sembcorp marine ltd and subsidiary companies€¦ · sembcorp marine ltd and subsidiary companies...

SEMBCORP MARINE LTD AND SUBSIDIARY COMPANIES

DirectorsWong Kok Siew ChairmanTan Kwi Kin PresidentChee Keng SoonGiam Chin ToonEr Kwong WahMasahiro Miyazaki (Resigned on 30 May 2002)Kiyotaka MatsuzawaTan Pheng HockNaoteru Tsuda (Appointed on 30 May 2002)Low Sin Leng (Appointed on 14 November 2002)Heng Chiang Gnee (Alternate to Tan Kwi Kin)

SecretaryLim Seh Li

RegistrarKon Choon Kooi Pte Ltd47 Hill Street #06-02Chinese Chamber of Commerce & Industry BuildingSingapore 179365

Registered Office29 Tanjong Kling RoadSingapore 628054

AuditorsErnst & Young

Audit PartnerNg Tiak SoonDate of appointment: 11 June 1999

Report of the Directors


67

The Directors present their report to the members together with the audited financial statements of the Company andof the Group for the year ended 31 December 2002.

Principal activitiesThe principal activities of the Company are provision of management services and investment holding. The principalactivities of its subsidiary companies are:

a) investment holding;b) ship building and ship owning;c) ship repair and conversion;d) the supply of equipment rental services;e) the trading in copper slag and related materials;f) the cleaning and maintenance of industrial premises;g) the processing and distribution of copper slag for grit blasting and building;h) the provision of marine, general electronic, electrical works and general contracting services; andi) the fabrication of metal structures.

There have been no significant changes in the nature of the activities of the Company and its subsidiary companiesduring the financial year.

Results for the financial yearGroup Company

$’000 $’000

Profit after taxation and minority interests 92,098 107,983Dividends paid, less tax (71,470) (71,470)

20,628 36,513

In the opinion of the Directors, the results of the operations of the Company and of the Group during the financial yearhave not been substantially affected by any item, transaction or event of a material and unusual nature except asdisclosed in Note 6 of the financial statements.

DividendsDuring the financial year the following dividends were paid by the Company:

(a) a final dividend of 1.0 cents per ordinary share, less tax of 22.0% and a special dividend of 4.0 cents perordinary share, less tax of 22.0%, in respect of the previous financial year and as proposed in the Report ofthe Directors of that year. The amounts paid totalled $54,963,171 based on the number of issued ordinaryshares at the date of payment of the dividend.

(b) an interim dividend of 0.75 cents per ordinary share, less tax of 22.0%, amounting to $8,253,546 and aspecial dividend of 0.75 cents per ordinary share, less tax of 22.0%, amounting to $8,253,546 in respect ofthe financial year under review.

The Directors propose a final dividend of 1.0 cent per ordinary share less tax of 22.0%, amounting to $11,031,715 anda special dividend of 4.0 cents per ordinary share, less tax of 22.0%, amounting to $44,126,861, be paid in respect ofthe financial year under review.



Transfers to/from reserves and provisionsThe following amounts have been (debited)/credited to :

Group Company

$’000 $’000

Foreign currency translation reserveExchange differences arising on consolidation (1,180) -

Share premium and other capital reservesPremium on shares issued upon the exercise of share options 5,142 5,142Deferred tax on redeemable convertible loan stocks of a subsidiary company (70) -Share of an associated company’s capital reserves 16 -Transfer to the profit and loss account upon disposal of an associated company (6,786) -Transfer to revenue reserve upon disposal of an associated company (3,600) -

Revenue reserveTransfer from other capital reserve upon disposal of an associated company 3,600 -

Acquisition and disposal of subsidiary companiesDuring the financial year, details of the acquisition and disposal of subsidiary companies are as follows:

Effective Net TangibleEquity Interest Assets Purchase

Acquired Acquired Consideration

% $’000 $’000

Jurong SML Pte Ltd 65.0 12,449 14,300(formerly known as Atlantis Shipyard Pte Ltd)

JPL Concrete Products Pte Ltd 16.3 610 1,048

Effective Net TangibleEquity Interest Assets Sales

Disposed Disposed Proceeds

% $’000 $’000

JPL Industries Pte Ltd 9.7 1,603 1,440

Share capital and share optionsSembCorp Marine Share Option PlanShare options were granted in 2002 (the “2002 Options”) pursuant to the SembCorp Marine Share Option Plan (the“Plan”) in respect of 15,639,000 unissued ordinary shares of $0.10 each to 1,086 full time executives of the Group, 9Directors of the Company and 30 executives and one non-executive director of the immediate holding company,SembCorp Industries Ltd, who are not substantial shareholders of the Company. In respect of options granted toexecutives and non-executive director of the immediate holding company, a total of 333,000 options were grantedduring the financial year, making it a total of 941,000 options granted to those executives and the non-executive directorfrom the commencement of the Plan to the end of the financial year. The 2002 Options are exercisable from 8 November2003 to 7 November 2012 (with the exception of 8 November 2003 to 7 November 2007 for non-executive Directors ofthe Company) and the exercise price is $0.90 per share for cash.

The details of the Plan (which was started in 1991 as the Jurong Shipyard Limited Executives’ Share Option Scheme)were set out in the financial statements of that year.



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The fair value of each of the 2002 Options at the date of grant is $0.20 which is estimated using the Black-Scholesoption-pricing model with the following assumptions: dividend yield of 3.89%, risk free interest rate of 3.42%, expectedvolatility of 40.15% and expected life of 2.5 years.

The options granted, exercised and cancelled under the Plan during the year and the options outstanding at the end ofthe year are as follows:

1998 1999 2000 2001 2002Options Options Options Options Options

Date options granted 27 Apr 1998 10 Mar 1999 8 Sep 2000 27 Sep 2001 7 Nov 2002Option exercise period:

From 27 Apr 2000 10 Mar 2001 8 Sep 2001 28 Sep 2002 8 Nov 2003To 26 Apr 2003 9 Mar 2004 7 Sep 2010 27 Sep 2011 7 Nov 2012

Number of holders at 31 December 2002 23 17 741 900 1,117

Exercise price per option $0.79 $0.65 $0.70 $0.66 $0.90

‘000 ‘000 ‘000 ‘000 ‘000Number of options outstanding:

At 1 January 2002 4,660 929 14,933 13,885 -Options exercised (3,270) (405) (3,502) (1,004) -Options granted - - - - 15,639Options granted but not accepted - - - - (28)Options cancelled (10) (30) (431) (511) (10)

At 31 December 2002 1,380 494 11,000 12,370 15,601

The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any right toparticipate in any share issue of any other company.

Save as disclosed, there were no other unissued shares of the Company or its subsidiaries under options as at the endof the financial year.

Proforma financial effect under United States Financial Accounting Standard No. SFAS 123

Strictly for information purposes only, the proforma profit after taxation and minority interests and the earnings pershare would have been as follows had the Company accounted for the fair value of the options granted under UnitedStates Financial Accounting Standard No. 123.

2002

$’000

Profit after taxation and minority interests, as reported 92,098Proforma profit after taxation and minority interests 89,797

2002cents

Earnings per share, as reported 6.54Proforma earnings per share 6.38

Diluted earnings per share, as reported 6.50Proforma diluted earnings per share 6.34

The estimated fair value of the share options was determined for the first time in respect of grants made since thefinancial year ended 31 December 1999. The proforma amounts may not be representative of future disclosures sincethe estimated fair value is amortised over the vesting period and additional options may be granted in future years.



SembCorp Marine Performance Share PlanThe SembCorp Marine Performance Share Plan (the “Performance Plan”) was approved at the Company’s ExtraordinaryGeneral Meeting held on 31 May 2000. The Performance Plan was established with the objective of motivating seniorexecutives to strive for superior performance and sustaining long-term growth for the Company. The Performance Planis administered by the Executives’ Share Option Scheme Committee (“ESOSC”).

Under the Performance Plan, the awards, which are granted conditional on performance targets set based on medium-term corporate objectives, are announced annually at the start of each rolling three-year performance qualifying period.The final number of shares given will depend on the level of achievement of those targets over the three-year performanceperiod. A specific number of performance shares shall be realised by the ESOSC to the recipient at the end of theperformance period provided the minimum level of targets achieved is not less than 80% of the targets set.

Recipients who do not meet at least 80% of the targets set at the end of the performance period will not be entitled tothe performance shares. If the achievement of the targets exceeds 100%, more performance shares than the originalaward could be delivered up to a maximum of 200% of the original award.

For the period up to 31 December 2002, the Company awarded 580,000 and 580,000 performance shares to the keyexecutives of the Group for the performance qualifying period of 2001 to 2003 and 2002 to 2004 respectively, Tan KwiKin, a key executive and also an executive director of the Board, was conditionally awarded an aggregate of 760,000shares. Heng Chiang Gnee, a key executive and an alternate director to Tan Kwi Kin, was conditionally awarded anaggregate of 400,000 shares.

As the release of performance shares would only be made upon completion of the three-year performance cycle, thetotal number of performance shares in awards granted outstanding at 31 December 2002 was 1,160,000.

SembCorp Marine Restricted Stock PlanThe SembCorp Marine Restricted Stock Plan (the “Restricted Plan”) was approved at the Company’s ExtraordinaryGeneral Meeting held on 31 May 2000. The Restricted Plan is administered by the ESOSC.

Under the Restricted Plan, awards granted vest only after the satisfactory completion of time-based service conditionsor where the award is performance-related, after a further period of service beyond the performance target completiondate (performance-based restricted awards). No minimum vesting period is prescribed under the Restricted Plan andthe length of the vesting period in respect of each award will be determined on a case-by-case basis. Performance-based restricted awards differ from awards granted under the Performance Plan in that an extended vesting period isimposed beyond the performance target completion date.

No awards have been granted under the Restricted Plan during the year.

No participants, other than those disclosed under the directors’ interests in share options, received 5% or more of thetotal number of options available.

Issue of shares by the CompanyDuring the financial year, other than the issue of 8,181,500 new ordinary shares of $0.10 each at various exercisableprices under the Plan, there was no other issue of new ordinary shares.

Issue of shares by other companies in the GroupDuring the financial year, JPL Industries Pte Ltd (“JPLI”), a subsidiary of the Company increased its paid up sharecapital from $11,000,000 to $12,048,000 by issuing 1,048,000 new ordinary shares, of par value $1 each at par, forpurposes of acquiring the remaining 40.9% shareholdings in JPL Concrete Products Pte Ltd it does not own from theminority shareholders. After this acquisition coupled with the dilution of interest of JPLI to minority interests, theGroup’s effective interest in JPL Concrete Products Pte Ltd increased from 37.5% to 53.8%.



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

Wong Kok Siew ChairmanTan Kwi Kin PresidentChee Keng SoonGiam Chin ToonEr Kwong WahKiyotaka MatsuzawaTan Pheng HockNaoteru Tsuda (Appointed on 30 May 2002)Low Sin Leng (Appointed on 14 November 2002)Heng Chiang Gnee (Alternate to Tan Kwi Kin)

Directors’ interests in shares, share options and debenturesThe following Directors who held office at the end of the financial year had, according to the register required to be keptunder Section 164 of the Companies Act, an interest in shares or debentures of the ultimate holding company, TemasekHoldings (Private) Limited or any other related corporations as stated below:

Name of Director Shareholdings Other shareholdingsand Corporation registered In in which the Director

in which Description of Exercise the name is deemed tointerests held interests period of Director have an interest

At beginning At end of At beginning At end ofof the year the year of the year the year

Wong Kok SiewSembCorp Marine Ordinary shares of - - 75,000 - -Ltd $0.10 each

Options to subscribefor ordinary sharesof $0.10 each- at $0.70 per share 8/9/2001 to

7/9/2005 300,000 225,000 - -- at $0.66 per share 28/9/2002 to

27/9/2006 250,000 250,000 - -- at $0.90 per share 8/11/2003 to

7/11/2007 - 250,000 - -

SembCorp Industries Ordinary shares ofLtd $0.25 each - 236,446 636,446 - -


19/5/2009 500,000 500,000 - -- at $1.99 per share 27/6/2001 to

26/6/2010 500,000 500,000 - -- at $1.55 per share 20/4/2002 to

19/4/2011 500,000 500,000 - -- at $1.59 per share 8/5/2003 to - 400,000 - -

7/5/2012 (7/5/2002)- at $0.98 per share 18/10/2003 to - 400,000 - -

17/10/2012 (17/10/2002)






Wong Kok SiewSembCorp Industries Conditional award ofLtd 280,000 shares pursuant

to the Performance - 0 to 0 to - -Share Plan to be 560,000 560,000delivered after 2002 (Note 1a) (Note 1a)

Conditional award of300,000 shares pursuantto the Performance - 0 to 0 to - -Share Plan to be 600,000 600,000delivered after 2003 (Note 1b) (Note 1b)

Conditional award of400,000 shares pursuantto the Performance - - 0 to - -Share Plan to be 800,000delivered after 2004 (Note 1c)

Conditional award of1,000,000 sharespursuant to the RestrictedStock Plan, vested equally - - 800,000 - -from 2002 to 2006 (Note 2)

SembCorp Logistics Options to subscribeLtd for ordinary shares

of $0.25 each- at $2.50375 per share 29/6/2001 to

28/6/2005 80,000 80,000 - -- at $1.8375 per share 16/5/2002 to

15/5/2006 120,000 120,000 - -- at $2.01 per share 28/2/2003 to

27/2/2007 - 200,000 - -

Singapore Food Ordinary sharesIndustries Ltd of $0.05 each - 80,000 80,000 - -

Options to subscribefor ordinary sharesof $0.05- at $0.78 per share 30/10/2001 to

29/10/2009 100,000 100,000 - -- at $0.55 per share 24/8/2001 to

23/8/2005 200,000 200,000 - -- at $0.69 per share 28/7/2002 to

27/7/2006 120,000 120,000 - -- at $0.78 per share 9/8/2003 to

8/8/2007 - 120,000 - -

Directors’ interests in shares, share options and debentures (con’t)



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Singapore Technologies Ordinary sharesEngineering Ltd of $0.10 each - 5,137 5,137 - -

ST Assembly Test Ordinary sharesServices Ltd of $0.25 each - 2,000 2,000 - -

Raffles Holdings Ltd Ordinary sharesof $0.50 each - 10,000 10,000 - -

Singapore Ordinary sharesTelecommunications of $0.15 each - 1,620 1,880 1,490 1,540Ltd

Pacific Internet Ltd Options to subscribefor ordinary sharesof $2.00 each- at US$32.48 per share 10/11/2000 to

9/11/2004 8,000 8,000 - -- at US$25.60 per share 25/4/2001 to

24/4/2005 6,000 6,000 - -- at US$3.60 per share 10/1/2002 to

9/1/2006 6,000 6,000 - -

Tan Kwi KinSembCorp Marine Ltd Ordinary shares

of $0.10 each - 500,000 950,000 - -


26/4/2003 400,000 200,000 - -- at $0.70 per share 8/9/2001 to

7/9/2010 1,000,000 750,000 - -- at $0.66 per share 28/9/2002 to

27/9/2011 800,000 800,000 - -- at $0.90 per share 8/11/2003 to

7/11/2012 - 800,000 - -







Tan Kwi KinSembCorp Marine Ltd Conditional award of

380,000 shares pursuantto the Performance - - 0 to - -Share Plan to be 760,000delivered after 2004 (Note 1c)

SembCorp Options to subscribeIndustries Ltd for ordinary shares of

$0.25 each- at $1.99 per share 27/6/2001 to

26/6/2010 25,000 25,000 - -- at $1.55 per share 20/4/2002 to

19/4/2011 25,000 25,000 - -- at $1.59 per share 8/5/2003 to - 12,500 - -

7/5/2012 (7/5/2002)- at $0.98 per share 18/10/2003 to - 12,500 - -

17/10/2012 (17/10/2002)

Singapore Food Ordinary sharesIndustries Ltd of $0.05 each - 18,000 18,000 - -



Singapore Ordinary shares - 200 200 200 200Telecommunications of $0.15 eachLtd

Chee Keng SoonSembCorp Marine Ltd Options to subscribe

for ordinary sharesof $0.10 each- at $0.70 per share 8/9/2001 to

7/9/2005 113,000 113,000 - -- at $0.66 per share 28/9/2002 to

27/9/2006 130,000 130,000 - -- at $0.90 per share 8/11/2003 to

7/11/2007 - 130,000 - -

SembCorp Ordinary sharesIndustries Ltd of $0.25 each - - 8,392 12,951 12,951




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SNP Corporation Ltd Ordinary sharesof $0.50 each - - - 5,000 5,000

Singapore Ordinary shares - 1,690 1,690 5,000 5,000Telecommunications of $0.15 eachLtd

Singapore Airlines Ltd Ordinary sharesof $0.50 each - 4,000 4,000 4,000 4,000

Giam Chin ToonSembCorp Marine Ltd Ordinary shares

of $0.10 each - 32,500 32,500 - -


7/8/2005 97,500 97,500 - -- at $0.66 per share 28/9/2002 to

27/9/2006 110,000 110,000 - -- at $0.90 per share 8/11/2003 to

7/11/2007 - 100,000 - -

Er Kwong WahSembCorp Marine Ltd Options to subscribe


7/9/2005 70,000 70,000 - -- at $0.66 per share 28/9/2002 to

27/9/2006 60,000 60,000 - -- at $0.90 per share 8/11/2003 to

7/11/2007 - 40,000 - -

SembCorp Options to subscribeLogistics Ltd for ordinary shares

of $0.25 each at$2.50375 per share Expired 32,000 - - -

Singapore Ordinary shares - 1,820 1,820 1,690 1,690Telecommunications of $0.15 eachLtd






Kiyotaka MatsuzawaSembCorp Marine Ltd Options to subscribe

for ordinary sharesof $0.10 each at 8/11/2003 to$0.90 per share 7/11/2007 - 100,000 - -

Tan Pheng HockSembCorp Marine Ltd Options to subscribe


27/9/2006 20,000 20,000 - -- at $0.90 per share 8/11/2003 to

7/11/2007 - 40,000 - -



7/8/2008 5,000 5,000 - -- at $1.418 per share 10/2/2001 to

9/2/2009 400,000 400,000 - -- at $2.000 per share 11/8/2001 to

10/8/2009 5,000 5,000 - -- at $2.260 per share 10/2/2002 to

9/2/2010 400,000 400,000 - -- at $2.720 per share 20/2/2002 to

19/2/2011 225,000 225,000 - -- at $2.680 per share 11/8/2002 to

10/8/2011 227,500 227,500 - -- at $2.290 per share 8/2/2003 to

7/2/2012 - 175,000 - -- at $1.920 per share 13/8/2003 to

12/8/2012 - 175,000 - -

Conditional award of110,000 performance - 0 to 0 to - -shares to be delivered 220,000 220,000after 2002 (Note 1a) (Note 1a)

Conditional award of150,000 performance - 0 to 0 to - -shares to be delivered 300,000 300,000after 2003 (Note 1b) (Note 1b)




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Conditional award of200,000 performance - - 0 to - -shares to be delivered 400,000after 2003 (Note 1c)

Chartered Ordinary sharesSemiconductor of $0.26 each - 7,000 7,000 - -Manufacturing Ltd



Vertex Technology Ordinary sharesFund (II) Ltd of US$1.00 each - - - 5 units 5 units


Naoteru TsudaSembCorp Marine Ltd Options to subscribe

for ordinary sharesof $0.10 each at 8/11/2003 to$0.90 per share 7/11/2007 - 20,000 - -

Low Sin Leng #SembCorp Marine Ltd Options to subscribe


27/9/2011 50,000 50,000 - -- at $0.90 per share 8/11/2003 to

7/11/2012 50,000 50,000 - -

SembCorp Ordinary sharesIndustries Ltd of $0.25 each - - 100,000 - -






Low Sin Leng #SembCorp Options to subscribeIndustries Ltd for ordinary shares


19/4/2011 300,000 300,000 - -- at $1.59 per share 8/5/2003 to

7/5/2012 250,000 250,000 -- at $0.98 per share 18/10/2003 to

17/10/2012 250,000 250,000 - -


Conditional award of150,000 shares pursuantto the Performance - 0 to 0 to - -Share Plan to be 300,000 300,000delivered after 2004 (Note 1c) (Note 1c)

SembCorp Options to subscribeLogistics Ltd for ordinary shares


15/5/2011 40,000 40,000 - -- at $2.01 per share 28/2/2003 to

27/2/2012 20,000 20,000 - -Singapore Food Ordinary sharesIndustries Ltd of $0.05 each - - 20,000 - -

CapitaLand Limited Ordinary sharesof $1.00 each - 2,000 2,000 - -

Singapore Computer Options to subscribeSystems Limited for ordinary shares

of $0.25 each 8/3/2003 toat $1.55 per share 7/3/2007 5,000 5,000 - -

Pacific Internet Ltd Options to subscribefor ordinary shares 10/1/2002 toat US$3.60 per share 9/1/2006 6,000 6,000 - -

Singapore Airlines Ltd Ordinary sharesof $0.50 each - 3,000 3,000 4,000 4,000




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Heng Chiang GneeSembCorp Marine Ltd Ordinary shares

of $0.10 each - 250,000 500,000 - -


26/4/2003 250,000 150,000 - -- at $0.70 per share 8/9/2001 to

7/9/2010 600,000 450,000 - -- at $0.66 per share 28/9/2002 to

27/9/2011 500,000 500,000 - -- at $0.90 per share 8/11/2003 to

7/11/2012 - 500,000 - -


Conditional award of200,000 shares pursuantto the Performance - - 0 to - -Share Plan to be 400,000delivered after 2004 (Note 1c)

SembCorp Ordinary sharesIndustries Ltd of $0.25 each - - - 12,715 12,715

Options to subscribefor ordinary sharesof $0.25 each- at $2.623 per share Expired 139,871 - - -- at $1.99 per share 27/6/2001 to

26/6/2010 12,000 12,000 - -- at $1.55 per share 20/4/2002 to

19/4/2011 12,000 12,000 - -- at $1.59 per share 8/5/2003 to

7/5/2012 - 7,000 - -- at $0.98 per share 18/10/2003 to

17/10/2012 - 7,000 - -






Heng Chiang GneeSingapore Food Ordinary sharesIndustries Ltd of $0.05 each - 18,000 18,000 - -

Chartered Ordinary shares - 5,000 5,000 - -Semiconductor of $0.26 eachManufacturing Ltd



Singapore Computer Ordinary sharesSystems Limited of $0.25 each - 3,000 3,000 - -

Singapore Ordinary sharesTelecommunications of $0.15 each - 200 200 - -Ltd

Vertex Venture Ordinary shares - 2,074 De-listed - -Holdings Ltd of $0.20 each 12/12/02

There was no change in the Directors’ interests between the end of the financial year and 21 January 2003.

# At date of appointment of director.

Note 1 : The actual number delivered will depend on the achievement of set targets over a 3 year period as indicatedbelow. Achievement of target below 80% level will mean no performance shares will be delivered, whileachievement up to 200% will mean up to twice the number of conditional performance shares awarded couldbe delivered.

(a) Period from 2000 to 2002(b) Period from 2001 to 2003(c) Period from 2002 to 2004

Note 2 : 1,000,000 SembCorp Industries Shares are comprised in conditional awards of restricted stocks granted toWong Kok Siew pursuant to the SembCorp Industries Restricted Stock Plan subject to completion of thevesting period referred to below and Wong Kok Siew continuing to be in the employment of the SembCorpIndustries Group at the time of the vesting. Of the 800,000 SembCorp Industries Shares:

(i) 200,000 SembCorp Industries Shares was awarded on 20 August 2002;(ii) 200,000 SembCorp Industries Shares will vest on 20 August 2003;(iii) 200,000 SembCorp Industries Shares will vest on 20 August 2004;(iv) 200,000 SembCorp Industries Shares will vest on 20 August 2005; and(v) 200,000 SembCorp Industries Shares will vest on 20 August 2006;




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If Wong Kok Siew ceases to be in the employment of the SembCorp Industries Group before the completionof each vesting date, his awards of all unvested SembCorp Industries Shares will lapse with immediateeffect and become null and void but he will be entitled to retain all SembCorp Industries Shares whichhave vested on or before the date of his cessation of employment.

Directors’ contractual benefitsSave as disclosed in the financial statements, since the end of the previous financial year, no Director of the Companyhas received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporationwith the Director, or with a firm of which the Director is a member, or with a company in which the Director has asubstantial financial interest.

Other than the SembCorp Marine Share Option Plan, neither at the end of the financial year, nor at any time during thatyear, did there subsist any arrangements, to which the Company is a party, whereby Directors might acquire benefits bymeans of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Asset valuesBefore the profit and loss account and balance sheet of the Company were made out, the Directors took reasonablesteps to ascertain that:

(a) action had been taken in relation to the writing off of bad debts and the making of provision for doubtfuldebts and satisfied themselves that all known bad debts had been written off and that adequate provision fordoubtful debts had been made; and

(b) any current assets which were unlikely to realise their book value in the ordinary course of business hadbeen written down to their estimated realisable values or adequate provision had been made for the differencebetween those values.

At the date of this report, the Directors are not aware of any circumstances which would render:(a) any amount written off or provided for bad and doubtful debts in the Group inadequate to any substantial

extent; and

(b) the values attributed to current assets in the consolidated financial statements misleading.

Charges on assets and contingent liabilitiesSince the end of the financial year, no charge on the assets of the Company or any company in the Group has arisenwhich secures the liabilities of any other person.

Since the end of the financial year, no contingent liability of the Company or any company in the Group has arisen.

Ability to meet obligationsNo contingent or other liability of the Company or any company in the Group has become enforceable or is likely tobecome enforceable within the period of twelve months after the end of the financial year which, in the opinion of theDirectors, will or may substantially affect the ability of the Company and of the Group to meet their obligations as andwhen they fall due.

Other circumstances affecting the financial statementsAt the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or inthe consolidated financial statements which would render any amount stated in the financial statements of the Companyand the consolidated financial statements of the Group misleading.

Unusual items after the financial yearIn the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen in the intervalbetween the end of the financial year and the date of this report which would affect substantially the results of theoperations of the Company or of the Group for the financial year in which this report is made.



Audit CommitteeThe members of the Audit Committee (“Committee”) at the date of this report are as follows:

Chee Keng Soon (Chairman)Giam Chin ToonKiyotaka Matsuzawa

The principal responsibility of the Committee is to assist the Board in the identification and monitoring of areas ofsignificant risks including the following:

• the reliability of management reporting;• compliance with laws and regulations, particularly those of the Companies Act, Chapter 50 and the Listing

Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST Listing Manual”);• the appropriateness of half year and full year announcement and reports;• the effectiveness and efficiency of internal and external audits; and• interested person transactions.

Specific functions of the Committee include reviewing the scope of work of the internal and external auditors, andreceiving and considering report of the internal and external auditors. The Committee also recommends the appointmentof the external auditors.

In addition, the Committee has, in accordance with Chapter 9 of the SGX-ST Listing Manual, reviewed the requirementsfor approval and disclosure of interested person transactions, reviewed the internal procedures set up by the Companyto identify and report, where necessary, seek approval for interested person transactions and, with the assistance ofthe internal auditors, reviewed interested person transactions.

The Committee has recommended to the Board that the auditors, Ernst & Young, be nominated for re-appointment asauditors at the forthcoming Annual General Meeting of the Company.

AuditorsErnst & Young have expressed their willingness to accept reappointment as auditors.

On behalf of the Board,

WONG KOK SIEWChairman

TAN KWI KINPresident

Singapore8 February 2003



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We, Wong Kok Siew and Tan Kwi Kin, being two of the Directors of SembCorp Marine Ltd, do hereby state that, in theopinion of the Directors:

(i) the accompanying balance sheets, profit and loss accounts, statements of changes in equity of the Companyand of the Group and the cash flow statement of the Group, together with the notes thereto, set out onpages 85 to 130 are drawn up so as to give a true and fair view of the state of affairs of the Company and ofthe Group as at 31 December 2002, and of the results of the business and the changes in equity of theCompany and of the Group and the cash flows of the Group 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 itsdebts as and when they fall due.

The Board of Directors authorised these financial statements for issue on 8 February 2003.

On behalf of the Board,

WONG KOK SIEWChairman

TAN KWI KINPresident


Statement by DirectorsPursuant to Section 201 (15)


We have audited the financial statements of SembCorp Marine Ltd and the consolidated financial statements of theGroup set out on pages 85 to 130. The financial statements comprise the balance sheets of the Company and of theGroup as at 31 December 2002, the profit and loss accounts and statements of changes in equity of the Company andof the Group and cash flow statement of the Group for the year ended 31 December 2002, and notes thereto. Thesefinancial statements are the responsibility of the Company’s Directors. Our responsibility is to express an opinion onthese financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates madeby the Directors, as well as evaluating the overall financial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

In our opinion,

(a) the financial statements and consolidated financial statements are properly drawn up in accordance with theprovisions of the Companies Act (Act) and Singapore Statements of Accounting Standard and so as to givea true and fair view of:(i) the state of affairs of the Company and of the Group as at 31 December 2002, the results and changes

in equity of the Company and of the Group and the cash flows of the Group for the year ended on thatdate; and

(ii) the other matters required by Section 201 of the Act to be dealt with in the financial statements andconsolidated financial statements;

(b) the accounting and other records and the registers required by the Act to be kept by the Company and by thesubsidiary companies incorporated in Singapore, of which we are the auditors, have been properly kept inaccordance with the provisions of the Act.

We have considered the financial statements and auditors’ reports of all subsidiary companies of which we have notacted as auditors, being financial statements included in the consolidated financial statements. The names of thosesubsidiary companies audited by our associated firms are stated in Note 37.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financialstatements of the Company are in form and content appropriate and proper for the purposes of the preparation of theconsolidated financial statements, and we have received satisfactory information and explanation as required by us forthose purposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification, andin respect of subsidiary companies incorporated in Singapore did not include any comment made under Section 207(3)of the Act.

ERNST & YOUNGCertified Public Accountants


Report of the Auditorto the Members of SembCorp Marine Ltd


85

Profit and Loss Accountsfor the year ended 31 December 2002

Group CompanyNote 2002 2001 2002 2001

$’000 $’000 $’000 $’000(restated) (restated)

Turnover 3 1,011,512 854,461 20,464 26,355Cost of sales (883,956) (744,842) (14,005) (12,367)

Gross profit 127,556 109,619 6,459 13,988Other operating income 9,933 17,565 1,743 5,390General and administrative expenses (47,606) (42,688) (5,706) (4,681)

Operating profit 4 89,883 84,496 2,496 14,697Dividend and net interest income 5 13,693 19,432 105,890 54,726Exceptional items 6 6,653 1,201 19,714 (15,873)Share of results of associated companies and joint venture 7 6,062 (1,737) - -

Profit before taxation 116,291 103,392 128,100 53,550Taxation 8 (23,084) (22,865) (20,117) (10,874)

Profit after taxation 93,207 80,527 107,983 42,676Minority interests (1,109) 1,892 - -

Profit attributable to members of the Company 92,098 82,419 107,983 42,676

Group2002 2001

Cents CentsEarnings per share 9

Basic 6.54 5.89Diluted 6.50 5.87

The accompanying notes form an integral part of the financial statements.


Balance Sheetsas at 31 December 2002



NON-CURRENT ASSETSFixed assets 10 447,886 429,914 183,662 188,378Subsidiary companies 11 - - 333,126 299,858Associated companies and joint venture 12 101,778 104,627 43,292 51,568Other long term investments 13 92,277 98,152 74,163 75,684Long term trade debtors 14 201,791 167,356 77,349 87,920Goodwill on consolidation 15 2,122 917 - -

TOTAL NON-CURRENT ASSETS 845,854 800,966 711,592 703,408

CURRENT ASSETSStocks and work-in-progress 16 247,806 189,357 - -Trade debtors 14 201,032 327,899 70,729 54,898Other debtors 17 31,424 59,395 129,253 158,545Fixed deposits 18 93,952 12,933 6,053 4,703Bank and cash balances 68,487 44,549 8,591 4,943

TOTAL CURRENT ASSETS 642,701 634,133 214,626 223,089

CURRENT LIABILITIESTrade creditors 19 385,912 378,748 5,292 9,309Other creditors and provisions 20 21,620 14,882 71,174 124,451Progress billings in excess of work-in-progress 21 20,980 299 - -Borrowings 22 27,709 21,256 23,000 27Provision for taxation 35,902 31,674 5,772 9,451

TOTAL CURRENT LIABILITIES 492,123 446,859 105,238 143,238

NET CURRENT ASSETS 150,578 187,274 109,388 79,851

TOTAL ASSETS LESS CURRENT LIABILITIES 996,432 988,240 820,980 783,259


87

Balance Sheetsas at 31 December 2002



NON-CURRENT LIABILITIESBorrowings 22 - 4,801 - -Deferred taxation 23 42,775 50,251 32,201 36,953Hire purchase creditors 24 57 226 - -Provision for retirement gratuities 25 3,296 1,699 - -

TOTAL NON-CURRENT LIABILITIES 46,128 56,977 32,201 36,953

950,304 931,263 788,779 746,306

CAPITAL & RESERVESShare capital 26 141,432 140,614 141,432 140,614Reserves 27 798,576 780,631 647,347 605,692

940,008 921,245 788,779 746,306

MINORITY INTERESTS 10,296 10,018 - -

950,304 931,263 788,779 746,306



Statements of Changes in Equity for the year ended 31 December 2002

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000Issued capital-ordinary shares (1)

Balance at 1 January1,406,140,980 (2001: 1,395,178,230) shares of $0.10 each 140,614 139,518 140,614 139,518Issue of 8,181,500 (2001: 10,962,750) shares of $0.10 each upon exercise of share options 818 1,096 818 1,096

Balance at 31 December1,414,322,480 (2001: 1,406,140,980) shares of $0.10 each 141,432 140,614 141,432 140,614

Revenue reserveBalance at 1 January as previously reported 518,942 496,553 376,626 394,400Cumulative effect on change of accounting policy of SAS 12 (revised), Note 23 (1,643) (1,317) (1,223) (1,317)

As restated 517,299 495,236 375,403 393,083Profit for the year 92,098 82,419 107,983 42,676Dividends on ordinary shares, Note 28 (b) (71,470) (60,356) (71,470) (60,356)Transfer from other capital reserve upon disposal of an associated company 3,600 - - -

Balance at 31 December 541,527 517,299 411,916 375,403

Foreign currency translation reserveBalance at 1 January 5,580 3,428 - -Realisation upon disposal of an associated company 195 - - -Translation differences for the year (1,180) 2,152 - -

Balance at 31 December 4,595 5,580 - -


89

Statements of Changes in Equity for the year ended 31 December 2002

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000Share premium accountBalance at 1 January 229,329 222,819 229,329 222,819Premium on shares issued on exercise of share options 5,142 6,510 5,142 6,510


Asset revaluation reserveBalance at 1 January and 31 December 960 960 960 960

Other capital reservesBalance at 1 January 27,463 27,471 - -Share of an associated company’s capital reserves 16 (8) - -Deferred tax on redeemable convertible loan stocks of a subsidiary company (70) - - -Transfer to the profit and loss account upon disposal of an associated company (6,786) - - -Transfer to revenue reserve upon disposal of an associated company (3,600) - - -


Total shareholders’ equity 940,008 921,245 788,779 746,306

Net change in equity from non-owner sources excluding net profits (11,425) 2,144 - -

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



Cash Flow Statement of the Group for the year ended 31 December 2002

2002 2001

$’000 $’000

CASH FLOW FROM OPERATING ACTIVITIESOperating profit 89,883 84,496Adjustments for:

Gain on disposal of fixed assets (159) (4,516)Amortisation of goodwill on consolidation of subsidary companies 935 188Amortisation of redeemable convertible loan stock discount 98 100Redeemable convertible loan stock discount write-off 10 -Depreciation of fixed assets 32,429 28,829Deferred expenditure write-off - 403Fixed assets write-off 89 6

Operating income before reinvestment in working capital 123,285 109,506Increase in stocks and work-in-progress (32,125) (52,949)Decrease/(increase) in debtors 205,003 (147,220)(Decrease)/increase in creditors (91,805) 56,706

Cash generated from/(used in) operations 204,358 (33,957)Investment and interest income received 15,487 19,093Income taxes paid (24,836) (20,313)Interest paid (843) (262)

Net cash provided by/(used in) operating activities 194,166 (35,439)

CASH FLOW FROM INVESTING ACTIVITIES:Additional interest in a subsidiary company - (1,135)Acquisition and disposal of subsidiary companies (18,635) (225)Investment in associated companies (27,526) (31,798)Purchase of fixed assets (14,435) (49,146)Purchase of other long term investments (3,020) (40)Capital refund from associated companies 3,075 3,387Dividends from associated companies 3,214 2,135Partial return of capital by an associated company in voluntary liquidation - 327Proceeds from disposal of fixed assets 4,010 931Proceeds from disposal of associated company 28,069 482Proceeds from sale of other long term investments 3,084 1,962

Net cash used in investing activities (22,164) (73,120)

CASH FLOW FROM FINANCING ACTIVITIES:Dividends paid - by the Company (71,470) (60,356)Proceeds on issue of new shares - by the Company 5,960 7,606 - by subsidiary to an associated company - 2,000Additional short term bank loan 78,000 20,000Repayment of borrowings (78,246) (328)Repayment to hire purchase creditors (279) (334)Repayment from associated company - 473Fixed deposit pledged with a bank for banking facilities (53,259) -

Net cash used in financing activities (119,294) (30,939)


91

Cash Flow Statement of the Group for the year ended 31 December 2002

2002 2001

$’000 $’000

Net increase/(decrease) in cash and cash equivalents 52,708 (139,498)Cash and cash equivalents at beginning of year 56,472 195,970

Cash and cash equivalents at end of year (Note 31) 109,180 56,472

The acquisition and disposal of subsidiary companies in 2002 and 2001 respectively have been shown as a single item.The effect on the individual assets and liabilities is set out below:

Acquisition Disposalof subsidiary of subsidiary

company company2002 2001

$’000 $’000

Fixed assets 43,997 -Joint venture - (1,500)Stocks and work-in-progress 5,642 -Debtors 30,228 (9)Bank and cash balances 52 (225)Bank overdrafts, unsecured (6,787) -Bank loans (2,800) -Creditors (50,410) 8Current taxation (690) 9

Net assets acquired/(disposed) 19,232 (1,717)Minority interests (52) 137Amount taken up as associated company (6,731) -Loss on disposal - 230Goodwill on acquisition 1,851 -

Purchase consideration/(sales proceeds) 14,300 (1,350)Amount reflected as non-trade (payable)/receivables (2,400) 1,350

Cash paid 11,900 -

The acquisition and disposal of subsidiary companies, net of cash is represented by :

Cash paid (11,900) -Less : Bank and cash balances acquired/(disposed) 52 (225)Add : Bank overdrafts, unsecured (acquired)/disposed (6,787) -

Net cash outflow (18,635) (225)



1. GENERALThe financial statements of SembCorp Marine Ltd for the year ended 31 December 2002 were authorised forissue in accordance with a resolution of the Directors on 8 February 2003.

The Company is a limited liability company incorporated in the Republic of Singapore. Its immediate holdingcompany is SembCorp Industries Ltd and the ultimate holding company is Temasek Holdings (Private) Limited.Both holding companies are incorporated in the Republic of Singapore.

The registered office and principal place of business of the Company is located at 29 Tanjong Kling Road, Singapore628054.

The principal activities of the Company are provision of management services and investment holding.The principal activities of subsidiary companies and associated companies are stated in Note 37. There havebeen no significant changes in the nature of these activities of the Company and its subsidiary companies duringthe year.

2. SIGNIFICANT ACCOUNTING POLICIES(a) Basis of preparation of financial statements

The financial statements are expressed in Singapore dollars. The financial statements have been preparedin accordance with Singapore Statements of Accounting Standard (“SAS”) and applicable requirements ofthe Singapore law.

The financial statements have been prepared under the historical cost basis modified by the revaluation ofcertain fixed assets. The accounting policies have been consistently applied with those used in the previousyear, except for the changes in accounting policies disclosed in paragraphs (b) below.

(b) Changes in accounting policiesSAS 12 (revised) Income Taxes has been adopted in the financial statements for the current financial year.

In accordance with SAS 12 (revised), a deferred tax liability is recognised for all taxable temporary differences,including those arising on revalued fixed asset and investment in associated company. Previously, a deferredtax liability was not recognised for temporary differences arising on revalued fixed asset and investment inan associated company. The financial effect of this change in accounting policy is the reduction of revenuereserves of the Group and the Company and a corresponding increase in deferred tax liability by $1,643,000and $1,223,000 respectively at the beginning of the year.

(c) Principles of consolidationThe accounting year of the Company and all its subsidiary companies ends on 31 December and theconsolidated financial statements incorporate the financial statements of the Company and all its subsidiarycompanies. The results of subsidiary companies acquired or disposed of during the year are included in orexcluded from the Group results from the respective dates of acquisition or disposal, as applicable.

Goodwill arising on acquisition which represents the excess of the cost of acquisition over the fair value ofthe Group’s share of the identifiable net assets acquired is amortised on the basis outlined in paragraph (f)below.

Assets, liabilities and results of the overseas subsidiary companies are translated into Singapore dollars onthe basis outlined in paragraph (t) below.

(d) Subsidiary companiesShares in subsidiary companies are stated at cost and provision is made for impairment in value which isconsidered to be other than temporary. Dividend income is accrued on the basis of dividends declared.

Notes to the Financial Statements - 31 December 2002


93

(e) Associated companies and joint venturesAn associated company is defined as a company, not being a subsidiary company, in which the Group hasa long term interest of not less than 20% of the equity and in whose financial and operating policy decisionsthe Group exercises significant influence. The accounting year of the associated companies ends on 31December.

A joint venture, not being a subsidiary or associated company, is one in which the Group has a long terminterest and contractual arrangement whereby parties in the joint venture undertake an economic activitywhose operational and financial affairs are subject to the joint control of the Group and the contractualparties.

The Group’s share of the results of associated companies and joint ventures are included in the consolidatedprofit and loss account under the equity method. The Group’s share of post-acquisition reserves of associatedcompanies and joint ventures are included in the investments in associated companies and joint ventures,respectively, in the consolidated balance sheet. Where the audited financial statements are not available,the share of results is arrived at from unaudited management financial statements made up mainly to theend of the accounting year to 31 December. Goodwill arising on acquisition which represents the excess ofthe cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired isamortised on the basis outlined in paragraph (f) below.

Shares in associated companies and joint ventures are stated in the Company’s balance sheet at cost andprovision is made for impairment in value which is considered to be other than temporary.

Dividend income is accrued on the basis of dividends declared.

(f) Goodwill on ConsolidationGoodwillGoodwill arising on acquisition represents the excess of cost of acquisition over the fair value of the Group’sshare of the identifiable net assets acquired. Goodwill is stated at cost less accumulated amortisation andimpairment losses. Goodwill is amortised from the date of initial recognition over its estimated useful lifeof not more than 20 years.

Negative GoodwillNegative goodwill arising on acquisition represents the fair value of the Group’s share of the identifiablenet assets acquired over the cost of acquisition.

To the extent that negative goodwill relates to an expectation of future losses and expenses, that areidentified in the plan of acquisition and can be measured reliably, but which have not yet been recognised,it is recognised in the profit and loss account when the future losses and expenses are recognised. Anyremaining negative goodwill, but not exceeding the fair values of the non-monetary assets acquired, isrecognised in the profit and loss account over the weighted average useful life of those assets that aredepreciable or amortisable. Negative goodwill in excess of the fair values of the non-monetary assetsacquired is recognised immediately in the profit and loss account.

(g) Revenue recognitionRevenue from the building of new ships, ship repairs and conversions are recognised on the percentage ofcompletion method in proportion to the stage of completion, provided the work is at least 20% completedand the outcome of the contract can be reliably estimated. The percentage of completion is measured byreference to the percentage of costs incurred to-date to the estimated total costs for each contract, withdue consideration made to include only those costs that reflect works performed.

Income on goods sold and other services rendered is recognised on completion of delivery. Charter hireincome is taken to the profit and loss account on an accrual basis over the charter hire period.



2. SIGNIFICANT ACCOUNTING POLICIES (con’t)

(h) Fixed assetsFixed assets are stated at cost or valuation less accumulated depreciation. The cost of an asset comprisesits purchase price and any directly attributable costs of bringing the asset to working condition for itsintended use. Expenditure for additions, improvements and renewals are capitalised and expenditure formaintenance and repairs are charged to the profit and loss account. When assets are sold or retired, theircost and accumulated depreciation are removed from the financial statements and any gain or loss resultingfrom their disposal is included in the profit and loss account.

Where fixed assets are revalued, any surplus on revaluation is credited to the asset revaluation reserve. Adecrease in net carrying amount arising on revaluation of fixed assets is charged to the profit and lossaccount to the extent that it exceeds any surplus held in reserve relating to previous revaluation of thesame class of assets.

(i) DepreciationDepreciation is calculated on the straight-line method to write off the cost or valuation of fixed assets overtheir estimated useful lives. No depreciation is provided on freehold land. The estimated useful lives offixed assets are as follows:

Freehold and leasehold buildings 45 years or remaining period of leaseQuays and dry docks 60 years or remaining period of leasePlant and machinery and tools 3 to 10 yearsMotor vessels, launches, cranes and floating docks 3 to 20 yearsMotor vehicles 3 to 5 yearsFurniture and office equipment 3 to 5 yearsUtilities and fittings 30 yearsComputer equipment 1 to 5 years

Fully depreciated assets are retained in the financial statements until they are no longer in use and nofurther charge for depreciation is made in respect of these assets.

(j) InvestmentsInvestments held on a long-term basis are stated at average cost. Provision is made for impairment invalue which is considered to be other than temporary.

Dividend income is recognised in the profit and loss account upon actual receipt. Interest income is accruedon the day-to-day basis.

(k) Stocks and work-in-progressStocks consist mainly of steel and other materials used for shipbuilding, repair and conversion and arestated at the lower of cost and net realisable value. Cost is principally determined on the weighted averagemethod. Provision is made for all deteriorated, obsolete and slow-moving items.

Work-in-progress comprises mainly uncompleted shipbuilding, repair and conversion jobs. It is stated atthe lower of cost and net realisable value. Cost includes materials, direct labour, sub-contractors’ costs andappropriate allocation of fixed and variable production overheads. Provision is made for anticipated losses,if any, on work-in-progress when the possibility of loss is ascertained.

(l) Trade and other receivablesTrade and other receivables, including related companies and related parties, on normal trade terms, arerecognised and carried at original invoiced amount less an allowance for any uncollectible amounts. Anestimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts arewritten off as incurred.



95

(m) Trade and other payablesLiabilities for trade and other amounts payable, including related companies and related parties, on normaltrade terms, are carried at cost which is the fair value of the consideration to be paid in the future of goodsand services received, whether or not billed to the Group.

(n) Finance leases and hire purchase assetsFinance leases are those leasing agreements including hire purchases that give rights approximating toownership. Assets financed under such leases are treated as if they had been purchased outright at thepresent value of the minimum lease payments during the periods of leases and the corresponding leasingcommitments are shown as obligations to the lessor. Depreciation of the relevant assets is provided for asin paragraph (i) above. Lease payments are treated as consisting of capital and interest elements and theinterest is amortised on the reducing balance basis over each lease term and charged to the profit and lossaccount.

(o) Employee benefitsDefined contribution planThe Group’s companies in Singapore make contributions to the state pension scheme, the Central ProvidentFund, as required by Singapore law. Contributions to this fund are recognised as compensation expense inthe same period as the employment that gives rise to the contribution.

Employee leave entitlementEmployee entitlements to annual leave are recognised when they accrue to employees. An accrual ismade for the estimated liability for leave as a result of services rendered by employees up to the balancesheet date.

Employee Stock OptionThe Group has an employee share incentive plan for the granting of non-transferable share options. Nocompensation cost or obligations are recognised. When the options are exercised, equity is increased bythe amount of the proceeds received.

Retirement gratuityRetirement benefits payable to certain categories of employees upon their retirement are provided for inthe financial statements based on their entitlement under the staff benefit plan or, in respect of unionisedemployees who joined on or before 31 December 1988, based on an agreement with the Union.

The Group’s net obligation in respect of retirement benefit is the amount of future benefits that employeeshad earned in return for their service in the current and prior periods. The obligation is calculated using theprojected salary increase and is discounted to its present value and the fair value of any related assets isdeducted.

(p) BorrowingsInterest bearing loansInterest bearing loans are recognised at cost.

Redeemable convertible loan stockThe components of the loan stock are split using the incremental method, where the value of the equitycomponent is the difference between the total proceeds at the date of issue and the present value of asimilar liability instrument without conversion right.

The equity component of the loan is included in the redeemable convertible loan stock reserve. The financialcomponent is initially recognised at fair value and subsequently at amortised cost. Amortised cost is calculatedby taking into account the discounts on settlement. The discount is amortised over the life of the redeemableconvertible loan stock and charged directly to the profit and loss account.



(q) ProvisionsA provision is recognised when there is a present obligation (legal or constructive) as a result of a pastevent and it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions arereviewed at each balance sheet date and adjusted to reflect the current best estimate.

(r) ImpairmentThe carrying amounts of the Group’s assets, other than stocks and work-in-progress, are reviewed at eachbalance sheet date to determine whether there is any indication of impairment. If any such indicationexists, the asset’s recoverable amount is estimated.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unitexceeds its recoverable amount. All impairment losses are recognised in the profit and loss account.

Calculation of recoverable amountThe recoverable amount is the greater of the asset’s net selling price and value in use. In assessing valuein use, the estimated future cash flows are discounted to their present value using a pre-tax discount ratethat reflects current market assessments of the time value of money and the risks specific to the asset.For an asset that does not generate cash inflows largely independent of those from other assets, therecoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversal of impairment lossAn impairment loss is reversed if there has been a change in the estimates used to determine the recoverableamount. An impairment loss is reversed only to the extent that the asset’s carrying amount does notexceed the carrying amount that would have been determined, net of depreciation or amortisation, if noimpairment loss had been recognised. A reversal of an impairment loss in respect of land and buildingscarried at revalued amount is recognised in the same way as a revaluation increase. All other reversals ofimpairment are recognised in the profit and loss account.

An impairment loss in respect of goodwill is not reversed unless the loss was caused by a specific externalevent of an exception nature that is not expected to recur, and the increase in recoverable amount relatesclearly to the reversal of the effect of that specific event.

(s) Deferred taxationDeferred taxation is provided, using the liability method, on all temporary differences at the balance sheetdate between the tax bases of assets and liabilities and their carrying amounts for financial reportingpurposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxableincome in the years on which those temporary differences are expected to be recovered or settled basedon the tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments insubsidiary companies, associated companies and joint ventures, except where the timing of reversal ofthe temporary difference can be controlled and it is probable that the temporary differences will not reversein the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry- forward of unused taxassets and unused tax losses, to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences, carry-forward of unused tax assets and unused tax losses canbe utilised.

Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that arecredited or charged, in the same or different period, directly to equity.


2. SIGNIFICANT ACCOUNTING POLICIES (con’t)


97


(t) Foreign currenciesForeign currency transactions are recorded in Singapore dollars at rates of exchange approximating thoseruling at transaction dates. Foreign currency monetary assets and liabilities are translated at rates ruling atthe balance sheet date. All exchange differences are dealt with in the profit and loss account.

For inclusion in the consolidated financial statements, all assets and liabilities of the foreign subsidiarycompanies, associated companies and joint ventures are translated into Singapore dollars at the exchangerates ruling at the balance sheet date and the results of foreign subsidiary companies, associated companiesand joint ventures are translated into Singapore dollars at the average exchange rates. Exchange differencesdue to such currency translations are included in the foreign currency translation reserve.

(u) Cash and cash equivalentsCash and cash equivalents consist of cash at bank and in hand less bank overdrafts but exclude securedbank overdrafts which are used for financing activities.

3. TurnoverTurnover represents sales from the various activities described in Note 1 and Note 33, including the revenuerecognised on contracts relating to the building of new ships, ship repairs and conversions which are at least20% completed.

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Services rendered:Shiprepair, building and conversion 961,991 806,609 411 6,802Ship chartering 22,599 21,926 - -Rental income - - 14,783 15,436Management fee - - 5,270 4,117Others 13,098 12,763 - -

Sale of goods 13,824 13,163 - -

1,011,512 854,461 20,464 26,355

4. Operating profitOperating profit is stated after charging/(crediting):

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Directors’ remuneration -Directors of the Company 1,400 1,142 1,400 1,142Other directors of subsidiary company 1,230 692 - -

Directors’ fee -Directors of the Company 317 311 317 311Other directors of subsidiary company 13 21 - -Directors of the Company,Prior year’s under-provision - 136 - 136

Depreciation of fixed assets 32,429 28,829 4,543 4,500Foreign currency exchange loss/(gain) 2,156 (5,221) (1,624) (1,333)Provisions/(write-back) -

External party trade debts 3,066 2,093 44 -Retirement gratuities 1,647 898 - -Stock obsolescence (79) 333 - -

Rental expenses 18,190 17,057 6,947 7,360


4. Operating profit (con’t)


Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Write-off -Trade debts 1,069 360 - -Fixed assets 89 6 - -Deferred expenditure - 403 - -Redeemable convertible loan stock discount 10 - - -

Gain on disposal of fixed assets (159) (4,516) - (4,122)

Amortisation of goodwill on consolidation of -Subsidiary companies 935 188 - -Associated company 5,328 1,332 - -

Redeemable convertible loan stock discount 98 100 - -Auditors’ remuneration -

Auditors of the CompanyStatutory audit 398 353 76 66Prior year’s under-provision - - - 15Other services 296 85 279 65

Other auditors of subsidiary companyStatutory audit 50 37 - -

As at 31 December 2002, the Group and Company had 5,155 and 12 (2001 : 5,220 and 12) employees, respectively.Staff costs, which include Directors’ remuneration for the year, amounted to $158,211,000 (2001 : $153,198,000)and $3,927,000 (2001 : $2,496,000) for the Group and Company, respectively. Central Provident Fund contributionswhich amounted to $8,153,000 (2001 : $8,410,000) and $79,000 (2001 : $62,000) for the Group and Company,respectively, were included as part of staff costs for the year.

5. Dividend & net interest incomeGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Gross dividend :Unquoted subsidiary companies - - 97,327 36,905Unquoted associated companies - - 968 821Quoted equity shares 32 96 18 1,952

32 96 98,313 39,678


99


Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Interest income :Subsidiary companies - - - 4,174Associated company 5 3,718 5 3,212Related parties 2,986 - 2,620 -Unquoted bonds 4,350 4,350 4,350 4,350Trade debtors 4,829 6,562 1,296 2,770Fixed deposits 1,003 2,023 48 1,272Loan to immediate holding company 158 678 - -Others 1,152 2,296 123 816

14,483 19,627 8,442 16,594

Interest expense :Redeemable convertible loan stock (92) - - -Subsidiary companies - - (553) (1,524)Bank borrowings (730) (291) (312) (22)

(822) (291) (865) (1,546)

13,693 19,432 105,890 54,726

6. Exceptional itemsGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Gain/(loss) on :Sale of long term equity investments 557 1,370 123 1,370Sale of redeemable convertible loan stocks of a subsidiary company - - 500 -Disposal of a subsidiary company - (230) - 397Dilution of interest in a subsidiary company to minority interest (163) - 600 -Disposal of associated companies 11,704 61 25,086 360Realisation of other capital and foreign currency translation reserves upon disposal of associated company 6,591 - - -

18,689 1,201 26,309 2,127



6. Exceptional items (con’t)

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Impairment loss - fixed assets, note (a) (4,000) - - -Quoted warrants written off (225) - (225) -Provision for share of loss in an associated company - - - (12,000)Provision for impairment in value of :

Subsidiary company - - - (5,385)Associated company (1,309) - (1,194) (615)Other long term equity investments, note (b) (4,391) - (1,391) -Other long term non-equity investments (1,753) - (1,753) -Club memberships (358) - (263) -Loan to an associated company - - (1,769) -

(12,036) - (6,595) (18,000)

6,653 1,201 19,714 (15,873)

(a) Due to the continued difficult operating environment in Karimum, the impairment loss for fixed assets in the“Ship repairing, building and conversion” business segment of $4 million represents the write-down ofcertain fixed assets to recoverable amount. This recoverable amount was determined based on the value-in-use at the cash generating unit level. In determining the value-in-use at the cash generating unit level, thecashflows were discounted at rate of 6% per annum on a pre-tax basis.

(b) Included in the provision for impairment in value of other long term equity investments is $3 million,representing the write-down of certain of the Group’s other long term quoted equity investments. The directorshave decided to provide for the impairment loss of $3 million on ground of prudence, after considering theprofitability prospects and the net tangible assets value of the Group’s other long term quoted equityinvestments.

7. Share of results of associated companies and joint ventureGroup

2002 2001

$’000 $’000

Share of net profit/(losses) for the year 11,390 (405)Amortisation of goodwill on acquistion of an associated company (5,328) (1,332)

6,062 (1,737)Share of taxation (2,288) (335)

3,774 (2,072)


101


8. TaxationGroup Company

2002 2001 2002 2001


In respect of profit for the year:Current taxation 28,152 24,212 24,671 13,179Deferred taxation (2,664) 480 (982) (373)

25,488 24,692 23,689 12,806

Under/(over)-provision in respect of prior years:Current taxation 222 (89) 199 (462)Deferred taxation (4,914) (2,073) (3,771) (1,470)

(4,692) (2,162) (3,572) (1,932)

20,796 22,530 20,117 10,874Share of taxation of associated companies and joint venture 2,288 335 - -

23,084 22,865 20,117 10,874

The Group and the Company have exempt profits amounting to approximately $122,841,000 (2001 : $114,000,000) and$25,000,000 (2001 : 25,000,000), respectively. Of this amount, $113,500,000 (2001 : $113,000,000) for the Group hasbeen agreed with the Comptroller of Income Tax.

As at 31 December 2002, certain subsidiary companies have unutilised tax losses of $2,419,000 (2001 : $2,464,000)and capital allowances of $4,182,000 (2001 : $6,678,000) available for set-off against future taxable income subject tothe provisions of the Income Tax Act and agreement by the Comptroller of Income Tax.

The amounts of tax losses and capital allowances previously carried forward at the beginning of the year and whichhave been utilised in the year to arrive at the computation of tax liabilities for the year are not significant.

A reconciliation between the tax expense and the product of accounting profit multiplied by the applicable tax rate forthe years ended 31 December was as follows:

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Tax at 22% (2001: 24.5%) 24,250 25,757 28,182 13,120Exempt income and capital gains (3,562) (7,765) (4,795) (4,420)Effect of tax rate and tax loss not recognised in foreign jurisdiction 2,738 3,833 - -Effect on tax losses utilised (69) (415) - -Non deducible expenses 1,975 5,201 302 4,418Tax incentives - (1,335) - (312)Effect on changes in tax rates (4,905) (2,073) (3,771) (1,470)Under/(over) provision in prior years 213 (89) 199 (462)Others 156 (584) - -

Effective tax 20,796 22,530 20,117 10,874



9. Earnings per share(a) Basic earnings per share (“EPS”) is calculated by dividing the profit attributable to shareholders after deducting

minority interests of $92,098,000 (2001 : $82,419,000*) by the weighted average number of ordinary sharesin issue during the year of 1,408,050,448 (2001 : 1,398,765,833).

(b) Fully diluted EPS is calculated after adjusting for those shares not yet exercised under the SembCorp MarineShare Option Plan as follows:

Group2002 2001

Weighted average number of ordinary shares in issue during the year 1,408,050,448 1,398,765,833Effects of dilutive share options 8,224,000 4,420,000

Weighted average number of ordinary shares outstanding used in the calculation of fully diluted EPS 1,416,274,448 1,403,185,833

(c) The basic and fully diluted EPS are as follows:Group

2002 2001Cents Cents

Basic EPS 6.54 5.89*Fully diluted EPS 6.50 5.87*

* Adjusted for new accounting standards SAS 12 (revised).

10. Fixed assetsDocks,quays,

launches, PlantLand & buildings cranes and machinery

Short term Construction- marine andFreehold leasehold in-progress vessels tools Others Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

GroupCost or valuation

Cost at 1.1.2002 4,445 82,158 9,599 419,260 124,530 21,058 661,050Valuation - - - 25,152 - - 25,152

4,445 82,158 9,599 444,412 124,530 21,058 686,202Currency re-alignment (100) - - - (11) (5) (116)Additions - 12 2,225 1,859 8,279 2,060 14,435Acquisition of a subsidiary company - 36,157 - 31,632 7,159 2,628 77,576Reclassifications 1,042 656 (4,261) - 473 2,090 -Disposals (193) - (258) (1,260) (5,354) (1,260) (8,325)Write-off - - - - (672) (1,632) (2,304)

At 31.12.2002 5,194 118,983 7,305 476,643 134,404 24,939 767,468


103

Docks,quays,



$’000 $’000 $’000 $’000 $’000 $’000 $’000

GroupRepresenting :

Valuation - - - 25,152 - - 25,152Cost 5,194 118,983 7,305 451,491 134,404 24,939 742,316

5,194 118,983 7,305 476,643 134,404 24,939 767,468

Accumulated depreciation/ impairment loss

At 1.1.2002 752 33,562 - 119,091 83,956 18,927 256,288Currency re-alignment (9) - - - (9) (7) (25)Charge for the year 85 2,973 - 17,377 9,420 2,574 32,429Acquisition of a subsidiary company - 8,717 - 16,354 6,099 2,409 33,579Reclassifications - 140 - - (893) 753 -Disposals (193) - - (298) (3,566) (417) (4,474)Write-off - - - - (583) (1,632) (2,215)Impairment losses - 1,096 286 2,336 251 31 4,000

At 31.12.2002 635 46,488 286 154,860 94,675 22,638 319,582

Charge for 2001 60 1,604 - 15,105 9,103 2,957 28,829

Net book valueAt 31.12.2002 4,559 72,495 7,019 321,783 39,729 2,301 447,886

At 31.12.2001 3,693 48,596 9,599 325,321 40,574 2,131 429,914

CompanyCost or valuation

At 1.1.2002 1,444 43,984 1,300 203,039 4,023 596 254,386Additions - - - - - 89 89Reclassification 1,042 - (1,042) - - - -Disposals (193) - (258) (4) - (101) (556)

At 31.12.2002 2,293 43,984 - 203,035 4,023 584 253,919

Representing:Valuation - - - 25,152 - - 25,152Cost 2,293 43,984 - 177,883 4,023 584 228,767

2,293 43,984 - 203,035 4,023 584 253,919




10. Fixed assets (con’t)

Docks,quays,



$’000 $’000 $’000 $’000 $’000 $’000 $’000

CompanyAccumulated depreciation

At 1.1.2002 484 15,805 - 47,030 2,093 596 66,008Charge for the year 44 964 - 3,383 133 19 4,543Disposals (193) - - - - (101) (294)

At 31.12.2002 335 16,769 - 50,413 2,226 514 70,257

Charge for 2001 19 964 - 3,383 134 - 4,500

Net book valueAt 31.12.2002 1,958 27,215 - 152,622 1,797 70 183,662

At 31.12.2001 960 28,179 1,300 156,009 1,930 - 188,378

(a) Docks and quays are stated at Directors’ valuation of 1973 of $25,152,000 with subsequent additions statedat cost. If the following re-valued assets of the Group and Company have been included in the financialstatements at cost less accumulated depreciation, the net written down value would have been:

Group and Company2002 2001

$’000 $’000

Docks and quays 6,989 7,237

The re-valued net book value of docks and quays is $11,811,000 (2001 : $12,230,000).

(b) In 2001, net book value of plant and equipment of a subsidiary company amounting to $841,000 is pledgedas security for a term loan granted to that subsidiary company.

Net book value of fixed assets acquired under hire purchase agreements as at balance sheet date amountedto $499,000 (2001 : $982,000) in respect of the Group only.

(c) Others comprise motor vehicles, furniture and office equipment, utilities and fittings and computer equipment.


105


11. Subsidiary companiesCompany

2002 2001

$’000 $’000

Unquoted shares, at cost 237,049 211,744Provision for impairment in value (5,385) (5,385)

231,664 206,359Loans to subsidiary companies 101,462 90,999Redeemable convertible loan stock, unsecured - 2,500

333,126 299,858

Provision for impairment in value in a subsidiary companyBalance at 1 January 5,385 -Charge to profit and loss account - 5,385

Balance at 31 December 5,385 5,385

The loans to subsidiary companies are unsecured, interest free (2001 : 3.5% per annum) and is not expected tobe repaid within the next twelve months.

The Company’s subsidiary companies are set out in Note 37.

12. Associated companies and joint ventureGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Associated companiesUnquoted shares, at cost 35,919 39,293 34,432 34,960Provision for impairment in value, note (a) - - - (615)

35,919 39,293 34,432 34,345Quoted shares, at cost - 11,811 - 2,983Share of net post-acquisition profits/(losses) 16,302 (5,446) - -Goodwill on acquisition, note (b) 9,322 14,650 - -

61,543 60,308 34,432 37,328Loans and advances to associated companies, note (c) 10,630 14,240 8,860 14,240

72,173 74,548 43,292 51,568


12. Associated companies and joint venture (con’t)


Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Joint ventureUnquoted shares, at cost 24,337 24,337 - -Share of net post-acquisition reserves 5,268 5,742 - -

29,605 30,079 - -

101,778 104,627 43,292 51,568

Market value of quoted shares in associated company - 23,582 - 23,582

(a) Provision for impairment in value of an associated companyBalance at 1 January - - 615 -Charge for the year 1,309 - 1,194 615Write-off (1,309) - (1,809) -

Balance at 31 December - - - 615

(b) Goodwill on Consolidation of an associated companyCostBalance at 1 January and 31 December 15,982 15,982 - -

Accumulated AmortisationBalance at 1 January 1,332 - - -Charge for the year 5,328 1,332 - -


Net Book Value 9,322 14,650 - -

(c) Loans and advances to associated companiesLoans and advances to associated companies are stated after deducting the impairment in value of $1,769,000(2001: nil).Charge for the year and balance at 31 December - - 1,769 -

The loans and advances to associated companies are unsecured, interest free and is not expected to berepaid within the next twelve months.

The Company’s associated companies are set out in Note 37.


107


Percentage of equityName of joint venture Principal activities held by the Group

2002 2001

% %

Bohai Sembawang Repair and conversion of all types of marine vessels, 50 50Shipyard (Tianjin) Co. Ltd production of quayside and container cranes and

installation and repair of mechanical andelectronic equipment

The Group’s share of results and balance sheet of the joint venture is as follows:Group

2002 2001

$’000 $’000

Results of the joint venture:Revenue 8,766 7,411

Profit/(loss) before taxation 243 (30)

Balance sheets of the joint venture:Non-current assets 23,050 24,143Current assets 9,705 9,615Current liabilities (3,150) (3,679)

29,605 30,079

13. Other long term investmentsGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Quoted equity security, note (a) 26,886 29,886 9,007 9,007Quoted equity securities, note (b) 1,800 5,718 1,800 4,174Quoted warrant, at cost - 225 - 225

28,686 35,829 10,807 13,406

Unquoted bonds, at cost, note (c) 60,000 60,000 60,000 60,000Unquoted equity securities, at cost 3,344 323 3,109 278Unquoted non-equity securities, note (d) 247 2,000 247 2,000

63,591 62,323 63,356 62,278

92,277 98,152 74,163 75,684

Market value of quoted securities and warrant 12,192 15,000 12,192 13,300

(a) The Directors consider that they do not have significant influence over the financial and operating policydecisions of Jurong Engineering Ltd (“JEL”). Accordingly, JEL ceased to be an associated company of theGroup. As at 31 December 2000, it was classified as a long term quoted equity investment.



13. Other long term investments (con’t)

At the Company level, this long term quoted equity investment is stated at cost. The carrying value of JEL tothe Group is based on the Group’s share of JEL’s net tangible assets value as at 31 December 1999 lessdividends received since that date and after deducting the provision for impairment in value as follows:

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Charge for the year and balance at 31 December 3,000 - - -

(b) Quoted equity securities are stated at cost and after deducting provision for impairment in value of $1,391,000(2001: nil) analysed as follows:

Charge for the year and balance at 31 December 1,391 - 1,391 -

(c) The unquoted bonds expire in 2009. The bonds’ effective interest rate is 7.25% per annum up to February2004, and from March 2004 to 2009, 7.50% per annum.

The indicative fair value of unquoted bonds at 31 December 2002 was $63,000,000 (2001 : $63,600,000).

(d) The indicative fair value of the unquoted non-equity securities at 31 December 2002 was $247,000 (2001 :$511,000). Unquoted non-equity securities are stated at cost and after deducting provision for impairment invalue of $1,753,000 (2001: nil) analysed as follows :

Charge for the year and balance at 31 December 1,753 - 1,753 -

14. Trade debtorsGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Trade debtors under “Current assets”, note (a) 217,453 341,808 77,142 61,948Less : Provision for doubtful debts (16,421) (13,909) (6,413) (7,050)

201,032 327,899 70,729 54,898Long term trade debtors, note (b) 201,791 167,356 77,349 87,920

402,823 495,255 148,078 142,818

(a) Current assetsAssociated companies 7,614 24,455 - 267Related companies 7,317 12,965 - -Related parties 2,005 - - -Subsidiary companies - - 52,063 33,659Joint venture company 755 580 - -External parties 192,239 296,470 21,155 24,261Lease receivables, note (c) 7,523 7,338 3,924 3,761

217,453 341,808 77,142 61,948


109


Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Provision for external party doubtful debtsBalance at 1 January 13,909 13,447 7,050 7,050Charge to profit and loss account 3,066 2,093 44 -Bad debts written off (683) (1,631) (681) -Subsidiary company acquired 129 - - -


Bad debts written off directly to profit and loss account 1,069 360 - -

(b) Long term trade debtorsExternal parties 137,924 98,681 22,923 29,570Lease receivables, note (c) 63,867 68,675 54,426 58,350

201,791 167,356 77,349 87,920

With the exception of $6,660,000 (2001: $9,659,000) for the Group and $6,660,000 (2001: $8,534,000) forthe Company, all of the debts due from external parties are interest-bearing with interest rates ranging from3% to 6% (2001: 4.375% to 6%) per annum.

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

(c) Lease receivablesAssociated company - 993 - -Related party 4,946 3,761 3,924 3,761External parties 2,577 2,584 - -

Total under “Current assets”, note (a) 7,523 7,338 3,924 3,761

Associated company - 8,605 - -Related party 62,001 58,350 54,426 58,350External parties 1,866 1,720 - -

Total under “Long term trade debtors”, note (b) 63,867 68,675 54,426 58,350

Under the terms of the lease agreements, no contingent rents are recognised. Interest rates ranged from4% to 18% (2001 : 4% to 18%) per annum. Additional information on lease receivables are set out inparagraph (d).


(d) Additional information on lease receivables :-Present

Total value ofMinimum Estimated gross Unearned minimum

lease residual investment interest leasepayment value in lease income payment

$’000 $’000 $’000 $’000 $’000Group2002

Receivable within 1 year 10,815 - 10,815 (3,292) 7,523Receivable after 1 year but within 5 years 32,801 3,000 35,801 (8,887) 26,914Receivable after 5 years 37,970 4,500 42,470 (5,517) 36,953

81,586 7,500 89,086 (17,696) 71,390

2001Receivable within 1 year 10,851 - 10,851 (3,513) 7,338Receivable after 1 year but within 5 years 32,677 - 32,677 (9,817) 22,860Receivable after 5 years 45,657 7,500 53,157 (7,342) 45,815

89,185 7,500 96,685 (20,672) 76,013

PresentTotal value of

Minimum Estimated gross Unearned minimumlease residual investment interest lease

payment value in lease income payment

$’000 $’000 $’000 $’000 $’000Company2002

Receivable within 1 year 6,328 - 6,328 (2,404) 3,924Receivable after 1 year but within 5 years 25,313 - 25,313 (7,840) 17,473Receivable after 5 years 37,970 4,500 42,470 (5,517) 36,953

69,611 4,500 74,111 (15,761) 58,350

2001Receivable within 1 year 6,328 - 6,328 (2,567) 3,761Receivable after 1 year but within 5 years 25,314 - 25,314 (8,566) 16,748Receivable after 5 years 44,298 4,500 48,798 (7,196) 41,602

75,940 4,500 80,440 (18,329) 62,111

14. Trade debtors (con’t)



111


15. Goodwill on consolidationGroup

2002 2001

$’000 $’000

CostAt 1 January 1,105 -Additions 2,140 1,105

At 31 December 3,245 1,105

Accumulated amortisationAt 1 January 188 -Charge for the year 935 188

At 31 December 1,123 188

Net book valueAt 31 December 2,122 917

16. Stocks and work-in-progressGroup

2002 2001

$’000 $’000

Materials, note (a) 19,351 24,331Finished goods, note (a) 2,896 1,255Work-in-progress, note (b) 225,559 163,771

247,806 189,357

(a) Stocks are stated after deducting provision for stock obsolescence of :-Materials 728 933Finished goods 18 197

746 1,130

Analysis of provision for obsolete stocks:Balance at 1 January 1,130 968(Write-back)/charge to profit and loss account (79) 333Stocks written off (305) (171)

Balance at 31 December 746 1,130

(b) Work-in-progressCosts and attributable profits less losses 493,932 236,067Less : Progress billings (268,373) (72,296)

225,559 163,771



17. Other debtorsGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Club memberships, note (a) 482 840 327 590Deposits and recoverables, note (b) 14,046 18,342 3,547 3,709Non-trade receivables, note (c) 11,136 28,023 125,232 153,975Prepayments 1,824 2,324 108 211Staff loans, note (d) 3,936 9,866 39 60

31,424 59,395 129,253 158,545

(a) Club memberships are stated after deducting provision for impairment of $358,000 (2001: nil) and $263,000(2001: nil) for the Group and the Company respectively and analysed as follows:

Charge for the year and balance at 31 December 358 - 263 -

(b) Deposits and recoverablesGST refundable 4,037 6,636 345 -Interest receivable 382 1,354 362 679Recoverable amounts 6,424 4,248 1,644 1,842Tax recoverable 120 118 - -Sundry deposits 3,083 5,986 1,196 1,188

14,046 18,342 3,547 3,709

(c) Non-trade receivablesAssociated companies 1,242 5,438 1,243 1,971Related company 6,894 7,917 72 -Subsidiary companies - - 120,917 137,336External parties - sale of fixed assets - 6,138 - 6,138 - sale of a subsidiary company 3,000 8,530 3,000 8,530

11,136 28,023 125,232 153,975

All amounts are repayable on demand.

All amounts due from associated companies are unsecured and interest-free and comprise mainly advancesand payments on behalf. The related company balance is an unsecured loan which bears interest rangingfrom 0.4% to 2.8175% (2001 : 0.4% to 2.8175%) per annum. Advances to and payments on behalf ofsubsidiary companies are unsecured and also interest-free. In 2001, a loan owing by a subsidiary of $56,695,000bear interest at 2.5% per annum.

The external party balances are interest-free except for $3,000,000 (2001 : $8,530,000) for the Group andCompany which bears interest at 4% (2001 : 6%) per annum.

(d) Staff loans bear interest at 3% (2001 : 3%) per annum.


113


18. Fixed depositsIncluded in the fixed deposits balance are fixed deposits of $53,259,000 pledged with a bank for banking facilitiesof a subsidiary company.

19. Trade creditorsGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Associated companies 6,561 39,102 - 520Immediate holding company 1,306 1,800 1,233 1,800Related companies 6,450 8,099 145 145Subsidiary companies - - 106 341External parties 371,595 329,747 3,808 6,503

385,912 378,748 5,292 9,309

20. Other creditors and provisionsGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Accrual for unconsumed leave 4,402 4,338 147 162Deposits received 532 446 - 402GST payables 539 618 - 211Hire purchase creditors (Note 24) 192 302 - -Non-trade payables, note (a) 10,959 6,103 71,027 111,676Provisions for warranty, note (b) 4,996 3,075 - -Provision for share of loss in an associated company, note (c) - - - 12,000

21,620 14,882 71,174 124,451

(a) Non-trade payablesAssociated companies 2,729 527 33 33Subsidiary companies - - 67,853 111,151Related parties 2,406 - 2,400 -External parties 5,824 5,576 741 492

10,959 6,103 71,027 111,676

With the exception of an unsecured amount owing to a subsidiary company of $35,674,000(2001 : $73,796,000), which comprises of interest bearing fixed deposits with interest ranging from 0.63%to 1.3% (2001 : 0.88% to 2.57%) per annum, the other non-trade amounts payable to the associated andsubsidiary companies are unsecured and interest free. All amounts are payable on demand.


20. Other creditors and provisions (con’t)


Group2002 2001

$’000 $’000

(b) Provision for warrantyBalance at 1 January 3,075 -Charge to profit and loss account 1,921 3,075


Company2002 2001

$’000 $’000

(c) Provision for share of loss in an associated companyBalance at 1 January 12,000 -Charge to profit and loss account - 12,000Amount utilised (12,000) -

Balance at 31 December - 12,000

21. Progress billings in excess of work-in-progressGroup

2002 2001

$’000 $’000

Costs and attributable profits less losses 4,232 -Less : Progress billings (25,212) (299)

Progress billings in excess of work-in-progress (20,980) (299)

22. BorrowingsGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Bank loans- secured, note (a) - 246 - -- unsecured, note (b) 23,000 20,000 23,000 -

Bank overdrafts - unsecured - 1,010 - 27Redeemable convertible loan stocks - unsecured, note (c) 4,709 4,801 - -

27,709 26,057 23,000 27

Shown as :Current liabilities 27,709 21,256 23,000 27Non-current liabilities - 4,801 - -

27,709 26,057 23,000 27


115


(a) The 2001 bank loan is secured on plant and equipment of a subsidiary company with a net book value of$841,000 under a deed of debenture dated 5 June 1998. This term loan, repayable in 16 equal quarterlyinstalments and bears interest of 3.5% per annum, which is based on the rate set out in the EconomicDevelopment Board’s Resource Productivity Scheme, was fully repaid during the year

(b) The unsecured bank loans of the Company comprise two loans of $15,000,000 (2001: $10,000,000) and$8,000,000 (2001: $10,000,000) which are repayable on 6 January 2003 and 27 January 2003. The loans bearinterest of 1.39% and 1.26% (2001: 1.6000% and 1.6875%) respectively.

(c) The redeemable convertible loan stocks are redeemable on 31 October 2003 or could be converted intoordinary shares of a subsidiary company at the option of the loan stockholders on or before 31 October 2003.

Interest at the rate of 6% per annum shall be due and payable on 31 October 2003. In the event that thesubsidiary company obtains in-principle approval before 31 October 2003 for listing on the Singapore or othersecurities markets agreed by the loan stockholders, no interest is payable.

The Directors of that subsidiary company are of the opinion that the above-mentioned approval can beobtained before 31 October 2003. Accordingly no interest has been accrued in the accounts. Cumulativeinterest, if accrued, would amount to $1,970,000 (2001 : $1,755,000).

Group2002 2001

$’000 $’000

At cost 4,800 5,000Less : Loan discount (91) (199)

Amortised cost/fair value 4,709 4,801

Analysis of loan discount:Balance at 1 January (199) (299)Write-off during the year 10 -Amortisation during the year 98 100

Balance at 31 December (91) (199)

23. Deferred taxationGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Balance at 1 JanuaryAs previously reported 48,608 50,527 35,730 37,479Effect upon adoption of SAS 12 (revised) 1,643 1,317 1,223 1,317

As restated 50,251 51,844 36,953 38,796Charge to equity relating to redeemable convertible loan stock 100 - - -Write-back for the year (7,576) (1,593) (4,752) (1,843)



23. Deferred taxation (con’t)


Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Deferred taxation arises as a result of:Deferred tax liabilities

Differences in depreciation 45,995 53,573 32,491 36,662Other deferred tax liabilities 2,005 1,045 27 319

48,000 54,618 32,518 36,981

Deferred tax assetsDoubtful debts (1,195) (1,081) - -Unutilised tax losses, capital allowance and investment allowance likely to be utilised (1,298) (2,250) - -Employee benefits (725) (416) - -Other deferred tax assets (2,007) (620) (317) (28)

(5,225) (4,367) (317) (28)

42,775 50,251 32,201 36,953

24. Hire purchase creditorsMinimum Unearned Present value of

lease Interest minimum leasepayment Income payment

$’000 $’000 $’000

Group2002

Payable after 1 year but within 5 years 71 (14) 57

Payable within 1 year, under “Other creditors and provisions” (Note 20) 218 (26) 192

289 (40) 249

2001Payable after 1 year but within 5 years 253 (37) 216Payable after 5 years 13 (3) 10

Payable under “Non-current liabilities” 266 (40) 226

Payable within 1 year, under “Other creditors and provisions” (Note 20) 345 (43) 302

611 (83) 528

Under the terms of the hire purchase agreements, no contingent rents are recognised. The implicit interestrates range from 6.58% to 6.81% (2001 : 4.13% to 6.81%) per annum.


117


25. Provision for retirement gratuitiesGroup

2002 2001

$’000 $’000

Balance at 1 January 1,699 878Charge for the year 1,647 898Utilised during the year (50) (77)


26. Share capitalGroup and Company2002 2001

$’000 $’000

Authorised :-5,000,000,000 ordinary shares of $0.10 each 500,000 500,000

Issued and fully paid up ordinary shares :-Balance at 1 January

1,406,140,980 (2001: 1,395,178,230) shares of $0.10 each 140,614 139,518

Issued during the yearExercise of share options of 8,181,500 (2001: 10,962,750) shares of $0.10 each 818 1,096

Balance at 31 December1,414,322,480 (2001: 1,406,140,980) shares of $0.10 each 141,432 140,614

During the year, other than the issue of new shares upon the exercise of share options under the SembCorpMarine Share Option Plan (the “Plan”) there was no other issue of new shares.

Share options were granted in 2002 (the “2002 Options”) pursuant to the Plan in respect of 15,639,000 unissuedordinary shares of $0.10 each to 1,086 full time executives of the Group, 9 Directors of the Company and 30executives and one non-executive director of the immediate holding company, SembCorp Industries Ltd, whoare not substantial shareholders of the Company. The 2002 Options are exercisable from 8 November 2003 to 7November 2012 (8 November 2003 to 7 November 2007 for non-executive Directors of the Company) and theexercise price is $0.90 per share for cash.

The details of the Plan (which was started in 1991 as the Jurong Shipyard Limited Executives’ Share OptionScheme) were set out in the financial statements of that year.


26. Share capital (con’t)


The options granted, exercised and cancelled under the Plan during the year and the options outstanding at theend of the year are as follows: -

1998 1999 2000 2001 2002Options Options Options Options Options

Date options granted 27 Apr 1998 10 Mar 1999 8 Sep 2000 27 Sep 2001 7 Nov 2002Option exercise period :-

From 27 Apr 2000 10 Mar 2001 8 Sep 2001 28 Sep 2002 8 Nov 2003To 26 Apr 2003 9 Mar 2004 7 Sep 2010 27 Sep 2011 7 Nov 2012

Number of holders at 31 December 2002 23 17 741 900 1,117Exercise price per option $0.79 $0.65 $0.70 $0.66 $0.90

$’000 $’000 $’000 $’000 $’000

Number of options outstanding :-

At 1 January 2002 4,660 929 14,933 13,885 -Options exercised (3,270) (405) (3,502) (1,004) -Option granted - - - - 15,639Options granted and not accepted - - - - (28)Options cancelled (10) (30) (431) (511) (10)

At 31 December 2002 1,380 494 11,000 12,370 15,601

27. ReservesGroup Company

2002 2001 2002 2001


Revenue reserves 541,527 517,299 411,916 375,403Share premium account 234,471 229,329 234,471 229,329Foreign currency translation reserves 4,595 5,580 - -Asset revaluation reserve 960 960 960 960Other capital reserves 17,023 27,463 - -

798,576 780,631 647,347 605,692

Made up of :Distributable 541,527 517,299 411,916 375,403Non-distributable 257,049 263,332 235,431 230,289

798,576 780,631 647,347 605,692


119


28. Dividends(a) The proposed net dividend of $55,159,000 for 2002 (2001 : $54,963,000) comprises:-

Group and Company2002 2001

$’000 $’000

A final dividend of 1.0 cents per share less tax of 22.0% (2001 : 1.0 cents per share less tax of 22.0%) 11,032 10,993A special dividend of 4.0 cents per share less tax of 22.0% (2001 : 4.0 cents per share less tax of 22.0%) 44,127 43,970

55,159 54,963

(b) Interim dividend of 0.75 cents per share less tax of 22.0% (2001 : 0.75 cents per share less tax of 24.5%) 8,253 7,959Interim special dividend of 0.75 cents per share less tax of 22.0% (2001 : 0.75 cents per share less tax of 24.5%) 8,254 7,9582001 Final dividend of 1.0 cents per share less tax of 22.0% (2001 : 2000 Final dividend of 1.0 cents per share less tax of 24.5%) 10,993 10,3942001 Special dividend of 4.0 cents per share less tax of 22.0% (2001 : 2000 Special dividend of 3.2 cents per share less tax of 24.5%) 43,970 33,781Under-provision in respect of 2000 final and special dividends - 264

71,470 60,356

29. Contingent liabilitiesGroup Company

2002 2001 2002 2001

$’000 $’000 $’000 $’000

Bankers’ guarantees :-- secured 53,259 - - -- unsecured 115,221 - - -

Performance guarantees :-- unsecured 733,059 580,839 694 694

Unsecured guarantees given to others in respect of :-

- associated companies 34,856 63,683 34,856 63,683- a subsidiary company - - 525,776 546,927



30. CommitmentsAt year end, there are commitments not provided for in the financial statements as follows:-

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

(a) Approved capital expenditure :Amounts approved by Directors but not committed 6,200 6,200 6,200 6,200Amounts approved and committed 240 15,813 - 15,333

6,440 22,013 6,200 21,533

(b) Foreign currency exchange contracts :Bought contracts 7,325 23,308 - 23,308Sold contracts 1,387 36,670 - 36,670

The net fair value of the foreign currency exchange contracts is not significantly different from the notionalamounts.

(c) Minimum lease rental payable to JTC Corporation and the immediate holding company in respect of land andbuildings :-

Within 1 year 12,205 13,735 9,773 7,413After 1 year but within 5 years 63,350 54,926 53,076 49,938After 5 years 52,089 52,941 34,325 47,953

127,644 121,602 97,174 105,304

31. Cash and cash equivalentsCash and cash equivalents included in the consolidated statement of cash flows comprise :-

Group2002 2001

$’000 $’000

Fixed deposits, bank and cash balances 162,439 57,482Bank overdrafts, unsecured - (1,010)Less : Fixed Deposits pledged with a bank for banking facilities

of a subsidiary company (53,259) -

109,180 56,472


121


32. Significant related party transactionsSignificant transactions during the year between the Group and its related parties on terms as agreed betweenthe respective parties and which are not otherwise disclosed in these financial statements consist of:

Group Company2002 2001 2002 2001

$’000 $’000 $’000 $’000

Subsidiary companiesPurchases from subsidiary companies - - 257 -

Immediate holding companyManagement fee payable 1,163 1,800 1,163 1,800Rental payable 8,700 8,700 - -

Related companiesSales 8,350 9,290 - -Purchases 2,447 2,565 - -

Associated companiesSales 94,589 19,916 - -Purchases 22,797 24,555 - -

33. Information by segment on Group operationsBusiness segmentsThe Group has 3 main business segments that are organized and managed separately according to their respectivebusiness activities. The 3 business segments are ship repairing, building and conversion, ship chartering andothers. The activities of these business segments are described in Note 1 and Note 37.

Segment accounting policies are the same as the policies described in Note 2 with inter-segment sales andtransfers carried out on an arms’ length basis. Segment assets consist primarily of fixed assets, current assetsand exclude interest-bearing assets and inter-segment balances. Segment liabilities comprise mainly of operatingliabilities and exclude interest-bearing liabilities, inter-segment balances and taxation liabilities.


Shiprepairing,

building and Shipconversion chartering Others Eliminations Total

$’000 $’000 $’000 $’000 $’000(a) By business segment : 2002

RevenueSales to external parties 961,991 22,599 26,922 - 1,011,512Inter-segment sales 165,672 508 65,042 (231,222) -

Consolidated sales 1,127,663 23,107 91,964 (231,222) 1,011,512

ResultsSegment results 81,302 4,193 4,388 - 89,883Exceptional items 6,748 - (95) - 6,653Investment and interest income 13,553 931 31 - 14,515Interest expenses (712) - (110) - (822)Share of results of associated companies & joint ventures 7,664 (324) (1,278) - 6,062

Profit before taxation 108,555 4,800 2,936 - 116,291Taxation (21,454) (801) (829) - (23,084)

Profit after taxation 87,101 3,999 2,107 - 93,207

Other informationCapital additions 14,284 - 151 - 14,435Depreciation 28,087 2,781 1,561 - 32,429Amortisation 6,082 - 181 - 6,263

Segment assets 894,900 61,458 54,944 - 1,011,302Interest bearing assets 366,728 13,903 5,474 - 386,105Investments in associated companies & joint ventures 86,568 72 4,508 - 91,148

Consolidated total assets 1,348,196 75,433 64,926 - 1,488,555

Segment liabilities 420,580 1,542 9,494 - 431,616Interest bearing liabilities 23,249 - 4,709 - 27,958Deferred taxation 41,646 170 959 - 42,775Provision for taxation 34,335 754 813 - 35,902

Consolidated total liabilities 519,810 2,466 15,975 - 538,251

33. Information by segment on Group operations (con’t)



123

Shiprepairing,

building and Shipconversion chartering Others Eliminations Total

$’000 $’000 $’000 $’000 $’000

(a) By business segment : 2001RevenueSales to external parties 806,609 21,926 25,926 - 854,461Inter-segment sales 117,533 513 49,998 (168,044) -

Consolidated sales 924,142 22,439 75,924 (168,044) 854,461

ResultsSegment results 79,907 3,354 1,235 - 84,496Gain on sale of long term investments 1,201 - - - 1,201Investment and interest income 18,018 1,552 153 - 19,723Interest expenses (222) - (69) - (291)Share of results of associated companies & joint ventures (771) (2,455) 1,489 - (1,737)

Profit before taxation 98,133 2,451 2,808 - 103,392Taxation (21,943) (429) (493) - (22,865)

Profit after taxation 76,190 2,022 2,315 - 80,527

Other informationCapital additions 25,579 23,015 552 - 49,146Depreciation 24,369 2,867 1,593 - 28,829Amortisation 1,332 - 188 - 1,520

Segment assets 945,180 60,072 59,181 - 1,064,433Interest bearing assets 261,096 13,902 5,281 - 280,279Investment in associated companies & joint ventures 73,875 (5,863) 22,375 - 90,387

Consolidated total assets 1,280,151 68,111 86,837 - 1,435,099

Segment liabilities 374,059 2,173 19,094 - 395,326Interest bearing liabilities 20,116 - 6,469 - 26,585Deferred taxation 49,967 227 57 - 50,251Provision for taxation 30,500 579 595 - 31,674

Consolidated total liabilities 474,642 2,979 26,215 - 503,836

(b) By geographical areaThe Group operates in 8 (2001 : 8) countries and principally in the Republic of Singapore. Pricing of inter-segment sales and transfers are carried out on an arm’s length basis.



34. Directors’ remunerationThe remuneration of Directors of the Company fell within the following ranges:

2002 2001

$500,000 and above 2 1$250,000 to $499,999 - 1Below $250,000 8 8

10 10

35. Financial risk management objectives and policiesThe main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, liquidityrisk and credit risk. The Board of Directors reviews and agrees policies for managing each of these risks and theyare summarised below :-

Credit riskThe Group has no significant concentration of credit risk with any single counter party and monitors its exposureto credit risks arising from sales to customers on an on-going basis where credit evaluations are done on customersthat require credit. The Group only deals with pre-approved counterparties with good credit rating and imposesa cap on the amount to be transacted with any counterparty so as to reduce its concentration of risk.

The carrying amounts of investments, trade and other receivables and cash represent the Group’s maximumexposure to credit risk.

Foreign currency riskThe Group incurs foreign currency risk on purchases that are denominated in a currency other than Singaporedollars, primarily the US dollar. To minimize exposure on foreign currency risks, the Group usually settles suchtransactions within 30 days terms.

Interest rate riskThe Group’s policy is to maintain an efficient optimal interest cost structure using a mix of fixed and variable ratedebts where working capital is finance by variable rate loans while long term investments are financed by fixedrate loans. Surplus funds, if any, are placed with reputable banks and/or investment in bonds.

The Group obtains additional financing through bank borrowings and leasing arrangements. The Group’s policyis to obtain the most favourable interest rates available without increasing its foreign currency exposure.

Liquidity riskShort-term funding is obtained from overdraft facilities and bank loans.

36. Fair value of financial instrumentsThe following methods and assumptions are used to estimate the fair value of each class of financial instrumentsfor which it is practicable to estimate that value :-

Cash and cash equivalents, debtors and creditorsThe carrying amounts of cash and cash equivalents and those debtors and creditors (including related partybalances which are expected to be repaid in accordance with normal credit terms) approximate their fair valuesdue to the short term nature of these balances.



125

Related party balancesNo disclosure of fair value is made for related party balances (including associated, related and subsidiarycompanies and any other related parties) which are in the nature of loans as it is not practicable to determinetheir fair values with sufficient reliability since these balances have no fixed terms of repayment although theseare not expected to be settled within twelve months from the balance sheet date.

Unquoted equity investments and long term trade receivablesOther than the disclosures made in Note 13 and Note 14, it is not practicable to determine the fair values of theremaining unquoted equity investments held as long term investments and the long term trade receivablescarried at cost. In the opinion of the Directors, the expected cash flows from these receivables are believed tobe in excess of their carrying amounts.

Unrecognised financial instrumentsThe valuation of financial instruments not recognised in the balance sheet reflects amounts which the Groupexpects to pay or receive to terminate the contracts or replace the contracts at their current market rates at thebalance sheet dates.

Other than the disclosure made in Note 30, there are no other unrecognised financial instruments.

37. Group companiesDetails of the Group’s subsidiary and associated companies are as follows :-

Percentage ofName of Companies Principal Activities equity held by(Country of Incorporation) (Place of Business) Cost the Group

2002 2001 2002 2001

$’000 $’000 % %

Subsidiary CompaniesJurong Shipbuilders Investment holding company 30,000 30,000 100 100Private Limited (Singapore) (Singapore)

Jurong Marine Contractors Provision of contract 25 25 100 100Private Limited (Singapore) services (Singapore)

Dolphin Shipping Company Ship owning and charter 500 500 100 100Private Limited (Singapore) (Singapore)

JPL Corporation Pte Ltd Investment holding company 5,100 5,100 70 70(Singapore) (Singapore)

Sembawang Shipyard Shiprepairing and related 54,230 54,230 100 100Pte Ltd (Singapore) services (Singapore)

Sembawang Shipyard (S) Investment holding 25,560 25,560 100 100Pte Ltd (Singapore) company (Singapore)

Karimun Shiprepair and Investment holding 22,565 22,565 100 100Engineering Pte Ltd company (Singapore)(Singapore)

Bulk Trade Pte Ltd Bulk trading of marine 1,764 1,764 100 100(Singapore) products (Singapore)



37. Group companies (con’t)



2002 2001 2002 2001

$’000 $’000 % %

Subsidiary CompaniesJurong Machinery and Marine and general electronic 2,000 2,000 100 100Automation Pte Ltd and electrical works(Singapore) (Singapore)

SML Shipyard Pte Ltd Shiprepairing and related 12,000 12,000 100 100(Singapore) services (Singapore)

Jurong Shipyard Pte Ltd Shiprepairing and related 50,000 50,000 100 100(Singapore) services (Singapore)

Jurong Integrated Services Steel fabrication work 5,000 5,000 100 100Pte Ltd (Singapore) (Singapore)

JPL Industries Pte Ltd Processing and distribution - 3,000 (a) (a)(Singapore) of copper slag (Singapore)

Jurong SML Pte Ltd Shiprepairing and related 28,305 (b) 100 (b)(formerly known as services (Singapore)Atlantis Shipyard Pte Ltd)(Singapore)

237,049 211,744

Associated CompaniesJurong SML Pte Ltd Shipbuilding, ship repairing (b) 14,005 (b) 35(formerly known as and civil engineering worksAtlantis Shipyard Pte Ltd) (Singapore)(Singapore)

** Neptune Associated Lines Shipowners - 615 - 50Private Limited (Singapore) (Singapore)

** Jurong Clavon Pte Ltd Engineering works 200 200 50 50(Singapore) (Singapore)

** Jurong Marine Services Provision of tugging and sea 1,050 1,050 50 50Pte Ltd (Singapore) transportation services

(Singapore)

** Joint Shipyard Investment Investment holding 2,120 2,120 50 50Pte Ltd (Singapore) company (Singapore)

Joint Shipyard Technologies Research and development 200 200 28.6 28.6Pte Ltd (Singapore) of new technologies (c) (c)

(Singapore)

Joint Shipyard Management Managing dormitories - - 25 25Services Pte Ltd (Singapore) (Singapore)


127



2002 2001 2002 2001

$’000 $’000 % %

Associated CompaniesJurong Technologies Marine and general electronic - 2,983 - 25.49Industrial Corpn. Limited and electrical works(Singapore) (Singapore)

PPL Shipyard Pte Ltd Shiprepairing and related 15,576 15,576 50 50(Singapore) services (Singapore)

Dalian Cosco Marine Shiprepairing and related 15,286 - 20 -Engineering Co. Ltd services(People’s Republic of China) (People’s Republic of China)

** Irano Singapore Shipyard In voluntary liquidation - 1,194 - 26Company (Sadra Jurong) (Bandar Abbas, Iran)(Bandar Abbas, Iran)

34,432 37,943

Subsidiary and associated companies of Sembawang Shipyard Pte LtdPercentage of

Name of Companies Principal Activities equity held by(Country of Incorporation) (Place of Business) the Group

2002 2001

% %

SES Marine Services (Pte) Ltd Marine services 100 100(Singapore) (Singapore)

* SES Engineering (M) Sdn Bhd Fabrication of metal structures 100 100(Malaysia) (Malaysia)

Sembawang Shipyard Services Marine services 100 100(Pte) Ltd (Singapore) (Singapore)

OmixAsia.com Pte Ltd E-commence & bulk procurement 30 30(Singapore) (Singapore)

* MR Tech (M) Sdn Bhd Fabrication of metal structures - 30(Malaysia) (Malaysia)


Subsidiary companies of Karimun Shiprepair and Engineering Pte LtdPercentage of


2002 2001

% %

* P.T. Karimun Sembawang Shipyard Shiprepairing and related services 100 65(Indonesia) (Indonesia)

Sinna Services Pte Ltd Shiprepairing and related services 65 65(Singapore) (Singapore)

Subsidiary and associated companies of Jurong Shipbuilders Private LimitedPercentage of


2002 2001

% %

Jurong Shipping Company Dormant 100 100Private Limited (Singapore) (Singapore)

Jurong Shipping Company Dormant 100 100Beta Pte Ltd (Singapore) (Singapore)

Jurong Shipping Company Dormant 100 100Gamma Pte Ltd (Singapore) (Singapore)

*** Tridex Investment Inc Investment holding company 100 100(British Virgin Islands) (British Virgin Islands)

*** Oslo Gas I LP Ship owning and charter 331/3 331/3(Republic of Liberia) (Norway)

*** Oslo Gas II LP Ship owning and charter 331/3 331/3(Republic of Liberia) (Norway)

Subsidiary and associated companies of Jurong Shipyard Pte LtdPercentage of


2002 2001

% %

Jurong Brazil-Singapore Pte Ltd, Investment holding company 100 100(Singapore) (Singapore)

*** Jurong Shipyard Inc Investment holding 35 35(Bahamas) (Bahamas)

*** Maua Jurong S.A. Shipbuilding and ship repairing 35 35(Brazil) (Brazil)

37. Group companies (con’t)



129


Subsidiary companies of JPL Corporation Pte LtdPercentage of


2002 2001

% %

JPL Services Pte Ltd Equipment rental services and trading 70 70(Singapore) in copper slag (Singapore)

JPL Industries Pte Ltd Processing and distribution (a) (a)(Singapore) of copper slag (Singapore)

JPL Concrete Products Pte Ltd Production of concrete products (d) 37.5(Singapore) (Singapore)

(a) JPL Industries Pte Ltd is held by the Group as follows :2002 2001

% %

The Company - 27.3Held through a 70% owned subsidiary company 53.8 27.1Held through a 50% owned associated company - 9.1

53.8 63.5

(b) Jurong SML Pte Ltd (formerly known as Atlantis Shipyard Pte Ltd) is held by the Group as follows :2002 2001

% %

The Company 100.0 35.0

(c) Joint Shipyard Technologies Pte Ltd is held by the Group as follows :-2002 2001

% %

The Company 14.3 14.3Held through a wholly-owned subsidiary company 14.3 14.3

28.6 28.6

(d) JPL Concrete Products Pte Ltd is held by the Group as follows :2002 2001

% %

Held through a 70% owned subsidiary company 53.8 37.5

(e) All changes in Group structure, if any, arising from the above transactions under (a) to (d) do not have amaterial impact on the results and financial position of the Group.

* Audited by other member firms of Ernst & Young, International** Audited by other firms*** These companies are not required to be audited under the laws of their country of incorporation



38. Comparative figuresBesides those arising from Note 2(b), certain other comparative figures relating to the previous year have beenreclassified to conform with the presentation in the current year.

The comparative for trade debtors and trade creditors have been decreased by $52,327,000 to reflect the set offfor amounts due to sub-contractors.


131

Supplementary Information31 December 2002 (Under SGX-ST Listing Manual Requirements)

(A) Directors’ RemunerationThe remuneration of directors of the Company falls within the following ranges:-

2002

$500,000 and above 2

$250,000 to $499,999 -Below 250,000 8

10

Summary compensation table for the year ended 31 December 2002 (Group):

Name of Diretor *Salary #Bonus Directors’ Total ^Fair ValueFees of stock

optiongranted

$’000 $’000 $’000 $’000 $’000

Wong Kok Siew - - 74 74 50

Tan Kwi Kin 598 289 - 887 160

Chee Keng Soon - - 75 75 26

Giam Chin Toon - - 44 44 20

Er Kwong Wah - - 23 23 8

Masahiro Miyazaki - - 9 9 -

Kiyotaka Matsuzawa - - 55 55 20

Tan Pheng Hock - - 22 22 8

Naoteru Tsuda - - 12 12 4

Low Sin Leng - - 3 3 -

Heng Chiang Gnee 333 180 - 513 100

Company 931 469 317 1,717 396

Directors of subsidiary companies 944 286 13 1,243 145

Group 1,875 755 330 2,960 541

In addition, the following directors were conditionally awarded an aggregate of 1,160,000 performance shares:Tan Kwi Kin 760,000Heng Chiang Gnee 400,000

The actual number delivered will depend on the achievement of set targets over a 3-year period from 2001 to2003 and 2002 to 2004. Achievement of targets below 80% level will mean no performance shares will bedelivered, while achievement up to 200% will mean up to twice the number of performance shares could bedelivered.

* The salary amount shown is inclusive of allowances, CPF, all fees other than directors’ fee, and other emolument.# The bonus amount shown is inclusive of CPF.^ Relates to options granted during the year by the Group. The fair value of share options granted is estimated using the

Black-Scholes Option-pricing model.


Supplementary Information31 December 2002 (Under SGX-ST Listing Manual Requirements)

(B) Interested Person TransactionsAggregate value of all transactions

conducted under a shareholders’mandate pursuant to Rule 920

of the SGX Listing Manual2002 2001

$’000 $’000

Transaction for the Sales of Goods and ServicesKeppel Corporation Ltd and its Associates - 1,397Neptune Orient Lines Ltd and its Associates 7,704 41,863SembCorp Industries Limited and its Associates 6,693 6,459Temasek Holdings (Private) Limited and its Associates - 855

Transaction for the Purchase of Goods and ServicesKeppel Corporation Ltd and its Associates 2,824 3,315Neptune Orient Lines Ltd and its Associates 6,368 72,668SembCorp Industries Limited and its Associates 23,933 9,234

Management and Support ServicesSembCorp Industries Limited 1,136 1,800

Total Interested Person Transactions 48,658 137,591

Treasury TransactionsPlacement of funds with interested persons for amounts ranging from $500,000 to $10,460,389 (2001: $ 68,963to $45,200,728).

Aggregate value of all transactionsexcluding transactions conducted

under a shareholders’mandate pursuant to Rule 920

of the SGX Listing Manual2002 2001

$’000 $’000

Investment TransactionsNeptune Orient Lines Ltd and its Associates 11,000 -Singapore Technologies Engineering Ltd and its Associates 3,300 -

14,300 -


133

NOTICE OF ANNUAL GENERAL MEETINGSEMBCORP MARINE LTD (Incorporated in the Republic of Singapore)

NOTICE IS HEREBY GIVEN THAT the 40th Annual General Meeting of the Company will be held on Thursday, April 17,2003 at 11.00 a.m. at 29 Tanjong Kling Road, Singapore 628054 to transact the following business:-

AS ORDINARY BUSINESS1 To receive and adopt the Directors’ Report and Audited Accounts for the year ended December

31, 2002.2 To approve the payment of a final dividend of 10 per cent per ordinary share less income tax

and a special dividend of 40 per cent per ordinary share less income tax for the year endedDecember 31, 2002.

3 To re-elect Mr Tan Kwi Kin, who will retire by rotation pursuant to Article 91 of the Company’sArticles of Association and who, being eligible, will offer himself for re-election.

4 To record the retirement of Mr Er Kwong Wah, who will retire by rotation pursuant to Article 91of the Company’s Articles of Association and who, has decided not to seek re-election.

5 To re-elect the following Directors, each of whom will cease to hold office pursuant to Article97 of the Company’s Articles of Association and who, being eligible, will offer themselves forre-election:-

(a) Mr Naoteru Tsuda(b) Ms Low Sin Leng

6 To note the retirement of Mr Chee Keng Soon, who will cease to act as a Director pursuant toSection 153(6) of the Companies Act, Cap. 50.

7 To approve the sum of S$316,500 as Directors’ fees for the year ended December 31, 2002.(2001: S$311,167)

8 To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directorsto fix their remuneration.

AS SPECIAL BUSINESSTo consider and, if thought fit, to pass with or without modifications, the following resolutionswhich will be proposed as Ordinary Resolutions:9 “THAT approval be and is hereby given to the Directors to:

(a) offer and grant options in accordance with the provisions of the SembCorp Marine ShareOption Plan (“Share Option Plan”) and/or to grant awards in accordance with theprovisions of the SembCorp Marine Performance Share Plan (“Performance Share Plan”)and/or the SembCorp Marine Restricted Stock Plan (“Restricted Stock Plan”) (the ShareOption Plan, the Performance Share Plan and the Restricted Stock Plan, together the“Share Plans”); and

(b) to allot and issue from time to time such number of shares of $0.10 each in the capitalof the Company as may be required to be alloted and issued pursuant to the exercise ofthe options under the Share Option Plan and/or such number of fully paid shares as maybe required to be issued pursuant to the vesting of awards under the PerformanceShare Plan and/or the Restricted Stock Plan,

provided always that the aggregate number of shares to be issued pursuant to the Share Plansshall not exceed 15 per cent of the issued share capital of the Company from time to time.”

10 To transact any other business.

BY ORDER OF THE BOARD

LIM SEH LICOMPANY SECRETARY

SingaporeApril 2, 2003

Resolution 1

Resolution 2

Resolution 3

Resolution 4Resolution 5

Resolution 6

Resolution 7

Resolution 8


Statement pursuant to Article 54 of the Articles of Association of the Company:(a) Resolution 8 is to allow the Directors to issue shares pursuant to the Share Plans provided that the aggregate

number of shares issued pursuant to the Share Plans shall not exceed 15 per cent of the issued share capital of theCompany from time to time.

Notes:-A member of the Company entitled to attend and vote at the Meeting may appoint not more than two (2) proxies toattend and vote on his behalf and where a Member appoints more than one (1) proxy, he shall specify the proportion ofhis shareholdings to be represented by each proxy. A proxy need not be a Member of the Company. The instrumentappointing a proxy or proxies must be deposited at 30 Hill Street #05-04 Singapore 179360 not later than 48 hoursbefore the time appointed for holding the Meeting.

NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATENOTICE IS HEREBY GIVEN that the Register of Members and Share Transfer Books will be closed from April 29, 2003to April 30, 2003 (both dates inclusive) for the preparation of dividend warrants. The proposed dividends, if approved atthe 40th Annual General Meeting, will be paid on May 20, 2003.

Duly completed transfers in respect of ordinary shares in the capital of the Company together with all relevant documentsof title received by the Company’s Share Registrar, Kon Choon Kooi Pte. Ltd., 47 Hill Street #06-02 Chinese Chamber ofCommerce & Industry Building, Singapore 179365 up to the close of business at 5.00 p.m. on April 28, 2003 (the“Books Closure Date”) will be registered to determine members’ entitlements to the proposed dividends. Subject asaforesaid, members whose securities accounts with The Central Depository (Pte) Limited are credited with ordinaryshares in the capital of the Company as at 5.00 p.m. on the Books Closure Date will be entitled to the dividends.

NOTICE OF ANNUAL GENERAL MEETINGSEMBCORP MARINE LTD (Incorporated in the Republic of Singapore)


135

(Incorporated in the Republic of Singapore)

P R O X Y F O R M

I/We of

being a member/members of SEMBCORP MARINE LTD hereby appoint:-

Name Address NRIC/Passport Number Proportion ofShareholdings (%)

and/or (delete as appropriate)

as my/our proxy/proxies to attend and vote for me/us on my/our behalf and, if necessary, to demand a poll, at the 40th Annual General Meetingof the Company to be held at 29 Tanjong Kling Road, Singapore 628054 on Thursday, April 17, 2003 at 11.00 a.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 theNotice 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.)

(Name)

(Address)

Total Number of Shares Held

No. Resolutions For Against

Ordinary Business

1 Adoption of Directors’ Report and Accounts

2 Declaration of Final Dividend and Special Dividend

3 Re-election of Mr Tan Kwi Kin

4 Re-election of Mr Naoteru Tsuda

5 Re-election of Ms Low Sin Leng

6 Approval of Directors’ fees

7 Re-appointment of Auditors

Special Business

8 Authority for Directors to offer and grant options and/or grant awards and issueshares in accordance with the Share Plans

Signature(s) of Member(s) or Common Seal

Dated this day of 2003.

Notes:

1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of theCompanies Act, Chapter 50 of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members, youshould insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Registerof Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Registerof Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote instead of him.Such proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of thewhole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at 30 Hill Street #05-04, Singapore 179360, not less than 48 hours before the time appointed forholding the Annual General 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 instrumentappointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised.

6. A corporation which is a member may authorise by a resolution of its directors or other governing body such person as it thinks fit to act as its representative atthe Annual General Meeting in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentionsof the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of sharesentered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown tohave shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting, as certified by TheCentral Depository (Pte) Limited to the Company.

IMPORTANT1.For investors who have used their CPF monies to buy SembCorp Marine

Ltd’s shares, this document is forwarded to them at the request of their CPFApproved Nominees solely FOR INFORMATION ONLY.

2.This Proxy Form is not valid for use by CPF investors and shall be ineffectivefor all intents and purposes if used or purported to be used by them.

AffixPostageStamp

THE COMPANY SECRETARY

SEMBCORP MARINE LTD

30 HILL STREET#05-04

SINGAPORE 179360

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