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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------
FORM 10-K/A
(MARK ONE) AMENDMENT NO. 1 TO
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NO. 2-63322
INTERNATIONAL SHIPHOLDING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-2989662
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
650 POYDRAS STREET, NEW ORLEANS, LOUISIANA 70130
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (504) 529-5461
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
Common Stock, $1 Par Value New York Stock Exchange
7 3/4% Senior Notes Due 2007 New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant.
DATE AMOUNT
---- ------
February 24, 2003 $24,957,871
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Common stock, $1 par value.............. 6,082,887 shares outstanding
as of February 24, 2003
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement dated March 13,
2003, have been incorporated by reference into Part III of this Form 10-K.
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EXPLANATORY NOTE
International Shipholding Corporation and its subsidiaries ("the
Company") has a 30% equity interest in Belden Cement Holding Inc., a Panamanian
limited company ("BCH"). BCH is a holding company engaged in the cement shipping
industry through its eight wholly-owned subsidiaries. Because in 2002 the
Company had a slight loss, the Company's equity in BCH's income during the same
period met the significant subsidiary test at the 20% level. As a result, the
Company is required by Rule 3-09 of Regulation S-X to provide audited
consolidated financial statements for BCH for the year ended December 31, 2002
by June 30, 2003. Item 15 is the only portion of the 2002 Form 10-K being
supplemented or amended by this Form 10-K/A.
With this Amendment No. 1 to this Form 10-K for the year ended December
31, 2002, the Company is filing unaudited consolidated financial statements for
BCH and separate audited financial statements for each of the eight
subsidiairies of BCH along with audited unconsolidated financial statements of
BCH . These financial statements were provided to the Company by BCH. In
reliance on Rule 12b-21 under the Securities Exchange Act of 1934, the Company
is omitting audited consolidated financial statements of BCH because the Company
does not have them and they are not reasonably available to the Company since
they rest peculiarly within the knowledge of BCH, which the Company does not
control. The Company has requested audited consolidated financial statements
from BCH and believes it is entitled to receive them under the terms of a
Shareholders Agreement among the shareholders of BCH. In response to that
request, however, BCH provided only the unaudited consolidated financial
statements for BCH and the individual audited financial statements for the eight
subsidiaries along with audited unconsolidated financial statements of BCH, and
has stated that it would be uneconomical for BCH to provide the audited
consolidated financial statements, although it has offered to provide them if
the Company pays for the associated costs. The Company is continuing to
negotiate with BCH to resolve the matter.
Because the Company has provided with this filing audited financial
statements for each subsidiary of BCH and audited unconsolidated financial
statements of BCH along with unaudited consolidated financial statements for
BCH, the Company does not expect the audited consolidated financial statements
of BCH, when and if obtained, to provide any additional material information to
the Company's shareholders. If the Company obtains the financial statements, it
will file them as a further amendment to this Form 10-K.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following financial statements, schedules and exhibits are filed as
part of this report:
(a) 1. Financial Statements
The information provided on the Report on Form 10-K filed on March 12,
2003 is not being amended by this Report on Form 10-K/A.
2. Financial Statement Schedules
The following financial statement schedules are included on pages A-1
through A-123 of this Form 10-K/A.
Unaudited Consolidated Balance Sheet of Belden Cement Holding Inc. as
at 31 December 2002 Unaudited Consolidated Profit and Loss Account of
Belden Cement Holding Inc. for the year ended 31 December 2002
Statement by Board of Directors for Belden Cement Holding Inc. for the
year ended 31 December 2002
Report of the Auditors to the Members of Belden Cement Holding Inc.
Balance Sheets of Belden Cement Holding Inc. as at 31 December 2002
Profit and Loss Account of Belden Cement Holding Inc. for the year
ended 31 December 2002
2
Statement of Changes in Equity of Belden Cement Holding Inc. for the
year ended 31 December 2002
Statement of Cash Flows in Equity of Belden Cement Holding Inc. for the
year ended 31 December 2002
Notes to the Financial Statements of Belden Cement Holding Inc. for the
year ended 31 December 2002
Statement by Board of Directors for Belden Management Inc. for the year
ended 31 December 2002
Report of the Auditors to the Members of Belden Management Inc.
Balance Sheets of Belden Management Inc. as at 31 December 2002
Profit and Loss Account of Belden Management Inc. for the year ended 31
December 2002
Statement of Changes in Equity of Belden Management Inc. for the year
ended 31 December 2002
Notes to the Financial Statements of Belden Management Inc. for the
year ended 31 December 2002
Director's Report for Belden Shipping Pte Ltd for the year ended 31
December 2002
Statement by Board of Directors for Belden Shipping Pte Ltd for the
year ended 31 December 2002
Report of the Auditors to the Members of Belden Shipping Pte Ltd.
Balance Sheets of Belden Shipping Pte Ltd as at 31 December 2002
Profit and Loss Account of Belden Shipping Pte Ltd for the year ended
31 December 2002
Notes to the Financial Statements of Belden Shipping Pte Ltd for the
year ended 31 December 2002
Statement by Board of Directors for Mattea Shipping Inc. for the year
ended 31 December 2002
Report of the Auditors to the Members of Mattea Shipping Inc.
Balance Sheets of Mattea Shipping Inc. as at 31 December 2002
Profit and Loss Account of Mattea Shipping Inc. for the year ended 31
December 2002
Statement of Changes in Equity of Mattea Shipping Inc. for the year
ended 31 December 2002
Statement of Cash Flows in Equity of Mattea Shipping Inc. for the year
ended 31 December 2002
Notes to the Financial Statements of Mattea Shipping Inc. for the year
ended 31 December 2002
Statement by Board of Directors for Echelon Shipping Inc. for the year
ended 31 December 2002
Report of the Auditors to the Members of Echelon Shipping Inc.
Balance Sheets of Echelon Shipping Inc. as at 31 December 2002
Profit and Loss Account of Echelon Shipping Inc. for the year ended 31
December 2002
Statement of Changes in Equity of Echelon Shipping Inc. for the year
ended 31 December 2002
Statement of Cash Flows in Equity of Echelon Shipping Inc. for the year
ended 31 December 2002
3
Notes to the Financial Statements of Echelon Shipping Inc. for the year
ended 31 December 2002
Statement by Board of Directors for Shining Star Shipping Inc. for the
year ended 31 December 2002
Report of the Auditors to the Members of Shining Star Shipping Inc.
Balance Sheets of Shining Star Shipping Inc. as at 31 December 2002
Profit and Loss Account of Shining Star Shipping Inc. for the year
ended 31 December 2002
Statement of Changes in Equity of Shining Star Shipping Inc. for the
year ended 31 December 2002
Statement of Cash Flows in Equity of Shining Star Shipping Inc. for the
year ended 31 December 2002
Notes to the Financial Statements of Shining Star Shipping Inc. for the
year ended 31 December 2002
Statement by Board of Directors for Emblem Shipping Inc. for the year
ended 31 December 2002
Report of the Auditors to the Members of Emblem Shipping Inc.
Balance Sheets of Emblem Shipping Inc. as at 31 December 2002
Profit and Loss Account of Emblem Shipping Inc. for the year ended 31
December 2002
Statement of Changes in Equity of Emblem Shipping Inc. for the year
ended 31 December 2002
Statement of Cash Flows in Equity of Emblem Shipping Inc. for the year
ended 31 December 2002
Notes to the Financial Statements of Emblem Shipping Inc. for the year
ended 31 December 2002
Statement by Board of Directors for Yakumo Shipping Inc. for the year
ended 31 December 2002
Report of the Auditors to the Members of Yakumo Shipping Inc.
Balance Sheets of Yakumo Shipping Inc. as at 31 December 2002
Profit and Loss Account of Yakumo Shipping Inc. for the year ended 31
December 2002
Statement of Changes in Equity of Yakumo Shipping Inc. for the year
ended 31 December 2002
Statement of Cash Flows in Equity of Yakumo Shipping Inc. for the year
ended 31 December 2002
Notes to the Financial Statements of Yakumo Shipping Inc. for the year
ended 31 December 2002
Statement by Board of Directors for Tilbury Shipping Inc. for the year
ended 31 December 2002
Report of the Auditors to the Members of Tilbury Shipping Inc.
Balance Sheets of Tilbury Shipping Inc. as at 31 December 2002
Profit and Loss Account of Tilbury Shipping Inc. for the year ended 31
December 2002
Statement of Changes in Equity of Tilbury Shipping Inc. for the year
ended 31 December 2002
Statement of Cash Flows in Equity of Tilbury Shipping Inc. for the year
ended 31 December 2002
Notes to the Financial Statements of Tilbury Shipping Inc. for the year
ended 31 December 2002
4
3. Exhibits
The information provided on the Report on Form 10-K filed on March 12,
2003 is not being amended by this Report on Form 10-K/A.
(b) Reports on Form 8-K filed during the quarter ended December
31, 2002.
The information provided on the Report on Form 10-K filed on March 12,
2003 is not being amended by this Report on Form 10-K/A.
5
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTERNATIONAL SHIPHOLDING CORPORATION
(REGISTRANT)
/s/ Gary L. Ferguson
June 27, 2003 By _______________________________________
Gary L. Ferguson
Vice President and Chief Financial Officer
6
INDEX OF FINANCIAL STATEMENT SCHEDULES
Unaudited Consolidated Balance Sheet of Belden Cement Holding Inc.
as at 31 December 2002.................................................................................. A-5
Unaudited Consolidated Profit and Loss Account of Belden Cement
Holding Inc. for the year ended 31 December 2002........................................................ A-6
Statement by Board of Directors for Belden Cement Holding Inc.
for the year ended 31 December 2002..................................................................... A-7
Report of the Auditors to the Members of Belden Cement Holding Inc......................................... A-8
Balance Sheets of Belden Cement Holding Inc.
as at 31 December 2002.................................................................................. A-9
Profit and Loss Account of Belden Cement Holding Inc.
for the year ended 31 December 2002..................................................................... A-10
Statement of Changes in Equity of Belden Cement Holding Inc.
for the year ended 31 December 2002..................................................................... A-11
Statement of Cash Flows in Equity of Belden Cement Holding Inc.
for the year ended 31 December 2002..................................................................... A-12
Notes to the Financial Statements of Belden Cement Holding Inc.
for the year ended 31 December 2002..................................................................... A-13
Statement by Board of Directors for Belden Management Inc.
for the year ended 31 December 2002..................................................................... A-20
Report of the Auditors to the Members of Belden Management Inc............................................. A-21
Balance Sheets of Belden Management Inc.
as at 31 December 2002.................................................................................. A-22
Profit and Loss Account of Belden Management Inc.
for the year ended 31 December 2002..................................................................... A-23
Statement of Changes in Equity of Belden Management Inc.
for the year ended 31 December 2002..................................................................... A-24
Notes to the Financial Statements of Belden Management Inc.
for the year ended 31 December 2002..................................................................... A-25
Director's Report for Belden Shipping Pte Ltd
for the year ended 31 December 2002..................................................................... A-31
Statement by Board of Directors for Belden Shipping Pte Ltd
for the year ended 31 December 2002..................................................................... A-35
Report of the Auditors to the Members of Belden Shipping Pte Ltd........................................... A-36
Balance Sheets of Belden Shipping Pte Ltd
as at 31 December 2002.................................................................................. A-37
A-1
Profit and Loss Account of Belden Shipping Pte Ltd
for the year ended 31 December 2002..................................................................... A-38
Notes to the Financial Statements of Belden Shipping Pte Ltd
for the year ended 31 December 2002..................................................................... A-39
Statement by Board of Directors for Mattea Shipping Inc.
for the year ended 31 December 2002..................................................................... A-47
Report of the Auditors to the Members of Mattea Shipping Inc............................................... A-48
Balance Sheets of Mattea Shipping Inc.
as at 31 December 2002.................................................................................. A-49
Profit and Loss Account of Mattea Shipping Inc.
for the year ended 31 December 2002..................................................................... A-50
Statement of Changes in Equity of Mattea Shipping Inc.
for the year ended 31 December 2002..................................................................... A-51
Statement of Cash Flows in Equity of Mattea Shipping Inc.
for the year ended 31 December 2002..................................................................... A-52
Notes to the Financial Statements of Mattea Shipping Inc.
for the year ended 31 December 2002..................................................................... A-53
Statement by Board of Directors for Echelon Shipping Inc.
for the year ended 31 December 2002..................................................................... A-59
Report of the Auditors to the Members of Echelon Shipping Inc.............................................. A-60
Balance Sheets of Echelon Shipping Inc.
as at 31 December 2002.................................................................................. A-61
Profit and Loss Account of Echelon Shipping Inc.
for the year ended 31 December 2002..................................................................... A-62
Statement of Changes in Equity of Echelon Shipping Inc.
for the year ended 31 December 2002..................................................................... A-63
Statement of Cash Flows in Equity of Echelon Shipping Inc.
for the year ended 31 December 2002..................................................................... A-64
Notes to the Financial Statements of Echelon Shipping Inc.
for the year ended 31 December 2002..................................................................... A-65
Statement by Board of Directors for Shining Star Shipping Inc.
for the year ended 31 December 2002..................................................................... A-72
Report of the Auditors to the Members of Shining Star Shipping Inc......................................... A-73
Balance Sheets of Shining Star Shipping Inc.
as at 31 December 2002.................................................................................. A-74
Profit and Loss Account of Shining Star Shipping Inc.
for the year ended 31 December 2002..................................................................... A-75
A-2
Statement of Changes in Equity of Shining Star Shipping Inc.
for the year ended 31 December 2002..................................................................... A-76
Statement of Cash Flows in Equity of Shining Star Shipping Inc.
for the year ended 31 December 2002..................................................................... A-77
Notes to the Financial Statements of Shining Star Shipping Inc.
for the year ended 31 December 2002..................................................................... A-78
Statement by Board of Directors for Emblem Shipping Inc.
for the year ended 31 December 2002..................................................................... A-86
Report of the Auditors to the Members of Emblem Shipping Inc............................................... A-87
Balance Sheets of Emblem Shipping Inc.
as at 31 December 2002.................................................................................. A-88
Profit and Loss Account of Emblem Shipping Inc.
for the year ended 31 December 2002..................................................................... A-89
Statement of Changes in Equity of Emblem Shipping Inc.
for the year ended 31 December 2002..................................................................... A-90
Statement of Cash Flows in Equity of Emblem Shipping Inc.
for the year ended 31 December 2002..................................................................... A-91
Notes to the Financial Statements of Emblem Shipping Inc.
for the year ended 31 December 2002..................................................................... A-92
Statement by Board of Directors for Yakuma Shipping Inc.
for the year ended 31 December 2002..................................................................... A-99
Report of the Auditors to the Members of Yakuma Shipping Inc............................................... A-100
Balance Sheets of Yakuma Shipping Inc.
as at 31 December 2002.................................................................................. A-101
Profit and Loss Account of Yakuma Shipping Inc.
for the year ended 31 December 2002..................................................................... A-102
Statement of Changes in Equity of Yakuma Shipping Inc.
for the year ended 31 December 2002..................................................................... A-103
Statement of Cash Flows in Equity of Yakuma Shipping Inc.
for the year ended 31 December 2002..................................................................... A-104
Notes to the Financial Statements of Yakuma Shipping Inc.
for the year ended 31 December 2002..................................................................... A-105
Statement by Board of Directors for Tilbury Shipping Inc.
for the year ended 31 December 2002..................................................................... A-111
Report of the Auditors to the Members of Tilbury Shipping Inc.............................................. A-112
A-3
Balance Sheets of Tilbury Shipping Inc.
as at 31 December 2002.................................................................................. A-113
Profit and Loss Account of Tilbury Shipping Inc.
for the year ended 31 December 2002..................................................................... A-114
Statement of Changes in Equity of Tilbury Shipping Inc.
for the year ended 31 December 2002..................................................................... A-115
Statement of Cash Flows in Equity of Tilbury Shipping Inc.
for the year ended 31 December 2002..................................................................... A-116
Notes to the Financial Statements of Tilbury Shipping Inc.
for the year ended 31 December 2002..................................................................... A-117
A-4
BELDEN CEMENT HOLDING INC. CONSOLIDATED BALANCE SHEET
UNAUDITED AS AT 31 DECEMBER 2002
2002
US$
NON-CURRENT ASSETS
Property, plant and equipment 56,338,356
Investment in associate 18,304
Loan to a third party 50,000
------------
56,406,660
CURRENT ASSETS
Trade receivables 126,000
Other receivables 948,573
Amounts owing to shareholders 10,000
Cash and cash equivalents 4,387,919
------------
5,472,492
Less :
CURRENT LIABILITIES
Trade payables and accruals 215,107
Accrued expenses 277,622
Advance charter hire 413,343
Loan from shareholders 500,000
Current portion of debt obligations 7,039,861
------------
8,445,933
------------
NET CURRENT ASSETS (2,973,441)
NON-CURRENT LIABILITIES
Loans from shareholders (8,069,250)
Long-term portion of debt obligations (35,409,942)
------------
NET ASSETS $ 9,954,027
============
CAPITAL AND RESERVES
Share capital 10,000
Reserves 9,944,027
------------
$ 9,954,027
============
A-5
BELDEN CEMENT HOLDING INC. CONSOLIDATED PROFIT AND LOSS ACCOUNT
UNAUDITED FOR THE YEAR ENDED 31 DECEMBER 2002
2002
US$
REVENUE 18,530,786
Other operating income 324,204
Depreciation of property, plant and equipment (6,471,180)
Vessel operating expenses (4,329,029)
Offhire expenses (166,997)
Commission (397,215)
Management Fee (41,473)
Legal and consultancy fee (327,788)
Compensation fee (96,754)
Staff costs (310,924)
Communication cost (71,317)
Other operating expenses (199,226)
------------
PROFIT FROM OPERATIONS 6,443,087
Finance costs (3,493,864)
------------
PROFIT BEFORE TAXATION 2,949,223
Taxation (134,112)
------------
PROFIT AFTER TAXATION $ 2,815,111
============
A-6
BELDEN CEMENT HOLDING INC. STATEMENT BY BOARD OF DIRECTORS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
We, ALF JOHAN LOVEN ANDERSEN and DAG AUDUN ROMMEN, being attorneys-in-fact of
Belden Cement Holding Inc., do hereby state that in our opinion the financial
statements set out on pages 3 to 13 are drawn up so as to present fairly the
state of affairs of the Company as at 31 December 2002 and the results of the
business, changes in equity and cash flows of the Company for the year ended on
that date.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
-------------------------------------------
ALF JOHAN LOVEN ANDERSEN
Attorney-in-fact
/s/ Dag Audun Rommen
-------------------------------------------
DAG AUDUN ROMMEN
Attorney-in-fact
SINGAPORE
25 March 2003
A-7
REPORT OF THE AUDITORS TO THE MEMBERS OF
BELDEN CEMENT HOLDING INC.
We have audited the financial statements of Belden Cement Holding Inc. for the
year ended 31 December 2002 as set out on pages 3 to 13. These financial
statements are the responsibility of the Company's directors. 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 plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
directors, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As stated in Note 3 to the Company's financial statements, the Company's
presentation of consolidated financial statements is not in accordance with
Singapore Statement of Accounting Standard 26 which requires the preparation of
one set of consolidated financial statements for the Company and its
subsidiaries.
Except for the foregoing, in our opinion, the financial statements of the
Company are properly drawn up in accordance with Singapore Statements of
Accounting Standard and so as to present fairly, in all material respects, the
state of affairs of the Company as at 31 December 2002 and the results, changes
in equity and cash flows of the Company for the year ended on that date.
/s/ KPMG
KPMG
CERTIFIED PUBLIC ACCOUNTANTS
SINGAPORE
25 March 2003
A-8
BELDEN CEMENT HOLDING INC. BALANCE SHEET
ANNUAL REPORT AS AT 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
NON-CURRENT ASSETS
Investment in subsidiaries 5 16,811,055 16,041,055
CURRENT ASSETS
------------ ------------
Loan to a subsidiary 6 703,530 255,961
Amounts owing by shareholders 7 10,000 10,000
Cash and cash equivalents 1,238,051 702,739
------------ ------------
1,951,581 968,700
------------ ------------
Less:
CURRENT LIABILITIES
Accrued expenses 19,978 2,778
Amount owing to a subsidiary 6 10,000 10,000
------------ ------------
29,978 12,778
------------ ------------
NET CURRENT ASSETS 1,921,603 955,922
NON-CURRENT LIABILITIES
Loans from shareholders 8 (8,069,250) (9,082,815)
------------ ------------
NET ASSETS $ 10,663,408 $ 7,914,162
------------ ------------
CAPITAL AND RESERVES
Share capital 9 10,000 10,000
Reserves 10 10,653,408 7,904,162
------------ ------------
$ 10,663,408 $ 7,914,162
------------ ------------
The accompanying notes form an integral part of these financial statements.
A-9
BELDEN CEMENT HOLDING INC. PROFIT AND LOSS ACCOUNT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
REVENUE 11 3,325,000 2,185,000
Other income 12(a) 24,414 1,777
Consultancy fee (19,961) -
Legal fee (67,315) (27,935)
Other operating expenses (4,152) (2,920)
----------- -----------
PROFIT from operations 3,257,986 2,155,922
Finance costs 12(b) (508,740) (432,815)
----------- -----------
PROFIT FOR THE YEAR $ 2,749,246 $ 1,723,107
----------- -----------
The accompanying notes form an integral part of these financial statements.
A-10
BELDEN CEMENT HOLDING INC. STATEMENT OF CHANGES IN EQUITY
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
SHARE SHARE RETAINED
CAPITAL PREMIUM PROFITS TOTAL
US$ US$ US$ US$
Issue of shares 10,000 6,181,055 - 6,191,055
Profit for the year - - 1,723,107 1,723,107
------------- ------------- ------------- -------------
At 31 December 2001 10,000 6,181,055 1,723,107 7,914,162
Profit for the year - - 2,749,246 2,749,246
------------- ------------- ------------- -------------
At 31 December 2002 $ 10,000 $ 6,181,055 $ 4,472,353 $10,663,408
------------- ------------- ------------- -------------
The accompanying notes form an integral part of these financial statements.
A-11
BELDEN CEMENT HOLDING INC. STATEMENT OF CASH FLOWS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
2002 2001
US$ US$
OPERATING ACTIVITIES
Profit before taxation 2,749,246 1,723,107
Adjustments for:
Interest income (24,414) (1,777)
Interest expense 508,740 432,815
------------ ------------
Operating profit before working capital changes 3,233,572 2,154,145
Changes in working capital:
Accrued expenses 17,200 2,778
------------ ------------
Cash generated from operations 3,250,772 2,156,923
Interest paid (822,305) -
Interest received 1,845 816
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES 2,430,312 2,157,739
------------ ------------
INVESTING ACTIVITIES
Acquisition of shares in subsidiaries (770,000) (16,041,055)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES (770,000) (16,041,055)
------------ ------------
FINANCING ACTIVITIES
Loan to a subsidiary (425,000) (255,000)
Repayment of loans from shareholders (700,000) -
Loans from shareholders - 8,650,000
Proceeds from issue of share capital - 6,191,055
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES (1,125,000) 14,586,055
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 535,312 702,739
Cash and cash equivalents at beginning of year 702,739 -
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,238,051 $ 702,739
------------ ------------
The accompanying notes form an integral part of these financial statements.
A-12
BELDEN CEMENT HOLDING INC. NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 31 DECEMBER 2002
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 25 March
2003.
1. DOMICILE AND ACTIVITIES
Belden Cement Holding Inc. is a company incorporated in the Republic of
Panama. The address of the resident agent is Arango Orillac Building,
third floor, 54 Street, Nueva Urbanizacion Obarrio, P.O. Box 5216
Panama 5, Republic of Panama.
The principal activities of the Company are those of an investment
holding company. The principal activities of the subsidiaries are set
out in note 5 to the financial statements.
2. THE RESTRUCTURING
The Company was incorporated on 6 December 2000 to be the holding
company for companies previously owned by the shareholders of the
Company. On 10 January 2001, the Company undertook a restructuring (the
"Restructuring") to acquire the entire share capital of the following
companies, the consideration for which was based on the capital
previously injected by the shareholders into these companies:-
CONSIDERATION
NAME US$
Belden Shipping Pte Ltd 186,765
Belden Management Inc. 10,000
Echelon Shipping Inc. 2,250,000
Emblem Shipping Inc. 2,453,710
Shining Star Shipping Inc. 1,744,290
Tilbury Shipping Inc. 4,546,290
Yakumo Shipping Inc. 2,000,000
-----------
Total $13,191,055
-----------
The beneficial interests of the shareholders in the subsidiaries are
exactly the same before and after the Restructuring.
A-13
3. CONSOLIDATED FINANCIAL STATEMENTS
One set of consolidated financial statements has not been prepared for
the Company and its subsidiaries as it is the opinion of the
shareholders that there is no practical benefit to the shareholders of
Belden Cement Holding Inc. from the preparation of one set of
consolidated financial statements. This presentation is not in
accordance with Singapore Statement of Accounting Standard No. 26,
which requires the preparation of one set of consolidated financial
statements for the Company and its subsidiaries.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) STATEMENT OF COMPLIANCE
Except as stated in note 3, these financial statements have
been prepared in accordance with the Singapore Statements of
Accounting Standard ("SAS") (including Interpretations of
Statements of Accounting Standard) issued by the Institute of
Certified Public Accountants of Singapore.
(b) BASIS OF PREPARATION
The financial statements, expressed in United States dollars,
are prepared on the historical cost basis.
(c) SUBSIDIARIES
Investments in subsidiaries are stated at cost less impairment
losses.
(d) REVENUE RECOGNITION
Dividends from subsidiaries are recognised in the profit and
loss account when the shareholder's right to receive payment
is established.
(e) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at banks.
(f) AFFILIATED COMPANY
An affiliated company is a company which has shareholders in
common with the Company.
A-14
5. INVESTMENT IN SUBSIDIARIES
2002 2001
US$ US$
Unquoted equity shares, at cost $16,811,055 $16,041,055
----------- -----------
Details of the subsidiaries are as follows:-
PLACE OF EQUITY COST OF
INCORPORATION INTEREST HELD INVESTMENT
PRINCIPAL AND 2002 2001 2002 2001
NAME ACTIVITIES BUSINESS % % US$ US$
Echelon Shipping Shipowners Republic of
Inc. Panama 100 100 2,250,000 2,250,000
Emblem Shipping Shipowners Republic of
Inc. Panama 100 100 2,453,710 2,453,710
Mattea Shipping Inc. Shipowners Republic of
Panama 100 100 3,450,000 2,850,000
Shining Star Shipowners Republic of
Shipping Inc. Panama 100 100 1,744,290 1,744,290
Tilbury Shipping Inc. Shipowners Republic of
Panama 100 100 4,546,290 4,546,290
Yakumo Shipping Shipowners Republic of
Inc. Panama 100 100 2,000,000 2,000,000
Minardi Shipping Shipowners Republic of
Inc. Panama 100 - 170,000 -
Belden Management Commercial Republic of
Inc. manager and Panama
insurer 100 100 10,000 10,000
Belden Shipping Pte Commercial Republic of
Ltd ship Singapore 100 100 186,765 186,765
Singapore
management
and brokering ----------- -----------
$16,811,055 $16,041,055
----------- -----------
The shares of Tilbury Shipping Inc. and Emblem Shipping Inc. are
pledged to the bank as additional security for the due performance
by the subsidiaries of their duties and obligations under the loan
agreements for the financing of the subsidiaries' vessels.
A-15
6. LOAN TO A SUBSIDIARY/AMOUNT OWING TO A SUBSIDIARY
2002 2001
US$ US$
Principal 680,000 255,000
Accrued interest 23,530 961
------------ ------------
$ 703,530 $ 255,961
------------ ------------
The amounts owing by and to subsidiaries are unsecured and have no
fixed terms of repayment.
7. AMOUNTS OWING BY SHAREHOLDERS
The amounts owing by shareholders are unsecured and interest free, with
no fixed terms of repayment.
8. LOANS FROM SHAREHOLDERS
2002 2001
US$ US$
Principal 7,950,000 8,650,000
Accrued interest 119,250 432,815
----------- -----------
$ 8,069,250 $ 9,082,815
----------- -----------
The loans from shareholders are unsecured. The loans have no fixed
terms of repayment and are classified as non-current liabilities in
accordance with management's intention to repay the loans after one
year.
9. SHARE CAPITAL
2002 2001
US$ US$
AUTHORISED, ISSUED AND FULLY PAID:
200 ordinary shares of US$50 each $ 10,000 $ 10,000
------------- -------------
10. RESERVES
2002 2001
US$ US$
Share premium 6,181,055 6,181,055
Retained profits 4,472,353 1,723,107
----------- -----------
$10,653,408 $ 7,904,162
----------- -----------
A-16
10. RESERVES (CONT'D)
The application of the share premium account is governed by Panamanian
laws and regulations.
Movements in reserves are set out in the statement of changes in
equity.
11. REVENUE
Revenue represents gross dividend income from subsidiaries.
12. PROFIT FROM OPERATIONS
Profit from operations includes the following:-
2002 2001
US$ US$
(a) OTHER OPERATING INCOME
Interest income from:
- banks 1,695 816
- loan to a subsidiary 22,719 961
------------- -------------
$ 24,414 $ 1,777
------------- -------------
(b) FINANCE COSTS
Interest paid and payable to:
- shareholders $ 508,740 $ 432,815
------------ -------------
13. SIGNIFICANT RELATED PARTY TRANSACTIONS
For the purpose of these financial statements, parties are considered
to be related to the Company if the Company has the ability, directly
or indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice
versa, or where the Company and the party are subject to common control
or common significant influence. Related parties may be individuals or
other entities.
During the year, there were the following significant transactions with
related parties:-
2002 2001
US$ US$
Dividend income from subsidiaries 3,325,000 2,185,000
--------- ---------
A-17
14. FINANCIAL INSTRUMENTS
(a) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Exposure to credit, foreign exchange and interest rate risk
arises in the normal course of the Company's business. The
Company manages these risks as part of the general day-to-day
management of its operations.
(b) CREDIT RISK
The carrying amounts of financial assets included in the
balance sheet represent the Company's maximum exposure to
credit risk in relation to those assets.
(c) FOREIGN EXCHANGE AND INTEREST RATE RISK
The Company believes that it does not have significant foreign
exchange and interest rate risk.
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS
In respect of interest earning financial assets and
liabilities, the following table indicates their effective
interest rates at balance sheet date and the periods in which
they reprice.
EFFECTIVE WITHIN 1 TO 5
2002 NOTE INTEREST RATE TOTAL 1 YEAR YEARS
FINANCIAL ASSETS US$ US$ US$
Loan to subsidiary 6 6% 625,000 625,000 -
Loan to subsidiary 6 2% 55,000 55,000 -
Cash and cash
equivalents 0.25% 1,238,051 1,238,051 -
----------- ------------- -----------
$ 1,918,051 $ 1,918,051 $ -
----------- ------------- -----------
FINANCIAL LIABILITIES
Loans from
shareholders 8 6% $ 7,950,000 $ - $ 7,950,000
----------- ------------- -----------
2001
FINANCIAL ASSETS
Loan to subsidiary 6 6% 200,000 200,000 -
Loan to subsidiary 6 2% 55,000 55,000 -
Cash and cash
equivalents 0.75% 702,739 702,739 -
----------- ------------- -----------
$ 957,739 $ 957,739 $ -
----------- ------------- -----------
FINANCIAL LIABILITIES
Loans from
shareholders 8 6% $ 8,650,000 $ - $ 8,650,000
----------- ------------- -----------
A-18
14. FINANCIAL INSTRUMENTS (CONT'D)
(d) FAIR VALUES
The fair values of the loans from shareholders cannot be
reasonably determined as there are no fixed terms of repayment
to ascertain the cash flows reliably.
The fair values of other financial assets and liabilities are
not significantly different from their carrying values.
15. CONTINGENT LIABILITY
The Company has issued a guarantee amounting to US$1,100,000 (2001:
US$600,000) for bank loans taken by its subsidiaries.
16. SUBSEQUENT EVENTS
On 10 January 2003, the Company's subsidiary, Belden Shipping Pte Ltd,
acquired a wholly-owned subsidiary, Belden Shipping Sweden AB
incorporated in Sweden for a consideration of $11,639. The subsidiary's
net assets at the date of acquisition were $11,639.
17. COMMITMENTS
On 13 December 2002, the Company's subsidiary, Minardi Shipping Inc.
has entered into a memorandum of agreement to acquire a vessel M/S
Credo (to be renamed as MV Glory Credo) for a consideration of
US$1,700,000. The transaction will be completed in 2003.
A-19
BELDEN MANAGEMENT INC. STATEMENT BY BOARD OF DIRECTORS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
We, ALF JOHAN LOVEN ANDERSEN and DAG AUDUN ROMMEN, being attorneys-in-fact of
BELDEN MANAGEMENT INC., do hereby state that in our opinion, the financial
statements set out on pages 3 to 11 are drawn up so as to present fairly the
state of affairs of the Company as at 31 December 2002 and the results of the
business and changes in equity of the Company for the year ended on that date.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
-------------------------------------------
ALF JOHAN LOVEN ANDERSEN
Attorney-in-fact
/s/ Dag Audun Rommen
-------------------------------------------
DAG AUDUN ROMMEN
Attorney-in-fact
SINGAPORE
25 March 2003
A-20
REPORT OF THE AUDITORS TO THE MEMBER OF
BELDEN MANAGEMENT INC.
We have audited the financial statements of Belden Management Inc. for the year
ended 31 December 2002 as set out on pages 3 to 11. These financial statements
are the responsibility of the Company's directors. 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 plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
directors, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements of the Company are properly drawn up in
accordance with Singapore Statements of Accounting Standard and so as to present
fairly, in all material respects, the state of affairs of the Company as at 31
December 2002 and the results of the business and changes in equity of the
Company for the year ended on that date.
/s/ KPMG
KPMG
CERTIFIED PUBLIC ACCOUNTANTS
SINGAPORE
25 March 2003
A-21
BELDEN MANAGEMENT INC. BALANCE SHEET
ANNUAL REPORT AS AT 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
NON-CURRENT ASSETS
Investment in associate 3 18,304 -
Loan to associate 4 28,736 -
Loan to a third party 5 51,114 -
------------- -------------
98,154 -
CURRENT ASSETS
Loan to a third party 5 - 50,097
Loan to associate 4 65,669 -
Amount owing by holding company (non-trade) 6 10,000 10,000
Cash and cash equivalents 152,745 201,195
------------- -------------
228,414 261,292
------------- -------------
Less:
CURRENT LIABILITIES
Other payables and accrued expenses 4,249 2,778
Amount owing to associate (trade) 41,473 -
Loan from holding company 7 347,289 255,961
------------- -------------
393,011 258,739
------------- -------------
NET CURRENT (LIABILITIES)/ASSETS (164,597) 2,553
------------- -------------
(Excess of liabilities over assets)/net assets $ (66,443) $ 2,553
============= =============
CAPITAL AND RESERVE
Share capital:
Authorised, issued and fully paid:
100 ordinary shares of US$100 each 10,000 10,000
Accumulated losses (76,443) (7,447)
------------- -------------
$ (66,443) $ 2,553
============= =============
The accompanying notes form an integral part of these financial statements.
A-22
BELDEN MANAGEMENT INC. PROFIT AND LOSS ACCOUNT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
REVENUE 8 722,884 178,333
Other income 9(a) 8,721 2,968
Waiver of amount owing by a related
party (trade) 11 - (441,733)
Management fees (366,473) -
Compensation fee (96,754) -
Legal fees (14,439) (700)
Office rental (14,258) -
Staff costs 9(b) (215,413) -
Other operating expenses (76,936) (8,192)
----------- ----------
Loss from operations (52,668) (269,324)
Finance cost 9(c) (16,328) (961)
----------- ----------
LOSS FOR THE YEAR $ (68,996) $ (270,285)
============ ===========
The accompanying notes form an integral part of these financial statements.
A-23
BELDEN MANAGEMENT INC. STATEMENT OF CHANGES IN EQUITY
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
RETAINED PROFITS/
SHARE (ACCUMULATED
CAPITAL LOSSES) TOTAL
$ $ $
At 1 January 2001 10,000 737,838 747,838
Net loss for the year - (270,285) (270,285)
Dividend paid - (475,000) (475,000)
------------- ------------- ------------
At 31 December 2001 10,000 (7,447) 2,553
Net loss for the year - (68,996) (68,996)
------------- ------------- ------------
At 31 December 2002 $ 10,000 $ (76,443) $ (66,443)
============= ============= ============
The accompanying notes form an integral part of these financial statements.
A-24
BELDEN MANAGEMENT INC. NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 31 DECEMBER 2002
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 25 March
2003.
1. DOMICILE AND ACTIVITIES
Belden Management Inc. (the "Company") is incorporated in the Republic
of Panama. The address of the resident agent is Arango Orillac
Building, third floor, 54 Street, Nueva Urbanizacion Obarrio, P.O. Box
5216 Panama 5, Republic of Panama.
The principal activities of the Company are those of a technical
shipmanager for the vessels owned by its related corporations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance
with the Singapore Statements of Accounting Standard ("SAS")
(including Interpretations of Statements of Accounting
Standard) issued by the Institute of Certified Public
Accountants of Singapore.
(b) BASIS OF PREPARATION
The financial statements, expressed in United States dollars,
are prepared on the historical cost basis.
(c) REVENUE RECOGNITION
Shipmanagement fee is recognised on an accrual basis.
(d) FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities in foreign currencies are
translated into United States dollars at rates of exchange
closely approximate to those ruling at the balance sheet date.
Transactions in foreign currencies are translated at rates
ruling on transaction dates. Translation differences are
included in the profit and loss account.
(e) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at banks and fixed
deposits.
A-25
(f) ASSOCIATE
An associate is a company in which the Company has significant
influence, but not control or joint control, over its
management, including participation in the financial and
operating policy decisions.
Investments in associates are stated at cost less any
impairment losses.
3. INVESTMENT IN ASSOCIATE
2002 2001
US$ US$
Unquoted equity shares, at cost $ 18,304 $ -
============= =========
Details of the associate are as follows:
PLACE OF
INCORPORATION EFFECTIVE EQUITY
NAME PRINCIPAL ACTIVITIES AND BUSINESS HELD
2002 2001
% %
Belden Ship Management, Shipmanager Philippines 40 -
Inc.
The Company's share of unaudited post-acquisition accumulated profits
of the associate at the balance sheet date was $14,570.
4. LOAN TO ASSOCIATE
2002 2001
US$ US$
Repayable within 1 year:
Loan principal 64,456 -
Accrued interest 1,213 -
------------- --------
65,669 -
------------- --------
Repayable between 2 to 5 years:
Loan principal 27,628 -
Accrued interest 1,108 -
------------- --------
28,736 -
------------- --------
Total $ 94,405 $ -
============= ========
The loan is expected to be fully repaid by July 2004.
A-26
5. LOAN TO A THIRD PARTY
2002 2001
US$ US$
Loan principal 50,000 50,000
Accrued interest 1,114 97
------------- ------------
$ 51,114 $ 50,097
============= ============
Non-current 51,114 -
Current - 50,097
------------- ------------
$ 51,114 $ 50,097
============= ============
The loan is repayable on 31 December 2004 (2001: 31 December 2002).
6. AMOUNT OWING BY HOLDING COMPANY
The amount owing by holding company is unsecured and interest free and
has no fixed terms of repayment.
7. LOAN FROM HOLDING COMPANY
2002 2001
US$ US$
Loan principal 330,000 255,000
Accrued interest 17,289 961
------------ ------------
$ 347,289 $ 255,961
============= ============
8. REVENUE
Revenue represents management fees for providing technical and
commercial shipmanagement to related parties.
9. NET LOSS FOR THE YEAR
Net loss for the year includes the following:
2002 2001
US$ US$
(a) OTHER INCOME
Interest income
- bank 355 2,871
- loan to third party 1,017 97
- loan to associate 7,349 -
------------- -------------
$ 8,721 $ 2,968
============= =============
A-27
9. NET LOSS FOR THE YEAR (CONT'D)
2002 2001
US$ US$
(b) STAFF COSTS
Wages and salaries 200,573 -
Other benefits 14,840 -
------------- -------------
$ 215,413 $ -
============= =============
Number of employees 3 -
============= =============
(C) FINANCE COST
Interest on loan from holding company $ 16,328 $ 961
============= =============
10. SIGNIFICANT RELATED PARTY TRANSACTIONS
For the purpose of these financial statements, parties are considered
to be related to the Company if the Company has the ability, directly
or indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice
versa, or where the Company and the party are subject to common control
or common significant influence. Related parties may be individuals or
other entities.
A related corporation is a corporation which is a holding company or a
subsidiary of the Company, or a subsidiary of the Company's holding
company.
In addition to those disclosed elsewhere in the financial statements,
during the year, there were the following significant transactions with
related parties:-
2002 2001
US$ US$
RELATED PARTIES
Management fee income 722,884 -
Insurance premium receivable - 178,333
Management fee expense (325,000) -
Waiver of amount owing - (441,733)
ASSOCIATE
Management fee expense (41,473) -
=========== ===========
11. HOLDING COMPANY
The immediate and ultimate holding company is Belden Cement Holding
Inc., incorporated in the Republic of Panama.
A-28
12. FINANCIAL INSTRUMENTS
(a) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Exposure to credit risk arises in the normal course of the
Company's business. The Company manages this risk as part of
the general day-to-day management of its operations.
(b) CREDIT RISK
The Company incurs credit risk on loans made to an associate
and a third party and exposure to this risk is monitored on an
ongoing basis. The Company does not require collateral in
respect of financial assets.
(c) INTEREST RATE RISK
The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's debt obligations.
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS
In respect of interest-earning financial assets and
interest-bearing financial liabilities, the following table
indicates their effective interest rates at balance sheet date
and the periods in which they reprice:
--------------------2002----------------- ---------2001-------
EFFECTIVE WITHIN EFFECTIVE
INTEREST WITHIN 2 TO INTEREST WITHIN
NOTE RATE TOTAL 1 YEAR 5 YEARS RATE 1 YEAR
$ $ $ $
FINANCIAL ASSETS
Loan to a third
party 5 2% 50,000 - 50,000 2% 50,000
Loan to associate 4 10% 92,084 64,456 27,628 - -
Cash and cash
equivalents 0.25% 152,745 152,745 - 0.75% 201,195
--------- --------- --------- ---------
$ 294,829 $ 217,201 $ 77,628 $ 251,195
========= ========= ========= =========
FINANCIAL LIABILITIES
Loan from holding
company 7 6% 275,000 275,000 - 6% 200,000
Loan from holding
company 7 2% 55,000 55,000 - 2% 55,000
--------- --------- --------- ---------
$ 330,000 $ 330,000 $ - $ 255,000
========= ========= ========= =========
A-29
12. FINANCIAL INSTRUMENTS (CONT'D)
(d) FAIR VALUES
It is not practicable to estimate the fair values of the
non-current portion of the loan to an associate as there are
no fixed terms of repayment to ascertain the future cash flows
reliably.
As at 31 December 2002 and 2001, the carrying amounts of other
financial assets and liabilities approximated their fair
values.
13. COMPARATIVE INFORMATION
Certain items in the comparative figures have been
reclassified to conform with the current year's presentation.
A-30
BELDEN SHIPPING PTE LTD DIRECTORS' REPORT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
DIRECTORS' REPORT
On behalf of all the directors of the Company, we are pleased to submit this
annual report to the member together with the audited financial statements of
the Company for the financial year ended 31 December 2002.
DIRECTORS
The directors in office at the date of this report are as follows:-
Alf Johan Loven Andersen
Dag Audun Rommen
PRINCIPAL ACTIVITIES
The principal activities of the Company during the financial year have been
those relating to commercial ship management and brokering. There have been no
significant changes in such activities during the financial year.
FINANCIAL RESULTS
The results of the Company for the financial year were as follows:-
$
Profit after taxation 226,818
Accumulated losses brought forward (369,844)
-----------
Accumulated losses carried forward $ (143,026)
===========
TRANSFERS TO OR FROM RESERVES OR PROVISIONS
There were no material transfers to or from reserves during the financial year.
Material movements in provisions including depreciation are as set out in the
accompanying financial statements.
ISSUES OF SHARES OR DEBENTURES
During the financial year, the Company did not issue any shares or debentures.
A-31
ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES
Neither at the end of nor at any time during the financial year was the Company
a party to any arrangement whose objects are, or one of whose objects is, to
enable the directors of the Company to acquire benefits by means of the
acquisition of shares in or debentures of the Company or any other body
corporate.
DIRECTORS' INTERESTS IN SHARES OR DEBENTURES
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 in shares and debentures in the
Company are as follows:
HOLDINGS IN THE NAME OTHER HOLDINGS IN
OF THE DIRECTOR, SPOUSE WHICH THE DIRECTOR IS
OR INFANT CHILDREN DEEMED TO HAVE AN INTEREST
AT BEGINNING AT END OF AT BEGINNING AT END OF
OF THE YEAR THE YEAR OF THE YEAR THE YEAR
THE COMPANY
ORDINARY SHARES OF $1 EACH FULLY PAID
Alf Johan Loven Andersen - - 31,750 31,750
Except as disclosed in this report, no director who held office at the end of
the financial year had interests in shares or debentures of the Company or of
related corporations either at the beginning or at the end of the financial
year.
DIVIDENDS
Since the end of the last financial year, no dividend has been paid in respect
of that previous financial year. No dividend has been paid or is proposed to be
paid in respect of the financial year under review.
BAD AND DOUBTFUL DEBTS
Before the profit and loss account and the balance sheet of the Company were
made out, the directors took reasonable steps to ascertain what action had been
taken in relation to writing off bad debts and providing for doubtful debts of
the Company. The directors have satisfied themselves that all known bad debts
have been written off and that adequate provision has been made for doubtful
debts.
At the date of this report, the directors are not aware of any circumstances
which would render any amounts written off for bad debts or provided for
doubtful debts in the financial statements of the Company inadequate to any
substantial extent.
A-32
CURRENT ASSETS
Before the profit and loss account and the balance sheet of the Company were
made out, the directors took reasonable steps to ascertain that current assets
of the Company which were unlikely to realise their book values in the ordinary
course of business have been written down to their estimated realisable values
and that adequate provision has been made for the diminution in value of such
current assets.
At the date of this report, the directors are not aware of any circumstances not
otherwise dealt with in this report which would render the values attributable
to current assets in the financial statements of the Company misleading.
CHARGES AND CONTINGENT LIABILITIES
Since the end of the financial year:
(i) no charge on the assets of the Company has arisen which secures the
liabilities of any other person; and
(ii) no contingent liability of the Company has arisen.
ABILITY TO MEET OBLIGATIONS
No contingent liability or other liability of the Company has become enforceable
or is likely to become enforceable within the period of twelve months after the
end of the financial year which, in the opinion of the directors, will or may
substantially affect the ability of the Company to meet its obligations as and
when they fall due.
OTHER CIRCUMSTANCES AFFECTING THE FINANCIAL STATEMENTS
At the date of this report, the directors are not aware of any circumstances not
otherwise dealt with in this report or the financial statements which would
render any amount stated in the financial statements of the Company misleading.
UNUSUAL ITEMS
In the opinion of the directors, no item, transaction or event of a material and
unusual nature has substantially affected the results of the operations of the
Company during the financial year.
In the opinion of the directors, no item, transaction or event of a material and
unusual nature has arisen in the interval between the end of the financial year
and the date of this report which is likely to affect substantially the results
of the operations of the Company for the financial year in which this report is
made.
A-33
DIRECTORS' INTERESTS IN CONTRACTS
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 to any person to take up unissued
shares in the Company; and
(ii) no shares issued by virtue of any exercise of option to take up
unissued shares of the Company.
As at the end of the financial year, there were no unissued shares of the
Company under option.
AUDITORS
The auditors, KPMG, have indicated their willingness to accept re-appointment.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
-------------------------------------------
ALF JOHAN LOVEN ANDERSEN
Director
/s/ Dag Audun Rommen
-------------------------------------------
DAG AUDUN ROMMEN
Director
SINGAPORE
1 April 2003
A-34
BELDEN SHIPPING PTE LTD STATEMENT BY BOARD OF DIRECTORS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
We, ALF JOHAN LOVEN ANDERSEN and DAG AUDUN ROMMEN, being directors of BELDEN
SHIPPING PTE LTD, do hereby state that in our opinion:-
(a) the financial statements set out on pages 7 to 16 are drawn up so as to
give a true and fair view of the state of affairs of the Company as at
31 December 2002 and the results of the business of the Company for the
year ended on that date; 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 authorised these financial statements for issue on
the date of this statement.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
-------------------------------
ALF JOHAN LOVEN ANDERSEN
Director
/s/ Dag Audun Rommen
-------------------------------
DAG AUDUN ROMMEN
Director
SINGAPORE
1 April 2003
A-35
REPORT OF THE AUDITORS TO THE MEMBER OF
BELDEN SHIPPING PTE LTD
We have audited the financial statements of the Company for the year ended 31
December 2002 as set out on pages 7 to 16. These financial statements are the
responsibility of the Company's directors. 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 plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
directors, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion:-
(a) the financial statements are properly drawn up in accordance with the
provisions of the Singapore Companies Act, Chapter 50 (the "Act") and
Singapore Statements of Accounting Standard and so as to give a true
and fair view of:-
(i) the state of affairs of the Company as at 31 December 2002 and
the results of the Company for the year ended on that date;
and
(ii) the other matters required by Section 201 of the Act to be
dealt with in the financial statements;
(b) the accounting and other records, and the registers required by the Act
to be kept by the Company have been properly kept in accordance with
the provisions of the Act.
/s/ KPMG
KPMG
CERTIFIED PUBLIC ACCOUNTANTS
SINGAPORE
1 April 2003
A-36
BELDEN SHIPPING PTE LTD BALANCE SHEET
ANNUAL REPORT AS AT 31 DECEMBER 2002
NOTE 2002 2001
$ $
NON-CURRENT ASSETS
Property, plant and equipment 3 27,611 11,468
CURRENT ASSETS
Amounts owing by related corporations (non-trade) - 31,363
Other receivables 4 162,202 15,295
Cash and cash equivalents 5 10,081 36,660
--------- --------
172,283 83,318
--------- --------
Less:
CURRENT LIABILITIES
Loans from shareholders of holding company 6 - 66,248
Accrued expenses 25,420 80,882
--------- --------
25,420 147,130
--------- --------
NET CURRENT ASSETS/(LIABILITIES) 146,863 (63,812)
--------- --------
NET ASSETS/(EXCESS OF LIABILITIES OVER ASSETS) $ 174,474 $(52,344)
========= ========
CAPITAL AND RESERVE
Share capital 7 317,500 317,500
Accumulated losses (143,026) (369,844)
--------- --------
$ 174,474 $(52,344)
========= ========
The accompanying notes form an integral part of these financial statements.
A-37
BELDEN SHIPPING PTE LTD PROFIT AND LOSS ACCOUNT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
NOTE 2002 2001
$ $
REVENUE 8 851,509 538,970
Other income 9(a) 35,204 1,154
Communication expenses (28,448) (30,229)
Depreciation of property, plant and equipment 3 (13,392) (7,065)
Legal and consultancy fees (269,557) (163,493)
Office rental (51,620) (20,180)
Staff costs 9(b)&(d) (145,683) (141,644)
Travelling expenses (89,224) (90,183)
Other operating expenses 9(c) (58,129) (51,404)
--------- ---------
Profit from operations 230,660 35,926
Finance costs 9(e) (3,842) (4,020)
--------- ---------
PROFIT before taxation 226,818 31,906
TAXATION 10 - -
--------- ---------
PROFIT AFTER TAXATION 226,818 31,906
Accumulated losses brought forward (369,844) (401,750)
--------- ---------
Accumulated losses carried forward $(143,026) $(369,844)
========= =========
No separate statement of recognised gains and losses has been prepared as the
profit for the year would be the only component of this statement.
The accompanying notes form an integral part of these financial statements.
A-38
BELDEN SHIPPING PTE LTD NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 31 DECEMBER 2002
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 1 April
2003.
1. DOMICILE AND ACTIVITIES
Belden Shipping Pte Ltd is a company incorporated in the Republic of
Singapore with its place of business at 16 Stanley Street, Singapore
068735.
The principal activities of the Company are those relating to
commercial ship management and brokering.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance
with the Singapore Statements of Accounting Standard ("SAS")
(including Interpretations of Statements of Accounting
Standard) issued by the Institute of Certified Public
Accountants of Singapore and the applicable requirements of
the Singapore Companies Act, Chapter 50.
(b) BASIS OF PREPARATION
The financial statements, which are expressed in Singapore
dollars, are prepared on the historical cost basis.
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
(i) OWNED ASSETS
Items of property, plant and equipment are stated at
cost less accumulated depreciation and impairment
losses.
(ii) SUBSEQUENT EXPENDITURE
Subsequent expenditure relating to a fixed asset that
has already been recognised is added to the carrying
amount of the asset when it is probable that future
economic benefits, in excess of the originally
assessed standard of performance of the existing
asset, will flow to the enterprise. All other
subsequent expenditure is recognised as an expense in
the period in which it is incurred.
A-39
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION (CONT'D)
(iii) DEPRECIATION
Items of property, plant and equipment are
depreciated so as to write off their costs on a
straight line basis over the following estimated
useful lives:-
Furniture and fixtures - 48 months
Office equipment - 60 months
Computer equipment - 15 to 36 months
(d) REVENUE RECOGNITION
Shipmanagement income is recognised on an accrual basis.
Commission income for shipbroking is recognised when services
are performed.
(e) BORROWING COSTS
Borrowing costs are recognised as an expense in the period in
which they are incurred.
(f) DEFERRED TAXATION
Deferred tax is provided in full, using the liability method,
on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the
financial statements. Temporary differences are not recognised
for goodwill not deductible for tax purposes and the initial
recognition of assets or liabilities that affect neither
accounting nor taxable profit. The amount of deferred tax
provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the
balance sheet date.
A deferred tax asset is recognised to the extent that it is
probable that future taxable profit will be available against
which the temporary differences can be utilised.
A-40
(h) FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities in foreign currencies are
translated into Singapore dollars at rates of exchange closely
approximate to those ruling at the balance sheet date.
Transactions in foreign currencies during the year are
translated at rates of exchange closely approximate to those
ruling at transaction dates. Translation differences are dealt
with through the profit and loss account.
(i) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand, bank deposits
and short-term, highly liquid investments which are readily
convertible into known amounts of cash and which are subject
to an insignificant risk of changes in value.
(j) OPERATING LEASES
Rental payable under operating leases is accounted for in the
profit and loss account on a straight-line basis over the
periods of the respective leases.
(k) EMPLOYEE BENEFITS
Defined contribution plans
Contributions to defined contribution plans are recognised as
an expense in the profit and loss account as incurred.
A-41
3. PROPERTY, PLANT AND EQUIPMENT
FURNITURE
COMPUTER AND OFFICE
EQUIPMENT FITTINGS EQUIPMENT TOTAL
2002 $ $ $ $
COST
At beginning of the year - 8,247 28,456 36,703
Additions 29,535 - - 29,535
--------- -------- --------- -------
At end of the year $ 29,535 $ 8,247 $ 28,456 $66,238
========= ======== ========= =======
ACCUMULATED DEPRECIATION
At beginning of the year - 6,949 18,286 25,235
Charge for the year 8,523 556 4,313 13,392
--------- -------- --------- -------
At end of the year $ 8,523 $ 7,505 $ 22,599 $38,627
========= ======== ========= =======
DEPRECIATION CHARGED
for 2001 $ - $ 1,334 $ 5,731 $ 7,065
========= ======== ========= =======
NET BOOK VALUE AT
31 December 2002 $ 21,012 $ 742 $ 5,857 $27,611
========= ======== ========= =======
NET BOOK VALUE AT
31 December 2001 $ - $ 1,298 $ 10,170 $11,468
========= ======== ========= =======
4. OTHER RECEIVABLES
2002 2001
$ $
Deposits 4,850 5,295
Staff advance 2,902 10,000
Prepayments 154,450 -
--------- --------
$ 162,202 $ 15,295
========= ========
5. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash in hand and at banks.
A-42
6. LOANS FROM SHAREHOLDERS OF HOLDING COMPANY
The loans from shareholders of the holding company were unsecured with
no fixed terms of repayment. Interest was charged at 6% (2001: 6%) per
annum during the year.
7. SHARE CAPITAL
2002 2001
$ $
Authorised:-
500,000 ordinary shares of $1 each $ 500,000 $500,000
========= ========
Issued and fully paid:-
317,500 ordinary shares of $1 each $ 317,500 $317,500
========= ========
8. REVENUE
Revenue represents management fees for providing commercial ship
management to related corporations.
9. PROFIT BEFORE TAXATION
Profit before taxation includes the following:-
(a) OTHER OPERATING INCOME
2002 2001
$ $
Bank interest income 444 217
Sundry income 34,560 937
Gain on disposal of property, plant
and equipment 200 -
--------- --------
$ 35,204 $ 1,154
========= ========
(b) STAFF COSTS
Salaries and wages 110,400 80,000
Apartment rental 26,633 29,740
Relocation expenses - 17,504
Contributions to defined contribution
plan 6,144 -
Other staff benefits 2,506 14,400
========= ========
$ 145,683 $141,644
========= ========
Number of employees
as at 31 December 2 1
========= ========
A-43
9. PROFIT BEFORE TAXATION (CONT'D)
(c) OTHER OPERATING EXPENSES
2002 2001
$ $
Auditors' remuneration 5,000 5,000
Operating lease expense 51,620 20,180
========= ========
(d) DIRECTORS' REMUNERATION
Directors' remuneration is recognised in the following line
item in the profit and loss account:-
Staff costs $ - $ 51,504
========= ========
(e) FINANCE COSTS
Interest on loans from
shareholders of holding company $ 3,842 $ 4,020
========= ========
10. TAXATION
RECONCILIATION OF TAX CHARGE
2002 2001
$ $
Profit before taxation $ 226,818 $ 31,906
========= =========
Income tax using Singapore tax rate
of 22% (2001: 24.5%) 49,900 7,817
Benefit arising from unrecognised tax
losses (49,900) (7,817)
--------- ---------
$ - $ -
========= =========
In May 2002, the Singapore government announced a reduction in the
corporate tax rate from 24.5% to 22%.
A-44
11. COMMITMENTS
At the balance sheet date, the Company was committed to making the
following payments in respect of lease agreements:-
2002 2001
$ $
Leases which expire:
Within one year - 11,500
Within two to five years - -
--------- --------
$ - $ 11,500
========= ========
12. SIGNIFICANT RELATED PARTY TRANSACTIONS
An affiliated company is a company which has shareholders in common
with the Company.
During the year, there were the following significant transactions with
related parties:-
2002 2001
$ $
Management fee income from related corporations 851,509 438,065
Consultancy fee paid to an affiliated company 269,557 141,859
Consultancy fee paid to a company of which a director is
a member - 20,000
======= =======
13. FINANCIAL INSTRUMENTS
(a) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Exposure to credit and currency risk arises in the normal
course of the Company's business. The Company manages these
risks as part of the general day-to-day management of its
operations.
No derivative financial instruments are used to reduce
exposure to fluctuations in foreign exchange rates as the
Company does not view them to have a significant impact on the
financial statements.
(b) CREDIT RISK
The Company incurs credit risk on the amounts due from its
related corporations and exposure to this risk is monitored on
an ongoing basis. The Company does not require collateral in
respect of financial assets.
(c) FOREIGN EXCHANGE RISK
The Company incurs foreign currency risk on settlement of
payments made on behalf of related corporations that are
denominated in a currency other than Singapore dollars. The
currency giving rise to this risk is primarily the US dollar.
A-45
13. FINANCIAL INSTRUMENTS (cont'd)
(d) FAIR VALUES
As at 31 December 2002 and 2001, the carrying amounts of
financial assets and liabilities approximated their fair
values.
14. HOLDING COMPANY
The immediate and ultimate holding company is Belden Cement Holding
Inc., incorporated in the Republic of Panama.
15. SUBSEQUENT EVENTS
On 10 January 2003, the Company acquired a wholly-owned subsidiary,
Belden Shipping Sweden AB incorporated in Sweden, for a consideration
of $20,216. The subsidiary's net assets at the date of acquisition were
$20,216.
16. COMPARATIVE INFORMATION
During the year, the Company has adopted the revised SAS 12 (2001) -
Income Taxes. The adoption of this accounting standard has not given
rise to any adjustments to the opening balances of accumulated losses
of the prior and current periods or to changes in comparative
information.
A-46
MATTEA SHIPPING INC. STATEMENT BY BOARD OF DIRECTORS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
We, ALF JOHAN LOVEN ANDERSEN and DAG AUDUN ROMMEN, being attorneys-in-fact of
MATTEA SHIPPING INC., do hereby state that in our opinion, the financial
statements set out on pages 3 to 12 are drawn up so as to present fairly the
state of affairs of the Company as at 31 December 2002 and the results of the
business, changes in equity and cash flows of the Company for the year ended on
that date.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
--------------------------------
ALF JOHAN LOVEN ANDERSEN
Attorney-in-fact
/s/ Dag Audun Rommen
--------------------------------
DAG AUDUN ROMMEN
Attorney-in-fact
SINGAPORE
25 March 2003
A-47
REPORT OF THE AUDITORS TO THE MEMBER OF
MATTEA SHIPPING INC.
We have audited the financial statements of Mattea Shipping Inc. for the year
ended 31 December 2002 as set out on pages 3 to 12. These financial statements
are the responsibility of the Company's directors. 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 plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
directors, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements of the Company are properly drawn up in
accordance with Singapore Statements of Accounting Standard and so as to present
fairly, in all material respects, the state of affairs of the Company as at 31
December 2002 and the results of the business, changes in equity and cash flows
of the Company for the year ended on that date.
/s/ KPMG
KPMG
CERTIFIED PUBLIC ACCOUNTANTS
SINGAPORE
25 March 2003
A-48
MATTEA SHIPPING INC. BALANCE SHEET
ANNUAL REPORT AS AT 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
NON-CURRENT ASSETS
Property, plant and equipment 3 12,397,208 11,298,117
CURRENT ASSETS
Trade receivables - 32,582
Other receivables 81,538 263,756
Cash and cash equivalents 1,316,617 340,514
---------- ----------
1,398,155 636,852
---------- ----------
Less:
CURRENT LIABILITIES
Trade payables and accruals 64,851 100,943
Advance charter hire 206,700 41,400
Current portion of interest
bearing bank loans (secured) 4 2,500,000 1,500,000
---------- ----------
2,771,551 1,642,343
---------- ----------
NET CURRENT LIABILITIES (1,373,396) (1,005,491)
NON-CURRENT LIABILITY
Interest-bearing bank loans (secured) 4 (6,125,000) (7,125,000)
---------- ----------
NET ASSETS $4,898,812 $3,167,626
========== ==========
CAPITAL AND RESERVES
Share capital
Authorised, issued and fully paid
100 ordinary shares of US$100 each 10,000 10,000
Reserves 5 4,888,812 3,157,626
---------- ----------
$4,898,812 $3,167,626
========== ==========
The accompanying notes form an integral part of these financial statements.
A-49
MATTEA SHIPPING INC. PROFIT AND LOSS ACCOUNT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
PERIOD FROM
5/6/2001 (DATE
YEAR ENDED OF INCORPORATION)
NOTE 31/12/2002 TO 31/12/2001
US$ US$
REVENUE 6 5,674,450 1,355,850
Other operating income 7(a) 11,380 12,492
Depreciation of property, plant and equipment 3 (1,517,684) (350,982)
Vessel operating expenses (2,118,454) (400,456)
Offhire expenses - (61,272)
Commission (165,461) (50,825)
Consultancy fee - (18,000)
Management fee (297,884) -
Legal fees (25,906) -
Other operating expenses (17,425) (4,648)
---------- ----------------
PROFIT FROM OPERATIONS 1,543,016 482,159
Finance costs 7(b) (411,830) (164,534)
---------- ----------------
NET PROFIT FOR THE YEAR $1,131,186 $ 317,625
========== ================
The accompanying notes form an integral part of these financial statements.
A-50
MATTEA SHIPPING INC. STATEMENT OF CHANGES IN EQUITY
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
SHARE SHARE RETAINED
CAPITAL PREMIUM PROFITS TOTAL
US$ US$ US$ US$
Issue of shares 10,000 2,840,001 - 2,850,001
Net profit for the period - - 317,625 317,625
---------- ---------- ---------- ----------
At 31 December 2001 10,000 2,840,001 317,625 3,167,626
Net profit for the year - - 1,131,186 1,131,186
Issue of shares - 600,000 - 600,000
---------- ---------- ---------- ----------
At 31 December 2002 $ 10,000 $3,440,001 $1,448,811 $4,898,812
========== ========== ========== ==========
The accompanying notes form an integral part of these financial statements.
A-51
MATTEA SHIPPING INC. STATEMENT OF CASH FLOWS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
PERIOD FROM
5/6/2001 (DATE
YEAR ENDED OF INCORPORATION)
NOTE 31/12/2002 TO 31/12/2001
US$ US$
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year 1,131,186 317,625
ADJUSTMENTS FOR:-
Interest income 7(a) (11,380) (12,492)
Interest expense 7(b) 411,830 164,534
Depreciation of property, plant and equipment 3 1,517,684 350,982
---------- ----------------
Operating profit before working capital changes 3,049,320 820,649
CHANGES IN WORKING CAPITAL:
Trade receivables 32,582 (32,582)
Other receivables 182,218 (263,756)
Advance charter hire 165,300 41,400
Trade payables and accruals (23,300) 54,716
---------- ----------------
CASH GENERATED FROM OPERATIONS 3,406,120 620,427
Interest paid (424,622) (118,307)
Interest received 11,380 12,492
---------- ----------------
Cash inflow from operating activities 2,992,878 514,612
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment 3 (2,616,775) (10,499,099)
---------- ----------------
Net cash outflow from investing activities (2,616,775) (10,499,099)
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of bank loan 2,000,000 9,000,000
Repayment of bank loan (2,000,000) (375,000)
Proceeds from issue of share capital 600,000 1,700,001
---------- ----------------
Cash flows from financing activities 600,000 10,325,001
---------- ----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 976,103 340,514
Cash and cash equivalents at beginning of year 340,514 -
---------- ----------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $1,316,617 $ 340,514
========== ================
The accompanying notes form an integral part of these financial statements.
A-52
MATTEA SHIPPING INC. NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 31 DECEMBER 2002
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 25 March
2003.
1. DOMICILE AND ACTIVITIES
Mattea Shipping Inc., is a company incorporated in the Republic of
Panama. The address of the resident agent is Arango Orillac Building,
third floor, 54 Street, Nueva Urbanizacion Obarrio, P.O. Box 5216
Panama 5, Republic of Panama.
The principal activities of the Company are those of ship owners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance
with the Singapore Statements of Accounting Standard ("SAS")
(including Interpretations of Statements of Accounting
Standard) issued by the Institute of Certified Public
Accountants of Singapore.
(b) BASIS OF PREPARATION
The financial statements, expressed in United States dollars,
are prepared on the historical cost basis.
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
(i) OWNED ASSETS
Items of property, plant and equipment are stated at
cost less accumulated depreciation and impairment
losses.
(iii) SUBSEQUENT EXPENDITURE
Subsequent expenditure relating to a fixed asset that
has already been recognised is added to the carrying
amount of the asset when it is probable that future
economic benefits, in excess of the originally
assessed standard of performance of the existing
asset, will flow to the enterprise. All other
subsequent expenditure is recognised as an expense in
the period in which it is incurred.
A-53
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION (CONT'D)
(iii) DEPRECIATION
Depreciation is calculated on a straight-line basis
so as to write off the cost, less estimated residual
value, of the vessels, MV "Glory Sun" and MV "Glory
Moon", over their estimated useful lives of 13 and 2
years, respectively.
(d) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank.
(e) FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities in foreign currencies are
translated into United States dollars at rates of exchange
closely approximate to those ruling at the balance sheet date.
Transactions in foreign currencies are translated at rates
ruling on transaction dates. Translation differences are
included in the profit and loss account.
(f) REVENUE RECOGNITION
Revenue from charter of the vessel is recognised on a
straight-line basis over the period of the charter and after
providing for off-service days.
Interest income from banks is recognised when earned based on
the principal outstanding and at the rate applicable.
(g) BORROWING COSTS
Borrowing costs are recognised as an expense in the year in
which they are incurred.
(h) IMPAIRMENT
The carrying amounts of the Company's assets, other than
inventories, are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If
any such indication exists, the asset's recoverable amount is
estimated.
An impairment loss is recognised whenever the carrying amount
of an item of property, plant and equipment exceeds its
recoverable amount. The impairment loss is charged to the
profit and loss account unless it reverses a previous
revaluation in which case it will be charged to equity. Any
subsequent increase in recoverable amount is reduced by the
amount that would have been recognised as depreciation had the
write-down or write-off not occurred.
A-54
(i) IDENTITY OF RELATED PARTIES
For the purpose of these financial statements, parties are
considered to be related to the Company if the Company has the
ability, directly or indirectly, to control the party or
exercise significant influence over the party in making
financial and operating decisions, or vice versa, or where the
Company and the party are subject to common control or common
significant influence. Related parties may be individuals or
other entities.
3. PROPERTY, PLANT AND EQUIPMENT
VESSEL VESSEL
2002 MV "GLORY SUN" MV "GLORY MOON" TOTAL
COST US$ US$ US$
At beginning of the year 11,649,099 - 11,649,099
Additions - 2,616,775 2,616,775
-------------- --------------- -----------
At end of the year $ 11,649,099 $ 2,616,775 $14,265,874
============== =============== ===========
ACCUMULATED DEPRECIATION
At beginning of the year 350,982 - 350,982
Charge for the year 911,406 606,278 1,517,684
-------------- --------------- -----------
At end of the year $ 1,262,388 $ 606,278 $ 1,868,666
============== =============== ===========
NET BOOK VALUE AS AT
31 December 2002 $ 10,386,711 $ 2,010,497 $12,397,208
============== =============== ===========
NET BOOK VALUE AS AT
31 December 2001 $ 11,298,117 $ - $11,298,117
============== =============== ===========
4. INTEREST-BEARING BANK LOANS (SECURED)
This note provides information about the Company's interest bearing
loans. For more information about the Company's exposure to interest
rate changes, refer to note 9.
A-55
4. INTEREST-BEARING BANK LOANS (SECURED) (CONT'D)
2002 2001
US$ US$
SECURED BANK LOANS
Loan repayable in 20 quarterly instalments
of US$375,000 commencing in August 2001 and
a final instalment of US$1,500,000 in August
2006, secured by a mortgage over a vessel
with net book value of US$10,386,711 (2001:
US$11,298,117) and an assignment of the
vessel's
earnings and insurances. 7,125,000 8,625,000
Loan repayable in 8 quarterly instalments of
US$250,000 commencing in July 2002, secured
by a mortgage over a vessel with net book
value of US$2,010,497 (2001: Nil) and an
assignment of the vessel's earnings and
insurances. 1,500,000 -
----------- -----------
$ 8,625,000 $ 8,625,000
=========== ===========
Payable:
Within 1 year 2,500,000 1,500,000
After 1 year but within 5 years 6,125,000 7,125,000
----------- -----------
$ 8,625,000 $ 8,625,000
=========== ===========
The bank loans are guaranteed up to US$900,000 by shareholders of the
holding company and guaranteed up to US$1,100,000 (2001: US$600,000) by
the holding company.
5. RESERVES
2002 2001
US$ US$
Share premium 3,440,001 2,840,001
Retained profits 1,448,811 317,625
----------- -----------
$ 4,888,812 $ 3,157,626
=========== ===========
Movements in reserves are set out in the statements of changes in
equity.
The application of the share premium account is governed by Panamanian
laws and regulations.
6. REVENUE
Revenue represents charter hire income.
A-56
7. NET PROFIT FOR THE YEAR
Net profit for the year includes the following:-
PERIOD FROM
5/6/2001 (DATE
YEAR ENDED OF INCORPORATION)
31/12/2002 TO 31/12/2001
US$ US$
(a) OTHER OPERATING INCOME
Interest income
- banks $ 11,380 $ 12,492
=========== ================
(b) FINANCE COSTS
Interest on bank loan $ 411,830 $ 164,534
=========== ================
8. HOLDING COMPANY
The immediate and ultimate holding company is Belden Cement Holding
Inc., incorporated in the Republic of Panama.
9. FINANCIAL INSTRUMENTS
(a) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Exposure to credit and interest rate risk arises in the normal
course of the Company's business. The Company manages these
risks as part of the general day-to-day management of its
operations.
No derivative financial instruments are used to reduce
exposure to fluctuations in interest rate as the Company does
not view it to have a significant impact on the financial
statements.
(b) CREDIT RISK
Credit evaluations are performed on charterers before
chartering the Company's vessel to them. The Company does not
require collateral in respect of financial assets.
(c) INTEREST RATE RISK
The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's debt obligations.
A-57
9. FINANCIAL INSTRUMENTS (CONT'D)
(c) INTEREST RATE RISK (CONT'D)
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS
In respect of interest-earning financial assets and
interest-bearing financial liabilities, the following table
indicates their effective interest rates at balance sheet date
and the periods in which they reprice.
EFFECTIVE WITHIN
NOTE INTEREST RATE 1 YEAR
US$
2002
FINANCIAL ASSETS
Cash and cash equivalents 0.7% $ 1,316,617
===========
FINANCIAL LIABILITIES
Secured bank loans 4 3.43% 6,375,000
3.43% 2,250,000
-----------
$ 8,625,000
===========
2001
FINANCIAL ASSETS
Cash and cash equivalents 1.25% $ 340,514
===========
FINANCIAL LIABILITIES
Secured bank loans 4 5.16% 7,875,000
5.02% 375,000
5.06% 375,000
-----------
$ 8,625,000
===========
(d) FAIR VALUES
As at 31 December 2002, the carrying amounts of financial
assets and liabilities approximated their fair values.
10. SIGNIFICANT RELATED PARTY TRANSACTIONS
During the year, there were the following significant transactions with
related parties:-
2002 2001
US$ US$
Related Party
Management fee expense 297,884 -
======= ====
11. COMPARATIVE INFORMATION
Certain items in the comparative figures have been reclassified to
conform with the current year's presentation.
A-58
ECHELON SHIPPING INC. STATEMENT BY BOARD OF DIRECTORS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
We, ALF JOHAN LOVEN ANDERSEN and DAG AUDUN ROMMEN, being attorneys-in-fact of
ECHELON SHIPPING INC., do hereby state that in our opinion, the financial
statements set out on pages 3 to 13 are drawn up so as to present fairly the
state of affairs of the Company as at 31 December 2002 and the results of the
business, changes in equity and the cash flows of the Company for the year ended
on that date.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
--------------------------------------
ALF JOHAN LOVEN ANDERSEN
Attorney-in-fact
/s/ Dag Audun Rommen
--------------------------------------
DAG AUDUN ROMMEN
Attorney-in-fact
SINGAPORE
25 March 2003
A-59
REPORT OF THE AUDITORS TO THE MEMBER OF
ECHELON SHIPPING INC.
We have audited the financial statements of Echelon Shipping Inc. for the year
ended 31 December 2002 as set out on pages 3 to 13. These financial statements
are the responsibility of the Company's directors. 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 plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
directors, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements of the Company are properly drawn up in
accordance with Singapore Statements of Accounting Standard and so as to present
fairly, in all material respects, the state of affairs of the Company as at 31
December 2002 and the results, changes in equity and cash flows of the Company
for the year ended on that date.
/s/ KPMG
KPMG
CERTIFIED PUBLIC ACCOUNTANTS
SINGAPORE
25 March 2003
A-60
ECHELON SHIPPING INC. BALANCE SHEET
ANNUAL REPORT AS AT 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
NON-CURRENT ASSETS
Property, plant and equipment 3 4,340,699 5,381,310
CURRENT ASSETS
----------- ----------
Trade receivables - 47,646
Other receivables 68,370 -
Cash and cash equivalents 723,444 284,894
----------- ----------
791,814 332,540
----------- ----------
Less:
CURRENT LIABILITIES
Trade payable and accruals 27,869 277,013
Advance charter hire 103,750 -
Loan from shareholders of the holding company 4 578,128 548,046
Current portion of interest-bearing
bank loan (secured) 5 1,000,000 2,750,000
----------- ----------
1,709,747 3,575,059
----------- ----------
NET CURRENT LIABILITIES (917,933) (3,242,519)
NON-CURRENT LIABILITIES
Interest-bearing bank loan (secured) 5 (1,750,000) -
Loan from a related party 6 - (770,600)
----------- ----------
NET ASSETS $ 1,672,766 $1,368,191
=========== ==========
CAPITAL AND RESERVES
Share capital
Authorised, issued and fully paid
200 ordinary shares of US$50 each 10,000 10,000
Reserves 7 1,662,766 1,358,191
----------- ----------
$ 1,672,766 $1,368,191
=========== ==========
The accompanying notes form an integral part of these financial statements.
A-61
ECHELON SHIPPING INC. PROFIT AND LOSS ACCOUNT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
REVENUE 8 3,103,925 3,772,694
Other income 9(a) 16,418 10,301
Depreciation of property, plant and equipment 3 (1,040,611) (1,174,160)
Vessel operating expenses (1,245,210) (1,449,372)
Management fees (175,000) (75,000)
Commission (115,279) (100,874)
Other operating expenses (27,979) (26,027)
----------- ----------
PROFIT FROM OPERATIONS 516,264 957,562
Finance costs 9(b) (211,689) (320,745)
----------- ----------
PROFIT FOR THE YEAR $ 304,575 $ 636,817
=========== ==========
The accompanying notes form an integral part of these financial statements.
A-62
ECHELON SHIPPING INC. STATEMENT OF CHANGES IN EQUITY
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
SHARE SHARE ACCUMULATED
CAPITAL PREMIUM LOSSES TOTAL
US$ US$ US$ US$
At 1 January 2001 10,000 2,240,000 (1,518,626) 731,374
Profit for the year - - 636,817 636,817
----------- ----------- ----------- -----------
At 31 December 2001 10,000 2,240,000 (881,809) 1,368,191
Profit for the year - - 304,575 304,575
----------- ----------- ----------- -----------
At 31 December 2002 $ 10,000 $ 2,240,000 $ (577,234) $ 1,672,766
=========== =========== =========== ===========
The accompanying notes form an integral part of these financial statements.
A-63
ECHELON SHIPPING INC. STATEMENT OF CASH FLOWS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
OPERATING ACTIVITIES
Profit for the year 304,575 636,817
Adjustments for:
Depreciation of property, plant and equipment 3 1,040,611 1,174,160
Interest income 9(a) (10,481) (10,301)
Interest expense 9(b) 211,689 320,745
----------- ----------
1,546,394 2,121,421
Changes in working capital:
Trade receivables 47,646 (728)
Other receivables (68,370) -
Trade payable and accruals (177,470) (262,014)
Advance charter hire 103,750 (124,150)
----------- ----------
Cash generated from operations 1,451,950 1,734,529
Interest received 10,481 10,301
Interest paid (333,881) (176,270)
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES 1,128,550 1,568,560
----------- ----------
FINANCING ACTIVITIES
Refinancing of bank loan 2,750,000 -
Repayment of bank loan (2,750,000) (1,000,000)
Repayment of loan from a related party (690,000) -
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES (690,000) (1,000,000)
----------- ----------
INVESTING ACTIVITIES
Purchase of property, plant and equipment 3 - (316,693)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES - (316,693)
----------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 438,550 251,867
Cash and cash equivalents at beginning of year 284,894 33,027
----------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 723,444 $ 284,894
=========== ==========
The accompanying notes form an integral part of these financial statements.
A-64
ECHELON SHIPPING INC. NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 31 DECEMBER 2002
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 25 March
2003.
1. DOMICILE AND ACTIVITIES
Echelon Shipping Inc is a company incorporated in the Republic of
Panama. The address of the resident agent is Arango Orillac Building,
third floor, 54 Street, Nueva Urbanizacion Obarrio, P.O. Box 5216
Panama 5, Republic of Panama.
The principal activities of the Company are those of ship owners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance
with the Singapore Statements of Accounting Standard ("SAS")
(including Interpretations of Statements of Accounting
Standard) issued by the Institute of Certified Public
Accountants of Singapore.
(b) BASIS OF PREPARATION
The financial statements, expressed in United States dollars,
are prepared on the historical cost basis.
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
(i) OWNED ASSETS
Items of property, plant and equipment are stated at
cost less accumulated depreciation and impairment
losses.
(ii) SUBSEQUENT EXPENDITURE
Subsequent expenditure relating to a fixed asset that
has already been recognised is added to the carrying
amount of the asset when it is probable that future
economic benefits, in excess of the originally
assessed standard of performance of the existing
asset, will flow to the enterprise. All other
subsequent expenditure is recognised as an expense in
the period in which it is incurred.
A-65
(iii) DEPRECIATION
Depreciation is calculated on a straight line basis
so as to write off the cost, less estimated residual
value, of the vessel over its estimated useful life
of 9 years.
(d) REVENUE RECOGNITION
Revenue from charter of the vessel is recognised on a straight
line basis over the period of the charter and after providing
for off-service days.
Interest income from banks is recognised when earned based on
the principal outstanding and at the rate applicable.
(e) FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities in foreign currencies are
translated into United States dollars at rates of exchange
closely approximate to those ruling at the balance sheet date.
Transactions in foreign currencies are translated at rates
ruling on transaction dates. Translation differences are
included in the profit and loss account.
(f) BORROWING COSTS
Borrowing costs are recognised as an expense in the year in
which they are incurred.
(g) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank.
(h) IMPAIRMENT
The carrying amounts of the Company's assets, other than
inventories, are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If
any such indication exists, the asset's recoverable amount is
estimated.
An impairment loss is recognised whenever the carrying amount
of an item of property, plant and equipment exceeds its
recoverable amount. The impairment loss is charged to the
profit and loss account unless it reverses a previous
revaluation in which case it will be charged to equity. Any
subsequent increase in recoverable amount is reduced by the
amount that would have been recognised as depreciation had the
write-down or write-off not occurred.
A-66
3. PROPERTY, PLANT AND EQUIPMENT
VESSEL MV
"MARIANA III"
2002 US$
COST
At beginning of the year 9,470,590
Additions -
----------
At end of the year $9,470,590
==========
ACCUMULATED DEPRECIATION
At beginning of the year 4,089,280
Charge for the year 1,040,611
----------
At end of the year $5,129,891
==========
NET BOOK VALUE at 31 December 2002 $4,340,699
==========
NET BOOK VALUE at 31 December 2001 $5,381,310
==========
4. LOAN FROM SHAREHOLDERS OF THE HOLDING COMPANY
2002 2001
US$ US$
Loan principal 500,000 500,000
Accrued interest 78,128 48,046
-------- --------
$578,128 $548,046
======== ========
The loan from shareholders of the holding company is unsecured and has
no fixed terms of repayment.
5. INTEREST-BEARING BANK LOAN (SECURED)
2002 2001
US$ US$
The bank loan is repayable as follows:
- Within 1 year 1,000,000 2,750,000
- After 1 year but within 5 years 1,750,000 -
----------- -----------
$ 2,750,000 $ 2,750,000
=========== ===========
A-67
5. INTEREST-BEARING BANK LOAN (SECURED) (CONT'D)
In October 2002, the Company refinanced its bank loan with another
financial institution. The new bank loan is repayable in 9 quarterly
instalments of US$250,000 commencing in January 2003 and a final
instalment of US$500,000 in April 2005. It is secured by a mortgage
over the Company's vessel and an assignment of the vessel's earnings
and insurances, guaranteed up to US$900,000 by shareholders of the
holding company and guaranteed up to US$1,100,000 by the holding
company.
6. LOAN FROM A RELATED PARTY
2002 2001
US$ US$
Loan principal - 690,000
Accrued interest - 80,600
--------- -----------
$ - $ 770,600
========= ===========
7. RESERVES
2002 2001
US$ US$
Share premium 2,240,000 2,240,000
Accumulated losses (577,234) (881,809)
--------- -----------
1,662,766 $ 1,358,191
========= ===========
Movements in reserves are set out in the statement of changes in
equity.
The application of the share premium account is governed by Panamanian
laws and regulations.
8. REVENUE
Revenue represents charter hire income.
9. PROFIT FOR THE YEAR
Profit for the year includes the following:
2002 2001
US$ US$
(a) OTHER INCOME
Interest income
- bank 10,481 10,301
Others 5,937 -
--------- -----------
$ 16,418 $ 10,301
========= ===========
A-68
9. PROFIT FOR THE YEAR (CONT'D)
2002 2001
US$ US$
(b) FINANCE COSTS
Loan refinancing charges 29,875 -
Interest expense
- bank loan 117,232 248,272
- loan from shareholders of the holding company 30,082 30,414
- loan from a related party 34,500 41,400
- bank overdraft - 659
-------- --------
$211,689 $320,745
======== ========
10. SIGNIFICANT RELATED PARTY TRANSACTIONS
For the purpose of these financial statements, parties are considered
to be related to the Company if the Company has the ability, directly
or indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice
versa, or where the Company and the party are subject to common control
or common significant influence. Related parties may be individuals or
other entities.
During the year, there were the following significant transactions with
related parties:-
2002 2001
US$ US$
RELATED PARTY
Management fee expense $175,000 $ 75,000
======== ========
11. HOLDING COMPANY
The immediate and ultimate holding company is Belden Cement Holding
Inc., incorporated in the Republic of Panama.
12. FINANCIAL INSTRUMENTS
(a) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Exposure to credit and interest rate risk arises in the normal
course of the Company's business. The Company manages these
risks as part of the general day-to-day management of its
operation.
No derivative financial instruments are used to reduce
exposure to fluctuations in interest rate as the Company does
not view them to have a significant impact on the financial
statements.
A-69
12. FINANCIAL INSTRUMENTS (CONT'D)
(b) CREDIT RISK
Credit evaluations are performed on charterers before
chartering the Company's vessel to them. The Company does not
require collateral in respect of financial assets.
(c) INTEREST RATE RISK
The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's debt obligations.
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS
In respect of interest-earning financial assets and
interest-bearing financial liabilities, the following table
indicates their effective interest rates at balance sheet date
and the periods in which they reprice.
WITHIN 1 TO 5
EFFECTIVE 1 YEAR YEARS TOTAL
NOTE INTEREST RATE US$ US$ US$
2002
FINANCIAL ASSETS
Cash and cash
equivalents 0.7% $ 723,444 $ - $ 723,444
=========== ========= ===========
FINANCIAL LIABILITIES
Loan from shareholders
of holding
company 4 6% 500,000 - 500,000
Secured bank loan 5 3.34% 2,000,000 - 2,000,000
3.39% 250,000 - 250,000
3.30% 250,000 - 250,000
3.29% 250,000 - 250,000
----------- --------- -----------
$ 3,250,000 $ - $ 3,250,000
=========== ========= ===========
2001
FINANCIAL ASSETS
Cash and cash
equivalents 1.5% $ 284,894 $ - $ 284,894
=========== ========= ===========
FINANCIAL LIABILITIES
Loan from shareholders
of holding
company 4 6% 500,000 - 500,000
Secured bank loan 5 5.63% 2,750,000 - 2,750,000
Loan from a
related party 6 6% - 690,000 690,000
----------- --------- -----------
$ 3,250,000 $ 690,000 $ 3,940,000
=========== ========= ===========
A-70
12. FINANCIAL INSTRUMENTS (CONT'D)
(d) FAIR VALUES
The net fair value of a financial liability which is not
carried at fair value in the balance sheet as at 31 December
is represented in the following table:
2002 2001
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
NOTE US$ US$ US$ US$
FINANCIAL LIABILITY
Loan from a related
party 6 $ - $ - $ 770,600 $ 647,011
============= =========== ========= ===========
Unrecognised gain $ - $ 123,589
=========== ===========
Other than the above, as at 31 December 2002 and 2001, the
carrying amounts of financial assets and liabilities
approximated their fair values.
13. COMPARATIVE INFORMATION
Certain items in the comparative figures have been reclassified to
conform with the current year's presentation.
A-71
SHINING STAR SHIPPING INC. STATEMENT BY BOARD OF DIRECTORS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
We, ALF JOHAN LOVEN ANDERSEN and DAG AUDUN ROMMEN, being attorneys-in-fact of
SHINING STAR SHIPPING INC., do hereby state that in our opinion, the financial
statements set out on pages 3 to 14 are drawn up so as to present fairly the
state of affairs of the Company as at 31 December 2002 and the results of the
business, changes in equity and cash flows of the Company for the year ended on
that date.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
----------------------------------
ALF JOHAN LOVEN ANDERSEN
Attorney-in-fact
/s/ Dag Audun Rommen
----------------------------------
DAG AUDUN ROMMEN
Attorney-in-fact
SINGAPORE
25 March 2003
A-72
REPORT OF THE AUDITORS TO THE MEMBER OF
SHINING STAR SHIPPING INC.
We have audited the financial statements of Shining Star Shipping Inc. for the
year ended 31 December 2002 as set out on pages 3 to 14. These financial
statements are the responsibility of the Company's directors. 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 plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
directors, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements of the Company are properly drawn up in
accordance with Singapore Statements of Accounting Standard and so as to present
fairly, in all material respects, the state of affairs of the Company as at 31
December 2002 and the results of the business, changes in equity and cash flows
of the Company for the year ended on that date.
/s/ KPMG
KPMG
CERTIFIED PUBLIC ACCOUNTANTS
SINGAPORE
25 March 2003
A-73
SHINING STAR SHIPPING INC. BALANCE SHEET
ANNUAL REPORT AS AT 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
NON-CURRENT ASSETS
Property, plant and equipment 3 11,825,501 12,933,737
Loan to a related party 4 - 770,600
---------- ----------
11,825,501 13,704,337
CURRENT ASSETS
Trade receivables - 194,329
Other receivables 291,831 192,650
Cash and cash equivalents 172,270 26,140
---------- ----------
464,101 413,119
---------- ----------
Less:
CURRENT LIABILITIES
Accrued expenses 2,156 13,683
Advance charter hire 102,893 23,121
Current portion of obligations under a
hire purchase agreement 5 1,508,301 1,414,119
---------- ----------
1,613,350 1,450,923
---------- ----------
NET CURRENT LIABILITIES (1,149,249) (1,037,804)
NON-CURRENT LIABILITIES
Obligations under a hire purchase agreement 5 (8,516,336) (10,024,637)
---------- ----------
NET ASSETS $2,159,916 $ 2,641,896
========== ===========
CAPITAL AND RESERVES
Share capital
Authorised, issued and fully paid
200 ordinary shares of US$50 each 10,000 10,000
Reserves 6 2,149,916 2,631,896
---------- ----------
$2,159,916 $ 2,641,896
========== ===========
The accompanying notes form an integral part of these financial statements.
A-74
SHINING STAR SHIPPING INC. PROFIT AND LOSS ACCOUNT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
PERIOD FROM
14/08/2000 (DATE
YEAR ENDED OF INCORPORATION)
31/12/2002 TO 31/12/2001
NOTE US$ US$
REVENUE 7 2,947,568 2,090,130
Other operating income 8(a) 232,554 235,866
Waiver of amount due to a related party (trade) - 441,733
Depreciation of property, plant and equipment 3 (1,108,236) (778,844)
Management fees (75,000) -
Legal fees (20,676) (20,532)
Commission (69,365) (49,133)
Other operating expenses (33,101) (6,514)
------------ -----------
PROFIT FROM OPERATIONS 1,873,744 1,912,706
Finance costs 8(b) (898,083) (711,045)
------------ -----------
PROFIT BEFORE TAXATION 975,661 1,201,661
Taxation 9 (132,641) (94,056)
------------ -----------
PROFIT AFTER TAXATION $ 843,020 $ 1,107,605
============ ===========
The accompanying notes form an integral part of these financial statements.
A-75
SHINING STAR SHIPPING INC. STATEMENT OF CHANGES IN EQUITY
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
SHARE SHARE RETAINED
CAPITAL PREMIUM PROFITS TOTAL
US$ US$ US$ US$
Issue of shares 10,000 1,734,291 - 1,744,291
Profit for the period - - 1,107,605 1,107,605
Dividend paid - - (210,000) (210,000)
------------- ------------- ------------ -----------
At 31 December 2001 10,000 1,734,291 897,605 2,641,896
Net profit for the year - - 843,020 843,020
Dividend paid - - (1,325,000) (1,325,000)
------------- ------------- ------------ -----------
At 31 December 2002 $ 10,000 $ 1,734,291 $ 415,625 $ 2,159,916
============= =========== ============ ===========
The accompanying notes form an integral part of these financial statements.
A-76
SHINING STAR SHIPPING INC. STATEMENT OF CASH FLOWS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
PERIOD FROM
14/08/2000 (DATE
YEAR ENDED OF INCORPORATION)
31/12/2002 TO 31/12/2001
NOTE US$ US$
OPERATING ACTIVITIES
Profit before taxation 975,661 1,201,661
Adjustments for:
Interest income 8(a) (50,643) (41,537)
Interest expense 8(b) 898,083 711,045
Depreciation of property, plant and equipment 3 1,108,236 778,844
Waiver of amount due to a related party - (441,733)
------------- -------------
Operating profit before working capital changes 2,931,337 2,208,280
Changes in working capital:
Trade receivables 194,329 (194,329)
Other receivables (99,181) 393,207
Accrued expenses (3,444) (10,840)
Charter hire received in advance 79,772 23,121
Trade portions of amount due to a related party - (647,866)
------------- -------------
Cash generated from operations 3,102,813 1,771,567
Interest paid (906,167) (748,024)
Interest received 131,244 12,442
Dividends paid (1,325,000) (210,000)
Foreign withholding tax deducted at source (132,641) (94,056)
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES 870,249 731,929
------------- -------------
INVESTING ACTIVITIES
Non-trade portions of amount due from a related party - 50,000
Effects of acquisition of assets and liabilities
from a related party 10 - 246,544
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES - 296,544
------------- -------------
FINANCING ACTIVITIES
Payment of hire purchase instalments (1,414,119) (1,002,333)
Repayment of loan to a related party 690,000 -
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES (724,119) (1,002,333)
------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 146,130 26,140
Cash and cash equivalents at beginning of year 26,140 -
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 172,270 $ 26,140
============= =============
The accompanying notes form an integral part of these financial statements.
A-77
SHINING STAR SHIPPING INC. NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 31 DECEMBER 2002
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 25 March
2003.
1. DOMICILE AND ACTIVITIES
Shining Star Shipping Inc. is a company incorporated in the Republic of
Panama. The address of the resident agent is Arango Orillac Building,
third floor, 54 Street, Nueva Urbanizacion Obarrio, P.O. Box 5216
Panama 5, Republic of Panama.
The principal activities of the Company are those of ship owners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance
with the Singapore Statements of Accounting Standard ("SAS")
(including Interpretations of Statements of Accounting
Standard) issued by the Institute of Certified Public
Accountants of Singapore.
(b) BASIS OF PREPARATION
The financial statements, expressed in United States dollars,
are prepared on the historical cost basis.
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
(i) OWNED ASSETS
Items of property, plant and equipment are stated at
cost less accumulated depreciation and impairment
losses.
(iv) SUBSEQUENT EXPENDITURE
Subsequent expenditure relating to a fixed asset that
has already been recognised is added to the carrying
amount of the asset when it is probable that future
economic benefits, in excess of the originally
assessed standard of performance of the existing
asset, will flow to the enterprise. All other
subsequent expenditure is recognised as an expense in
the period in which it is incurred.
A-78
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION (CONT'D)
(iii) DEPRECIATION
Depreciation is calculated on a straight-line basis
so as to write off the cost, less estimated residual
value, of the vessel over its estimated useful life
of 11 years.
(d) REVENUE RECOGNITION
Revenue from charter of the vessel is recognised on a
straight-line basis over the period of the charter and after
providing for off-service days.
Interest income from banks is recognised when earned based on
the principal outstanding and at the rate applicable.
(e) FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities in foreign currencies are
translated into United States dollars at rates of exchange
closely approximate to those ruling at the balance sheet date.
Transactions in foreign currencies are translated at rates
ruling on transaction dates. Translation differences are
included in the profit and loss account.
(f) BORROWING COSTS
Borrowing costs are recognised as an expense in the year in
which they are incurred.
(g) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank.
(h) IMPAIRMENT
The carrying amounts of the Company's assets, other than
inventories, are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If
any such indication exists, the asset's recoverable amount is
estimated.
An impairment loss is recognised whenever the carrying amount
of an item of property, plant and equipment exceeds its
recoverable amount. The impairment loss is charged to the
profit and loss account unless it reverses a previous
revaluation in which case it will be charged to equity. Any
subsequent increase in recoverable amount is reduced by the
amount that would have been recognised as depreciation had the
write-down or write-off not occurred.
A-79
3. PROPERTY, PLANT AND EQUIPMENT
VESSEL
MV "ARO"
2002 US$
COST
At beginning of the year 13,712,581
Additions -
-----------
At end of the year $13,712,581
===========
ACCUMULATED DEPRECIATION
At beginning of the year 778,844
Charge for the year 1,108,236
-----------
At end of the year $ 1,887,080
===========
NET BOOK VALUE AS AT
31 December 2002 $11,825,501
===========
NET BOOK VALUE AS AT
31 December 2001 $12,933,737
===========
4. LOAN TO A RELATED PARTY
2002 2001
US$ US$
Loan principal - 690,000
Accrued interest - 80,600
------------- -------------
$ - $ 770,600
============ =============
5. OBLIGATIONS UNDER A HIRE PURCHASE AGREEMENT
The vessel was acquired through a hire purchase agreement, under which
the outstanding principal is repayable in quarterly instalments of an
increasing amount ranging from approximately $368,000 in March 2003 to
approximately $405,000 in June 2004, and a final instalment of $7.3
million in December 2004.
A-80
5. OBLIGATIONS UNDER A HIRE PURCHASE AGREEMENT (CONT'D)
At 31 December, the obligations are payable as follows:
PAYMENTS INTEREST PRINCIPAL
2002 US$ US$ US$
Within 1 year 2,289,771 781,470 1,508,301
After 1 year but within 5 years 9,120,749 604,413 8,516,336
----------- ----------- -----------
$11,410,520 $ 1,385,883 $10,024,637
=========== =========== ===========
2001
Within 1 year 2,315,265 901,146 1,414,119
After 1 year but within 5 years 11,471,382 1,446,745 10,024,637
----------- ----------- -----------
$13,786,647 $ 2,347,891 $11,438,756
=========== =========== ===========
6. RESERVES
2002 2001
US$ US$
Share premium 1,734,291 1,734,291
Retained profit 415,625 897,605
----------- -----------
$ 2,149,916 $ 2,631,896
=========== ===========
Movements in reserves are set out in the statement of changes in
equity.
The application of the share premium account is governed by Panamanian
laws and regulations.
7. REVENUE
Revenue represents charter hire income.
A-81
8. PROFIT FROM OPERATIONS
Profit from operations includes the following:-
PERIOD FROM
14/08/2000 (DATE
YEAR ENDED OF INCORPORATION)
31/12/2002 TO 31/12/2001
US$ US$
(a) OTHER OPERATING INCOME
Interest income
- banks 16,143 12,442
- loan to a related party 34,500 29,095
Sundry income 181,911 194,329
------------ ------------
$ 232,554 $ 235,866
============ ============
(b) FINANCE COSTS
Hire purchase interest $ 898,083 $ 711,045
============ ============
9. TAXATION
Taxation represents foreign withholding tax deducted at source.
10. SIGNIFICANT RELATED PARTY TRANSACTIONS
For the purpose of these financial statements, parties are considered
to be related to the Company if the Company has the ability, directly
or indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice
versa, or where the Company and the party are subject to common control
or common significant influence. Related parties may be individuals or
other entities.
In addition to those disclosed elsewhere in the financial statements,
during the year, there were the following significant transactions with
related parties:-
2002 2001
US$ US$
RELATED PARTY
Management fee expense 75,000 -
====== ======
A-82
11. FINANCIAL INSTRUMENTS
(a) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Exposure to credit and interest rate risk arises in the normal
course of the Company's business. The Company manages these
risks as part of the general day-to-day management of its
operations.
(b) CREDIT RISK
Credit evaluations are performed on charterers before
chartering the Company's vessel to them. The Company does not
require collateral in respect of financial assets.
(c) INTEREST RATE RISK
The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's debt obligations.
Derivative financial instruments are used to reduce exposure
to fluctuations in interest rate.
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS
In respect of interest-earning financial assets and
interest-bearing financial liabilities, the following table
indicates their effective interest rates at balance sheet date
and the periods in which they reprice.
EFFECTIVE WITHIN 1 TO 5
INTEREST 1 YEAR YEARS TOTAL
NOTE RATE US$ US$ US$
2002
FINANCIAL ASSETS
Cash and cash
equivalents 0.25% $ 172,270 $ - $ 172,270
=========== =========== ===========
FINANCIAL LIABILITY
Hire purchase 5 8.145% $1,508,301 $8,516,336 $10,024,637
=========== =========== ===========
2001
FINANCIAL ASSETS
Loan to a related
party 4 6% - 690,000 690,000
Cash and cash
equivalents 0.75% 26,140 - 26,140
----------- ----------- -----------
$ 26,140 $ 690,000 $ 716,140
=========== =========== ===========
A-83
11. FINANCIAL INSTRUMENTS (CONT'D)
(c) INTEREST RATE RISK (CONT'D)
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS (CONT'D)
EFFECTIVE WITHIN 1 TO 5
INTEREST 1 YEAR YEARS TOTAL
NOTE RATE US$ US$ US$
2001
FINANCIAL LIABILITY
Hire purchase 5 8.145% $1,414,119 $10,024,637 $11,438,756
========== =========== ===========
(d) FAIR VALUES
The net fair values of financial assets and liabilities which
are not carried at fair value in the balance sheet as at 31
December is represented in the following table:
2002 2001
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
NOTE US$ US$ US$ US$
FINANCIAL ASSET
Loan to a related
party 4 $ - $ - $ 770,600 $ 647,000
============ ============ ============ ============
FINANCIAL LIABILITY
Hire purchase
obligations 5 $(10,024,637) $(11,018,877) $(11,438,756) $(12,172,011)
============ ============ ============ ============
Unrecognised loss $ (994,240) $ (856,855)
============ ============
The fair value of the hire purchase obligations is determined
based on the current offer of the hire purchase obligations as
advised by the financier.
Other than the above, the carrying amounts of financial assets
and liabilities approximated their fair values.
A-84
12. HOLDING COMPANY
The immediate and ultimate holding company is Belden Cement Holding
Inc., incorporated in the Republic of Panama.
13. COMPARATIVE INFORMATION
Certain items in the comparative figures have been reclassified to
conform with the current year's presentation.
A-85
EMBLEM SHIPPING INC. STATEMENT BY BOARD OF DIRECTORS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
We, ALF JOHAN LOVEN ANDERSEN and DAG AUDUN ROMMEN, being attorneys-in-fact of
EMBLEM SHIPPING INC., do hereby state that in our opinion, the financial
statements set out on pages 3 to 13 are drawn up so as to present fairly the
state of affairs of the Company as at 31 December 2002 and the results of the
business, changes in equity and cash flows of the Company for the year ended on
that date.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
----------------------------------
ALF JOHAN LOVEN ANDERSEN
Attorney-in-fact
/s/ Dag Audun Rommen
----------------------------------
DAG AUDUN ROMMEN
Attorney-in-fact
SINGAPORE
25 March 2003
A-86
REPORT OF THE AUDITORS TO THE MEMBER OF
EMBLEM SHIPPING INC.
We have audited the financial statements of Emblem Shipping Inc. for the year
ended 31 December 2002 as set out on pages 3 to 13. These financial statements
are the responsibility of the Company's directors. 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 plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
directors, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements of the Company are properly drawn up in
accordance with Singapore Statements of Accounting Standard and so as to present
fairly, in all material respects, the state of affairs of the Company as at 31
December 2002 and the results of the business, changes in equity and cash flows
of the Company for the year ended on that date.
/s/ KPMG
KPMG
CERTIFIED PUBLIC ACCOUNTANTS
SINGAPORE
25 March 2003
A-87
EMBLEM SHIPPING INC. BALANCE SHEET
ANNUAL REPORT AS AT 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
NON-CURRENT ASSETS
Property, plant and equipment 3 7,132,613 8,181,638
CURRENT ASSETS
Sundry receivables 90,615 72,913
Cash and cash equivalents 260,854 187,374
------------- -------------
351,469 260,287
------------- -------------
Less:
CURRENT LIABILITIES
Accrued expenses 110,478 84,108
Current portion of interest
bearing bank loan (secured) 4 438,198 406,060
------------- -------------
548,676 490,168
------------- -------------
NET CURRENT LIABILITIES (197,207) (229,881)
NON-CURRENT LIABILITY
Interest-bearing bank loan (secured) 4 (5,660,419) (6,098,617)
------------- -------------
NET ASSETS $ 1,274,987 $ 1,853,140
============= =============
CAPITAL AND RESERVES
Share capital
Authorised, issued and fully paid
100 ordinary shares of US$100 each 10,000 10,000
Reserves 5 1,264,987 1,843,140
------------- -------------
$ 1,274,987 $ 1,853,140
============= =============
The accompanying notes form an integral part of these financial statements.
A-88
EMBLEM SHIPPING INC. PROFIT AND LOSS ACCOUNT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
PERIOD FROM
27/10/2000 (DATE
YEAR ENDED OF INCORPORATION)
NOTE 31/12/2002 TO 31/12/2001
US$ US$
REVENUE 6 1,395,466 1,127,156
Other operating income 7(a) 1,040 5,718
Depreciation of property, plant and equipment 3 (1,049,025) (961,628)
Management fee (75,000) (50,000)
Other operating expenses (19,938) (8,890)
------------- ------------
PROFIT FROM OPERATIONS 252,543 112,356
Finance costs 7(b) (430,696) (462,926)
------------- ------------
NET LOSS FOR THE YEAR $ (178,153) $ (350,570)
============= ============
The accompanying notes form an integral part of these financial statements.
A-89
EMBLEM SHIPPING INC. STATEMENT OF CHANGES IN EQUITY
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
SHARE SHARE ACCUMULATED
CAPITAL PREMIUM LOSS TOTAL
US$ US$ US$ US$
Issue of shares 10,000 2,443,710 - 2,453,710
Net loss for the period - - (350,570) (350,570)
Dividend paid - (250,000) - (250,000)
------------- ----------- ------------ -----------
At 31 December 2002 10,000 2,193,710 (350,570) 1,853,140
Net loss for the year - - (178,153) (178,153)
Dividend paid - (400,000) - (400,000)
------------- ----------- ------------ -----------
At 31 December 2002 $ 10,000 $ 1,793,710 $ (528,723) $ 1,274,987
============= =========== ============ ===========
The accompanying notes form an integral part of these financial statements.
A-90
EMBLEM SHIPPING INC. STATEMENT OF CASH FLOWS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
PERIOD FROM
27/10/2000 (DATE
YEAR ENDED OF INCORPORATION)
NOTE 31/12/2002 TO 31/12/2001
US$ US$
OPERATING ACTIVITIES
Net loss for the year (178,153) (350,570)
Adjustments for:
Interest income 7(a) (1,040) (5,718)
Interest expense 7(b) 430,696 462,926
Depreciation of property, plant and equipment 3 1,049,025 961,628
------------- ------------
Operating profit before working capital changes 1,300,528 1,068,266
Changes in working capital:
Other receivables (17,702) (72,739)
Accrued expenses (546) 4,818
------------- ------------
Cash generated from operations 1,282,280 1,000,345
Interest paid (403,780) (383,636)
Interest received 1,040 5,544
Dividend paid (400,000) (250,000)
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES 479,540 372,253
------------- ------------
INVESTING ACTIVITIES
Purchase of property, plant and equipment 3 - (9,143,266)
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES - (9,143,266)
------------- ------------
FINANCING ACTIVITIES
Drawdown of bank loan - 6,789,556
Repayment of bank loan (406,060) (284,879)
Proceeds from issue of share capital - 2,453,710
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES (406,060) 8,958,387
------------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 73,480 187,374
Cash and cash equivalents at beginning of year 187,374 -
------------- ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 260,854 $ 187,374
============= =============
The accompanying notes form an integral part of these financial statements.
A-91
EMBLEM SHIPPING INC. NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 31 DECEMBER 2002
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 25 March
2003.
1. DOMICILE AND ACTIVITIES
Emblem Shipping Inc. (the "Company") is incorporated in the Republic of
Panama. The address of the resident agent is Arango Orillac Building,
third floor, 54 Street, Nueva Urbanizacion Obarrio, P.O. Box 5216
Panama 5, Republic of Panama.
The principal activities of the Company are those of ship owners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance
with the Singapore Statements of Accounting Standard ("SAS")
(including Interpretations of Statements of Accounting
Standard) issued by the Institute of Certified Public
Accountants of Singapore.
(b) BASIS OF PREPARATION
The financial statements, expressed in United States dollars,
are prepared on the historical cost basis.
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
(i) OWNED ASSETS
Items of property, plant and equipment are stated at
cost less accumulated depreciation and impairment
losses.
(v) SUBSEQUENT EXPENDITURE
Subsequent expenditure relating to a fixed asset that
has already been recognised is added to the carrying
amount of the asset when it is probable that future
economic benefits, in excess of the originally
assessed standard of performance of the existing
asset, will flow to the enterprise. All other
subsequent expenditure is recognised as an expense in
the period in which it is incurred.
A-92
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION (CONT'D)
(iii) DEPRECIATION
Depreciation is calculated on a straight-line basis
so as to write off the cost, less estimated residual
value, of the vessel over its estimated useful life
of 8 years.
(d) REVENUE RECOGNITION
Revenue from charter of the vessel is recognised on a
straight-line basis over the period of the charter and after
providing for off-service days.
Interest income from banks is recognised when earned based on
the principal outstanding and at the rate applicable.
(e) FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities in foreign currencies are
translated into United States dollars at rates of exchange
closely approximate to those ruling at the balance sheet date.
Transactions in foreign currencies are translated at rates
ruling on transaction dates. Translation differences are
included in the profit and loss account.
(f) BORROWING COSTS
Borrowing costs are recognised as an expense in the year in
which they are incurred.
(g) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank.
(h) IMPAIRMENT
The carrying amounts of the Company's assets are reviewed at
each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the
asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. The impairment
loss is charged to the profit and loss account. Any subsequent
increase in recoverable amount is reduced by the amount that
would have been recognised as depreciation had the write-down
or write-off not occurred.
A-93
(i) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses interest rate swap contracts to hedge its
exposure to interest rate risks from financing activities.
Derivative financial instruments used for hedging purposes are
accounted for on an equivalent basis to the underlying assets,
liabilities or net positions. Any profit or loss arising is
recognised on the same basis as that arising from the related
assets, liabilities or positions.
3. PROPERTY, PLANT AND EQUIPMENT
VESSEL
MV "ALCEM CALACA"
2002 US$
COST
At beginning and end of the year $ 9,143,266
===========
ACCUMULATED DEPRECIATION
At beginning of the year 961,628
Charge for the year 1,049,025
-----------
At end of the year $ 2,010,653
===========
NET BOOK VALUE AS AT
31 December 2002 $ 7,132,613
===========
NET BOOK VALUE AS AT
31 December 2001 $ 8,181,638
===========
4. INTEREST-BEARING BANK LOAN
2002 2001
US$ US$
The bank loan is repayable as follows:
- Within 1 year 438,198 406,060
- After 1 year but within 5 years 3,638,350 3,036,493
- After 5 years 2,022,069 3,062,124
----------- -----------
$ 6,098,617 $ 6,504,677
=========== ===========
A-94
4. INTEREST-BEARING BANK LOAN (CONT'D)
The bank loan is repayable in 34 quarterly instalments ranging from
$1,000 to $315,000 commencing in January 2001. It is secured by a
mortgage over the Company's vessel and an assignment of the vessel's
earnings and insurances and guaranteed by a related party.
5. RESERVES
2002 2001
US$ US$
Share premium 1,793,710 2,193,710
Accumulated loss (528,723) (350,570)
----------- -----------
$ 1,264,987 $ 1,843,140
=========== ===========
Movement in reserves are set out in the statement of changes in equity.
The application of the share premium account is governed by Panamanian
laws and regulations.
6. REVENUE
Revenue represents charter hire income.
7. NET LOSS FOR THE YEAR
Net loss for the year includes the following:-
PERIOD FROM
27/10/2000 (DATE
YEAR ENDED OF INCORPORATION)
NOTE 31/12/2002 TO 31/12/2001
US$ US$
(a) OTHER OPERATING INCOME
Interest income
- banks $ 1,040 $ 5,718
============= =============
(b) FINANCE COSTS
Interest on bank loan $ 430,696 $ 462,926
============= =============
A-95
8. SIGNIFICANT RELATED PARTY TRANSACTIONS
For the purpose of these financial statements, parties are considered
to be related to the Company if the Company has the ability, directly
or indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice
versa, or where the Company and the party are subject to common control
or common significant influence. Related parties may be individuals or
other entities.
During the year, there were the following significant transactions with
related parties:-
2002 2001
US$ US$
Management fee expense $ 75,000 $ 50,000
============= ============
9. HOLDING COMPANY
The immediate and ultimate holding company is Belden Cement Holding
Inc., incorporated in the Republic of Panama.
10. FINANCIAL INSTRUMENTS
(a) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Exposure to credit and interest rate risk arises in the normal
course of the Company's business. The Company manages these
risks as part of the general day-to-day management of its
operations.
(b) CREDIT RISK
Credit evaluations are performed on charterers before
chartering the Company's vessel to them. The Company does not
require collateral in respect of financial assets.
(c) INTEREST RATE RISK
The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's debt obligations.
Interest rate swaps are used to reduce exposure to
fluctuations in interest rates.
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS
In respect of interest-earning financial assets and
interest-bearing financial liabilities, the following table
indicates their effective interest rates at balance sheet date
and the periods in which they reprice.
A-96
10. FINANCIAL INSTRUMENTS (CONT'D)
(c) INTEREST RATE RISK (CONT'D)
EFFECTIVE WITHIN 1 TO 5 AFTER
INTEREST 1 YEAR YEARS 5 YEARS
2002 NOTE RATE US$ US$ US$
FINANCIAL ASSETS
Cash and cash
equivalents 0.24% $ 260,854 $ - $ -
============ =========== ===========
FINANCIAL LIABILITIES
Floating rate loan 4 3.21% 6,098,617 - -
Effect of interest rate
swap 2.98% (4,980,603) 4,177,757 802,846
------------ ----------- -----------
$ 1,118,014 $ 4,177,757 $ 802,846
============ =========== ===========
2001
FINANCIAL ASSETS
Cash and cash
equivalents 0.64% $ 187,374 $ - $ -
============ =========== ===========
FINANCIAL LIABILITIES
Floating rate loan 4 3.73% 6,504,677 - -
Effect of interest rate
swap 2.46% (5,689,740) 3,882,770 1,806,970
------------ ----------- -----------
$ 814,937 $ 3,882,770 $ 1,806,970
============ =========== ===========
(d) FAIR VALUES
Recognised financial instruments
As at 31 December 2002, the carrying amounts of financial
assets and liabilities approximated their fair values.
Unrecognised financial instruments.
The valuation of financial instruments not recognised in the
balance sheet reflects amounts which the Company expects to
pay or receive to terminate the contracts or replace the
contracts at their current market rates at the balance sheet
date.
A-97
10. FINANCIAL INSTRUMENTS (CONT'D)
(d) FAIR VALUES (CONT'D)
Unrecognised financial instruments (cont'd)
The notional amount and net fair value of financial instrument
not recognised in the balance sheet as at 31 December are:
2002 2001
NOTIONAL FAIR NOTIONAL FAIR
AMOUNT VALUE AMOUNT VALUE
US$ US$ US$ US$
Interest rate swap
agreement $ 4,980,603 $ (645,852) $ 5,689,740 $ (224,936)
============= ============= ============= =============
11. COMPARATIVE INFORMATION
Certain items in the comparative figures have been
reclassified to conform with the current year's presentation.
A-98
YAKUMO SHIPPING INC. STATEMENT BY BOARD OF DIRECTORS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
We, ALF JOHAN LOVEN ANDERSEN and DAG AUDUN ROMMEN, being attorneys-in-fact of
YAKUMO SHIPPING INC., do hereby state that in our opinion, the financial
statements set out on pages 3 to 12 are drawn up so as to present fairly the
state of affairs of the Company as at 31 December 2002 and the results of the
business, changes in equity and cash flows of the Company for the year ended on
that date.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
----------------------------------
ALF JOHAN LOVEN ANDERSEN
Attorney-in-fact
/s/ Dag Audun Rommen
----------------------------------
DAG AUDUN ROMMEN
Attorney-in-fact
SINGAPORE
25 March 2003
A-99
REPORT OF THE AUDITORS TO THE MEMBER OF
YAKUMO SHIPPING INC.
We have audited the financial statements of Yakumo Shipping Inc. for the year 31
December 2002 as set out on pages 3 to 12. These financial statements are the
responsibility of the Company's directors. 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 plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
directors, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements of the Company are properly drawn up in
accordance with Singapore Statements of Accounting Standard and so as to present
fairly, in all material respects, the state of affairs of the Company as at 31
December 2002 and the results of the business, changes in equity and cash flows
of the Company for the year ended on that date.
/s/ KPMG
KPMG
CERTIFIED PUBLIC ACCOUNTANTS
SINGAPORE
25 March 2003
A-100
YAKUMO SHIPPING INC. BALANCE SHEET
ANNUAL REPORT AS AT 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
NON-CURRENT ASSETS
Property, plant and equipment 3 4,816,388 4,830,756
CURRENT ASSETS
Trade receivable 126,000 -
Other receivables 4 61,683 219,275
Cash and cash equivalents 218,195 308,517
----------- -----------
405,878 527,792
----------- -----------
Less:
CURRENT LIABILITIES
Trade payables and accruals 25,958 332,823
Bank loan (secured) 5 700,000 700,000
Loan from holding company 6 356,241 -
----------- -----------
1,082,199 1,032,823
----------- -----------
NET CURRENT LIABILITIES (676,321) (505,031)
NON-CURRENT LIABILITY
Bank loan (secured) 5 (1,800,000) (2,100,000)
----------- -----------
NET ASSETS $ 2,340,067 $ 2,225,725
=========== ===========
CAPITAL AND RESERVES
Share capital
Authorised, issued and fully paid
100 ordinary shares of US$100 each 10,000 10,000
Reserves 7 2,330,067 2,215,725
----------- -----------
$ 2,340,067 $ 2,225,725
=========== ===========
The accompanying notes form an integral part of these financial statements.
A-101
YAKUMO SHIPPING INC. PROFIT AND LOSS ACCOUNT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
REVENUE 8 1,879,075 1,962,595
Other income 9(a) 27,003 12,499
Depreciation of property, plant and equipment 3 (464,368) (424,370)
Vessel operating costs (932,490) (1,138,514)
Management fee (175,000) (50,000)
Commission expense (47,110) (48,131)
Offhire - (20,286)
Other operating expenses (20,027) (19,154)
------------- -------------
Profit from operations 267,083 274,639
Finance costs 9(b) (152,741) (212,706)
------------- -------------
NET PROFIT FOR THE YEAR $ 114,342 $ 61,933
============= =============
The accompanying notes form an integral part of these financial statements.
A-102
YAKUMO SHIPPING INC. STATEMENT OF CHANGES IN EQUITY
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
SHARE SHARE RETAINED
CAPITAL PREMIUM PROFITS TOTAL
US$ US$ US$ US$
At 1 January 2001 10,000 1,990,000 163,792 2,163,792
Net profit for the year - - 61,933 61,933
----------- ----------- ------------ -----------
At 31 December 2001 10,000 1,990,000 225,725 2,225,725
Net profit for the year - - 114,342 114,342
----------- ----------- ------------ -----------
At 31 December 2002 $ 10,000 $ 1,990,000 $ 340,067 $ 2,340,067
=========== =========== ============ ===========
The accompanying notes form an integral part of these financial statements.
A-103
YAKUMO SHIPPING INC. STATEMENT OF CASH FLOWS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
OPERATING ACTIVITIES
Profit for the year 114,342 61,933
Adjustments for:
Interest expense 9(b) 109,170 212,706
Interest income 9(a) (3,095) (12,499)
Depreciation of property, plant and equipment 3 464,368 424,370
------------- -------------
684,785 686,510
Changes in working capital:-
Trade receivable (126,000) 50,736
Sundry receivables 157,592 29,545
Trade payables and accruals (274,947) 284,070
------------- -------------
Cash generated from operations 441,430 1,050,861
Interest paid (134,847) (238,874)
Interest received 3,095 12,499
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES 309,678 824,486
------------- -------------
FINANCING ACTIVITIES
Drawdown of bank loan 225,000 -
Loan from holding company 350,000 -
Repayment of bank loan (525,000) (700,000)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES 50,000 (700,000)
------------- -------------
INVESTING ACTIVITIES
Purchase of property, plant and equipment 3 (450,000) (216,736)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES (450,000) (216,736)
------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (90,322) (92,250)
Cash and cash equivalents at beginning of year 308,517 400,767
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 218,195 $ 308,517
============= =============
The accompanying notes form an integral part of these financial statements.
A-104
YAKUMO SHIPPING INC. NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 31 DECEMBER 2002
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 25 March
2003.
1. DOMICILE AND ACTIVITIES
Yakumo Shipping Inc. (the "Company") is incorporated in the Republic of
Panama. The address of the resident agent is Arango Orillac Building,
third floor, 54 Street, Nueva Urbanizacion Obarrio, P.O. Box 5216
Panama 5, Republic of Panama.
The principal activities of the Company are those of ship owners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance
with the Singapore Statements of Accounting Standard
(including Interpretations of Statements of Accounting
Standard) issued by the Institute of Certified Public
Accountants of Singapore.
(b) BASIS OF PREPARATION
The financial statements, expressed in United States dollars,
are prepared on the historical cost basis.
(c) PROPERTY, PLANT AND EQUIPMENT
(i) OWNED ASSETS
Items of property, plant and equipment are stated at cost
less accumulated depreciation and impairment losses.
(ii) SUBSEQUENT EXPENDITURE
Subsequent expenditure relating to a fixed asset that
has already been recognised is added to the carrying
amount of the asset when it is probable that future
economic benefits, in excess of the originally
assessed standard of performance of the existing
asset, will flow to the enterprise. All other
subsequent expenditure is recognised as an expense in
the period in which it is incurred.
(iii) DEPRECIATION
Depreciation is calculated on a straight line basis
so as to write off the cost, less estimated residual
value, of the vessel over its estimated useful life
of 13 years.
A-105
Costs of drydocking are depreciated on a straight
line basis over the interval to the next drydocking,
which is estimated at 30 months.
(d) REVENUE RECOGNITION
Revenue from charter of the vessel is recognised on a straight
line basis over the period of the charter and after providing
for off-service days.
Interest income from banks is recognised when earned based on
the principal outstanding and at the rate applicable.
(e) FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities in foreign currencies are
translated into United States dollars at rates of exchange
closely approximate to those ruling at the balance sheet date.
Transactions in foreign currencies are translated at rates
ruling on transaction dates. Translation differences are
included in the profit and loss account.
(f) BORROWING COSTS
Borrowing costs are recognised as an expense in the year in
which they are incurred.
(g) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank.
(h) IMPAIRMENT
The carrying amounts of the Company's assets are reviewed at
each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the
asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. The impairment
loss is charged to the profit and loss account. Any subsequent
increase in recoverable amount is reduced by the amount that
would have been recognised as depreciation had the write-down
or write-off not occurred.
3. PROPERTY, PLANT AND EQUIPMENT
VESSEL
MV "GLORY STAR"
2002 US$
COST
At beginning of the year 5,339,542
Additions 450,000
-------------
At end of the year $ 5,789,542
=============
A-106
3. PROPERTY, PLANT AND EQUIPMENT (CONT'D)
VESSEL
MV "GLORY STAR"
2002 US$
ACCUMULATED DEPRECIATION
At beginning of the year 508,786
Charge for the year 464,368
-------------
At end of the year $ 973,154
=============
NET BOOK VALUE at 31 December 2002 $ 4,816,388
=============
NET BOOK VALUE at 31 December 2001 $ 4,830,756
=============
4. OTHER RECEIVABLES
2002 2001
US$ US$
Prepayments 19,154 -
Sundry receivables 42,529 219,275
------------- -------------
$ 61,683 $ 219,275
============= =============
5. INTEREST-BEARING BANK LOAN (SECURED)
2002 2001
US$ US$
The bank loan is repayable as follows:
- Within 1 year 700,000 700,000
- After 1 year but within 5 years 1,800,000 2,100,000
------------- -------------
$ 2,500,000 $ 2,800,000
============= =============
In October 2002, the Company refinanced its bank loan with another
financial institution. The new bank loan is repayable in 13 quarterly
instalments of US$175,000 commencing in January 2003 and a final
instalment of US$225,000 in April 2006. It is secured by a mortgage
over the Company's vessel and an assignment of the vessel's earnings
and insurances, guaranteed up to US$900,000 by shareholders of the
holding company and guaranteed up to US$1,100,000 by the holding
company.
The previous bank loan was repayable in 20 quarterly instalments of
US$175,000 commencing in January 2002 and was secured by a mortgage
over the Company's vessel and an assignment of the vessel's earnings
and insurances.
A-107
6. LOAN FROM HOLDING COMPANY
2002 2001
US$ US$
Loan principal 350,000 -
Accrued interest 6,241 -
------------ ------------
$ 356,241 $ -
============ ============
The loan from the holding company is unsecured. The Company shall have
the option at any time to repay the loan in full or in part.
7. RESERVES
2002 2001
US$ US$
Share premium 1,990,000 1,990,000
Retained profits 340,067 225,725
----------- -----------
$ 2,330,067 $ 2,215,725
=========== ===========
Movements in reserves are set out in the statement of changes in
equity.
The application of the share premium account is governed by Panamanian
laws and regulations.
8. REVENUE
Revenue represents charter hire income.
9. NET PROFIT FOR THE YEAR
2002 2001
US$ US$
Net profit for the year includes the following:-
(a) OTHER INCOME
Interest income - bank 3,095 12,499
Sundry income 23,908 -
------------- -------------
$ 27,003 $ 12,499
============= =============
A-108
9. NET PROFIT FOR THE YEAR (CONT'D)
2002 2001
US$ US$
(b) FINANCE COSTS
Interest expense:
- bank loan 102,929 212,706
- loan from holding company 6,241 -
Loan refinancing charges 43,571 -
------------- -------------
$ 152,741 $ 212,706
============= =============
10. SIGNIFICANT RELATED PARTY TRANSACTIONS
For the purpose of these financial statements, parties are considered
to be related to the Company if the Company has the ability, directly
or indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice
versa, or where the Company and the party are subject to common control
or common significant influence. Related parties may be individuals or
other entities.
During the year, there were the following significant transactions with
related parties:-
2002 2001
US$ US$
Management fee expense $ 175,000 $ 50,000
============ =============
11. HOLDING COMPANY
The immediate and ultimate holding company is Belden Cement Holding
Inc., incorporated in the Republic of Panama.
12. FINANCIAL INSTRUMENTS
(a) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Exposure to credit and interest rate risk arises in the normal
course of the Company's business. The Company manages these
risks as part of the general day-to-day management of its
operations.
No derivative financial instruments are used to reduce
exposure to fluctuations in interest rate as the Company does
not view them to have a significant impact on the financial
statements.
A-109
12. FINANCIAL INSTRUMENTS (CONT'D)
(b) CREDIT RISK
Credit evaluations are performed on all charterers before
chartering the Company's vessel to them. The Company does not
require collateral in respect of financial assets.
(c) INTEREST RATE RISK
The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's debt obligations.
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS
In respect of interest-earning financial assets and
interest-bearing financial liabilities, the following table
indicates their effective interest rates at balance sheet date
and the periods in which they reprice.
NOTE EFFECTIVE WITHIN
INTEREST RATE 1 YEAR TOTAL
2002 % US$ US$
FINANCIAL ASSETS
Cash and cash equivalents 0.7% $ 218,195 $ 218,195
============= =============
FINANCIAL LIABILITIES
Bank loan 5 3.34% 1,975,000 1,975,000
3.32% 525,000 525,000
Loan from holding company 6 6% 350,000 350,000
------------- -------------
$ 2,850,000 $ 2,850,000
============= =============
2001
FINANCIAL ASSETS
Cash and cash equivalents 0.25% $ 308,517 $ 308,517
============= =============
FINANCIAL LIABILITIES
Bank loan 5 6.19% $ 2,800,000 $ 2,800,000
============= =============
(d) FAIR VALUES
As at 31 December 2002 and 2001, the carrying amounts of
financial assets and liabilities approximated their fair
values.
13. COMPARATIVE INFORMATION
Certain items in the comparative figures have been reclassified to
conform with the current year's presentation.
A-110
TILBURY SHIPPING INC. STATEMENT BY BOARD OF DIRECTORS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
We, ALF JOHAN LOVEN ANDERSEN and DAG AUDUN ROMMEN, being attorneys-in-fact of
TILBURY SHIPPING INC., do hereby state that in our opinion, the financial
statements set out on pages 3 to 13 are drawn up so as to present fairly the
state of affairs of the Company as at 31 December 2002 and the results of the
business, changes in equity and cash flows of the Company for the year ended on
that date.
On behalf of the Board of Directors
/s/ Alf Johan Loven Andersen
----------------------------------
ALF JOHAN LOVEN ANDERSEN
Attorney-in-fact
/s/ Dag Audun Rommen
----------------------------------
DAG AUDUN ROMMEN
Attorney-in-fact
SINGAPORE
25 March 2003
A-111
REPORT OF THE AUDITORS TO THE MEMBER OF
TILBURY SHIPPING INC.
We have audited the financial statements of Tilbury Shipping Inc. for the year
ended 31 December 2002 as set out on pages 3 to 13. These financial statements
are the responsibility of the Company's directors. 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 plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
directors, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements of the Company are properly drawn up in
accordance with Singapore Statements of Accounting Standard and so as to present
fairly, in all material respects, the state of affairs of the Company as at 31
December 2002 and the results of the business, changes in equity and cash flows
of the Company for the year ended on that date.
/s/ KPMG
KPMG
CERTIFIED PUBLIC ACCOUNTANTS
SINGAPORE
25 March 2003
A-112
TILBURY SHIPPING INC. BALANCE SHEET
ANNUAL REPORT AS AT 31 DECEMBER 2002
NOTE 2002 2001
US$ US$
NON-CURRENT ASSETS
Property, plant and equipment 3 15,812,600 17,103,861
CURRENT ASSETS
Sundry receivables 1,494 1,776
Cash and cash equivalents 299,929 296,733
------------- -------------
301,423 298,509
------------- -------------
Less:
CURRENT LIABILITIES
Accrued expenses 108,827 81,091
Current portion of interest
bearing bank loan (secured) 4 893,362 827,598
------------- -------------
1,002,189 908,689
------------- -------------
NET CURRENT LIABILITIES (700,766) (610,180)
NON-CURRENT LIABILITY
Interest-bearing bank loan (secured) 4 (11,558,187) (12,451,550)
------------- -------------
NET ASSETS $ 3,553,647 $ 4,042,131
============= =============
CAPITAL AND RESERVES
Share capital
Authorised, issued and fully paid
100 ordinary shares of US$100 each 10,000 10,000
Reserves 5 3,543,647 4,032,131
------------- -------------
$ 3,553,647 $ 4,042,131
============= =============
The accompanying notes form an integral part of these financial statements.
A-113
TILBURY SHIPPING INC. PROFIT AND LOSS ACCOUNT
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
PERIOD FROM
1/12/2000 (DATE
YEAR ENDED OF INCORPORATION)
NOTE 31/12/2002 TO 31/12/2001
US$ US$
REVENUE 6 3,363,305 2,932,586
Other operating income 7(a) 2,426 27,467
Depreciation of property, plant and equipment 3 (1,291,261) (1,183,670)
Management fee (75,000) (25,000)
Legal and consultancy fee (10,505) (27,400)
Other operating expenses (15,907) (22,875)
------------- -------------
PROFIT FROM OPERATIONS 1,973,058 1,701,108
Finance costs 7(b) (861,542) (955,268)
------------- -------------
NET PROFIT FOR THE YEAR $ 1,111,516 $ 745,840
============= =============
The accompanying notes form an integral part of these financial statements.
A-114
TILBURY SHIPPING INC. STATEMENT OF CHANGES IN EQUITY
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
SHARE SHARE RETAINED
CAPITAL PREMIUM PROFIT TOTAL
US$ US$ US$ US$
Issue of shares 10,000 4,536,291 - 4,546,291
Net profit for the period - - 745,840 745,840
Dividend paid - (504,160) (745,840) (1,250,000)
------------- ------------- ------------- -------------
At 31 December 2001 10,000 4,032,131 - 4,042,131
Net profit for the year - - 1,111,516 1,111,516
Dividend paid - (488,484) (1,111,516) (1,600,000)
------------- ------------- ------------- -------------
At 31 December 2002 $ 10,000 $ 3,543,647 $ - $ 3,553,647
============= ============= ============= =============
The accompanying notes form an integral part of these financial statements.
A-115
TILBURY SHIPPING INC. STATEMENT OF CASH FLOWS
ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2002
PERIOD FROM
1/12/2000
(DATE OF
YEAR ENDED INCORPORATION)
NOTE 31/12/2002 TO 31/12/2001
US$ US$
OPERATING ACTIVITIES
Net profit for the year 1,111,516 745,840
Adjustments for:
Interest income 7(a) (2,426) (27,467)
Interest expense 7(b) 861,542 955,268
Depreciation of property, plant and equipment 3 1,291,261 1,183,670
------------- -------------
Operating profit before working capital changes 3,261,893 2,857,311
Changes in working capital:
Sundry receivables 282 (1,494)
Accrued expenses (913) 3,690
------------- -------------
Cash generated from operations 3,261,262 2,859,507
Interest paid (832,894) (877,867)
Interest received 2,426 27,185
Dividend paid (1,600,000) (1,250,000)
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES 830,794 758,825
------------- -------------
INVESTING ACTIVITIES
Purchase of property, plant and equipment 3 - (18,287,531)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES - (18,287,531)
------------- -------------
FINANCING ACTIVITIES
Drawdown of bank loan - 13,859,614
Repayment of bank loan (827,598) (580,466)
Proceeds from issue of share capital - 4,546,291
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES (827,598) 17,825,439
------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,196 296,733
Cash and cash equivalents at beginning of year 296,733 -
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 299,929 $ 296,733
============= =============
The accompanying notes form an integral part of these financial statements.
A-116
TILBURY SHIPPING INC. NOTES TO THE FINANCIAL STATEMENTS
ANNUAL REPORT 31 DECEMBER 2002
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the Directors on 25 March
2003.
1. DOMICILE AND ACTIVITIES
Tilbury Shipping Inc. is a company incorporated in the Republic of
Panama. The address of the resident agent is Arango Orillac Building,
third floor, 54 Street, Nueva Urbanizacion Obarrio, P.O. Box 5216
Panama 5, Republic of Panama.
The principal activities of the Company are those of ship owners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) STATEMENT OF COMPLIANCE
These financial statements have been prepared in accordance
with the Singapore Statements of Accounting Standard ("SAS")
(including Interpretations of Statements of Accounting
Standard) issued by the Institute of Certified Public
Accountants of Singapore.
(b) BASIS OF PREPARATION
The financial statements, expressed in United States dollars,
are prepared on the historical cost basis.
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION
(i) OWNED ASSETS
Items of property, plant and equipment are stated at
cost less accumulated depreciation and impairment
losses.
(vi) SUBSEQUENT EXPENDITURE
Subsequent expenditure relating to a fixed asset that
has already been recognised is added to the carrying
amount of the asset when it is probable that future
economic benefits, in excess of the originally
assessed standard of performance of the existing
asset, will flow to the enterprise. All other
subsequent expenditure is recognised as an expense in
the period in which it is incurred.
A-117
(c) PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION (CONT'D)
(iii) DEPRECIATION
Depreciation is calculated on a straight-line basis
so as to write off the cost, less estimated residual
value, of the vessel over its estimated useful life
of 13 years.
(d) REVENUE RECOGNITION
Revenue from charter of the vessel is recognised on a
straight-line basis over the period of the charter and after
providing for off-service days.
Interest income is recognised when earned based on the
principal outstanding and at the rate applicable.
(e) FOREIGN CURRENCY TRANSLATION
Monetary assets and liabilities in foreign currencies are
translated into United States dollars at rates of exchange
closely approximate to those ruling at the balance sheet date.
Transactions in foreign currencies are translated at rates
ruling on transaction dates. Translation differences are
included in the profit and loss account.
(f) BORROWING COSTS
Borrowing costs are recognised as an expense in the year in
which they are incurred.
(g) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at bank.
(h) IMPAIRMENT
The carrying amounts of the Company's assets are reviewed at
each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the
asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. The impairment
loss is charged to the profit and loss account. Any subsequent
increase in recoverable amount is reduced by the amount that
would have been recognised as depreciation had the write-down
or write-off not occurred.
A-118
(i) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses interest rate swap contracts to hedge its
exposure to interest rate risks from financing activities.
Derivative financial instruments used for hedging purposes are
accounted for on an equivalent basis to the underlying assets,
liabilities or net positions. Any profit or loss arising is
recognised on the same basis as that arising from the related
assets, liabilities or positions.
3. PROPERTY, PLANT AND EQUIPMENT
VESSEL
MV "ALCEM LUGAIT"
2002 US$
COST
At beginning of the year 18,287,531
Additions -
-------------
At end of the year $ 18,287,531
=============
ACCUMULATED DEPRECIATION
At beginning of the year 1,183,670
Charge for the year 1,291,261
-------------
At end of the year $ 2,474,931
=============
NET BOOK VALUE AS AT
31 December 2002 $ 15,812,600
=============
NET BOOK VALUE AS AT
31 December 2001 $ 17,103,861
=============
A-119
4. INTEREST-BEARING BANK LOAN
2002 2001
US$ US$
The bank loan is repayable as follows:
- Within 1 year 893,362 827,598
- After 1 year but within 5 years 7,427,072 6,196,456
- After 5 years 4,131,115 6,255,094
------------- -------------
$ 12,451,549 $ 13,279,148
============= =============
The bank loan is repayable in 34 quarterly instalments ranging from
$86,000 to $645,000 commencing in January 2001. It is secured by a
mortgage over the Company's vessel and an assignment of the vessel's
earnings and insurances and guaranteed by a related party.
5. RESERVES
2002 2001
US$ US$
Share premium 3,543,647 4,032,131
Retained profit - -
------------- -------------
$ 3,543,647 $ 4,032,131
============= =============
Movements in reserves are set out in the statement of changes in
equity.
The application of the share premium account is governed by Panamanian
laws and regulations.
6. REVENUE
Revenue represents charter hire income.
A-120
7. NET PROFIT FOR THE YEAR
Net profit for the year includes the following:-
PERIOD FROM
1/12/2000 (DATE
YEAR ENDED OF INCORPORATION)
31/12/2002 TO 31/12/2001
US$ US$
(a) OTHER OPERATING INCOME
Interest income
- banks $ 2,426 $ 27,467
============= =============
(b) FINANCE COSTS
Interest on bank loan $ 861,542 $ 955,268
============= =============
8. SIGNIFICANT RELATED PARTY TRANSACTIONS
For the purpose of these financial statements, parties are considered
to be related to the Company if the Company has the ability, directly
or indirectly, to control the party or exercise significant influence
over the party in making financial and operating decisions, or vice
versa, or where the Company and the party are subject to common control
or common significant influence. Related parties may be individuals or
other entities.
During the year, there were the following significant transactions with
related parties:-
2002 2001
US$ US$
Management fee expense $ 75,000 $ 25,000
========= =========
9. HOLDING COMPANY
The immediate and ultimate holding company is Belden Cement Holding
Inc., incorporated in the Republic of Panama.
A-121
10. FINANCIAL INSTRUMENTS
(a) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Exposure to credit and interest rate risk arises in the normal
course of the Company's business. The Company manages these
risks as part of the general day-to-day management of its
operations.
(b) CREDIT RISK
Credit evaluations are performed on charterers before
chartering the Company's vessel to them. The Company does not
require collateral in respect of financial assets.
(c) INTEREST RATE RISK
The Company's exposure to market risk for changes in interest
rates relates primarily to the Company's debt obligations.
Interest rate swaps are used to reduce exposure to
fluctuations in interest rates.
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS
In respect of interest-earning financial assets and
interest-bearing financial liabilities, the following table
indicates their effective interest rates at balance sheet date
and the periods in which they reprice.
EFFECTIVE WITHIN 1 TO 5 AFTER
INTEREST 1 YEAR YEARS 5 YEARS
2002 NOTE RATE US$ US$ US$
FINANCIAL ASSETS
Cash and cash
equivalents 0.24% $ 299,925 $ - $ -
============= ============= =============
FINANCIAL LIABILITIES
Floating rate secured
bank loan 4 2.93% 12,451,549 - -
Effect of interest rate
swap 3.29% (10,334,292) 8,725,426 1,608,866
------------- ------------- -------------
$ 2,117,257 $ 8,725,426 $ 1,608,866
============= ============= =============
A-122
10. FINANCIAL INSTRUMENTS
(c) INTEREST RATE RISK (CONT'D)
EFFECTIVE INTEREST RATES AND REPRICING ANALYSIS (CONT'D)
EFFECTIVE WITHIN 1 TO 5 AFTER
INTEREST 1 YEAR YEARS 5 YEARS
2001 NOTE RATE US$ US$ US$
FINANCIAL ASSETS
Cash and cash
equivalents 0.64% $ 296,733 $ - $ -
============ ============ =============
FINANCIAL LIABILITIES
Floating rate secured
bank loan 4 3.58% 13,279,148 - -
Effect of interest rate
swap 2.64% (11,725,574) 8,105,353 3,620,221
------------ ------------ -------------
$ 1,553,574 $ 8,105,353 $ 3,620,221
============ ============ =============
(d) FAIR VALUES
Recognised financial instruments
As at 31 December 2002, the carrying amounts of financial
assets and liabilities approximated their fair values.
Unrecognised financial instruments
The valuation of financial instruments not recognised in the
balance sheet reflects amounts which the Company expects to
pay or receive to terminate the contracts or replace the
contracts at their current market rates at the balance sheet
date.
The notional amount and net fair value of financial instrument
not recognised in the balance sheet as at 31 December are:
2002 2001
NOTIONAL FAIR NOTIONAL FAIR
AMOUNT VALUE AMOUNT VALUE
US$ US$ US$ US$
Interest rate swap
agreement $ 10,334,292 $ (1,417,442) $ 11,725,574 $ (492,482)
============= ============= ============= =============
A-123