What drives us at CWT is the passion for offering the best and most comprehensive logistics solutions for different business needs. Undaunted by any challenges that may come our way, we are committed to going the extra mile to provide the lift to live one’s dreams, strive for aspirations and achieve the potential for infinite possibilities.
table of contents 01 02 04 08 10 11 12 16 28 30 31 32
About The CWT Group Group Financial Highlights Group At A Glance Chairman’s Message The Board Executive Team Highlights of the Year Group CEO’s Report Global Presence Corporate Data Corporate Directory Financial Calendar
01
vision: to be a world-class corporation with global logistics capabilities. mission: to excel as a leading logistics solutions provider delivering best value to customers.
about the CWT group CWT Limited was set up in 1970 and listed on the Singapore Exchange in 1993. CWT has since grown and the principal businesses of CWT currently comprise integrated logistics solutions, international freight forwarding and engineering maintenance and facilities management services. Our integrated logistics solutions cater to customers’ specific logistics requirements and provide the boost they need to pursue even loftier dreams and aspirations. As one of the largest listed logistics company in Southeast Asia, CWT facilitates and creates possibilities for some of the world’s leading brands in the chemical, commodities, automotive, marine, oil & gas and industrial sectors. We enable and play a part in realising our customers’ goals by providing an entire spectrum of supply chain logistics services. Whatever it takes to propel them to their destination, at CWT, we go the extra mile.
In international freight forwarding, CWT is involved in the Non-Vessel Operating Common Carrier (“NVOCC”) services. Our NVOCC business specializes in consolidation of loose cargoes from freight forwarders/shippers and delivers them to specified destinations through our comprehensive network of delivery points around the world. With offices spanning across 21 countries, the CWT Group has a vast network of delivery points that connects customers to 120 ports and over 1,200 destinations. In addition, CWT’s engineering business provides engineering maintenance and facilities management services for equipment and facilities owners. From companies in the government sector and statutory/government linked organizations to commercial establishments, our ever growing pool of clients is a testament to our dedication and mission to meet all of our customers’ needs.
CWT Limited Annual Report 2008
group financial highlights
revenue
NTA
(S$’000)
(S$’000)
534,907
219,417
602,708 176,366
326,739 239,687 248,176
2004
2005
84,401
2006
2007
2008
2004
101,193
108,459
2005
2006
PAT
earnings per share
(S$’000)
(cents)
2007
72,777
28,389 3,455 2004
Dreams, Aspirations, Possibilities
12.87
37,139
5.90
6.65
2.29
9,882
2005
2008
0.53 2006
2007
2008
2004
2005
2006
2007
2008
03
2008
2007
% change
602.7
534.9
+12.7
97.9 88.0 77.6 73.9
55.4 35.2 41.0 34.8
+76.7 +150.0 +89.3 +112.4
Per share Earnings (cents) Before tax PATMI Net assets (S$ million) Net tangible assets (S$ million) Weighted average number of issued shares (million) Number of issued shares as at 31 Dec (million)
13.5 12.9 283.1 219.4 574.3 574.3
7.8 6.7 216.6 176.4 522.9 574.3
+73.1 +92.5 +30.7 +24.4 +9.8 -
At year-end (S$ million) Shareholders’ funds Minority interests Capital employed Net borrowings Net gearing (times)
266.7 16.5 283.1 62.1 0.2
204.9 11.7 216.6 65.7 0.3
+30.2 +41.0 +30.7 -5.5 -33.3
29.1 27.7
20.0 17.0
+45.5 +62.9
0 2.0 2.0 0.305
14.0 2.0 16.0 1.130
NM -87.5 -73.0
For the year (S$ million) Revenue Profit EBITDA Operating Before tax PATMI
Return on shareholders’ funds (%) Profit before tax PATMI
Shareholders’ value Distribution (cents per share paid & proposed) Interim dividend (net) Final dividend (net) Total distribution Share price as at 31 Dec (S$)
Note: PATMI- Profit After Tax & Minority Interests NM- Not Meaningful
CWT Limited Annual Report 2008
group at a glance
logistics business Focus on providing integrated logistics solutions.
Logistics Infrastructure & Supply Chain Logistics Commodities Logistics Container Logistics Marine Engineering Logistics
international freight forwarding business Focus on providing cargo consolidation services.
engineering business Focus on providing quality facilities maintenance & management & automotive maintenance services.
Dreams, Aspirations, Possibilities
05
100% CWT Logistics Pte Ltd
100% CWT Commodities Pte Ltd 100% OCWS Logistics Pte Ltd 100% CWT Engineering Pte Ltd
100% CWT Globelink Pte Ltd
100% Indeco Engineers Pte Ltd
CWT Limited Annual Report 2008
Dreams, Aspirations, Possibilities
Dreams are what keep us going, so we dream and we dream big. We dream of overcoming barriers. We dream of becoming the world’s superhighway connecting people and cultures all across the globe with our ever evolving and enhanced technological expertise. At CWT, not even the sky is the limit because we dare to dream.
CWT Limited Annual Report 2008
chairman’s message
“We will continue our relentless effort to seek and develop new engines of growth as well as the development of the supply chain management and logistic capabilities in niche areas.” Loi Kai Meng Chairman
Dear Shareholders, 2008 presented many challenges. Record high oil prices, sub-prime crisis in the United States, followed by credit crunch globally, has affected all the major economies in the world. Undeterred, the Group continued to make progress and turn in good results.
–
The Group achieved a profit after tax and minority interests (“PATMI”) of S$73.9 million, an increase of 112% over 2007. Earnings per share (“EPS”) grew 93% to 12.9 cents bringing the compounded annual growth rate of our EPS to 122% over the past five years. The Group’s Return on Equity (“ROE”) reached 28% in 2008 from 17% in 2007.
In view of the economic downturn which has adversely affected investment and assets value in general, the Group has made the necessary provision totaling S$25.0 million to write down the affected investments/properties to their market value. This included a mark to market adjustment of S$18.2 million for Cambridge REIT units held. As a prudent measure, several other provisions were also made.
During the year, we completed two significant transactions with substantial gains. –
Dreams, Aspirations, Possibilities
The sale and leaseback of CWT Logistics Hub 2 for a total proceeds of S$115.2 million realized a total gain of S$85.9 million, of which S$69.2 million was booked in 2008.
The disposal of our entire 20% interest in Cambridge Industrial Trust Management Limited and the entire 50% interest in Cambridge Industrial Property Management Pte Ltd for a total consideration of S$9.2 million, represented a gain of S$6.7 million.
We are cautiously optimistic that our investments will drive growth in the foreseeable future. This will include the completion of Phase 2 of CWT Commodity Hub, the largest logistics facility in Singapore and Southeast Asia and the acquisition of commodity logistics businesses in Europe. We
09
acquired a 100% stake in HNN Logistics N.V. in Belgium and a 60% and 30% stake in Sitos Group B.V. and LML Properties B.V. in the Netherlands. These acquisitions will increase our commodity logistics market share and strengthened our global network. We are now in a better position to capture commodity flow in the relevant region. Our acquisition strategies remain unaltered, that is to acquire synergistic businesses that would expand our footprint and network efficiently throughout the world. We will continue our relentless effort to seek and develop new engines of growth as well as the development of the supply chain management and logistic capabilities in niche areas. Outlook for 2009 The global financial turmoil and recession is affecting the world economy and impacting all businesses. Amidst this downturn, management pursues prudent cost management and is working hard to position the Group to take advantage of available opportunities. As long as the Group does not lose sight of its visions and aspirations to be Singapore’s first multi-national logistics company, we should be able to continually create possibilities and grow our future. Shareholder’s Value We thank our shareholders for the continued support and confidence in the Company. With prudent management and sound policies under the guidance of a committed and dedicated Board of Directors, we will continue to deliver value to our shareholders.
Maintaining our Dividend Payout
Sincere Gratitude
To thank our loyal shareholders, the Board has recommended a final onetier cash dividend of 2 cents per share, amounting to a net dividend of S$11.5 million.
Mr Lim Ho Kee, an independent director retired from the Board during the year. On behalf of the Board, I would like to thank Mr Lim for his valuable contributions to CWT and welcome Professor Tan Wee Liang, our new Board member.
The proposed first and final dividend, if approved by shareholders at the forthcoming Annual General Meeting, will be paid on 15 May 2009. Corporate Governance We advocated for a strong governance right from the beginning and made sure that our conviction was indeed carried out. Our Board is independent of management. Half of the Board is independent and no major shareholder or Director dominates our discussions and decision-making processes. Directors are encouraged to surface issues for discussion and review. The Board plays its part by laying down strategy and directions. The Group CEO reports to the Board promptly on major issues and presents major issues for discussion and consideration. He keeps the Board informed of the Group’s financial performance. The Board’s two standing committees – Audit and Nominating cum Remuneration Committees meet frequently to discuss the various issues under their charge. Quarterly results are released promptly. Annual General Meetings are also held promptly within the prevailing laws.
I would also like to express my deepest appreciation to my fellow directors for their wise counsel and guidance. I feel privileged to work with a team of directors who are committed to the Company’s long-term best interests, and shareholders can be confident that the Board’s commitment to their interests is absolute. In closing, I want to sincerely thank the 4,000+ CWT employees world-wide for their outstanding commitment and efforts. I thank our customers for entrusting us with more of their business. And I thank you, our shareholders, investors, bankers, business partners and associates for your confidence in CWT as well as sharing our aspirations as we begin yet another challenging year. Loi Kai Meng Chairman 24 March 2009
We are transparent in all our business undertakings and we believe this will benefit all stakeholders in the Company.
CWT Limited Annual Report 2008
the board
Loi Kai Meng Chairman
Loi Pok Yen Director & Group CEO
Tan Wee Liang Independent Director
Mr Loi joined the Board as Chairman in November 2004. He is an accountant by profession and has been in the logistics sector for over 38 years. Mr Loi is also the Group Managing Director of C&P Holdings Pte Ltd and a Director of a number of private companies.
Mr Loi joined the Board in November 2004. He is also CWT’s Group CEO. With his extensive experience in strategic and logistics business management, Mr Loi led the Executive Team in strengthening the Group’s businesses and competitiveness for the long-term success of the CWT Group. Mr Loi graduated from National University of Singapore with a Bachelor of Business Administration (Honours) degree.
Mr Tan joined the Board in June 2008. He is Associate Professor of Entrepreneurship and Law at the Singapore Management University, where he is programme coordinator for the MSc.(Management) by research. He has previously taught at National University of Singapore and Nanyang Technological University of Singapore. Mr Tan served as the International President of the Institute of Chartered Secretaries and Administrators, U.K. in 2004. He currently also serves on the board of St. Luke’s Hospital and executive committee of the Presbyterian Community Services. He was educated at the National University of Singapore, University of Cambridge and MIT.
Jimmy Yim Wing Kuen Lead Independent Director Mr Yim joined the Board as an Independent Director in May 2003. He is a senior director of one of Singapore’s most established law firms, Drew & Napier LLC. Mr Yim was admitted to the Singapore Bar in 1983 and was appointed Senior Counsel in 1998. His legal practice covers most areas of civil and commercial law, criminal law and international commercial arbitrations. His various appointments include Fellow of the Singapore Institute of Arbitrations, regional arbitrator with the Singapore International Arbitration Centre and member of the Competition Appeal Board appointed by Ministry of Trade and Industry. Liao Chung Lik Director Mr Liao joined the Board in November 2004. He is the Deputy Group Managing Director of C&P Holdings Pte Ltd and a Director of a number of private companies. He graduated from the National University of Singapore with a degree in Bachelor of Business Administration.
Dreams, Aspirations, Possibilities
Hu Jian Ping Independent Director Dr Hu was appointed to the Board in December 2004. He is the Chairman of Shenzhen Bus Group Company Ltd, a China based company that owns the largest bus network in the Shenzhen Special Economic Area. He has more than 17 years of experience in the transportation industry. Prior to this, he was the Executive Deputy General Manager of Shenzhen Metro Co., Ltd and the Shenzhen Transportation Bureau from 1992 to 2001. Dr Hu was also the Civil Engineer, Project Manager and Deputy Division-Chief of the Department of Construction from 1992 to 1996. Dr Hu did a research study in the Transportation Research Centre, University of Kansas, USA, before returning to Shenzhen Transportation Bureau as Division-Chief for Human Resource from 1997 to 1999. He was the Senior Manager for Transportation from 1999 to 2001.
11
executive team
Tan Choon Wei CEO, NVOCC Business & Executive Chairman of CWT Globelink Pte Ltd Mr Tan has been with the Company since 1988. Prior to his appointment as CEO, NVOCC of CWT in January 2005, Mr Tan has held various senior positions in the Group. He led the Company’s regional development in the past 17 years and was appointed as Executive Chairman of CWT Globelink group since January 2002, overseeing the Non-Vessel Operating Common Carrier (“NVOCC”) business of the CWT group. Adam Slater CEO, Commodity Logistics Business & Managing Director of CWT Commodities Pte Ltd Mr Slater has more than 11 years of experience in the commodity logistics industry. As Managing Director of CWT Commodities Pte Ltd, a wholly-owned subsidiary of CWT, he oversees the commodity logistics business of the CWT Group which consists of London Metal Exchange (“LME”) and collateral management business across Asia and Europe. Prior to working in the commodity logistics industry, he worked as a metal trader in China for 5 years. He has a Bachelor of Art in East Asian Studies from McGill University and also studied Chinese language at Fudan University. Lynda Goh Deputy Group CEO & Chief Financial Officer Mrs Goh has more than 27 years of working experience in accounting, financial and corporate management of
which 17 years were spent holding senior positions within the CWT Group. As Deputy Group CEO and Chief Financial Officer of the Company, her key role is to assist the Group CEO in the corporate development and strategic expansion, corporate finance and general management of the CWT Group of companies. Other roles include managing the Group’s engineering business, new business start-up, treasury, financial, human resource and corporate affairs. Mrs Goh is a Certified Public Accountant and Fellow of Chartered Certified Accountant (U.K). Thong Jian Jen Director, NVOCC Business Mr Thong graduated with a Bachelor of Engineering degree and worked in the port & marine sector prior to joining the CWT Group. As Director of NVOCC Business, he is responsible for the strategic development and expansion of CWT’s freight forwarding subsidiary, CWT Globelink and its group of companies. Eric Herman CEO, Contract Logistics Business Mr Herman has over 14 years of experience in the logistics industry. Prior to CWT, he was employed by AP Moller Maersk in various senior positions in the United States, Latin America and across Asia, where he optimized supply chain solutions for multi-national companies. As CEO of Contract Logistics, Mr Herman manages the global logistics portfolio including forming and implementing strategies for creating synergies and expanding the global logistics business for CWT. He earned
a Bachelor of Arts from the State University of New York at Albany. Foo Say Chuang Managing Director, Infrastructure & Business Development Mr Foo has more than 25 years of logistics experience in local and multinational corporations. As Managing Director of Infrastructure & Business Development, he is responsible for the development and expansion of the Group’s logistics business in Singapore and the regional market, including Russia, India, Malaysia and Thailand. He has a Bachelor of Business in Transport from the Royal Melbourne Institute of Technology, a Diploma in Shipping Management (Maritime Studies) and a Diploma in Sales & Marketing. Kay Kong Swan CEO, Container Logistics Business & Managing Director of OCWS Logistics Pte Ltd Mr Kay has more than 13 years of logistics experience. He is responsible for the container transportation and container depot operation which include specialized services such as reefer repairs and ISO tank cleaning. Prior to working in the logistics industry, he was involved in management consultancy and business development. He has a Master’s degree in Business Analysis (with distinction) from the University of Lancaster, U.K.
CWT Limited Annual Report 2008
highlights of the year
March 2008
Official opening of CWT Logistics Hub 1 & 2. Acquired the container depot business & assets from C&P Holdings Pte Ltd making CWT the largest container depot operator in Singapore.
June 2008
Disposed its entire 20% interest in Cambridge Industrial Trust Management Limited and the entire 50% interest in Cambridge Industrial Property Management Pte Ltd for a total consideration of S$9.2 million.
Embarked on the construction of Phase 2 of the CWT Commodity Hub.
July 2008
Offcial opening of CWT Logistics Hub 1 & 2 by Mr Lim Hng Kiang, Minister for Trade and Industry
April 2008
Completed the construction of Phase 1 of the CWT Commodity Hub.
Dreams, Aspirations, Possibilities
Conferred with the Total Defence Award in recognition of our support and participation in 2008 Total Civil Defence exercise.
13
August 2008
Became a member of the Responsible Care Community in Singapore.
October 2008
Acquired a 100% stake in HNN Logistics N.V. further enhancing and broadening CWT’s scope of commodity logistics services. Acquired a 60% and 30% stake in Sitos Group B.V. and LML Properties B.V. further expanding CWT’s commodity logistics business in terms of breadth and depth.
September 2008
Singapore International 100 Awards
Completed the sale and leaseback of CWT Logistics Hub 2 for a total proceeds of S$115.2 million.
Obtained ISO 28000:2007 certification by TUV Rheinland. Awarded BizSAFE Star certification by Workplace Safety and Health Council of Ministry of Manpower.
Entered into a joint venture with Tamadam Bonded Warehouse Berhad to pursue and develop logistics opportunities in Malaysia.
November 2008
Became one of Singapore International 100 companies for its success in internationalization.
CWT Limited Annual Report 2008
We place our goals and aspirations in front of us and we make a beeline to them. We know nothing can deter us from what we have set our minds to. Fulfilling aspirations is at the core of our business, ever spurring us on to greater heights of service and achievements.
Dreams, Aspirations, Possibilities
CWT Limited Annual Report 2008
group CEO’s report
“2008 is another year of improved returns and progress towards making our dreams and aspirations of becoming the first multi-national logistics company to emerge from Singapore a possibility.” Loi Pok Yen Group CEO
Logistics Revenue (S$’m) 215.0 169.9
+26.5%
The only certainty about business cycles is its unpredictability. After the “boom” years from 2005 to 2007, the world is now faced with an economic crisis that doomsayers have compared with the Great Depression of the 1930s and coining phrases such as “econocalpse”. Whilst precipitated by the destruction of the subprime industry in the United States, it has led to global liquidity contraction and the collapse of the financial industry and even countries. As in previous crisis, the shock has led our clients to rethink their overall strategy. Thus, this crisis may once again present opportunities for CWT to make a transformational breakthrough and improve our market position. I remain cautiously optimistic about 2009 as we wade into a new realm of possibilities. Logistics Business
2007
2008
Our focus on providing niche logistics services has worked well. We are now well-established, profitable and growing in Singapore, Asia and Europe and continuing to gain market share and increase our logistics capabilities in all markets. 2008 was another year of steady growth for our Logistics Business. Revenue has grown by 26.5% from S$169.9 million to S$215.0 million.
Dreams, Aspirations, Possibilities
17
“Our focus on providing niche logistics services has worked well. We are now well-established, profitable and growing in Singapore, Asia and Europe�
CWT Limited Annual Report 2008
logistics business
Logistics Infrastructure In the year, we have increased our warehousing capacity by 1.6 million sq ft with the commissioning of two new logistics facilities, CWT Logistics Hub 2 in January and Phase 1 of CWT Commodity Hub in April. Of which, CWT Logistics Hub 2 was sold and leaseback in September realizing total proceeds of S$115.2 million. Due to overwhelming demand, construction of Phase 2 of CWT Commodity Hub has begun, providing an additional 1.2 million sq ft of logistics capacity. When completed in first half 2009, the 2.3 million sq ft CWT Commodity Hub will be the largest logistics facility in Southeast Asia and probably among the three largest warehouses in the world. CWT Logistics Hub 2 CWT Commodity Hub
However, in view of the prevailing economic conditions, development of logistics facilities in China, Ukraine and Vietnam have been scaled back and paced according to demand. Chemical Logistics We have been able to take advantage of the extensive network we have built over the years to enhance our customers’ supply chains. A significant amount of our growth in this past year comes from providing full supply chain logistics services to major multi-national corporations.
Dreams, Aspirations, Possibilities
A conscious effort to focus on the chemical sector by our wholly-owned subsidiary, CWT Logistics Pte Ltd has seen a level of expertise that is attracting new business. An example of this is the award of a 10-year Southeast Asia Logistics Hub contract in January 2009 from Borouge, a leading provider of innovative and value creating plastics solutions. The Group combines its extensive network, strong supply chain knowledge and innovation of warehousing to provide the most robust supply chain solution for Borouge, meeting their future growth plans by bringing them closer to their markets and delivering a best in class service to their customers in the region. In the year, CWT Logistics also became one of the first companies to be awarded the ISO 28000 certification by TUV Rheinland, which focused primarily on the distribution, storage and disposal services of hazardous chemicals. The certificate represented a significant milestone in CWT’s chemical logistics business that endorses the Group to offer a high quality supply chain solutions to its customers across the regions without compromising safety requirements.
19
logistics business
Antwerp, Belgium Amsterdam, Netherlands
Commodity Logistics CWT Commodities Pte Ltd, a whollyowned subsidiary, provides storage, handling and related services for a wide range of commodities including hard and soft commodities. The past year has seen a significant increase in our commodity logistics reach & capabilities as a result of acquisitions in Belgium, Netherlands, the United Kingdom and Ghana.
London Metal Exchange (“LME�) warehouse provider in Singapore, Korea, Dubai, Belgium, Holland, Germany, New Orleans, the Netherlands, and United Arab Emirates. Through its subsidiary, CWT Sitos, CWT Commodities offers a wide range of logistics services for soft commodities in Europe and Africa. The company is LIFFE approved and has EKO license to store and handle organic commodities. Marine Engineering Logistics
These acquisitions are part of the Group’s strategic plan to further expand its commodity business in terms of breadth and depth providing CWT Commodities with an excellent platform to establish a firm foothold in Europe as well as to capture a significant portion of the commodity flows between Asia and Europe. Our strategy is to continue to focus on expanding the niche logistics sector we operate in, in order to become a market leader and dominate. CWT Commodities is a leading collateral manager in Asia, providing services in Korea, China, Vietnam, Thailand, Malaysia, Indonesia, India and the United Arab Emirates. CWT Commodities is also a prominent
Serving all the major shipyards in Singapore, our wholly-owned subsidiary, CWT Engineering Pte Ltd maintained its leading position as the largest marine engineering operator in Singapore offering a one-stop, integrated marine engineering logistics solution which entails transportation of metal materials to our yard/warehouse for storage, to our workshop for blasting and painting and delivery to customers both locally and regionally upon completion. Container Logistics
Pte Ltd in April 2008 to further expand its storage capacity to 22,000 TEUs. It is now one of the largest container depot operators in Singapore and the only operator with the capability to handle all types of containers which include ISO tanks, general purpose containers and reefer containers. OCWS is equipped with environmentally friendly ISO tank cleaning station and state-of-the-art waste treatment system for the cleaning of chemicals in ISO tanks; widening its scope of container logistics services to include storage, washing, repair and major overhaul. Cold Chain Logistics Owning the largest multi-temperaturecontrolled logistics facility in Singapore, we have expanded our logistics capabilities and competencies to cold chain logistics. Located at Fishery Port Road, CWT Cold Hub offers freezer, chiller, air-conditioned and ambient storage to meet the increasing demand and expectation of customers in the Food & Beverages Industry, as well as food manufacturers and food retailers.
OCWS Logistics Pte Ltd, a wholly-owned subsidiary, acquired the container depot business & its assets from C&P Holdings CWT Limited Annual Report 2008
international freight forwarding business
NVOCC Revenue (S$’m) 303.7 281.0
+ 8.1% 2007
2008 International Freight Forwarding Business CWT’s international freight forwarding arm, CWT Globelink Pte Ltd specializes in consolidating loose cargoes into containers and moving them by sea to their final destination anywhere in the world.
In 2008, the Chinese Customs Authority started categorizing all customs brokers in China into four categories, namely, A, B, C & D. We are proud to announce that all our offices in Tianjin have been classified under Category A.
2008 has been a good year for CWT Globelink, recording a volume growth of 7% and a revenue growth of 8.1%.
Our service offering too has expanded to strengthen our trade lanes coverage into Eastern Europe, South America and Africa. We continue to look at opportunities to enhance our service coverage.
CWT Globelink, an established neutral Non-Vessel Operating Common Carrier (“NVOCC”) consolidator in Asia has received strong support from the forwarding community as it develops and expands its range of consolidated sea freight services. Asia remains key to developing our world-wide network. The past year has seen the opening of several new branch offices in China, India, Thailand and United Arab Emirates.
Dreams, Aspirations, Possibilities
We have widened our global footprint and strengthened our position as the largest consolidator in Asia and among the top in the world. Going forward, we will continue to look at new opportunities for growth and build on our network of 75 offices which spans across 14 countries with services covering 120 ports and more than 1,200 inland destinations globally.
21
“We have widened our global footprint and strengthened our position as the largest consolidator in Asia and among the top in the world.�
Limited AnnualReport Report 2008 2008 CWTCWT Limited Annual
engineering business
Facilities Management & Maintenance Automotive Maintenance
Engineering Business
Engineering Revenue (S$’m)
84.0
84.0
Our engineering maintenance and management subsidiary, Indeco Engineers Pte Ltd returned stable performance last year. The business group registered a turnover of S$84.0 million. During the year, Indeco secured more than S$60.0 million worth of facilities and equipment maintenance/management contract, increasing our total order book at S$100.0 million as at the end of 2008.
2007
Dreams, Aspirations, Possibilities
2008
The business group continues to ride on its track records and competencies to win more business contracts and tenders to expand the scale and scope of its businesses.
23
environment, safety & health The Group has always attempted to reduce the environmental impact of its operations. In the year, we became a member of the Responsible Care Community in Singapore and are fully committed to the core principles of Responsible Care: To pr otect our customers, our people and our environment. We continually review and improve our safety and environmental management systems, so as to optimize safety in the planning and preparation, handling, storage and transportation of clients’ chemical products. We have also been recycling office and depot waste. Lastly, our new logistics facilities are designed and built with energy saving features. Drive up ramps, natural ventilation and ambient lighting used in most part of the warehouses enable us to conserve electrical energy efficiently. We are always committed to practise the best standards in health and safety. We believe such commitments enhance our service quality and increase productivity. We take vigilant and proactive approaches towards safety, health and wellness programs, which offer our employees a positive benefit to lead healthy lives. In recognition of our commitment to workplace safety and health (“WSH”) practices, we were accredited with bizSAFE certification
risk assessment & management at business level We have successfully launched a Behaviour Based Safety Program (“BBSP”) to promote safe habits in the workplace. The aim of this program is to inculcate a positive attitude culture and reinforcement in the change of individual unsafe behaviour at work, towards achieving service excellence and to benchmark against best practices in the industry.
social responsibilities We strive to be a good corporate citizen both in Singapore and in the overseas communities within which we operate. We believe in giving back and promoting a sustainable environment for future generations. Throughout 2008, the Group increased its efforts in charitable causes for underprivileged children in Singapore.
CWT Limited Annual Report 2008
“Our people are the life and blood of CWT. Many of them are the future leaders of our business, as we continue towards becoming a bigger and stronger global company �
Dreams, Aspirations, Possibilities
25
people Our people are the life and blood of CWT. Many of them are the future leaders of our business, as we continue towards becoming a bigger and stronger global company. Providing the appropriate education, training and resources our staff needs is part of our continuous effort and key motivator in people learning and development. In CWT, we provide career opportunity while employees take responsibility of their own value, career goal and achievement. In year 2008, we conducted 134 training classes with a total of 885 employees undergoing training to better equip our employees with the right competencies and positive attitude towards themselves and their jobs in order to move on in their career.
industrial relations The Union and Management have always maintained a cordial relationship. We shared key corporate concerns and vision. The result was a win-win approach to address business requirements while we established fair work place environment and employment practices, enhance productivity through retraining, upgrading and building new capabilities to meet the changing needs of our business for long term employability.
dreams + aspirations = possibilities 2008 is another year of improved returns and progress towards making our dreams and aspirations of becoming the first multi-national logistics company to emerge from Singapore a possibility.
Loi Pok Yen Group CEO 24 March 2009
CWT Limited Annual Report 2008
Dreams, Aspirations, Possibilities
CWT doesn’t believe anything’s impossible. We believe instead in working around obstacles with all the ingenuity of our resources and technology. Let your imagination take flight with CWT and envisage a world full of infinite potential made possible by flawless facilitation and execution of all your logistics solutions.
Limited AnnualReport Report 2008 2008 CWTCWT Limited Annual
global presence
Canada
United States of America
Peru
Brazil
Uruguay Chile Argentina
ASIA PACIFIC Australia Adelaide Brisbane Fremantle Melbourne Sydney China Beijing Changsha Chengdu Dalian Fuzhou Guangzhou Hanzhou Hong Kong Jiangmen Jinan
Nanhai Nanjing Ningbo Panyu Qingdao Shanghai Shantou Shenzhen Shijiazhuang Shunde Taiyuan Tianjin Weihai Xiamen Xian Xiaolan Yangjiang Yantai
Dreams, Aspirations, Possibilities
Zhengzhou Zhongshan India Ahmedabad Bangalore Baroda Calcutta Chennai Cochin Coimbatore Goa Hyderabad Indore Jaipur Jodhpur Kandla/Mundra Kanpur
Karur Ludhiana Mumbai Nagpur New Delhi Nhava Sheva Pune Tirupur Tuticorin
Malaysia Johor Bahru Kota Kinabalu Kuantan Kuching Melaka Penang Port Klang Sibu
Indonesia Belawan Jakarta Semarang Surabaya
Singapore South Korea Seoul Sri Lanka Colombo
Thailand Bangkok Vietnam Danang Haiphong Hanoi Hiep Phouc Ho Chi Minh
29
Russia Germany
Sweden United Kingdom
Denmark
Netherlands Belgium
China Japan
Italy Cyprus
Spain
Greece Egypt Saudi Arabia
Korea Taiwan Pakistan India Sri Lanka Dubai
Vietnam
Thailand Cambodia Malaysia
Bangladesh
Singapore
Indonesia Fiji Island Australia
South Africa
New Zealand
AFRICA
EUROPE
Ghana
Belgium Antwerp
Ukraine Kiev
Germany Hamburg
United Kingdom Liverpool
Netherlands Rotterdam Amsterdam Spain Barcelona Bilbao Madrid Valencia
AMERICA
MIDDLE EAST
United States of America New Orleans
Egypt Alexandria Cairo Port Said Pakistan Faisalabad Karachi United Arab Emirates Abu Dhabi Dubai
CWT Limited Annual Report 2008
corporate data Audit Committee
Principal Bankers
Mr Jimmy Yim Wing Kuen (Chairman) Prof. Tan Wee Liang Mr Liao Chung Lik
DBS Bank Ltd 6 Shenton Way DBS Building Singapore 068809
Nominating cum Remuneration Committee Mr Jimmy Yim Wing Kuen (Chairman) Dr Hu Jian Ping Mr Loi Kai Meng Executive Council Mr Loi Kai Meng (Chairman) Mr Liao Chung Lik (Vice Chairman) Mr Loi Pok Yen Mr Tan Choon Wei Mr Adam Slater Mdm Lye Siew Hong (Mrs Lynda Goh) Mr Thong Jian Jen Mr Eric Herman Mr Foo Say Chuang Company Secretary Mdm Lye Siew Hong (Mrs Lynda Goh) Registered Address 38 Tanjong Penjuru CWT Logistics Hub 1 Singapore 609039 Tel: 6262 6888 Fax: 6261 2373 Email: e-mail@cwtlimited.com Auditors and Reporting Accountants Partner in-charge of the audit: Mr Kenny Tan Choon Wah (appointed since 31 December 2005) KPMG LLP 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581
Dreams, Aspirations, Possibilities
Oversea-Chinese Banking Corporation Limited 65 Chulia Street OCBC Centre Singapore 049513 Malayan Banking Berhad 2 Battery Road Maybank Tower Singapore 049907 Standard Chartered Bank 6 Battery Road Singapore 049909 Solicitor Rajah & Tann LLP 4 Battery Road #26-01 Bank of China Building Singapore 049908 Drew & Napier LLC 20 Raffles Place #17-00 Ocean Towers Singapore 048620 Share Registrar Boardroom Corporate & Advisory Services Pte. Ltd 3 Church Street #08-01 Samsung Hub Singapore 049483
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corporate directory Loi Pok Yen Group CEO pokyen@cwtlimited.com
Glen Creighton Director, SEA glen@cwtcommodities.com
Thong Jian Jen Director jjthong@sg.globelink.cwtlimited.com
Lynda Goh Deputy Group CEO & Chief Financial Officer shlynda@cwtlimited.com
Contract Logistics Eric Herman CEO ericherman@sg.logistics.cwtlimited.com
Engineering
Infrastructure & Business Development
Leaw Tiew San Managing Director, SEA tsleaw@sg.logistics.cwtlimited.com
CIS & India Foo Say Chuang Managing Director scfoo@cwtlimited.com Indochina Henry Tan Director thhenry@cwtlimited.com China Oliver Ong Director ywoliver@cwtlimited.com Seet Juay Hwa Director jhseet@cwtlimited.com Dubai & Middle East Ken Lua Director ken.lua@cwtsml.co.ae Logistics Commodity Logistics Adam Slater CEO adam@cwtcommodities.com Kitty Heeremans Operations Director kit@cwtcommodities.com Yang Shuguang Director, China ysg@cn.cwtcommodities.com Simon Maddocks Director, LME simon@cwtcommodities.com
Jean Wang Managing Director, China wjean@cn.logistics.cwtlimited.com Koh Pee Kok Director, SEA pkkoh@sg.logistics.cwtlimited.com Michael Aw Director, Operations sqmichael@sg.logistics.cwtlimited.com Defence Logistics Loh Lian General Manager lloh@cwtlimited.com Marine Engineering Logistics Tan Puay Huay General Manager phtan@sg.engineering.cwtlimited.com Container Logistics Kay Kong Swan CEO kskay@ocws.cwtlimited.com Yeo Tiong Joo General Manager tjyeo@ocws.cwtlimited.com Transportation Logistics Lee Soon Heng General Manager shlee@cwtlimited.com International Freight Forwarding Tan Choon Wei CEO cwtan@sg.globelink.cwtlimited.com
Lynda Goh Managing Director shlynda@cwtlimited.com Lim Fang Chek General Manager fclim@sg.indeco.cwtlimited.com Finance & Corporate Services Chan Chai Ling Finance Director, Group Accounting clchan@cwtlimited.com Loh Chee Meng Finance Director, Logistics Business cmloh@cwtlimited.com Henry Ow Finance Director, Commodity Logistics Business henryow@cwtcommodities.com Luah Leng Kah Finance Director, International Freight Forwarding Business lengkah@sg.globelink.cwtlimited.com Chong Yin Fen Financial Controller, Engineering Business yfchong@sg.engineering.cwtlimited.com Joshua Tan Audit Controller wyjoshua@cwtlimited.com Syazanna Leong Human Resource Manager lsya@cwtlimited.com Andrea Chong Manager, Corporate Communications lpandrea@cwtlimited.com Information Technology Mark Lui Director whmark@cwtlimited.com CWT Limited Annual Report 2008
financial calendar
15 may 2008
31 december 2008
08 may 2008
2007 final dividend paid
Financial year end
Announcement of 1st quarter results 2008
12 august 2008
03 november 2008
25 february 2009
Announcement of half year results 2008
Announcement of 3rd quarter results 2008
Announcement of full year results 2008
23 april 2009
15 may 2009
may 2009
Annual General Meeting
Proposed payment date of 2008 final dividend
Announcement of 1st quarter results 2009
august 2009
november 2009
february 2010
Announcement of half year results 2009
Dreams, Aspirations, Possibilities
Announcement of 3rd quarter results 2009
Announcement of full year results 2009
Corporate Governance Report Directors’ Report Statement by Directors Independent Auditors’ Report Balance Sheets Consolidated Income Statement Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Statistics of Shareholdings Share Prices and Monthly Volumes for 2008 Notice of Annual General Meeting Proxy Form
34 55 58 59 60 61 62 64 66 130 132 133
corporate governance report CWT Limited (CWT) believes in having high standards of corporate governance, and is committed to making sure that effective selfregulatory corporate practices exist to protect the interests of its shareholders and maximise long-term shareholder value. This report describes CWT’s corporate governance practices with specific reference to the revised Code of Corporate Governance 2005 (Code).
PRINCIPLE 1: BOARD’S CONDUCT OF ITS AFFAIRS Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board. Guidelines Of The Code
Compliance CWT Corporate Governance Practices Related To Principle
1.1 The Board’s role
The Board oversees the business affairs of the Group, approves the financial objectives and the strategies to be implemented by management and monitors standards of performance and issues policy, both directly and through its committees.
1.2 Board to objectively take decisions in the interests of the Company
The Board shall objectively take decisions in the interests of the Company.
1.3 Disclosure on delegation of authority by Board to board committees
The Board supervises the management of business and affairs of the Group. Apart from its statutory responsibilities, the Board approves the Group’s strategic plans, key business initiatives, significant investments and funding decisions and it reviews and evaluates the Group’s financial performance and determines the compensation policies for senior management. These functions are carried out by the Board directly or through committees of the Board which have been set up to support its role. To assist in the execution of its responsibilities, the Board has established 2 board committees, namely, the Audit Committee (“AC”) and Nominating cum Remuneration Committee (“NRC”). The terms of reference and composition of each board committee can be found in the Report.
1.4 Board to meet regularly
The Board meets regularly and holds at least four meetings a year. Ad-hoc meetings are convened when circumstances require. The Company’s Articles of Association (the “Articles”) allow a board meeting to be conducted by way of a tele-conference. The frequency of meeting and the attendance of each director at every board and board committee meetings, are disclosed in this Report.
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corporate governance report 1.5 Matters requiring Board approval
Matters which specifically require the Board’s decision are those involving a conflict of interest for a substantial shareholder or a director (such transactions are subject to Audit Committee’s prior approval), material acquisitions and disposal of assets, corporate or financial restructuring and share issuances, dividends and other returns to shareholders and matters which require Board’s approval as specified under the Company’s interested person transaction policy. Specific Board’s approval is required for any investment or expenditure exceeding S$5 million per transaction.
1.6 Directors to receive appropriate training
The Company conducts orientation programme to familiarise directors with the Group’s structure & organisation, businesses governance policies. The aim of the orientation programme is to directors a better understanding of the Company’s businesses allow them to assimilate into their new roles.
new and give and
The Company has adopted a policy that directors are welcome to request further explanations, briefings or informal discussions on any aspects of the Company’s operations or business issues from management. The Chairman or the Group CEO or the Company Secretary/Chief Financial Officer will make the necessary arrangements for the briefings, informal discussions or explanations required by the director. 1.7 Formal letter to be provided to directors, setting out duties and obligations
The Directors are aware of their duties and obligations and the requirements in respect of disclosure of interests in securities, disclosure of conflicts of interest in transactions involving CWT, prohibition on dealings in CWT’s securities and restrictions on the disclosure of pricesensitive information. Directors are also informed of regulatory changes affecting CWT.
1.8 First-time directors to receive training in areas such as accounting, legal and industryspecific knowledge
The Company has available budget for directors to receive further relevant training of their choice in connection with their duties. Relevant courses include programmes conducted by the Singapore Institute of Directors.
Principle 2: Board Composition And Balance There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board’s decision making.
corporate governance report Guidelines Of The Code 2.1 One-third of directors to be independent
Compliance CWT Corporate Governance Practices Related To Principle The Board comprises 1 executive director and 5 non-executive directors (“NEDs”) of whom 3 are considered as independent by the NRC. Executive Director & Group CEO Loi Pok Yen Non-Executive Directors Loi Kai Meng (Chairman) Liao Chung Lik Independent Non-Executive Directors (“IDs”) Jimmy Yim Wing Kuen Hu Jian Ping Tan Wee Liang
2.2 Board to explain when it deems a non-independent director as independent
The independence of each independent director is reviewed annually by the NRC. The NRC adopts the Code’s definition of what constitutes an independent director in its review and it is satisfied that no individual or small group of individuals dominate the Board’s decision making process.
2.3 Board to determine its appropriate size
While the Company’s Articles allow for the appointment of a maximum of 15 directors, the Board is of the view that the present board size of 6 directors and number of committees facilitate effective decision making and are appropriate for the nature and scope of the Company’s operations.
2.4 Board to comprise directors with core competencies
Each director has been appointed on the strength of his calibre, experience and potential to contribute to the Company and its businesses. The directors bring valuable insights from different perspectives vital to the strategic interests of the Company. Please refer to page 10 of the Annual Report for the directors’ profiles. The Board is of the view that its directors as a group possess the necessary competencies necessary to lead and govern the Company effectively.
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corporate governance report 2.5 Role of NEDs
The NEDs participate in board and board committees activities, provide necessary advice and guidance and contribute to the overall strategic development of the Group. The LID/NRC/AC may, as it deems necessary, organise a formal executive session for the NEDs to meet without the presence of management or executive directors to review any matters that must be raised privately. The NRC comprising only NEDs, reviews management’s performance and determines the rewards for such performance.
Principle 3: Chairman And Group Chief Executive Officer There should be a clear division of responsibilities at the top of the company – the working of the Board and the executive responsibility of the company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.
Guidelines Of The Code
Compliance CWT Corporate Governance Practices Related To Principle
3.1 Chairman and Group CEO should be separate persons
The Company has a separate Chairman and Group CEO. The roles of the Chairman and Group CEO are separate and their responsibilities are clearly defined to ensure a balance of power and authority within CWT.
3.2 Chairman’s role
The Chairman ensures that board meetings are held when necessary and sets the board meeting agenda in consultation with the Group CEO. The Chairman reviews most board papers before they are presented to the Board and ensures that board members are provided with complete, adequate and timely information. The Chairman ensures that procedures are introduced to comply with the Code. The Group CEO is the most senior executive in the Group and bears executive responsibility for the Group’s business, while the Chairman bears responsibility for the workings of the Board. The Group CEO is the son of the Chairman.
3.3 Appointment of Lead Independent Director (“LID”) where Chairman and Group CEO are related by close family ties or where the Chairman and the Group CEO are both part of the executive management team
The board appointed Mr Jimmy Yim Wing Kuen as LID in 18 August 2008 to lead and co-ordinate the activities of the IDs of the company. The LID aids the IDs to constructively challenge business proposals and review business strategies put up by management and provide necessary advice and guidance to management.
corporate governance report
Principle 4: Board Membership There should be a formal and transparent process for the appointment of new directors to the Board.
Guidelines Of The Code 4.1 NRC to comprise at least three directors, majority of whom are independent; chairman not associated with a substantial shareholder
Compliance CWT Corporate Governance Practices Related To Principle The Company’s NRC comprises of 2 independent directors and a nonexecutive director: Jimmy Yim Wing Kuen (Chairman) Hu Jian Ping Loi Kai Meng
- Lead Independent director - Independent director - Non-executive director
The NRC Chairman is an independent NED. He is not associated with a substantial shareholder. The NRC covers dual roles in directors’ nomination/evaluation and remuneration. The NRC’s principal functions in directors’ nomination/evaluation are: (a) to identify candidates and review all nominations for the appointment or re-appointment of members of the board of directors and the various board committees, for the purpose of proposing such nominations to the Board for its approval; (b) to determine the criteria for identifying candidates and reviewing nominations for the appointments referred in paragraph (a). One of the criteria for the appointment of a director is the independence status of the candidate; (c) to decide how the Board’s performance may be evaluated and propose objective performance criteria for the Board’s approval; (d) to determine annually whether or not a director is independent; (e) to assess the effectiveness of the Board as a whole, and the contribution by each individual director to the effectiveness of the Board. The NRC also considered the following matters: (a) review of the functions and effectiveness of the board; (b) board composition of the CWT group of companies; (c) salary review and variable bonus for senior executives.
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corporate governance report 4.2 NRC responsible for re-nomination of directors
The NRC recommends all appointments and re-appointments of directors to the Board and board committees. Article 92 of the Articles requires one-third of the Board to retire by rotation at every Annual General Meeting (“AGM”). In other words, no directors stay in office for more than 3 years without being re-elected by shareholders. New directors are at present appointed by way of a board resolution, after the NRC approves their appointment. Such new directors must submit themselves for re-election at the next AGM of the Company.
4.3 NRC to determine director’s independence annually
The NRC conducts an annual review of director independence. Based on the Code’s criteria for independence, the NRC has ascertained that all the non-executive directors are independent.
4.4 NRC to decide whether or not a director is able to and has been adequately carrying out his/her duties as director of the company in the event that a director has multiple board representation
The NRC considers whether directors who serve on many boards are able to commit the necessary time to discharge their responsibilities.
4.5 Description of process for selection and appointment of new directors to be disclosed.
Procedure for selection of new directors includes (a) The Board has delegated to the NRC the responsibility for identifying and recommending to the Board new Board members, after considering the necessary and desirable competencies. (b) Accordingly, in selecting potential new directors, the NRC will seek to identify the competencies required to enable the Board to fulfill its responsibilities. In so doing, the NRC will have regard to the results of the annual appraisal of the Board’s performance. (c) The NRC may engage recruitment consultants to undertake research on, or assess, candidates for new positions on the Board, or to engage such other independent experts, as the Committee considers necessary to carry out its duties and responsibilities. (d) Recommendations for new Board members are put to the Board for its consideration and approval.
corporate governance report 4.6 Date of first appointment and last re-election as a director
The year of initial appointment and year of last re-election of each of the directors are set out below: Date of first appointment to the Board
Date of last re-election as a Director
Chairman
26 November 2004 (as Director & Chairman)
24 April 2007
Liao Chung Lik
Director
26 November 2004
24 April 2006
Loi Pok Yen
Director
26 November 2004
24 April 2006
Jimmy Yim Wing Kuen
Director
28 May 2003
24 April 2007
Hu Jian Ping
Director
13 December 2004
24 April 2008
Tan Wee Liang
Director
15 June 2008
NA
Name of Director
Position held on the Board
Loi Kai Meng
Principle 5: Board Performance There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.
Guidelines Of The Code 5.1 Board to implement process to assess board performance and disclose the process in Annual Report
Compliance CWT Corporate Governance Practices Related To Principle The Board and NRC will evaluate together the Board’s performance as a whole. The assessment process adopts an objective performance criteria such as comparison of the Company’s performance with its industry peers.
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corporate governance report 5.2 Performance criteria should address how the Board has enhanced long term shareholders’ value
The Board performance targets include a measure aligned with shareholders’ interests, such as Total Shareholder Return (“TSR”), and a comparison of CWT’s TSR against industry peers.
5.3 Performance criteria should include company’s share price performance and benchmark index of industry peers
The performance criteria also consider the company’s share price performance over a three-year period vis-à-vis the Singapore Straits Times Index and a benchmark index of its industry peers.
5.4 There should be individual evaluation of directors’ effective contributions
The NRC, in considering the re-appointment of any director, will evaluate the performance of the director. The assessment of each director’s performance is undertaken by the Chairman and the NRC chairman. The criteria for assessment include but not limited to attendance record at meetings of the Board and Board committees, intensity of participation at meetings and the quality of contributions.
5.5 Other performance criteria
Other performance criteria including Return on Total Assets (“ROTA”) and Return on Equity (“ROE”).
Principle 6: Access To Information In order to fulfil their responsibilities, Board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.
Guidelines Of The Code 6.1 Management obliged to provide Board with adequate and timely information; Board should have separate, independent access to senior management
Compliance CWT Corporate Governance Practices Related To Principle Proposals to the Board for decision or mandate sought by management are in the form of memos/board papers that give the facts, analysis, resources needed, expected outcomes, conclusions and recommendations. As a general rule, board and board committee papers are sent to directors at least three days in advance and these are reviewed at the meeting. Board interaction with, and independent access to, senior management is encouraged. The directors have also been provided with the contact details of the Company’s senior management and Company Secretary to facilitate separate and independent access.
6.2 Information provided to include background and explanatory information
Management staff who have prepared the papers, or who can provide additional insight into the matters to be discussed, are invited to present the paper or attend at the relevant time during the board and board committee meetings. All analysts’ reports on the Company are forwarded to the Board as and when received to keep the directors abreast of analysts’ views on the Company’s performance.
corporate governance report 6.3 Directors to have access to Company Secretary; role of Company Secretary to be clearly defined
Directors have separate and independent access to the Company Secretary. The Company Secretary’s role is to advise the board on all governance matters, ensuring that legal and regulatory requirements as well as board policies and procedures are complied with; and facilitating and organising directors’ induction and training. The Company Secretary attends all board meetings.
6.4 Appointment and removal of the Company Secretary should be a matter for the Board as a whole
The Board is involved in the appointment and removal of the Company Secretary.
6.5 Procedure for Board to take independent professional advice at Company’s cost
Where directors, whether as a group or individually, need independent professional advice, the Company Secretary will, upon direction by the Board, appoint a professional advisor selected by the group or the individual, and approved by the Chairman, to render the advice. The cost of such professional advice will be borne by the Company.
Principle 7: Procedures For Developing Remuneration Policies There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.
Guidelines Of The Code
Compliance CWT Corporate Governance Practices Related To Principle
7.1 NRC to consist entirely of NEDs; majority, including NRC chairman, must be independent
Mr Jimmy Yim, an Independent Director, chairs the NRC. Mr Yim has a wealth of experience in corporate management. All NRC members are non-executive. No NRC member or director is involved in deliberations in respect of any remuneration, compensation or any form of benefits to be granted to him.
7.2 NRC to recommend remuneration of directors and Group CEO, and to review remuneration of senior management
The NRC has recommended, in consultation with the Board Chairman, to the Board a framework of director fees for the Company’s nonexecutive directors and has reviewed the compensation package for key executives, which is performance based. The Committee review regularly to seek enhancement to the compensation structure with the view to incentivise performance.
7.3 NRC should seek expert advice, if necessary
Where necessary, the NRC shall seek expert advice inside and/or outside the company on remuneration of all directors.
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corporate governance report
Principle 8: Level And Mix Of Remuneration & Disclosure On Remuneration The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance.
Guidelines Of The Code 8.1 Package should align executive directors’ interests with shareholders’ interests
Compliance CWT Corporate Governance Practices Related To Principle In determining the level of remuneration, the NRC shall: (a) give due consideration to the Code’s principles and guidance notes on the level and mix of remuneration so as to ensure that the level of remuneration is appropriate to attract, retain and motivate the directors needed to run the Company successfully; (b) ensure that proportion of the remuneration, especially that of key executives, is linked to corporate and individual’s performance; (c) ensure that performance-related elements of remuneration should form a significant portion of the total remuneration package of executive director; (d) remuneration packages should be designed to align interests of executive director with those of shareholders.
corporate governance report 8.2 Remuneration to consider contribution, effort, time spent and responsibilities
In determining the remuneration for NEDs, the NRC shall take into account factors such as efforts and time spent, and responsibilities of the NEDs. Every director on the Board during FY2008 will receive a basic fee. In addition, he will receive the Chairman’s allowance if he is Chairman of the Board, as well as the relevant allowance (depending on whether he is Chairman or Member of the relevant board committee) for each position he holds on a board committee, subject to an overall cap on the total fees and allowances to be received by him. If he occupied a position for part of FY2008, the fee or allowance payable will be prorated accordingly. The parameters for directors’ fees are as follows: (a) Board Chairman - S$80K (b) Lead Independent Director – S$20K (c) Basic fee - S$40K per annum; (d) Attendance fee - S$5K per meeting in excess of 4 meetings each for Board, AC and NRC; (e) Committee fee as follows: (i) AC chairman - S$50K; (ii) AC member - S$10K; (iii) NRC chairman - S$30K; (iv) NRC member - S$10K; (v) Executive Council chairman - S$30K (vi) Executive Council member - S$10K
8.3 Fixed appointment period for all service contracts for executive directors should not be excessively long and there are no onerous removal clauses or early termination clauses
The Group CEO does not have a fixed appointment period.
8.4 Long term incentive schemes are generally encouraged
The Company has yet implemented any long term incentive scheme for employees.
8.5 Company should be aware of pay and employment conditions within the industry and in comparable companies when setting remuneration packages
The Company shall review the pay and employment conditions within the industry and those from the peer companies to ensure that directors and key executives are adequately remunerated.
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corporate governance report
Principle 9: Disclosure On Remuneration Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance.
Guidelines Of The Code
Compliance CWT Corporate Governance Practices Related To Principle
9.1 Remuneration of directors and at least the top 5 key executives (who are not also directors)
All directors will receive 100% fixed fees for their services in FY2008 in accordance with the approved fee structure. The fees payable to each of the directors fall within the S$250,000 band.
9.2 Disclose remuneration details of directors and at least the top 5 key executives (who are not also directors) earning which falls within bands of S$250,000 during the year
There are both fixed and variable components to executive pay. The variable components are tied to organisational performance. For FY2008, the average fixed and variable components paid for key executives including executive director were 57% and 43% respectively:Annual Remuneration
No. of Executives
More than S$1,000,000
1
S$500,000 to $749,999
3
S$250,000 to S$499,999
4
Note: The annual remuneration includes fixed pay, variable bonus and other benefits-in-kind. 9.3 Disclose remuneration details of employees who are immediate family members of a director or the CEO, and whose remuneration exceed S$150,000 during the year
The Group CEO is the son of the Chairman. His remuneration package falls in the highest band in the above table and 76% of his package is variable.
9.4 Details of employee share scheme
The Company does not have any employee share scheme.
corporate governance report
Principle 10: Accountability The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.
Guidelines Of The Code
Compliance CWT Corporate Governance Practices Related To Principle
10.1 Board’s responsibility to provide balanced, understandable assessment of company’s performance and position on interim basis
The Board provides shareholders with quarterly and annual financial reports. Results for the first three quarters are released to shareholders within 45 days of the end of the quarter. Annual results are released within 60 days of the financial year-end. In presenting the Company’s annual and quarterly financial statements to shareholders, the Board aims to provide shareholders with a balanced and understandable assessment of CWT’s position and prospects.
10.2 Management should provide Board with management accounts on a monthly basis
Management provides the Executive Council with a monthly financial and operational report within 20 days. Monthly meetings are conducted involving senior management and the business unit heads. Management provides directors with a quarterly financial management report, which includes the quarterly management accounts, other financial statements and an analysis of those accounts and an update of business and development projects. The report is submitted within 45 days of the quarter end.
Principle 11: Audit Committee The Board should establish an Audit Committee (“AC”) with written terms of reference which clearly set out its authority and duties.
Guidelines Of The Code 11.1 AC should comprise at least three directors, all non-executives, and the majority of whom, including the chairman, are independent
Compliance CWT Corporate Governance Practices Related To Principle The AC comprises 2 independent non-executive directors including the Chairman of AC and 1 non-executive director. The members of the AC are:
11.2 Board to ensure AC members are qualified
Jimmy Yim Wing Kuen (Chairman) Tan Wee Liang Liao Chung Lik
The members of the AC, collectively, have expertise or experience in financial management and are qualified to discharge the AC’s responsibilities.
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corporate governance report 11.3 AC to have explicit authority to investigate and have full access to management and reasonable resources
The AC has full access to and co-operation by the Company’s management and auditors, and has full discretion to invite any director or executive officer to attend its meetings. The auditors have unrestricted access to the AC. The AC has reasonable resources to enable it to discharge its functions properly.
11.4 Duties of AC
The AC holds at least 4 meetings a year and performs the following functions: (a) reviews the quarterly financial results before submission to the Board and announcement to the shareholders; (b) reviews the financial statements of the Company and the consolidated financial statements of the Group before submission to the Board and the auditors’ report on those financial statements; (c) reviews the scope and results of the external and internal audits, and to evaluate, with the assistance of internal and external auditors, the adequacy of the systems of internal and accounting controls, risk management and compliance; (d) reviews the audit plans of the Company’s auditors and their evaluation of the systems of internal accounting controls arising from their audit examination; (e) reviews that the system of internal controls maintained by the Company is sufficient to provide reasonable assurances that assets are safeguarded against loss from unauthorised use, transactions are properly authorised and proper accounting records are maintained; (f) reviews the independence of the auditors; (g) reviews interested person transactions; and (h) recommends the nomination of auditors, approves the compensation of the auditors, and reviews the scope and results of the audit and its cost-effectiveness. The AC may examine whatever aspects it deems appropriate of the Group’s financial affairs, its internal reviews and external audits and its exposure to risks of a regulatory or legal nature. It keeps under review the effectiveness of the Company’s system of accounting and financial controls, for which the directors are responsible. It also keeps under review the Company’s programme to monitor compliance with its legal, regulatory and contractual obligations.
corporate governance report The AC has the explicit authority to conduct or authorise investigations into any matters within its terms of reference. Minutes of the AC meetings are regularly submitted to the Board for its information and review. The AC reviews with the Chief Financial Officer and auditors all audit matters including: (a) Auditors’ report to management on significant audit findings and recommendations for improvements in control systems; (b) The company’s quarterly and audited annual financial statements and related footnotes, and the integrity of financial reporting of the Company and accounting principles, for recommendation to the board for approval; and (c) The auditor’s audit of the annual financial statements and reports. 11.5 AC to meet internal and external auditors, without presence of management, annually
Where necessary, the AC meets with internal and external auditors – without the presence of management – to review any matters that might be raised privately.
11.6 AC to review independence of external auditors annually
The AC has received the requisite information from the external auditors evidencing the latter’s independence. It has also reviewed the volume and nature of non-audit services provided by the external auditors during the current financial year. Based on this information, the AC is satisfied that the financial, professional and business relationships between the Company and the external auditors will not prejudice the independence and objectivity of the external auditors. The AC reviewed the performance of the existing auditors and decided to nominate for re-appointment, KPMG, as the Company’s auditors for the financial year 2009.
11.7 AC to review arrangements for staff to raise concerns/possible improprieties to AC
CWT has an open culture where there is no restriction for staff of the Company to access the AC, Chairman, Group CEO, members of the Executive Council, the Audit Controller, the Chief Financial Officer and the Manager of Human Resources to raise concerns about improprieties. Contact details of these persons are accessible to all staff.
11.8 Disclose the details of the AC’s activities in the company’s annual report
In the review of the financial statements for the year ended 31 December 2008, the AC discussed with management and the external auditors the accounting principles that were applied and their judgement of items that might affect the financial statements. Based on the review and discussions, the AC is of the view that the financial statements are fairly presented in conformity with the relevant Singapore Financial Reporting Standards in all material aspects.
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corporate governance report Principle 12: Internal Controls The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets.
Guidelines Of The Code
Compliance CWT Corporate Governance Practices Related To Principle
12.1 AC to review adequacy of financial, operational and compliance controls and risk management policies
The Company’s auditors, KPMG, carry out, in the course of their statutory audit, a review of the effectiveness of the Company’s material internal controls, including financial, operational and compliance controls, and risk management annually to the extent of their scope as laid out in their audit plan. Material non-compliance and internal control weaknesses noted during their audit, and the auditors’ recommendations, are reported to the AC. The Finance department follows up on KPMG’s recommendations as part of its role in the review of the Company’s internal control systems.
12.2 Board’s comment on the adequacy of the internal controls
The AC has reviewed the Company’s risk assessment, and based on the external auditors’ audit reports, management controls in place and management review reports, it is satisfied that there are adequate internal controls in the Company. The AC expects the risk assessment process to be a continuing process. The Group uses its financial resources to perform cross review of the internal control systems of the group companies. The Group has also appointed an independent Audit Controller to conduct regular audit of internal control systems of the group companies and recommend necessary improvements and enhancement.
Principle 13: Internal Audit The company should establish an internal audit function that is independent of the activities it audits.
corporate governance report Guidelines Of The Code
Compliance CWT Corporate Governance Practices Related To Principle
13.1 IA to report to AC chairman, and to CEO administratively
The Audit Controller is an independent qualified resource reporting directly to the AC on audit matters, and to the Chief Financial Officer on administrative matters.
13.2 IA to meet or exceed the standards set out by nationally or internationally recognised professional bodies including Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors
The Audit Controller meets the standards set out by recognised professional bodies.
13.3 AC to ensure the internal audit function is adequately resourced and has appropriate standing within the company.
The Audit Controller operates within the framework stated in its Internal Audit Charter, which is approved by the AC. Its mission is to provide independent review, objective assessment of CWT’s internal control framework/systems to add value and improve CWT’s operations. It helps CWT achieve its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, controls and governance processes.
13.4 AC to ensure adequacy of IA function annually
The Audit Controller plans its internal audit schedules annually in consultation with, but independent of, management and its plan is submitted to and approved by the AC. Its plans are aligned to the business objectives of the Company. The audit scope is driven primarily from a risk-based audit approach, with audit resources being focused on higher risk assignments. The Audit Controller reports are distributed to the AC, management and the external auditors as and when issued. These reports are discussed with senior management periodically, and with the AC quarterly. The Audit Controller works with the external auditors to discuss IA’s audit scope and findings as well as to co-ordinate their specific audit efforts to achieve maximum synergies. Supervisory reports issued by the external auditors and the Audit Controller are actively followed up for implementation by management based on the agreed timelines.
51
corporate governance report
Principle 14: Communication With Shareholders Companies should engage in regular, effective and fair communication with shareholders.
Guidelines Of The Code
Compliance CWT Corporate Governance Practices Related To Principle
14.1 Company to regularly convey pertinent information
The Company strives to convey to shareholders pertinent information in a clear, forthcoming, detailed, timely manner and on a regular basis, take into consideration their views and inputs, and address shareholders’ concerns.
14.2 Company to disclose timely and non-selective information
The Company also monitors the dissemination of material information to ensure that it is made publicly available on a timely and non-selective basis. All financial results are made available to the public and all shareholders by publishing it through the SGXNET, and the Company’s website www.cwtlimited.com. All information on the Company’s new initiatives are first disseminated via SGXNET followed by a news release, which is also available on the website. The Company does not practise selective disclosure. Results and annual reports are announced or issued within the mandatory period and are available on the Company’s website.
Principle 15: Greater Shareholder Participation Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company.
corporate governance report Guidelines Of The Code 15.1 Shareholders should be allowed to vote in absentia
Compliance CWT Corporate Governance Practices Related To Principle All shareholders of the Company receive the annual report and notice of AGM. The notice is also advertised in newspapers and made available on the website. At AGMs, shareholders are given the opportunity to air their views and ask directors or management questions regarding the Company. The Articles also allow a shareholder of the Company to appoint one proxy to attend and vote in place of the shareholder. The Articles presently do not provide for shareholders to vote at General Meetings in absentia such as by mail, email or fax. The Company will consider implementing the relevant amendment to the Articles if the Board is of view that there is a demand for the same, and after the Company has evaluated and put in place the necessary security and other measures to facilitate absentia voting and protect against errors, fraud and other irregularities.
15.2 There should be separate resolutions at general meetings on each substantially separate issue
Each item of special business included in the notice of the general meetings is accompanied, where appropriate, by an explanation for the proposed resolution. Separate resolutions are proposed for each separate issue at the meeting.
15.3 Committee chairman and external auditors to be present at AGMs
Chairpersons of the AC and NRC as well as the external auditors will be present and available to address questions at General Meetings.
15.4 Companies encouraged to amend Articles to avoid imposing limit on the number of proxies for nominee companies
While CWT does not have a specific limit in the Articles on the number of proxy votes for nominee companies, there is a limit for the number of proxies. This is because CWT does not want to create separate classes of rights in shareholders. Also, under current law, on a show of hands, only one vote is counted.
15.5 Companies encouraged to prepare minutes and make minutes available upon request
Additionally, all minutes of general meetings, and a summary of the questions and answers raised at general meetings are publicly available to shareholders upon request.
16
Code On Share Dealing And Interested Person Transaction (IPT) Policy
16.1 Relevant management employees of the Group have been advised of the guideline on Share Dealings, the implications of insider trading and the recommendations of the Best Practices Guide issued by the Singapore Exchange Limited. 16.2 The Company has put in place an internal policy in respect of any interested person transactions of the Company (“IPT Policy”). All division heads are required to familiarise themselves with the IPT policy, and highlight any such transactions to the Company’s Corporate Services Division, where a register of the company’s interested person transactions is maintained. The IPT policy also sets out the levels and procedures to obtain approval for applicable transaction.
53
corporate governance report 16.3 The transactions conducted for the year ended 31 December 2008 were as follows: Aggregate Value S$’000 Purchases - C&P Holdings Pte Ltd (Transfer of assets announced on 31 Mar 2008) - C&P Capital Pte Ltd - C&P Transport Pte Ltd
17
5,050 1,321 870
Executive Council (EXCO)
17.1 The EXCO comprises 2 non-executive directors, Loi Kai Meng & Liao Chung Lik, 1 executive director, Loi Pok Yen and senior management members. 17.2 The EXCO oversees management of CWT and its group of companies. Its principal responsibilities are: (a) reviews and strategizes CWT Group’s long term business objectives and direction, taking into account changing market trends and technological changes; (b)
reviews the organization and resource structure of the CWT Group and recommends appropriate changes for effective business management and development for sustainable growth;
(c)
reviews revenue, profit and cost drivers of the Group business and guide and direct management with specific action/ solutions for long term business success of the Group;
(d)
reviews and monitors technological applications and systems to the Group business and monitors their progress to ensure competitiveness of the Group’s business solutions;
(e)
reviews the Group’s on-going financial performance, cost management, business projects/proposals, major business concerns and pipelines for sustainable long term profitability;
(f)
reviews corporate effectiveness of the Group companies including business management and control, Finance, HR and information processing.
corporate governance report 18 Meeting Attendance Report
Name Loi Kai Meng Liao Chung Li Loi Pok Yen Jimmy Yim Wing Kuen Tan Wee Liang Hu Jian Ping
CWT Board No. of No. of Meetings Meetings Held Attended 7 6 7 7 7 7 7 7 7 *3 7 4
NRC Committee No. of No. of Meetings Meetings Held Attended 3 3
3
3
3
**-
Audit Committee No. of No. of Meetings Meetings Held Attended 4
4
4 4 4
4 *2 **2
Note: *Tan Wee Liang was appointed as Independent Directors and as member of the Audit Committee of the Company with effect from 15 June 2008.
**Hu Jian Ping was appointed as member of the NRC and relinquished his role in the Audit Committee with effect from 4 June 2008.
55
directors’ report We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2008.
Directors The directors in office at the date of this report are as follows: Loi Kai Meng (Chairman) Liao Chung Lik Loi Pok Yen Jimmy Yim Wing Kuen Tan Wee Liang (Appointed on 15 June 2008) Hu Jian Ping
Directors’ interests According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares in the Company and in related corporations are as follows: Name of director and corporation in which interests are held
Holdings registered in the name of director or nominee At At At
Holdings in which director is deemed to have an interest At At At
1/1/2008
31/12/2008
21/1/2009
1/1/2008
31/12/2008
21/1/2009
32,280,000 5,600,000 6,000,000 1,269,000
45,650,000 7,800,000 9,000,000 1,489,000
45,650,000 7,800,000 9,000,000 1,489,000
270,850,000 15,820,000 -
262,590,000 15,000,000 16,000,000 -
262,590,000 15,000,000 16,000,000 -
-
-
-
2,790,551 3,331,735
2,790,551 3,331,735
2,790,551 3,331,735
CWT Limited Ordinary shares Loi Kai Meng Liao Chung Lik Loi Pok Yen Jimmy Yim Wing Kuen C & P Holdings Pte Ltd Ordinary shares Loi Kai Meng Liao Chung Lik
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares of the Company, or of related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year.
directors’ report Neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Except for salaries, bonuses and fees and those benefits that are disclosed in note 28 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive, a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which he is a member, or with a company in which he has a substantial financial interest.
Share options During the financial year, there were: (i)
no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries; and
(ii)
no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries granted by the Company or its subsidiaries.
As at the end of the financial year, there were no unissued shares of the Company or its subsidiaries under option.
Audit Committee The members of the Audit Committee at the date of this report are: Jimmy Yim Wing Kuen (Chairman) Liao Chung Lik Tan Wee Liang The Audit Committee performs the functions specified by section 201B of the Companies Act, the Listing Manual, the Code of Corporate Governance and the Best Practices Guide of the Singapore Exchange. The Audit Committee held 4 meetings since the last directors’ report. In performing its functions, the Audit Committee met with the Company’s external and internal auditors to discuss the scope of their work and the results of their examination and evaluation of the Company’s internal accounting control system. The Audit Committee also reviewed the following: •
assistance provided by the Company’s officers to the external auditors;
•
quarterly financial information and annual financial statements of the Group and of the Company prior to their submission to the directors of the Company for adoption; and
•
interested person transactions (as defined in Chapter 9 of the SGX Listing Manual).
57
directors’ report The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees. The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.
Auditors The auditors, KPMG LLP, have expressed their willingness to accept re-appointment.
On behalf of the Board of Directors
Loi Kai Meng Director
Jimmy Yim Wing Kuen Director
24 March 2009
statement by directors In our opinion: (a)
the financial statements set out on pages 60 to 129 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and
(b)
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.
On behalf of the Board of Directors
Loi Kai Meng Director
Jimmy Yim Wing Kuen Director
24 March 2009
59
independent auditors’ report to the members of the Company CWT Limited We have audited the financial statements of CWT Limited (the Company) and its subsidiaries (the Group), which comprise the balance sheets of the Group and of the Company as at 31 December 2008, the income statement, statement of changes in equity and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 60 to 129. Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes: (a)
devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets;
(b)
selecting and applying appropriate accounting policies; and
(c)
making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion: (a)
the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group for the year ended on that date; and
(b)
the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
KPMG LLP Public Accountants and Certified Public Accountants Singapore 24 March 2009
balance sheets as at 31 December 2008 Group Note
2008 $’000
2007 $’000
Company 2008 2007 $’000 $’000
Non-current assets Property, plant and equipment Intangible assets Subsidiaries Associates Jointly-controlled entities Financial assets Non-current receivables Deferred tax assets Other non-current assets
3 4 5 6 7 8 9 11
322,330 47,259 23,940 10,645 12,429 3,035 1,282 93 421,013
220,869 28,548 13,890 10,216 32,004 3,683 956 93 310,259
71,478 209 184,737 3,358 5,185 6,882 6,500 204 3 278,556
99,519 175 141,247 3,598 5,199 17,757 6,500 3 273,998
Current assets Inventories Trade and other receivables Cash and cash equivalents Tax recoverable
12 14 18
1,921 133,127 77,690 229 212,967 633,980
1,263 130,591 51,775 974 184,603 494,862
725 125,731 4,585 131,041 409,597
379 97,199 366 114 98,058 372,056
19 20
149,390 117,286 266,676 16,460 283,136
149,390 55,524 204,914 11,682 216,596
149,390 56,270 205,660 205,660
149,390 14,723 164,113 164,113
21 11 23
98,951 9,204 44,729 152,884
90,577 3,795 36,835 131,207
95,369 31,736 127,105
88,955 150 23,649 112,754
22 21
138,358 40,882 6,432 10,194 2,094 197,960 350,844 633,980
105,011 26,895 6,765 6,500 1,888 147,059 278,266 494,862
30,892 37,568 345 7,592 435 76,832 203,937 409,597
66,995 23,639 4,250 305 95,189 207,943 372,056
Total assets Equity attributable to equity holders of the Company Share capital Reserves Minority interests Total equity Non-current liabilities Financial liabilities Deferred tax liabilities Deferred gain Current liabilities Trade and other payables Financial liabilities Current tax payable Deferred gain Provisions Total liabilities Total equity and liabilities
23 24
The accompanying notes form an integral part of these financial statements.
61
consolidated income statement year ended 31 December 2008
Note
Revenue Cost of sales Gross profit Other income Administrative expenses Other operating expenses Profit from operations Finance income Finance expenses Net finance (expenses)/income Share of profit of jointly-controlled entities, net of tax Share of profit of associates, net of tax Profit before income tax Income tax expense Profit for the year
26
29
27 30
Attributable to: Equity holders of the parent Minority interests Profit for the year Earnings per share (cents) Basic Diluted
The accompanying notes form an integral part of these financial statements.
31 31
2008 $’000
2007 $’000
602,708 (535,771) 66,937 78,936 (48,030) (9,803) 88,040
534,907 (477,249) 57,658 18,034 (37,473) (3,044) 35,175
3,852 (23,192) (19,340)
5,634 (4,668) 966
1,888 7,061 77,649 (4,872) 72,777
1,812 3,036 40,989 (3,850) 37,139
73,912 (1,135) 72,777
34,786 2,353 37,139
12.87 12.87
6.65 6.65
32 32
19
(3,428) (4,289) (4,289) -
-
-
84,258
-
-
1,175
(785)
-
149,390
(76)
-
-
-
-
-
5,464
65,132
Share capital $’000
The accompanying notes form an integral part of these financial statements.
At 1 January 2007 Translation differences relating to financial statements of foreign entities Share of associates’ change in fair value of available-for-sale financial assets Transfer to income statement on disposal of available-for-sale financial assets Change in fair value of available-for-sale financial assets Net loss recognised directly in equity Profit for the year Total recognised income and expense for the year Issue of shares Interim dividend paid of 14.02 cents per share less tax at 18% in respect of 2007 Final dividend paid of 2 cents per share less tax at 18% in respect of 2006 Transfer to statutory reserves in compliance with foreign entities’ statutory requirements Acquisition of shares from minority shareholders Acquisition of subsidiaries Capital contribution by minority shareholders Dividend paid to minority shareholders At 31 December 2007
2007
Note
(2,853)
-
-
-
-
(1,913) -
(1,913) -
-
-
(1,913)
(940)
417
-
165
-
-
-
-
-
-
-
252
56,785
-
(165)
(5,678)
(39,814)
34,786 -
34,786
-
-
-
67,656
204,914
-
-
(5,678)
(39,814)
28,584 84,258
(3,428) (6,202) 34,786
(785)
(76)
(1,913)
137,564
Total Fair Currency attributable to value translation Statutory Accumulated equity holders reserve reserve reserves profits of the parent $’000 $’000 $’000 $’000 $’000
4,602 (1,487) 11,682
(828) 26
-
-
-
1,531 -
(614) (822) 2,353
-
-
(208)
7,838
Minority interests $’000
4,602 (1,487) 216,596
(828) 26
-
(5,678)
(39,814)
30,115 84,258
(4,042) (7,024) 37,139
(785)
(76)
(2,121)
145,402
Total $’000
consolidated statement of changes in equity year ended 31 December 2008
32 32
(116)
116 (16,965)
15,795 (1,170) (1,170) -
-
-
5
-
-
149,390
1,175
149,390
Share capital $’000
The accompanying notes form an integral part of these financial statements.
At 1 January 2008 Translation differences relating to financial statements of foreign entities Share of associates’ change in fair value of available-for-sale financial assets Share of an associate’s fair value reserve transferred to income statement upon disposal of the associate Change in fair value of available-for-sale financial assets Transfer to income statement arising from impairment on available-for-sale financial assets Net (loss)/gain recognised directly in equity Profit for the year Total recognised income and expense for the year Final one-tier dividend paid of 2 cents per share in respect of 2007 Transfer to statutory reserves in compliance with foreign entities’ statutory requirements Acquisition of shares from minority shareholders Acquisition of subsidiaries Dividend paid to minority shareholders At 31 December 2008
2008
Note
(2,347)
-
-
506
506 -
-
-
-
506
(2,853)
Fair Currency value translation reserve reserve $’000 $’000
474
57
-
-
-
-
-
-
-
417
119,154
(57)
(11,486)
73,912
73,912
-
-
-
-
56,785
266,676
-
(11,486)
73,248
15795 (664) 73,912
(16,965)
116
(116)
506
204,914
Total attributable to Statutory Accumulated equity holders reserves profits of the parent $’000 $’000 $’000
(2) 7,616 (422) 16,460
-
-
(2,414)
2,430 (1,279) (1,135)
(2,610)
-
-
(1,099)
11,682
Minority interests $’000
(2) 7,616 (422) 283,136
-
(11,486)
70,834
18,225 (1,943) 72,777
(19,575)
116
(116)
(593)
216,596
Total $’000
63
consolidated statement of changes in equity year ended 31 December 2008
consolidated statement of cash flows year ended 31 December 2008 Note Operating activities Profit before income tax Adjustments for: Interest expense Interest income Dividend income from available-for-sale financial assets Depreciation of property, plant and equipment Gain/(loss) on disposal or liquidation of: - Available-for-sale financial assets - Property, plant and equipment - Associate - Jointly-controlled entities Gain on deconsolidation of a subsidiary Share of profit of: - Associates - Jointly-controlled entities Amortisation of: - Intangible assets - Deferred gain Amounts written-off for: - Property, plant and equipment - Available-for-sale financial assets Negative goodwill on acquisition of subsidiaries Impairment losses on: - Available-for-sale financial assets - Property, plant and equipment - Deposit for acquisition of property, plant and equipment Changes in working capital: Inventories Trade and other receivables Trade and other payables Provisions Cash generated from operations Income taxes paid Cash flows from operating activities
The accompanying notes form an integral part of these financial statements.
29 29 27
27 27
27 27 27
2008 $’000
2007 $’000
77,649
40,989
2,915 (1,198) (2,654) 15,930
3,526 (1,456) (3,045) 9,790
(69,965) (5,421) (1,299) (50)
(1,133) (9,923) 85 -
(7,061) (1,888)
(3,036) (1,812)
2,590 (7,824)
2,587 (6,085)
11 -
16 23 (6,734)
18,225 3,014 3,630 26,604
23,792
(659) 15,618 20,818 213 62,594 (5,674) 56,920
1,414 (18,619) 31,230 (365) 37,452 (16,155) 21,297
65
consolidated statement of cash flows year ended 31 December 2008 Note Investing activities Interest received Dividends received from: - Associates - Jointly-controlled entities - Available-for-sale financial assets Purchases of: - Property, plant and equipment - Intangible assets - Available-for-sale financial assets - Other non-current assets Proceeds from disposal of: - Property, plant and equipment - Available-for-sale financial assets - Associates - Jointly-controlled entity Acquisitions of interests in: - Subsidiaries, net of cash acquired - Associates - Jointly-controlled entities Acquisition of additional equity interest in an existing subsidiary Deposits paid for land leases Cash flows from investing activities
4
32
Financing activities Interest expense paid Dividends paid: - Shareholders of the Company - Minority shareholders of subsidiaries Repayment of hire purchase and finance lease obligations Repayment of loan granted to minority shareholder of a subsidiary Capital contributions from minority shareholders Proceeds from issuance of new shares Proceeds from: - Short-term bank borrowings - Long-term bank borrowings Repayments of: - Short-term bank borrowings - Long-term bank borrowings Changes in pledged fixed deposits Cash flows from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate changes on balances held in foreign currencies Cash and cash equivalents at end of the year The accompanying notes form an integral part of these financial statements.
18
2008 $’000
2007 $’000
1,017
1,456
1,512 1,125 2,654
958 845 3,045
(112,667) (227) -
(134,192) (203) (643) (15)
120,636 7,332 1,840
28,482 6,142 -
(49,205) (6,559) (17) (32,559)
(26,124) (392) (2,000) (16,331) (138,972)
(2,915)
(3,037)
(11,486) (422) (652) 359 -
(45,492) (1,487) (334) 4,602 84,258
39,840 75,252
102,547 108,318
(30,860) (67,787) (131) 1,198
(99,250) (21,269) 128,856
25,559 51,775 (779) 76,555
11,181 41,809 (1,215) 51,775
notes to the financial statements year ended 31 December 2008 These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Board of Directors on 24 March 2009.
1
Domicile and activities
CWT Limited (the Company) is incorporated in the Republic of Singapore and has its registered office at 38 Tanjong Penjuru, CWT Logistics Hub 1, Singapore 609039.
The principal activities of the Group and Company are those relating to the provision of warehousing and logistics services, transportation services, import and export cargo consolidation and freight forwarding services, engineering services, collateral management services, container depot operations and investment holding.
The consolidated financial statements relate to the Company and its subsidiaries (collectively referred to as the “Group”) and the Group’s interests in associates and jointly-controlled entities.
2
Summary of significant accounting policies
2.1
Basis of preparation
The financial statements are prepared in accordance with the Singapore Financial Reporting Standards (FRS).
The financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities which are stated at fair value and/or amortised cost as disclosed in the accounting policies set out below.
The financial statements are presented in Singapore dollars which is the Company’s functional currency. All financial information presented in Singapore dollars have been rounded to the nearest thousand, unless otherwise stated.
The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in the following notes: •
Note 3 – Impairment assessment, provision for restoration costs, depreciation expense of property, plant and equipment and sale and leaseback of warehouse property
•
Note 4 – Measurement of recoverable amounts for goodwill impairment test
•
Note 5 – Impairment allowances on investments in subsidiaries
67
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D) •
Note 11 – Measurement of deferred tax assets
•
Note 14 – Measurement of allowance for trade receivables
•
Note 24 – Measurement of provisions
•
Note 30 – Assessment of income tax provision
•
Note 32 – Valuation of assets, liabilities and contingent liabilities acquired in business combinations
•
Note 33 – Valuation of financial instruments
The accounting policies set out below have been applied consistently by the Group. The accounting policies used by the Group have been applied consistently to all periods presented in these financial statements.
2.2
Basis of consolidation
Business combinations
Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at fair value of the assets given and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.
Any excess of the purchase consideration over the net fair value of the identifiable asset acquired and liabilities and contingent liabilities assumed is accounted for as goodwill (see note 2.6).
Negative goodwill in a business combination represents the excess of the Group’s interest in the net fair value of the identifiable assets acquired, liabilities and contingent liabilities assumed over the cost of acquisition. It is recognised directly in the income statement.
Subsidiaries
Subsidiaries are those companies controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date control ceases.
Associates
Associates are companies in which the Group has significant influence, but not control, over the financial and operating policies. In the Group’s financial statements, they are accounted for using the equity method of accounting.
The consolidated financial statements include the Group’s share of the total recognised gains and losses of associates from the date that significant influence commences until the date that significant influence ceases. The accounting policies of associates have been changed where necessary to align them with the policies adopted by the Group.
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D)
2.2
Basis of consolidation (cont’d)
Associates (cont’d)
When the Group’s share of losses exceeds the carrying amount of the associate, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate.
Jointly-controlled entities
Jointly-controlled entities are enterprises whose activities the Group has joint control over, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. In the Group’s financial statements, they are accounted for using the equity method of accounting.
The consolidated financial statements include the Group’s share of the total recognised gains and losses of jointly-controlled entities from the date that joint control commences until the date that joint control ceases. The accounting policies of jointlycontrolled entities have been changed where necessary to align them with the policies adopted by the Group.
When the Group’s share of losses exceeds the carrying amount of the jointly-controlled entity, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the jointly-controlled entity.
Transactions eliminated on consolidation
Intragroup balances and any significant unrealised gains and losses or income and expenses arising from intragroup transactions are eliminated in preparing the consolidated financial statements. Significant unrealised gains arising from transactions with associates and jointly-controlled entities are eliminated to the extent of the Group’s interest in the entity. Significant unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Accounting for subsidiaries, associates and jointly-controlled entities by the Company
Investments in subsidiaries, associates and jointly-controlled entities are stated in the Company’s balance sheet at cost less accumulated impairment losses.
2.3
Foreign currencies
Foreign currency balances and transactions
Transactions in foreign currencies are translated at the respective functional currencies of Group entities at the exchange rate at the date of the transaction. The functional currencies of the Group entities are mainly the Singapore dollars, United States dollars, Euro and the Chinese Yuan Renminbi. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined.
Foreign currency differences arising on retranslation are recognised in the income statement, except for differences arising on the retranslation of monetary items that in substance form part of the Group’s net investment in a foreign operation (see below) and available-for-sale equity instruments.
69
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D)
2.3
Foreign currencies (cont’d)
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on the acquisition of foreign operations are translated to Singapore dollars for consolidation at the rates of exchange ruling at the balance sheet date. Revenue and expenses of foreign operations are translated at the average exchange rates for the year. Exchange differences arising on translation are recognised directly in equity. On disposal, the accumulated translation differences are recognised in the consolidated income statement as part of the gain or loss on sale.
Net investments in a foreign operation
Exchange differences arising from monetary items that in substance form part of the Group’s net investment in a foreign operation are recognised in the respective income statement of the Group entities. Such exchange differences are reclassified to equity in the consolidated financial statements. When the foreign operation is disposed of, the cumulative amount in equity is transferred to the consolidated income statement as an adjustment to the profit or loss arising on disposal.
2.4
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.
Depreciation is recognised in the income statement on a straight-line basis over their estimated useful lives (or lease term, if shorter) of each part of an item of property, plant and equipment. Freehold land and warehouse-under-construction are not depreciated.
The estimated useful lives are as follows:
Leasehold land and buildings Leasehold improvements Plant, machinery and equipment Motor vehicles and trailers Furniture, fittings, computers and office equipment
remaining term of lease of 10 to 58 years 15 years 5 to 10 years 5 to 10 years 1 to 5 years
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D)
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.
Warehouse-under-construction is stated at cost. Expenditure directly attributable to warehouse-under-construction is capitalised when incurred. Depreciation will commence when the warehouse is ready for use.
2.5
Leases
When entities within the Group are lessors of a finance lease
Amount due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant rate of return on the Group’s net investment outstanding in respect of the leases.
When entities within the Group are lessees of a finance lease
Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases are capitalised at the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Leased assets are depreciated over the shorter of the lease term and their useful lives. Lease payments are apportioned between finance expense and reduction of the lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
When the entities within the Group are lessors of an operating lease
Assets subject to operating leases are included in leasehold buildings and are stated at cost less accumulated depreciation and impairment losses. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term.
When the entities within the Group are lessees of an operating lease
Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease.
2.6
Intangible assets
Goodwill
Goodwill is measured at cost less accumulated impairment losses. Goodwill arising from the acquisition of subsidiaries is presented as intangible assets. Goodwill arising from the acquisition of associates and jointly-controlled entities is presented together with interests in associates and jointly-controlled entities.
Goodwill is tested for impairment as described in note 2.9.
71
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D)
2.6
Intangible assets (cont’d)
Acquisitions of minority interest
Goodwill arising on the acquisition of minority interest in subsidiary represents the excess of cost of the additional investment over the net fair value of the identifiable net assets acquired and liabilities and contingent liabilities assumed at the date of exchange.
Computer software
Computer software which is acquired by the Group, where it is not an integral part of the related hardware, is treated as an intangible asset. This computer software is stated at cost less accumulated amortisation and impairment losses.
Computer software is amortised in the income statement using the straight-line method over its estimated useful life of 3 years.
Customer contracts
Customer contracts relate to the estimated contracts value acquired in a business combination; and have finite lives and are measured at cost less accumulated amortisation and impairment losses.
Customer contracts are amortised in the income statement using the straight-line method over the customers contract periods of 1 to 10 years.
London Metal Exchange (“LME”) licence
The licence relates to the estimated licence value acquired in a business combination; and has finite life and is measured at cost less accumulated amortisation and impairment losses.
LME licence is amortised in the income statement using the straight-line method over its estimated useful life of 30 years.
Port Concession Rights (“PCR”)
PCR relates to the estimated value of PCR arising from a foreign warehouse located and operated within a port concession area that was acquired in a business combination; and has finite life and is measured at cost less accumulated amortisation and impairment losses.
PCR is amortised in the income statement using the straight-line method over its estimated useful life of 36 years.
2.7
Government grants
Government grants received in relation to the purchase or construction of assets are deducted against the costs of the assets acquired. These government grants are recognised in the income statement on a straight-line basis over the useful lives of the assets by way of a reduced depreciation charge.
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D)
2.8
Financial instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity securities, non-current receivables, trade and other receivables, cash and cash equivalents, financial liabilities, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to the initial recognition, non-derivative financial instruments are measured as described below.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and fixed deposits. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts which are repayable on demand and which form an integral part of the Group’s cash management.
Available-for-sale financial assets
The Group’s investment in equity securities is classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, are recognised directly in equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to the income statement.
Interest-bearing liabilities
Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.
Others
Other non-derivative financial instruments are measured at amortised cost using effective interest method, less any impairment losses.
Impairment of financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
73
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D)
Impairment of financial assets (cont’d)
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to the income statement.
Impairment losses in respect of financial assets measured at amortised cost are reversed if the subsequent increase in fair value can be related objectively to an event occurring after the impairment loss was recognised.
Impairment losses once recognised in the income statement in respect of available-for-sale equity securities are not reversed through the income statement. Any subsequent increase in fair value of such assets is recognised directly in equity.
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.
2.9
Impairment – non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, the recoverable amount is estimated at each reporting date, and as and when indicators of impairment are identified.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognised in the income statement unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro-rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D)
2.10 Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
2.11 Contract work-in-progress
Contract work-in-progress comprises uncompleted service contracts.
Contract work-in-progress at the balance sheet date is recorded in the balance sheet at cost plus attributable profit less recognised losses, net of progress billings and allowances for foreseeable losses, and is presented in the balance sheet as contract work-in-progress (as an asset) or as excess of progress billings over contract work-in-progress (as a liability), as applicable. Cost includes all expenditure related directly to specific contracts and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity.
Allowance is made where applicable for any foreseeable losses on uncompleted contracts as soon as the possibility of the loss is ascertained.
Progress claims not yet paid by the customer are included in the balance sheet under progress billings receivables.
2.12 Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.
Short-term employee benefits
All short-term employee benefits, including accumulated compensated absences, are recognised in the income statement in the period in which the employees render their services.
2.13 Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
75
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D)
2.13 Provisions (cont’d)
Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting the obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.
2.14 Revenue recognition
Provision of logistics services
Provided it is probable that the economic benefits will flow to the Group, and that the revenue and costs can be measured reliably, revenues from the provision of logistic services are recognised as follows:
Freight forwarding
Export revenue is recognised when the cargos are delivered to the carriers and import revenue is recognised upon the arrival of cargos.
Distribution services, repair and maintenance services and surface preparation services
Revenues from distribution services, repair and maintenance services and surface preparation services are recognised as and when the services are rendered.
Sale of goods
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.
Warehouse rental income
Warehouse rental income receivable under operating leases is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income to be received. Contingent rentals are recognised as income in the accounting period in which they are earned.
Contract revenue
When the outcome of the service contract can be estimated reliably, contract revenue and costs are recognised as income and expense using the percentage of completion method, measured by reference of the contract activity at the balance sheet date. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the outcome of a contract cannot be estimated reliably, contract costs are recognised as an expense in the period in which they are incurred and revenue is recognised only to the extent of contract costs incurred that can probably be recovered.
notes to the financial statements year ended 31 December 2008 2
Summary of significant accounting policies (CONT’D)
2.15 Finance income and expenses
Finance income comprises interest income on funds invested, dividend income, gain on disposal of available-for-sale financial assets and net foreign currency gains that are recognised in the income statement. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the Group’s right to receive payment is established.
Finance expenses comprise interest expense on borrowings, unwinding of the discount on provisions, loss on disposal of available-for-sale financial assets, net foreign currency losses and impairment losses recognised on financial assets. All borrowing costs are recognised in the income statement using effective interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale.
2.16 Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the temporary differences arising from the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly-controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
77
notes to the financial statements year ended 31 December 2008 3
Property, plant and equipment
Group Cost At 1 January 2007 Additions Acquisition through business combinations Transfers Disposals Write offs Translation differences At 31 December 2007 Additions Acquisition through business combinations Transfers Disposals Write offs Translation differences At 31 December 2008
Leasehold land, Plant, buildings machinery and Freehold and Note improvements land equipment $’000 $’000 $’000
32 (iii)
32 (iii)
Furniture, Motor fittings, vehicles computers Warehouseand and office undertrailers equipment construction $’000 $’000 $’000
Total $’000
42,771 14,439
10,182
14,905 11,022
11,238 6,318
8,055 5,584
43,315 120,284 87,208 134,753
20,770 34,272 (14,713) (21) 50 97,568 53,426
10,182 -
480 8,672 (246) (36) (7) 34,790 5,578
3,747 (1,905) (46) (5) 19,347 4,108
411 (179) (314) 30 13,587 1,632
1 25,409 (42,944) (22) (17,065) (1) (418) (5) 63 87,552 263,026 51,686 116,430
32,442 89,618 (28,974) (13) 1,172 245,239
(2,819) 7,363
4,095 (319) (15) (336) 43,793
186 (1,266) (107) 22,268
460 (510) (276) (301) 14,592
- 37,183 (89,618) (2,849) (33,918) (304) 278 (2,113) 47,049 380,304
notes to the financial statements year ended 31 December 2008 3
Property, plant and equipment (cont’d)
Group Accumulated depreciation and impairment losses At 1 January 2007 Depreciation charge for the year Disposals Write offs Translation differences At 31 December 2007 Depreciation charge for the year Impairment losses Disposals Write offs Translation differences At 31 December 2008 Carrying amount At 1 January 2007 At 31 December 2007 At 31 December 2008
Leasehold Plant, land, machinery buildings and Freehold and Note improvements land equipment $’000 $’000 $’000
(iv)
Motor vehicles and trailers $’000
Furniture, fittings, computers Warehouseand office underequipment construction $’000 $’000
Total $’000
13,673
-
9,509
6,108
5,981
- 35,271
4,082 (538) (21) (1) 17,195
-
2,359 (47) (33) (6) 11,782
2,099 (1,782) (46) (5) 6,374
1,250 (139) (302) 16 6,806
- 9,790 - (2,506) (402) 4 - 42,157
7,714 1,068 (1,065) (9) 32 24,935
1,946 1,946
3,738 (171) (15) (46) 15,288
2,812 (1,081) (3) 8,102
1,666 (341) (269) (159) 7,703
- 15,930 - 3,014 - (2,658) (293) (176) - 57,974
29,098 80,373 220,304
10,182 5,417
5,396 23,008 28,505
5,130 12,973 14,166
2,074 6,781 6,889
43,315 85,013 87,552 220,869 47,049 322,330
79
notes to the financial statements year ended 31 December 2008 3
Property, plant and equipment (cont’d)
Company Cost At 1 January 2007 Additions Transfer Disposals Write offs At 31 December 2007 Additions Disposals Transfer At 31 December 2008
Furniture, fittings, computers Warehouseand office underequipment construction $’000 $’000
Leasehold buildings and improvements $’000
Plant, machinery and equipment $’000
Motor vehicles and trailers $’000
19,713 10,615 34,271 (38) 64,561 4,494 (33,521) 28,312 63,846
3,712 3,252 8,640 (102) 15,502 1,045 (228) 16,319
7,558 1,850 9,408 1,044 (472) 9,980
3,251 3,705 (247) 6,709 581 (2) 7,288
38,701 32,160 (42,911) 27,950 3,260 (28,312) 2,898
72,935 51,582 (140) (247) 124,130 10,424 (34,223) 100,331
11,463
3,493
3,946
3,065
-
21,967
Total $’000
Accumulated depreciation At 1 January 2007 Depreciation charge for the year Disposals Write offs At 31 December 2007 Depreciation charge for the year Disposals At 31 December 2008
1,495 (4) 12,954
693 4,186
492 4,438
213 (245) 3,033
-
2,893 (4) (245) 24,611
2,712 (528) 15,138
1,306 (92) 5,400
737 (468) 4,707
577 (2) 3,608
-
5,332 (1,090) 28,853
Carrying amount At 1 January 2007 At 31 December 2007 At 31 December 2008
8,250 51,607 48,708
219 11,316 10,919
3,612 4,970 5,273
186 3,676 3,680
38,701 27,950 2,898
50,968 99,519 71,478
(i)
During the year, the Group acquired property, plant and equipment with an aggregate cost of $116,430,000 (2007: $134,753,000) of which $375,000 (2007: $561,000) was acquired under finance lease arrangement. At the balance sheet date, the carrying amount of property, plant and equipment of the Group held under finance lease and hire purchase agreements amounted to $3,440,000 (2007: $1,491,000).
(ii)
Property, plant and equipment of the Group with carrying amount of $58,052,000 (2007: $49,667,000) was pledged as security for bank loans and bank overdrafts granted to the Group.
(iii)
Two leasehold buildings were disposed of under sale and leaseback arrangements completed during the year (see notes 23 and 27). In 2007, one leasehold building was also disposed of under such sale and leaseback arrangement.
notes to the financial statements year ended 31 December 2008 3
Property, plant and equipment (cont’d) (iv)
The following are the significant accounting estimates on the Group’s property, plant and equipment and judgements used in applying accounting policies: (a)
Depreciation of property, plant and equipment
Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives, after taking into account the estimated residual value. The Group reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation expense to be recorded at each financial year. Changes in the expected level of use of the assets and the Group’s historical experience with similar assets, after taking into account anticipated technological changes, could impact the economic useful lives and the residual values of the assets; therefore future depreciation charges could be revised. Any changes in the economic useful lives could impact the depreciation charge and consequently affect the Group’s results. The residual value is reviewed at each reporting date, with any change in estimate accounted for prospectively.
During the year, there were no changes in useful lives or residual values on the Group’s property, plant and equipment.
(b)
Provision for restoration
In some lease agreements, the Group and Company are required to carry out site restoration work. At the balance sheet date, the Group and Company made provisions for site restoration amounting to $516,000 and $284,000 (2007: $506,000 and $284,000) respectively. The site restoration cost is based on estimated cost of dismantling and removing assets and restoring the premises to their original conditions provided by external contractors.
(c)
Impairment assessment
The Group has substantial investments in property, plant and equipment for its logistics and warehousing businesses. Each of these warehouse properties (including land) and the related plant and equipment is a separate cash-generating unit (“CGU”). Due to the uncertain economy outlook, an impairment assessment was performed. The recoverable amount for a cash-generating unit is determined based on higher of fair value less costs to sell and value-in-use calculation.
The fair value is determined based on open market values on freehold and leasehold land and buildings appraised by independent professional valuers close to the balance sheet date.
The value-in-use calculation uses discounted cash flow projections based on contractual cash flows arising from rental of the warehouse properties over the lease term. These cash flows take into account contractual lease rentals (including any lease escalation clauses), projected occupancy and renewal rates by reference to the Group’s historical experience and expectations for market developments. The cash flows are then discounted at rates determined using the appropriate Weighted Average Cost of Capital.
Based on management’s assessment, no impairment has been identified, except for two parcels of land located in China and Europe. In this connection, the Group recognised an impairment loss of $3,014,000 comprising $1,068,000 for the CGU in China and $1,946,000 for the CGU in Europe, in the current year’s income statement and recorded it under “other operating expenses”. The recoverable amounts were determined based on fair value.
81
notes to the financial statements year ended 31 December 2008 3
Property, plant and equipment (cont’d) (d)
Sales and leaseback
During the financial year, the Group completed two sale and leaseback transactions for leasehold buildings with third parties. In determining whether the leaseback transaction are operating leases, the Group compared the lease payments to market rent and the sale consideration of the leasehold building to their fair values; and also evaluated its share on the residual risk of the leasehold buildings. The Group believes that substantially all risks and rewards of the properties have been transferred to third parties. Based on these factors, the Group has accounted for the leaseback transactions as operating leases; and deferred the excess of sales consideration over the fair values of the leasehold buildings (see note 23).
(e)
Expenses capitalised
The Group capitalised the following expenses in warehouse-under-construction and leasehold buildings: Group
Operating lease expense Interest expense
2008 $’000
2007 $’000
507 643 1,150
3,326 1,278 4,604
Company 2008 2007 $’000 $’000 -
1,846 454 2,300
notes to the financial statements year ended 31 December 2008 4
Intangible assets Goodwill Software on Computer development Customer Note consolidation software cost contracts
Group Cost At 1 January 2007 Additions Acquisition through business combinations Acquisition of minority interest Translation differences At 31 December 2007 Additions Acquisition through business combinations Acquisition of minority interest Disposals Write offs Translation differences At 31 December 2008 Accumulated amortisation At 1 January 2007 Amortisation charge for the year Translation differences At 31 December 2007 Amortisation charge for the year Disposals Write offs Translation differences At 31 December 2008 Carrying amount At 1 January 2007 At 31 December 2007 At 31 December 2008
Port LME Concession licence Rights $’000
Total
$’000
$’000
$’000
$’000
$’000
$’000
11,806 -
2,594 200
3
7,935 -
10,198 -
- 32,533 203
32 32
656 1,172 (3) 13,631 -
17 2,811 227
3 -
7,935 -
10,198 -
656 - 1,172 14 - 34,578 227
32 32
7,976 15 21,622
86 (4) (2) (16) 3,102
3
7,935
10,198
12,255 20,317 15 (4) (2) 732 716 12,987 55,847
741
2,252
-
349
85
-
3,427
741
250 16 2,518
-
1,997 2,346
340 425
-
2,587 16 6,030
741
260 (4) (2) (25) 2,747
1 1
1,928 4,274
340 765
61 (1) 60
2,590 (4) (2) (26) 8,588
11,065 12,890 20,881
342 293 355
3 2
7,586 5,589 3,661
10,113 9,773 9,433
- 29,106 - 28,548 12,927 47,259
83
notes to the financial statements year ended 31 December 2008 4
Intangible assets (cont’d) Computer software $’000
Company Cost At 1 January 2007 Additions At 31 December 2007 Additions At 31 December 2008
2,149 138 2,287 222 2,509
Accumulated amortisation At 1 January 2007 Amortisation charge for the year At 31 December 2007 Amortisation charge for the year At 31 December 2008
1,967 145 2,112 188 2,300
Carrying amount At 1 January 2007 At 31 December 2007 At 31 December 2008
182 175 209
The amortisation charge is recognised in the following line items in the income statement: Group
Administration expenses Cost of sales Other operating expenses
2008 $’000
2007 $’000
222 38 2,330 2,590
190 60 2,337 2,587
Company 2008 2007 $’000 $’000 188 188
145 145
Impairment test for cash-generating units containing goodwill
For the purpose of annual impairment testing, goodwill is allocated to the following cash-generating units, which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes: Group
LME licence Collateral management (“CMA”) Freight forwarding
2008 $’000
2007 $’000
11,916 6,113 2,852 20,881
3,925 6,113 2,852 12,890
notes to the financial statements year ended 31 December 2008 4
Intangible assets (cont’d)
The recoverable amount of the cash-generating unit is based on value-in-use calculations which was determined by discounting future cash flows generated from continuing use of the units. Key assumptions used for projecting future cash flows are as follows: Freight forwarding Gross margin Revenue growth rate Discount rate *
15% (1%) - 5%* 15%
LME licence 30% 3% 12%
CMA 62% 3% 15%
Average annual growth rate is 3%.
The budgeted gross margin is based on past performance trends and expectations for market developments. The average growth rate used is consistent with past performance trends and forecasts included in industry reports. The discount rates used are pre-tax and reflect the return that management expects to earn on its investment in the respective cash-generating units.
Cash flows are projected based on financial budgets approved by management covering a period of 1 year and are extrapolated using the growth rates and gross margins as described above for the next four years. The terminal value is estimated by extrapolating the fifth year cash flow at zero growth rate and discounting it.
The recoverable amount of each cash generating unit exceeds its respective carrying amount by an amount more than $10,000,000. The Group believes that any reasonably possible changes in the above key assumptions are not likely to cause any of the recoverable amounts to be materially lower than the related carrying amount.
5
Subsidiaries
Note
Unquoted equity shares, at cost Quasi-equity loans Less: Accumulated impairment losses At 1 January Impairment losses At 31 December
(a)
(a)
(b)
Company 2008 2007 $’000 $’000 99,231 101,135 200,366
103,151 42,835 145,986
(4,739) (10,890) (15,629) 184,737
(3,200) (1,539) (4,739) 141,247
Quasi-equity loans to subsidiaries are interest-free and form part of the Company’s net investments in subsidiaries. The loans are unsecured and settlement is neither planned nor likely to occur in the foreseeable future.
85
notes to the financial statements year ended 31 December 2008 5
Subsidiaries (cont’d) (b)
Impairment losses in respect of investments in the following subsidiaries were recognised in the Company’s income statement: Note
CWT (Xian) Warehousing Development Co., Ltd (XIAN) Xida Warehousing (Shanghai) Co., Ltd (XIDA) CWT Distripark One LLC (CDO) 49 Pandan Pte Ltd (49P) CWT China Logistics (Shanghai) Co., Ltd (CCL) CWT Logistics (Tianjin) Co., Ltd (LTJ) CWT Tianjin Logistic Hub Co., Ltd (TJH) Pryzma Ltd (PRYZMA) CWT Properties Sdn Bhd (CPP)
(i) (i) (i) (i) (i) (i) (ii) (ii) (iii)
Company 2008 2007 $’000 $’000 1,207 2,109 1,505 460 1,100 4,128 381 10,890
931 608 1,539
(i)
In view of the present difficult operating conditions, management has decided to terminate the development projects planned for in these companies. The estimated recoverable amount as at 31 December 2008 is measured using “fair value less costs to sell” approach. Management considered the fair values of the underlying assets of these companies to approximate their carrying amounts due to the relative short-term nature of these assets; and the fair value of the liabilities were based on the estimated cash outflows to settle the obligations.
(ii)
The open market values of TJH’s leasehold land and PRYZMA’s freehold land appraised by independent professional valuers close to the balance sheet date were lower than their carrying amounts as at 31 December 2008. This indicated that the investments in TJH and PRYZMA might be impaired and caused the Company to assess the recoverable amounts of the investments. The estimated recoverable amount as at 31 December 2008 is measured using the “fair value less costs to sell” approach.
(iii)
In prior years, CPP paid a deposit of $410,000 for a leasehold land in Malaysia. Despite that the pre-sale conditions and warranties were met, the legal title over the land was not transferred to CPP. Therefore, CPP entered into a legal suit with the vendor in 2007 to obtain refund of the deposit and compensation from the vendor. As at 31 December 2008, no judgement has been passed. In view of the uncertainty in recovering the deposit of $410,000 the deposit has been fully impaired in the current year. CPP has been inactive since incorporation. These events indicated that the investment in CPP might be impaired and caused the Company to assess the recoverable amount of the investment. The estimated recoverable amount as at 31 December 2008 is based on the “fair value less costs to sell” approach.
notes to the financial statements year ended 31 December 2008 5
Subsidiaries (cont’d) Details of the significant subsidiaries are as follows:
Name of subsidiaries
Country of incorporation/ business
Effective interest held by the Group 2008 2007 % %
1
Jurong Districentre Pte Ltd
Singapore
70.0
70.0
1
CWT International Pte Ltd
Singapore
100.0
100.0
1
CWT Engineering Pte Ltd
Singapore
100.0
100.0
1
CWT Logistics Pte Ltd
Singapore
100.0
100.0
1
Caddee Pte Ltd
Singapore
100.0
100.0
1
CWT Globelink Pte Ltd
Singapore
100.0
100.0
1
CWT Commodities Pte Ltd
Singapore
100.0
100.0
1
OCWS Logistics Pte Ltd
Singapore
100.0
100.0
1
Trident Districentre Pte Ltd
Singapore
100.0
100.0
1
Singapore Commodity Hub Pte Ltd
Singapore
100.0
100.0
1
CWT EDG Pte Ltd
Singapore
72.0
72.0
1
Indeco Engineers (Pte) Ltd
Singapore
100.0
100.0
1
CWT Commodities (Metals) Pte Ltd
Singapore
100.0
100.0
1
CWT Commodities (China) Pte Ltd
Singapore
100.0
100.0
1
CWT Commodities (SEA) Pte Ltd
Singapore
100.0
100.0
1
CWT Commodities Warehousing Pte Ltd
Singapore
100.0
100.0
87
notes to the financial statements year ended 31 December 2008 5
Subsidiaries (cont’d)
Name of subsidiaries
2
Globelink Egypt
2
Country of incorporation/ business
Effective interest held by the Group 2008 2007 % %
Egypt
51.0
CWT Commodities (Antwerp) NV
Belgium
100.0
2
Globelink International Pty Limited
Australia
65.0
65.0
2
CWT Globelink Colombo (Pvt) Ltd
Sri Lanka
51.0
51.0
2
Globelink WW India Pvt Ltd
India
51.0
51.0
2
Globelink Korea Co., Ltd
Korea
70.0
70.0
2
Globelink Uniexco S.L.
Spain
56.0
56.0
2
Globelink - Trans (Tianjin) International Forwarding Co., Ltd
People’s Republic of China
100.0
100.0
3
49 Pandan Pte Ltd
Singapore
100.0
100.0
4
CWT China Logistics (Shanghai) Co., Ltd
People’s Republic of China
100.0
100.0
4
CWT Logistics (Tianjin) Co., Ltd
People’s Republic of China
75.0
75.0
People’s Republic of China
100.0
100.0
People’s Republic of China
100.0
100.0
CWT Warehousing Transportation (Shanghai) Development Co., Ltd 4
51.0 -
4
CWT Tianjin Logistic Hub Co., Ltd
5
CWT SPL Distripark Vietnam Limited
Vietnam
51.0
51.0
6
Globelink Container Lines (JB) Sdn. Bhd.
Malaysia
90.0
90.0
6
Globelink Container Line (M) Sdn. Bhd.
Malaysia
97.8
97.8
7
CWT Sitos Group B.V.
The Netherlands
60.0
-
7
Sitos Commodities (Amsterdam) B.V.
The Netherlands
100.0
-
notes to the financial statements year ended 31 December 2008 5
Subsidiaries (cont’d)
Name of subsidiaries
8
CWT Commodities Shanghai Warehousing Management Co., Ltd
CWT Commodities (Rotterdam) B.V. (formerly known as CWT Commodities (Europe) B.V.) 9
9
Quality Logistic Warehousing B.V.
Effective interest held by the Group 2008 2007 % %
People’s Republic of China
51.0
51.0
The Netherlands
80.0
80.0
The Netherlands
80.0
80.0
Ghana
100.0
-
10
Sitos Commodities (Ghana) Ltd
11
Sitos Commodities (UK) Ltd
United Kingdom
95.0
-
11
CWT Sitos Properties (UK) Ltd
United Kingdom
100.0
-
12
CWT Logistics Sdn Bhd
Malaysia
100.0
1
3 4 5 6 7 8 9
Audited by KPMG LLP, Singapore
2
Audited by other member firms of KPMG International
11 12
Audited by Deloitte & Touche
10
Country of incorporation/ business
100.0
Audited by Lee Seng Chan & Co Audited by ShuLunPan CPAS Ltd International (A member of Horwath International) Audited by STT Audit & Advisory (A member of Mazars International) Audited by Horwath Malaysia Audited by Baker Tilly Berk BV Audited by Shanghai Huaxia Certified Public Accountants Co., Ltd Audited by Troost-Accountantskantoor v.o.f. Audited by Baker Tilly UK Audit LLP Audited by RSM, Robert Teo Kuan & Co.
Significant subsidiaries include those considered significant as defined under the Singapore Exchange Limited listing manual if the Group’s share of net tangible assets represents 20% or more of the Group’s consolidated net tangible assets, or if the Group’s share of pre-tax profit accounts for 20% or more of the Group’s consolidated pre-tax profit.
89
notes to the financial statements year ended 31 December 2008 6
Associates Group
Investments in associates Quasi-equity loans
2008 $’000
2007 $’000
23,554 386 23,940
13,504 386 13,890
Company 2008 2007 $’000 $’000 3,358 3,358
3,598 3,598
Investments in associates at 31 December 2008 include goodwill on acquisition of $2,142,000 (2007: $1,458,000).
The quasi-equity loans to an associate are interest-free and formed part of the Group’s net investment in associates. The loans are unsecured and settlement is neither planned nor likely to occur in the foreseeable future.
Details of the significant associates are as follows:
Name of associates
1
Cambridge Industrial Trust Management Limited
2
Country of incorporation/ business
Effective interest held by the Group 2008 2007 % %
Singapore
-
20.0
Globelink Westar Shipping LLC
United Arab Emirates
49.0
49.0
3
WHA Alliance Company Limited
Thailand
25.0
25.0
4
CWT Sitos B.V.
The Netherlands
30.0
-
5
GLS Interfreight Co., Ltd
Thailand
49.0
49.0
3 4 5 1
Audited by KPMG LLP, Singapore
2
Audited by other member firms of KPMG International Audited by S S Auditing Audited by Baker Tilly Berk BV Audited by DIA International Accounting
notes to the financial statements year ended 31 December 2008 6
Associates (cont’d)
Significant associates include those considered significant as defined under the Singapore Exchange Limited listing manual if the Group’s share of net tangible assets represent 20% or more of the Group’s consolidated net tangible assets, or if the Group’s share of pre-tax profit account for 20% or more of the Group’s consolidated pre-tax profit.
The summarised financial information relating to associates is not adjusted for the percentage of ownership held by the Group.
The financial information of associates is as follows: Group
2008 $’000
2007 $’000
Income statement Revenue Expenses Profit after taxation
234,570 (216,747) 17,823
190,432 (184,714) 5,718
Balance sheet Total assets Total liabilities
172,591 115,292
92,794 59,323
2008 $’000
2007 $’000
2,171
4,249
346 1,433 11,030 12,809
860 321 2,747 3,928
2,531 8,378 7,216 18,125
911 4,610 8,518 14,039
The Group’s share of the associates’ commitments is as follows:
(a) Capital commitments Expenditure for property, plant and equipment: Contracted but not provided for (b) Non-cancellable operating lease commitments Payable: Within 1 year After 1 year but within 5 years After 5 years Receivable: Within 1 year After 1 year but within 5 years After 5 years
91
notes to the financial statements year ended 31 December 2008 7
Jointly-controlled entities Group
Investments in jointly-controlled entities Quasi-equity loans
2008 $’000
2007 $’000
9,275 1,370 10,645
8,832 1,384 10,216
Company 2008 2007 $’000 $’000 3,815 1,370 5,185
3,815 1,384 5,199
The quasi-equity loans to a jointly-controlled entity are interest-free and formed part of the Group’s net investment in jointlycontrolled entities. The loans are unsecured and settlement is neither planned nor likely to occur in the foreseeable future.
Details of the significant jointly-controlled entities are as follows:
Name of jointly-controlled entities
1
Cambridge Industrial Property Management Pte Ltd
2
Fujian Alt-CWT Logistic Co., Ltd (formerly known as Fuzhou Harbour-CWT Co.,Ltd)
3
JIC Inspection Services Pte Ltd
4
CWT-SML Logistics LLC
3 4
1
Audited by KPMG LLP, Singapore
2
Audited by other member firms of KPMG International
Country of incorporation/ business
Effective interest held by the Group 2008 2007 % %
Singapore
-
50.0
People’s Republic of China
49.0
49.0
Singapore
22.0
22.0
United Arab Emirates
40.0
40.0
Audited by Deloitte & Touche, Singapore Audited by Deloitte & Touche, United Arab Emirates
Significant jointly-controlled entities include those considered significant as defined under the Singapore Exchange Limited listing manual if the Group’s share net tangible assets represent 20% or more of the Group’s consolidated net tangible assets, or if the Group’s share pre-tax profit account for 20% or more of the Group’s consolidated pre-tax profit.
notes to the financial statements year ended 31 December 2008 7
Jointly-controlled entities (cont’d)
The Group’s share of the jointly-controlled entities’ results, assets and liabilities is as follows: Group
Assets and liabilities Non-current assets Current assets Current liabilities Non-current liabilities Net assets Cumulative share of unrecognised losses * Results Revenue Expenses Profit after taxation *
2008 $’000
2007 $’000
8,846 5,504 (2,972) (2,378) 9,000 275 9,275
9,008 5,891 (3,127) (2,940) 8,832 8,832
14,401 (12,513) 1,888
14,003 (12,191) 1,812
At 31 December 2008, the Group’s cumulative share of unrecognised losses for a jointly-controlled entity had exceeded the Group’s cost of investment in this jointly-controlled entity.
The Group’s share of the jointly-controlled entities’ commitments is as follows: 2008 $’000
2007 $’000
232 1,392 13,077 14,701
312 1,017 13,580 14,909
15 15
132 12 144
Non-cancellable operating lease commitments Payable: Within 1 year After 1 year but within 5 years After 5 years Receivable: Within 1 year After 1 year but within 5 years
93
notes to the financial statements year ended 31 December 2008 8
Financial assets Group
Quoted equity securities available-for-sale Less: Impairment losses Unquoted equity securities available-for-sale
9
2008 $’000
2007 $’000
30,606 (18,225) 12,381 48 12,429
31,956 31,956 48 32,004
Company 2008 2007 $’000 $’000 17,007 (10,125) 6,882 6,882
17,757 17,757 17,757
Non-current receivables Group Note Non-current portion of: Loan to minority shareholder of a subsidiary Loan to a jointly-controlled entity Loan to a subsidiary Finance lease receivables
16 15 10
2008 $’000
2007 $’000
Company 2008 2007 $’000 $’000
1,375 440 1,220 3,035
1,958 1,725 3,683
6,500 6,500
6,500 6,500
The loan to minority shareholder of a subsidiary is unsecured, interest-free and repayable in March 2010. The loan is measured at an implied rate of 10.5% per annum since inception.
10
Finance lease receivables Group Note Amounts receivable under finance leases: Gross investment Unearned interest income Net receivables Current Non-current
14 9
2008 $’000
2007 $’000
2,070 (219) 1,851
2,622 (309) 2,313
631 1,220 1,851
588 1,725 2,313
notes to the financial statements year ended 31 December 2008 10
Finance lease receivables (cont’d)
2008 Within 1 year After 1 year but within 5 years After 5 years
2007 Within 1 year After 1 year but within 5 years After 5 years
Gross investment $’000
Unearned income $’000
Net investment $’000
697 895 478 2,070
(66) (119) (34) (219)
631 776 444 1,851
678 1,308 636 2,622
(90) (163) (56) (309)
588 1,145 580 2,313
The Group entered into finance lease arrangements for certain of its plants and motor vehicles. The average term of finance leases entered into ranges from 3 to 10 years (2007: 3 to 10 years).
The interest rate inherent in the leases is fixed at the agreement date throughout the lease term. The average effective interest rate ranges from 3.7% to 5.7% (2007: 3.7% to 5.7%) per annum.
The Group recognised contingent rents of $46,000 (2007: $37,000) as “finance income”.
The carrying amount of the Group’s finance lease receivables at the balance sheet date approximates its fair value, based on discounting the estimated cash flows at the market rate.
95
notes to the financial statements year ended 31 December 2008 11
Deferred tax
Movements in deferred tax assets and liabilities (prior to offsetting of balances) during the year are as follows:
Group Deferred tax liabilities Fair value adjustment on leasehold building Property, plant and equipment Intangible assets Deferred tax assets Trade and other receivables Trade and other payables Provisions Unutilised tax losses
At 1/1/2007 $’000
Acquisition through Recognised business in income Translation combinations statement differences (note 32) (note 30) $’000 $’000 $’000
At 31/12/2007 $’000
296 2,889 2,040 5,225
7 7
990 (306) 684
(296) (2,050) (2,346)
990 540 2,040 3,570
(674) (436) (1,110)
(1) 1 (3) 4 1
-
483 195 (215) (85) 378
(192) (240) (218) (81) (731)
1,255
-
-
(900)
355
(142) (63) (205)
-
-
-
(142) (63) (205)
Company Deferred tax liabilities Property, plant and equipment Deferred tax assets Trade and other receivables Trade and other payables
notes to the financial statements year ended 31 December 2008 11
Deferred tax (cont’d)
At 1/1/2008 $’000
Acquisition through Recognised business in income Translation combinations statement differences (note 32) (note 30) $’000 $’000 $’000
At 31/12/2008 $’000
Group Deferred tax liabilities Fair value adjustment on leasehold building Property, plant and equipment Intangible assets Deferred tax assets Trade and other receivables Trade and other payables Provisions Unutilised tax losses
990 540 2,040 3,570
51 (25) 243 269
850 161 4,166 5,177
(207) 1,415 (342) 866
1,684 2,091 6,107 9,882
(192) (240) (218) (81) (731)
45 15 36 1 97
-
(170) (178) (62) (916) (1,326)
(317) (403) (244) (996) (1,960)
355
-
-
517
872
(142) (63) (205)
-
-
142 (15) (998) (871)
(78) (998) (1,076)
Company Deferred tax liabilities Property, plant and equipment Deferred tax assets Trade and other receivables Trade and other payables Unutilised tax losses
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxation authority. The amounts determined after appropriate offsetting are included in the balance sheets as follows: Group
Deferred tax liabilities Deferred tax assets
2008 $’000
2007 $’000
9,204 (1,282)
3,795 (956)
Company 2008 2007 $’000 $’000 (204)
150 -
97
notes to the financial statements year ended 31 December 2008 11
Deferred tax (cont’d)
Deferred tax assets have not been recognised in respect of the following items: Group
Deductible temporary differences Unutilised tax losses
2008 $’000
2007 $’000
18,848 23,108 41,956
18,147 17,651 35,798
The tax losses are subject to agreement by the tax authorities and compliance with tax regulations in the respective countries in which certain subsidiaries operate. The deductible temporary differences do not expire under current tax legislation.
Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the subsidiaries of the Group can utilise the benefits.
12
Inventories Group
Raw materials Work-in-progress Finished goods Consumables, equipment and spare parts Merchandise Allowance for inventory obsolescence
2008 $’000
2007 $’000
867 93 227 734 1,921
272 236 62 448 364 (119) 1,263
Company 2008 2007 $’000 $’000 7 718 725
23 356 379
The inventory obsolescence of $119,000 was recognised in 2007 as the inventories belonging to the ceased business activities had become obsolete. In 2008, the allowance for inventory obsolescence was utilised by writing off the underlying inventories.
Raw materials and consumables and changes in finished goods and work-in-progress, recognised in cost of sales amounted to $11,126,000 (2007: $3,936,000).
notes to the financial statements year ended 31 December 2008 13
Contract work-in-progress Group Note
Costs incurred and attributable profits Allowance for foreseeable losses Progress billings Represented by: Progress billing receivables Accrued amount payable and advance billings
14 22
2008 $’000
2007 $’000
337,182 (1,799) 335,383 (340,316) (4,933)
296,969 296,969 (300,689) (3,720)
2,320 (7,253) (4,933)
3,904 (7,624) (3,720)
The change in allowance for foreseeable losses during the year is as follows: Group
At 1 January Allowance made during the year At 31 December
2008 $’000
2007 $’000
1,799 1,799
-
The Group assesses allowance for foreseeable losses by taking into account the contracted revenue, estimated costs to completion, project duration and overruns. It is possible that management estimate is not indicative of future losses that it will incur. Any increase or decrease would affect profit or loss in the future years. In 2008, the allowance for foreseeable losses included in cost of sales is $1,799,000.
99
notes to the financial statements year ended 31 December 2008 14
Trade and other receivables Group Note
Trade receivables Less: Impairment losses Amounts due from: Subsidiaries: - Trade and non-trade - Loan Related parties: - Trade - Non-trade Associates: - Trade - Non-trade Jointly-controlled entities: - Trade - Non-trade - Loan Minority shareholders of subsidiaries (non-trade) Staff loans Finance lease receivables Interest receivables Other receivables Progress billing receivables Total loans and receivables Reimbursement for contingent liabilities assumed on business combinations Deposits Prepayments Deposits for acquisition of property, plant and equipment Impairment losses
17 15
16
10
13
Company 2008 2007 $’000 $’000
2008 $’000
2007 $’000
110,869 (1,930) 108,939
94,482 (1,534) 92,948
11,621 (269) 11,352
11,422 (91) 11,331
-
-
10,029 99,049
30,713 51,422
2,137 -
3,688 10
1,021 -
1,339 -
2,131 5
2,393 26
955 -
702 -
316 273 352 111 631 48 5,471 2,320 122,734
149 358 140 284 588 120 2,559 3,904 107,167
90 18 8 209 2,070 124,801
149 36 824 96,516
581 2,914 6,898
581 2,608 3,904
172 758
238 445
3,630 (3,630) 133,127
16,331 16,331 130,591
125,731
97,199
$4,403,000 (2007: $Nil) of the trade receivables have been pledged as security for bank loans granted to the Group.
The non-trade amounts due from, subsidiaries, related parties, associates, jointly-controlled entities and minority shareholders of subsidiaries are unsecured, interest-free and repayable on demand.
Owing to the termination of development projects, the Group recognised impairment losses of $3,630,000 (2007: $Nil) on the deposits for acquisition of property, plant and equipment in the current year’s income statement and recorded it under “other operating expenses”.
notes to the financial statements year ended 31 December 2008 14
Trade and other receivables (cont’d)
The maximum exposure to credit risk for loans and receivables at the reporting date (business segment) is: Group
Business segment Logistics Engineering
Company 2008 2007 $’000 $’000
2008 $’000
2007 $’000
103,772 18,962 122,734
87,255 19,912 107,167
124,801 124,801
96,516 96,516
Gross 2008 $’000
Impairment losses 2008 $’000
Gross 2007 $’000
Impairment losses 2007 $’000
76,481 19,632 18,034 4,814 5,703 124,664
(13) (94) (60) (308) (1,455) (1,930)
63,687 17,292 12,718 6,212 8,792 108,701
(26) (52) (118) (1,338) (1,534)
115,978 2,239 1,468 1,235 4,150 125,070
(269) (269)
83,829 2,271 1,963 914 7,630 96,607
(91) (91)
The ageing of loans and receivables at the reporting date is:
Group Not past due Past due 0 – 30 days Past due 31 – 90 days Past due 91 – 180 days Past due more than 180 days Company Not past due Past due 0 – 30 days Past due 31 – 90 days Past due 91 – 180 days Past due more than 180 days
The change in impairment loss in respect of trade receivables during the year is as follows: Group
At 1 January Impairment loss recognised/(reversed) Impairment loss utilised Translation differences At 31 December
2008 $’000
2007 $’000
1,534 1,437 (863) (178) 1,930
3,795 245 (2,445) (61) 1,534
Company 2008 2007 $’000 $’000 91 181 (3) 269
649 (537) (21) 91
The Group assessed collectibility based on historical default rates to determine the impairment loss to be recognised. Management reviewed trade receivables aging and believes that no impairment loss is necessary in respect of the remaining trade receivables due to the good track records and reputation of its customers.
101
notes to the financial statements year ended 31 December 2008 14
Trade and other receivables (cont’d)
The Group’s primary exposure to credit risk arises through its trade and other receivables. Concentration of credit risk relating to these trade and other receivables is limited due to the Group’s many varied customers, which are internationally dispersed. The Group’s historical experience in the collection of accounts receivable falls within the recorded allowances. Due to these factors, management believes that no additional credit risk beyond the amounts provided for collection losses is inherent in the Group’s trade and other receivables.
15
Loans to subsidiaries Note
Company 2008 2007 $’000 $’000
Non-current Loan to a subsidiary
9
6,500
6,500
Current Loan to subsidiaries
14
99,049
51,422
The non-current loan to a subsidiary is unsecured. The loan bears floating interest at a rate of 3.3% per annum as at 31 December 2008 (2007: 3.9%). The interest rate reprices on half yearly basis.
The current loans to subsidiaries are unsecured and repayable on demand. The loans bear floating interest from 2.5% to 3.5% per annum as at 31 December 2008 (2007: 3.6%). The interest rate reprices on monthly or quarterly basis.
16
Loan to jointly-controlled entities Group Note Non-current Loan to a jointly-controlled entity
2008 $’000
2007 $’000
9
440
-
14
131 (131) -
131 (131) -
Current Loan to a jointly-controlled entity Impairment loss
The non-current loan to a jointly-controlled entity is unsecured, has no fixed term of repayment and bears fixed interest rate of 5% per annum.
The current loan to a jointly-controlled entity is unsecured and bears interest at an effective rate of 3.7% (2007: 3.7%) per annum. The interest rate reprices on an annual basis. The loan was originally repayable within two years from the date of disbursement of the loan but in 2006, the maturity date of the loan was extended to 25 February 2008. No further extension in maturity date has been granted. The Group recognised an impairment loss of $131,000 on this loan as a result of the jointly-controlled entity defaulting the loan repayment on extended maturity date.
notes to the financial statements year ended 31 December 2008 17
Amounts due from subsidiaries Company 2008 2007 $’000 $’000 Amounts due from subsidiaries - trade - non-trade
11,609 599 12,208 (2,179) 10,029
Impairment losses
All the balances with subsidiaries are unsecured, interest-free and repayable on demand.
The change in impairment losses in respect of amounts owing by subsidiaries during the year is as follows:
14,149 18,584 32,733 (2,020) 30,713
Company 2008 2007 $’000 $’000 At 1 January Impairment losses Impairment losses utilised At 31 December
2,020 770 (611) 2,179
1,914 106 2,020
The Company assessed collectibility of the balances, having considered the financial conditions of the subsidiaries and their ability to make the required repayments. Management believes that no further impairment loss beyond the recorded allowances is necessary. If the financial conditions of the subsidiaries were to deteriorate subsequently, further impairment loss may then be required in future periods.
18
Cash and cash equivalents Group Note
Fixed deposits Cash and bank balances Cash and cash equivalents Less: Bank overdrafts Fixed deposits pledged Cash and cash equivalents in the cash flow statement
21
2008 $’000
2007 $’000
20,440 57,250 77,690
16,344 35,431 51,775
(1,003) (132)
-
76,555
51,775
Company 2008 2007 $’000 $’000 4,585 4,585
366 366
Included in bank overdrafts as at 31 December 2008 is an amount of $891,000 which is unsecured. The remainder of $112,000 is secured on certain fixed deposits, a lien on trade receviables and fixed and floating charges over certain property, plant and equipment.
103
notes to the financial statements year ended 31 December 2008 18
Cash and cash equivalents (cont’d)
The weighted average effective interest rates per annum at the balance sheet date are as follows: Group
Fixed deposits Bank overdrafts
Interest rates reprice at intervals of one week, one, three or six months.
19
Share capital
2008 %
2007 %
3.82 5.24
3.89 -
Group and Company 2008 Note Issued and fully paid, with no par value: Ordinary shares At 1 January Right issue of shares Issue of new ordinary shares At 31 December *
(i) (ii)
2007
No. of shares (’000)
$’000
No. of shares (’000)
574,305 574,305
149,390 149,390
346,203 173,102 55,000 574,305
$’000
65,132 39,813* 44,445* 149,390
Net of transaction cost amounting to $1,205,000, of which $75,000 was paid to a firm in which a director is a member.
The Company issued the following shares in 2007: (i)
On 7 June 2007, a total of 173,101,550 ordinary shares were allotted relating to the rights issue on the basis of one right share for every two existing shares held by the shareholders.
(ii)
On 19 June 2007, the Company issued 55,000,000 new ordinary shares in the capital of the Company at an issued price of $0.83 per share.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
Capital management
The Board defines “Capital” to include share capital, reserves and minority interests. The Board’s policy is to maintain a strong capital base to sustain the future development and expansion of the Group’s business, so as to maintain investor and creditor confidence in the Group. The Board of Directors monitors the level of dividend payment by taking into account the Group’s business expansion requirements.
notes to the financial statements year ended 31 December 2008 19
Share capital (cont’d)
The Board of Directors also seeks to maintain a healthy level of borrowings with a view to optimise financial return to shareholders. The Group targets to achieve a return on shareholders’ equity (“ROE”) of between 13.0% and 18.0%. In 2008, the Group achieved a ROE of 27.8% (2007: 17.0%).
The Group monitors capital on the basis of the debt to equity ratio. This ratio is calculated as total borrowings divided by equity. Total borrowings refer to “financial liabilities” as shown in the consolidated balance sheet; and equity refers to share capital, reserves and minority interests as shown in the consolidated balance sheet.
The Group’s strategy, which was unchanged from 2007, was to maintain the debt to equity ratio under 1.0. The debt to equity ratio at 31 December 2008 and 2007 were as follows: Group
Total borrowings Equity Debt to equity ratio
2008 $’000
2007 $’000
139,833 283,136 0.5
117,472 216,596 0.5
There were no changes in the Group’s approach to capital management during the year.
The Company and its subsidiaries are not subject to externally imposed capital requirements, except for certain financial covenants (including those relating to consolidated net assets) as stipulated by its bankers in respect of credit facilities drawn down.
20
Reserves Group
Fair value reserve Currency translation reserve Statutory reserves Accumulated profits
2008 $’000
2007 $’000
5 (2,347) 474 119,154 117,286
1,175 (2,853) 417 56,785 55,524
Company 2008 2007 $’000 $’000 56,270 56,270
750 13,973 14,723
The fair value reserve comprises the cumulative net changes in the fair values of available-for-sale financial assets.
The currency translation reserve of the Group comprises foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the functional currency of the Company.
The statutory reserve relates to profits set aside in accordance with legislation in the countries of certain foreign entities and is non-distributable.
105
notes to the financial statements year ended 31 December 2008 21
Financial liabilities Group
Current liabilities Bank overdrafts Bank loans: Loan 1 Loan 2 Loan 3 Loan 4 Loan 6 Loan 7 Loan 8 Loan 9 Hire purchase and finance lease liabilities Total Non-current liabilities Bank loans: Loan 2 Loan 3 Loan 4 Loan 5 Loan 6 Loan 7 Loan 9 Hire purchase and finance lease liabilities Total
2008 $’000
2007 $’000
18
1,003
-
-
-
(a) (b) (c) (d) (f) (g) (h) (i) (j)
11,279 1,889 4,600 19,800 750 252 367 58 884 40,882
2,300 1,889 4,600 14,850 3,000 256 26,895
11,279 1,889 4,600 19,800 37,568
2,300 1,889 4,600 14,850 23,639
(b) (c) (d) (e) (f) (g) (i) (j)
8,906 8,733 21,230 56,500 1,685 185 1,712 98,951
10,794 11,731 28,430 38,000 750 872 90,577
8,906 8,733 21,230 56,500 95,369
10,794 11,731 28,430 38,000 88,955
(a)
Loan 1 is unsecured and repayable in full upon maturity in January 2009.
(b)
Loan 2 is secured on:
Company 2008 2007 $’000 $’000
Note
(i)
First all-monies Legal Mortgage over a leasehold land and building;
(ii)
First fixed charge over the equipment and machineries financed;
(iii)
The project account in relation to the development of the warehouse; and
(iv)
The assignment of all insurance policies, lease payments, lease agreements and construction contract in respect of the construction of the warehouse development.
The loan is repayable over 15 consecutive quarterly instalments of $472,000 commencing from 31 March 2007 and a final instalment of $5,602,000.
notes to the financial statements year ended 31 December 2008 21
Financial liabilities (cont’d) (c)
Loan 3 is secured by a deed of assignment of building agreement and mortgage-in-escrow in closed format in respect of a leasehold land and building and subsequently upon issuance of the title documents relating to the property, a first legal closed mortgage of the property. The loan is repayable over 19 quarterly instalments of $1,150,000 commencing from 7 October 2007 and a final instalment of the balance amount outstanding upon completion of construction of a warehouse development.
(d)
Loan 4 is unsecured and repayable over 8 quarterly instalments of $4,950,000 commencing from 15 May 2008 and a final instalment of the balance amount outstanding.
(e)
Loan 5 is unsecured and repayable upon maturity on 15 May 2010.
(f)
Loan 6 is unsecured and repayable over 12 consecutive quarterly instalments commencing from 26 April 2006.
(g)
Loan 7 is secured on property, plant and equipment with a carrying amount of $3,333,000 and repayable over 11 years from 1 January 2004.
(h)
Loan 8 is secured by a change over a leasehold property, trade receivables and a cross-guarantee scheme of certain subsidiaries and repayable over 4 years from 1 December 2005.
(i)
Loan 9 is secured by a change over certain property, plant and equipment, trade receivables and a cross-guarantee scheme of certain subsidiaries and repayable over 6 years from 1 February 2007.
(j)
Hire purchase and finance lease liabilities
The Group has obligations under hire purchase and finance leases that are repayable as follows: Principal $’000
Interest $’000
Payments $’000
884 1,651 61 2,596
358 396 11 765
1,242 2,047 72 3,361
256 791 81 1,128
96 142 2 240
352 933 83 1,368
Group 2008 Repayable within 1 year Repayable after 1 year but within 5 years Repayable after 5 years 2007 Repayable within 1 year Repayable after 1 year but within 5 years Repayable after 5 years
107
notes to the financial statements year ended 31 December 2008 21
Financial liabilities (cont’d)
Terms and debt repayment schedule
The terms and conditions of outstanding loans and borrowings are as follows: Nominal interest rate %
Group
2008 Year of maturity
Face value $’000
2010 - 2012
122,087
2007 Carrying amount $’000
Face value $’000
121,658
111,013
Carrying amount $’000
S$ floating rate loans
SWAP + 0.5% - 0.7%
S$ floating rate loans
SIBOR + 0.8%
2009
750
750
3,750
3,750
S$ floating rate loans
2.0% - 2.9%
2009
11,279
11,279
2,300
2,300
GBP fixed rate loans
6.5%
2015
1,937
1,937
-
-
Euro fixed rate loans
4.7% - 5.7%
2009 - 2013
610
610
-
-
Bank overdrafts
3.3% - 11.5%
2009
1,003
1,003
-
-
Hire purchase and finance lease liabilities
2.5% - 17.3% 2008 - 2014
2,596 140,262
2,596 139,833
1,128 118,191
1,128 117,472
121,658
111,013
11,279 132,937
2,300 113,313
1
1
110,294
Company
S$ floating rate loans
SWAP + 0.5% - 0.7%
2010 - 2012
122,087
S$ floating rate loans
2.0% - 2.9%
2009
11,279 133,366
1
1
Before the deduction of unamortised debt transaction costs of $720,000
1
110,294 2,300 112,594
notes to the financial statements year ended 31 December 2008 21
Financial liabilities (cont’d)
The following are the expected contractual undiscounted cash inflows (outflows) of financial liabilities, including interest payments and excluding the impact of netting agreements:
Group 2008 Floating rate loans Fixed rate loans Hire purchase and finance lease liabilities Bank overdrafts Trade and other payables* 2007 Floating rate loans Fixed rate loans Hire purchase and finance lease liabilities Trade and other payables*
*
Contractual cash flows $’000
More than 5 years $’000
133,687 2,547 2,596 1,003 130,242 270,075
(138,659) (2,826) (3,361) (1,007) (130,242) (276,095)
(40,937) (820) (1,242) (1,007) (130,242) (174,248)
(97,722) (1,482) (2,047) (101,251)
(524) (72) (596)
114,044 2,300 1,128 96,084 213,556
(125,272) (2,306) (1,368) (96,084) (225,030)
(27,948) (2,306) (352) (96,084) (126,690)
(97,324) (933) (98,257)
(83) (83)
Excluding accrued amount payable and advance billings, as well as deposits received
Company 2008 Floating rate loans Trade and other payables 2007 Floating rate loans Fixed rate loans Trade and other payables*
*
Cash flows Within Within 1 year 1 to 5 years $’000 $’000
Carrying amount $’000
Excluding deposits received
Carrying amount $’000
Contractual cash flows $’000
Cash flows Within 1 year $’000
Within 1 to 5 years $’000
132,937 30,892 163,829
(137,909) (31,042) (168,951)
(40,187) (31,042) (71,229)
(97,722) (97,722)
110,294 2,300 66,251 178,845
(121,470) (2,306) (66,251) (190,027)
(24,897) (2,306) (66,251) (93,454)
(96,573) (96,573)
109
notes to the financial statements year ended 31 December 2008 22
Trade and other payables Group Note
Trade payables and accrued operating expenses Accrued amount payable and advance billings Deposits received Amounts due to: Subsidiaries: - Trade - Non-trade - Loan Related parties: - Trade - Non-trade - Loan Associates: - Trade - Non-trade Jointly-controlled entities: - Trade - Non-trade
13
Company 2008 2007 $’000 $’000
2008 $’000
2007 $’000
128,388 7,253 863
93,935 7,624 1,303
16,572 -
14,155 744
-
-
2 1,388 12,500
50 19,430 32,300
946 390 9
1,778 32 -
429 -
312 -
255 1
112 2
1 -
-
26 227 138,358
21 204 105,011
30,892
4 66,995
The non-trade amounts due to the subsidiaries, related parties, associates and jointly-controlled entities are unsecured, interest-free and repayable on demand.
The loans due to subsidiaries are unsecured, bear interest at an effective rate of 1.5% (2007: 3.1%) per annum and are repayable on demand.
23
Deferred gain Group
Deferred gain: - current - non-current
2008 $’000
2007 $’000
10,194 44,729 54,923
6,500 36,835 43,335
Company 2008 2007 $’000 $’000 7,592 31,736 39,328
4,250 23,649 27,899
Deferred gain relates to the excess of sales proceeds over the fair values of the leasehold buildings disposed of under sale and leaseback arrangements. Deferred gain is released to income statement using the straight-line basis over the leaseback period ranging from 5 to 8 years.
notes to the financial statements year ended 31 December 2008 24
Provisions
Warranties $’000
Claims for damage of goods and services $’000
Site restoration cost $’000
Total $’000
131 60 191
1,251 820 (499) (178) (7) 1,387
506 10 516
1,888 890 (499) (178) (7) 2,094
-
21 130 151
284 284
305 130 435
Group At 1 January 2008 Provision made Reversal of provision Provision utilised Translation differences At 31 December 2008 Company At 1 January 2008 Provision made At 31 December 2008
The provisions made by the Group and the Company are in respect of: (i)
warranty claims for completed projects. The provision is made based on estimates from historical warranty data and a weighting of all possible outcomes against their associated probabilities;
(ii)
claims by customers for damage of goods and liquidated damages for services rendered in the course of business including third party claims for accident; and
(iii)
obligations to carry out site restoration work on the leasehold buildings used for warehouse operations.
25
Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segments), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.
Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on internal reporting structure.
Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate expenses, interest income, interest expenses and related assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.
111
notes to the financial statements year ended 31 December 2008 25
Segment reporting (cont�d)
Business segments
The Group comprises the following main business segments: (a) (b) (c)
Logistics services Engineering services Other services
Logistics services mainly comprise warehousing, transportation, freight forwarding and cargo consolidation, collateral management services, surface preparation of metal materials for corrosion control and container depot operations.
Engineering services include maintenance and repairs of vehicles and buildings.
Other services of the Group comprise project management services and other investment-holding activities.
Geographical segments
The logistics services segment is managed on a worldwide basis and the Group operates principally in Singapore, China, Asia/Australia (excluding Singapore and China), Europe and other regions. Singapore is a major market for logistics and engineering service; Asia/Australia (excluding Singapore and China) and China are also major markets for logistics services.
In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the operations. Segment assets are based on the geographical location of the assets.
notes to the financial statements year ended 31 December 2008 25
Segment reporting (cont’d) Logistics services 2008 2007 $’000 $’000 (a)
Engineering services 2008 2007 $’000 $’000
Other services 2008 2007 $’000 $’000
Total 2008 $’000
2007 $’000
Business segments Revenue and expenses Revenue 518,658 450,937 Segmental results 63,555 53,741 Gain on disposal of property, plant and equipment 69,965 9,223 Gain/(loss) on disposal or liquidation of jointlycontrolled entities (85) Gain on disposal of an associate 5,421 Gain on deconsolidation of a subsidiary 50 Impairment losses on property, plant and (3,014) equipment Impairment losses on deposits for acquisition of property, plant and equipment (3,630) Unallocated corporate expenses Profit from operations Finance income Finance expense Share of profit of jointlycontrolled entities 1,141 1,056 Share of profit/(losses) of associates 6,064 3,237 Income tax expense Profit after income tax Minority interests Profit attributable to equity holders of the parent
84,050 3,382
83,970 3,917
-
- 602,708 534,907 66,937 57,658
-
700
-
-
69,965
9,923
1,299
-
-
-
1,299
(85)
-
-
-
-
5,421
-
-
-
-
-
50
-
-
-
-
-
(3,014)
-
-
-
-
-
(3,630)
-
(48,988) 88,040 3,852 (23,192)
(32,321) 35,175 5,634 (4,668)
747
756
-
-
1,888
1,812
-
-
997
(201)
7,061 (4,872) 72,777 1,135
3,036 (3,850) 37,139 (2,353)
73,912
34,786
113
notes to the financial statements year ended 31 December 2008 25
Segment reporting (cont’d) Logistics services 2008 2007 $’000 $’000 (a)
Business segments
Assets and liabilities Segment assets 460,004 341,449 Interests in associates 23,940 13,038 Interests in jointly-controlled entities 9,610 8,455 Unallocated assets Total assets 493,554 362,942
Segment liabilities Unallocated liabilities Total liabilities
Other segmental information Provisions 331 310 Capital expenditure 113,016 134,736 Depreciation of property, plant and equipment (15,638) (9,438) Amortisation of: - Intangible assets (662) (590) - Deferred gain 7,824 6,085 Gain on disposal of available- for-sale financial assets 1,133 Amounts written-off for: - Property, plant and equipment (11) (16) - Available-for-sale financial assets (23) Negative goodwill on acquisition of subsidiaries 6,734 Impairment losses on available-for-sale financial assets (18,225) -
172,564 172,564
127,113 127,113
Engineering services 2008 2007 $’000 $’000
Other services 2008 2007 $’000 $’000
Total 2008 $’000
2007 $’000
484,977 23,940
370,104 13,890
24,973 -
28,655 -
-
852
1,035 26,008
1,761 30,416
-
10,645 10,216 - 114,418 100,652 852 633,980 494,862
22,136 22,136
21,852 21,852
-
-
194,700 156,144 350,844
148,965 129,301 278,266
60 253
60 220
-
-
391 113,269
370 134,956
(292)
(352)
-
-
(15,930)
(9,790)
(1,928) -
(1,997) -
-
-
(2,590) 7,824
(2,587) 6,085
-
-
-
-
-
1,133
-
-
-
-
(11)
(16)
-
-
-
-
-
(23)
-
-
-
-
-
6,734
-
-
-
-
(18,225)
-
notes to the financial statements year ended 31 December 2008 25
Segment reporting (cont”d) (b)
Geographical segments 2008 $’000
2007 $’000
321,369 113,378 103,013 54,217 10,731 602,708
290,614 101,744 102,203 32,065 8,281 534,907
93,000 14,950 2,410 1,295 1,614 113,269
116,551 5,439 2,089 10,877 134,956
423,210 61,903 30,936 94,401 23,530 633,980
385,056 45,650 32,973 21,192 9,991 494,862
Revenue Singapore China Asia/Australia (excluding Singapore and China) Europe Other regions Total Capital expenditure Singapore China Asia/Australia (excluding Singapore and China) Europe Other regions Total Total assets Singapore China Asia/Australia (excluding Singapore and China) Europe Other regions Total
26
Revenue Group
Rendering of services Sale of goods
2008 $’000
2007 $’000
594,325 8,383 602,708
528,528 6,379 534,907
115
notes to the financial statements year ended 31 December 2008 27
Profit before income tax
The following items have been included in arriving at profit before income tax: Group
Negative goodwill on acquisition of subsidiaries* Staff costs Contributions to defined contribution plan included in staff costs Operating lease expense Non-audit fees paid to: - Auditors of the Company - Other auditors Professional fees paid to a firm in which a director is a member Depreciation of property, plant and equipment Amortisation of: - Intangible assets - Deferred gain Amounts written-off for: - Property, plant and equipment - Bad debts - Available-for-sale financial assets - Inventories Impairment losses on: - Property, plant and equipment - Available-for-sale financial assets - Deposits for acquisition of property, plant and equipment - Loan to a jointly-controlled entity Gain on deconsolidation of a subsidiary (Gain)/loss on disposal or liquidation of: - Property, plant and equipment* - An associate - Jointly-controlled entity *
2008 $’000
2007 $’000
105,803 7,384 26,663
(6,734) 86,031 6,216 19,421
77 252 135 15,930
94 49 143 9,790
2,590 (7,824)
2,587 (6,085)
11 493 5
16 155 23 119
3,014 18,225 3,630 (50)
131 -
(69,965) (5,421) (1,299)
(9,923) 85
Negative goodwill and gain on disposal of property, plant and equipment are recognised in “Other income” in the income statement.
The gain on disposal of property, plant and equipment in 2008 relates to the sale of leasehold buildings under sale and leaseback arrangements.
notes to the financial statements year ended 31 December 2008 28
Directors’ and executive officers’ remuneration
The compensation paid/payable to key management personnel is as follows: Group
Directors’ fees Senior management team remuneration* Post-employment benefits
*
29
2008 $’000
2007 $’000
491 12,212 250 12,953
487 8,912 393 9,792
Represents short-term employees benefits
Finance income and expense Group
Gain on disposal of available-for-sale financial assets Dividend income from available-for-sale financial assets Interest income: - Cash and cash equivalents - Finance lease - Jointly-controlled entities - Available-for-sale financial assets - Accretion of loan to minority shareholder of a subsidiary - Others Finance income Exchange loss (net) Impairment loss on available-for-sale financial assets Interest expense: - Bank overdrafts - Bank loans - Finance leases - Implied discount on loan to minority shareholder of a subsidiary at inception - Others Less: Interest expense capitalised into property, plant and equipment Finance expenses Net finance income and expenses recognised in income statement
2008 $’000
2007 $’000
2,654
1,133 3,045
796 91 4 28 181 98 3,852
1,201 60 2 185 8 5,634
(2,052) (18,225)
(1,142) -
(19) (2,845) (92) (602) 643 (23,192) (19,340)
(1) (4,025) (46) (672) (60) 1,278 (4,668) 966
117
notes to the financial statements year ended 31 December 2008 30
Income tax expense Group
Current tax expense Current year Over provided in prior years Deferred tax expense Origination and reversal of temporary differences Under provided in prior years Reduction in tax rate Total income tax expense
2008 $’000
2007 $’000
5,925 (593) 5,332
6,003 (185) 5,818
(1,110) 1,046 (396) (460) 4,872
(1,886) (82) (1,968) 3,850
Reconciliation of effective tax rate Group 2008 $’000
2007 $’000
Profit before income tax
77,649
40,989
Tax calculated using Singapore tax rate of 18% (2007: 18%) Effect of different tax rates in other countries Effect of reduction in tax rates Income not subject to tax Effect of utilisation of tax losses and wear and tear allowances not previously recognised as deferred tax assets Expenses not deductible for tax purposes Effect of tax benefits not recognised Under/(over) provided in prior years
13,977 405 (396) (16,996)
7,378 147 (82) (5,207)
(19) 5,902 1,546 453 4,872
(255) 518 1,536 (185) 3,850
Certain of the tax returns of the Group entities for prior years have not been finalised with the respective tax authorities. In arriving at the current tax expense of the Group, management made a best estimate of the expenditure required to settle its current tax liabilities based on its actual experience of similar transactions in the past, and in some cases, advice from its legal advisors on certain transactions.
In respect of the gain recognised on sale and leaseback of certain leasehold buildings, the Group continues to view the disposal of leasehold buildings as capital transactions and accordingly, the gain on disposal of leasehold buildings including the accretion of the deferred gain over the leaseback period are therefore not subject to corporate income tax.
Subsequent to the tax affairs being finalised by the tax authorities, there may be significant adjustments affecting the Group’s results in future periods.
notes to the financial statements year ended 31 December 2008 31
Earnings per share Group 2008 $’000
2007 $’000
73,912
34,786
Basic and diluted earnings per share The basic and diluted earnings per share are based on: Profit for the year attributable to shareholders
No. of shares 2008 2007 (’000) (’000) Issued ordinary shares at beginning of the year Effects of: Rights issue of shares Bonus element of rights issue of shares New shares issued Weighted average number of shares issue during the year Weighted average number of shares at end of the year
574,304
346,203
574,304
98,644 48,511 29,534 176,689 522,892
32
Acquisition of subsidiaries and minority interests
Acquisition of subsidiaries in FY2008
On 28 October 2008, the Group acquired 100% equity interest in CWT Commodities (Antwerp) NV (formerly known as HNN Logistics NV) (“Antwerp”), for a cash consideration of $32,776,000. In the two months to 31 December 2008, Antwerp contributed a net loss of $19,000 to the consolidated net profit for the year. If the acquisition had occurred on 1 January 2008, Group revenue would have been $624,473,000 and net profit would have been $71,506,000.
On 28 October 2008, the Group acquired 60% equity interest in CWT Sitos Group B.V. (formerly known as Sitos Group B.V.) (“SitosG”), for a cash consideration of $17,119,000. In the two months to 31 December 2008, Sitos contributed a net profit of $454,000 to the consolidated net profit for the year. If the acquisition had occurred on 1 January 2008, Group revenue would have been $643,188,000 and net profit would have been $75,275,000.
The acquisition of equity interest in Sitos was carried out concurrently with the Group’s acquisition of 30% equity interest in CWT Sitos B.V. (“Sitos”) and was negotiated with the same vendors. The sales and purchase agreement in respect of the acquisitions of equity interests in SitosG and Sitos provides for a contingent consideration payable to the vendors which is computed based on the extent the annual consolidated net profit of SitosG and Sitos exceeds Euro 2.3 million in the financial years ending 31 December 2009 and 2010 respectively. After taking into account the performance of SitosG and Sitos for the financial year ended 31 December 2008, as well as the profit projections for the financial year ending 31 December 2009 and having regard to the current economic conditions, management is of the view that the probability of paying the contingent consideration to the vendors is low. Hence, no provision for the contingent consideration has been made as at 31 December 2008.
The final allocation of the purchase price to the identifiable assets acquired and liabilities and contingent liabilities assumed in these business combinations are currently being determined and have not been completed. In the meantime, a provisional positive goodwill of $7,976,000, which results from the difference between the purchase consideration and the adjusted carrying amounts of the assets and liabilities acquired, is reported under “Intangible assets”.
119
notes to the financial statements year ended 31 December 2008 32
Acquisition of subsidiaries and minority interests (cont’d)
The effects of acquisition of subsidiaries are provided below:
Note
Property, plant and equipment Intangible assets Jointly-controlled entities Non-current receivables Trade and other receivables Cash and cash equivalents Trade and other payables Interest-bearing liabilities Current tax payable Deferred tax liabilities Minority interests Net identifiable assets acquired and liabilities assumed Goodwill on acquisition Consideration paid * Less: Cash and cash equivalents of subsidiaries acquired Cash flow on acquisition net of cash and cash equivalents acquired
*
3 4
11
4
Carrying amounts 2008 $’000 34,064 86 (19) 415 23,489 690 (14,102) (4,651) (634) (161) (7,616) 31,561
Fair value Recognised adjustments values 2008 2008 $’000 $’000 3,119 12,255 (5,016) 10,358
37,183 12,341 (19) 415 23,489 690 (14,102) (4,651) (634) (5,177) (7,616) 41,919 7,976 49,895 (690) 49,205
Include acquisition costs of $330,000
Pre-acquisition carrying amounts were determined based on applicable FRSs immediately before the acquisition. The values of assets, liabilities and contingent liabilities recognised on acquisition are their estimated fair values.
The provisional goodwill of $7,976,000 recognised on the acquisition of CWT Commodities (Antwerp) NV and CWT Sitos Group B.V. is attributable to the expected synergies and other benefits from integrating the newly acquired Europe operations with the Group’s existing operations and logistics network in Asia.
Acquisition of minority interest in FY2008
On 3 March 2008, the Group acquired the remaining 49% interests in C&P Commodity (India) Pvt Ltd (“CCI”) for a cash consideration of $17,000.
notes to the financial statements year ended 31 December 2008 32
Acquisition of subsidiaries and minority interests (cont’d)
The carrying amount of the CCI’s net assets in the consolidated financial statements on the date of acquisition was $3,000. The share of net assets acquired, which comprise predominantly net monetary assets, approximates the fair values. Arising from this, the Group recognised a decrease in minority interest of $2,000; and the resulting positive goodwill of $15,000 is reported under “Intangible assets”.
The goodwill recognised on this acquisition is attributable to the ability to generate more future economic benefits from the provision of commodity logistics services in India.
Deconsolidation of subsidiary FY2008
During the current financial year, a subsidiary was deconsolidated following the voluntary liquidation of that subsidiary. The assets and liabilities of this subsidiary were not significant to the Group as the said subsidiary had not commenced business activities since its incorporation.
Acquisition of subsidiaries in FY2007
On 9 February 2007, the Group acquired all the shares in OCWS Logistics Pte Ltd (“OCWS”), for $20,094,000 satisfied by way of cash. In the 11 months to 31 December 2007, OCWS contributed a net profit of $2,007,000 to the consolidated net profit for the year. If the acquisition had occurred on 1 January 2007, Group revenue would have been $537,653,000 and net profit would have been $37,352,000.
On 9 February 2007, the Group acquired all the shares in Trident Districentre Pte Ltd (“Trident”), for $10,500,003 satisfied by way of cash of $3 and an assignment of loan of $10,500,000 owing to the ex-vendor by Trident to the Company. In the 11 months to 31 December 2007, Trident contributed a net profit of $1,017,000 to the consolidated net profit for the year. If the acquisition had occurred on 1 January 2007, Group revenue would have been $535,423,000 and net profit would have been $37,153,000.
On 31 October 2007, the Group acquired 80% shares in CWT Commodities Europe B.V. (“ComEur”, formerly known as JVT Shipping B.V.), for $565,000 satisfied by way of cash. In the two months to 31 December 2007, ComEur contributed a net profit of $91,000 to the consolidated net profit for the year. If the acquisition had occurred on 1 January 2007, Group revenue would have been $540,139,000 and net profit would have been $37,344,000.
On 31 October 2007, the Group acquired 80% shares in Quality Logistic Warehousing B.V. (“QLW”), for $167,000 satisfied by way of cash. In the two months to 31 December 2007, QLW contributed a net loss of $29,000 to the consolidated net profit for the year. If the acquisition had occurred on 1 January 2007, Group revenue would have been $536,014,000 and net profit would have been $37,176,000.
The positive and negative goodwill amounted to $656,000 and $6,734,000 which resulted from the difference between the purchase price and the adjusted carrying amounts of the assets and liabilities acquired and were reported under “Intangible assets” and “Other income” respectively.
The goodwill of $656,000 recognised on the acquisition of ComEur and QLW is attributable to the expected synergies and other benefits from integrating the newly acquired Europe operations and the Group’s existing major operations in Asia.
The negative goodwill represents a bargain purchase.
121
notes to the financial statements year ended 31 December 2008 32
Acquisition of subsidiaries and minority interests (cont’d)
The effects of acquisition of subsidiaries are provided below:
Note
Property, plant and equipment Financial assets Other non-current assets Deferred tax assets Inventories Trade and other receivables Cash and cash equivalents Trade and other payables Interest-bearing liabilities Current tax payable Deferred tax liabilities Minority interests Net identifiable assets and liabilities acquired Loan assignment deemed as purchase consideration Negative goodwill Goodwill on acquisition Consideration paid * Less: Cash and cash equivalents of subsidiaries acquired Cash flow on acquisition net of cash and cash equivalents acquired *
3
11
11
27 4
Carrying amounts 2007 $’000 20,449 23 40 385 305 14,529 5,203 (17,337) (111) (446) (79) (26) 22,935
Fair value Recognised adjustments values 2007 2007 $’000 $’000 4,960 (990) 3,970
25,409 23 40 385 305 14,529 5,203 (17,337) (111) (446) (1,069) (26) 26,905 10,500 (6,734) 656 31,327 (5,203) 26,124
Includes acquisition costs of $94,000
Acquisition of minority interest in FY2007
On 25 September 2007, the Group acquired the remaining 15% interests in CWT Commodities (China) Pte Ltd (formerly known as C & P Asia (China) Pte Ltd) (“CWTC”) from a key management personnel of CWTC, for a cash consideration of $2,000,000.
The carrying amount of the CWTC’s net assets in the consolidated financial statements on the date of acquisition was $5,795,000. The share of net assets acquired, which comprise predominantly net monetary assets, approximates the fair values. Arising from this, the Group recognised a decrease in minority interest of $828,000; and the positive goodwill of $1,172,000 is reported under “Intangible assets”.
The goodwill recognised on this acquisition is attributable to the ability to generate more future economic benefits from the collateral management services as a result of CWTC’s present market position in the industry.
notes to the financial statements year ended 31 December 2008 33
Financial risk management
Overview
Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
Credit risk
Credit risk is the potential financial loss resulting from the failure of a customer or a counter party to settle its financial and contractual obligations to the Group, as and when they fall due.
The Group has a credit policy in place whereby new customers are subject to credit evaluations based on available financial information and past experiences. The Group has established credit limits for customers and monitors their balances on an ongoing basis. Cash and fixed deposits are placed with banks and financial institutions, which are regulated.
At the balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheets.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalent and availability of funding as required. The Group monitors and maintains a level of cash and bank balances and credit facilities deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows.
The Group aims at maintaining flexibility in funding by keeping adequate liquidity available. Where necessary and at appropriate time, the Group would unlock cash from properties held to meet expansion needs.
The Group maintains adequate secured and unsecured loan facilities. As at 31 December 2008, the Group has unutilised loan facilities amounting to $144 million to fund its capital projects in progress and projects in the pipeline, as well as to meet working capital requirements and to service financing obligations.
Market risk
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and other price risk (including fuel/diesel prices and shipping freight rates) that affects the Group’s profit. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
Interest rate risk
Certain of the Group’s term and other loans attract floating interest rate. The Group’s earnings are affected by changes in interest rates due to the impact such changes have on short-term cash deposits and debt obligations. The Group’s debt obligations are mainly denominated in Singapore dollars. Generally, the Group adopts a conservative approach in interest risk management. The Group’s policy is to maintain its borrowings such as to balance risks and cost effectiveness.
123
notes to the financial statements year ended 31 December 2008 33
Financial risk management (cont’d)
The Group does not use derivatives to hedge its interest rate risk.
Sensitivity analysis
In managing its interest rate risk, the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings. Over the longer term, however, any prolonged adverse change in interest rate can have a significant impact on profit.
For the variable rate bank loans, a change of 100 bp in interest rate at the reporting date would increase/(decrease) profit or loss (and the accumulated profits) by the amounts shown below. The analysis assumes that all other variables, in particular, foreign currency rates, remain constant. Profit or loss 100 bp 100 bp increase decrease $’000 $’000 Group 31 December 2008 Variable rate bank loans
(1,337)
1,337
31 December 2007 Variable rate bank loans
(1,140)
1,140
Foreign exchange risk
The Group operates internationally and is exposed to foreign currency risks arising from various currency exposures. The Group’s exposure to foreign currency receivables is significantly matched by its exposure to foreign currency payables, both predominantly denominated in United States dollars.
The Group seeks to minimise its foreign currency exposures in foreign subsidiaries, associates and jointly-controlled entities by repatriating their earnings, where practicable. The Group also requires the foreign subsidiaries, associates and jointlycontrolled entities to maintain their borrowings in the relevant foreign currencies which match their respective functional currencies.
In respect of the other monetary assets and liabilities held in currencies other than the functional currencies, the Group reviews the balances periodically to ensure the net exposure is kept at an acceptable level.
The Group does not use derivatives to hedge its foreign exchange risk at 31 December 2008.
notes to the financial statements year ended 31 December 2008 33
Financial risk management (cont’d)
The Group’s and Company’s exposures to foreign currencies are as follows:
US dollar $’000
Singapore dollar $’000
Euro dollar $’000
U.A.E. Dirham $’000
12,774 6,647 (8,232) 11,189
2,473 334 (590) (46) (1,427) 744
1,166 1,000 (796) 1,370
385 385
12,625 7,757 (8,441) 11,941
2,227 4,341 (514) (56) (1,802) 4,196
(437) (437)
386 386
751 1,129 (1,577) 303
-
21 241 (10) 252
-
1,466 95 (33) 1,528
-
-
-
Group 2008 Trade and other receivables Cash and cash equivalents Trade and other payables Financial liabilities Current tax payable 2007 Trade and other receivables Cash and cash equivalents Trade and other payables Financial liabilities Current tax payable Company 2008 Trade and other receivables Cash and cash equivalents Trade and other payables 2007 Trade and other receivables Cash and cash equivalents Trade and other payables
125
notes to the financial statements year ended 31 December 2008 33
Financial risk management (cont’d)
Sensitivity analysis
A 10% strengthening of the Group’s major functional currencies against the following currencies at the reporting date would increase (decrease) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. Group
Group 31 December 2008 US dollar Singapore dollar Euro dollar U.A.E. Dirham 31 December 2007 US dollar Singapore dollar Euro dollar U.A.E. Dirham
Company Profit Equity or loss $’000 $’000
Equity $’000
Profit or loss $’000
(39) (39)
(1,119) (74) (137) (1,330)
-
30 (25) 5
(39) (39)
(1,194) (420) 44 (1,570)
-
(152) (152)
A 10% weakening of the Group’s major functional currency against the above currencies would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Fair values
The aggregate net fair value of financial assets and financial liabilities which are not carried at fair value in the balance sheets as at 31 December, are represented in the following table:
Group Financial asset Loan to minority shareholder of a subsidiary Financial liabilities Fixed interest rate bank loans Finance lease liabilities 1 1
Carrying amount 2008 $’000
Fair value 2008 $’000
Carrying amount 2007 $’000
Fair value 2007 $’000
1,375
1,255
1,958
1,958
2,547 2,596 5,143
2,549 2,596 5,145
2,300 1,128 3,428
2,300 1,128 3,428
The fair value of finance lease liabilities is estimated as the present value of future cash flows, discounted at market interest rates for homogeneous lease agreements. The estimated fair value reflects change in interest rate. The carrying amount of finance lease liabilities closely approximates the fair value since the market interest rate as at the balance sheet date closely approximates the effective interest rate implicit in the finance lease.
notes to the financial statements year ended 31 December 2008 33
Financial risk management (cont’d)
The following methods and assumptions are used to estimate fair values of the following significant classes of financial instruments not included above:
Cash and cash equivalents, trade and other receivables, trade and other payables
The carrying amounts approximate the fair values due to the relatively short-term nature of these financial instruments.
Investment in equity securities
The fair value of available-for-sale financial assets is determined by reference to their quoted bid price at the reporting date.
Floating interest rate bank loans and loan to a subsidiary
No fair value is calculated as the carrying amounts of these floating interest-bearing loans, which are repriced within six months interval, reflect the corresponding fair values.
Interest rates used in determining fair values
The interest rates used to discount estimated cash flows, where applicable, are based on the 5-year loan rates plus adequate credit spread or actual average cost of debt, whichever is higher: Group
Finance lease receivables Loan to minority shareholder of a subsidiary Bank loans Finance lease liabilities
34
2008 %
2007 %
3.7 - 5.7 13.0 2.0 - 11.5 2.5 - 17.3
3.7 - 5.7 10.5 3.1 2.5 - 4.5
Commitments Group
Capital commitments: - contracted for but not provided - authorised but not contracted for
2008 $’000
2007 $’000
43,741 1,807 45,548
103,851 101,010 204,861
Company 2008 2007 $’000 $’000 1,112 1,112
315 315
127
notes to the financial statements year ended 31 December 2008 34
Commitments (cont’d)
The Group and Company lease land, warehouse facilities, offices and motor vehicles under operating leases. The leases typically run for an initial period of 1 to 46 years, with an option to renew the lease after the expiry dates. Lease payments for land are revised on annual basis to reflect the market rental where other lease payments are revised at renewal of lease contract to reflect market rental. None of the leases include contingent rental.
At the balance sheet date, the Group and the Company had commitments for future minimum lease payments under noncancellable operating leases as follows: Group
Within 1 year After 1 year but within 5 years After 5 years
2008 $’000
2007 $’000
42,866 143,234 153,789 339,889
27,223 89,443 116,663 233,329
Company 2008 2007 $’000 $’000 22,372 84,877 76,771 184,020
16,272 58,465 61,408 136,145
The Group and the Company sub-lease out part of its leasehold buildings to tenants under operating leases. The leases typically run for an initial period of 1 to 8 years. Lease payments are revised at renewal of lease contract to reflect market rental. None of the leases include contingent rental. The non-cancellable operating lease rental receivables are as follows: Group
Within 1 year After 1 year but within 5 years After 5 years
2008 $’000
2007 $’000
29,826 30,511 60,337
18,603 25,314 1,052 44,969
Company 2008 2007 $’000 $’000 27,219 51,403 4,809 83,431
35
Related parties
Other than disclosed elsewhere in the financial statements, transactions with related parties are as follows:
19,117 33,279 7,374 59,770
Group
Related parties Sales Purchases of services Rental paid Interest income from loan Purchases of leasehold property Purchase of forklift
2008 $’000
2007 $’000
8,844 (4,094) 181 (4,570) (480)
8,873 (2,497) (2,304) -
notes to the financial statements year ended 31 December 2008 35
Related parties (cont’d) Group
Associates Sales Purchases of services Rental paid Jointly-controlled entities Sales Purchases of services Interest income from loan
2008 $’000
2007 $’000
12,226 (5,697) (988)
11,168 (5,019) (37)
283 (20) 4
207 (100) 2
Related parties refere to companies and their subsidiaries with a substantial shareholder in common with the company.
36
Subsequent events
The directors proposed a final one tier dividend of 2 cents per ordinary share amounting to $11,486,093 (2007: $11,486,093). The dividend has not been provided for in the financial statements as at 31 December 2008 and is subject to shareholders’ approval at the forthcoming Annual General Meeting of the Company.
37
New accounting standards and interpretations not yet adopted
The Group has not applied the following accounting standards (including its consequential amendments) and interpretations that have been issued as of the balance sheet date but are not yet effective: • • • • • • • • • •
FRS 1 (revised 2008) Presentation of Financial Statements FRS 23 (revised 2007) Borrowing Costs Amendments to FRS 32 Financial Instruments: Presentation and FRS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation Amendments to FRS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items Amendments to FRS 101 First-time Adoption of Financial Reporting Standards and FRS 27 Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to FRS 102 Share-based Payment – Vesting Conditions and Cancellations FRS 108 Operating Segments Improvements to FRSs 2008 INT FRS 113 Customer Loyalty Programmes INT FRS 116 Hedges of a Net Investment in a Foreign Operation
129
notes to the financial statements year ended 31 December 2008 37
New accounting standards and interpretations not yet adopted (cont’d)
FRS 1 (revised 2008) will become effective for the Group’s financial statements for the year ending 31 December 2009. The revised standard requires an entity to present, in a statement of changes in equity, all owner changes in equity. All non-owner changes in equity (i.e. comprehensive income) are required to be presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). Components of comprehensive income are not permitted to be presented in the statement of changes in equity. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the reclassification of items in the financial statements. FRS 1 (revised 2008) does not have any impact on the Group’s financial position or results.
FRS 23 (revised 2007) will become effective for financial statements for the year ending 31 December 2009. FRS 23 (revised 2007) removes the option to expense borrowing costs and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The Group’s current policy to capitalise borrowing costs is consistent with the requirement in the revised FRS 23.
FRS 108 will become effective for financial statements for the year ending 31 December 2009. FRS 108, which replaces FRS 14 Segment Reporting, requires identification and reporting of operating segments based on internal reports that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the segment and to assess its performance.
Improvements to FRSs 2008 will become effective for the Group’s financial statements for the year ending 31 December 2009, except for the amendment to FRS 105 Non-current Assets Held for Sale and Discontinued Operations which will become effective for the year ending 31 December 2010. Improvements to FRSs 2008 contain amendments to numerous accounting standards that result in accounting changes for presentation, recognition or measurement purposes and terminology or editorial amendments. The Group is in the process of assessing the impact of these amendments.
Other than changes in disclosures relating to FRS 1 and FRS 108, the initial application of these standards (including their consequential amendments) and interpretations is not expected to have any material impact on the Group’s financial statements.
statistics of shareholdings as at 16 March 2009 DISTRIBUTION OF SHAREHOLDINGS NO. OF NO. OF SIZE OF SHAREHOLDINGS SHAREHOLDERS % SHARES % 1-999 1,000-10,000 10,001-1,000,000 1,000,001 AND ABOVE TOTAL :
259 1,934 1,131 25 3,349
7.73 57.75 33.77 0.75 100.00
36,938 10,932,463 64,690,779 498,644,470 574,304,650
0.01 1.90 11.26 86.83 100.00
SHAREHOLDING HELD IN THE HANDS OF PUBLIC Based on information available to the Company as at 16 March 2009, 27.54% of the issued ordinary shares of the Company is held by the public and therefore, Rule 723 of the Listing Manual issued by SGX-ST is complied with. TWENTY LARGEST SHAREHOLDERS NO. NAME NO. OF SHARES % 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
C&P HOLDINGS PTE LTD DBS NOMINEES PTE LTD HSBC (SINGAPORE) NOMINEES PTE LTD DBSN SERVICES PTE LTD LOI KAI MENG (PTE) LIMITED LOI KAI MENG CITIBANK NOMINEES SINGAPORE PTE LTD MAYBAN NOMINEES (S) PTE LTD PENJURU CAPITAL PTE LTD LOI POK YEN UNITED OVERSEAS BANK NOMINEES PTE LTD STANLEY K K LIAO LIAO CHUNG LIK LOI WIN YEN STANLEY LIAO PRIVATE LIMITED OCBC NOMINEES SINGAPORE PTE LTD LIM SOO SENG (PTE) LIMITED LYE SIEW HONG LIM LAY KHIA @ LIM LAY CHOO KIM ENG SECURITIES PTE. LTD. TOTAL :
215,740,000 59,699,288 36,893,000 30,532,372 28,000,000 21,090,000 18,534,500 15,946,000 15,000,000 10,400,000 8,522,050 6,540,000 5,967,000 5,036,000 3,581,000 3,103,000 2,624,000 1,900,000 1,850,000 1,673,260 492,631,470
37.57 10.40 6.42 5.32 4.88 3.67 3.23 2.78 2.61 1.81 1.48 1.14 1.04 0.88 0.62 0.54 0.46 0.33 0.32 0.29 85.79
131
statistics of shareholdings as at 16 March 2009 DIRECT DEEMED NAME INTEREST INTEREST TOTAL % C&P HOLDINGS PTE LTD(1) 215,740,000 - 215,740,000 37.57 LOI KAI MENG (PTE) LTD(1)(2) 28,000,000 215,740,000 243,740,000 42.44 STANLEY LIAO PRIVATE LIMITED(1)(3) 18,581,000 215,740,000 234,321,000 40.80 LIM SOO SENG (PTE) LTD(1)(4) 2,624,000 215,740,000 218,364,000 38.02 LOI KAI MENG(5) 51,650,000 245,590,000 297,240,000 51.76 MORGAN STANLEY ENTITIES(6) - 56,240,736 56,240,736 9.79 (1) C&P Holdings Pte Ltd is majority-owned by Loi Kai Meng (Pte) Ltd, Stanley Liao Private Limited and Lim Soo Seng (Pte) Ltd, each of whom owns more than 20% of its issued share capital. (2) Loi Kai Meng (Pte) Ltd is deemed to be interested in the shares held by C&P Holdings Pte Ltd. (3)
(4)
(5)
(6)
Stanley Liao Private Limited is deemed to be interested in the shares held by C&P Holdings Pte Ltd. Lim Soo Seng (Pte) Ltd is deemed to be interested in the shares held by C&P Holdings Pte Ltd. Mr Loi Kai Meng is the legal and beneficial owner of 21,090,000 shares and is also the beneficial owner of 30,560,000 shares registered in the name of DBS Nominees Pte Ltd. Mr Loi Kai Meng is deemed to be interested in the shares held by C&P Holdings Pte Ltd and Loi Kai Meng (Pte) Ltd. He is also deemed to be interested in 1,850,000 shares which are held by his spouse, Mdm Lim Lay Khia@Lim Lay Choo. This includes Morgan Stanley Investment Management Company, Morgan Stanley (Singapore) Holdings Pte Ltd, Morgan Stanley Asia Regional (Holdings) III LLC, Morgan Stanley Asia Pacific (Holdings) Limited, Morgan Stanley & Co. International plc, Morgan Stanley UK Group, Morgan Stanley Group (Europe), Morgan Stanley International Limited, Morgan Stanley International Holdings Inc., Morgan Stanley (together, the “Morgan Stanley Entities”).
share prices and monthly volumes for 2008 Share Price and Straits Times Index (STI)
Monthly Volume
Closing Price (S$)
ST Index
Volume (‘000)
STI Closing Price Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Closing Price
0.981
0.857
0.834
0.791
0.777
0.843
0.803
0.694
0.582
0.382
0.339
0.329
High
1.140
0.960
0.900
0.820
0.800
0.880
0.850
0.800
0.650
0.510
0.435
0.360
Low
0.800
0.755
0.775
0.765
0.760
0.750
0.755
0.605
0.430
0.280
0.300
0.300
Average
0.970
0.858
0.838
0.793
0.780
0.815
0.803
0.703
0.540
0.395
0.368
0.330
Volume (‘000)
5,643
5,661
4,735
5,903
3,060
12,498
2,537
2,185
6,765
9,424
40,984
3,539
ST Index
3,179.90 3,021.59 2,899.11 3,136.36 3,186.39 3,040.14 2,903.33 2,786.21 2,542.38 1,961.09 1,751.86 1,744.54
133
notice of annual general meeting NOTICE IS HEREBY GIVEN THAT the Thirty-ninth Annual General Meeting of the Company will be held at 38 Tanjong Penjuru, CWT Logistics Hub 1, Singapore 609039 on 23 April 2009 at 5.00 pm to transact the following business:– ORDINARY BUSINESS 1
To receive and adopt the Audited Accounts for the financial year ended 31 December 2008 and the Directors’ Report and the Auditors’ Report thereon. (Resolution 1) 2 To approve a final one-tier cash dividend of 2 cents per share (or a total net dividend of S$11,486,093) for the financial year ended 31 December 2008. (Resolution 2) 3 To approve Directors’ fees of S$450,000 for the financial year ended 31 December 2008. (2007 – S$461,000). (Resolution 3) 4 To re-elect the following Directors pursuant to Article 92 of the Company’s Articles of Association and who, being eligible, will offer themselves for re-election:- Loi Pok Yen (Resolution 4) Liao Chung Lik (Resolution 5) 5 To re-appoint KPMG as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 6) SPECIAL BUSINESS To consider and, if thought fit, to pass the following Resolutions with or without amendments as Ordinary Resolutions: 6
That pursuant to Section 161 of the Companies Act, Chapter 50 (“Act”) and the listing rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”), authority be and is hereby given to the directors of the Company to:-
(A)
(i)
issue shares in the capital of the Company (“Shares”) (whether by way of rights, bonus or otherwise); and/or
(ii)
make or grant offers, agreements, or options or awards (collectively, “Instruments”) that might or would require Shares to be issued, including but not limited to the creation and issue of warrants, debentures or other instruments convertible or exchangeable into Shares, at any time and upon such terms and conditions and for such purposes and to such persons as the directors may in their absolute discretion deem fit; and
(B)
(notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue Shares in pursuance of any Instrument made or granted by the directors while this Resolution was in force,
provided that:
the aggregate number of Shares to be issued pursuant to this Resolution (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution but excluding Shares which may be issued pursuant to any adjustments effected under any relevant Instrument) does not exceed 50 per cent. of the total number of issued Shares excluding any treasury shares (as calculated in accordance with sub-paragraph (2) below) of which the aggregate number of Shares to be issued other than on a pro-rata basis to shareholders of the Company (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution but excluding Shares which may be issued pursuant to any adjustments effected under any relevant Instrument) does not exceed 20 per cent. of the total number of issued Shares excluding treasury shares (as calculated in accordance with sub-paragraph (2) below); and
(1)
notice of annual general meeting (2)
(subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of Shares that may be issued under sub-paragraph (1) above:(i)
(ii)
the total number of issued Shares excluding treasury shares shall be calculated based on the total number of issued Shares excluding treasury shares at the time this Resolution is passed, after adjusting for: (a)
new Shares arising from the conversion or exercise of convertible securities;
(b)
new Shares arising from the exercise of share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed; and
(c)
any subsequent bonus issue, consolidation or subdivision of Shares;
in relation to an Instrument, the number of Shares shall be taken to be that number as would have been issued had the rights therein been fully exercised or effected on the date of the making or granting of the Instrument;
(3)
the 50 per cent. limit in sub-paragraph (1) above may be increased to 100% for issues of Shares and/or Instruments by way of a renounceable rights issue where shareholders of the Company are entitled to participate in the same on a pro-rata basis(2);
(4)
in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the listing manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and
(5)
(unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier. (Resolution 7)
7 That:(A)
subject to and conditional upon the passing of Ordinary Resolution 7 above, approval be and is hereby given to the directors of the Company at any time to issue Shares (other than on a pro-rata basis to shareholders of the Company) at an issue price for each Share which shall be determined by the directors of the Company in their absolute discretion provided that such price shall not represent a discount of more than 20 per cent. to the weighted average price of a Share for trades done on the SGX-ST (as determined in accordance with the requirements of SGX-ST) (3); and
(B)
(unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier. (Resolution 8)
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notice of annual general meeting And to transact any other business which may be properly transacted at an Annual General Meeting.
Explanatory Notes:(1)
Ordinary Resolution No. 7 if passed, will empower the Directors from the date of the Annual General Meeting until the date of the next Annual General Meeting to issue further Shares and Instruments in the Company, including a bonus or rights issue. The maximum number of Shares which the Directors may issue under this Resolution shall not exceed the quantum set out in the Resolution.
(2)
This increased limit of up to 100% for renounceable rights issue will be effective up to 31 December 2010 pursuant to SGXST’s notification dated 19 February 2009 and the increased limit is subject to the conditions that the issuer makes periodic announcements on the use of the proceeds as and when the funds are materially disbursed and provides a status report on the use of proceeds in the annual report.
(3)
The increase in the discount limit of up to 20% for the issue of shares on a non-pro rata issue basis is effective up to 31 December 2010 pursuant to SGX-ST’s notification dated 19 February 2009.
BY ORDER OF THE BOARD
Madam Lye Siew Hong (Mrs Lynda Goh) Company Secretary Singapore 8 April 2009
Notes:– 1. A member of the Company entitled to attend and vote at the Annual General Meeting may appoint a proxy to attend and vote in his/her stead. A proxy need not be a member of the Company. 2.
If a proxy is to be appointed, the instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power of attorney, must be duly deposited at the registered office of the Company at 38 Tanjong Penjuru, CWT Logistics Hub 1, Singapore 609039 not less than 48 hours before the time appointed for the holding of the Annual General Meeting.
3.
The instrument appointing a proxy must be signed by the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy is executed by a corporation, it must be executed either under its seal or under the hand of any official or attorney duly authorised.
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proxy form
IMPORTANT: 1. For investors who have used their CPF monies to buy CWT Limited shares, this Annual Report is forwarded to them at the request of their CPF Approved Nominee and is sent solely FOR INFORMATION ONLY.
CWT LIMITED (Company Registration Number 197000498M) (Incorporated in the Republic of Singapore)
2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.
I/We of being a *member/members of CWT LIMITED (the “Company”) hereby appoint Name
Address
NRIC/Passport Number
Proportion of Shareholdings (%)
and/or (delete as appropriate)
as *my/our *proxy/proxies, to attend and to vote for *me/us on *my/our behalf and, if necessary, to demand a poll at the Thirty-ninth Annual General Meeting (the “AGM”) of the Company to be held at 38 Tanjong Penjuru, CWT Logistics Hub 1, Singapore 609039 on 23 April 2009 at 5.00 p.m. and at any adjournment thereof. Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary Resolutions as set out in the Notice of AGM. In the absence of specific directions, the *proxy/proxies may vote or abstain as *he/they may think fit. Ordinary Resolutions 1.
Approval and adoption of Audited Accounts for the financial year ended 31 December 2008 and the Directors’ Report and the Auditors’ Report thereon
2.
Approval of final dividend for the financial year ended 31 December 2008
3.
Approval of Directors’ fees for the financial year ended 31 December 2008
4.
Re-election of Mr Loi Pok Yen as Director
5.
Re-election of Mr Liao Chung Lik as Director
6.
Re-appointment of Auditors and authorising the Directors to fix their remuneration
7.
Authority to Directors to issue shares
8.
Authority to Directors to issue Shares (other than on a pro-rata basis to shareholders of the Company) at a discount of not more than 20%
For
Against
* Delete accordingly.
Dated this
day of
2009. Total number of shares held:
Signature(s) of Member(s) or Common Seal IMPORTANT: PLEASE READ NOTES OVERLEAF
Notes:– 1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register as well as registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you. 2. A member entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his stead. A proxy need not be a member of the Company. 3. A member appointing more than one proxy shall specify the percentage of Shares to be represented by each proxy and if no percentage is specified, the first named proxy shall be deemed to represent 100 per cent. of the shareholding and the second named proxy shall be deemed to be an alternate to the first named. 4. This instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 38 Tanjong Penjuru, CWT Logistics Hub 1, Singapore 609039 not less than 48 hours before the time appointed for the AGM. 5. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter of power of attorney or a duly certified copy thereof must be lodged with the instrument, failing which, the instrument may be treated as invalid. 6. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore. 7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instruments appointing a proxy or proxies. In addition, in the case of members whose Shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have Shares entered against their names in the Depository Register as at 48 hours before the time appointed for holding the AGM, as certified by The Central Depository (Pte) Limited to the Company.