 16 1,469 1,475 – –Deferred tax liabilities 21 9,747 9,308 – –

144,376 94,584 65,020 11,045

Net Assets 324,117 295,043 100,092 98,589

Equity attributable to owners of the parent

Share capital 22 83,061 83,051 83,061 83,051Treasury shares 22 (923) (923) (923) (923)Reserves 23 233,195 206,428 17,954 16,461

315,333 288,556 100,092 98,589Non-Controlling Interests 8,784 6,487 – –

Total Equity 324,117 295,043 100,092 98,589

Statements of Financial Position as at 30 June 2010

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

42

Note 2010 2009 $’000 $’000

Revenue 25 468,372 435,442

Cost of sales (407,622) (357,405)

Gross profit 60,750 78,037

Other operating income 26 9,320 30,024

Administrative expenses (9,840) (11,539)

Other operating expenses (3,418) (7,590)

Finance costs 27 (8,072) (6,475)

Share of profit of jointly-controlled entity and associate (670) 1,492

Profit before tax 28 48,070 83,949

Tax expense 29 (8,806) (10,137)

Profit for the year 39,264 73,812

Attributable to:

Owners of the parent 30 37,286 71,070

Non-controlling interests 1,978 2,742

39,264 73,812

Earnings per share (cents)

Basic 30 12.45 23.68

Diluted 30 12.44 23.68

Consolidated Income Statement for the year ended 30 June 2010



Consolidated Statement of Comprehensive Incomefor the year ended 30 June 2010

Note 2010 2009 $’000 $’000

Profit for the year 39,264 73,812

Other comprehensive income:

Translating differences relating to financial statements of foreign subsidiaries, net of tax 329 3,604

Share of other comprehensive income of jointly-controlled entity (74) 49

Net fair value changes to cash flow hedges 1,531 (9,990)

Other comprehensive income for the year, net of tax 24 1,786 (6,337)

Total comprehensive income for the year 41,050 67,475

Attributable to:

Owners of the parent 38,753 64,689

Non-controlling interests 2,297 2,786

41,050 67,475


44

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2010 2009$’000 $’000

Cash flows from operating activities

Profit before tax 48,070 83,949

Adjustments for: Amortisation of lease prepayments 199 200 Allowance for impairment of doubtful receivables (net) 577 3,632 Bad debts written off (non-trade) 2 – Depreciation of property, plant and equipment 30,475 27,006 Ineffective portion of cash flow hedges on forward currency contracts and interest rate swaps 1,126 1,092 Gain on disposal of property, plant and equipment (4,216) (7,310) Property, plant and equipment written off 3 7 Impairment loss on property, plant and equipment 2,297 3,950 Interest expense 8,072 6,475 Interest income (179) (516) Provision for warranty claims (net) – (343) Share of profit of jointly-controlled entity and associate 670 (1,492) Gain on disposal of assets held for sale (2,495) (20,044)

Operating profit before working capital changes 84,601 96,606

Changes in working capital: Inventories (742) 10,350 Construction work-in-progress (net) 21,459 (90,707) Trade and other receivables (38,107) 20,674 Trade and other payables 8,635 25,835 Balances with related parties (trade) (924) 2,488 Bank balances, deposits and cash (restricted use) (5,551) (1,237)

Cash generated from operations 69,371 64,009Tax paid (5,468) (7,057)

Net cash generated from operating activities 63,903 56,952


Consolidated Statement of Cash Flow for the year ended 30 June 2010

Note 2010 2009 $’000 $’000

Cash flows from investing activities

Interest received 175 516Purchase of property, plant and equipment (Note A) (83,192) (178,630)Proceeds from disposal of property, plant and equipment 10,104 20,675Purchase of assets held for sale (3,231) (12,028)Proceeds from disposal of assets held for sale 8,985 68,033Balances with related parties (non-trade) 1 3,323Investment in associate – (1,024)

Net cash used in investing activities (67,158) (99,135)

Cash flows from financing activities

Interest paid (8,029) (6,415)Dividend paid (11,984) (11,984)Repayment of interest-bearing loans and borrowings (89,999) (40,227)Proceeds from interest-bearing loans and borrowings 107,803 59,390Proceeds from finance lease receivables 1,721 893Proceeds from issue of shares 8 279Purchase of treasury shares – (923)Repayment of trust receipts (83,312) (41,983)Proceeds from trust receipts 75,401 74,927Proceeds from loan from non-controlling interests of subsidiaries 289 –

Net cash (used in)/generated from financing activities (8,102) 33,957

Net decrease in cash and cash equivalents (11,357) (8,226)Cash and cash equivalents at beginning of year 94,775 102,995Effects of exchange rate changes on opening cash and cash equivalents (116) 6

Cash and cash equivalents at end of year 14 83,302 94,775

Note A:

The Group acquired property, plant and equipment with an aggregate cost of $89,250,000 (2009: $183,203,000), of which $6,058,000 (2009: $4,573,000) was acquired by means of finance lease. Cash payments of $83,192,000 (2009: $178,630,000) were made to purchase property, plant and equipment.


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Notes to the Financial Statements 30 June 2010

1. Corporate information

ASL Marine Holdings Ltd. (the “Company”), incorporated in the Republic of Singapore, is a public limited company listed on the Singapore Exchange Securities Trading Limited.

The registered office and principal place of business of the Company is located at No. 19 Pandan Road, Singapore 609271.

The principal activities of the Company are those relating to an investment holding company. The principal activities of the subsidiaries are set out in Note 6.

2. Summary of significant accounting policies

2.1 Basis of preparation

The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”).

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Singapore Dollar (“SGD” or “$”) and all values in the tables are rounded to the nearest thousand ($’000) unless otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 July 2009, the Group adopted the following standards and interpretations mandatory for annual financial periods beginning on or after 1 January 2009:

• Revised FRS 1 Presentation of Financial Statements• Amendments to FRS 18 Revenue• Amendments to FRS 23 Borrowing Costs• Amendments to FRS 32 Financial Instruments: Presentation and FRS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation• Amendments to FRS 101 First-time Adoption of Financial Reporting Standards and FRS 27 Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate• Amendments to FRS 102 Share-based Payment – Vesting Conditions and Cancellations• Amendments to FRS 107 Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments• FRS 108 Operating Segments• Improvements to FRSs issued in 2008 • INT FRS 113 Customer Loyalty Programmes • INT FRS 116 Hedges of a Net Investment in a Foreign Operation• Amendments to INT FRS 109 Reassessment of Embedded Derivatives and FRS 39 Financial Instruments: Recognition and Measurement – Embedded Derivatives • INT FRS 118 Transfer of Assets from Customers • Amendments to FRS 27 Consolidated and Separate Financial Statements • Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Item • Restructuring to FRS 101 First-time Adoption of Financial Reporting Standards • Revised FRS 103 Business Combinations • Amendments to FRS 105 Non-current Assets Held for Sale and Discontinued Operations • INT FRS 117 Distributions of Non-cash Assets to Owners • Improvements to FRSs issued in 2009: – Amendments to FRS 38 Intangible Assets – Amendments to FRS 102 Shared-based Payment – Amendments to INT FRS 109 Reassessment of Embedded Derivatives – Amendments to INT FRS 116 Hedges of a Net Investment in a Foreign Operation

Adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group. They did however give rise to additional disclosures.



2. Summary of significant accounting policies (cont’d)

2.2 Changes in accounting policies (cont’d)

The principal effects of these changes are as follows:

Revised FRS 1 Presentation of Financial Statements

The revised FRS 1 separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented in the statement of other comprehensive income. In addition, the Standard introduces the statement of comprehensive income which presents income and expense recognised in the period. This statement may be presented in one single statement, or two linked statements. The Group has elected to present this statement as two linked statements.

Amendments to FRS 107 Financial Instruments: Disclosures

The amendments to FRS 107 require additional disclosure about fair value measurement and liquidity risk. Fair value measurements are to be disclosed by source of inputs using a three level hierarchy for each class of financial instrument. In addition, reconciliation between the beginning and ending balance for Level 3 fair value measurements is now required, as well as significant transfers between Level 1 and Level 2 fair value measurements. The amendments also clarify the requirements for liquidity risk disclosures. The liquidity risk disclosures and fair value measurement disclosures are presented in Note 34 and Note 35 respectively.

FRS 108 Operating Segments

FRS 108 requires disclosure of information about the Group’s operating segments and replaces the requirement to determine primary and secondary reporting segment of the Group. As a result of the adoption, the Group had identified several reporting segments. The Group determined that the reportable operating segments are the same as the business segments previously identified under FRS 14 Segment Reporting.

2.3 Standards issued but not yet effective

The Group has not adopted the following standards and interpretations that have been issued but not yet effective:

Description

Effective forannual periods

beginning on or after

Improvement to FRSs issued in 2009:– Amendments to FRS 1 Presentation of Financial Statements 1 January 2010– Amendments to FRS 7 Statement of Cash Flows 1 January 2010– Amendments to FRS 17 Leases 1 January 2010– Amendments to FRS 36 Impairment of Assets 1 January 2010– Amendments to FRS 39 Financial Instruments: Recognition and Measurement 1 January 2010– Amendments to FRS 105 Non-current Assets Held for Sale and Discontinued Operations 1 January 2010– Amendments to FRS 108 Operating Segments 1 January 2010Amendments to FRS 102 Share-based Payment – Group Cash Settled Share-based Payment Transactions 1 January 2010Amendments to FRS 32 Financial Instruments: Presentation – Classification of Rights Issues 1 February 2010Amendments to FRS 101 First-time Adoption of Financial Reporting Standards – Limited Exemption from Comparative FRS 107 Disclosures for First-time Adopters 1 July 2010INT FRS 119 Extinguishing Financial Liabilities with Equity Instruments 1 July 2010Revised FRS 24 Related Party Disclosures 1 January 2011Amendments to INT FRS 114 Prepayments of Minimum Funding Requirements 1 January 2011INF FRS 115 Agreements for the Construction of Real Estate 1 January 2011

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2.3 Standards issued but not yet effective (cont’d)

Management expects that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application, except the following:

Revised FRS 24 Related Party Disclosures

The revised FRS 24 clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other whenever a person (or a close member of that person’s family) or a third party entity has control or joint control over the entity, or has significant influence over the entity. The revised standard also introduces a partial exemption of disclosure requirements for government-related entities. The Group is currently determining the impact of the expanded definition has on the disclosure of related party transactions. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Group when implemented in year ending 30 June 2011.

2.4 Functional and foreign currency

(a) Functional currency

The individual financial statements of each group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The financial statements of the Group and the Company are presented in Singapore Dollar, which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the financial year-end. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the financial year-end are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operations.

(c) Foreign currency translation

The assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the financial year-end and their statements of comprehensive income are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income relating to that particular foreign operation is recognised in the consolidated profit or loss.

2.5 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 30 June. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, transactions, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.




2.5 Basis of consolidation (cont’d)

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 non-controlling interest.

Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Goodwill acquired in a business combination is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events and circumstances indicate that the carrying value may be impaired.

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 consolidated profit or loss on the date of acquisition.

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. They are presented in the consolidated statement of financial position within equity, separately from the parent shareholders’ equity, and are separately disclosed in the consolidated profit or loss.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

2.6 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. The Group generally has such power when it directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the Board of Directors.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less any impairment losses.

2.7 Associates

An associate 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 between 20% and 50% of the voting power, or has representation on the board of directors. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investment in associate is accounted for using the equity method. Under the equity method, the investment in associate is measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is deducted from the carrying amount of the investment and is recognised as income as part of the Group’s share of profit or loss of the associate in the period in which the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in consolidated profit or loss.

The financial statements of the associate are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

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2.8 Jointly-controlled entities

A jointly-controlled entity is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control, where the strategic financial and operating decisions relating to the activity require the unanimous consent of the parties sharing control.

Interests in jointly-controlled entities are accounted for at cost less any impairment losses.

The Group’s interest in jointly-controlled entities are accounted for in the consolidated financial statements using the equity method, whereby the Group’s share of results in jointly-controlled entities is included in the consolidated profit or loss. In the consolidated statement of financial position, the carrying value of jointly-controlled entities reflects the Group’s share of the underlying net assets of the jointly-controlled entities.

The most recent available audited financial statements of the jointly-controlled entities are used by the Group in applying the equity method. Where the dates of the audited financial statements used are 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.

2.9 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

The initial cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition and location for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs are charged to profit or loss.

Subsequent to initial recognition, property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the estimated useful lives of the asset on the following basis:

Leasehold property and buildings – 20 to 30 yearsPlant and machinery – 3 to 30 yearsOffice equipment, furniture and fittings – 3 to 10 yearsTugs and other vessels – 1 to 25 yearsBarges – 1 to 15 yearsMotor vehicles – 5 to 8 yearsDry docks, quays and ancillary – 8 to 20 years

Assets under construction included in property, plant and equipment are not depreciated until such time as the relevant assets are completed and put into operational use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual values, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in profit or loss in the year the asset is derecognised.

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.




2.10 Lease prepayment

Leases of land under which the lessor has not transferred all the risks and benefits of ownership are classified as operating leases.

Lease prepayment for land use rights is stated at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged to profit or loss on a straight-line basis over the term of the respective leases.

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 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 are recognised in profit or loss. After the recognition of an impairment loss, the depreciation (amortisation) charge for the asset shall be adjusted in future periods to allocate the asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses recognised for an asset may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. 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 previously. Such reversal is recognised in profit or loss. 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.

2.12 Financial assets

Financial assets are recognised in the statement of financial position 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.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that has been recognised directly in other comprehensive income is recognised in profit or loss.

All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e. the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned.

54



2.12 Financial assets (cont’d)

(a) Financial assets at fair value through profit or loss

Financial assets held for trading are classified as ‘financial assets at fair value through profit or loss’.Financial assets held for trading are derivatives or financial assets acquired principally for the purpose of selling in the near term. Derivative financial instruments are also classified as held for trading unless they are designated as effective hedging instruments.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial assets are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss include exchange differences, interest and dividend income.

(b) Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

The Group classifies the following financial assets as loans and receivables:

• Bank balances, deposits and cash• Trade and other receivables, including amounts due from subsidiaries, jointly-controlled entity and

related parties

(c) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

(d) Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are not classified in any other categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in the other comprehensive income, except that impairment losses, foreign exchange gains and losses and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised.

2.13 Bank balances, deposits and cash

Bank balances, deposits and cash comprise cash at bank and on hand and demand deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Bank balances, deposits and cash carried in the statements of financial position are classified and accounted for as loans and receivables. The accounting policy for this category of financial assets is stated in Note 2.12(b).

2.14 Trade and other receivables

Trade and other receivables, including amounts due from subsidiaries, jointly-controlled entity and related parties are classified and accounted for as loans and receivables. The accounting policy for this category of financial assets is stated in Note 2.12(b).




2.14 Trade and other receivables (cont’d)

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 2.15(a) below.

2.15 Impairment of financial assets

The Group assesses at each financial year-end whether there is any objective evidence that a financial asset is impaired.

(a) Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments 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 profit or loss.

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

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 profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(b) Assets carried at cost

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, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

(c) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

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 profit or loss, is transferred from equity to profit or loss. Reversals in respect of equity instruments classified as available-for-sale are not recognised in profit or loss. Reversals of impairment losses on debt instruments are reversed through the profit or loss, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.

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2.16 Inventories

Inventories comprise raw materials and fuel on board for consumption purposes and are stated at the lower of cost (determined on first-in-first-out basis) and net realisable value. Raw materials consist mainly of steel and other materials used for shipbuilding and shiprepair operations.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

2.17 Construction contracts

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised as revenue and expenses respectively, by reference to the stage of completion of the contract activity at each reporting date. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that are likely to be recoverable and contract costs are recognised as expense in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss on the construction contract is recognised as an expense immediately.

The stage of completion is measured by reference to the percentage of direct costs incurred for work performed to date to estimated total direct costs for the contract.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in the contract work and claims that can be measured reliably. A variation or a claim is recognised as contract revenue when it is probable that the customer will approve the variation or negotiations have reached an advanced stage such that it is probable that the customer will accept the claim.

At each reporting date, the aggregated costs incurred plus recognised profit (less recognised loss) on each contract is compared against the progress billings. Where costs incurred plus the recognised profits (less recognised losses) exceed progress billings, the balance is presented as construction work-in-progress within “Current Assets”. Where progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is presented as progress billings in excess of construction work-in-progress within “Current Liabilities”.

2.18 Financial liabilities

Financial liabilities include trade payables, which are normally settled on 30-120 day terms, other payables, payables to related parties, interest-bearing loans and borrowings and derivative financial instruments. Financial liabilities are recognised in the statements of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.

Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transaction costs.

Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest method, except for derivatives, which are measured at fair value.

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired. For financial liabilities other than derivatives, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

2.19 Borrowing costs

Borrowing costs are recognised in profit or loss as incurred except to the extent that they are capitalised. Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are 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.




2.20 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a result of a past event, it is probable that an outflow of economic resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance costs.

Provision for liquidated damages is made in respect of anticipated claims from customers on contracts of which deadlines are overdue or not expected to be completed on time in accordance with contractual obligations. The utilisation of provisions is dependent on the timing of claims.

Provision for warranties represents the best estimate of the Group’s liability to repair vessels or replace affected parts during the warranty period. The provision is calculated based on past experience of the level of repairs and returns.

2.21 Government grant

Cash grants received from the government in relation to the Jobs Credit Scheme are recognised upon receipts. Such grants are recorded by the Group as other income in the financial statements.

2.22 Employee benefits

(a) Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore companies in the Group make contributions to Central Provident Fund Scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

(b) Employee leave entitlements

Employee entitlements to annual leave are recognised as a liability when they accrue to employees. The estimated liability for leave is recognised for services rendered by employees up to financial year-end.

(c) Employee share option plans

Employees (including non-executive Directors) of the Group and of the Company receive remuneration in the form of share options as consideration for services rendered. The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date on which the share options are granted.

The cost of equity-settled transactions is recognised, together with a corresponding increase in the employee share option reserve, over the vesting period. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of options that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for options that do not ultimately vest, except for options where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

The employee share option reserve is transferred to retained earnings upon expiry of the share options. When the options are exercised, the employee share option reserve is transferred to share capital if new shares are issued.

58



2.22 Employee benefits (cont’d)

(c) Employee share option plans (cont’d)

Where the employee share option plan is cancelled, it is treated as if it had vested on the date of cancellation, and any expense that otherwise would have been recognised for services received over the remaining vesting period is recognised immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. All cancellations of equity-settled transaction awards are treated equally.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

The Group has taken advantage of the transitional provisions of FRS 102 in respect of equity-settled awards and has applied FRS 102 only to equity-settled awards granted after 22 November 2002 that had not vested on or before 1 July 2005.

2.23 Leases

(a) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in profit or loss 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.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of the ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased assets and are recognised over the lease term on the same basis as rental income. The accounting policy for rental income is set out in Note 2.25(c).

2.24 Assets held for sale

An asset is deemed to be held for sale if its carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Upon classification as held for sale, non-current assets and disposal groups are not depreciated and are measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised in profit or loss.

2.25 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. Revenue is not recognised to the extent when there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. Group turnover excludes intercompany transactions.




2.25 Revenue (cont’d)

(a) Shipbuilding

Revenue from shipbuilding contracts is recognised using the percentage of completion method, provided the work is at least 10% completed and the outcome of the contract can be reliably estimated. The percentage of completion is measured by reference to the percentage of direct costs incurred for work performed to date to estimated total direct costs for the contract.

When the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable.

(b) Shiprepair and conversion

Revenue from fabrication and outfitting works and conversion jobs is recognised using the percentage of completion method, provided the work is at least 10% completed and the outcome of the contract can be reliably estimated. The percentage of completion is measured by reference to the percentage of direct costs incurred for work performed to date to estimated total direct costs for the contract. When the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable.

Revenue from other shiprepair and conversion are recognised upon completion of work.

(c) Shipchartering and rental

Shipchartering revenue and rental income are recognised on a time proportion basis.

(d) Trade sales

Revenue is recognised upon the transfer of significant risks and rewards of ownership of the goods to the customer.

(e) Interest income

Interest income is recognised using the effective interest method.

(f) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

2.26 Income taxes

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the financial year-end.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

60



2.26 Income taxes (cont’d)

(b) Deferred tax (cont’d)

Deferred tax liabilities are recognised for all 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 the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates 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 tax assets are recognised for all deductible temporary differences, carry forward 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 except:

• where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the financial year-end.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

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.

(c) Sales tax

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 statements of financial position.




2.27 Derivative financial instruments and hedging activities

The Group uses derivative financial instruments such as forward currency contracts and interest rate swaps 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 the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in profit or loss for the 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 swap contracts is determined by reference to market values for similar instruments.

For the purpose of hedge accounting, hedges are classified as

• Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment, that is attributable to a particular risk and could affect profit or loss; or

• Cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction 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 fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

(a) Fair value hedges

For fair value hedges, the carrying amount of the hedged item is adjusted for gains and losses attributable to the risk being hedged, the derivative is remeasured at fair value and gains and losses from both are recognised in profit or loss.

For fair value hedges relating to items carried at amortised cost, the adjustment to carrying value is amortised through the profit or loss over the remaining term to maturity. Any adjustment to the carrying amount of a hedged financial instrument for which the effective interest method is used is amortised to profit or loss.

Amortisation begins as soon as an adjustment exists but no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss. The changes in the fair value of the hedging instrument are also recognised in profit or loss.

The Group discontinues fair value hedge accounting if the hedging instrument expires or is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation. Any adjustment to the carrying amount of a hedged financial instrument for which the effective interest method is used is amortised to profit or loss. Amortisation begins as soon as an adjustment exists but no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

62



2.27 Derivative financial instruments and hedging activities (cont’d)

(b) Cash flow hedges

For cash flow hedges, the effective portion of the gain or loss on the hedging instrument is recognised directly in the hedging reserve, while the ineffective portion is recognised in profit or loss.

Amounts taken to hedging reserve are transferred to profit or loss when the hedged transaction affects profit or loss, such as when hedged financial income or financial expense is recognised or when a forecast sale or purchase occurs. Where the hedged item is the cost of a non-financial asset or liability, the amounts taken to hedging reserve are transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction is no longer expected to occur, amounts previously recognised in hedging reserve are transferred to profit or loss. 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 recognised in profit or loss.

2.28 Segment reporting

A business segment is a distinguishable component of the Group that is engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of the Group that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.

2.29 Share capital and share issue expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.

2.30 Treasury shares

When shares recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity until they are cancelled, sold or reissued. No gain or loss is recognised in profit or loss on purchase, sale, issue or cancellation of treasury shares.

2.31 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statement of financial position.

3. Significant accounting judgements and estimates

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the financial year-end. These 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. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.



3. Significant accounting judgements and estimates (cont’d)

(a) 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.

(i) Revenue recognition

Total contract revenue includes an estimation of the value of variation works that is recoverable from the customers.

The Group has recognised estimated recoverable variation works of $1,215,000 (2009: $Nil) as contract revenue for which customer acceptance is pending. In making the judgement, the Group evaluates its past experience and the history of settlements with the customers. Any shortfall in recovery of this recoverable amount will impact the results of the Group by the same quantum.

(ii) Accounting for leases

The Group enters into charter hire leases on its fleet of vessels and equipment with third parties. The Group generally retains all the significant risks and rewards of ownership of these vessels and equipment, and therefore accounted for these leases as operating leases. The carrying amount of these vessels at 30 June 2010 was $247,589,000 (2009: $226,245,000).

Certain charter agreements contain terms and conditions, which may transfer significant risks and rewards of vessels to the lessee. Such arrangements aggregating to $Nil (2009: $1,717,000) are accounted for as finance leases.

(iii) Income taxes

The Group has exposure to income taxes in various jurisdictions. 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. The carrying amount of the Group’s current tax payable and deferred tax liabilities at 30 June 2010 was $12,007,000 (2009: $8,796,000) and $9,747,000 (2009: $9,308,000) respectively.

(iv) Determination of functional currency

The Group measures foreign currency transactions in the respective functional currencies of the Company and its subsidiaries. In determining the functional currencies, judgement is required to determine the currency that mainly influences sales prices for goods and services and of the country whose competitive forces and regulations mainly determines the sales prices of its goods and services. The functional currencies of the entities in the Group are determined based on management’s assessment of the economic environment in which the entities operate and its process of determining sales prices.

(b) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting 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.

64

3. Significant accounting judgements and estimates (cont’d)

(b) Key sources of estimation uncertainty (cont’d)

(i) Useful lives of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over their useful lives. Management estimates the useful lives of these property, plant and equipment to be within 1 to 30 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amount of the Group’s property, plant and equipment is disclosed in Note 4.

(ii) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivables is disclosed in Notes 11 and 14.

(iii) Construction contracts

The Group recognises contract revenue by reference to the stage of completion of the contract activity at each reporting date, when the outcome of a construction contract can be estimated reliably. The stage of completion is measured by reference to the proportion that contract costs incurred for work performed to date bear to the estimated total contract costs. Significant assumptions are required to estimate the total contract costs that will affect the stage of completion. The estimates are made based on past experience and knowledge of the management. The carrying amounts of assets and liabilities arising from construction contracts are disclosed in Note 10.

(iv) Impairment of non-financial assets

The Group determines an asset’s recoverable amount based on the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use. When value in use calculation is undertaken, management estimates the expected future cash flows from the asset or cash-generating unit by applying a suitable discount rate to calculate the present value of those cash flows. When fair value less costs to sell is used, management engages the services of professional valuers to determine the fair values using valuation techniques which involve the use of estimates and assumptions which are reflective of current market conditions.

The carrying amount of the Group’s property, plant and equipment is disclosed in Note 4.



4.

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66

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4. Property, plant and equipment (cont’d)

The CompanyMotor

vehicles$’000

CostAt 1 July 2008, 30 June 2009, 1 July 2009 and 30 June 2010 227

Accumulated depreciationAt 1 July 2008 79Depreciation charge for the year 24

At 30 June 2009 and 1 July 2009 103Depreciation charge for the year 24

At 30 June 2010 127

Carrying amountAt 30 June 2009 124

At 30 June 2010 100

The depreciation charge for the year as shown in profit or loss is arrived at as follows:

The Group 2010 2009 $’000 $’000

Depreciation charge for the year 30,765 26,130Depreciation included in work-in-progress carried forward (2,675) (2,385)Depreciation previously included in work-in-progress now charged to profit or loss 2,385 3,261

Depreciation charge as disclosed in Note 28 30,475 27,006


68

4. Property, plant and equipment (cont’d)

Included in carrying amount of property, plant and equipment of the Group and the Company are the following:

The Group The Company2010 2009 2010 2009$’000 $’000 $’000 $’000

Assets held under finance leases: Motor vehicles 654 914 100 124 Plant and machinery 12,234 6,855 – –

12,888 7,769 100 124

Assets pledged as security for interest- bearing loans and borrowings: Leasehold property and buildings 5,060 5,419 – – Plant and machinery 10,265 11,934 – – Tugs and other vessels 129,930 88,162 – – Barges 39,700 43,838 – – Dry docks, quays and ancillary 18,716 14,793 – – Assets under construction – 28,925 – –

203,671 193,071 – –

During the year, borrowing costs of $817,000 (2009: $334,000) at interest rates ranging from 4.75% to 5.5% (2009: 3.55% to 3.75%) per annum was capitalised as property, plant and equipment.

Management has carried out a review of the recoverable amount of property, plant and equipment of the Group during the financial year and recorded an impairment loss of $2,297,000 (2009: $3,950,000). The recognised impairment loss represents the write-down of assets to their recoverable amounts, determined at the cash-generating unit level (individual vessel) and is based on fair value less costs to sell determined with respect to valuations obtained. The impairment loss was recognised in profit or loss under “other operating expenses” (Note 28).



5. Lease prepayments

The GroupLeasehold

land$’000

CostAt 1 July 2008 6,519Net exchange differences 81

At 30 June 2009 and 1 July 2009 6,600Net exchange differences (36)

At 30 June 2010 6,564

Accumulated amortisationAt 1 July 2008 2,273Amortisation charge for the year 200Net exchange differences 3

At 30 June 2009 and 1 July 2009 2,476Amortisation charge for the year 199Net exchange differences (3)

At 30 June 2010 2,672

Carrying amountAt 30 June 2009 4,124

At 30 June 2010 3,892

Included in lease prepayments of the Group are the following:

Leasehold land mortgaged to banks as security for interest-bearing loans and borrowings granted to a subsidiary

The Group 2010 2009 $’000 $’000

1,414 1,492

The Group has land use rights over 7 plots of land in the People’s Republic of China, Indonesia and Singapore where the shipyards of the Group reside. The land use rights have a remaining tenure of 11 to 45 years (2009: 12 to 46 years).


70

6. Subsidiaries

Unquoted equity shares, at cost

The Company

2010 2009 $’000 $’000

33,573 31,370

Details of the subsidiaries are as follows:

Name of subsidiaries Principal activitiesCountry of

incorporation

Equityinterest held

by the Company2010 2009

% %Held by the Company

* ASL Shipyard Pte Ltd Shipbuilding, shiprepair and conversion and general engineering

Singapore 100 100

** PT. ASL Shipyard Indonesia 1

Shipbuilding, shiprepair and general engineering

Indonesia 10 10

* ASL Offshore & Marine Pte. Ltd. Chartering of vessels and ship management

Singapore 100 100

* Capitol Marine Pte Ltd Chartering of vessels Singapore 100 100

* Capitol Offshore Pte Ltd Chartering of vessels Singapore 100 100

* Capitol Tug & Barge Pte Ltd Chartering of vessels Singapore 100 100

* Capitol Shipping Pte Ltd Chartering of vessels Singapore 100 100

* Lightmode Pte Ltd Chartering of vessels Singapore 100 100

* Capitol Logistics Pte. Ltd. Chartering of vessels Singapore 100 100

* Capitol Navigation Pte. Ltd. Chartering of vessels Singapore 100 100

* Capitol Aquaria Pte. Ltd. Chartering of vessels Singapore 100 100

* Capitol Oceans Pte. Ltd. Chartering of vessels Singapore 100 100

* ASL Maritime Services Pte. Ltd. Chartering of vessels and ship management

Singapore 100 100

* Intan Maritime Investments Pte. Ltd. Chartering of vessels Singapore 100 100

* Intan Synergy Pte. Ltd. Chartering of vessels Singapore 100 100

* Intan Offshore Pte. Ltd. Chartering of vessels Singapore 100 -

* ASL Triaksa Offshore Pte. Ltd. Chartering of vessels Singapore 60 60

* Hongda Investment Pte. Ltd. Investment holding Singapore 60 60

* Intan Overseas Investments Pte. Ltd. Investment holding Singapore 100 100

1 90% owned by ASL Shipyard Pte Ltd, a wholly-owned subsidiary of the Company.



6. Subsidiaries (cont’d)

Name of subsidiaries Principal activitiesCountry of

incorporation

Equityinterest held

by the Company2010 2009

% %Held through subsidiaries

** PT. ASL Shipyard Indonesia Shipbuilding, shiprepair and general engineering

Indonesia 90 90

** PT. Cipta Nusantara Abadi Investment holding and provision of agency, handling and consultancy services

Indonesia 75 75

** PT. Capitol Nusantara Indonesia Shipping activities Indonesia 60 60

** PT. Bina Kontinental Lestari Investment holding and provision of agency, handling and consultancy services

Indonesia 100 100

** PT. Awak Samudera Transportasi Shipping activities Indonesia 100 100

** PT. Cemara Intan Shipyard Shipbuilding, shiprepair and general engineering

Indonesia 100 100

*** Jiang Men Hongda Shipyard Ltd. Shipbuilding and general engineering

People’s Republic of China

60 60

* Audited by Ernst & Young LLP, Singapore.** Audited by Drs Bernardi & Co, Indonesia.*** Audited by Zhishang Certified Public Accountants Co., Ltd., People’s Republic of China.

In accordance to Rule 716 of the SGX-ST Listing Manual, the Audit Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment of different auditors for its subsidiaries would not compromise the standard and effectiveness of the audit of the Company.


72

7. Interest in jointly-controlled entity and associate


Interest in jointly-controlled entityShares, at cost 87 87 – –Share of post-acquisition reserves 1,137 2,171 – –

1,224 2,258 – –

Interest in associateShares, at cost 1,558 1,558 1,558 1,558Share of post-acquisition reserves (957) (466) – –

601 1,092 1,558 1,558

Total interest in jointly-controlled entity and associate 1,825 3,350 1,558 1,558

Interest in jointly-controlled entity

Details of the jointly-controlled entity are as follows:

Name of jointly-controlled entity Principal activities

Place of incorporation and

business

Effective equity interest held by the Group

2010 2009

% %

Held through a subsidiary

* HKR-ASL Joint Venture Limited Chartering of vessels and ship management

Hong Kong 50 50

* Audited by Alan Chan & Company, Hong Kong.



7. Interest in jointly-controlled entity and associate (cont’d)

The following amounts represent the Group’s proportionate share of the results, assets and liabilities of the jointly-controlled entity, which have been equity accounted in the consolidated statement of financial position and profit or loss:

The Group 2010 2009 $’000 $’000

Turnover – 3,718Profit after taxation (179) 1,747

Current assets 190 1,294Non-current assets 1,034 1,218

Total assets 1,224 2,512

Current liabilities (1) (254)Non-current liabilities – –

Total liabilities (1) (254)

Interest in associate

Details of the associate are as follows:

Name of associate Principal activities

Place of incorporation and

business

Effective equityinterest heldby the Group

2010 2009% %

Held by the Company

* Fastcoat Industries Pte. Ltd. Investment holding and metal galvanising, coating and protecting operations

Singapore 44.5 44.5

Held through an associate

** PT. Fastcoat Industries Metal galvanising, coating and protecting operations

Indonesia 44.5 44.5

* Audited by Ernst & Young LLP, Singapore.** Audited by Drs Bernardi & Co, Indonesia.


74

7. Interest in jointly-controlled entity and associate (cont’d)

Interest in associate (cont’d)

The summarised financial information of the associate, not adjusted for the proportion of ownership interest held by the Group, is as follows:

The Group 2010 2009 $’000 $’000

Turnover 3,950 873Loss after taxation (1,103) (884)

Current assets 3,359 2,128Non-current assets 2,248 2,471

Total assets 5,607 4,599

Current liabilities (4,256) (2,146)Non-current liabilities – –

Total liabilities (4,256) (2,146)

8. Finance lease receivables

The Group has entered into agreements that provide the lessees a right to charter the Group’s tugs and barges. Charter agreements that transfer substantially all the risks and rewards of ownership to the lessee, and provide for the transfer of ownership of the asset to the lessee by the end of the lease term at a nominal price, are classified as finance leases. All other charter agreements are classified as operating leases.

Future minimum lease receipts under finance leases together with the present value of the net minimum lease receipts for the Group are as follows:

2010 2009

The Group

Total minimum lease

receipts

Unearned finance income

Present value of receipts

Total minimum lease

receipts

Unearned finance income

Present value of receipts

$’000 $’000 $’000 $’000 $’000 $’000

Within 1 year – – – 1,742 (25) 1,717Between 1 and 5 years – – – – – –

– – – 1,742 (25) 1,717

The weighted average effective interest rate for finance lease receivables is Nil (2009: 5%) per annum.



9. Inventories

The Group2010 2009$’000 $’000

Raw materials 12,841 11,570Fuel on board 310 839

13,151 12,409

10. Construction work-in-progress/Progress billings in excess of construction work-in-progress

The Group2010 2009$’000 $’000

Construction work-in-progress and attributable profits 235,386 386,970Progress billings (208,200) (337,458)Allowance for foreseeable losses – (1,157)

27,186 48,355

Represented by:Construction work-in-progress 67,734 108,375Progress billings in excess of construction work-in-progress (40,548) (60,020)

27,186 48,355


76

11. Trade and other receivables

The Group The Company 2010 2009 2010 2009 $’000 $’000 $’000 $’000

Trade and other receivables (current):Trade receivables 100,586 68,113 – –Less: Allowance for impairment (5,011) (4,420) – –

Net trade receivables 95,575 63,693 – –

Other receivables 9,067 5,633 – –Insurance claimable 2,486 1,100 – –Amount due from director of a subsidiary – 132 – –Amount due from subsidiaries - non-trade – – 165,437 130,134Amount due from jointly-controlled entity and associate - trade 1,499 458 – – - non-trade 181 180 – –

13,233 7,503 165,437 130,134Less: Allowance for impairment (215) (215) – –

Net other receivables 13,018 7,288 165,437 130,134

Total 108,593 70,981 165,437 130,134

Other receivable (non-current):Amount due from subsidiary - non-trade – – 2,203 2,212

Total trade and other receivables 108,593 70,981 167,640 132,346



11. Trade and other receivables (cont’d)

Movements in allowance for impairment of doubtful trade and other receivables during the financial year is as follows:

The Group2010 2009$’000 $’000

At 1 July 4,635 1,145Charge for the year 610 3,780Write-back (33) (148)Utilised – (133)Net exchange differences 14 (9)

At 30 June 5,226 4,635

The ageing of trade receivables and allowance for impairment of doubtful trade receivables of the Group is as follows:

2010 2009Gross Impairment Gross Impairment$’000 $’000 $’000 $’000

Not past due 15,797 – 27,253 –Past due 0 to 3 months 35,272 – 19,604 –Past due 3 to 6 months 17,479 – 5,208 132Past due 6 to 12 months 16,878 – 8,645 1,388More than 1 year 15,160 5,011 7,403 2,900

100,586 5,011 68,113 4,420

Trade receivables

Trade receivables are non-interest bearing and are generally on 30 - 90 days’ terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

Amount due from director of a subsidiary

Amount due from director of a subsidiary is unsecured, interest-free and was fully repaid during the year.

Amount due from subsidiaries, jointly-controlled entity and associate

The non-trade balances with subsidiaries are unsecured, interest-free and are repayable on demand except for balances with certain wholly-owned subsidiaries which are charged interest at rates ranging from 3.93% to 5.05% (2009: 3.36% to 4.82%) per annum.

The non-trade balances with jointly-controlled entity and associate are unsecured, interest-free and are repayable on demand.

Amount due from subsidiary (non-current)

The non-trade balance with subsidiary is unsecured, interest-free and is not expected to be repayable within the next twelve months.


78

11. Trade and other receivables (cont’d)

Trade and other receivables are denominated in the following currencies:


Singapore Dollar 71,883 54,350 162,177 127,197United States Dollar 30,943 10,946 5,463 5,149Euro 3,569 4,122 – –Indonesia Rupiah 1,295 781 – –Chinese Renminbi 860 782 – –Others 43 – – –

108,593 70,981 167,640 132,346

12. Deposits and prepayments


Deposits 293 277 – –Downpayment for purchase of land, machinery, vessels and yard development 2,734 4,753 2,454 2,454Prepayments 4,021 1,060 679 106

7,048 6,090 3,133 2,560

13. Derivative financial instruments

Derivative financial instruments as at 30 June are as follows:

The Group2010 2009

Assets Liabilities Assets Liabilities$’000 $’000 $’000 $’000

Forward currency contracts 1,350 (443) 1,481 (2,246)Interest rate swaps – (3,121) – (2,000)

1,350 (3,564) 1,481 (4,246)



13. Derivative financial instruments and hedging activities (cont’d)

The Company 2010 2009

Assets Liabilities Assets Liabilities$’000 $’000 $’000 $’000

Interest rate swaps – (368) – (822)

(i) Forward currency contracts

During the year, the Group entered into various foreign exchange forward contracts to sell United States Dollar and Euro and to purchase United States Dollar, Euro, Norwegian Kroner and Japanese Yen on its future anticipated income and expenditure respectively. As at 30 June 2010, the terms of these contracts and the fair value adjustments on these derivative financial instruments are as follows:

The Group

Forward currency contracts Maturity dates

Contract or notional amount

Fair valueadjustments

Assets Liabilities$’000 $’000 $’000

2010Sell - fixed forward contracts 9 July 2010 –

30 December 201187,525 1,314 (241)

Buy - fixed forward contracts 30 July 2010 –

28 April 201110,977 36 (202)

1,350 (443)

The terms of the forward currency contracts have been negotiated to match the terms of the commitments.

For the cash flow hedges of the expected future sales which were assessed to be effective, a net fair value gain of $993,000 (2009: loss of $361,000) was included in the hedging reserve. An ineffective portion of the cash flow hedges amounted to $72,000 (2009: $7,000) was recognised as gain in profit or loss during the year.

For the cash flow hedges of the expected future purchases which were assessed to be effective, a net fair value loss of $140,000 (2009: $413,000) was included in the hedging reserve. An ineffective portion of the cash flow hedges amounted to $27,000 (2009: $Nil) was recognised as loss in profit or loss during the year.


80


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14. Bank balances, deposits and cash


Cash on hand 42 10 – –Cash at banks 32,425 43,369 510 2,046Fixed deposits with banks 57,623 52,633 – 15,938

90,090 96,012 510 17,984

Cash at banks of the Group amounting to $14,815,000 (2009: $24,210,000) earn interest based on daily bank deposit rates.

The maturity period of fixed deposits with banks ranges from 1 week to 1 year (2009: 1 week to 6 months) for the Group and Nil (2009: 1 week to 1 month) for the Company. The weighted average effective interest rates per annum for fixed deposits at 30 June for the Group and the Company are 0.20% (2009: 0.18%) and Nil (2009: 0.14%) respectively.

Bank balances, deposits and cash of the Group and the Company are denominated in the following currencies:


Singapore Dollar 73,246 83,093 510 17,984United States Dollar 8,367 6,498 – –Euro 7,924 4,129 – –Chinese Renminbi 279 2,079 – –Indonesia Rupiah 273 212 – –Others 1 1 – –

90,090 96,012 510 17,984

The Group’s restricted cash included in cash at banks and fixed deposits amounted to $1,861,000 (2009: $1,236,000) and $4,927,000 (2009: $Nil) respectively, and is set aside for specific use with respect to certain financing facilities secured by certain subsidiaries.

For the purpose of cash flow statement, cash and cash equivalents comprise the following:


Cash on hand 42 10 – –Cash at banks 32,425 43,369 510 2,046Fixed deposits with banks 57,623 52,633 – 15,938

90,090 96,012 510 17,984Less: Restricted cash - Cash at banks (1,861) (1,236) – – - Fixed deposits with banks (4,927) – – –

Cash and cash equivalents 83,302 94,776 510 17,984


82

15. Assets held for sale


VesselsAt 1 July 845 13,982 – –Additions 3,231 12,028 – –Disposals (6,490) (24,062) – –Transfer from property, plant and equipment 9,683 1,304 – –Transfer to property, plant and equipment – (2,407) – –

At 30 June 7,269 845 – –

16. Trade and other payables


Trade and other payables (current):Trade payables 85,554 76,747 64 32Accrued operating expenses 34,255 39,345 1,102 466Payables for yard development 9,132 8,447 – –Other payables 3,295 1,649 – –Amount due to subsidiaries - non-trade – – 28,843 35,918Amount due to jointly-controlled entity and associate - trade 146 30 – – - non-trade 90 87 – –Amount due to non-controlling interests of subsidiaries - non-trade 2,080 1,862 – –

134,552 128,167 30,009 36,416

Other payables (non-current):Amount due to non-controlling interests of subsidiaries - non-trade 1,469 1,475 – –

Total trade and other payables 136,021 129,642 30,009 36,416



16. Trade and other payables (cont’d)

Trade payables are non-interest bearing and are normally settled on 30-120 days’ terms.

Amount due to subsidiaries and jointly-controlled entity

The non-trade balances with subsidiaries, jointly-controlled entity and associate are unsecured, interest-free and are repayable on demand.

Amount due to non-controlling interests of subsidiaries (current)

The balance with non-controlling interests of subsidiaries is unsecured, interest-free and is repayable on demand.

Amount due to non-controlling interests of subsidiaries (non-current)

This balance relates to non-controlling interests’ loan to subsidiaries of the Company which is unsecured, interest-free and is not expected to be repaid within the next twelve months.

Trade and other payables are denominated in the following currencies:


Singapore Dollar 112,144 99,846 30,009 36,416United States Dollar 8,527 9,813 – –Euro 1,612 7,045 – –Indonesia Rupiah 11,764 10,311 – –Chinese Renminbi 475 547 – –Hong Kong Dollar 91 88 – –Swedish Krona 135 142 – –Japanese Yen 172 687 – –Sterling Pound 30 649 – –Norwegian Kroner 1,040 475 – –Others 31 39 – –

136,021 129,642 30,009 36,416

17. Other liabilities

The Group2010 2009$’000 $’000

Deferred income 93 342Deposits received from customers 3,252 1,723

3,345 2,065


84

18. Trust receipts

Trust receipts are denominated in the following currencies:

The Group2010 2009$’000 $’000

Singapore Dollar 23,467 32,944United States Dollar 1,566 –

25,033 32,944

The effective interest rate at 30 June for the Group is 2.12% (2009: 2.95%) per annum. Interest rates are repriced within a year.

19. Interest-bearing loans and borrowings

The Group The CompanyEffective interest

ratesMaturity

dates 2010 2009 2010 2009 $’000 $’000 $’000 $’000

CurrentSGD Finance lease liabilities – secured 2.63 2011 2,953 1,499 25 24RMB Finance lease liabilities – secured 4.88 2011 1 11 – –SGD Floating rate – secured 2.84 1 2011 5,325 7,485 – –SGD Fixed rate – secured 4.17 2 2011 17,141 14,002 – –SGD Fixed rate – unsecured 4.28 2, 3 2011 12,000 43,000 11,000 39,000USD Fixed rate – secured 5.55 2 2011 10,589 6,457 – –Euro Fixed rate – secured 5.17 2 2011 2,031 2,419 – –RMB Fixed rate – secured 5.04 2011 1,030 1,694 – –

51,070 76,567 11,025 39,024



19. Interest-bearing loans and borrowings (cont’d)

The Group The CompanyEffective interest

ratesMaturity

dates 2010 2009 2010 2009$’000 $’000 $’000 $’000

Non-currentSGD Finance lease liabilities – secured 2.63 2012 - 2017 5,781 3,807 20 45SGD Floating rate – secured 2.84 1 2012 - 2015 10,248 24,071 – –SGD Fixed rate – secured 4.17 2 2012 - 2014 22,804 19,064 – –SGD Fixed rate – unsecured 4.31 2, 3 2014 65,000 11,000 65,000 11,000USD Fixed rate – secured 5.55 2 2013 - 2015 26,281 19,812 – –Euro Fixed rate – secured 5.17 2 2013 3,046 6,047 – –

133,160 83,801 65,020 11,045

Total 184,230 160,368 76,045 50,069

1 The interest rates of these floating rate loans are repriced at interval of 1 month.

2 Includes interest-bearing loans and borrowings with interest rate swaps.

3 Includes notes issued under the S$300 million Multicurrency Debt Issuance Programme established by the Company in May 2008. These notes are unsecured and are issued in series or tranches and comprised floating rate notes of $11,000,000 and $21,000,000 due in June 2011 and March 2014 respectively and fixed rate note of $44,000,000 due in March 2014.

The carrying value of the Group’s assets pledged as security for interest-bearing loans and borrowings are disclosed under Notes 4 and 5.


86

20. Provision for warranty claims

The Group 2010 2009 $’000 $’000

Provision for warranty claims – 257

Movements in provision for warranty claims during the year are as follows:

At 1 July 257 600Charge for the year 140 510Reversed during the year (140) –Utilised during the year (257) (853)

At 30 June – 257

The provision for warranty claims represents the best estimate of the Group’s liability to repair vessels and replace affected parts during the warranty period and is calculated based on past experience of the level of repairs and returns.

21. Deferred tax liabilities

The Group 2010 2009 $’000 $’000

Deferred tax assetsAllowance for unutilised leave (48) (42)Others (25) (73)Unabsorbed wear and tear allowances and unutilised tax losses (177) (755)

(250) (870)

Deferred tax liabilitiesDifferences in depreciation 9,852 10,178Revaluation of forward contract to fair value 145 –

9,997 10,178

9,747 9,308

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off and when the deferred taxes relate to the same taxation authority. The following amounts, determined after appropriate offsetting are as follows:

The Group 2010 2009 $’000 $’000

Deferred tax liabilities 9,747 9,308



21. Deferred tax liabilities (cont’d)

At the financial year-end, the Group has undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised. No liability has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

22. Share capital

The Group and the CompanyNumber of shares Amount

Issued sharecapital

Treasuryshares

Issuedsharecapital

Treasuryshares

’000 ’000 $’000 $’000

Fully paid ordinary shares, with no par value

2010

Balance at beginning of year 301,383 1,794 83,051 (923)

Issued under ASL Employee Share Option Scheme (Note 32) 15 – 10 –

Balance at end of year 301,398 1,794 83,061 (923)

2009

Balance at beginning of year 300,876 – 82,725 –

Issued under ASL Employee Share Option Scheme (Note 32) 507 – 326 –

Purchase of treasury shares – 1,794 – (923)

Balance at end of year 301,383 1,794 83,051 (923)

The holders of ordinary shares (except for treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares (except for treasury shares) carry one vote per share without restriction.


88

22. Share capital (cont’d)

Treasury shares

Pursuant to the Share Purchase Mandate approved by shareholders, the Company purchased 1,794,000 of its ordinary shares amounted to $923,000 by way of on-market purchases, with prices ranging from $0.48 to $0.60 per share in financial year ended 30 June 2009. This is shown as a component within shareholders’ equity as a reduction of total shareholders’ equity.

During the year, the Company did not buy back any shares.

The Company holds the shares bought back as treasury shares.

23. Reserves


Accumulated profits 234,212 208,910 18,317 17,276Employee share option reserve 5 7 5 7Foreign currency translation reserve (55) (96) – –Hedging reserve (967) (2,393) (368) (822)

233,195 206,428 17,954 16,461

Employee share option reserve

Employee share option reserve represents the equity-settled share options granted to employees (Note 32). The reserve is made up of the cumulative value of services received from employees recorded on grant of equity-settled share options.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

Hedging reserve

Hedging reserve records the portion of the fair value changes of derivative financial instruments designated as hedging instruments in cash flow hedges that is determined to be effective.



24. Other comprehensive income

Tax effects relating to each component of other comprehensive income are set out below:

2010 2009

The GroupBefore

taxTax

expenseNet

of taxBefore

taxTax

expenseNet

of tax$’000 $’000 $’000 $’000 $’000 $’000

Translation differences relating to financial statements of foreign subsidiaries 329 – 329 3,604 – 3,604

Share of other comprehensive income of jointly-controlled entity (74) – (74) 49 – 49

Fair value changes to cash flow hedges 1,676 (145) 1,531 (11,726) 1,736 (9,990)

1,931 (145) 1,786 (8,073) 1,736 (6,337)

25. Revenue

The Group2010 2009$’000 $’000

Shipbuilding 306,316 269,883Shiprepair and conversion 89,061 69,336Shipchartering and rental 72,995 96,223

468,372 435,442


90

26. Other operating income

The Group 2010 2009 $’000 $’000

Interest income from: - fixed deposits and bank balances 155 371 - finance lease receivables 24 125 - others – 20Insurance claims 356 413Gain on disposal of property, plant and equipment 4,216 7,310Management fee income – 60Miscellaneous income 1,723 1,008Gain on disposal of assets held for sale 2,495 20,044Grant income from Jobs Credit Scheme 351 221Gain on foreign exchange – 452

9,320 30,024

Under the introduction of a Jobs Credit Scheme (Scheme) in 2009 by the government, the Group received cash grant of $351,000 (2009: $221,000) in relation to the Scheme.

27. Finance costs

The Group 2010 2009 $’000 $’000

Interest expense on: - bank loans and bonds 8,386 6,563 - finance lease 456 149 - trust receipts 4 37 - others 43 60

8,889 6,809Less: Interest expense capitalised in property, plant and equipment (817) (334)

8,072 6,475



28. Profit before tax

The Group2010 2009$’000 $’000

Profit before tax is stated after charging/(crediting):

Allowance for foreseeable losses (Note 10) – 1,157Amortisation of lease prepayments (Note 5) 199 200Depreciation of property, plant and equipment (Note 4) 30,475 27,006Employee benefits expense (Note 32) 25,577 26,264Ineffective portion of cash flow hedges on forward currency contracts and interest rate swaps 1,126 1,092Impairment loss on property, plant and equipment (Note 4) 2,297 3,950Loss/(gain) on foreign exchange (net) 539 (452)Non-audit fees payable to auditors of the Company 21 21Operating lease expenses (Note 31(c)) 687 596Provision for warranty claims, net (Note 20) – 510Property, plant and equipment written off 3 7Allowance for impairment of doubtful receivables (net) 577 3,632

29. Tax expense

Major components of income tax expense for the years ended 30 June are:

The Group2010 2009$’000 $’000

Current income tax:

Current income tax 8,673 8,018Underprovision in respect of prior years 683 614

9,356 8,632

Deferred income tax:

Movements in temporary differences 47 1,622Overprovision in respect of prior years (597) (117)

(550) 1,505

8,806 10,137


92

29. Tax expense (cont’d)

The Group 2010 $’000

2009 $’000

Reconciliation of effective tax rate

Profit before tax 48,070 83,949

Income tax using Singapore tax rate of 17% 8,172 14,271Expenses not deductible for tax purposes 458 836Non assessable income (257) (1,636)Tax effect of partial tax exemption (180) (128)Effect of different tax rates in foreign countries 642 1,608Effect of reduction in tax rate – (201)Tax exempt income (187) (2,610)Effect on utilisation of deferred tax assets not previously recognised – (465)Group relief (844) (55)Deferred tax assets not recognised 1,584 –Tax incentives/concessions under foreign jurisdiction (1,342) (1,489)Losses not available for carried-forward 520 92Others 154 (583)Underprovision in respect of prior years 86 497

8,806 10,137

The Group is granted the “Approval International Shipping” incentive by the Maritime Port Authority, under which the income from qualifying shipping operations of its Singapore incorporated subsidiaries are exempt from tax for a period of 10 years commencing 1 January 2004 under the Singapore Income Tax Act.

The Group has adopted a loss transfer system of group relief (group relief system) under the Singapore Income Tax Act. Under the group relief system, a Singapore incorporated company belonging to a group may transfer its current year unabsorbed capital allowances, trade losses and donations (loss items) to another Singapore incorporated company belonging to the same group, to be deducted against the assessable income of the latter company.



30. Earnings per share

The Group2010 2009$’000 $’000

(a) Basic earnings per share

Basic earnings per share is based on:

(i) Profit for the year attributable to owners of the parent 37,286 71,070

No. ofShares

No. ofShares

(ii) Weighted average number of ordinary shares:

Issued ordinary shares at beginning of the year 299,589,002 300,876,002 Weighted average number of ordinary shares issued/

(bought back) during the year 12,164 (808,748)

Weighted average number of ordinary shares (basic) at end of the year 299,601,166 300,067,254

(b) Diluted earnings per share

The weighted average number of ordinary shares adjusted for the effects of all dilutive potential ordinary shares is determined as follows:

The Group2010 2009

No. ofShares

No. ofShares

Weighted average number of ordinary shares used in the calculation of basic earnings per share 299,601,166 300,067,254

Weighted average number of unissued ordinary shares under share options 49,836 139,085

Weighted average number of ordinary shares that would have been issued at fair value (29,364) (112,246)

20,472 26,839

Weighted average number of ordinary shares used in the calculation of diluted earnings per share 299,621,638 300,094,093


94

31. Commitments and contingencies


(a) Capital commitments

Capital expenditure approved but not provided for: Purchase of vessels – 1,858 – –Purchase of plant and machinery 3,003 3,611 – –Yard development 10,856 11,842 – –Capital injection for investment in subsidiary – – – 100

13,859 17,311 – 100

(b) Operating lease commitments – As lessor

The Group has entered into operational leases on its fleet of vessels. These non-cancellable leases have remaining lease terms of up to 2 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

Future minimum lease payments receivable under non-cancellable operating leases as at 30 June are as follows:

The Group 2010 2009$’000 $’000

Not later than one year 5,004 11,121Later than one year but not later than five years 1,057 1,521

6,061 12,642



31. Commitments and contingencies (cont’d)

(c) Operating lease commitments – As lessee

In addition to the land use rights disclosed in Note 5, the Group has entered into commercial property leases. There are no restrictions placed upon the Group by entering into these leases. Operating lease payments recognised in the consolidated profit or loss during the year amounted to $687,000 (2009: $596,000).

Future minimum lease payments payable under non-cancellable operating leases (excluding land use rights) as at 30 June are as follows:

The Group 2010 2009 $’000 $’000

Not later than one year 709 646Later than one year but not later than five years 2,513 2,209Later than five years 6,138 5,442

9,360 8,297

(d) Finance lease commitments – As lessee

The Group and the Company have entered into leases for its motor vehicles and plant and machinery. The leases are classified as finance leases and expire over the next 7 years (2009: 5 years). Under the terms of the finance lease arrangements, no contingent rents are payable. The average effective interest rates implicit in the leases are 2.63% (2009: 2.64%) per annum for the Group and 2.5% (2009: 2.5%) per annum for the Company.

Future minimum lease payments under finance leases (Note 19) together with the present value of the net minimum lease payments for the Group are as follows:

The Group2010 2009

Minimum lease payments

Presentvalue of

payments

Minimum lease

payments

Presentvalue of

payments$’000 $’000 $’000 $’000

Not later than one year 3,320 2,954 1,743 1,510Later than one year but not later than five years 6,065 5,761 4,079 3,807More than five years 20 20 – –

Total minimum lease payments 9,405 8,735 5,822 5,317Less: Amounts representing finance charges (670) – (505) –

Present value of minimum lease payments 8,735 8,735 5,317 5,317


96

31. Commitments and contingencies (cont’d)

(d) Finance lease commitments – As lessee (cont’d)

The Company2010 2009

Minimum lease

payments

Presentvalue of

payments

Minimum lease

payments

Presentvalue of

payments$’000 $’000 $’000 $’000

Not later than one year 27 25 27 24Later than one year but not later than five years 20 20 47 45

Total minimum lease payments 47 45 74 69Less: Amounts representing finance charges (2) – (5) –

Present value of minimum lease payments 45 45 69 69

(e) Contingent liabilities

(i) Corporate guarantees (unsecured)

The Company has given the following corporate guarantees in respect of banking facilities utilised as at 30 June:

The Company2010 2009$’000 $’000

Subsidiaries 495,693 769,879

The financial effects of FRS 39 relating to financial guarantee contracts issued by the Company are not material to the financial statements of the Company and therefore are not recognised.

(ii) Legal claim

Two wholly-owned subsidiaries of the Company have been served with arbitration proceedings in May 2009 by a customer in connection with the latter’s exposure to a third party claim for damage caused to an underwater pipeline arising out of an incident in November 2005 involving a tug chartered by one of the subsidiaries.

The claim which could be in the region of USD 1.75 million, is being disputed and in the event the subsidiaries are held liable, the insurers of the tug are expected to indemnify the subsidiaries.



32. Employee benefits

The Group2010 2009$’000 $’000

Employee benefits expense (including executive Directors)

Salaries and bonuses 23,742 24,008Central Provident Fund contributions 853 1,070Provision for short-term accumulating compensated absences 35 (16)Staff benefits 947 1,202

25,577 26,264

ASL Employee Share Option Scheme (the “Scheme”)

The Scheme was approved and adopted by the shareholders of the Company at an Extraordinary General Meeting held on 23 January 2003. Details of the Scheme were set out in the Directors’ Report for the year ended 30 June 2003. The Scheme is administered by the Remuneration Committee of the Company comprising three independent directors, Hong Chin Fock (Chairman), Christopher Chong Meng Tak and Andre Yeap Poh Leong.

Other statutory information regarding the Scheme is set out below:

(i) Exercise Price

The exercise price to be paid upon the exercise of the options are as follows:

• the options were granted at the exercise price of $0.55 per share and no options were granted at a discount to the then prevailing Market Price; and

• the “Market Price”, defined as the average of the last dealt price for a share, is determined by reference to the daily Official List published by SGX-ST for five consecutive market days immediately prior to the date an offer to grant an option is made (“Offer Date”), rounded up to the nearest whole cent.

(ii) Option Exercise Period

The options which were granted shall be exercisable during the option exercise period commencing after the first anniversary of the Offer Date and expiring on, in the case of options granted to non-executive Directors and/or associated company employees, the day preceding the fifth anniversary of the Offer Date and, in the case of options granted to other than non-executive Directors and/or associated company employees, the day preceding the tenth anniversary of the Offer Date.


98

32.

Em

plo

yee

ben

efits

(co

nt’d

)

AS

L E

mp

loye

e S

har

e O

ptio

n S

chem

e (t

he

“Sch

eme”

) (c

ont

’d)

Det

ails

of t

he o

ptio

ns g

rant

ed u

nder

the

Sch

eme

on th

e un

issu

ed o

rdin

ary

shar

es o

f the

Com

pany

at t

he e

nd o

f the

fina

ncia

l yea

r ar

e as

follo

ws:

Dat

e o

f g

rant

o

f o

ptio

ns

Exe

rcis

e p

rice

per

sh

are

No

. of

op

tions

out

stan

din

gat

beg

inni

ngo

f fin

anci

alye

arO

ptio

ns

exer

cise

d 1

Op

tions

ca

ncel

led

No

. of

op

tions

out

stan

din

g

at e

nd o

f fin

anci

al

year

2

No

. of

op

tions

exer

cisa

ble

at e

nd o

f fin

anci

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Mar

ket

pri

ceo

f sh

ares

at d

ate

of

gra

nt o

fo

ptio

nE

xerc

ise

per

iod

2010

18/1

2/20

03$0

.55

62,0

00(1

5,00

0)–

–47

,000

$0.5

518

/12/

2004

to

17/1

2/20

13

2009

18/1

2/20

03$0

.55

94,0

00(7

,000

)(2

5,00

0)–

62,0

00$0

.55

18/1

2/20

04 to

17

/12/

2013

18/1

2/20

03$0

.55

500,

000

(500

,000

) –

––

$0.5

518

/12/

2004

to

17/1

2/20

08

594,

000

(507

,000

)(2

5,00

0)–

62,0

00

1 Th

e w

eigh

ted

aver

age

shar

e pr

ice

for

the

optio

ns e

xerc

ised

dur

ing

the

year

was

$1.

08 (

2009

: $1.

03).

2 Th

e w

eigh

ted

aver

age

rem

aini

ng c

ontr

actu

al li

fe fo

r th

e op

tions

is 3

.47

year

s (2

009:

4.4

7 ye

ars)

.



32. Employee benefits (cont’d)

ASL Employee Share Option Scheme (the “Scheme”) (cont’d)

The fair value of equity-settled share options as at the date of grant, is estimated by an external valuer using a binomial model, taking into account the terms and conditions upon which the options were granted. The inputs to the model used as at the date of grant are shown below.

The GroupIndependent

Directors Employees

Dividend yield (%) 3.35 4.93Expected volatility (%) 42 42Historical volatility (%) 42 42Risk-free interest rate (%) 1.81 3.62Expected life of options (years) 5 10Weighted average share price ($) 0.55 0.55

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value.

33. Related party disclosures

An entity or individual is considered a related party of the Group for the purposes of the financial statements if: i) it possesses the ability (directly or indirectly) to control or exercise significant influence over the operating and financial decisions of the Group or vice versa; or ii) it is subject to common control or common significant influence.

(a) Sale and purchase of goods and services

In addition to those related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and its related parties took place during the year on terms agreed between the parties:

The Group2010 2009$’000 $’000

Jointly-controlled entity and associateCharter and trade expenses – (458)Management fee income – 60Trade sales income – 13Rental income 720 300Consultancy income – 476Galvanising expense (222) (57)Miscellaneous income 27 –


100

33. Related party disclosures (cont’d)

(b) Compensation of key management personnel

The Group 2010 $’000

2009$’000

Short-term employee benefits 2,103 2,591Central Provident Fund contributions 27 63Other long-term benefits 284 242

Total compensation paid to key management personnel 2,414 2,896

Comprise amounts paid to:• Directors of the Group 2,414 2,896

The remuneration of key management personnel are determined by the remuneration committee having regard to the performance of individuals and market trends.

34. Financial risk management objectives and policies

The Group and the Company are exposed to a variety of financial risks, including market risk (interest rate risk and foreign currency risk), credit risk, liquidity risk and capital management risk arising from its business activities. The Group’s overall risk management strategy seeks to minimise the potential material adverse effects from these exposures. The Group uses financial instruments such as interest rate swaps and forward currency contracts to hedge certain financial risk exposures. It is the Group’s policy that no trading in derivative financial instruments shall be undertaken. Exposure to foreign currency risks is also hedged naturally where possible.

The Group’s policy on financial authority limit seeks to mitigate risks by setting out the threshold of approvals required for entry into contractual obligations and investments.

The Board has overall responsibility for the establishment and oversight of the Group’s risk management framework. Risk management is carried out under policies approved by the Board. The Board reviews and approves policies for managing each of these risks and they are summarised below.

(a) Market risk

Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and reduce market risk exposures within acceptable parameters.

(i) Interest rate risk

The Group’s exposures to interest rates relates primarily to interest-earning financial assets and interest-bearing financial liabilities. The Group’s interest rate risk mainly arises from its bank balances, deposits and cash and borrowings with financial institutions. The Group’s policy is to maintain an efficient and optimal interest cost structure using a mix of fixed and variable rate borrowings as well as long-term and short-term borrowings.

The Group seeks to minimise its exposure to interest rate fluctuations through interest rate swaps, where appropriate, over the duration of its borrowings. The Group classifies these interest rate swaps as cash flow hedges.



34.

Fina

ncia

l ris

k m

anag

emen

t o

bje

ctiv

es a

nd p

olic

ies

(co

nt’d

)

(a)

Mar

ket

risk

(co

nt’d

)

(i)

Inte

rest

rat

e ri

sk (

cont

’d)

Eff

ectiv

e in

tere

st r

ates

and

rep

rici

ng a

naly

sis

In r

espe

ct o

f int

eres

t-ear

ning

fina

ncia

l ass

ets

and

inte

rest

-bea

ring

finan

cial

liab

ilitie

s th

at a

re e

xpos

ed to

inte

rest

rat

e ris

k, th

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llow

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tabl

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ts o

ut th

e ca

rryi

ng a

mou

nt b

y m

atur

ity o

f the

fina

ncia

l ins

trum

ents

that

are

exp

osed

to in

tere

st r

ate

risk.

2010

2009

The

Gro

up

Less

th

an

1 ye

ar

Bet

wee

n 1

to 5

ye

ars

Ove

r 5

year

sTo

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Less

th

an

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Bet

wee

n 1

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$’00

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––

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7B

ank

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––

72,4

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––

76,8

43D

eriv

ativ

e fin

anci

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stru

men

ts

- i

nter

est r

ate

swap

(3,1

21)

––

(3,1

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(2,0

00)

––

(2,0

00)

Fina

nce

leas

e lia

bilit

ies

(2,9

54)

(5,7

61)

(20)

(8,7

35)

(1,5

10)

(3,8

07)

–(5

,317

)In

tere

st-b

earin

g lo

ans

and

borr

owin

gs*

(42,

791)

(117

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)–

(159

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)(6

7,57

2)(5

5,92

3)–

(123

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)

Flo

atin

g r

ate

Trus

t rec

eipt

s(2

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3)–

–(2

5,03

3)(3

2,94

4)–

–(3

2,94

4)In

tere

st-b

earin

g lo

ans

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(5,3

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(10,

248)

–(1

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(31,

556)


102

34.

Fina

ncia

l ris

k m

anag

emen

t o

bje

ctiv

es a

nd p

olic

ies

(co

nt’d

)

(a)

Mar

ket

risk

(co

nt’d

)

(i)

Inte

rest

rat

e ri

sk (

cont

’d)

Eff

ectiv

e in

tere

st r

ates

and

rep

rici

ng a

naly

sis

(co

nt’d

)

2010

2009

The

Co

mp

any

Less

th

an

1 ye

ar

Bet

wee

n 1

to 5

ye

ars

Ove

r 5

year

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Less

th

an

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ar

Bet

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n 1

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r 5

year

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tal

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55–

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k ba

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ash

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15,9

38–

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,938

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ivat

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finan

cial

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rum

ents

- in

tere

st r

ate

swap

(368

)–

–(3

68)

(822

)–

–(8

22)

Fina

nce

leas

e lia

bilit

ies

(25)

(20)

–(4

5)(2

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(69)

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rest

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ring

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d

bo

rrow

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*(1

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000)

–(5

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clud

es fl

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rest

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aps.

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Exc

lude

s flo

atin

g ra

tes

loan

s he

dged

by

inte

rest

rat

e sw

aps.



34. Financial risk management objectives and policies (cont’d)

(a) Market risk (cont’d)

(i) Interest rate risk (cont’d)

Effective interest rates and repricing analysis (cont’d)

Interest on financial instruments subject to floating interest rates is contractually repriced at intervals ranging from 1 to 6 months (2009: 1 to 10 months). Interest on financial instruments at fixed rates is fixed until the maturity of the instrument. The other financial instruments of the Group and the Company that are not included in the above tables are not subject to interest rate risk.

Sensitivity analysis

For the Group’s and Company’s borrowings at variable rates on which effective hedges have not been entered into, an increase of 0.5% (2009: 0.5%) in interest rate at 30 June would have decreased profit before tax by the amounts shown below. A decrease of 0.5% (2009: 0.5%) in interest rate at 30 June would have an equal but opposite effect. The analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.

The Group The Company2010 2009 2010 2009Profit

before taxProfit

before taxProfit

before taxProfit

before tax$’000 $’000 $’000 $’000

Floating rate instruments 203 323 – –


104

34.

Fina

ncia

l ris

k m

anag

emen

t o

bje

ctiv

es a

nd p

olic

ies

(co

nt’d

)

(a)

Mar

ket

risk

(co

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(ii)

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reig

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isk

The

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s ex

pose

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(“U

SD

”),

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o (“

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(“ID

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and

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Ren

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on

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m a

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ard

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ange

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trac

ts i

n re

spec

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ual

or f

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sure

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hich

are

reas

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erta

in o

r hed

ged

natu

rally

by

a m

atch

ing

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or p

urch

ase

of a

mat

chin

g as

set o

r lia

bilit

y of

the

sam

e cu

rren

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nd a

mou

nt.

The

Gro

up’s

exp

osur

e to

fore

ign

curr

ency

is a

s fo

llow

s:

The

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GD

US

DE

UR

IDR

RM

BO

ther

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tal

2010

$’00

0$’

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0Fi

nanc

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sset

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ade

and

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r re

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s71

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30,9

433,

569

1,29

586

043

108,

593

Ban

k ba

lanc

es, d

epos

its a

nd c

ash

73,2

468,

367

7,92

427

327

91

90,0

90

145,

129

39,3

1011

,493

1,56

81,

139

4419

8,68

3

Fina

ncia

l lia

bili

ties

Trad

e an

d ot

her

paya

bles

112,

144

8,52

71,

612

11,7

6447

51,

499

136,

021

Inte

rest

-bea

ring

loan

s an

d bo

rrow

ings

141,

252

36,8

705,

077

–1,

031

–18

4,23

0Tr

ust r

ecei

pts

23,4

671,

566

––

––

25,0

33

276,

863

46,9

636,

689

11,7

641,

506

1,49

934

5,28

4

Net

fina

ncia

l (lia

bili

ties)

/ ass

ets

(131

,734

)(7

,653

)4,

804

(10,

196)

(367

)(1

,455

)(1

46,6

01)

Net

fina

ncia

l lia

bilit

ies/

(ass

ets)

den

omin

ated

in

the

resp

ectiv

e en

titie

s’ fu

nctio

nal

curr

enci

es13

1,67

125

,763

–25

736

7–

158,

058

Cur

renc

y ex

posu

re(6

3)18

,100

4,80

4(9

,939

)–

(1,4

55)

11,4

57



34.

Fina

ncia

l ris

k m

anag

emen

t o

bje

ctiv

es a

nd p

olic

ies

(co

nt’d

)

(a)

Mar

ket

risk

(co

nt’d

)

(ii)

Fo

reig

n cu

rren

cy r

isk

(co

nt’d

)

The

Gro

upS

GD

US

DE

UR

IDR

RM

BO

ther

sTo

tal

2009

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0Fi

nanc

ial a

sset

sTr

ade

and

othe

r re

ceiv

able

s54

,350

10,9

464,

122

781

782

–70

,981

Ban

k ba

lanc

es, d

epos

its a

nd c

ash

83,0

936,

498

4,12

921

22,

079

196

,012

137,

443

17,4

448,

251

993

2,86

11

166,

993

Fina

ncia

l lia

bili

ties

Trad

e an

d ot

her

paya

bles

99,8

469,

813

7,04

510

,311

547

2,08

012

9,64

2In

tere

st-b

earin

g lo

ans

and

borr

owin

gs12

3,92

826

,269

8,46

6–

1,70

5–

160,

368

Trus

t rec

eipt

s32

,944

––

––

–32

,944

256,

718

36,0

8215

,511

10,3

112,

252

2,08

032

2,95

4

Net

fina

ncia

l (lia

bili

ties)

/ ass

ets

(119

,275

)(1

8,63

8)(7

,260

)(9

,318

)60

9(2

,079

)(1

55,9

61)

Net

fina

ncia

l lia

bilit

ies/

(ass

ets)

den

omin

ated

in th

e re

spec

tive

entit

ies’

func

tiona

l

curr

enci

es11

9,66

026

,161

–(2

78)

(609

)–

144,

934

Cur

renc

y ex

posu

re38

57,

523

(7,2

60)

(9,5

96)

–(2

,079

)(1

1,02

7)


106



(ii) Foreign currency risk (cont’d)

The Company is exposed to foreign currency exchange rate movements primarily for United States dollar (“USD”) on its balances with related parties.

SGD USD Total$’000 $’000 $’000

The Company2010Financial assetsTrade and other receivables 162,177 5,463 167,640Bank balances, deposits and cash 510 – 510

162,687 5,463 168,150

Financial liabilitiesTrade and other payables 30,009 – 30,009Interest-bearing loans and borrowings 76,045 – 76,045

106,054 – 106,054

Net financial assets 56,633 5,463 62,096Net financial assets denominated in the functional currency of the Company (56,633) – (56,633)

Currency exposure – 5,463 5,463

2009Financial assetsTrade and other receivables 127,197 5,149 132,346Bank balances, deposits and cash 17,984 – 17,984

145,181 5,149 150,330

Financial liabilitiesTrade and other payables 36,416 – 36,416Interest-bearing loans and borrowings 50,069 – 50,069

86,485 – 86,485

Net financial assets 58,696 5,149 63,845Net financial assets denominated in the functional currency of the Company (58,696) – (58,696)

Currency exposure – 5,149 5,149





(ii) Foreign currency risk (cont’d)

Sensitivity analysis

A 5% strengthening of the following foreign currencies against Singapore dollar at 30 June would increase/(decrease) profit before tax by the amounts shown below.

A 5% weakening of the following foreign currencies against Singapore dollar at 30 June would have the equal but opposite effect. The analysis assumes that all other variables, in particular interest rates, remain constant.

The Group The Company2010 2009 2010 2009Profit

before taxProfit

before taxProfit

before taxProfit

before tax$’000 $’000 $’000 $’000

USD 906 376 273 257EUR 240 (363) – –IDR (497) (480) – –

(b) Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group manages its exposure to credit risk arising from sales to trade customers through credit evaluation, credit limits and debt monitoring procedures on an on-going basis. Where appropriate, the Group obtains guarantees from the customers or arrange netting agreements. Cash terms, advance payments or letters of credit are required for customers of lower credit standing.

The Group’s major classes of financial assets are bank balances, deposits and cash and trade receivables. Cash and fixed deposits are placed in banks and financial institutions with good credit rating.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures. Where the Group is certain that no recovery of the amount owing is possible, the financial asset is considered irrecoverable and the amount charged to the impairment account is written off against the carrying amount of the impaired financial asset.

The ageing analysis of trade receivables and impairment of doubtful trade receivables is disclosed in Note 11.


108


(b) Credit risk (cont’d)

The concentration of credit risk relating to trade receivables is limited as the Group provides services spanning a myriad of sectors and industries. The Group’s historical experience in the collection of trade and other receivables falls within the recorded allowances.

At 30 June, the Group’s and the Company’s maximum exposure to credit risk is the carrying amount of each financial asset, including derivative financial instruments. Guarantees granted by the Company and certain subsidiaries to banks in respect of banking facilities are only given for companies within the Group. The maximum exposure to credit risk in respect of financial guarantees at the financial year-end is disclosed in Note 31.

Credit risk concentration profile

The Group determines concentration of credit risk by monitoring the business activities and geographical areas profile of its trade receivables on an on-going basis. The credit risk concentration profile of the Group’s net trade receivables is as follows:

The Group2010 2009$’000 $’000

By business activitiesShipbuilding 28,144 5,667Shiprepair 40,131 35,566Shipchartering 27,300 22,460

95,575 63,693

By geographical areasSingapore 38,529 37,398Indonesia 16,221 9,811Rest of Asia 15,786 5,114Europe and other countries 25,039 11,370

95,575 63,693




(c) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group manages its liquidity risk by maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations to meet its liabilities when due. The Group maintains flexibility in funding by keeping committed credit facilities available.

The table below summarises the maturity profile of the Group’s and the Company’s financial assets and financial liabilities based on undiscounted repayment obligations.

Contractual Cash Flows

Carrying amounts Total

Within1 year

Between1 and 5 years

After 5 years

$’000 $’000 $’000 $’000 $’000

The Group2010Derivative Financial InstrumentsDerivative financial liabilities 3,564 - inflow 16,378 16,378 – – - outflow (13,642) (11,940) (1,702) –Derivative financial assets (1,350) - inflow 72,029 48,867 23,162 – - outflow (59,560) (59,560) – –

Non-derivative Financial InstrumentsTrade and other payables 136,021 (136,021) (134,552) (1,469) –Trust receipts 25,033 (25,112) (25,112) – –Interest-bearing loans and borrowings 184,230 (197,648) (57,067) (140,561) (20)

347,498 (343,576) (222,986) (120,570) (20)


110


(c) Liquidity risk (cont’d)



Within1 year


After 5 years

$’000 $’000 $’000 $’000 $’000

The Group2009Derivative Financial InstrumentsDerivative financial liabilities 4,246 - inflow 105,400 105,400 – – - outflow (25,847) (24,216) (1,631) –Derivative financial assets (1,481) - inflow 118,888 118,888 – – - outflow (4,062) (2,011) (2,051) –

Non-derivative Financial InstrumentsTrade and other payables 129,642 (129,641) (128,166) (1,475) –Trust receipts 32,944 (33,101) (33,101) – –Interest-bearing loans and borrowings 160,368 (168,180) (80,680) (87,500) –

325,719 (136,543) (43,886) (92,657) –

The Company2010Derivative Financial InstrumentsDerivative financial liabilities 368 - outflow (835) (291) (544) –

Non-derivative Financial InstrumentsTrade and other payables 30,009 (30,009) (30,009) – –Interest-bearing loans and borrowings 76,045 (83,938) (14,109) (69,829) –

106,422 (114,782) (44,409) (70,373) –




(c) Liquidity risk (cont’d)



Within1 year


After 5 years

$’000 $’000 $’000 $’000 $’000The Company2009Derivative Financial InstrumentsDerivative financial liabilities 822 - outflow (945) (831) (114) –

Non-derivative Financial InstrumentsTrade and other payables 36,416 (36,416) (36,416) – –Interest-bearing loans and borrowings 50,069 (51,793) (40,428) (11,365) –

87,307 (89,154) (77,675) (11,479) –

(d) Capital management risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings.

Management monitors capital based on the Group’s return on shareholders’ funds and net gearing (times). The return on shareholders’ funds was 11.8% for the financial year ended 30 June 2010 (2009: 24.6%). Net gearing was 0.38 as at 30 June 2010 (2009: 0.34).

The return on shareholders’ funds is calculated as net profit attributable to owners of the parent divided by shareholders’ funds as at the financial year-end.

The net gearing (times) is calculated as net borrowings divided by shareholders’ funds. Net borrowings is calculated as total interest-bearing loans and borrowings (Note 19), trust receipts (Note 18), less bank balances, deposits and cash (Note 14).

The Group and the Company are in compliance with all externally imposed financial covenant requirements for the financial years ended 30 June 2010 and 2009.


112

35. Fair value of financial instruments

(a) Fair value of financial instruments that are carried at fair value

The financial instruments of the Group and the Company that are carried at fair value comprised derivative financial instruments (Note 13) which fall under Level 2 of the fair value hierarchy.

The Group and the Company classifies fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1: quoted prices (unadjusted) in active markets of identical assets or liabilities.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3: inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The fair value has been determined by reference to banker quotes at the financial year-end without factoring in transaction costs.

(b) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are a reasonable approximation of fair value

Bank balances, deposits and cash, trade and other receivables, finance lease receivable, balances with related parties and non-controlling interests of subsidiaries, trade and other payables, trust receipts and floating rate loans

The carrying amount of these financial assets and liabilities are a reasonable approximation of fair values due to their short-term nature.



35.

Fair

val

ue o

f fin

anci

al in

stru

men

ts (

cont

’d)

(c)

Fair

val

ue o

f fin

anci

al i

nstr

umen

ts b

y cl

asse

s th

at a

re n

ot

carr

ied

at

fair

val

ue a

nd w

ho

se c

arry

ing

am

oun

ts a

re n

ot

a re

aso

nab

le

app

roxi

mat

ion

of

fair

val

ue

Set

out

bel

ow is

the

net f

air

valu

es o

f fina

ncia

l ass

ets

and

liabi

litie

s w

hich

are

not

car

ried

at fa

ir va

lue

in th

e st

atem

ent o

f fina

ncia

l pos

ition

as

at

30 J

une.

The

Gro

upTh

e C

om

pan

yC

arry

ing

am

oun

tFa

ir v

alue

Car

ryin

g a

mo

unt

Fair

val

ue20

1020

0920

1020

0920

1020

0920

1020

09$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0

Fina

ncia

l ass

ets

Oth

er r

ecei

vabl

e (n

on-c

urre

nt)

(i)–

––

–2,

203

2,21

22,

030

2,10

1

Fina

ncia

l lia

bili

ties

Fina

nce

leas

e lia

bilit

ies

(ii)

8,73

55,

317

8,53

05,

195

4569

4467

Inte

rest

-bea

ring

loan

s an

d bo

rrow

ings

(fi

xed

rate

)* (

ii)58

,665

2,86

457

,595

2,78

444

,000

–43

,136

–A

mou

nt d

ue to

non

-con

trol

ling

inte

rest

s

of s

ubsi

diar

ies

(non

-cur

rent

)1,

469

1,47

51,

353

1,40

0–

––

–

* E

xclu

des

float

ing

rate

s lo

ans

hedg

ed b

y in

tere

st r

ate

swap

s

(i)

The

non-

curr

ent

rece

ivab

le fr

om a

sub

sidi

ary

to t

he C

ompa

ny a

mou

ntin

g to

$2,

203,

000

(200

9: $

2,21

2,00

0) h

as n

o re

paym

ent

term

s

and

is n

ot e

xpec

ted

to b

e re

paya

ble

with

in th

e ne

xt tw

elve

mon

ths

from

rep

ortin

g da

te. A

ccor

ding

ly th

e fa

ir va

lue

of th

e am

ount

due

from

sub

sidi

ary

is b

ased

on

estim

atio

n, a

s th

e tim

ing

of th

e fu

ture

cas

h flo

ws

cann

ot b

e de

term

ined

rel

iabl

y.

(ii)

The

fair

valu

e of

fina

nce

leas

e re

ceiv

able

s, fi

nanc

e le

ase

liabi

litie

s an

d in

tere

st-b

earin

g lo

ans

and

borr

owin

gs w

ith fi

xed

inte

rest

rat

es

has

been

det

erm

ined

usi

ng d

isco

unte

d fu

ture

prin

cipa

l and

inte

rest

at t

he m

arke

t int

eres

t rat

e at

the

finan

cial

yea

r-en

d.

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bala

nce

with

non

-con

trol

ling

inte

rest

s of

sub

sidi

arie

s ha

s be

en d

eter

min

ed b

y di

scou

ntin

g es

timat

ed fu

ture

cas

h flo

ws

at th

e m

arke

t int

eres

t rat

e

at th

e fin

anci

al y

ear-

end.

The

est

imat

ed fu

ture

cas

h flo

ws

are

proj

ecte

d ba

sed

on m

anag

emen

t’s b

est e

stim

ates

.


114

36. Segment reporting

Reporting format

The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

Business segments

The Group has the following four main business segments:

Shipbuilding : Construction of vessels

Shiprepair and conversion : Provision of shiprepair and related services

Shipchartering and rental : Provision for chartering of vessels, transportation services and rental of plant and machinery

Investment holding : Investment holding

Geographical segments

The Group operates in Singapore, Indonesia, rest of Asia, Europe and other countries. In presenting information on the basis of geographical segments, segment revenue is based on the countries in which customers are invoiced.

Allocation basis and transfer pricing

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses.

Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.



36.

Seg

men

t re

po

rtin

g (

cont

’d)

(i)

Bus

ines

s se

gm

ents

Sh

ipb

uild

ing

Sh

ipre

pai

r an

d

conv

ersi

on

Sh

ipch

arte

ring

an

d

rent

al

Inve

stm

ent

ho

ldin

gE

limin

atio

nsC

ons

olid

ated

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

Rev

enue

and

exp

ense

s

2010

Rev

enue

from

ext

erna

l cus

tom

ers

306,

316

89,0

6172

,995

––

468,

372

Inte

r-se

gmen

t rev

enue

70,3

0340

,430

37,0

8414

,000

(161

,817

)–

Tota

l rev

enue

376,

619

129,

491

110,

079

14,0

00(1

61,8

17)

468,

372

Seg

men

t res

ults

20,8

7216

,537

21,5

1416

,056

(16,

422)

58,5

57

Una

lloca

ted

expe

nses

(1,7

45)

Fina

nce

cost

s(8

,072

)

Sha

re o

f pro

fit o

f joi

ntly

-con

trolle

d

entit

y an

d as

soci

ate

(670

)

Tax

expe

nse

(8,8

06)

Pro

fit fo

r th

e ye

ar39

,264


116


36.

Seg

men

t re

po

rtin

g (

cont

’d)

(i)

Bus

ines

s se

gm

ents

(co

nt’d

)

Sh

ipb

uild

ing

Sh

ipre

pai

r an

d

conv

ersi

on

Sh

ipch

arte

ring

an

d

rent

al

Inve

stm

ent

ho

ldin

gE

limin

atio

nsC

ons

olid

ated

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

Rev

enue

and

exp

ense

s

2009

Rev

enue

from

ext

erna

l cus

tom

ers

269,

883

69,3

3696

,223

––

435,

442

Inte

r-se

gmen

t rev

enue

73,4

1133

,439

39,2

4212

,000

(158

,092

)–

Tota

l rev

enue

343,

294

102,

775

135,

465

12,0

00(1

58,0

92)

435,

442

Seg

men

t res

ults

22,6

0519

,811

38,7

3023

,117

(13,

001)

91,2

62

Una

lloca

ted

expe

nses

(2,3

30)

Fina

nce

cost

s(6

,475

)

Sha

re o

f pro

fit o

f joi

ntly

-con

trolle

d

entit

y an

d as

soci

ate

1,49

2

Tax

expe

nse

(10,

137)

Pro

fit fo

r th

e ye

ar73

,812


36.

S

egm

ent

rep

ort

ing

(co

nt’d

)

(i)

Bus

ines

s se

gm

ents

(co

nt’d

)

Sh

ipb

uild

ing

Sh

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pai

r an

d

conv

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on

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ring

an

d

rent

al

Inve

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limin

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nsC

ons

olid

ated

$’00

0$’

000

$’00

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000

$’00

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000

Ass

ets

and

liab

ilitie

s

2010

Seg

men

t ass

ets

266,

620

100,

916

365,

508

3,74

3–

736,

787

Una

lloca

ted

asse

ts1,

825

Tota

l ass

ets

738,

612

Seg

men

t lia

bilit

ies

118,

621

39,3

4923

,978

1,53

0–

183,

478

Una

lloca

ted

liabi

litie

s23

1,01

7

Tota

l lia

bilit

ies

414,

495

2009

Seg

men

t ass

ets

263,

185

74,7

0734

0,77

920

,668

–69

9,33

9

Una

lloca

ted

asse

ts3,

350

Tota

l ass

ets

702,

689

Seg

men

t lia

bilit

ies

140,

862

32,4

8621

,566

1,31

6–

196,

230

Una

lloca

ted

liabi

litie

s21

1,41

6

Tota

l lia

bilit

ies

407,

646


118


36.

Seg

men

t re

po

rtin

g (

cont

’d)

(i)

Bus

ines

s se

gm

ents

(co

nt’d

)

Sh

ipb

uild

ing

Sh

ipre

pai

r an

d

conv

ersi

on

Sh

ipch

arte

ring

an

d

rent

al

Inve

stm

ent

ho

ldin

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limin

atio

nsC

ons

olid

ated

$’00

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000

$’00

0$’

000

$’00

0$’

000

Oth

er s

egm

enta

l inf

orm

atio

n

2010

Cap

ital e

xpen

ditu

re21

,713

17,6

7549

,862

––

89,2

50D

epre

ciat

ion

and

amor

tisat

ion

7,88

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120

37. Dividends

The Group andthe Company

2010 2009 $’000 $’000

Declared and paid during the year:

Dividends on ordinary shares:• First and final tax-exempt dividend for 2009: 3.0 cents (2008: 3.0 cents) per share 8,988 8,988• Special dividend for 2009: 1.0 cents (2008: 1.0 cents) per share 2,996 2,996

11,984 11,984

Proposed but not recognised as a liability as at 30 June:

Dividends on ordinary shares, subject to shareholders’ approval at the AGM• Final one-tier tax-exempt dividend for 2010: 3.0 cents (2009: 3.0 cents) per share 8,988 8,988• Special one-tier tax-exempt dividend for 2010: Nil (2009: 1.0 cents) per share – 2,996

8,988 11,984

38. Authorisation of financial statements

The financial statements for the year ended 30 June 2010 were authorised for issue in accordance with a resolution of the Directors on 8 September 2010.



Class of Equity Security : Ordinary shares Voting Rights : On a show of hands: one vote for each member On a poll: one vote for each ordinary share Treasury shares held by the Company will have no voting rights DISTRIBUTION OF SHAREHOLDINGS Size of Shareholdings No. of No. of Shareholders % Shares % 1 - 999 129 3.05 9,444 0.00

1,000 - 10,000 2,877 68.08 16,677,122 5.54

10,001 - 1,000,000 1,199 28.37 51,545,596 17.10

1,000,001 and above 21 0.50 233,165,840 77.36

Total 4,226 100.00 301,398,002 100.00

TOP 20 SHAREHOLDERS

S/No. Name of Shareholders No. of Shares %* 1 Ang Kok Tian 41,427,000 13.83

2 Ang Ah Nui 39,600,000 13.22

3 Ang Kok Eng 34,750,000 11.60

4 Ang Kok Leong 34,650,000 11.56

5 Ang Sin Liu 23,633,000 7.89

6 Ang Swee Kuan 12,950,000 4.32

7 Raffles Nominees (Pte) Ltd 10,936,000 3.65

8 United Overseas Bank Nominees Pte Ltd 6,542,016 2.18

9 Kim Eng Securities Pte. Ltd. 5,687,590 1.90

10 DBS Nominees Pte Ltd 3,909,000 1.30

11 HSBC (Singapore) Nominees Pte Ltd 3,124,000 1.04

12 Citibank Nominees S’pore Pte Ltd 2,478,000 0.83

13 DBS Vickers Securities (S) Pte Ltd 1,949,000 0.65

14 OCBC Securities Private Ltd 1,893,048 0.63

15 ASL Marine Holdings Ltd - Account Share Buy-Share 1,794,000 0.60

16 Toh Kim Bock C-E Contractor Pte Ltd 1,736,000 0.58

17 Eastern Navigation Pte Ltd 1,498,000 0.50

18 Toyogo (Singapore) Pte Ltd 1,350,000 0.45

19 Hong Leong Finance Nominees Pte Ltd 1,188,000 0.40

20 DBSN Services Pte Ltd 1,068,000 0.36

Total 232,162,654 77.49

* The percentage is computed based on 299,604,002 issued ordinary shares of the Company as of 3 September 2010, being 301,398,002 total shares in issue less 1,794,000 treasury shares as at that date.

SHAREHOLDINGS HELD IN THE HANDS OF PUBLIC Based on information available to the Company and to the best knowledge of the Company as at 3 September 2010, approximately 35% of the issued ordinary shares of the Company is held by the public and therefore, Rule 723 of the SGX-ST Listing Manual is complied with.

Analysis of Shareholdings as at 3 September 2010

122

SUBSTANTIAL SHAREHOLDERS AS AT 3 SEPTEMBER 2010 Direct Interest Deemed Interest No. of No. of Substantial Shareholders Shares % Shares %

Ang Kok Tian (1) (2) (3) 41,427,000 13.83 154,172,000 51.46

Ang Ah Nui (1) (2) (3) 39,600,000 13.22 155,999,000 (4) 52.07

Ang Kok Eng (1) (2) (3) 34,750,000 11.60 160,849,000 53.69

Ang Kok Leong (1) (2) (3) 34,650,000 11.56 160,949,000 53.73

Ang Sin Liu (2) (3) 23,633,000 7.89 171,966,000 (5) 57.40

Ang Swee Kuan (2) (3) 12,950,000 4.32 182,649,000 60.97

Notes

(1) Ang Kok Tian, Ang Ah Nui, Ang Kok Eng and Ang Kok Leong are brothers. Each of the brothers is deemed to have an interest in the shares held by the other.

(2) Ang Sin Liu is the father of Ang Kok Tian, Ang Ah Nui, Ang Kok Eng, Ang Kok Leong and Ang Swee Kuan. Each of them is deemed to have an interest in the shares held by the other.

(3) Ang Swee Kuan is the sister of Ang Kok Tian, Ang Ah Nui, Ang Kok Eng and Ang Kok Leong and the daughter of Ang Sin Liu. Each of them is deemed to have an interest in the shares held by the other.

(4) 4,175,000 shares are registered in the name of a nominee.

(5) 4,414,000 shares are registered in the name of a nominee.

Analysis of Shareholdingsas at 3 September 2010


Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Tenth Annual General Meeting of the Company will be held at Jurong Country Club, 9 Science Centre Road, Singapore 609078 on Monday, 25 October 2010 at 2.00 p.m. for the following purposes:-

ORDINARY BUSINESS

1. To receive and adopt the audited financial statements and the reports of the directors and auditors of the Company for the year ended 30 June 2010.

Resolution 1

2. To declare a final one-tier tax-exempt dividend of 3 Singapore cents per ordinary share for the year ended 30 June 2010. Resolution 2

3. To approve directors’ fees of S$176,000 for the year ended 30 June 2010. (2009: S$176,000) Resolution 3

4. To re-elect Mr Andre Yeap Poh Leong, a director who will retire by rotation in accordance with Article 91 of the Company’s Articles of Association and who, being eligible, will offer himself for re-election.

Note: Mr Andre Yeap Poh Leong, if re-elected as a director of the Company, will remain a member of the audit committee, the chairman of the nominating committee and a member of the remuneration committee. Mr Yeap is an independent director.

Resolution 4

5. To re-elect Mr Ang Kok Leong, a director who will retire by rotation in accordance with Article 91 of the Company’s Articles of Association and who, being eligible, will offer himself for re-election.

Resolution 5

6. To re-appoint Ernst & Young LLP as auditors of the Company and to authorise the directors to fix their remuneration. Resolution 6

SPECIAL BUSINESS

To consider and, if thought fit, to pass with or without any modifications, the following resolutions as ordinary resolutions:-

7. That pursuant to Section 161 of the Companies Act, Cap. 50 (the “Companies Act”) and Rule 806 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”), authority be and is hereby given to the directors of the Company to:-

(a) allot and issue shares in the Company; and

(b) issue convertible securities and any shares in the Company arising from the conversion of such convertible securities, (whether by way of rights, bonus or otherwise) at any time to such persons 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 and convertible securities to be issued pursuant to such authority shall not exceed 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, of which the aggregate number of shares and convertible securities to be issued other than on a pro rata basis to shareholders of the Company shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company, and for the purposes of this resolution and Rule 806(3) of the Listing Manual, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this resolution is passed (after adjusting for new shares arising from the conversion or exercise of any convertible securities or exercise of share options or vesting of share awards which are outstanding or subsisting at the time of the passing of this resolution approving the mandate, provided the options or awards were granted in compliance with the Listing Manual and any subsequent bonus issue, consolidation or subdivision of the Company’s shares), and unless revoked or varied by the Company in general meeting, such authority conferred by this resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.

Resolution 7

124


8. That:-

(a) for the purposes of Sections 76C and 76E of the Companies Act, the exercise by the directors of the Company of all the powers of the Company to purchase or otherwise acquire issued ordinary shares each fully paid in the capital of the Company (“Shares”) not exceeding in aggregate the Maximum Percentage (as hereafter defined), at such price or prices as may be determined by the directors from time to time up to the Maximum Price (as hereafter defined), whether by way of:-

(i) market purchase(s) on the SGX-ST; and/or

(ii) off-market purchase(s) (if effected otherwise than on the SGX-ST) in accordance with any equal access scheme(s) as may be determined or formulated by the directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other laws and regulations and rules of the SGX-ST, be and is hereby authorised and

approved generally and unconditionally (the “Share Purchase Mandate”); (b) unless varied or revoked by the Company in general meeting, the authority conferred on the directors of the Company

pursuant to the Share Purchase Mandate may be exercised by the directors at any time and from time to time during the period commencing from the date of the passing of this resolution and expiring on the earlier of: -

(i) the date on which the next Annual General Meeting of the Company is held or required by law to be held; (ii) the date on which the authority conferred by the Share Purchase Mandate is revoked or varied by shareholders in

general meeting; or

(iii) the date on which the Company has purchased the maximum number of Shares mandated under the Share Purchase Mandate;

(c) in this resolution:-

“Average Closing Price” means the average of the closing market prices of a Share over the five consecutive Market Days on which the Shares are transacted on the SGX-ST, immediately preceding the date of the market purchase by the Company or, as the case may be, the date of the making of the offer pursuant to the off-market purchase, and deemed to be adjusted, in accordance with the listing rules of the SGX-ST, for any corporate action that occurs after the relevant five Market Days period;

“date of the making of the offer” means the date on which the Company makes an offer for the purchase or acquisition of

Shares from holders of Shares, stating therein the relevant terms of the equal access scheme for effecting the off-market purchase;

“Market Day” means a day on which the SGX-ST is open for trading in securities; “Maximum Percentage” means that number of issued Shares representing 10% of the total number of issued ordinary

shares (excluding treasury shares) in the capital of the Company as at the date of the passing of this resolution; and “Maximum Price” in relation to a Share to be purchased, means an amount (excluding brokerage, stamp duties, applicable

goods and services tax and other related expenses) not exceeding:-

(i) in the case of a market purchase, 105% of the Average Closing Price; and (ii) in the case of an off-market purchase pursuant to an equal access scheme, 110% of the Average Closing Price, and

(d) the directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this resolution.

Resolution 8



9. That pursuant to Section 161 of the Companies Act, authority be and is hereby given to the directors of the Company to offer and grant options in accordance with the provisions of the ASL Employee Share Option Scheme (the “Share Option Scheme”) and to allot and issue from time to time such number of ordinary shares in the capital of the Company as may be required to be issued pursuant to the exercise of the options under the Share Option Scheme, provided that the aggregate number of ordinary shares in respect of which such options may be granted and which may be issued pursuant to the Share Option Scheme and any other share based schemes of the Company shall not exceed 10% of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.

Resolution 9

10. That pursuant to Section 161 of the Companies Act, authority be and is hereby given to the directors of the Company to grant awards in accordance with the rules of the ASL Marine Performance Shares Scheme (the “Shares Scheme”) and to allot and issue from time to time such number of fully paid-up shares in the capital of the Company as may be required to be issued pursuant to the vesting of the awards under the Shares Scheme, provided that the aggregate number of shares in respect of which such awards may be granted and which may be issued pursuant to the Shares Scheme and any other share based schemes of the Company shall not exceed 10% of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.

Resolution 10

11. To transact such other business as can be transacted at an Annual General Meeting of the Company.

NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATES

NOTICE IS HEREBY GIVEN that the share transfer books and register of members of the Company will be closed on 30 October 2010, for the purpose of determining members’ entitlements to a final one-tier tax-exempt dividend of 3 Singapore cents per ordinary share for the year ended 30 June 2010.

Duly completed transfers received by the Company’s Share Registrar, M & C Services Private Limited at 138 Robinson Road #17-00, The Corporate Office, Singapore 068906 up to 5.00 p.m. on 29 October 2010 will be registered to determine members’ entitlements to the proposed dividend.

Members whose securities accounts with The Central Depository (Pte) Limited are credited with ordinary shares at 5.00 p.m. on 29 October 2010 will be entitled to the proposed dividend.

The proposed dividend, if approved by members at the Company’s Tenth Annual General Meeting to be held on 25 October 2010, will be paid on 10 November 2010.

By Order of the Board

Lilian Tan Yin Yen and S.ThillainathanCompany Secretaries

Singapore1 October 2010

Notes

1. A member entitled to attend and vote at the Annual General Meeting may appoint not more than two proxies to attend and vote on his behalf. Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy.

2. A proxy need not be a member of the Company.

3. The instrument appointing a proxy shall, in the case of an individual, be signed by the appointor or his attorney, and in the case of a corporation shall be either under its common seal or signed by its attorney or a duly authorised officer on behalf of the corporation.

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 19 Pandan Road, Singapore 609271 not less than 48 hours before the time appointed for holding the Annual General Meeting.

126


Explanatory notes on the Special Business to be transacted:-

1. The ordinary resolution proposed in resolution 7 above is to authorise the directors from the date of the above meeting until the date of the next Annual General Meeting to allot and issue shares and convertible securities in the Company. The aggregate number of shares and convertible securities which the directors may allot and issue under this resolution shall not exceed 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company at the time this resolution is passed. For allotments and issues of shares and convertible securities other than on a pro rata basis to all shareholders, the aggregate number of shares and convertible securities to be issued shall not exceed 15% of the total number of issued shares (excluding treasury shares) in the capital of the Company, at the time this resolution is passed.

2. The ordinary resolution proposed in resolution 8 above is to authorise the directors from the date of the above meeting until the earliest of (i) the date on which the next Annual General Meeting of the Company is held or required by law to be held, (ii) the date on which the authority conferred by this mandate is revoked or varied by shareholders in general meeting, or (iii) the date on which the Company has purchased the maximum number of shares mandated under this mandate, to purchase or otherwise acquire issued ordinary shares in the capital of the Company by way of market purchases or off-market purchases of up to 10% of the total number of issued ordinary shares (excluding treasury shares) in the capital of the Company. For more information on this resolution, please refer to the letter to shareholders dated 1 October 2010.

3. The ordinary resolution proposed in resolution 9 above is to authorise the directors to offer and grant options and to allot and issue shares in the capital of the Company pursuant to the Share Option Scheme, provided that the aggregate number of shares in respect of which such options may be granted and which may be issued pursuant to the Share Option Scheme and any other share based schemes of the Company shall not exceed 10% of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.

4. The ordinary resolution proposed in resolution 10 above is to authorise the directors to grant awards and to allot and issue shares in the capital of the Company pursuant to the Shares Scheme, provided that the aggregate number of shares in respect of which such awards may be granted and which may be issued pursuant to the Shares Scheme and any other share based schemes of the Company shall not exceed 10% of the total number of issued shares (excluding treasury shares) in the capital of the Company from time to time.


Proxy Form

ASL MARINE HOLDINGS LTD.(Incorporated In The Republic Of Singapore)Company Registration No. 200008542N

IMPORTANT

1 For investors who have used their CPF monies to buy ASL Marine Holdings Ltd.’s shares, this annual report is forwarded to them at the request of their CPF approved nominees and is sent solely FOR INFORMATION ONLY.

2 This proxy form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

I/We , NRIC/Passport no.

of

being a member/members of ASL Marine Holdings Ltd. hereby appoint

Name Address NRIC/Passport No.

Proportion ofShareholdings (%)

and/or (delete as appropriate)

Name Address NRIC/Passport No.

Proportion ofShareholdings (%)

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll at the Tenth Annual General Meeting of the Company to be held at Jurong Country Club, 9 Science Centre Road, Singapore 609078 on Monday, 25 October 2010 at 2.00 p.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the resolutions as set out in the notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.)

No. Resolutions For Against

Ordinary Business

1 Adoption of audited financial statements and reports

2 Declaration of final one-tier tax-exempt dividend

3 Approval of directors’ fees

4 Re-election of Mr Andre Yeap Poh Leong as director

5 Re-election of Mr Ang Kok Leong as director

6 Re-appointment of Ernst & Young LLP as auditors

Special Business

7 Authority for directors to allot and issue shares and convertible securities

8 Renewal of Share Purchase Mandate

9 Authority for directors to offer and grant options and to allot and issue shares pursuant to the ASL Employee Share Option Scheme

10 Authority for directors to grant awards and to allot and issue shares pursuant to the ASL Marine Performance Shares Scheme

Dated this _____ day of ________________ 2010

_____________________________________________Signature(s) of Member(s) or Common Seal

IMPORTANTPLEASE READ NOTES OVERLEAF

Total Number of Shares Held

128

Notes

1 Please insert the total number of shares in the Company held by you either in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50) or in the Register of Members, or both. If no number is inserted, this proxy form will be deemed to relate to all the shares held by you.

2 A member entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

3 Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy.

4 The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 19 Pandan Road, Singapore 609271 not less than 48 hours before the time appointed for the meeting.

5 The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed under its common seal or under the hand of its attorney or a duly authorised officer of the corporation.

6 Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

7 A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the meeting, in accordance with Section 179 of the Companies Act, Cap. 50.

8 The Company shall be entitled to reject an instrument of proxy which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument of proxy. In addition, in the case of shares entered in the Depository Register, the Company may reject an instrument of proxy if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the meeting, as certified by The Central Depository (Pte) Limited to the Company.

Corporate Information

BOARD OF DIRECTORSExecutiveAngKokTian(ChairmanandManagingDirector)AngAhNui(DeputyManagingDirector)AngKokEngAngKokLeong

Independent, Non-ExecutiveDamianHongChinFock(LeadIndependentDirector)AndreYeapPohLeongChristopherChongMengTak

AUDIT COMMITTEEDamianHongChinFock(Chairman)AndreYeapPohLeongChristopherChongMengTak

NOMINATING COMMITTEEAndreYeapPohLeong(Chairman)ChristopherChongMengTakDamianHongChinFock

REMUNERATION COMMITTEEDamianHongChinFock(Chairman)AndreYeapPohLeongChristopherChongMengTak

COMPANY SECRETARIESLilianTanYinYenS.Thillainathan

INVESTOR RELATIONS [email protected]

[email protected]

REGISTERED OFFICE19PandanRoadSingapore609271Telephone:(65)62643833Facsimile:(65)62680274Email:[email protected]:www.aslmarine.com

INCORPORATION DATAPlaceofIncorporation:SingaporeDateofIncorporation:4October2000Co.Reg.No.200008542N

SHARE LISTINGASLMarineHoldingsLtd.’ssharesarelistedandtradedontheMainBoardoftheSingaporeExchangeSecuritiesTradingLimitedsinceMarch2003.

SHARE REGISTRAR & SHARE TRANSFER OFFICEM&CServicesPrivateLimited138RobinsonRoad#17-00TheCorporateOfficeSingapore068906Telephone:(65)62276660Facsimile:(65)62251452

AUDITORSErnst&YoungLLPCertifiedPublicAccountantsOneRafflesQuayNorthTower,Level18Singapore048583Partner-In-Charge:TerryWeeHiangBing(appointedsincethefinancialyearended30June2010)

PRINCIPAL BANKERSUnitedOverseasBankLimitedTheDevelopmentBankofSingaporeLtdOversea-ChineseBankingCorporationLimitedStandardCharteredBankTheRoyalBankofScotlandN.V.

ASL Marine Holdings Ltd.CompanyRegistrationNo.200008542N

19PandanRoadSingapore609271Telephone:(65)62643833Facsmile:(65)62680274Website:www.aslmarine.com

annual report - ASL Marine Holdings Ltd

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