Contents
Brief Profile of Steamships Trading Company Limited . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . 4
Chairman’s Report . . . . . . . . . . . . . . . . . . . . . 6
Directors’ Economic Analysis . . . . . . . . . . . . . . . 8
Directors’ Review . . . . . . . . . . . . . . . . . . . . 12
Division Review
Review of Operations - Logistics . . . . . . . . . . . 15
Steamships Shipping . . . . . . . . . . . . . . . . 16
Consort Express Lines Ltd . . . . . . . . . . . . . 18
East West Transport . . . . . . . . . . . . . . . . 20
Review of Operations - ProPerty and HoteLs . . . . 23
Pacific Palms Property . . . . . . . . . . . . . . . 24
Coral Sea Hotels . . . . . . . . . . . . . . . . . . 26
Review of Operations - commerciaL . . . . . . . . . 28
Laga Industries . . . . . . . . . . . . . . . . . . . 29
Datec . . . . . . . . . . . . . . . . . . . . . . . 31
Review of Operations - Joint Ventures . . . . . . . . 33
Pacific Towing . . . . . . . . . . . . . . . . . . . 34
Colgate Palmolive . . . . . . . . . . . . . . . . . 35
sUstAinABiLitY
A Message from the Board of Directors . . . . . . . . . . 37
Selected Group Performance Highlights . . . . . . . . . 39
Steamships’ Sustainability Focus Areas . . . . . . . . . . 40
Our People . . . . . . . . . . . . . . . . . . . . 40
Our Environment . . . . . . . . . . . . . . . . . 47
Our Community . . . . . . . . . . . . . . . . . . 50
CoRPoRAte GoveRnAnCe
Corporate Governance Statement . . . . . . . . . . . . 53
FinAnCiAL seCtion
Statements of Comprehensive Income . . . . . . . . . . 60
Statement of Changes in Equity . . . . . . . . . . . . . . 61
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . 62
Statements of Cash Flows . . . . . . . . . . . . . . . . 63
Notes to the Financial Statements . . . . . . . . . . . . 64
Independent Auditor’s Report . . . . . . . . . . . . . . 98
Directors’ Report . . . . . . . . . . . . . . . . . . . . .100
Stock Exchange Information . . . . . . . . . . . . . . .104
Company Directory . . . . . . . . . . . . . . . . . . . IBC
PioneeRinG sUstAinABLe PRoGRess
Steamships Trading Company has a
95-year tradition of investing in Papua
New Guinea’s growth, development
and progress. Its transition from
pioneer coastal trader to a diversified
leader in shipping, transport, property,
manufacturing, hotels and information
technology has been integral to, and part
of, Papua New Guinea’s development
into a modern and formative leader
within the Asia Pacific region.
That tradition continues today.
Committed to our people, the
sustainability of our operations, and the
future of Papua New Guinea, Steamships
Trading Company is pioneering
sustainable progress in PNG into the
twenty-first century.
Steamships Annual Report 2013 1
BRieF PRoFiLe oF steAmshiPs tRADinG ComPAnY LtD
Steamships Trading Company (Steamships) has a long history
in Papua New Guinea and is one of the country’s leading
businesses. Today Steamships is a well-established business
conglomerate with diverse commercial interests and listings on
both the Australian and Port Moresby Stock Exchanges.
Steamships has a vision to build a valuable and profitable
business that is widely respected as being the best company to
work for and with which to do business.
Integral to this vision are the following
business strategies:
•
•
•
•
•
The long-term development of a
diversified range of businesses in
which shareholder value can be
created;
Employment of staff who we believe
will further our strategic objectives
and will be committed to the Group
for the long term and providing
them with rewarding careers;
Operational excellence in the way
we conduct our business;
Doing business in a sustainable
manner; and
Commitment to the highest
standards of corporate governance.
The Group employs close to 4,000
PNG citizens and non-citizens in seven
diverse Divisions grouped under the
three operating categories of Logistics,
Property and Hotels, and Commercial.
Steamships has redefined its values to
include the following:
•
Integrity – Taking the more ethical
and honest path; honouring our
commitments and delivering on
our promises; creating a bond
of trust that sustains relationships
with our staff, customers,
shareholders, business partners and
the communities in which we do
business.
•
•
•
•
•
•
Excellence – Our customers and
colleagues expect us to deliver
high quality goods and services.
If something is to be done, we
believe it should be done in the best
possible way.
Humility – We believe in the need
to respect and to learn from others.
To do this we must be aware of
our own limitations and to seek
to understand other perspectives.
Humility guides our approach to
colleagues, customers and partners.
This does not mean that we lack
self-confidence but that we act with
humble pride.
Continuity – We take a long term
view. We grow our business
sustainably and create enduring
value that earns the respect of
our customers, our staff, our
communities and our shareholders.
Customer Focus – Our customers
are the final judges of our success or
failure. We understand and respond
to the needs of our customers.
Safety – We prioritise safety
awareness and compliance to
ensure our business operations are
conducted safely.
People Development – We value a
working environment that fosters
innovation and encourages personal
development and learning.
2 Steamships Annual Report 2013
Brief Profile of Steamships Trading Company Ltd
Steamships is aware of its pre-eminent position in the
community and its responsibility to serve that community.
The Group continues to be one of PNG’s largest private
sector employers and one of the largest supporters of
community initiatives in education, health, environment
and social welfare. Steamships ensures that core
sustainability concepts are embedded in its business
models and systems. The Group is wholly aware that its
business goals cannot be achieved unless this is the case.
Steamships cannot succeed without the engagement
and support of the people it employs, the loyalty of and
satisfaction of its customers, the local communities and the
environment in which it operates.
With ninety-five years of service to the PNG community,
Steamships is still showing it has the resources and
capacity, vision and capability to meet the dynamic needs
of a growing country.
steAmshiPs’ oRGAnisAtionAL stRUCtURe
steamsHiPs Head oFFice
Logistics
diVision
ProPerty
diVision
commerciaL
diVision
Key Joint
Ventures
Steamships
Shipping
Coral Sea
Hotels
Datec
Colgate-
Palmolive (PNG)
Stevedoring
Companies
Pacific Palms
Property
Laga
Industries
Pacific
Towing*
Coastal
Shipping
Consort Express
Lines
East West
Transport
* The remaining interest in Pacific Towing was acquired by
Steamships on the 21st November 2013.
Steamships Annual Report 2013 3
FinAnCiAL hiGhLiGhts
2013 FinanCial HigHligHts
Revenue
Operating profit
Profit attributable to shareholders
Cash generated from operations
Net cash inflow/(outflow) before financing
Shareholders’ funds
External Borrowings
Earnings per share
Dividends per share
Shareholders’ funds per share
2013
K’000
969,652
114,868
117,050
236,608
(73,984)
717,016
640,284
377
185
2,312
2012
K’000
1,038,195
296,509
177,700
266,866
28,452
677,178
491,700
573
285
2,184
Underlying profit attributable to shareholders (see page 12)
Underlying earnings per share
128,367
414
156,213
504
Gearing ratio
Interest cover
Dividend cover
46.4%
7.5
2.0
39.2%
14.2
2.0
Change
%
-7%
-61%
-34%
-11%
-360%
6%
30%
-34%
-35%
6%
-18%
-18%
18%
-47%
0%
4 Steamships Annual Report 2013
summary oF Past PeFormanCe
2004
K’000
2005
K’000
2006
K’000
2007
K’000
2008
K’000
2009
K’000
2010
K’000
2011
K’000
2012
K’000
2013
K’000
Financial Highlights
inCome statement
Revenue
Operating profit before tax
Share of associates profit
Income tax expense
Minority interests
Net profit attributable to shareholders
Depreciation transfer
Equity adjustment
Dividends paid or provided
Earnings retained this year
328,880 370,037 336,302
53,502
45,434
13,590
15,115
13,389
11,118
(18,357)
(16,589)
(6,969)
(2,781)
(2,026)
(3,036)
47,479
40,208
14,703
1,467
1,467
1,467
0
0
0
(31,008)
(20,157)
(5,583)
17,938
21,518
10,587
406,757 465,750 499,415 800,333 934,717 1,038,195 969,652
80,674
91,208 111,615 120,602 180,834 233,967
265,574
14,188
11,416
16,732
15,029
9,697
13,859
16,837
(81,414) (11,930)
(53,935) (67,727)
(34,637)
(27,869) (32,808)
(6,137)
(5,418)
(4,211)
(20,648) 38,609
(21,870) (21,838)
96,560 116,445 158,261 177,700 117,050
90,226
74,157
0
(1,061)
159
1,467
(8,994)
0
0
0
(88,373) (57,365)
(31,008) (58,916)
(38,760) (45,272)
50,691
89,327
98,284
85,437
45,113
36,864
0
0
(45,272)
51,288
0
0
0
0
Underlying profit attributable to shareholders
(adjusted for significant items)
13,848
28,696
35,067
49,926
67,770
85,120 113,597 153,566 156,213 128,367
BalanCe sHeet
shARe CAPitAL & ReseRves
Issued Capital
Retained Earnings
Shareholders’ funds
Minority Shareholder’s Interest
eQuity
Fixed Assets
Investments in Associated Companies
Future Income Tax Benefit
Goodwill
Current assets
total assets
24,200
24,200
24,200
254,230 302,595 353,883 428,157 554,349
24,200
24,200
24,200
24,200
24,200
162,157 196,161 218,833
652,978 692,816
186,357 220,361 243,033 278,430 326,795 378,083 452,357 578,549 677,178 717,016
22,907
192,788 230,417 254,127 292,114 345,131 421,937 515,208 653,914 761,500 739,923
10,056
75,365
62,851
84,322
24,200
24,200
43,854
13,684
18,336
11,094
6,431
173,858 193,639 227,773
16,839
10,572
11,181
12,944
24,207
9,885
3,568
3,068
0
98,006
98,588
95,308
263,276 353,261 664,196 786,510 938,709 1,023,861 1,066,393
31,471
15,416
22,225
38,687
0
9,282
5,358
0
17,183
93,514
17,183
3,568
411,920 353,916
290,232 330,074 359,130 432,050 552,834 910,103 1,122,595 1,283,971 1,491,651 1,545,294
28,445
17,939
0
7,305
17,183
17,183
137,623 154,508 203,480 294,203 299,634
33,337
4,150
7,578
Current Liabilities
Non-Current Liabilities
total liaBilities
90,786
6,658
97,444
90,867
8,790
98,517
6,486
370,396 230,727
359,755 574,644
99,657 105,003 139,936 207,703 488,166 607,386 630,057 730,151 805,371
134,941 122,562 236,847 273,055 283,445
85,141 251,319 334,331 346,612
4,995
net assets
192,788 230,417 254,127 292,114 345,131 421,937 515,208 653,914 761,500 739,923
ratios
Current assets to current liabilities
Borrowings to shareholders funds
Gearing
Tangible net asset backing per share (toea)
Net profit to revenue %
Net profit to shareholders’ funds %
Underlying profit to shareholders’ funds %
Dividends per share (toea)
Earnings per share (toea)
Underlying earnings per share (toea)
Earnings retained %
1.05
15.5%
13.0%
6.22
4.5%
7.9%
7.4%
18
47
45
72.0%
1.08
13.7%
11.6%
7.33
10.9%
18.2%
13.0%
65
130
93
53.5%
0.99
10.6%
9.2%
8.08
14.1%
19.5%
14.4%
100
153
113
37.8%
1.02
13.6%
11.5%
9.31
18.2%
26.6%
17.9%
125
239
161
49.7%
1.26
34.8%
24.8%
10.89
19.4%
27.6%
20.7%
146
291
219
50.0%
0.86
89.1%
44.4%
13.05
19.3%
25.5%
22.5%
146
311
275
53.1%
1.08
89.7%
44.0%
16.06
14.5%
25.7%
25.1%
100
376
366
73.4%
1.06
70.1%
38.3%
20.53
16.9%
27.4%
26.5%
190
510
495
62.1%
1.11
72.6%
39.2%
24.00
17.1%
26.2%
23.1%
285
573
504
50.3%
1.53
89.3%
46.4%
20.85
12.1%
16.3%
17.9%
185
377
414
43.3%
Notes
Earnings per share = profit attributable to shareholders / average shares in issue
Gearing = debt / debt plus equity
Interest cover = earnings before interest and tax / net finance charge
Dividend cover = profit attributable to shareholders / total dividend paid and provided
Steamships Annual Report 2013 5
ChAiRmAn’s RePoRt
2013 was a challenging year for PNG. The wind down in
the construction phase of the PNG LNG project and slowing
investment in the country’s mining sector, a weakening Kina,
declining exports, lower commodity prices and falling domestic
consumption all led to a weaker-than-expected year for
Steamships. However, the return to political stability following
the 2012 election has sustained business confidence in PNG.
Similarly, improving budget management and increases in
government spending offset to a limited extent other negative
impacts. Steamships remain committed to investment in PNG
having spent K435 million in capital expenditure in 2012 and
2013, with a further K222 million expected for 2014.
Steamships’ trading revenue (excluding
other income) for the year declined
by 5.6 per cent to K931 million, with
profit after tax attributed to shareholders
declining by 34.1 per cent to K117
million. Excluding the impact of
significant items profit after tax attributed
to shareholders declined by 17.8 per
cent.
The performance of Steamships’ logistics
businesses was weaker in 2013 as PNG’s
economy slowed, domestic consumption
flagged and the resource and commodity
sectors slowed. Unscheduled out-of-
service periods for vessels and lower
than anticipated growth in the Highlands
and Islands also had adverse effects. In
November 2013 Steamships acquired its
joint venture partner’s interest in Pacific
Towing. The Division continued to
invest in fleet capacity with the notable
addition of the Kiwai Chief, a 70 meter
double skinned landing craft, with
another on order, and 90 trucks and 61
trailers (inclusive of the acquisition of
the fleet of Kimbe Shipping & Transport).
During the year the Steamships Board
approved an impairment of Consort
Express Lines vessels with a net non-
cash negative impact to shareholders of
K32 million.
The Property and Hotels Division had
a mixed year. Pacific Palms Property
recorded solid year on year revenue
growth and successfully navigated a
downturn in the rental property market
to maintain an average occupancy rate
of 98 per cent across existing properties.
6 Steamships Annual Report 2013
Significant property developments
continued with eight ‘Captain Fitch’
town houses commissioned in Port
Moresby early in the year, twelve
‘Blaikie Apartments’ commissioned in
Lae in November and forty ‘Windward
East’ apartments commissioned in Port
Moresby in December. There are a
number of other industrial, retail and
commercial developments nearing
completion. Coral Sea Hotels fared less
well; slowing economic activity coupled
with an increase in hotel room supply
saw the Hotel group’s room occupancy
and rates fall below expectation for the
year.
Steamships’ manufacturing business,
Laga Industries, transformed its
business model to focus on ice
cream and vegetable oil production
and distribution. In September 2013
Steamships acquired the remaining
minority interest in the business.
Revenues for the IT Division remained
largely static however margin was lower
as increased competition and exchange
rate movements reduced margins.
Steamships’ broader performance
was built upon a Group-wide focus
on operational efficiencies, improved
cost management and strategies for
new business development. Improved
customer service, and a sharper focus on
training, health, safety and community
relations across the year all contributed
to the maintenance of a strong company
culture.
Chairman’s Report
The PNG economy expanded again in 2013, but this
fact belies the significant challenges it faces. Growth was
slower, as the construction phase of the PNG LNG project
wound down, prices for PNG commodity exports declined
and investment in the country’s mining sector slowed. PNG
is entering a transition period in which its main source of
growth will shift from construction and related activities to
resource export earnings from LNG. However, with LNG
production not set to start until late 2014, the Government
faces a challenge to encourage economic vibrancy.
The O’Neill Government’s commitment to fund national
infrastructure projects and other development enablers
such as education and health initiatives in the 2013 and
2014 budgets targets sustained growth. This will be a
challenge. Responsibility will fall on PNG’s national and
provincial Governments to prudently manage public
revenues and invest appropriately to generate long term,
broad-based economic growth. The challenges this
environment presents for companies operating in PNG
are examined in the economic analysis elsewhere in this
annual report.
Steamships strongly supports Government measures in
priority development sectors - infrastructure, education,
health and law and order. In 2013 the Group again
supported staff and community initiatives on health, safety
and security, training and development, environmental
education and sustainability reporting. We remain
committed to working with Government and non-
governmental organisations to improve the skills and living
conditions of our employees and local communities and
to conducting business in a manner which minimises any
adverse impacts on the environment.
The 2013 Annual Report demonstrates an important
commitment by Steamships to operate its businesses
in PNG sustainably. This year the Group will report to
shareholders and stakeholders its performance against
selected sustainability indicators for the first time.
In 2011, Steamships trialled a framework to demonstrate
performance against some representative indicators
developed by the Global Reporting Initiative (GRI), the
world’s leading sustainability benchmark. Baseline data
was collected in 2012 against eleven indicators relating
to our economic contribution to society, environmental
stewardship and the development of our employees. In
2013, data collection was expanded, bringing the total
number of chosen indicators to twelve.
The presentation of this aggregated data this year enables
Steamships to demonstrate its commitment to providing
accurate and relevant data from across the Group. Our
systems for doing this will improve and mature over time.
On behalf of the Board I would like to acknowledge the
efforts and commitment in 2013 of the 4,000 employees
in Steamships’ many divisions and diverse locations. Their
contribution ensured the Group is well placed to meet the
challenges that lie ahead.
WL rothery
Chairman
February 2014
Steamships Annual Report 2013 7
DiReCtoRs’ eConomiC AnALYsis
Papua New Guinea’s economy expanded for the 11th consecutive
year in 2013; a product of several years of political stability,
improved economic management and growth in the Asia Pacific
region. The projected GDP growth rate of 5.2 per cent though
reveals the economy has slowed from the stellar 8 per cent
growth recorded in 2012.
The winding down of the PNG LNG
Project construction, retreating prices for
PNG commodity exports and shrinking
foreign direct investment in the mineral
sector all adversely impacted on PNG’s
economic activity during 20131 .
World Bank representatives in PNG
estimate that the level of construction
activity value added in PNG tripled
between 2009 and 2013. The PNG
LNG project was the key driver. Now
that it is 90 per cent complete the PNG
Department of Treasury estimates PNG’s
non-extractive GDP growth will halve
from 2012 levels, falling to 4.7 per cent.
The nearing completion of the PNG
LNG facility marks the beginning of an
important transition period for the PNG
economy; one in which the underlying
driver of PNG’s economic growth will
shift from construction of the project
to resource export earnings from its
LNG. Sustaining economic activity
and domestic demand throughout
this period, while maintaining fiscal
discipline, looms as a key challenge.
LNG exports are on track to begin in the
second half of 2014 and are expected
to raise the level of GDP by one-third
or more by 2015. However, in the near
1 Source material related to the content of this report is available upon request from Steamships’
Public Relations unit.
8 Steamships Annual Report 2013
Directors’ Economic Analysis
As a result, PNG’s trade surplus narrowed to K382 million
in 2013 from K1,621 million in 2012. This led the Bank of
PNG to dramatically revise its current account forecast for
2013 from a deficit of K2.7 billion (7.7% of GDP) to K6.9
billion (19.9 % of GDP) in September.
International prices for PNG’s mineral commodity exports
retreated considerably in 2013. The Asian Development
Bank estimates the international price of gold fell 20
per cent, while copper and oil fell by 12 and 6 per cent
respectively. International agricultural commodity prices
were also flat or weaker with benchmark coffee prices
falling by 25 per cent, and palm oil and rubber prices by
15 per cent, while copra and cocoa prices remained flat.
Weaker prices, poor extension services, aging coffee, copra
and cocoa trees, poor harvests and high logistical and
processing costs have translated into lower returns for PNG
farmers. They have responded by cutting back production,
further reducing export receipts and income flows to rural
communities.
Annual export volumes of coffee to the June quarter
2013 were down 50 per cent on the previous year;
cocoa exports were 30 per cent lower. Export receipts for
coffee and cocoa were the lowest since 2007 and 2002
respectively. Palm oil export volumes have weakened since
2011, but are still 10 per cent above long term averages.
In 2013, this impacted strongly on Steamships’ logistics
businesses. Transport services between Lae and the
Highlands region were reduced because of low coffee
volumes for a second consecutive year; tonnages across
the Group’s coastal shipping operations were down again
on 2012 figures.
Lower international prices and slower economic growth
in PNG’s major trading partner, Australia, contributed to a
14.4 per cent drop in the value of PNG’s exports (mainly
gold, petroleum, silver and platinum and coffee) in 2013.
This was in line with a general fall in Pacific region exports
to Australia during the year.
With import prices remaining high on the back of mineral
fuels, PNG’s terms of trade continue to decline. The ANZ
Bank warns that the current account deficit is likely to
persist into 2014, placing pressure on the Kina, until export
receipts improve as LNG shipments begin late in the year.
term the impact on gross national income, the current
account and government revenues is expected to be far
more modest due to the need to service international
debts, which funded 75 per cent of the project’s
construction costs. One short term challenge presented by
slow economic activity is finding employment for the large
skilled workforce to be discharged from the PNG LNG
Project.
The PNG Government’s 2013 and 2014 budgets seek to
address these challenges through greater public spending
on development projects. The aim is to boost domestic
activity in non-mining sectors, especially the construction
sector, and provide alternative employment streams for
former PNG LNG workers. The Bank of PNG estimates
that fiscal stimulus may add as much as 2 per cent to real
output growth in 2013 if these projects can be effectively
implemented.
Beyond PNG, the worst of the global economic crisis
appears to be over although global growth remains slow.
Subdued demand has impacted on the Pacific region,
largely through lower commodity prices which have
reduced agriculture, mineral and forestry export earnings
in some Pacific economies.
In PNG the depreciation of the Kina, which dropped 25
per cent in nominal terms against the US Dollar over 2013,
cushioned the economy from weaker export prices to some
extent by supporting incomes for farmers and exporters
and improving PNG’s competiveness. This depreciation
reflected a general strengthening of the US Dollar and was
in line with the weakening of other currencies. Inflation
remained subdued with the headline rate expected to
average 5.5 per cent in 2013.
trade
Steamships’ performance directly reflects fluctuations in
PNG trade and business as dictated by developments in the
macroeconomic environment. Its considerable interests in
shipping, transport, logistics, retail and manufacturing are
directly affected.
In 2013, lower international commodity prices lowered
export earnings for PNG. A fall in export values of 9.1 per
cent through the first six months of the year was reported
in the Bank of PNG’s June Economic Bulletin. In the same
period, despite easing economic growth, robust domestic
demand saw import prices climb some 13.4 per cent.
Steamships Annual Report 2013 9
Directors’ Economic Analysis
PROSPECTS AND CHALLENGES FOR 2014
While LNG production is expected to boost economic growth
after 2015, the country’s economic outlook for 2014 remains soft.
To stimulate growth in 2014, the Government plans fiscal
stimulus.
45 per cent of the 2014 budget is allocated to spending on
infrastructure, education, health and law and order. Most
expenditure will focus on major projects to enhance road,
civil aviation, shipping and port infrastructure networks.
When implemented, these will increase domestic demand.
The IMF has forecast economic growth of 6.3 per cent in
2014. Year on year GDP growth is forecast to surge to 21.5
per cent of GDP in 2015 as LNG production peaks, before
slowing to around 3.5 per cent over the medium term to
converge with growth in the non-mineral sector and as
output growth in mature mines continues to slow.
Despite the large increase in GDP, World Bank officials in
PNG warn the impact of LNG exports on the broader PNG
economy will be limited in the near term. They note that
only a fraction of receipts will be retained in the domestic
economy and the need to service international debts will
adversely impact on gross national income. They also point
to forecasts that employment on the PNG LNG project will
be less than 10 per cent of the level during construction.
To generate longer term growth, the World Bank advises
that PNG’s national and provincial Governments will
need to implement development projects and ensure
public revenue streams are carefully managed and funds
strategically reinvested across the economy.
Fiscal challenges
Fiscal challenges lie ahead for the PNG Government.
Growth in Government expenditure of nearly 25 per
cent combined with lower global commodity prices, a
mixed Government revenue performance and a significant
slowdown in non-mining growth will widen the fiscal
deficit in the 2013 budget to a projected 7.2 per cent of
GDP from 4.3 per cent in 2012.
The PNG Government has forecast increased revenue
collections will reduce the budget deficit to 5.9 per cent
of GDP in 2014. Total revenue collections are forecast
to grow by a record 23 per cent in 2014 and to outpace
planned expenditure in following years, allowing the
Government to project a declining budget deficit of 2.5
per cent of GDP in 2015, 2.2 per cent of GDP in 2016 and
below 2 per cent of GDP from 2017.
A return to modest fiscal deficits will assist the Government
in managing its debt burden. Financing recent budget
deficits has already seen central Government debt rise from
22 per cent of GDP in 2011, to 31 per cent in 2013 and an
expected 35 per cent in 2014.
These liabilities are in line with PNG’s medium term debt
strategy. However there are significant risks that ratios
could be exceeded unless fiscal management is prudent.
In particular, expenditure plans will have to be carefully
managed.
improving quality of life
Despite strong growth in recent years average living
standards for Papua New Guineans have changed very
little between 1996 and 2010. Ensuring that economic
growth translates into tangible benefits for the people of
Papua New Guinea remains a great challenge.
According to recently released 2009-10 PNG Household
Income Expenditure Survey (HIES) data, 40 per cent of
Papua New Guineans consumed less than a minimum
basket of food and other goods and services in 2010. Life
expectancy at birth is 63 years, considerably below the
Pacific Islands average of 70 years and the infant mortality
rate is 48 per thousand compared to a regional average of
26.5. PNG’s composite Human Development Index (HDI)
was 0.462 in 2011, placing it 153 out of 187 countries.
PNG still lags behind many of its peers in the region in
the provision of infrastructure and basic education and
health services. Despite a significant growth in funding for
these sectors, the capacity to implement projects remains
a key challenge for public agencies. This is particularly
so for national infrastructure projects, which the Asian
Development Bank claims are often funded before
feasibility and preparatory design studies are completed
and often suffer from weak oversight.
The PNG Government has put in place a number of
measures to improve the effectiveness of government
spending in the 2014 Budget. These include an enhanced
project screening and review process; continuation of the
move toward a multiyear budgeting process; integration
of the previously separate “recurrent” and “development
budgets” into a single national budget; further rollout of
the integrated financial management system; and some
strengthened accountability measures for public servants.
10 Steamships Annual Report 2013
supporting growth in Png’s agriculture
sector
Steamships commends Government plans to improve
agricultural extension services and market access (both
domestic and international) and provide education,
training and logistics services such as distribution and
storage.
Boosting non-resource economic activity, particularly in
PNG’s large agriculture sector, is a key objective of the
O’Neill Government’s 2014 Budget strategy. The 2014
Budget commits K313 million in 2014 and around K1.4
billion over four years to initiatives focused on developing
the economic potential of the agriculture sector and better
integrating it with the wider economy.
Agriculture is the key source of income for some 80 per
cent of PNG’s population. World Bank representatives
in PNG estimate there are around 270,000 households
in which the main activity is growing coffee, 140,000
growing cocoa and roughly 18,500 households mainly
involved in smallholder production of oil palm. Income
from tree crops typically comprises a significant share of
total income for these households.
Further development of PNG’s agricultural industries will
bring many PNG farmers into the formal economy, provide
productive employment and income to the rural majority,
and help counteract “Dutch Disease” phenomena.
In September 2013, the Bank of PNG Governor Loi Bakani,
called for greater effort to put structures in place which
support the development of agriculture export industries
in oil palm, cocoa, coffee, rubber, tea and coconut.
Mr Bakani argued for the introduction of an incentive
framework which encourages investment in the agriculture
sector and noted the importance of the Government’s
tuition free education program as a means to improve
technical skills and ensure the development of more
sophisticated agricultural industries.
Promoting the private sector and inclusive
growth
Steamships supports the Government’s efforts to develop
an environment conducive to private sector growth. A
competitive and dynamic private sector promotes inclusive
growth, delivering benefits to all Papua New Guineans in
the form of more jobs and better goods and services.
The World Bank’s 2013 Doing Business survey found that
it was more difficult for entrepreneurs to set-up, invest,
employ and operate in PNG than most other countries.
PNG’s overall ranking slipped five places compared with
2012, to 113 out of 189 countries surveyed.
Directors’ Economic Analysis
Difficulty enforcing contracts was highlighted as a
particular challenge, while businesses regularly cite law
and order, corruption, internet access, telecommunications
and electricity and transport infrastructure as key
impediments to operating, investing and expanding
employment in the country.
International experience shows that sustainable investment
and development is only possible where the integrity of
property rights and contractual obligations are strong
and regulatory actions are consistent, transparent and
predictable. Improving access to market entry and
establishing a robust regulatory framework is also
important.
The PNG Government has successfully addressed some
impediments to investment in recent times through
relatively low-cost adjustments in market conditions and
regulatory reforms. Liberalisation of PNG’s mobile phone
market allowed the country’s ICT sector to experience
significant growth in the last decade, providing numerous
social benefits to Papua New Guineans. Recent reforms to
the wholesale broadband internet market have already led
to price decreases and service improvements.
In late November 2013, PNG’s Investment Promotion
Authority launched an online business registry which
allows users to register and maintain details of companies
online. The registry has greatly sped up the processing of
new business registrations and will help to attract new
investment.
Recent efforts to reduce the costs of business and
encourage greater competition should be commended.
Further opportunity for reform exists in sectors including
telecommunications, power generation, aviation and
petroleum products.
Steamships Annual Report 2013 11
DiReCtoRs’ Review
2013 was not without its challenges as slowing economic activity
and lower trade volumes across PNG affected the individual
performances of Steamships’ Divisions to varying degrees.
The following significant items have impacted the results in the year:
Net profit attributable to shareholders
117,050
177,700
-34.1%
2013
K’000s
2012
K’000s
Change
Add back/(less) impact of significant items (post tax & minority interest)
Property sales
Inventory impairment (Laga)
Asset impairments (Laga, East West Transport, Consort)
Steamships Agency closure
Pacific Towing equity gain on gaining control
Bemobile investment write off
Net other
Total impact of significant items
0
3,500
42,795
0
(35,467)
0
490
11,318
(48,387)
0
0
2,100
0
24,800
0
(21,487)
Underlying profit attributable to shareholders
128,368
156,213
-17.8%
Due to weaker trading conditions and
a falling Kina, the Directors performed
an impairment review of inventory and
assets across all divisions which resulted
in write downs in Laga Industries
(K5.2m), East West Transport (K8.1m)
and Consort Express Lines (K33m).
In late November 2013 Steamships
acquired the remaining interest in Pacific
Towing for PGK 51.1 million. Fair value
accounting on the business acquisition
resulted in a gain on the previous equity
accounted portion.
In the Logistics category, Steamships
Shipping had a difficult year. Both
project cargo and liner trade volumes
were impacted by reduced activity
in PNG’s key commodity and
resource industries. Charter activity
was an exception, performing above
expectations throughout the year. The
Division did however expand activities,
with the development of two new liner
trades, and added a new vessel to its
fleet. 2014 will see the addition of a
third new 70 metre Landing Craft (LCT)
sister and two new 45 metre LCT’s.
12 Steamships Annual Report 2013
Steamships’ JV Stevedoring businesses
were also affected by the general
slowdown of the PNG economy in
2013. Throughput was lower across
all operations, including those at
the major ports of Port Moresby and
Lae. Businesses at the smaller ports
were strongly affected by the lower
levels of activity. In addition to cost
reductions, Steamships JV Stevedoring
will explore expansion opportunities
in 2014 in an effort to counter slower
economic activity, beginning with the
establishment of new operations in
Alotau, Milne Bay Province.
Despite the best efforts of management
and staff the Division’s ship repair
facility, Steamships Marine Engineering
Services (MES), was an unfortunate
casualty of the economic slowdown with
Steamships’ Board of Directors deciding
it would cease operations on
1 November 2013.
Consort Express Lines also experienced
another challenging year. The tighter
management of costs and strong
Steamships Annual Report 2013 13
in corporate activity resulted in falling
demand for hotel rooms and food and
beverage services. This, coupled with an
increase in hotel room supply, especially
in Port Moresby and Lae, put significant
pressure on CSH to maintain market
share. Hotel room occupancy and rates
fell below expectation for the year. The
apartments portfolio however exceeded
expectations.
In the Commercial category, 2013 was a
year of transformation for Laga Industries
with the Division implementing a series
of strategic changes it expects will
set a platform for positive growth and
development in the coming years. Laga
Industries changed its business model
during the year to focus primarily on
increased ice cream and vegetable oil
production and distribution. The strategic
shift towards ice cream production is
designed to capitalise on latent demand
in PNG. On the 30 September 2013,
Steamships acquired the remaining
shareholding in Laga.
Datec performed satisfactorily in 2013
with revenues for the year matching
those from 2012. However contribution
was lower as increased competition and
a fluctuating exchange rate put pressure
on product margins. Datec was pleased
to report the corporate sales division
recorded double digit revenue growth in
2013 .
Steamships’ remaining major joint
venture Colgate-Palmolive (PNG), a
manufacturer of personal and home
care products, saw revenue and margin
figures fall below expectations in 2013,
with the slowing economic conditions
weighing heavily on demand for
consumer goods in PNG for much of the
year.
Directors’ Review
performances from Riback Stevedoring
as well as Consort’s depot services made
solid contributions to Consort’s 2013
result. There are plans to introduce two
replacement vessels in 2014 as part of
a fleet replacement program to lower
operational costs and improve reliability.
East West Transport (EWT) performed
below expectations for the financial
year. Downward pressure on rates from
increased competition, the loss of a
key haulage and materials handling
contract in Lae and a lack of anticipated
business growth in the Highlands region
contributed significantly to this result.
A medium term economic rebound is
anticipated when LNG royalties begin
to flow and as the agricultural sector
recovers. EWT is well positioned with
facilities, equipment and knowledge to
accommodate this renewed growth.
The development of the Highlands
Highway business will be a key focus.
During the year EWT acquired the
trade and assets of Kimbe Shipping &
Transport for K18.0 million.
Pacific Towing suffered from a downturn
in job numbers at the main ports in 2013
as project traffic supporting mineral,
oil and gas projects eased. However,
this was offset to a degree by the arrival
of larger vessels, both tanker and dry
cargo types, providing uplift to towage
revenues on a per movement basis.
The Property & Hotels category had a
mixed performance in 2013. Pacific
Palms Property recorded solid year on
year revenue growth in 2013 due to
increased residential and warehousing
rental capacity. However, falling demand
and increased supply put pressure on
occupancy and rates.
2013 was a challenging year for Coral
Sea Hotels (CSH). The general slump
14 Steamships Annual Report 2013
Review of Operations
LoGistiCs
Steamships Annual Report 2013 15
steAmshiPs shiPPinG
Steamships has been a leader in coastal shipping in PNG since
1919. Through its Steamships Shipping Division, the Group today
operates a fleet of 16 coastal vessels focused on the Papuan coast.
Designed for shallow water and river passage, their safety and
technical specifications are maintained to international standards.
The fleet includes landing craft, bulk carriers, tankers, tugs and
barges. While the Division specialises in river shipping, it also
has vessels fully certified for international trading, which regularly
operate charters to Australia.
Steamships Shipping provides short and
long term vessel charters, as well as
reliable scheduled cargo liner services
to the shores and rivers of the Gulf of
Papua. It also develops, implements and
supports intermodal logistics solutions
linked to land based services such as
road transport, cargo handling, storage,
customs clearance, lay down areas and
warehousing.
In addition to owning vessels,
Steamships JV Stevedoring businesses
offer a full range of stevedoring and
handling facilities. They operate in
the ports of Port Moresby, Lae, Oro,
Madang, Kimbe, Kavieng and Kiunga.
With a fleet of specialist equipment the
businesses handle all types of containers,
as well as project cargo, break-bulk, RO-
RO, LO-LO and grains. Local trucking
businesses are also operated at several
16 Steamships Annual Report 2013
locations. The stevedoring companies
are joint ventures between Steamships
Shipping and local landowner groups
at the respective ports. Each joint
venture employs a local workforce
and is structured in a manner so that
earnings are able to filter back into the
community.
Performance in 2013
Steamships Shipping had a challenging
year. Both project cargo and liner trade
volumes were impacted by reduced
activity in PNG’s key commodity and
resource industries. Charter activity
was an exception, performing above
expectations throughout the year.
The liner trade to Kiunga was affected by
the continuous silting of the town wharf,
which blocked vessels from docking
until river levels had increased. This was identified as
a priority issue and by the end of November a 200 ton
crawler crane was in place to dredge the wharf and
assist loading and discharging of cargo. Steamships
Shipping expects improved turnaround times
throughout 2014.
Steamships Shipping expanded activities during 2013
with the development of two new liner trades: one to
Balimo in Western Province and another, operated via
a joint arrangement by Consort Express Lines, on the
North coast between Lae and Manus.
The Kiwai Chief, Steamships’ newest vessel, joined
the fleet in October 2013. The vessel is a fully
double-skinned landing craft identical to the Kopi
Chief, which was delivered at a similar time last
year. Both vessels comply with the highest safety,
accommodation and environmental standards.
Steamships Marine Engineering Services (MES), the
Division’s ship repair facility has been an important
business unit for many years. Unfortunately in recent
times and despite the best efforts of management
and staff, MES has been making losses. The current
economic slowdown in PNG has added to these losses
and it is with great sadness that the Board of Directors
of Steamships Trading Company decided to close MES
on the 1 November 2013.
Steamships’ JV Stevedoring businesses experienced
a particularly challenging year in 2013 due in large
part to the general slowdown of the PNG economy.
Throughput was lower across all operations, including
those at the major ports of Port Moresby and Lae.
Businesses at the smaller ports were strongly affected
by the lower levels of activity.
A robust training program and the ongoing
implementation of strategies to improve the
management of Steamships JV Stevedoring businesses
have led to significant advances in productivity. The
adoption of IT software “CargoPro” has improved
accuracy, efficiency and debtor settlement.
A new stevedoring award was signed with the PNG
Maritime Union in October 2013. This represents
a significant development for waterfront activities.
Amongst other changes, the stevedoring award
reduces the number of hours per shift increases the
maternity allowance, and includes a new category of
permanent worker.
Health and Safety were again a major focus for
Steamships Shipping throughout 2013. All business
units observed major improvements in staff awareness,
attitude and the reporting of safety matters. Steamships
Shipping is proud of these efforts and is aware that
continuous training is required to ensure high health,
safety, security and environmental (HSSE) standards
are maintained.
Steamships Shipping
Future aims
growth
Steamships Shipping has in place a fleet renewal and
replacement program which will see a number of new
vessels added to the coastal shipping operations in
2014. A new Tug boat, the OK Tarim, will be delivered
in February and the Kerema Chief, a sister vessel to
the Kopi Chief and Kiwai Chief, will be delivered in
October.
Two new 45 metre Landing Craft (LCTs) will be
delivered at the end of 2014. These vessels have been
designed for use on oil and gas projects (especially
for initial exploratory work), but can also be used to
establish new liner trades.
With these continuing investments Steamships
Shipping is well positioned to capitalise on both
renewed resource activity as a logistics supplier of
choice, and general liner growth in PNG expanding
upon the Division’s strong service offerings in coastal
shipping and stevedoring.
Steamships JV Stevedoring will establish new
operations in Alotau, Milne Bay Province in early
January 2014. The new business, Palm Stevedores, is
a joint venture between Steamships Shipping, Consort
Express Lines and local landowners. Steamships JV
Stevedoring will continue to explore new expansion
opportunities in 2014.
Process improvements
Steamships Shipping aims to be at the forefront of
industry progress in PNG over the coming years. To
achieve this, the Division must ensure it has processes
in place which enable it to operate efficiently and
effectively and which prepare it for future growth.
A major review of all systems and processes will
be conducted in 2014 with a view to streamlining
operations. New technological solutions will be
explored and adopted.
Health and safety initiatives
A number of health and safety initiatives launched in
2013 will continue in 2014, including “Monthly Safety
Themes” and “Safety Awareness Days”. These activities
allow all office based staff to take part in tasks which
improve their awareness of the environment at the
waterfront and in vessels, and provide them with the
tools to assess and evaluate all types of potential risks.
Steamships Shipping actively participates in the
Coastal Ship Owner’s Association and at the National
Maritime Safety Authority, seeking to lead by example.
Steamships Annual Report 2013 17
ConsoRt eXPRess Lines LtD
As a complementary business to Steamships Shipping, Consort
Express Lines Limited (Consort), established in 1978, provides the
most comprehensive network of scheduled liner shipping services
in PNG focused on the New Guinea coast. Operating from its
hub in Lae, Consort connects 15 ports in PNG and provides an
international service to Townsville, Australia.
The Division has scheduled services to
the North Coast (Madang, Basamuk,
Wewak, Vanimo), South Coast (Port
Moresby, Oro Bay, Alotau), New Guinea
Islands (Kimbe, Rabaul, Kavieng),
Bougainville (Buka, Kieta), Australia
(Townsville) and Western Province
(Daru, Kiunga). Consort proudly serves
the people of PNG by providing the sole
supply link to many of the communities
on its routes.
Consort owns nine geared, multi-
purpose vessels (PNG flagged and
manned) with all safety and technical
specifications maintained according to
international standards. The Division
can carry a range of cargoes including
containerised, break-bulk, reefer, LCL
and project cargo. Consort transports
cargo for a diverse customer base
from domestic manufacturers and
wholesalers to international liner carriers
transhipping cargoes to outports.
In addition to owning and operating
ships, Consort provides complementary
depot services to customers at its Lae
hub (including bond yard, container
storage and wash bay facilities) and is a
shareholder and manager of stevedoring
operations at five PNG ports (Riback
Stevedoring, Lae; United Stevedoring
Limited, Lae; United Stevedoring
Limited, Port Moresby; Makerio
Stevedoring, Buka; Nikana Stevedoring,
18 Steamships Annual Report 2013
Consort Express Lines Ltd
Kieta). These stevedoring companies are partnerships
between Consort and local landowner companies and
provide significant employment opportunities for the
nearby communities.
Performance in 2013
Consort’s shipping services experienced another difficult
year in 2013.
Two vessels endured unscheduled out of service periods
linked to their dry-docking in 2012, which required the
charter of a third party vessel for an additional two months
this year. The planned disposal of one of the smaller vessels
in the fleet, Morobe Coast, following the purchase of
Nakanai Coast, was delayed by twelve months. The vessel
was eventually disposed of in October 2013 reducing the
fleet to eight.
Tonnage volumes were negatively affected by agricultural
commodity prices, which remained depressed throughout
the year, reducing disposable income and suppressing
demand for consumer goods in the New Guinea Islands
and Bougainville. However volumes improved in the
second half of 2013 due to increased Kina returns as a
consequence of the currency’s depreciation against the US
dollar.
The impact of a reduction in the Gold price was also felt,
as mining operations in PNG reduced staffing levels and
initiated severe cost cutting. Meanwhile, the Townsville
Service was particularly hard hit by floods in Queensland
in the early months of 2013 and ran reduced services
throughout the year in an effort to support schedule
integrity on the coast.
Despite these challenges, the tighter management of costs
resulted in a 2013 contribution that was similar to that of
the 2012 result.
Consort’s depot services and JV Stevedoring Associates
performed well and made a solid contribution to Consort’s
final 2013 result. Riback Stevedoring continued to benefit
from favourable cargo volumes to Lae associated with the
PNG LNG project.
Consort offered nine scholarships for the Consort Express
Lines PNG Officer Cadetship Program in 2013. These
scholarships offer high performing PNG nationals a
structured, four-year training and development program.
Twenty-seven Consort officers and crew attended programs
at the Madang Centre of Excellence during the year.
Future aims
Improving Efficiencies
Given the current economic climate, Consort will
dedicate significant time and effort to improving
efficiencies and reducing the cost of operations in
2014 .
Consort expects to achieve improved fleet efficiencies
by continuing to prioritise services on competitive
trades. The Division will reduce port calls on the
North Coast through the introduction of a larger vessel
to this service, while it anticipates the renovation of
the Kimbe Coastal Wharf in West New Britain will aid
turnaround times.
Consort’s land transport service in Port Moresby
will be fully operational in 2014, while the planned
upgrade of the Division’s Lae depot will provide better
efficiencies and new opportunities for growth.
Business development
Business development plans for 2014 include
commencement of Landing Craft Operations from Lae
and the launch of a joint venture to operate terminal
facilities in Lae and Madang.
Consort also plans to strengthen its joint venture
agency and stevedoring operations at the ports of Buka
and Kieta in Bougainville and will expand agency
services to two additional ports, Kimbe and Alotau,
during the year.
Consort will continue to pursue strategic partnerships
with resource companies in an effort to sustain the
Australia service. Depot operations will be expanded
and upgraded as necessary throughout the year.
capital investment
Capital investment will be in line with approved fleet
renewal plans for 2013-2015. These aim to reduce
structural and operating costs, provide additional
capacity and ensure the reliability of services to
customers.
Consort will continue with the expansion and upgrade
of the container fleet in 2014 through the purchase of
1,000 new 20ft dry containers, 100 new 20ft reefer
containers and 240 units of 9m3 and 4m3 containers.
Consort also plans to replace its heavy container
handling equipment for ongoing stevedoring
operations and will make new purchases for joint
venture operations as necessary.
Steamships Annual Report 2013 19
eAst west tRAnsPoRt
East West Transport (EWT) is one of Papua New Guinea’s largest
multifaceted transport and logistics companies. Based in Lae,
it also has a significant presence in Port Moresby, Kimbe, Mt
Hagen, Goroka, Rabaul, Madang, Wewak and Kavieng. With 720
employees, the Division has a growing fleet of 150 prime movers,
46 heavy trucks, 10 light trucks and 53 forklifts and reachstackers
ranging from 2.5 to 45 tons in capacity. All equipment is
supported by localised workshop facilities, safety and emergency
vehicles and in house training programs.
EWT operates across a wide spectrum of
transport-related activities including bulk
fuel, containerised cargoes, bulk grain,
sawdust and coffee along with break-
bulk cargoes and depot services such
as equipment hire, warehousing and
yard storage. EWT also offers a licensed
customs cargo clearance service in Lae
and Port Moresby and operates a large
export coffee processing facility in Lae.
The Division capitalises on its close
relationships with sister companies in
shipping and stevedoring by offering
specialised project solutions for the
mining, oil and gas sectors.
Performance in 2013
EWT performed below expectations
for the financial year. The slowing of
the PNG economy, lower commodity
20 Steamships Annual Report 2013
prices, downward pressure on rates from
increased competition and the loss of
a key haulage and materials handling
contract in Lae contributed significantly
to this result. Contribution was also
affected by a lack of anticipated business
growth in the Highlands region.
Haulage of reagents to the Hidden Valley
mine site continued in steady volumes
for the majority of the year. However the
significant reduction in the gold price
impacted heavily on activity levels in the
fourth quarter of 2013.
Additionally, the 2013 coffee harvest
was the smallest in many years. This
along with a return to traditional
price levels saw a large reduction in
eastbound freight from the Highlands
and a reduction in coffee bulking at the
Lae facility.
East West Transport
The general transport business in Port
Moresby and Lae has been impacted by
increased competition and lower import
volumes. Low hard and soft commodity
prices, together with an expected
weakening in the exchange rate, will
continue to influence imports and place
additional pressure on rates.
The new Port Moresby warehouse
facility at Baruni has attracted
encouraging initial interest and is
strategically positioned for future growth,
close to the expected new port location
at Motukea.
The empty container depot in Port
Moresby experienced lower throughput
in the earlier part of the year, but
showed signs of recovery as 2013
closed. Space is available at the facility
to accommodate third parties and a
range of services can be tailored to
customer’s requirements.
Fuel delivery volumes remained strong
in Port Moresby but were lower in
Lae and most outer ports. The InterOil
Momase contract, covering operations in
Lae, Madang and Wewak, was renewed
for a period of two years. Exxon Mobil
fuel haulage continued successfully in
Port Moresby, Lae and Madang.
A new joint venture partnership in West
New Britain, branded EWT Kimbe,
commenced in March under parent
company New Britain Shipping Ltd,
offering integrated logistics solutions.
The EWT fleet grew with the arrival of
additional equipment, predominantly
from China. The Shacman brand of
highway trucks has been a successful
addition to the fleet, servicing all
highway destinations including Bulolo
and the Hidden Valley mine site.
Carrier audits for dangerous goods
handling and haulage in Port Moresby
and Lae were conducted in the fourth
quarter of 2013 for which positive results
were attained. The process contributes
to the Division’s strategic objective of
achieving full ISO compliance in the
coming years.
Steamships Annual Report 2013 21
Future aims
growth on the Highlands Highway
EWT anticipates a number of challenges
in 2014. Rates will continue to be
squeezed as surplus truck capacity,
decommissioned from construction of
the LNG plant, enters the open market.
This will primarily impact the highway
sector of the business, but local cartage
services are also expected to be affected.
Additionally, low investment in coffee
replanting coupled with the damage
resulting from an abnormally wet 2013
season suggests another poor crop could
be anticipated for 2014.
Road conditions remain very poor.
Landslides and security incidents are
regular occurrences. Government plans
have been announced to upgrade the
Highlands Highway, but competing
priorities for government funding and
capacity limitations for delivery may
hinder progress in the short to medium
term.
However, a medium term economic
rebound is anticipated when LNG
royalties begin to flow and as
the agricultural sector recovers.
Infrastructure spending should also
improve road conditions over the longer
term, reducing costs and allowing more
frequent use of B Double combination
trailers.
Despite the current challenging
environment, EWT is well positioned
with facilities, equipment and
experience to accommodate growth
and any change in demand in the major
commercial centres. The development of
the Highlands Highway business will be
a key focus next year and beyond.
Improving Efficiencies
Improving the efficiency of operations
will again be a priority in 2014 with an
emphasis on innovative thinking and
the adoption of emerging sustainable
technologies.
EWT will continue to develop an end
to end supply chain service which
is fully supported by management
systems, providing visibility and tracking
capabilities for all products and services.
Driver simulator technology will be
operational in Lae in early 2014. This
technology will support the in house
training program and allow EWT to test
and train drivers in a range of equipment
and a variety of environmental
conditions.
Business development
Bulk fuel haulage will continue to be
a very important specialised service
within the Division. Growth in this
area will be supported by the innovative
development of new equipment and the
turnover of existing equipment. This has
commenced and will continue in 2014.
The waste management business will
be grown in Port Moresby and Lae in
2014 along with the commencement
of passenger bus services for corporate
clients in those cities.
EWT will continue to add value to its
key service offerings, particularly for
high volume clients and project related
activities. Continuing focus remains on
cargo traceability, on time performance
and loss or damage mitigation as EWT
presents value added premium door to
door (including customs) and complex
handling (dangerous goods) services.
These efforts will be supported
by improved technology and
communications, in-house staff training
and development, the use of external
security services and equipment tracking
as required.
22 Steamships Annual Report 2013
Review of Operations
PRoPeRtY
AnD hoteLs
Steamships Annual Report 2013 23
PACiFiC PALms PRoPeRtY
Pacific Palms Property is one of the largest and most dynamic
property developers in PNG. The Division provides residential,
commercial, retail and industrial property throughout
the country.
Pacific Palms Property has two
separate streams of business activity.
The development team manages land
acquisition, investment assessment and
construction management, while the
lettings team manages marketing, tenant
placements, rental collections and
property maintenance.
Building and land assets are located in
Port Moresby, Lae, Madang, Wewak,
Goroka, Mt Hagen, Popondetta and
Rabaul. The Division currently holds
a total lettable space of 13,745m2 of
commercial property, 180,479m2 of
industrial property, 21,942m2 of retail
property and 160 residential townhouses
and apartments.
Performance in 2013
Pacific Palms Property recorded solid
year on year growth in 2013, capping off
another successful year.
2013 was not without its difficulties
however as a down turn in the rental
property market increased the pressure
to maintain occupancy. This was
especially the case in the residential
portfolio where the market experienced
weaker demand as contractors were
decommissioned from construction of
the PNG LNG project. Through vigorous
marketing efforts Pacific Palms Property
was able to successfully maintain an
average occupancy rate of 98 per cent
across existing properties.
24 Steamships Annual Report 2013
Pacific Palms Property had a range of
developments ongoing during 2013.
In the Residential category, construction
of the prestigious Windward Apartments
East was completed in December 2013.
Construction also finished on the 12-unit
Blaikie Apartment complex located
in Lae at the end of October with
occupancy commencing in November.
In the Retail category, construction
of the 5,300m2 SVS supermarket and
commercial complex in Lae and the
9,300m2 Waigani Central Development
incorporating the new Stop n Shop
supermarket and Paradise Cinema
complex in Port Moresby both neared
completion at the end of 2013.
In the Commercial category,
construction continued on the 18,864m2
Harbourside Office Complex, which is
to be the first Green Star rated building
of its kind in Papua New Guinea. Pre-
leasing of the high quality waterfront
property will commence in 2014 with
construction due for completion in
January 2015.
In the Industrial category, development
work continues at Baruni stage 3, a 3.3
hectare subdivision, while construction
of a new estate in Madang, incorporating
12 mixed-use tenancies, is expected to
be completed in March 2014. Elsewhere,
the construction of eight warehouses at
Six Mile in Port Moresby is expected to
be completed in March 2014.
Future aims
new developments
2014 will see the completion
of many ongoing projects,
while the property development
team will review various future
development options including
support for Coral Sea Hotels’
expansion. At this stage no new
projects have been formally
endorsed by the Steamships
Board.
customer service & risk
management
Pacific Palms Property has
committed to a shift from re-
active to pro-active customer
service in order to be a
rental provider of choice in a
compressed market. Various
initiatives are underway to lift
performance. The Division has
budgeted for an investment
in external audits to ensure a
continuing and enhanced focus
on property risk management.
Land acquisition
Historically-high property
prices coupled with capacity
constraints brought on by PNG’s
land tenure system continue to
restrict the Division’s ability to
acquire strategic properties to
add to its significant land banks.
Pacific Palms Property is
however committed to further
land acquisition for property
development and, to this end,
has employed an officer to liaise
with statutory bodies that deal
with land matters to improve
relations, participate in town
planning lobbying and enhance
opportunities for strategic land
and property acquisitions.
Pacific Palms Property
Steamships Annual Report 2013 25
CoRAL seA hoteLs
Coral Sea Hotels (CSH) operates nine properties offering full hotel
facilities and serviced apartments as well as extensive meeting,
conference and banqueting facilities.
CSH remains the largest hotel group
in PNG, offering 646 hotel rooms and
136 apartments. The Group comprises
the Grand Papua Hotel, the Gateway
Hotel and Apartments, the Ela Beach
Hotel and Whittaker Apartments in Port
Moresby; the Huon Gulf Hotel and
Apartments and Melanesian Hotel and
Apartments in Lae; the Highlander Hotel
and Apartments in Mount Hagen; the
Bird of Paradise Hotel and Apartments in
Goroka, and the Coastwatchers Hotel in
Madang.
Performance in 2013
2013 was a challenging but satisfactory
year for CSH. The completion of
construction activities at the PNG LNG
project, tighter controls on Government
spending and a general decline in
corporate activity resulted in falling
demand for hotel rooms, apartments,
conferences and food and beverage
services. This, coupled with an increase
in hotel room supply, especially in
Port Moresby and Lae, put significant
pressure on CSH to maintain market
share. Both hotel room occupancy and
rates fell below budget for the year. The
apartments portfolio however exceeded
budget expectations.
26 Steamships Annual Report 2013
CSH put in place a number of initiatives
during the year to maintain market
share and drive margin. All expenditure
(including capital expenditure) and
existing contracts were reviewed to
reduce costs. Rates in all properties
were reduced in response to increased
competitive pressure. The sales team was
expanded and electronic marketing and
social media efforts were improved.
A new corporate website was launched
with an updated online booking system
allowing for real time direct bookings
at all CSH hotels. The reservation
department was centralised for Port
Moresby hotels to improve efficiencies
in yield management and allow cross
selling.
CSH became a member of the Qantas
Frequent Flyer program during the year
and remains the only hotel partner for
the Air Niugini Destinations rewards
program.
Opened in 2012, the Grand Papua
Hotel further established itself as PNG’s
Premier “Five Star Hotel” in 2013 and
continues to improve service standards
and product offerings to maintain its
position as a market leader.
Coral Sea Hotels
training and development
CSH expects that pressure to retain experienced staff
will increase in 2014 due to the increased supply of
hotel rooms in the market. To uphold its reputation as
an employer of choice, CSH will launch a number of
staff initiatives to improve benefits.
Training and career development will continue to be
a high priority. An arrangement has been entered into
with The Australian Pacific Training College to train
and provide Australian certification for Food Service
Graduates. This will be expanded in 2014 to include
cookery and apprenticeship development and the
Division is exploring the establishment of a hospitality
school in Mt Hagen.
CSH will employ a Group Training Chef to monitor
the development of all kitchen staff; to introduce new
innovative food and beverage options; and to ensure
all proper food handling practices are being followed.
Future aims
maintaining market share
CSH expects 2014 to be another challenging year.
To meet these challenges, the Division is committed
to ongoing internal and external reviews aimed at
improving operational standards and ensuring that
product offerings capitalise on CSH’s considerable
“points of difference” in the market. Brand standards
are being reviewed and a phased rollout of these
will begin in January 2014 together with the
commencement of a three year program, “Project
Cambridge,” to upgrade and standardise all hotel
rooms across the Group.
Maintaining business levels in an increasingly
competitive market will be a difficult task. Flexible
rate structures, new sales and marketing initiatives,
improvements in product and service offerings and
the continued training and development of all staff
will continue to position CSH as a quality, preferred
supplier of all accommodation needs.
growth opportunities
New opportunities for business growth will be pursued
in 2014. Plans include the development of new bar
and gaming facilities for the Gateway Hotel in Port
Moresby.
Steamships Annual Report 2013 27
Review of Operations
CommeRCiAL
28 Steamships Annual Report 2013
LAGA inDUstRies
Headquartered in Lae, Laga Industries is PNG’s premier consumer
goods business and the country’s leading manufacturer of ice
creams, vegetable oils, drink powders, condiments and spirits.
The Division is also a distributor for international consumer goods
companies including Diageo and Constellation Wines.
Performance in 2013
Laga Industries experienced a tough year
in 2013. The reduced PNG LNG activity,
coupled with falling commodity prices,
low agricultural output and a weakening
Kina have led to falling disposable
incomes and consequently suppressed
retail demand generally for PNG. This
has prompted a transformation with
the Division implementing a series of
strategic changes it expects will set
a platform for positive growth and
development in the coming years.
Laga Industries changed its business
model during the year to focus primarily
on increased ice cream and vegetable
oil production and distribution.
The strategic focus on ice cream
production is designed to capitalise
on latent demand in PNG where the
average annual consumption of ice
cream is one litre per person compared
to Fiji, where it is five litres per person.
Laga Industries is confident the proposed
strategic changes will be of significant
benefit to the Division as a whole.
In September, Steamships purchased
Laga Industries’ remaining interests from
a minority party. Just prior to this, a new
General Manager was appointed to the
Division.
In October, Laga Industries had its
HACCP accreditation renewed,
reinforcing the Division’s high standards
and commitment to food safety.
Steamships Annual Report 2013 29
Laga Industries
30 Steamships Annual Report 2013
Future aims
Business innovation
Targeting opportunities for rapid growth in PNG and
developing the systems and infrastructure required
to support this growth will be key aims for Laga
Industries in 2014. Specific areas of focus will be
product development, maintenance improvements and
increased investment in ice cream sales, distribution
and marketing.
increased investment in sales and marketing
Laga Industries plans to expand its sales and marketing
team to provide significantly increased coverage in the
PNG market. Forty new sales staff will be recruited in
2014, representing a 45 per cent increase in numbers
on previous years.
expanding and upgrading ice cream production and
freezer facilities
In early 2014 Laga Industries will install a new ice
cream molding machine - a Rollo R 29 - which will
significantly increase capacity and the quality of
products. The Division will also expand its ice cream
freezer facilities in Lae by 50 per cent and increase
its production and mixing capacity by 60 per cent to
support increased sales and distribution of ice cream.
DAteC
Datec (PNG) Limited (Datec) has operated in PNG since 1985
and is the country’s premier information and communications
technology (ICT) solutions provider and internet service provider
(ISP).
The Division provides a suite of ICT
solutions to assist companies, from
network consultancy and remote
server management to application
development and training. Datec NGN
(Next Generation Network), which
predominantly services the corporate
sector, offers the fastest internet service
of any ISP in PNG.
Datec operates a data centre in
Port Moresby, the largest computer
retail store in the country (the Datec
Megastore) as well as corporate and
degree-level training and education
through Datec Learning Centres (an
accredited academic certificate and
diploma IT program).
Datec has established partnerships with
international companies including IBM,
HP, Apple, Microsoft, Oracle, Sony,
Canon, Cisco, Lenovo and Eaton. In
addition, the Division has developed
a closed-circuit TV (CCTV) and
cabling business that designs, installs
and services CCTV and electronic
surveillance systems, as well as full
service project management capability.
Performance in 2013
Datec performed satisfactorily in 2013
with revenues for the year matching
those from 2012, however, increased
competition and a falling exchange rate
brought margin compression.
Key objectives for 2013 were an
increase in corporate market share and
an expansion into regional Highland
areas through new agency partnerships.
The corporate sales division recorded
double digit revenue growth in 2013.
However, regional expansion plans were
less successful, due in large part to the
challenging economic conditions.
Poor net results led Datec to focus in the
second quarter of 2013 on consolidating
operating costs to ensure business
sustainability. As part of these changes
Datec Learning Centre’s academic
training rooms were relocated to the
education hub at the Jubilee University
campus.
Datec NGN continued to establish itself
as the leading ISP in PNG and led the
market when wholesale prices changes
were announced by Telikom during the
year. Datec NGN also introduced fixed
price internet service plans to customers
and saw data usage increase by more
than 100 per cent.
The Datec Megastore recorded lower
revenues in 2013, affected, as many
retailers were, by a downturn in
consumer demand.
A number of key senior positions were
localised during the year in line with
Datec’s strategic objectives for human
resources.
Steamships Annual Report 2013 31
Datec
Future aims
growth in internet services
The rollout of value-added data products
and services for internet customers
will be a major focus in 2014. Datec
expects that downward pressure on the
cost of data, driven by Vsat and O3B
service offerings, will allow Datec NGN
to deliver internet services at more
competitive pricing than ever before.
with the launch of its New Horizons
Learning Centre franchise partnership.
New Horizons are a leading global
training solutions provider specialising
in the development of IT technical,
graphics, desktop applications and
business skills.
Datec Learning Centres will also
establish two provincial centres in 2014
in the Eastern Highlands and Southern
Highlands.
sales and marketing
Improved efficiencies
Datec’s corporate sales and service
division will focus on improving
efficiencies through cost reduction,
improved margins and the continued
training and development of staff to
ensure the effective delivery of ICT
solutions.
Datec will further embed sales and
marketing resources for all products
and services in 2014. Informed sales
strategies and accurate target market
analysis will drive revenue growth and
ensure Datec’s leading market position
is retained.
expansion of datec Learning centres
Datec Learning Centres will pioneer a
new era of education services in PNG
32 Steamships Annual Report 2013
Review of Operations
Joint
ventURes
Steamships Annual Report 2013 33
PACiFiC towinG
Pacific Towing became a wholly owned Steamships subsidiary at
the end of November 2013. The Division is the leading provider
of harbour towage and mooring services in PNG and offers
coastal and ocean towage services. It also retains a fast responder
salvage capability complimented by a comprehensive range of
commercial dive services.
Pacific Towing is headquartered
in Port Moresby and operates 22
vessels, including tugs and line
boats, in five ports across PNG
(Port Moresby, Lae, Rabaul, Kimbe
and Madang). Dedicated harbour
towage services were extended to
the Solomon Islands in 2013 through
a newly formed subsidiary company
operating in Honiara.
Performance in 2013
There was a downturn in job
numbers at the main ports in 2013
as project traffic supporting mineral,
oil and gas projects eased. This
was offset to a degree by the arrival
of larger vessels, both tanker and
dry cargo types, providing uplift to
towage revenues on a per movement
basis.
Two new mooring boats were
introduced at Lae in September
to upgrade service levels, lower
operating costs and increase
reliability at the port. Accordingly
revenues in harbour exceeded the
34 Steamships Annual Report 2013
prior year. Tug charter activity was
significantly higher than forecast and
provided strong cash flows.
Two major salvage operations were
successfully completed in 2013. The
stranded refrigerated carrier ASIAN
LILY was safely refloated in January
in association with SVITZER Salvage.
In March extensive unconventional
underwater repairs were carried out
on the POAVOSA WISDOM VIII in
association with Nippon Salvage.
Two 50tbp ASD tugs were purchased
from Australia during the year in
accordance with fleet renewal plans.
They will increase service capacity
and enable manning reductions to be
introduced.
Training was a focus in 2013.
Experienced overseas officers were
engaged to mentor PNG counterparts
at a senior level. This initiative is
designed to ensure that command,
technical and environmental
awareness skills do not fall behind
the operational requirements of a
modernising fleet.
Future aims
Improving crewing standards
will continue to be a priority
in 2014. The development of
effective on-board leadership
skills will be addressed through a
comprehensive crewing strategy
including the recruitment of high
calibre cadet officers.
This is combined with a continued
fleet renewal program which seeks
to reduce the average age of tugs
over five years.
Pacific Towing plans to upgrade
services at the Port of Lae in 2014
to coincide with the completion of
the Lae Basin project.
CoLGAte PALmoLive
Steamships holds a 50 per cent beneficial interest in Colgate-
Palmolive (PNG) Ltd (Colgate), a company that markets and
distributes oral, personal, home, and fabric care products in
PNG. Joint control is exercised by the board however day to day
management is performed by Colgate-Palmolive Australia.
Performance in 2013
Colgate had a challenging year in
2013 with revenue and margin figures
falling below the prior year. The slowing
economic conditions weighed heavily
on demand for consumer goods in PNG
for much of the year.
Despite the challenging economic
environment, progress was made on
Colgate’s key educational programs
with increased participation during the
year in the Oral care program, Colgate
“Bright Smiles, Bright Futures,” and the
hand hygiene program, Protex “Clean
Hands, Good Health.”
Both programs were buoyed by
the increased cooperation of Non-
Government Organisations (NGOs).
Colgate expects participation to expand
further in 2014 and beyond.
A strategic focus on in-store execution
in 2013 saw significant improvement in
on-shelf and display presentations in key
retail outlets.
Future aims
Business simplification will
be a key focus for Colgate in
2014. Plans and strategies to
increase the efficiency and
effectiveness of the PNG
operation will be developed
and implemented throughout
the year.
Colgate will continue to
leverage relationships with
other emerging market
operations, particularly in
Fiji and other Pacific Island
countries, to ensure best
practice in all areas.
Steamships Annual Report 2013 35
sUstAinABiLitY
36 Steamships Annual Report 2013
sUstAinABiLitY: A Message from the Board of Directors
“Sustainability to Steamships represents a meaningful investment
in our people’s future, a fundamental commitment to the highest
standards of health and safety at work, practical efforts to improve
the lives of the communities in which we operate and genuine
measures to ensure we minimise any negative environmental
impacts from our diverse activities. Only by focusing on these
areas will Steamships be able to ensure that our long term growth,
along with the economic and social development of Papua New
Guinea, is truly sustainable.”
Steamships continues to strengthen and
expand its commitment to sustainability
through the implementation of strategic
initiatives in three broad areas: Our
People, Our Environment and Our
Community.
The establishment of a strong corporate
governance policy framework, to act as a
foundation for the Group’s sustainability
efforts and initiatives, was a major
strategic goal in 2013. In October, the
Steamships Board adopted a formal
Sustainable Development Policy. The
policy outlines the Group’s commitment
to sustainable business practices and
establishes the conduct expected of all
Steamships employees, contractors and
customers. A Sustainability Committee
was established to provide strategic
Steamships Annual Report 2013 37
Sustainability: A Message from the Board of Directors
direction and governance on key
sustainability issues and initiatives. The
committee is comprised of Steamships
Executive management and includes a
representative from the John Swire and
Sons Group of Australia.
There was progress on sustainability
issues across the Group in 2013. Further
adjustments were made to improve the
reliability of the Group’s sustainability
data. Data sources were regularly
audited and information capturing
processes were improved at the Division
level. The rollout of the Health, Safety,
Security and Environment (HSSE)
Portal in 2013 further improved HSSE
management systems, which contribute
to the sustainability reporting process. As
a consequence of these improvements,
Steamships will for the first time report
sustainability data related to its chosen
GRI indicators in 2013.
Staff continued to embrace a wide
variety of awareness programs on issues
including women’s health, malaria,
cancer, HIV/AIDS, domestic violence
and general wellbeing. In a major
development for staff health, Steamships
launched a Group Medical Insurance
Scheme for all permanent employees
during the year. Staff training and
development was again a major focus,
with the Group investing over K5 million
to deliver 138,336 hours of staff training
in 2013. The launch of the Graduate
Management Development Program
and a highly successful Leadership Skills
workshop initiative were highlights. In
the community, Steamships contributed
close to K2 million to initiatives and
projects covering health and social
welfare, education, the environment and
sports.
Steamships commits considerable time,
effort and resources to the development
of its Sustainability Strategy and the
strengthening of key initiatives. It
does this because it understands that
its long term business goals can only
be achieved if its business operations
are imbued with the principles of
sustainable development.
Steamships Trading Company and
The Global Reporting Initiative
Steamships utilises the Global Reporting
Initiative’s (GRI) G3.1 Guidelines
as a framework for its sustainability
monitoring and reporting. Steamships
has based its reporting on a C level of
application of the GRI indicators.
This year Steamships has presented
sustainability data and disclosed
the Group’s performance on select
GRI indicators to shareholders and
stakeholders for the first time. The
primary sustainability data disclosed for
2013 was collected by all Steamships
Divisions and reported to the Steamships
Board on a quarterly basis throughout
the year. Year on year comparisons are
made with baseline data collected in
2012 .
The Group has adopted a multi-
format approach to reporting this
performance, which more effectively
targets communication to the needs of
different stakeholders. In addition to
the sustainability information published
in this Annual Report and on our
website, Steamships publishes an annual
Sustainable Development Statistics
Report and a GRI Content Index to
help stakeholders better understand our
performance and compliance with the
GRI 3.1 Guidelines.
This information is available at http://
www.steamships.com.pg/sustainability/
sustainability-reporting.
Steamships is committed to providing
an accurate and relevant set of data
from across the Group and improving
this as its systems mature over time.
The achievement of a C+ level of GRI
reporting remains a strategic goal.
38 Steamships Annual Report 2013
Selected Group Performance Highlights
2012
% Change
Total employees
Citizens in senior roles
Female employees as a proportion of total workforce %
Staff turnover %
Staff representation on health & safety committees
LTIIR (number of injuries per 100 full-time equivalent employees)
LTISR (average number of days off per injury)
Employee attendance at health programs
Average hours of training per employee
Direct Energy consumed (GJ)
Indirect Energy consumed (GJ)
Water withdrawl (KL)
Energy consumed (CO2 tons)
Expenditure on community programs (k’000)
2013
4,000
47.0%
24.1%
37.1%
9.4%
0.93
11.0
1,488
34.6
4,166
51.6%
26.8%
41.1%
9.8%
0.70
7.4
1,008
23.9
1,052,091
915,116
93,441
84,705
576,028
475,095
93,098
1,941
81,499
1,608
-4%
-9%
-10%
-10%
-4%
33%
49%
48%
45%
15%
10%
21%
14%
21%
Further details can be found in Steamships’ annual Sustainable Development Statistics Report
at http://www.steamships.com.pg/sustainability/sustainability-reporting
Steamships Annual Report 2013 39
steAmshiPs sUstAinABiLitY FoCUs AReAs
oUR PeoPLe
As one of the largest and most diverse
private employers in PNG, Steamships
recognises the importance of its people
and the significant contribution they
make to the success of the Group.
‘People’ are one of the three major
pillars of the Group’s Sustainability
Strategy and a key focus of its corporate
governance policies.
In 2013 Steamships formally adopted
corporate governance policies which
outline the Group’s commitment
to, and expectations of, its people.
Steamships’ Sustainable Development
Policy commits the Group to being an
employer of choice and to providing
an environment in which all employees
are treated fairly and encouraged to
realise their full potential. Its Diversity
Policy commits Steamships to fostering
an inclusive culture, improving talent
management, enhancing recruitment
practices and aspiring to pay equity.
The Group’s Code of Conduct calls for
its people to operate with the highest
standards of business ethics and to
conduct all business with integrity and
fairness.
Steamships understands that an effective,
engaged and diverse workforce will
contribute to improved operating
performance, the achievement of
strategic objectives and the delivery
of continued value to customers and
shareholders.
steamships’ People strategy
Steamships’ ‘People’ strategy focuses
heavily on implementing staff initiatives
in occupational health and safety,
security, diversity and training and
development. Through these, it aims to
create an environment that promotes an
engaged, safe and diverse workforce,
encourages ongoing skill development
and facilitates an emerging generation
of leaders. In doing so, the Group
understands that it can help employees
succeed while generating continued
value to customers and shareholders.
The provision of clear performance
40 Steamships Annual Report 2013
objectives and regular feedback are
crucial components in the process.
In 2013 Steamships’ main hub for
human resources administration, the
People and Culture (P&C) Portal, was
fully implemented and rolled out to
the wider Group. An administrative
database accessible to all staff, the P&C
Portal encourages transparency and
accountability and houses the Human
Resources (HR) and HSSE Portals. In
2014, Steamships will launch and
implement its Performance Management
System and use the P&C Portal as the
administration tool for the compilation
of personal objectives and performance
appraisals.
Steamships successfully carried out its
second consecutive “People Compass
Survey”. The survey is an essential tool
in engaging staff. Two initiatives were
implemented in 2013 as a direct result
of feedback to the 2012 survey: a Group
Staff Medical Insurance Scheme for all
permanent employees was launched
in July, while the Steamships minimum
wage for entry level operational staff
was also raised during the year taking
it to 26% more than the governments
legislated minimum wage level. Other
initiatives including minor alterations to
company policy and the implementation
of additional training and development
initiatives continue to be pursued as a
result of staff feedback.
1,430 employees responded to the 2013
survey. It was encouraging to see that
the company culture remains strong,
with 94 per cent of employees claiming
they were proud to work for Steamships.
There was also a positive response
to the 2013 implementation of the
medical insurance scheme. Key focus
areas identified include a competitive
benefits review, further development
of leadership skills and more variety of
personal development training including
safety. Corporate Human Resources has
plans in place to address these areas in
2014 .
Steamships Sustainability Focus Areas - OUR PEOPLE
oUR PeoPLe: Review of Activities and Objectives
Highlights
Future aims
Introduced a number of corporate governance policies
including a Steamships Corporate Code of Conduct,
Sustainable Development Policy, Diversity Policy,
Remuneration Policy and a Performance Evaluation
process.
Review the HR function within Steamships Divisions and
ensure appropriate resources are in place to deliver required
outcomes.
Standardise the HR function across the Group through
the introduction of relevant new policies and Board and
Management Committees.
Minimum wage for entry level operational staff increased
and Medical Insurance Scheme for all permanent
employees launched as a direct result of feedback from the
2012 Survey.
Survey will be conducted for a third consecutive year.
Results and feedback from the 2013 ‘People Compass’
Survey will be addressed and recommendations considered.
2013 ‘People Compass’ survey conducted.
Launched inaugural Graduate Management Development
Program (GMDP) in 2013 with the intake of two graduates,
together with another three candidates for the ongoing
Graduate Accountant Program.
Launched the Steamships “Leadership Skills” program.
Saw improved reporting for accidents/incidents, hazards
and near misses and a heightened awareness of proactive
safety measures.
Continue to roll out the “Leadership Skills” program to
supervisory and management staff, together with the re-
launch of a GRID program for senior management.
HSSE audits will be conducted to ensure effectiveness of
action tracking and reporting.
Gaps in HSSE Management system documentation will be
identified and addressed through the HSSE Portal.
Commenced job mapping and job evaluation as part of a
total job grading exercise to be completed in 2014.
Continue with job mapping and job evaluation to complete a
fully functional job grading model in 2014.
HSSE Portal rolled out, providing a centralised depository
for all reporting data and documentation.
Established a formal Occupational Health and Safety
(OH&S) Committee with clear reporting lines to
Sustainability Committee.
Fully engage the HSSE Portal for all HR administration work.
Continue staff training on Portal use and review systems to
optimise functionality.
Implement plans and programs initiated through
Sustainability & OH&S Committees.
Implement Division management training and awareness
programs.
Worked with external partners to provide health services to
Steamships employees including dental services, eye care,
reproductive health, first aid training and PAP smear tests.
Organise and provide more basic health checks for Staff
in partnership with respective Government and non-
Government organisations.
External provider completed a partial employee
and business asset security review. Implemented
recommendations as appropriate.
Continuation of external review and conduct focused audit
of OH&S systems and activities. Ongoing implementation of
key recommendations from external security audit.
Implemented Group-wide training and health awareness
programs aimed at fostering a health and safety culture
Increase health awareness training programs in all business
units (especially outside Port Moresby).
Steamships Annual Report 2013 41
Steamships Sustainability Focus Areas - OUR PEOPLE
HeaLtH
Steamships’ approach to health
focuses on the provision of general
medical services for all staff and the
implementation of education programs
to improve staff awareness of health
issues. These initiatives were extremely
well supported in 2013. There was a
marked increase in staff participation
levels in awareness programs with
attendance up 47 per cent on 2012
levels. The number of programs held
also increased to meet growing interest.
For instance, a new initiative to educate
staff on the impacts of depression was
successfully added to existing programs
for HIV/AIDs, Malaria, Alcohol and Drug
Abuse, TB and Cancer.
In October, Steamships held a week-long
cancer awareness program for staff at
Head Office and the Shipping and Hotel
Divisions to coincide with international
Cancer Awareness month. The initiative
was a first of its kind for Steamships,
featuring presentations from those living
with cancer or affected by it.
Steamships staff were given the
opportunity to undergo medical tests
for various conditions during the year. A
highlight for a number of Port Moresby-
based staff was a visit to the ‘floating
surgery’ of Steamships’ community
engagement partner, Youth with a
Mission Medical Ships Australia (YWAM
MSA), for dental and optical treatment.
YWAM MSA was one of a number of
individual and organisational health
service providers engaged by Steamships
in 2013.
saFety
Steamships’ approach to safety focuses
on the development of a “Wok
Seif” culture and the adoption of a
“Zero Harm” mandate at all levels
of operation. The Group strives to
be an incident-free organisation by
implementing robust safety management
systems and improving staff awareness of
safety issues.
Steamships’ safety management systems
require that all safety incidents are
recorded, reported and analysed.
This allows for the identification
and implementation of corrective
actions and the reduction of repeat
42 Steamships Annual Report 2013
occurrences. Safety Committees at the
Division and Group level regularly
scrutinise workplace behavior and safety
performance to ensure reporting is
robust and accurate.
Steamships continued to update and
refine these systems during 2013. The
HSSE Portal will serve as a centralised
depository for all reporting data and
documentation. The portal is expected
to be fully implemented in 2014.
During 2013 an increased number
of internal and external audits were
carried out along with risk assessments
on all Group-owned buildings. Fire
and electrical exposures were a key
focus. The HSSE scorecard was revised
to include new measurables, while a
number of HSSE risk assessment tools,
including job safety analysis tools,
were identified and rolled out for
implementation.
Steamships Sustainability Focus Areas - OUR PEOPLE
The establishment of a Group Occupational Health and
Safety (OH&S) Committee was a particular highlight.
The Committee supports Steamships management in
pursuing major safety objectives and reports directly to the
Sustainability Committee on health and safety performance
across the Group. Members of the committee include the
Managing Director, the General Manager for Corporate
Affairs, the Group HSSE Manager, and two Divisional HSSE
Managers.
Safety data collected for 2013 shows an increase in the
number of reportable safety incidents, lost time injuries
and lost days over 2012 levels. Steamships’ Lost Time
Injury Incidence Rate was down 7 per cent to 0.92
(number of LTI’s per 100 employees) in 2013, while the
Lost Time Injuries Severity rate was up 48.6 per cent to 11
days.
Statistical increases in 2013 can be attributed to two
factors: (i) the successful implementation of new safety
management and reporting systems has improved safety
awareness across the Group and (ii) the unfortunate
occurrence of several serious Lost Time Injuries in which
employees were hospitalised for more than a month. The
health and safety of staff is paramount and Steamships has
ensured these incidents were investigated and that best
practice back-to-work programs are implemented for all
staff.
2014 will be Steamships’ “Year of Safety”. Various plans
are in place to build on existing initiatives and ensure “best
in class” safety behavior across the Group. These include:
•
•
•
•
•
•
•
A safety poster competition for Steamships employees’
children will be run every six months to build safety
awareness.
The new HSSE Portal will be fully implemented and is
expected to drive an improvement in health and safety
management systems.
Steamships will partner with businesses in PNG to
share OH&S best practices.
Management will drive commitment across the Group
to close audit action items.
General safety awareness will be promoted through
newsletters, staff meetings and community safety
awareness programs.
Greater emphasis on OH&S training across the Group.
Competent trainers will be sought to deliver training
and build capacity.
Risk assessments at respective locations and worksites
will be carried out to reduce and/or eliminate OH&S
exposures.
security
Security is a fundamental area of concern for all businesses
operating in PNG. Steamships has established policies
and processes to ensure that risks to the security of the
Group’s people and assets are minimised. Staff training and
education programs have increased awareness of security
issues.
In 2013 Steamships implemented a comprehensive
system for reporting, recording and monitoring security-
related incidents across the Group’s operations. The
reporting system has successfully increased awareness
of security incidents and allowed the Group to better
address operational weaknesses. Steamships’ data shows
the number of incidents recorded each quarter remained
relatively stable across 2013. The most prevalent security
issues were theft and alcohol-related incidents.
Steamships commissioned an external security audit by a
leading security firm during the year. This exposed several
operational weaknesses requiring further attention. In
response, Steamships implemented new staff security
initiatives and consulted all external service providers to
ensure appropriate levels of vigilance and protection are
maintained. Security enhancements to Group property and
vehicles were implemented inclusive of panic response
systems.
The Employee Assistance Program (EAP), which assists
employees affected by increased levels of theft, robbery
and public violence, was successfully implemented in
2013. Steamships will review the EAP in 2014, including a
proposal to extend pick up/drop off transport arrangements
to a wider staff audience.
Steamships Annual Report 2013 43
Steamships Sustainability Focus Areas - OUR PEOPLE
training and
deVeLoPment
Steamships is committed to implementing
training and development programs which
assist in the development of a strong pool
of skilled and experienced Board and
executive management candidates. In
particular, Steamships aims to provide its
PNG citizen employees with the necessary
skills and experience to assume leadership
positions across the Group.
Steamships continues to invest significant
time and resources into staff educational
initiatives. In 2013, the Group invested
over K5 million to deliver 138,336 hours
of staff training, roughly 35 hours of
training per employee. This is an additional
eight hours of training per employee than
was provided in 2012 and an investment
of an additional K1 million in training and
development initiatives.
The Group launched its Graduate
Management Development Program
(GMDP) in 2013 with the intake of two
graduates. The GMDP is a three year
program during which graduates will rotate
through Divisions every six months. The
program is designed to give candidates
operational training while developing skills
in sales and marketing, human resource
management, finance and ICT.
The Graduate Accountant Program
continued in 2013. Graduates attended
phase one of an external personal
development course and received support
to undertake professional accountancy
certification courses through the chartered
accountants body.
Steamships also piloted a Leadership
Skills training program and workshop for
Division supervisors and management
staff. The program had 15 participants
from two Divisions and the Head Office.
The overwhelmingly positive response to
this initiative by participants will see a
more extensive rollout of the program in
2014 .
Mandatory seafarer training, heavy
equipment operations training and
the cadetship program continued
for employees in logistics Divisions.
Steamships also invested in technical skills
upgrading courses for support systems
related to the Group’s products and
services.
44 Steamships Annual Report 2013
Steamships is proud of the role it plays
in assisting promising young Papua New
Guineans to further their education.
Steamships and Swire fund an annual
Chevening Scholarship which provides
candidates with the opportunity to
undertake postgraduate study in the UK.
The 2013/2014 Chevening scholarship
recipient is Karen Hiawalyer, an
employee of the Department of Planning
and Monitoring. She will be studying
a Master’s degree in Climate Change
and Environmental Development at the
University of East Anglia. 2012/2013
Scholarship recipient, Misika Rea, is
studying for an MSc Applied Management
and Sustainability at the Bradford School of
Management and returns to PNG in early
2014 .
Steamships remains committed to training
and development initiatives and plans
to implement the following programs in
2014:
•
Graduate Accountant and Graduate
Management Development Programs –
Personal Development Courses
• Leaderships Skills Training
• GRID Senior Management Training
• Soft Skills Training
• HSSE Training
• Frontline Management Courses
Customer Service and Business
•
Etiquette Workshops
Information Technology Applications
Training
•
• Technical Upgrading Courses
Steamships Sustainability Focus Areas - OUR PEOPLE
diVersity
Steamships is committed to fostering diversity at all
levels of the organisation. The Group strives to create a
work environment inclusive of all people regardless of
gender, age, race, disability, sexual orientation, cultural
background, religion, family responsibilities or any other
area of potential difference.
In 2013, the Steamships Board approved a Diversity
Policy for the Group that commits it to being an
employer of choice; complying with all applicable equal
opportunity and anti-discrimination laws; facilitating
equal employment opportunities; adopting and applying
best practice human resource processes; building and
maintaining a safe work environment; training and
development; and continuous disclosure regarding gender
diversity.
Steamships also formalised a Group Anti-Violence
Policy during the year. The Group seeks to provide an
environment that is free from violence or threats of
violence against individuals or groups of employees or
threats against Steamships property, including partner
violence, which may occur on any of its properties. The
policy requires that all individuals on Steamships’ premises
or while representing Steamships, conduct themselves
in a professional manner consistent with good business
practice and in conformity with non-violent principles and
standards.
In a bid to further strengthen its ties with employees,
Steamships began to establish Worker Welfare Committees
in 2013. These committees provide a regular forum for
employees, through nominated department representatives,
to discuss with management issues affecting them in the
work place. The committees represent a mature, open and
transparent approach to recognising, discussing and acting
on employee concerns. They are intended to build trust,
eliminate status differentials and reinforce management’s
belief in the involvement of employees.
Committee members are elected from each Division
department. One representative is elected to oversee
issues of seasonal, casual and disadvantaged groups of
employees. The committees are chaired by an employee
representative. Agenda items typically include listening to
grievances from all workers without bias or discrimination
for improving employees’ conditions of service.
Steamships’ workforce continued to grow in 2013.
There was a slight increase in PNG citizens in senior
management roles from 116 in 2012 to 126 in 2013
despite the overall percentage declining from 52% to 47%.
Steamships aims to continue to implement training and
development programs to ensure positions are filled from
within the Group.
The number of female employees at Steamships decreased
in 2013, constituting 24 per cent of the total workforce.
This was due to an increase in male hires at Laga
Industries and EWT which corresponded to the operational
requirements of those Divisions. The Group is committed
to addressing this decrease in 2014 through diversity
initiatives and specialised hiring strategies.
Employee turnover increased again in 2013. The impact
of PNG LNG construction on the PNG workforce and
Steamships’ tighter controls and higher expectations of
employee performance were key influences. Steamships
will continue to analyse employment data to determine the
reasons for employees leaving by age group and gender
and customise retention programs accordingly.
case study 1: Png Passes Family Protection Legislation
In September 2013, PNG’s Family Protection Bill was
tabled and passed on the floor of Parliament having
been endorsed by the National Executive Council some
months earlier. The event was a landmark day for PNG
as the Bill made domestic violence an offence under
PNG law.
Steamships is proud to have played a part in this
historic process through its relationship with the
Coalition for Change PNG Inc. (CFC PNG), a
community-based not for profit advocacy group
launched in 2008 to address the issue of gender based
violence, particularly in the home.
Chaired by Lady Winifred Kamit CBE, a non-executive
director on the Steamships board, CFC PNG has been
the lead advocate for legislative reform of PNG’s pre
independence Family legislation. The Group engaged
international consultants to review measures against
domestic violence and found there was widespread
support for revised Family Protection legislation.
CFC PNG was responsible for commissioning the
drafting of new legislation for the Protection of
Families. It was supported in its work by PNG’s
Secretary to the Attorney General in a working group
comprising private and public stakeholders.
Steamships is proud to continue to support CFC PNG
through funding and staff participation in building
awareness for White Ribbon Day, which promotes the
elimination of violence against women and girls.
Steamships Annual Report 2013 45
Steamships Sustainability Focus Areas - OUR PEOPLE
case study 2: graduate management development trainees
sebastian negints:
“I am currently at Coral Sea Hotels having
rotated from East West Transport. I have
been going through the operations and
administration departments, learning about
the products and services offered and
observing under senior management. I also
took part in Steamships’ organised sporting
events and enjoyed bonding with work
mates during training and the build up to
the games. It made me feel truly part of the
team. I knew the staff and management
better and it made my learning experience
more effective and enjoyable.
“It is a challenge to learn and understand
everything about these Divisions’ operations
in very competitive industries, but from
what I have learnt so far I anticipate the next
few years in Steamships will be a highly
rewarding experience.”
danmon Pangali:
“The Steamships Graduate Management
Program provides a career development
opportunity in management which very
few companies can compare with in PNG.
Having the opportunity to be exposed to the
different commercial activities Steamships
is involved in through its various Divisions
is a privilege and continues to be one of the
greatest draw cards for me.
“My first attachment with the Hotels Division
under the mentorship of the General
Manager, Mr Glen Murphy has been a
positive experience. I found myself involved
in a number of activities that required me
to further develop skills in communication,
team work, problem solving, and to be more
self-directed. The close contact with senior
management has been the highlight of the program
for me. It has allowed great insight into the nature of
the business and also exposed me to different styles
of coordinating the efforts of people to accomplish
goals and objectives using available resources.
“I am currently attached with East West Transport
and I look forward to new experiences and
continued growth in my career under the
Steamships Graduate Management Development
Program.”
46 Steamships Annual Report 2013
steAmshiPs sUstAinABiLitY FoCUs AReAs
oUR enviRonment
Steamships appreciates Papua New Guinea’s remarkably
diverse environment and strives to be a good steward of
the natural resources under its influence. Environmental
sustainability is a pillar of Steamships’ Sustainability
Strategy and a high priority Key Performance Indicator at
every operational level across the Group.
Steamships is committed to conducting business in a
manner which fosters the sustainable use of the earth’s
resources and minimises any adverse impacts on the
environment.
approach to environmental sustainability
Steamships firmly believes that environmental education is
one of the most effective ways to ensure the principles of
environmental sustainability are understood and adopted.
Steamships’ ‘Environment’ strategy aims to increase
environmental awareness within the Group and the
community, through environmental education workshops
and community engagement initiatives.
Steamships continues to develop comprehensive systems
and procedures to ensure that all environmental impacts
of operations are identified, monitored and appropriately
managed. The consolidation of these systems and
continued staff education were key sustainability goals in
2013 .
Environmental Aspects and Impacts Registries (EAIR) were
rolled out to a selection of Steamships’ Divisions during
the year. These registries support the identification of
specific and potential environmental impacts from business
operations and assist in the development of measures to
eliminate or minimise these. All Divisions are expected to
have EAIR’s in place during 2014.
A comprehensive Waste Management Plan was developed
in 2013. The plan aims to identify the different waste
streams generated at Steamships facilities and potential
environmental impacts and develop methods to avoid,
reduce, capture and store waste where practical. The plan
also builds staff awareness on the impacts of different
waste types. Work will continue with Divisions in 2014 to
ensure implementation across the Group.
Steamships engages extensively with the community
in the area of environmental sustainability. The Group
successfully celebrated the 2013 World Environment Day
in the National Capital District (NCD) by supporting a
series of competitions for school children from seventeen
local schools. This was complemented by a ‘mangrove
planting’ exercise in which Steamships staff and the
community planted 500 seedlings at Pari Village outside
Port Moresby. Steamships plans to introduce similar
initiatives to additional schools and communities in 2014.
Steamships continued support for the Swire Papua
New Guinea Rainforest Study (SPRS) in the Wanang
Conservation Area during the year. Funding was provided
for conservation activities and the Wanang elementary and
primary school, which serves six local villages.
The inaugural recipient of the Swire Conservation
Scholarship in Forest Science and Conservation took up
post graduate studies in Forest Science at the University
of Minnesota in the United States of America in 2013. The
scholarship, funded by the Swire Educational Trust, aims to
support individuals of exceptional promise in developing
leadership roles in forest science and management in PNG.
Steamships Annual Report 2013 47
Steamships Sustainability Focus Areas - OUR ENVIRONMENT
oUR enviRonment: Review of Activities and Objectives
Highlights
Future aims
Implemented an initial rollout of Environmental Aspects
and Impacts Registries (EAIR) to some Divisions.
EAIR’s to be rolled out to remaining Divisions and reporting
systems to be implemented.
HSSE Portal was rolled out, providing a centralised
depository for all reporting data and documentation.
Steamships will conduct reviews and focused audits on
individual Divisional EAIR’s throughout the year.
Ensure HSSE Portal is used as a one stop shop for
environmental data and continue to train portal users as and
when required.
Sponsored a post graduate scholarship for a student to
study forest science in the United States of America.
A further scholarship will be offered in 2014 to assist citizens
wishing to pursue a Master course.
Environmental Awareness training and education programs
held internally and in local communities.
Continue support for staff and community level
environmental awareness education programs.
Supported World Environment Day activities in Port
Moresby by sponsoring Schools competition and mangrove
planting initiative. Providing funding of K50,000.
Expand World Environment Day school contest to schools in
Morobe Province. Increase budget for support to K100,000.
Continue mangrove planting project.
Waste Management Plan developed and implementation
begun. Initiated training to increase awareness of different
waste streams.
Implement Waste Management plan across the Group.
Review Division plans and continue awareness training for
Division staff.
Consolidated system for collection of data for energy
consumption, CO2 emissions and water use.
Ongoing consolidation of reporting systems. Pronto to be
used to extract all energy consumption and water use data.
Continued support for the Swire PNG Rainforest Study
(SPRS) including funds for conservation activities and the
educational facilities in local communities.
Continue to provide funding and support for the SPRS.
energy use, Water use and environmental
emissions
Steamships is strongly committed to reducing energy
use, water use and environmental emissions at every
operational level. Environmental training and education
programs held in 2013 focused on the planning and
implementation of sustainable workplace practices and the
adoption of processes aimed at reducing energy and water
use and lowering emissions. Continued staff education on
Steamships’ systems for monitoring and reporting usage
and emissions data was also carried out throughout the
year with the aim of improving data quality.
Steamships has been collecting and internally reporting
data on direct and indirect energy consumption by
primary source, greenhouse gas emissions and water usage
since 2012. Reporting efforts and data quality improved
significantly in 2013.
Diesel and electricity consumption were the primary
sources of CO2 emissions during 2013. Overall emissions
rose by around 14 per cent over 2012 levels. Data shows
that water usage rose 21 per cent on 2012 levels. At this
48 Steamships Annual Report 2013
stage the increases are primarily attributed to better data
capture discipline in 2013 as overall activity levels in the
group were static if not slightly down.
Steamships continues to prioritise efforts to improve the
accuracy of data and efficiency of reporting across the
Group. The continued rollout of Division EAIR’s provides
significant support to this process by helping Steamships
staff to identify, monitor and address action items to lower
resource usage and emissions. Steamships believes this
comprehensive system of reporting and monitoring will
manage and improve long term environmental impacts
from operations.
The Group will regularly review EAIR’s and reporting
systems to ensure accurate data is consistently reported
and housed on Steamships’ HSSE Portal. In 2014 the
Group will also explore opportunities to expand the use
of the Pronto IT management system to collect data on
energy and water usage and associated costs. Steamships
anticipates this will improve reporting efficiencies by
reducing the time and effort required by Divisions to
collect data.
Steamships Sustainability Focus Areas - OUR ENVIRONMENT
case study 3: improving the understanding of Png’s tropical Forests
•
An International Course of Ecology was held at
Swire Station for three weeks in July. Participants
included ten European and twenty PNG students
(including Wanang community members and BRC
staff, as well as students and researchers from
several PNG universities, NARI, FRI, NAQUIA).
•
PNG Department of Environment and
Conservation visited and continued work on
establishing the Wanang Conservation Area.
Steamships has a long standing commitment to
support scientific research on PNG’s tropical forests,
the third-largest tract of rainforest in the world.
Since 2008 Steamships’ majority shareholder, John
Swire & Sons Limited, has committed USD6000,000
(USD100,000 in 2013) to the Swire PNG Rainforest
Study (SPRS). In 2010 the Swire Research Centre at
Wanang in Madang Province was officially launched.
The project has made good progress since its launch
and a number of important community and research
activities took place in 2013. These included:
•
•
•
•
•
•
•
Continuing work on 50-ha forest survey: tagging
of approximately 300,000 trees completed,
identification and data basing of some 400 species
nearing completion.
Conducting research of forest canopy using a hot
air balloon. Funded with a EUR40,000 grant from
the Belgium Lottery Fund.
Developing a seed project, butterfly monitoring,
and bird study. A PhD student was supported to
work in Wanang Conservation Area with five well
trained assistants. Funded by the Czech Science
Foundation.
MSc student project on soil chemistry and an
Honours project on ethnobiology were carried out
in Wanang, along with part of an MSc project on
ant ecology from the University of PNG.
Seacology primary school classroom built and
opened.
Continued construction of the EUR 50,000 project
for solar equipment at Swire Station, funded by
the Prince of Monaco Foundation (who visited
in December 2012). This project will also supply
lights to Wanang School.
Established the Darwin Initiative project to
estimate carbon stock in Wanang Conservation
Area. A UK expert, Dr Mika Peck, started training
at the site in late 2013. The project aims to gain
Verified Carbon Standards and Carbon Community
Biodiversity Standards accreditation.
•
Swire funds continued to support the Wanang
elementary and primary school, which serves six
villages.
Steamships Annual Report 2013 49
steAmshiPs sUstAinABiLitY FoCUs AReAs
oUR CommUnitY
Community is the third and final pillar
of Steamships’ Sustainability Strategy.
The Group has a considerable footprint
in PNG and considers it essential to
have a positive impact on the various
communities in which it operates.
Steamships’ Sustainable Development
Policy commits the Group to playing an
active role as a responsible corporate
citizen; to being involved in community
engagement programs; and to
encouraging staff to participate in these
initiatives. These commitments guide
the Group’s approach to community
engagement and development activities.
approach to community
development
Steamships adds value to the
communities in which the Group
operates, over and above the economic
benefits derived from employment, taxes
and levies and associated businesses.
The Group’s community program
prioritises four key areas: health and
social welfare, education, sports and
culture. Funding to these areas was
over K1.94 million in 2013, an increase
of some 20 per cent on 2012. The
Group expects to increase funding for
community development activities by an
additional 15 per cent in 2014.
Steamships’ community strategy
focuses financial support on a select
group of larger, high impact activities
to ensure funds are most effectively
utilised. Steamships Divisions continue
to provide additional support to
local initiatives related directly to the
communities in which they operate.
50 Steamships Annual Report 2013
Highlights
Future aims
Assisted the Coalition for Change
PNG Inc. (CFC PNG) to create
awareness about violence against
women and children.
Continue to promote efforts to reduce
gender based inequality and violence
by supporting groups such as the
CFC PNG and the newly constituted
Business Coalition for Women (BCW).
Worked with the CFC PNG and
government agencies to promote the
Family Protection Act.
Provided support to Youth with a
Mission (YWAM), which contributed
to YWAM receiving Government
funding for a new vessel.
Increase support to K50, 000.
Continue to assist YWAM to expand
operations to Milne Bay, Morobe and
Central Province.
Staff visited both the Port Moresby
Children’s Hospital and the Tembari
Child Care Orphanage to present
gifts.
Increase staff involvement in
community-based projects and
activities and complement with
funding where appropriate.
Donated prime land to the 2015
Pacific Games Commission for the
construction of facilities for the
Games.
Appointed a General Manager
Corporate Affairs.
Assist in the purchase of vital
equipment for Cancer Facility at the
Port Moresby General Hospital
Establish a committee to manage
community investment program and
identify communities and charities to
assist.
Invested K1.94 million in
community initiatives, an increase of
20% from 2012.
Increase funding for community
initiatives by 15% to K2.25 million.
area
2013 spending (Kina)
2014 Budget (Kina)
Health & Social Welfare
1,210,153
Education & Environment
Sports & Culture
TOTAL
497,190
234,000
1,941,343
1,270,480
462,919
130,000
1,863,399
Steamships Sustainability Focus Areas - OUR COMMUNITY
major recipients of steamships community engagement Funds in 2013:
yWam medical ship
salvation army
World environment day
Purpose
Helps people in rural areas and
urban settlement areas improve
living conditions, raise skill levels,
increase productivity and instill self-
confidence.
steamships 2013 contribution:
K220,000
Purpose
Buk Bilong Pikinini
Purpose
Delivers medical services into the
remote rural areas of the Gulf and
Western provinces.
steamships 2013 contribution:
K400,000
BaHa
Encourages school children to
understand the importance of taking
care of the environment.
steamships 2013 contribution:
K50,000
susu mama inc
Purpose
Helps to reduce maternal and infant
morbidity and mortality in PNG.
steamships 2013 contribution:
K120,000
Purpose
Assists the private & public sector
to develop workplace policies on
HIV/AIDS and provides training &
awareness on the disease.
Purpose
Provides young children access
to books and reading materials to
develop their basic literacy and
numeracy skills before entering the
school system.
steamships 2013 contribution:
steamships 2013 contribution:
K50,000
K196,000
steamships also supported the following charitable organisations in 2013:
•
•
•
•
•
•
coalition for change Png: Creates awareness about
violence against women and children.
Png Paralympics: Gives people with disability the
opportunity to achieve their dreams and aspirations.
operation open Heart: Flies in doctors from Australia
to carry out open heart surgery on patients where
procedures are not possible due to a lack of necessary
technical or financial means.
cheshire disability services: The only organisation in
PNG that takes care of, and trains, people living with
disabilities.
Halfway House and tembari children care: Gives
women and children who are victims of violence and
abuse a place to take shelter.
steamships make a child smile Project:
Steamships’ staff visit hospitals and other institutions
over Christmas Season to donate gifts to children.
•
•
•
Kone Kanu Klub: A rowing club based in Port Moresby
which represents the country and participates in
competitions in Australia.
crocodile Prize/Literary sponsorship: PNG’s only
National Literature Contest. Steamships sponsor the
Short Story Prize.
international course of ecology was held at Swire
Station for three weeks in July. Participants included ten
European and twenty PNG students (including Wanang
community members and BRC staff, as well as students
and researchers from several PNG universities, NARI,
FRI, NAQUIA).
•
Png department of environment and conservation
visited and continued work on establishing the Wanang
Conservation Area.
Steamships Annual Report 2013 51
Steamships Sustainability Focus Areas - OUR COMMUNITY
case study 4: supporting the development of Literacy and numeracy skills
Steamships is proud to support Buk Bilong Pikinini
(BBP), an independent not-for-profit organisation which
aims to establish children’s libraries and encourage
reading and learning in PNG.
In addition to financial support for BBP, Steamships
provides rent-free space at its Bird of Paradise Hotel to
house BBP’s Goroka library, along with providing toilet
facilities for children and staff.
There are few functioning libraries outside the school
system in PNG and most children do not have access
to books. Only half of school age children go to school
and in many places the literacy rate is well under the
official rate of 50 per cent; in some it is as low as five
per cent.
BBP libraries give young children access to books
and reading materials to develop basic literacy and
numeracy skills, before entering the school system.
These libraries are a very important resource,
deliberately built in community-based localities such
as settlements, clinics and market places.
Steamships is a platinum founder and sponsor of BBP
and currently supports three BBP libraries. Steamships
will be providing financial support to the Lawes Road
(Port Moresby), Lae and Goroka Libraries until at least
2017 .
case study 5: steamships expands support for World environment day
Steamships is a major sponsor of PNG’s activities to
celebrate ‘World Environment Day’ on the 5 June each
year.
In 2013 the Group was the sole private sector sponsor
of the World Environment Day School contest, in
partnership with the Department of Environment and
Conservation (DEC). Three activities were organised
- the Clean School contest (Best Environmentally
Friendly School Award), an Essay competition and
a Debate contest – and all were based on the 2013
theme “Think, Eat, Save”.
The day was regarded as a great success with a total of
seventeen schools participating in organised activities.
Steamships’ involvement was the first time a company
had partnered with the DEC to organise and host a
program on World Environment Day.
Complementing the schools initiative was a ‘mangrove
planting’ exercise involving Steamships staff and the
community from Pari Village outside Port Moresby.
Staff and their families planted a total of 500 seedlings
along the shoreline to stop erosion. Steamships is
considering proposals to expand these activities for the
2014 World Environment Day.
52 Steamships Annual Report 2013
CoRPoRAte GoveRnAnCe stAtement
CoRPoRAte GoveRnAnCe stRUCtURe
Steamships formalised the above
governance structure in 2013. During
the year an independent Internal Audit
department was established to report to
the Audit & Risk Committee, together
with the following executive committees
to support the Executive Directors in
their duties: Sustainability, ICT, Property
Development and Legal. The formation
of these additional committees adds
further integrity to the Group’s risk
management processes.
Director’s attendance at the relevant
Board and Board Committee meetings is
outlined below.
Board and committee attendance
Board
meeting
audit and risk
committee
remuneration
and nomination
committee
strategic
Planning
committee
W.L. Rothery
G. Aopi, CBE
T. Blackburn
Sir M. Bromley, KBE
D. Cox, OL
G. Cundle
G.J. Dunlop
J. Hughes Hallett, CMG
Lady W. Kamit, CBE
S. Pelling
3/4
4/4
4/4
4/4
4/4
4/4
4/4
2/4
4/4
4/4
4/4
4/4
4/4
2/2
2/2
2/2
1/1
1/1
1/1
1/1
1/1
Steamships Annual Report 2013 53
CoRPoRAte GoveRnAnCe stAtement
a commitment to good governance
Steamships and its Board are committed to achieving
and demonstrating the highest standards of corporate
governance and ethical behaviour, and they expect these
standards from all employees. The Group believes that the
maximisation of long term returns to shareholders is best
achieved by acting in a socially responsible manner that
recognises the interests of community stakeholders.
Steamships is committed to:
•
•
•
Providing high-quality products and services to meet
customers’ needs;
Maintaining high standards of business ethics and
corporate governance;
Ensuring the safety and wellbeing of employees and
others with whom the Group has contact; and
• Promoting sustainable business practice.
Steamships believes it complied with the 2010 Australian
Stock Exchange Corporate Governance Principles and
Recommendations with 2010 amendments during the
twelve months ended 31 December 2013, except where
noted in the following pages.
Steamships reports against the Australian Stock Exchange
(ASX) recommendations by addressing each key principle
in the order it is listed in the ASX guidelines. Each section
addressing a key principle includes references to relevant
information that appears elsewhere in the 2013 Annual
Report or on Steamships’ website.
Lay solid foundations for management and
oversight
Steamships focuses on the long-term development and
growth of business where it can add value through
its industry-specific expertise, its partnerships and its
knowledge of Papua New Guinea, gained through its long
history in the country. In order to achieve this, the Group
combines the efforts of dedicated management teams in
the individual Divisions, supported by a small Corporate
Office management team, to provide services such as
strategic direction, investment and performance review,
treasury, legal support, health & safety development,
human resources management and people development
services.
Steamships’ Board of Directors, together with Divisional
advisory boards, has the responsibility to set the strategic
direction of the Group; to review the operational and
financial performance of the Group’s activities; to monitor
the achievements of the Group against its objectives; to
review the management of business risk; and to report to
the shareholders. Steamships has formalised and defined
the functions reserved for the Board and those delegated
54 Steamships Annual Report 2013
to management in a formal Board Charter. This Charter
defines Board duties to facilitate accountability to the
Group and its shareholders.
Steamships has adopted a structured approach to strategic
business planning across all Divisions. The Group has
implemented a key performance indicator monitoring
system to ensure it remains focused on core strategies and
the action plans outlined to achieve them. Progress against
the strategies and indicators are measured on a quarterly
basis.
The Board has formed a Strategic Planning Committee
that meets annually and provides a detailed review of
the annual budget and the three-year planning process
in discussion with the Division General Managers. This
review in no way diminishes the responsibility of the full
Board to review and approve the Group’s strategy at a
more macro level.
Core strategies are implemented by means of programs,
budgets and procedures. Implementation involves the
organisation of the Group’s resources and motivation of the
staff to achieve objectives.
The Managing Director reviews the performance of
senior Executives regularly and at least annually. These
reviews address individual and corporate key performance
indicators and compliance with the Group code of
conduct and ethics. A written report on the annual reviews
is prepared and sent to the Remuneration and Nomination
Committee which provides feedback to the Board and
Managing Director on senior management succession
plans.
The Board assesses the performance of the Managing
Director, and other Executive Directors, according to the
formal performance evaluation process. Performance
evaluations for all senior Executives were carried out
during 2013 in accordance with this process.
The Group is committed to the development of its
employees by ensuring its succession program is
appropriate and monitored. Although the expertise and
skills of expatriate staff are still required, an active program
of training and skills transfer seeks to enable the Group
to promote citizen staff and to build a strong, long-term
workforce for the future.
Copies of the Board Charter, Board Committee Charters
and Terms of Reference and the formal process for Senior
Management Performance Evaluation can be found on
Steamships’ website in the corporate governance section.
structure the Board to add value
The Steamships Board currently comprises two Executive
Directors, two independent Non-Executive Directors
(Lady Winifred Kamit and Mr Gerea Aopi), and six Non-
Executive Directors, of whom three are also Directors of
other John Swire & Sons’ subsidiary companies. The roles
of Chairman and Managing Director are performed by
separate individuals.
Steamships notes the ASX recommendations and
comments concerning Director independence and advises
that the Group departs from these recommendations due to
the nature of its shareholdings and its location. Steamships
currently has 98 per cent of its shares held by three major
shareholders, one of which holds 72 per cent of the
shares. The pool of available independent representatives
in Papua New Guinea is small, and it would be very
difficult to find an adequate number of truly independent
Directors qualified to serve on the Board. To disqualify
existing Directors on the grounds of lack of independence
would deprive the Group of valuable experience in
the management of its affairs. While recognising the
importance of the ASX recommendations, the Board feels
that, under current circumstances, the recommendations
are not practicable, and would not serve the interest of the
Group or its shareholders.
All Non-Executive Directors retire on a rotational basis at
least every three years. Retiring Directors are eligible for
re-election.
The Board has a Remuneration and Nomination
Committee comprising three Directors. The members of
the Remuneration and Nomination Committee and their
attendance at meetings of the Committee during 2013 are
detailed above and in the Directors’ Report.
The responsibilities of the Remuneration and Nomination
Committee include reviewing, monitoring and making
recommendations to the Board regarding the composition
of the Board, Board Committees and senior management
team.
Steamships believes that its Board should consist
of Directors with an appropriate mix of skills and
experience to understand, critique and contribute to the
Group’s financial performance, strategic direction, risk
management, operations, sustainability, values and culture.
The skills, expertise, experience of each Director and
term of office at the date of this report are detailed in the
Directors’ Report.
The Steamships Board has adopted a formal performance
evaluation process which reviews the performance of the
Board, Board Committees and individual Directors on an
annual basis.
The process is conducted by the Chairman of the Board,
who meets with each Non-Executive Director and
specifically addresses key performance indicators and
compliance with the Group Code of Conduct and ethics.
In reviewing the performance of Board Committees, the
Chairman conducts meetings with the Chairperson of each
Board Committee addressing key performance criteria
and compliance with Committee charters and terms of
reference.
CoRPoRAte GoveRnAnCe stAtement
Both formal review processes were completed in 2013.
A more detailed explanation of Steamships’ formal
performance evaluation processes for the Board, Board
Committees and individual Directors is available on
Steamships’ website in the corporate governance section.
In exercising their duties as Directors, the Board,
and individual members of it, can seek independent
professional advice at the Group’s expense. Requests for
the provision of such advice are directed to the Chairman.
Steamships’ Board Charter and the Remuneration
and Nomination Committee Charter are available on
Steamships’ website in the corporate governance section.
Promote ethical and responsible decision
making
Steamships promotes ethical and responsible decision-
making in all its Divisions. This commitment falls within
the Group’s strong focus on ensuring the sustainability
of its business operations, described separately in this
Annual Report. The Group’s evolving sustainability strategy
promotes ethical and responsible behaviour in three key
focus areas: People, Environment and Community.
In early 2013, Steamships adopted a formal Group Code of
Conduct. The Code embodies previously informal practice
and is supported by a training module and periodic
monitoring of compliance. Among matters addressed,
the Code of Conduct details Steamships’ requirements
regarding monetary payments and gifts offered by third
parties to Steamships’ personnel.
The following Board committees assist the Board in
promoting ethical and responsible decision making:
• Strategic Planning Committee
• Audit and Risk Committee
• Remuneration and Nomination Committee
Steamship began to consider some key benchmarks from
the global standard on sustainability reporting – the Global
Reporting Initiative (GRI) - in its 2011 Annual Report for
the first time. By establishing systems to collect relevant
data and monitor progress against these benchmarks,
Steamships continues to promote ethical and responsible
decision making, improve operations and increase
transparency.
Commentary on Group performance in health and safety,
security, training and development, labour relations,
diversity, in addition to environmental measures on energy,
water, effluent and waste emissions and the Group’s
approach to community development can be found in
the sustainability section of this Annual Report and on the
Steamships website.
Steamships Annual Report 2013 55
CoRPoRAte GoveRnAnCe stAtement
diversity
ASX recommendations focus heavily on gender diversity.
While Steamships is committed to fostering diversity at
all levels, gender diversity has been and continues to be
a priority for the Group. Its approach to gender diversity
is based on fostering an inclusive culture, improving
talent management, enhancing recruitment practices and
ensuring pay equity.
Notwithstanding ASX recommendations, Steamships
believes that for a Group operating entirely in Papua New
Guinea, diversity must go further and incorporate culture.
This country of just over seven million people is widely
reported as having around 800 unique languages. The
challenges of its mountainous and island terrain contribute
to its highly traditional tribal and rural societies (less than
20 per cent of PNG citizens live in urban centres).
Steamships operates in 12 of PNG’s 20 provinces,
consistent with its broad range of business interests. Having
operated successfully in PNG since 1919, Steamships
recognises the social and commercial value of diversity
and strives to create a work environment which is inclusive
of all people regardless of gender, age, race disability,
sexual orientation, cultural background, religion, family
responsibilities or any other area of potential difference.
In 2013, the Board approved a Diversity Policy for the
Group that reflects this commitment and includes the
requirement for reviewing and providing recommendations
to the Board on the Group’s performance development
initiatives aimed at promoting diversity. Commentary on
adopted measures is included in the sustainability section
of the 2013 Annual Report and on the Steamships’ website.
Steamships’ Code of Conduct and Diversity Policy are
available on the Steamships website in the corporate
governance section.
Safeguard integrity in financial reporting
While the Board maintains overall responsibility for the
systems of internal control and monitors their effectiveness,
it is assisted in discharging its responsibilities by the
Audit and Risk Committee, which is composed of an
independent Non-Executive Chairman and two Non-
Executive Directors who are representatives of major
shareholders.
The Audit and Risk Committee recommends the
appointment and remuneration of the external auditors,
reviews the Group’s financial statements and the adequacy
and effectiveness of existing internal and external audit
arrangements. It also considers management of the Group’s
risk. The findings and recommendations of the Committee
are reported to the Board. The Committee meets quarterly,
at which time it receives and discusses reports from senior
56 Steamships Annual Report 2013
management and from external auditors. The Audit and
Risk Committee has formal terms of reference which detail
its role and responsibilities, composition, structure and
membership requirements.
The members of the Audit and Risk Committee, their
qualifications and their attendance at meetings of the
Committee held during 2013 are shown above and in the
Directors’ Report.
Divisions within the Group have established their own
internal audit and monitoring functions. Regular reviews of
monthly accounts and balance sheets conducted by senior
management seek to ensure that internal control is properly
managed throughout the Group. In the opinion of the
Board, this has been the most efficient and cost-effective
means of managing internal control, given the diversity
of the business and the nature of the risk. However, to
enhance the internal system of control and business risk,
the Board approved the establishment of a standardised
corporate office internal audit process in 2013.
The Audit and Risk Committee Terms of Reference
is available on Steamships’ website in the corporate
governance section.
make timely and balanced disclosure
Steamships promotes timely and balanced disclosure of all
material matters concerning the Group. The Board seeks to
inform shareholders of issues affecting the Group through
comprehensive Annual Reports, the Steamships website
and the release of reports to the Port Moresby Exchange,
the Australian Securities Exchange and appropriate
media. These detail the Group’s financial and operating
performance.
Steamships has written policies designed to ensure
compliance with the continuous public disclosure and
external communications requirements of the Port Moresby
Stock Exchange and Australian Securities Exchange, and
the Board will ensure these are met at all times.
Steamships has explored methods to more effectively
inform shareholders. While many local smallholders still
rely solely on the postal system, an increasing number
have access to the internet. By relaunching its corporate
website in early 2013, Steamships has further developed
the mechanisms designed to ensure compliance with the
ASX listing rule requirements, such that:
•
•
All investors have equal and timely access to material
information concerning the Group, including its
financial position, performance, ownership and
governance.
Group announcements are factual and presented in a
clear and balanced way, including disclosure of both
positive and negative information.
respect the rights of shareholders
As mentioned earlier, some 98 per cent of Steamships
shares are held by three major shareholders, two of which
are represented on the Board. Steamships is nonetheless
very aware that it has smaller shareholders and seeks to
ensure they are fully empowered.
The Steamships website is regularly updated to give
all shareholders ready access to balanced and easy to
understand information about the Group and its business
activities.
Steamships is incorporated in Papua New Guinea and
accordingly holds its Annual General Meeting in Port
Moresby, with shareholders encouraged to attend and
participate.
Steamships’ Public Disclosure and External
Communications Policy is available on Steamships’ website
in the corporate governance section. Steamships’ website
details how investors may contact the Group’s investor
relations team. In addition, the website contains contact
details for the Group’s external share registry, including a
general enquiry line, fax number and email details.
recognise and manage risk
Steamships has identified its material business risks and
actively manages those risks. The Group is committed
to the management of risks throughout its operations to
protect its employees, the environment, Group assets,
earnings and reputation.
Certain risks occur in the normal course of Steamships’
business and include foreign exchange and interest rate
risks. Steamships has policies and standards in place
covering the oversight and management of these inherent
material business risks.
The Group has adopted an Enterprise Risk Management
process that enables it to identify, assess and manage
factors that threaten the Group’s ability to achieve its long
term strategic objectives.
Under this system all material business risks that arise in
the course of the Group’s activities have clearly defined
management ownership and accountability for reporting to
the Board.
The Board requires management to continually and at
least annually assess, prioritise, mitigate and manage its
existing risks and the emerging risks it faces. The General
Manager of each Division draws up and manages each
organisation’s corporate risk register and mitigation plans
and is required to present these to the Board on an annual
basis.
During 2013, management reported to the Board on
the effectiveness of its risk management systems and
CoRPoRAte GoveRnAnCe stAtement
performance in managing material business risks.
Steamships’ Strategic Planning Committee formally reviews
Divisional risks as part of its annual strategic review.
Steamships’ Risk Management program utilises a risk
management tool and database to assist in monitoring
and enforcement of compliance with the Group’s risk
management procedures and policies. The Group also uses
other risk management techniques, including insurance,
to reduce the financial impact of any uncontrollable or
catastrophic losses.
The Board is responsible for reviewing the Group’s
policies on risk oversight and management. In doing so,
the Board satisfies itself that management has developed
and implemented a sound system of risk management and
internal control.
Steamships has an Audit and Risk Committee responsible
for monitoring and reviewing the risk management system.
While the Audit and Risk Committee assists the Board to
fulfil its risk oversight obligations, ultimate responsibility
for risk oversight and risk management rests with the full
Board.
Minutes of all Board committee meetings are made
available to all Directors. The members of the Audit and
Risk Committee, their qualifications and attendance at
meetings of the Committee during 2013 are detailed above
and in the Directors report.
Steamships is incorporated in Papua New Guinea and is
not generally subject to the Australian Corporations Act,
hence the Board does not require the Managing Director
and the Finance Director to provide a declaration that is
consistent with section 295A of the Australian Corporations
Act 2001.
A summary of Steamships’ policies on risk oversight and
management is available on Steamships’ website in the
corporate governance section.
remunerate fairly and responsibly
Steamships’ policy is to ensure that the level and
composition of remuneration for all employees is
competitive and reasonable and that the relationship
between remuneration and performance is clearly defined.
Steamships’ Board has established a Remuneration and
Nomination Committee comprising the Steamships
Chairman, the Managing Director and a Non-
Executive Director. Steamships acknowledges the ASX
recommendations that suggest this committee be chaired
by an independent Director, however the Board considers
this committee structure appropriate given Steamships’
shareholder structure.
The Remuneration and Nomination Committee meets
annually to review, monitor and make recommendations
Steamships Annual Report 2013 57
CoRPoRAte GoveRnAnCe stAtement
to the Board regarding the remuneration and incentive
framework for non-executive Directors, the Managing
Director and other executive Directors, and senior
executives at the General Manager level.
Steamships’ remuneration policy is designed to attract and
retain the talent necessary to create value for shareholders;
to motivate senior executives to pursue long term growth
and success for the Group; to reward key management
personnel and other employees fairly and responsibly; and
to comply with all relevant legal and regulatory provisions.
Steamships’ executive remuneration policy, which applies
to the Managing Director, other executive Directors, and
senior executives at the general manager level, comprises
three components: Fixed remuneration, incentives and
salary packaging and other benefits. Incentive-based
remuneration is aligned with individual and corporate
objectives with performance against these evaluated
annually.
Non-executive Directors are remunerated by way of fees
and do not receive options, bonus payments or retirement
benefits.
Further details of Steamships’ approach to remuneration
can be found in the Groups’ Remuneration Policy, which
is available on Steamships’ website in the corporate
governance section.
The members of the Remuneration and Nomination
Committee, their qualifications and attendance at meetings
of the Committee during 2013 are detailed above and in
the Director’s Report. The Remuneration and Nomination
Committee’s charter is available on Steamships’ website in
the corporate governance section.
Steamships is incorporated in Papua New Guinea and
is not generally subject to the Australian Corporations
Act, hence section 300A the Australian Corporations Act
2001 concerning remuneration disclosure does not apply.
Steamships reports company remuneration details in
accordance with the Papua New Guinea Companies Act
1997 .
58 Steamships Annual Report 2013
Steamships Annual Report
FinAnCiAL
Contents
Statements of Comprehensive Income . . . . . . . . . . 60
Statement of Changes in Equity . . . . . . . . . . . . . . 61
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . 62
Statements of Cash Flows . . . . . . . . . . . . . . . . 63
Notes to the Financial Statements . . . . . . . . . . . . 64
Independent Auditor’s Report . . . . . . . . . . . . . . 98
Directors’ Report . . . . . . . . . . . . . . . . . . . . .100
Stock Exchange Information . . . . . . . . . . . . . . .104
Company Directory . . . . . . . . . . . . . . . . . . . IBC
Steamships Annual Report 2013 59
stAtements oF ComPRehensive inCome
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
Consolidated
Parent Entity
note
2013
2012
2013
2012
Continuing Operations
Revenue
Other income
Operating expenses
oPeRAtinG PRoFit
Finance costs – net
Share of profit of associates and joint ventures
PRoFit BeFoRe inCome tAX
3(a)
3(a)
3(b)
3(e)
4(b)
930,934
38,718
986,310
51,885
56,971
6,103
(871,288)
(751,111)
(6,001)
98,364
287,084
57,073
78,346
7,441
(5,581)
80,206
72
(17,690)
(21,510)
14,188
9,697
90,371
72
- -
279,762
57,145
80,278
Income tax expense
5(a)
(11,930)
(81,414)
(572)
(59)
PRoFit FRom ContinUinG oPeRAtions
78,441
198,348
56,573
80,219
Other comprehensive income
-
-
- -
totAL ComPRehensive inCome FoR the YeAR
78,441
198,348
56,573
80,219
Attributable to:
Non-controlling interests
Shareholders
(38,609)
117,050
78,441
20,648
177,700
198,348
- -
56,573
56,573
80,219
80,219
Basic and Diluted Earnings per share continuing (toea)
3(f)
377t
573t
- -
These statements of comprehensive income are to be read in conjunction with the accompanying notes.
60 Steamships Annual Report 2013
stAtement oF ChAnGes in eqUitY
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
Share
Capital
Retained
Earnings
Other
Total Capital Controlling
Reserves & Reserves
Interest
Total
Equity
non-
BALANCE AT 1 JANUARY 2012
24,200
554,349
Profit from continuing operations
Other comprehensive income
Dividends paid 2012
-
-
-
177,700
-
(79,071)
BALANCE AT 31 DECEMBER 2012
24,200
652,978
Profit from continuing operations
Other comprehensive income
Dividends paid 2013
Change in ownership interests not resulting
in a change in control (note 22b)
-
-
-
-
117,050
-
(68,218)
-
-
-
-
-
-
-
-
578,549
75,365
653,914
177,700
20,648
198,348
-
-
-
(79,071)
(11,691)
(90,762)
677,178
84,322
761,500
117,050
(38,609)
78,441
-
-
-
(68,218)
(5,702)
(73,920)
-
(8,994)
(8,994)
(17,104)
(26,098)
BALAnCe At 31 DeCemBeR 2013
24,200
701,810
(8,994)
717,016
22,907
739,923
This statement of changes in equity is to be read in conjunction with the accompanying notes.
No statement of changes in equity is presented for the Parent Entity as the only movement in equity is represented by the retained
earnings as shown in the statement of comprehensive income and dividend movements as reflected above for the Group.
Steamships Annual Report 2013 61
BALAnCe sheets
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Non-current assets classified as held for sale
Financial assets at fair value through profit and loss
Loans to related companies
Non-current assets
Property, plant and equipment
Investment properties
Investments in related companies
Loans to related companies
Intangible assets
Deferred tax asset
total assets
Current liabilities
Trade and other payables
Provisions for other liabilities and charges
Loans from related company
Loan from shareholder
Borrowings
Income tax payable
Non-current liabilities
Deferred tax liability
Provisions for other liabilities and charges
Borrowings
total liaBilities
net assets
eQuity
Issued capital
Retained earnings
Capital and reserves attributable to the
Company’s shareholders
Non-controlling interests
total eQuity
Consolidated
Parent Entity
note
2013
2012
2013
6
7(a)
8
9
10
11
12
13
4(a)
11
14
5(c)
15
16
11
17
17
5(c)
16
17
18
11,640
178,996
59,878
-
-
337
250,851
722,735
343,658
31,471
103,065
93,514
21,081
1,315,524
1,566,375
130,662
10,176
16,335
15,160
50,681
7,713
230,727
25,598
12,019
558,108
595,725
826,452
739,923
24,200
692,816
717,016
22,907
739,923
21,508
242,553
68,381
8,426
20,307
2,455
363,630
755, 349
268,512
38,687
48,290
17,183
-
1,128,021
1,491,651
149,007
12,658
14,314
16,133
144,381
33,903
370,396
32,898
9,985
316,872
359,755
730,151
761,500
24,200
652,978
677,178
84,322
761,500
643
1,056
- -
- -
- -
- -
1,699
28,944
- -
146,395
5,712
- -
771
181,822
183,521
213
- -
155,234
- -
- -
(604)
154,843
- -
- -
- -
- -
154,843
28,678
24,200
4,478
28,678
- -
28,678
2012
3,225
4,680
7,905
32,478
68,676
5,715
905
107,774
115,679
150
76,248
(1,042)
75,356
75,356
40,323
24,200
16,123
40,323
40,323
These statements of balance sheets are to be read in conjunction with the accompanying notes.
For and on behalf of the Board:
28 March 2014
W. L. Rothery
Chairman
G.L. Cundle
Managing Director
62 Steamships Annual Report 2013
stAtements oF CAsh FLows
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
Consolidated
Parent Entity
note
2013
2012
2013
2012
CasH FloWs From oPerating aCtiVities
Receipts from customers
962,288
990,355
1,206
Payments to suppliers and employees
(643,060)
(626,171)
(1,177)
Interest received
Interest and other finance costs paid
Income tax paid
106
(17,796)
(64,930)
135
(21,645)
(75,808)
72
- -
-
Net cash provided by operating activities
20
236,608
266,866
101
CAsh FLows FRom investinG ACtivities
Purchase of property, plant & equipment
(224,734)
(202,646)
Proceeds from sales of property, plant & equipment
52,463
4,917
Loans made (to)/repaid by associated companies
(51,609)
(44,620)
Dividends received
5,921
3,935
(497)
- -
86,780
56,971
Acquisition of subsidiaries and non-controlling interests(net of cash acquired) (92,633)
-
(77,719)
1,885
(1,435)
72
(219)
303
(510)
4,157
78,346
-
Net cash (used in)/provided by investing activities
(310,592)
(238,414)
65,535
81,993
220,000
145,000
(51,319)
- -
- -
CAsh FLows FRom FinAnCinG ACtivities
Proceeds from borrowings
Repayments of borrowings
Dividends paid
Net cash provided by/(used in) financing activities
NET INCREASE/(DECREASE) IN CASH HELD
CAsh At BeGinninG oF the YeAR
CAsh At enD oF the YeAR
CAsh ComPRises:
Cash and cash equivalents
Bank overdrafts
6
17
(86,401)
(73,920)
59,679
(14,305)
(15,673)
(29,978)
11,640
(41,618)
(29,978)
(90,762)
(68,218)
(79,071)
2,919
(68,218)
(79,071)
31,371
(2,582)
3,225
(47,044)
(15,673)
3,225
643
21,508
(37,181)
(15,673)
643
- -
643
-
3,225
3,225
3,225
Steamships Annual Report 2013 63
These statements of cash flows are to be read in conjunction with the accompanying notes.
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
1.
Summary of significant accounting policies
The Company is a company limited by shares and is
incorporated and domiciled in Papua New Guinea.
These group consolidated financial statements were
authorised for issue by the Board of Directors on 28
March 2014.
The Board of Directors has the power to amend the
financial statements after their issue.
The financial statements have been prepared in
accordance with International Financial Reporting
Standards (“IFRS”).
changes in accounting policy and disclosures
i.
Standards, amendment and interpretations
effective in the year ended 31 December 2013
The following new standards and amendments were
applicable for the first time during the accounting
period beginning 1 January 2013:
•
•
•
Amendment to IAS 1, ‘Financial statement
presentation’ (effective 1 July 2012) regarding
other comprehensive income requires entities to
separate items presented in other comprehensive
income into two groups, based on whether they
may be recycled to profit or loss in the future.
This does not effect the measurement of any
items recognised in the balance sheet or profit
and loss in the current period.
Amendments to IAS 19, ‘Employee benefits’
(effective 1 January 2013) require the
recognition of all re-measurements of defined
benefit liabilities/assets immediately in other
comprehensive income and the calculation of a
net interest expense or income by applying the
discount rate to the net defined benefit liability or
asset. The entity does not have a defined benefit
pension scheme.
IFRS 10, ‘Consolidated Financial Statements’
(effective 1 January 2013) replaces all of the
guidance on control and consolidation in
IFRS 27 Consolidated and Separate Financial
Statements, and SIC 12 Consolidation – Special
Purpose Entities. The standard introduces a
single definition of control that focuses on the
need to have both power and rights or exposure
to variable returns before control is present.
The Group early adopted the standard in 2011
resulting in two entities being consolidated.
•
IFRS 11, ‘Joint arrangements’ (effective 1 January
2013) introduces a principles based approach to
accounting for joint arrangements.
64 Steamships Annual Report 2013
The focus is no longer on the legal structure of
joint arrangements, but rather on how rights
and obligations are shared by the parties to the
joint arrangement. Based on the assessment
of rights and obligations, a joint arrangement
will be classified as either a joint operation or
joint venture. Joint ventures are accounted
for using the equity method, and the choice
to proportionately consolidate will no longer
be permitted. Parties to a joint operation will
account for their share of revenues, expenses,
assets and liabilities in much the same way as
under the previous standard. This has resulted
in the reclassification of certain interests from
associates to joint ventures.
IFRS 12, ‘Disclosures of interests in other entities’
(effective 1 January 2013) includes the disclosure
requirements for all forms of interest in other
entities, including joint arrangements, associates,
special purpose vehicles and other off-balance
sheet vehicles. The Group adopted the standard
in 2012 but did not require any significant
additional disclosures.
IFRS 13, ‘Fair value measurement’ (effective 1
January 2013) aims to improve the consistency
and reduce complexity by providing a precise
definition of fair value and a single source of fair
value measurement and disclosure requirements
for use across IFRSs. The entity does not use
fair value measurement extensively apart from
certain investments and its impairment reviews.
Additional disclosure requirements come with
the standard which have been adopted by the
Group.
IAS 27 (revised 2011) ‘Separate financial
statements’ (effective 1 January 2013) is now a
standard dealing solely with separate financial
statements. Application of this standard has not
affected any of the amounts recognised in the
consolidated or parent entity financial statements.
IAS 28 (revised 2011), ‘Associates and joint
ventures’ (effective 1 January 2013) includes
the requirements for joint ventures, as well as
associates, to be equity accounted following the
issue of IFRS 11. The standard does not have any
impact on the existing group.
Amendment to IFRS 7, ‘Financial instruments:
Disclosures’ on offsetting financial assets and
financial liabilities (effective 1 January 2013)
enhance current offsetting disclosures. This does
not affect the accounting for any of the Group’s
current offsetting arrangements.
•
•
•
•
•
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
ii.
Standards, amendment and interpretations
issued but not yet effective for the year ended 31
December 2013 or adopted early
The following standards, amendments and
interpretations to existing standards have been
published and are mandatory for the entity’s
accounting periods beginning on or after 1 January
2014 or later periods, but the entity has not early
adopted them:
•
•
•
•
•
IFRS 9, ‘Financial Instruments’ (effective date
is open) is the first phase of replacing IAS 39,
‘Financial Instrument” with a standard that is less
complex and principles based. The new standard
addresses the classification, measurement and
derecognition of financial assets and financial
liabilities. The standard is not expected to change
the entity’s existing accounting policy for its
financial assets and liabilities. IASB has also
amended IFRS 9 to allow entities to early adopt
the requirement to recognise in OCI the changes
in fair value attributable to changes in an entity’s
own credit risk (from financial liabilities that are
designated under the fair value option). This can
be applied without having to adopt the remainder
of IFRS 9.
Amendments to IAS 36 “Impairment of assets”
(effective 1 January 2014) address the disclosure
of information about the recoverable amount of
impaired assets if that amount is based on fair
value less costs of disposal. The Group has early
adopted these requirements.
Amendments to IAS 32, “Financial Instrument:
Presentation” (effective 1 January 2014). These
amendments are to the application guidance in
IAS 32 and clarify some of the requirements for
offsetting financial assets and financial liabilities
on the balance sheet.
IFRIC 21 “Levies” . This is an interpretation to
IAS 37, “provisions, contingent liabilities and
contingent assets. IAS 37 sets out criteria for
the recognition of a liability, one of which is
the requirement for the entity to have present
obligation as a result of past event (known as
obligating event). The interpretation clarifies that
the obligating event that gives rise to a liability to
pay a levy is the activity described in the relevant
legislation that triggers the payment of the levy.
IFRS 9 “Hedge Accounting” (no effective
date – the standard is available for immediate
application”). IFRS 9 relaxes the requirements
for hedge effectiveness and, consequently
to apply hedge accounting. IFRS 9 replaces
the 80%-125% hedge effectiveness test with
a requirement for an economic relationship
between the hedged item and hedging
instrument, and for the ‘hedged ratio’ to be the
same as the one that the entity actually uses for
risk management purposes. Hedge ineffectiveness
will continue to be reported in profit or loss
(P&L). The new requirements change what
qualifies as a hedged item. The standard provides
an accounting policy choice for an entity to
continue to apply hedge accounting (and hedge
accounting only) under IAS 39 instead of IFRS
9 until the IASB completes its separate macro
hedging project.
There are no other IFRS’s or IFRIC interpretations that
are not yet effective that would be expected to have a
material impact on the Group.
(a) Basis of preparation
The consolidated financial statements of the
Group have been prepared in accordance with
International Financial Reporting Standards
(IFRS) and IFRIC interpretations. The consolidated
financial statements have been prepared under
the historical cost convention as modified by
financial assets and liabilities at fair value through
profit and loss.
The preparation of financial statements in
conformity with IFRS requires the use of certain
critical accounting estimates. It also requires
management to exercise its judgement in the
process of applying the Group’s accounting
policies. The areas involving a higher degree
of judgement or complexity, or areas where
assumptions and estimates are significant to the
consolidated financial statements are disclosed in
note 1(y).
(b) Foreign currency
The Company’s functional and presentation
currency is the Papua New Guinea Kina.
Transactions in foreign currencies have been
translated into the functional currency at rates
ruling at the date of the transaction. Amounts
payable to and by the Group in foreign currencies
have been translated to the functional currency
at rates of exchange ruling at the year end. Gains
and losses arising from movements in foreign
exchange rates are recognised in the statement of
comprehensive income when they arise.
(c) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of the
Steamships Trading Company Limited as at
31 December 2013 and the results of all
Steamships Annual Report 2013 65
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
subsidiaries for the year then ended. Steamships
Trading Company Limited and its subsidiaries
together are referred to as the Group or the
consolidated entity.
Subsidiaries are all entities over which the Group
has control, that is when the Group is exposed
to or has rights to, variable returns from its
involvement with the entity and has the ability
to affect those returns through its power over the
entity.
Subsidiaries are fully consolidated from the date
on which control is transferred to the Group.
They are de-consolidated from the date that
control ceases.
The acquisition method of accounting is used to
account for business combinations by the Group
(refer to note 1d).
Intercompany transactions, balances and
unrealised gains on transactions between group
companies are eliminated. Unrealised losses
are also eliminated unless the transaction
provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure
consistency with the policies adopted by the
Group.
Non-controlling interests in the results and
equity of subsidiaries are shown separately in
the consolidated statement of comprehensive
income, statement of changes in equity and
balance sheet respectively.
(ii) Associates
Associates are all entities over which the Group
has significant influence but not control generally
accompanying a shareholding of between 20%
and 50% of the voting rights. Investments in
associates are accounted for using the equity
method of accounting, after initially being
recognised at cost. The Group’s investment
in associates includes goodwill identified on
acquisition (refer to note 14).
The Group’s share of its associates’ post-
acquisition profits or losses is recognised in profit
or loss, and its share of post-acquisition other
comprehensive income is recognised in other
comprehensive income. The cumulative post-
acquisition movements are adjusted against the
carrying amount of the investment. Dividends
receivable from associates are recognised
as a reduction in the carrying amount of the
investment.
66 Steamships Annual Report 2013
When the Group’s share of losses in an associate
equals or exceeds its interest in the associate,
including any other unsecured long-term
receivables, the Group does not recognise further
losses, unless it has incurred obligations or made
payments on behalf of the associate.
Unrealised gains on transactions between the
Group and its associates are eliminated to the
extent of the Group’s interest in the associates.
Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment
of the asset transferred. Accounting policies of
associates have been changed where necessary to
ensure consistency with the policies adopted by
the Group.
(iii) Joint ventures
Joint venture entities
The interest in a joint venture is accounted for
using the equity method after initially being
recognised at cost as for associates.
(iv) Changes in ownership interests
The Group treats transactions with non-
controlling interests that do not result in a loss
of control as transactions with equity owners
of the Group. A change in ownership interest
results in an adjustment between the carrying
amounts of the controlling and non-controlling
interests to reflect their relative interests in the
subsidiary. Any difference between the amount
of the adjustment to non-controlling interests and
any consideration paid or received is recognised
in a separate reserve within equity attributable to
shareholders.
When the Group ceases to have control or
significant influence, any retained interest in
the entity is remeasured to its fair value with
the change in carrying amount recognised
in profit or loss. This fair value becomes the
initial carrying amount for the purposes of
subsequently accounting for the retained interest
as an associate or financial asset. In addition,
any amounts previously recognised in other
comprehensive income in respect of that entity
are accounted for as if the Group had directly
disposed of the related assets or liabilities. This
may mean that amounts previously recognised in
other comprehensive income are reclassified to
profit or loss.
If the ownership interest in a jointly-controlled
entity or an associate is reduced but significant
influence is retained, only a proportionate share
of the amounts previously recognised in other
comprehensive income are reclassified to profit
or loss where appropriate.
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
(d) Business combinations
The acquisition method of accounting is used to
account for all business combinations, regardless
of whether equity instruments or other assets
are acquired. The consideration transferred for
the acquisition of a subsidiary comprises the
fair values of the assets transferred, the liabilities
incurred and the equity interests issued by
the Group. The consideration transferred also
includes the fair value of any asset or liability
resulting from a contingent consideration
arrangement and the fair value of any pre-existing
equity interest in the subsidiary. Acquisition-
related costs are expensed as incurred.
Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business
combination are, measured initially at their fair
values at the acquisition date. On an acquisition-
by-acquisition basis, the Group recognises any
non-controlling interest in the acquiree either
at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net
identifiable assets.
The excess of the consideration transferred, the
amount of any non-controlling interest in the
acquiree and the acquisition date fair value
of any previous equity interest in the acquiree
over the fair value of the Group’s share of the
net identifiable assets acquired is recorded as
goodwill. If those amounts are less than the
fair value of the net identifiable assets of the
subsidiary acquired and the measurement of all
amounts has been reviewed, the difference is
recognised directly in determining profit or loss
as a bargain purchase.
Where settlement of any part of cash
consideration is deferred, the amounts payable in
the future are discounted to their present value as
at the date of exchange. The discount rate used
is the entity’s incremental borrowing rate, being
the rate at which a similar borrowing could be
obtained from an independent financier under
comparable terms and conditions.
Contingent consideration is classified either
as equity or a financial liability. Amounts
classified as a financial liability are subsequently
remeasured to fair value with changes in fair
value recognised in profit or loss.
(e) revenue recognition
The Group recognises revenue when the amount
of revenue can be reliably measured, it is
probable that future economic benefits will flow
to the entity and specific criteria have been met
for each of the Group’s activities as described
below. The Group bases its estimates on historical
results, taking into consideration the type of
customer, the type of transaction and the specifics
of each arrangement.
Revenue is recognised for the major business
activities as follows:
sale of goods - Revenue from the sale of goods
is recognised when the entity sells a product to
the customer and all significant risks and rewards
have been transferred.
services - Service revenue is recognised when
the service has been rendered.
interest income - Interest income is recognised
using the effective interest method.
dividend income - Dividends are recognised as
revenue when the right to receive payment is
established.
rental income - Rental income is recognised on
a straight line basis over the term of the lease.
(f) income tax
The income tax expense or revenue for the period
is the tax payable on the current period’s taxable
income based on the notional income tax rate
adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences
between the tax bases of assets and liabilities
and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred income tax is provided in full, on
temporary differences arising between the tax
bases of assets and liabilities and their carrying
amounts in the financial statements. Currently
enacted tax rates are used in the determination
of deferred income tax. Deferred tax assets are
recognised to the extent that it is probable that
the future taxable profit will be available, against
which the temporary differences can be utilised.
(g) cash and cash equivalents
For the purpose of the statement of cash flows,
cash and cash equivalents includes cash on hand,
deposits held at call with banks and Treasury
Bills with a maturity less than 90 days. Bank
overdrafts are shown in current liabilities in the
statement of financial position.
(h) receivables
Trade receivables are amounts due from
customers for merchandise sold or services
provided in the ordinary course of business.
There are classified as current assets if collection
is expected within one year. Receivables are
recognised initially at fair value and subsequently
Steamships Annual Report 2013 67
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
measured at amortised cost using the effective
interest method, less provision for impairment. A
provision is established when there is objective
evidence that the Group will not be able to
collect all amounts due according to the original
terms of receivables.
(i)
inventories
Inventories are valued at the lower of cost
and net realisable value. In general, cost is
determined on the weighted average basis and,
where appropriate, includes a proportion of
variable overhead expenditure. Net realisable
value is the estimated selling price in the ordinary
course of business, less applicable variable
selling costs.
(j) non-current assets held for resale
Non-current assets (or disposal groups) are
classified as held for sale if their carrying amount
will be recovered principally through a sale
transaction rather than through continuing use
and a sale is considered highly probable. They
are measured at the lower of their carrying
amount and fair value less costs to sell, except
for assets such as deferred tax assets, assets
arising from employee benefits, financial assets
and investment property that are carried at fair
value and contractual rights under insurance
contracts, which are specifically exempt from this
requirement.
An impairment loss is recognised for any initial or
subsequent write down of the asset (or disposal
group) to fair value less costs to sell. A gain is
recognised for any subsequent increases in fair
value less costs to sell of an asset (or disposal
group), but not in excess of any cumulative
impairment loss previously recognised. A gain or
loss not previously recognised by the date of the
sale of the non-current asset (or disposal group) is
recognised at the date of derecognition.
Non-current assets (including those that are
part of a disposal group) are not depreciated or
amortised while they are classified as held for
sale. Interest and other expenses attributable to
the liabilities of a disposal group classified as
held for sale continue to be recognised.
Non-current assets classified as held for sale
and the assets of a disposal group classified as
held for sale are presented separately from the
other assets in the balance sheet. The liabilities
of a disposal group classified as held for sale are
presented separately from other liabilities in the
balance sheet.
68 Steamships Annual Report 2013
A discontinued operation is a component of the
entity that has been disposed of or is classified
as held for sale and that represents a separate
major line of business or geographical area of
operations, is part of a single coordinated plan
to dispose of such a line of business or area of
operations, or is a subsidiary acquired exclusively
with a view to resale. The results of discontinued
operations are presented separately in the income
statement.
(k) Financial assets
Classification
The Group classifies its financial assets in the
following categories: at fair value through profit
or loss and loans and receivables. The Group
does not hold any held to maturity investments
or available for sale financial assets. The
classification depends on the purpose for which
the financial assets were acquired. Management
determines the classification of its financial assets
at initial recognition.
(i) Financial assets at fair value through profit or
loss
Financial assets at fair value through profit or loss
are financial assets held for trading. A financial
asset is classified in this category if acquired
principally for the purpose of selling in the short
term. Derivatives are also categorised as held
for trading unless they are designated as hedges.
Assets in this category are classified as current
assets.
(ii) Loans and receivables
Loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active market.
They are included in current assets, except
for maturities greater than 12 months after the
balance sheet date. These are classified as non-
current assets. The Group’s loans and receivables
comprise ‘trade and other receivables’ and ‘cash
and cash equivalents’ in the balance sheet.
Recognition and measurement
Regular purchases and sales of financial assets
are recognised on the trade date – the date on
which the Group commits to purchase or sell the
asset.
Financial assets carried at fair value through
profit or loss are initially recognised at fair
value, and transaction costs are expensed in
the income statement. Financial assets are
derecognised when the rights to receive cash
flows from the investments have expired or have
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
been transferred and the Group has transferred
substantially all risks and rewards of ownership.
Loans and receivables are carried at amortised
cost using the effective interest method.
Gains or losses arising from changes in the fair
value of the ‘financial assets at fair value through
profit or loss’ category are presented in the
income statement within ‘other (losses)/gains –
net’ in the period in which they arise. Dividend
income from financial assets at fair value
through profit or loss is recognised in the income
statement as part of other income when the
Group’s right to receive payments is established.
The Group assesses at each balance sheet date
whether there is objective evidence that a
financial asset or a group of financial assets is
impaired. Impairment testing of trade receivables
is described in note 1(h).
(l) Property, plant and equipment
All property, plant and equipment are initially
recorded at cost. Borrowing costs directly
attributable to the acquisition or construction of
qualifying assets are added to the cost of those
assets until the assets are ready for their intended
use. Depreciation is calculated on the straight-
line method to write off the cost of each asset
to their residual values using the below rates
which is reflective of their estimated useful life as
follows:
0 - 10%
5 - 10%
Properties
Ships
Plant and fittings 10 - 33%
20 - 33%
Motor vehicles
Where the carrying amount of an asset is greater
than its estimated recoverable amount, it is
written down immediately to its recoverable
amount. Gains and losses on disposal of property,
plant and equipment are determined by reference
to their carrying amount and are taken into
account in determining operating profit.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with the
item will flow to the Group and the cost of the
item can be measured reliably. All other repairs
and maintenance are charged to the statements
of comprehensive income during the financial
period in which they are incurred.
(m) investment properties
Investment properties include land held for long-
term capital appreciation and buldings leased out
under operating leases. Properties that comprise
a portion held to earn rentals and a portion for
own use or occupation will only be classified as
investment property if an insignificant portion
is held for own use of occupation. Investment
properties are recognised when it is probable
that future economic benefits associated with
the property will flow to the Group and the
cost of the investment property can be reliably
measured. Investment properties are stated at cost
less accumulated depreciation and accumulated
impairment losses. Transaction costs are included
on initial measurement. Borrowing costs directly
attributable to the acquisition or construction of
qualifying assets are added to the cost of those
assets until the assets are ready for their intended
use. The fair values of investment properties are
disclosed in Note 13. These are assessed using
internationally accepted valuation methods,
such as taking comparable properties as a guide
to current market prices or by applying the
discounted cash flow method. Like property,
plant and equipment, investment properties
are normally depreciated using the straight-line
method over similar useful lives
(n) goodwill
Goodwill represents the excess of the cost of
an acquisition over the fair value of the Group’s
share of the net identifiable assets of the acquired
business at the date of acquisition.
Goodwill is capitalised and assessed for
impairment annually or more frequently if
events or changes in circumstances indicate
a potential for impairment and is carried at
cost less impairment losses. Any impairment is
recognised immediately as an expense and is not
subsequently reversed.
Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating
to the entity sold. Goodwill is allocated to cash-
generating units for the purpose of impairment
testing.
(o) trade and other payables
These amounts represent obligations to pay for
goods and services that have been acquired in
the ordinary course of business from suppliers.
They are classified as current liabilities if payment
is due within one year or less. Trade payables are
recognised initially at fair value and subsequently
measured at amortised cost using the effective
interest method. The amounts are unsecured and
are usually paid within 30 days of recognition.
Steamships Annual Report 2013 69
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
(p) Provisions
Provisions are recognised when the Group has a
present legal or constructive obligation as a result
of past events; it is probable that an outflow of
resource embodying economic benefits will be
required to settle the obligation; and a reliable
estimate of the amount of the obligation can be
made.
A liability for annual leave is recognised and
measured at the amount of unpaid leave at
amounts expected to be paid to settle the present
entitlements. A liability for long service leave is
recognised taking into consideration expected
future wage and salary levels, experience of
employee departures and periods of service,
discounted to present values.
A provision for estimated ship dry docking
costs is only recognised where the Group has a
contractual obligation under a Bare Boat charter
agreement in from a third party. Dry docking
costs relating to ships not under third party long
term charter agreements are only recognised as
incurred, and are capitalised to the extent that the
previously assessed economic benefits associated
with the asset are restored.
(q) Employee benefits
(i) Short term obligations
Liabilities for wages and salaries, including
non-monetary benefits, annual leave and
accumulating sick leave expected to be settled
within 12 months after the end of the period in
which the employees render the related service
are recognised in respect of employees’ services
up to the end of the reporting period and are
measured at the amounts expected to be paid
when the liabilities are settled. The liability
for annual leave and accumulating sick leave
is recognised in the provision for employee
benefits. All other short term employee benefit
obligations are presented as payables.
(ii) Other long-term employee benefit obligations
The liability for long service leave and annual
leave which is not expected to be settled within
12 months after the end of period in which
the employees render the related service is
recognised in the provision for the employee
benefits and measured as the present value of
expected future payments to be made in respect
of services provided by employees up to the end
of the reporting period using the projected unit
credit method. Consideration is given to expected
future wage and salary levels, experience of
employee departments and periods of service.
Expected future payments are discounted using
70 Steamships Annual Report 2013
the market yields at the end of the reporting
period on national government bonds with terms
to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
The obligations are presented as current liabilities
in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least
twelve months after the reporting date, regardless
of when the actual settlement is expected to
occur.
(r) Borrowings
Borrowings are recognised initially at fair value,
net of any transaction costs incurred, and are
subsequently measured at amortised cost using
the effective interest method. Borrowings are
classified as current liabilities unless the Group
has an unconditional right to defer settlement of
the liability for at least 12 months after the end of
the reporting period.
(s) impairment of assets
Assets that have an indefinite useful life are
not subject to amortisation and are tested
annually for impairment. Assets that are subject
to amortisation are reviewed for impairment
whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying
value exceeds its fair value less costs to sell. For
the purpose of assessing impairment, assets are
grouped at the lowest levels for which there are
separately identifiable cash flow (cash generating
units).
(t) Borrowing costs
Borrowing costs incurred for the construction
of qualifying assets which are assets that take a
substantial period of time to get ready for their
intended use or sale, are capitalised during the
period of time that is required to complete and
prepare the asset for its intended use or sale.
Other borrowing costs are expensed.
The capitalisation rate used to determine the
amount of borrowing costs to be capitalised is the
weighted average interest rate applicable to the
entity’s outstanding borrowings during the year,
in this case 6.8% (2012 – 8.2%).
(u) segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision maker. The chief
operating decision maker who is responsible for
allocating resources and assessing performance
of the operating segments, has been identified as
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
the Strategic Steering Committee.
(v) earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to equity holders of the
Group, by the weighted average number of
ordinary shares outstanding during the financial
year. There are no potential ordinary shares on
issue and hence the diluted earnings per share is
equal to the basic earnings per share.
agreement from a third party and where the
Group has a contractual obligation for dry
docking costs, the cost of future dry docking
is provided. The cost of dry docking is not
accurately known until the vessels are surveyed
and assessed at the commencement of docking.
Estimates are based on the dry docking interval
(ie Special or Interim), repairs considered
necessary identified at balance date, its age, and
docking history.
(w) goods and services tax (gst)
Docking intervals are assumed to be 5 years.
Revenues, expenses and assets are recognised
net of the amount of associated GST. Receivables
and payables are stated inclusive of GST. The
amount of GST recoverable from, or payable
to, the Taxation authority is included with other
receivables or payables in the balance sheet.
(x) rounding of amounts
Amounts in the financial statements have been
rounded off to the nearest thousand Kina.
(y) critical accounting estimates and judgments
Estimates and judgments are continually
evaluated and are based on historical experience
and other factors, including expectations of future
events that may have a financial impact on the
entity and that are believed to be reasonable
under the circumstances.
The Group makes estimates and assumptions
concerning the future. The resulting accounting
estimates will, by definition, seldom equal
the related actual results. The estimates and
assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year
are discussed below:
(i) Estimated impairment of goodwill
The Group tests annually whether goodwill
has suffered any impairment. The recoverable
amounts of cash-generating units have been
determined based on value-in-use calculations.
(ii) Estimated fair values of investments
The Group carries an indirect investment in
an unlisted entity with changes in fair value
being recognised in profit or loss. At the end
of each reporting period, a future maintainable
earnings calculation is performed, or if available,
non observable market information is used
to determine the appropriate fair value of the
investment.
(iii) Provision for dry docking
For vessels on long term bare boat charter
Docking costs are often incurred in either
AUD, USD or SGD currencies. The costings are
updated monthly for the foreign exchange rate.
(iv) Estimated impairment of ships and other
plant and equipment
Impairment losses have been recognised in
relation to ships and plant and vehicles. The
impairment of these ships arose from changes
in expectations of future freight volumes and
pricing and changes in ship replacement strategy.
A change in the vehicle replacement policy
and review of vehicle conditions has given rise
to an impairment charge for vehicles, while a
change in manufacturing strategy has resulted
in an impairment charge for plant. Recoverable
amounts have been determined using the higher
of fair value less cost to sell and its value in use.
Fair value has been determined using market
based information while value in use has been
determined using a post-tax discount rate of
15.9%
During the year the directors performed an
impairment review on all key assets of the Group
given the economic slowdown. As a result of
this assessment the depreciation charge on ships
includes an additional K92.4M(2012:4.0M)
due to impairment. The effect to shareholders
post tax and minority interest is K47.1M. The
depreciation charge on plant and vehicles
includes an additional K11.5M impairment on
Vehicles and K2.4M on plant.
(z) changes in accounting policies and
comparatives.
Where necessary, comparative figures have been
adjusted to conform with changes in presentation
and accounting policies in the current year.
In an effort to simplify its legal structure, the
Company has been working through a process
of amalgamating non-core and dormant entities
into Steamships Trading Company. As a result of
these amalgamations, some of which were legally
approved in 2012, the 2012 parent numbers have
been amended to reflect the changes to the legal
Steamships Annual Report 2013 71
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
structure. The impact on the previously reported
2012 parent numbers is as follows:
higher, mainly as a result of higher/lower interest
expense on floating rate borrowings.
Increase in revenue of K1.5M
Increase in net profit after tax of K1.5M
Increase in total assets of K8.5M
Increase in total liabilities of K11.8M
Decrease in equity of K3.3M
2. Financial risk management
The Group’s activities expose it to a variety of
financial risks including market risk (including
currency, and interest rate risk), credit risk, liquidity
risk and capital risk. The Group’s overall risk
management program focuses on the unpredictability
of financial markets and seeks to minimise potential
adverse effects on the financial performance of the
Group. Risk management is carried out under policies
approved by the Board of Directors.
(a) market risk
(i) Foreign exchange risk
The Group engages in international purchase
transactions and is exposed to foreign exchange
risk arising from various currency exposures,
primarily with respect to the Australian dollar.
Foreign exchange risk arises from recognised
assets and liabilities.
The Group’s foreign currency purchases do not
represent a significant proportion of the Group’s
costs and as such exposure to foreign currency
risk is minimal. It is not the Group’s policy
to hedge foreign currency risk. As the foreign
currency exposure is minimal no sensitivity
analysis is provided.
(ii) Price risk
The Group is not significantly exposed to equity
securities or commodities price risk.
(iii) Cash flow interest rate risk
The Group’s interest rate risk arises from long-
term borrowings. Borrowings issued at variable
rates expose the Group to cash flow and fair
value interest rate risk. Borrowings issued at
fixed rates expose the Group to fair value interest
rate risk. Long term borrowings are at a fixed rate
of interest. It is not the Group’s policy to hedge
cash flow and interest rate risk.
At 31 December 2013, if interest rates on
PNGKina-denominated borrowings had been
1% higher/lower with all other variables held
constant, post-tax profit for the year would have
been K1,350,000 (2012: K1,311,000) lower/
72 Steamships Annual Report 2013
(b) credit risk
The Group has no significant concentration of
credit risk and it is not the Group’s policy to
hedge credit risk. The Group has policies in place
to ensure that sales of products and services are
made to customers with an appropriate credit
history and has policies that limit the amount of
credit exposure to any one customer. No credit
limits were exceeded during the reporting period
and management does not expect any losses from
non-performance by counterparties.
(c) Liquidity risk
Prudent liquidity risk management implies
maintaining sufficient cash and the availability
of funding through an adequate amount
of committed credit facilities. The Group
manages liquidity risk by maintaining sufficient
bank balances to fund its operations and the
availability of funding through committed credit
facilities.
Management monitors rolling forecasts of the
Group’s liquidity reserve on the basis of expected
cash flows.
Undrawn finance facilities as of 31 December
2013 were as follows:
2013
K’000
2012
K’000
Undrawn Facilities
26
102,819
The table below analyses the Group’s financial
liabilities which will be settled on a net basis
into relevant maturity groupings based on the
remaining period at the balance sheet date to the
contractual maturity date. The amounts disclosed
in the table are the contractual undiscounted
cash flows.
Between Between Over
5
2 & 5
Less than 1 & 2
Years
Years
Years
K’000 K’000 K’000
1Year
K’000
At 31 December 2013
Borrowings
Trade and other payables
Income tax payable
At 31 December 2012
Borrowings
Trade and other payables
Income tax payable
(85,007) (42,849) (575,897)
-
(130,662)
-
(7,713)
-
-
-
-
-
(171,288) (25,365) (262,117) (89,212)
-
-
(149,007)
-
-
(33,903)
-
-
The Group does not hold derivative financial
instruments.
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
(d) capital risk management
The Group’s objectives when managing capital
are to safeguard the Group’s ability to continue
as a going concern in order to provide returns to
shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital
structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to
reduce debt.
The Group monitors capital on the basis of the
gearing ratio. This ratio is calculated as net debt
divided by total capital. Net debt is calculated
as external borrowings and unsecured loans
less cash and cash equivalents. Total capital is
calculated as capital and reserves attributable to
the Company’s shareholders plus net debt.
The gearing ratios at each balance date were as
follows:
2013
K’000
2012
K’000
Total external borrowing
& unsecured loans
640,284
491,700
Less: Cash & Cash equivalents
11,640
21,508
Net debt
Total equity
Total capital
628,644
470,192
739,923
761,500
1,368,567
1,231,692
Gearing ratio
46%
38%
(e) Fair value estimation
IFRS 7 ”Financial Instruments: Disclosures”
requires disclosure of fair value measurements
by level of the following fair value measurement
hierarchy:
Quoted prices (unadjusted) in active markets for
identical assets or liabilities (level 1).
Inputs other than quoted prices included
within level 1 that are observable for the asset
or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based
on observable market data (that is, unobservable
inputs) (level 3).
The following table presents the Group’s assets
and liabilities that are measured at fair value at
31 December 2013.
Level 1
Level 2
Level 3
K’000
K’000
K’000
at 31 December 2013
Assets
Financial assets at fair value
through profit & loss
Total Assets
at 31 December 2012
Assets
Financial assets at fair value
through profit & loss
Total Assets
-
-
-
-
-
-
-
-
-
-
20,307
20,307
If one or more of the significant inputs is not based on
observable market data, the instrument is included in
level 3.
The following table presents the change in level 3
instruments for the year ended 31 December 2013.
Financial asset at fair value through profit and loss
(consolidated).
2013
K’000
Opening balance
Additions
Losses recognised in profit and loss
Closing Balance
20,307
- -
(20,307)
-
2012
K’000
45,107
(24,800)
20,307
Total losses for the period included in
other operating expenses that relate
to assets held at the end of the
reporting period
20,307
24,800
Minority Interest in share of loss
(20,307)
24,800
-
24,800
The parent entity does not hold any financial assets.
Steamships Annual Report 2013 73
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
3. operating results
(a) Revenue and other income comprises:
Revenue from sale of goods
Revenue from provision of service
Dividend income
Total Revenue
Other income *
Consolidated
Parent Entity
2013
2012
2013
2012
196,990
733,944
-
224,685
761,625
-
930,934
986,310
- -
- -
56,971
56,971
78,346
78,346
38,718
51,885
6,103
7,441
* Other income principally represents a gain of K35.5M on re-measuring to fair value the existing interest in Pacific Towing Limited
on acquiring a controlling interest (2012: includes the gain on sale of a property of K48.4M).
(b) Expenses comprise:
Cost of sales
Staff costs (note 3c)
Depreciation and amortisation
Impairment of fixed assets (refer note 12b)
Electricity and fuel
Other operating expenses
Total Operating expense
(c) Staff costs:
Wages and salaries
Retirement benefit contributions
Accommodation and other benefits
Number of staff employed by the
Group at year end:
217,611
188,035
106,653
106,427
72,728
179,834
871,288
130,252
7,835
49,948
188,035
244,504
180,258
94,379
4,000
67,223
160,747
751,111
124,938
8,853
46,467
180,258
- -
- -
3,995
4,100
1,481
5,581
- -
- -
2,006
6,001
- -
- -
- -
- -
Full Time
4,000
4,166
- -
74 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
3. operating results (continued)
Consolidated
Parent Entity
2013
2012
2013
2012
(d) The operating profit before income tax is arrived at after charging and crediting the following specific items:
After charging:
Audit fees
Fees for non-audit services to Auditors
Bad and doubtful debts
Donations
Fair value impairment on financial assets *
Loss on sale of property plant and equipment
After crediting:
Gain on acquiring a controlling interest (net) (refer note 25)
Net foreign exchange transaction gains
Profit on sale of property plant and equipment
1,033
462
2,420
1,887
20,307
919
35,467
1,801
-
948
688
1,962
2,201
24,800
-
-
3,567
48,937
* 2013 impairment is wholly attributable to Minority Interests (refer note 2e).
28
10
- -
- -
- -
- -
- -
- -
- -
- -
(e) Cost of financing – net:
Expense
Income
Net finance costs
(f) Earnings per share
17,796
(106)
17,690
21,645
(135)
21,510
- -
(72)
(72)
(72)
(72)
Basic earnings per share are calculated by dividing the net profit attributable to shareholders by the average number of ordinary
shares on issue during the year. There is no difference between the basic and diluted earnings per share.
Net profit attributable to shareholders
Average number of ordinary shares on issue (thousands)
Basic earnings per share (continuing operations)
117,050
31,008
377t
177,700
31,008
573t
- -
- -
- -
Steamships Annual Report 2013 75
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
4.
investments in subsidiaries, associates and joint ventures
Consolidated
Parent Entity
2013
2012
2013
2012
(a) Investments are accounted for in accordance with the policy set out in Note 1(c) and relate to:
Investments in subsidiary companies (note 22)
-
-
126,344
48,486
Investments in associates (note 23)
Investments in joint ventures (note 24)
16,449
15,022
31,471
12,177
26,510
38,687
- -
20,051
146,395
20,190
68,676
(b) Share of profit in associates and joint venture
Share of profit in associates
Share of profit in joint ventures
5.
income tax
(a) Income tax expense
Current tax
Deferred tax
4,354
5,343
9,697
5,468
8,720
14,188
- -
- -
- -
Consolidated
Parent Entity
2013
2012
2013
2012
40,311
(28,381)
11,930
56,180
25,234
81,414
465
107 -
572
59
59
(b) The income tax in the Statement of Comprehensive Income is determined in accordance with the policy set out in note
1(f). The effective rate of tax charged differs from the statutory rate of 30% for the following reasons.
Prima facie tax payable on operating profit
24,202
79,672
Tax effect of rebateable dividends
Expenses not deductible for tax
Deductible expenses not recognised for accounting purposes
Income not assessable for tax
Prior year (over)/under provisions
(c) The deferred tax (liability)/ asset comprises:
Provisions
Prepayments
Property, plant and equipment
Comprising of
Deferred tax asset
Deferred tax liability
76 Steamships Annual Report 2013
-
7,269
(666)
(10,640)
(8,235)
11,930
16,264
(3,296)
(17,485)
(4,517)
21,081
(25,598)
(4,517)
-
8,952
(533)
(14,519)
7,842
81,414
9,112
(2,840)
(39,170)
(32,898)
-
(32,898)
(32,898)
17,144
(17,091)
24,083
(23,504)
(26) -
- -
-
545 -
572
65
- -
706
771
771
- -
771
(520)
59
149
756
905
905
905
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
5.
income tax (continued)
(d) The gross movement on the deferred tax account is as follows:
At January 1
Tax effect of:
Provisions
Prepayments
Tax depreciable assets
At December 31
(e) The ageing analysis of the deferred tax balance is as follows:
Net deferred tax asset/(liability) expected to be recovered
within 12 months
Net deferred tax asset/(liability) expected to be recovered after
more than 12 months
6. cash and cash equivalents
Cash and short term deposits
Consolidated
Parent Entity
2013
2012
2013
2012
(32,898)
(7,664)
905
1,604
7,152
(456)
21,685
(4,517)
324
632
(26,190)
(32,898)
217
(549)
(4,734)
(4,517)
(32,349)
(32,898)
(84)
- -
(50)
771
65
706
771
190
(889)
905
149
756
905
Consolidated
Parent Entity
2013
2012
2013
11,640
11,640
21,508
21,508
643
643
2012
3,225
3,225
The maximum exposure to credit risk at the reporting date is the fair value of cash and cash equivalents on the balance sheet. Cash
and short term deposits are held with the Bank of South Pacific and Westpac PNG who have Standard and Poor’s long term credit
ratings of B+ and AA- respectively.
7. trade and other receivables
Trade and other receivables
Trade receivables
Provision for impairment
Other receivables & prepayments (see (iii) below)
Consolidated
Parent Entity
2013
2012
2013
2012
114,132
(6,415)
107,717
71,279
178,996
107,528
(5,102)
102,426
140,127
242,553
- -
- -
- -
1,056
1,056
4,680
4,680
Steamships Annual Report 2013 77
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
7. trade and other receivables (continued)
Consolidated
Parent Entity
2013
2012
2013
2012
(i) Impaired trade receivables
As at 31 December 2013, trade receivables of K6.4M (2012:K5.1M) relating to trade debtors were considered impaired and were
provided for by management. The ageing of these receivables is as follows:
3 to 6 months
Over 6 months
704
5,711
6,415
Movement in the provision for impairment of trade receivables is as follows:
Opening balance
Impairments recognised during the year
Provision utilised
Total
5,102
2,420
(1,107)
6,415
2,095
3,007
5,102
4,186
1,962
(1,046)
5,102
- -
- -
- -
- -
- -
- -
- -
The creation and release of the provision for impaired receivables is included in operating expenses in the statement of
comprehensive income. Amounts charged to the provision account are generally written off when there is no expectation of
recovering additional cash.
(ii) Past due but not impaired
As at 31 December 2013, trade receivables of K2.1M (2012: K7.3M) were past due but not impaired. These relate to a number of
independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:
3 to 6 months
Over 6 months
1,692
416
2,108
7,226
91
7,317
- -
- -
- -
The other classes within trade and other receivables do not contain impaired assets and are not past due. The maximum exposure
to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Group does not hold any
collateral as security in relation to these receivables.
(iii) Other receivables and prepayments
Other receivables generally arise from transactions outside the usual operating activities of the Group. Interest may be charged at
commercial rates where the terms of repayment exceed six months. Collateral is not normally obtained.
Prepayments relate to advance payments for expenses not yet incurred.
78 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
8.
inventories
Raw materials
Work in progress
Finished goods
Provision for obsolescence
Consolidated
Parent Entity
2013
2012
2013
2012
21,407
31
40,127
(1,687)
59,878
29,000
3
41,494
(2,116)
68,381
- -
- -
- -
- -
- -
Inventories recognised as an expense during the year ended 31 December 2013 and included in cost of sales and cost of providing
services amounted to K76.9M (2012: K53.6M). A reduction in the provision for obsolescence of inventories to net realisable value
resulted in a credit during the year ended 31 December 2013 of K0.4M (2012: K0.7M).
9. Non-current assets classified as held for sale
At 31 December 2012, two properties were presented as held for sale following the approval of the Group’s management and
directors in August 2012 to sell the properties. The transactions were expected to be completed within twelve months from
balance sheet date. However, during 2013 both sales didn’t eventuate and the properties were withdrawn from the market, and
the assets have been reinstated to non-current property, plant and equipment.
Consolidated
Parent Entity
2013
2012
2013
2012
Property plant and equipment
Accumulated depreciation
Carrying value
-
-
-
22,383
(13,957)
8,426
- -
- -
- -
10. Financial assets at fair value through profit and loss
Consolidated
Parent Entity
2013
2012
2013
2012
Opening balance
Additional investment
Fair value loss recorded in the profit and loss *
Closing balance
20,307
-
(20,307)
-
45,107
-
(24,800)
20,307
- -
- -
- -
- -
The financial asset represents an Investment in GEMS PNG Limited, which holds an interest in Bemobile Ltd.
*Refer to note 2e
Steamships Annual Report 2013 79
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
11. Loans to/(from) related companies
Loans to associates and joint ventures:
Current
Consort Express Lines Limited’s associates
Non-Current
Harbourside Development Limited
Colgate Palmolive (PNG) Limited
Kelton Investments Limited
Loans to subsidiaries
Loans from associates and joint ventues:
Consort Express Lines Limited’s associates
Loans from subsidiaries
Consolidated
Parent Entity
2013
2012
2013
2012
337
337
2,455
2,455
101,775
47,000
500
790
103,065
-
103,065
500
790
48,290
-
48,290
- -
- -
- -
500
- -
500
5,212
5,712
500
500
5,215
5,715
(16,335)
(16,335)
-
(14,314)
(14,314)
- -
- -
-
(155,234)
(16,335)
(14,314)
(155,234)
(76,248)
(76,248)
80 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
12. Property, plant & equipment
Property
Ships
Plant and
Vehicles
Total
Consolidated
December 31, 2013
Cost or valuation
Accumulated depreciation (including impairment losses)
Net book value
Opening value
Additions
Business combinations
Disposals
Transfer from asset held for sale
Transfer to investment property(note13)
Depreciation
Impairment losses
Closing value
December 31, 2012
Cost or valuation
Accumulated depreciation
Net book value
Opening value
Additions
Disposals
Transfer to asset held for sale
Depreciation
Impairment losses
Closing value
Parent
December 31, 2013
Cost or valuation
Accumulated depreciation
Net book value
Opening value
Additions
Disposals
Depreciation
Closing value
471,550
(94,945)
376,605
358,444
29,323
124
-
8,426
(730)
(18,982)
-
394,758
478,197
1,344,505
(280,192)
(246,633)
(621,770)
114,566
231,564
722,735
178,015
41,038
15,683
218,890
70,333
755,349
140,694
11,197 27,004
(121)
(4,431) (4,552)
-
-
-
-
(27,617)
(92,432)
(50,430)
(13,995)
8,426
(730)
(97,029)
(106,427)
376,605
114,566
231,564
722,735
418,202
(59,758)
358,444
338,152
44,649
-
(8,426)
(15,931)
-
325,180
438,283
1,181,665
(147,165)
(219,393)
(426,316)
178,015
218,890
755,349
175,649
32,413
(2,459)
-
(23,588)
(4,000)
196,488
67,159
710,289
144,221
(919)
(3,378)
- (8,426)
(43,838)
(83,357)
-
(4,000)
358,444
178,015
218,890
755,349
75,540
(48,244)
27,296
30,646
105
-
(3,455)
6,474
(6,474)
-
-
-
-
-
27,296 -
5,822
(4,174)
87,836
(58,892)
1,648 28,944
1,832
392
32,478
497
(35) (35)
(541)
1,648
(3,996)
28,944
Steamships Annual Report 2013 81
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
12. Property, plant & equipment (continued)
Property
Ships
Plant and
Vehicles
Total
Parent
December 31, 2012
Cost or valuation
Accumulated depreciation
Net book value
Opening value
Additions
Disposals
Depreciation
Closing value
75,452
(44,806)
30,646
34,275
75
(86)
(3,618)
30,646
6,474
(6,474)
-
-
-
-
-
-
7,382
(5,550)
1,832
89,308
(56,830)
32,478
1,891
36,166
435
(12)
510
(98)
(482) (4,100)
1,832 32,478
(a) Assets in the course of construction
The carrying amounts of the assets disclosed above include the following expenditure recognised in relation to property, plant and
equipment and investment properties which is in the course of construction:
Consolidated
Parent Entity
2013
2012
2013
2012
Property (classified as investment properties, note 13)
Ships
Plant and vehicles
243,348
15,954
569
156,406
4,730
-
Total assets in the course of construction
259,871
161,136
- -
- -
- -
- -
The cost of additions in 2013 includes capitalised borrowing costs of K16.5M (2012: K9.4M) in relation to qualifying assets.
(b) Impairment losses
Impairment losses have been recognised in relation to ships and plant and vehicles. The impairment of these ships arose from
changes in expectations of future freight volumes and pricing and changes in ship replacement strategy. A change in the vehicle
replacement policy and review of vehicle conditions has given rise to an impairment charge for vehicles, while a change in
manufacturing strategy has resulted in an impairment charge for plant. Recoverable amounts have been determined using the
higher of fair value less cost to sell and its value in use. Fair value has been determined using market based information while value
in use has been determined using a post-tax discount rate of 15.9%.
The directors performed an impairment review on all key assets of the group given the economic slowdown. As a result of
this assessment the depreciation charge on ships includes an additional K92.4M(2012:4.0M) due to impairment. The effect to
shareholders post tax and minority interests is K47.1M. The depreciation charge on plant and vehicles includes an additional
K11.5M impairment on vehicles and K2.4M on plant.
There are no other conditions that indicate impairment of property, plant and equipment as at 31 December 2013.
82 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
13. investment properties
Investment properties represent the group’s residential and commercial properties that are available for external lease rather than
internal use. Properties used by the group are shown as ‘Property’ within note 12.
Non-current assets – at cost
Cost
Accumulated depreciation
Net book value
Opening value
Additions
Disposals
Transfers from property (note 12)
Depreciation
Closing value
(a) Amounts recognised in profit/loss for investment properties
Consolidated
Parent Entity
2013
2012
2013
2012
426,146
(82,488)
343,658
268,512
84,040
-
730
(9,624)
343,658
343,559
(75,047)
268,512
228,420
52,545
(1,431)
-
(11,022)
268,512
- -
- -
- -
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
Parent Entity
2013
2012
2013
2012
Rental income
Repairs and maintenance attributable to rental properties
under non-cancellable leases
Operating expenses directly attributable to rental properties
under non-cancellable leases
90,069
93,597
(3,675)
(2,770)
(8,249)
(7,556)
- -
- -
- -
(b) Valuation basis
Properties include commercial and residential properties occupied by Group businesses together with commercial and residential
investment properties which are available for external lease. An analysis of the carrying amount and estimated range of fair values
for each category of property is shown below. Fair values have been estimated internally, based on market evidence of property
values, supported by independent professional valuations as at December 2013 for a selected sample of representative properties.
Included in properties are the following:
Investment properties
Other properties (note 12)
Total
NBV
Valuation Lower
Range Higher
343,658
376,605
720,263
865,497
851,001
1,716,498
1,041,218
1,044,768
2,085,986
The independent valuer utilised certain historical facts and relevant market data available up to the date of valuation in reaching
their opinion to the valuation of the properties.
(c) Non-current assets pledged as security
Refer to note 17 for information on non-current assets pledged as security by the group.
(d) Contractual receivables
Minimum lease receivables under non-cancellable operating leases of investment properties not recognised in the financial
statements are receivable as follows:
2013
2012
2013
2012
Within one year
Later than one year but not later than five years
Later than five years
76,989
141,079
145,059
363,127
92,066
245,279
-
337,345
- -
- -
- -
- -
Steamships Annual Report 2013 83
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
14. intangible assets
Goodwill opening value
Additions
Impairment
Closing value
Impairment tests for goodwill
Consolidated
Parent Entity
2013
2012
2013
2012
17,183
76,331
-
93,514
17,183
-
-
17,183
- -
- -
- -
- -
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to operating segment. The goodwill balance
of K93.5M (2012: K17.2M) is attributable to Datec (K9.2M), Consort (K0.5M), Laga Industries (K7.5M), Pacific Towing (K67.3M)
and New Britain Shipping (K9M). The recoverable amount of a CGU is determined based on value-in-use calculations. These
calculations use pre-tax cash flow projections based on financial budgets approved by management covering a three-year period.
Growth beyond year three for the purpose of the impairment testing is set at 0%. A post-tax discount rate of 15.92% (2012:
18.3%) has been used and reflects specific risks relating to the operating segment. No goodwill is considered to be impaired as at
31 December 2013.
15. trade and other payables
Trade Payables
Accruals
Other payables
Consolidated
Parent Entity
2013
2012
2013
2012
50,177
57,281
23,204
74,098
43,134
31,775
130,662
149,007
- -
- -
213
213
All trade and other payables are due and payable within 12 months and are recorded at their carrying value.
16. Provisions for other liabilities and charges
Opening value
Charged to profit & loss
Transferred in on business combination
Utilised during year
Closing value
Current
Non-current
Employee
17,224
9,014
1,445
(8,379)
19,304
7,285
12,019
19,304
Dry
Dock
4,397
-
-
Other
1,022
304
-
2013
Total
22,643
9,318
1,445
(1,955)
(877)
(11,211)
(22,712)
2,442
2,442
-
2,442
449
449
-
449
22,195
10,176
12,019
22,195
22,643
12,658
9,985
22,643
150
150
2012
Total
30,623
14,732
-
A description of employee and dry dock provisions is disclosed in note 1(p).
84 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
17. Borrowings
Current:
Bank overdrafts (secured)
Bank loans (secured)
Other loans (unsecured)
Non-current:
Other loans (secured)
Bank loans (secured)
Total Borrowings
Consolidated
Parent Entity
2013
2012
2013
2012
41,618
9,063
15,160
65,841
135,000
423,108
558,108
623,949
37,181
107,200
16,133
160,514
135,000
181,872
316,872
477,386
- -
- -
- -
- -
- -
- -
- -
- -
Mortgages over certain of the Group’s properties and a registered equitable charge over the remainder of the Group’s assets,
undertakings and uncalled capital are held by the Group’s bankers as security for the bank overdrafts and secured loans.
Interest is paid on all loans at commercial rates at a discount to Indicator Lending Rates. The effective interest rate on bank
facilities at the balance sheet date was 6.8% (2012: 8.2%). Bank overdrafts are interest-only with no agreed repayment schedule.
Bank loans are secured loans with varying terms.
The fair value of borrowings approximates their carrying amounts. Borrowing terms, margins and credit risk factors approximate
currently obtainable levels for similar facilities.
18. issued capital
Consolidated
Parent Entity
2013
2012
2013
2012
(a) Issued and paid up capital
Ordinary shares
24,200
24,200
24,200
24,200
Balance brought forward
Share issue
Balance carried forward
(b) Issued and paid up capital
Number of shares
Ordinary shares
Balance brought forward
Share issue
Balance carried forward
24,200
-
24,200
24,200
24,200
24,200
-
- -
24,200
24,200
24,200
31,008
31,008
31,008
31,008
31,008
-
31,008
31,008
31,008
31,008
-
- -
31,008
31,008
31,008
In accordance with the Papua New Guinea Companies Act 1997 the shares have no par value.
The Company’s securities consist of ordinary shares which have equal participation and voting rights.
Steamships Annual Report 2013 85
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
19. related party disclosures
(a) Parent entity
The Group is controlled by John Swire & Sons (PNG) Limited, which owns 72.12% of the Company’s shares. The ultimate
Holding Company is John Swire & Sons Limited, incorporated in England.
(b) Interest in subsidiaries, associates and joint ventures:
These are set out in notes 22, 23 and 24.
(c) Directors:
G.J. Dunlop, W.L.Rothery, T. Blackburn and S.C.Pelling are directors of John Swire & Sons (PNG) Limited. Dividends were
received by those directors holding an interest in the Company as set out in the Directors’ Report.
(d) Remuneration:
Income received or due and receivable both by Directors and senior managers in connection with the management of the
Group companies is shown in the Directors’ Report. The Group paid NIL (2012:K5.9M) to SCL Nominees Limited for
management services.
Key management personnel disclosure
Consolidated
Parent Entity
2013
2012
2013
2012
Wages and salaries
Other short term benefits
Long-term benefits
Termination benefits
Share-based payments
(e) Material transactions:
Sales of goods and services
Associates & joint ventures
Key Management
Shareholders of associated companies
Lease and rental income
Associates & joint ventures
Shareholders of associated companies
Dividends received
9,386
1,126
313
-
-
951
17
11,662
4,067
4,536
11,718
1,444
391
-
-
4,818
-
29,507
4,146
-
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
Subsidiaries, associates & Joint ventures
5,922
3,935
56,971
78,346
Management fees income
Associates & joint ventures
Royalty/license income
Associates & joint ventures
Purchase of goods and services
Associates & joint ventures
Other shareholders
Shareholders of associated companies
Management fees paid
Other shareholders
Container/charter hire fees
Other shareholders
86 Steamships Annual Report 2013
868
843
1,206
1,460
(20,979)
-
(12,313)
(25,272)
(1,200)
(4,184)
(99)
(259)
-
(8,340)
- -
- -
- -
- -
- -
- -
- -
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
19. related party disclosures (continued)
Consolidated
Parent Entity
2013
2012
2013
2012
Finance cost
Associates & joint ventures
Other shareholders
Fellow subsidiary of ultimate shareholder
Dividends paid
Other shareholders
Shareholders of associated companies
Loans to/(from) related companies
Associates & joint ventures
Other shareholders
Shareholders of associated companies
(504)
-
(1,169)
(5,702)
(49,198)
(50,636)
-
973
(367)
(916)
-
(11,691)
(57,025)
(42,293)
5,000
(7,327)
All transactions with related parties are made on normal commercial terms and conditions.
Balances with related companies:
Associates and joint ventures:
Consort associates (note 11)
Consort shareholders (note 17)
Collins and Leahy (note 17)
Basilok Ltd (note 17)
Loans to related Companies:
Colgate Pamolive Ltd (note 11)
Harbourside Development Limited (note 11)
Kelton Investments (note 11)
(15,998)
(15,000)
-
(160)
500
101,775
790
(11,859)
(15,000)
(973)
(160)
500
47,000
790
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
500
500
- -
- -
Subsidiary Companies (note 11)
-
-
5,212
5,215
Steamships Annual Report 2013 87
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
20. Reconciliation of profit after income tax to net cash inflow from operating activities
Consolidated
Parent Entity
2013
2012
2013
2012
Profit for the year
Depreciation and impairment
Dividend and interest income
Net loss (gain) on sale of non-current asset
Fair value adjustment on acquisition
Fair value adjustment on financial assets
Share of profit after tax of associates
Change in operating assets and liabilities, net of effects from
purchase of controlled entity
(Increase)/decrease in trade debtors
(Increase)/decrease in inventory
(Increase)/decrease in deferred tax asset
(Increase)/decrease in operating assets
Increase/(decrease) in trade creditors
(Decrease)/increase in other operating liabilities
(Decrease)/increase in provision for income tax payable
Increase/(decrease) in deferred tax liability
78,441
213,080
-
919
(35,467)
20,307
(9,697)
(1,053)
9,487
(19,509)
36,029
(26,070)
3,631
(26,190)
(7,300)
198,348
98,379
56,573
3,995
80,219
4,100
-
(56,971)
(78,346)
(48,937)
-
24,800
(14,188)
26,847
(18,047)
-
(14,048)
16,278
(8,172)
(19,628)
25,234
- -
- -
- -
- -
-
- -
134
- -
62
(4,130)
438
- -
(4,841)
848
(668)
-
(1,009)
Net cash inflow from operating activities
236,608
266,866
101
303
21. Retirement benefit plans
The total cost of retirement benefits of the Group in 2013 was K11.1M (2012:11.1M). The Group participates in the National
Superannuation Fund of Papua New Guinea, a multi-employer defined contribution fund, on behalf of all citizen employees
with minimum employer and employee contribution rates established by legislation. The Group also contributes to a defined
contribution superannuation plan on behalf of senior management. The defined contribution superannuation plan was established
in 2002.
The parent entity does not employ staff directly; consequently there was no charge during the year.
88 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
22. subsidiaries and transactions with non-controlling interests
(a) Significant investments in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
the accounting policy described in Note 1 (c):
Name of Entity
Country of Incorporation
Class of Shares
Consort Express Lines Limited
Papua New Guinea
Ordinary
Datec (PNG) Limited
Papua New Guinea
Ordinary
Kavieng Port Services Limited
Papua New Guinea
Ordinary
Kiunga Stevedoring Company Limited
Papua New Guinea
Ordinary
Lae Port Services Limited
Papua New Guinea
Ordinary
Laga Industries Limited
Papua New Guinea
Ordinary
Madang Port Services Limited
Papua New Guinea
Ordinary
Middle Fly Shipping Limited**
Papua New Guinea
Ordinary
New Britain Shipping Limited**
Papua New Guinea
Ordinary
Oro Agencies Limited
Papua New Guinea
Ordinary
Pacific Rumana Limited**
Papua New Guinea
Ordinary
Pacific Rumana Mobile Investments Limited
Papua New Guinea
Ordinary
Pacific Towing (PNG) Limited
Papua New Guinea
Ordinary
Port Services PNG Limited
Papua New Guinea
Ordinary
Steamships Limited
Papua New Guinea
Ordinary
Windward Apartments Limited
Papua New Guinea
Ordinary
Equity
Holdings*
2013
Equity
Holdings*
2012
51
100
60
100
51
100
60
50
50
100
50
80
100
54
100
100
51
100
60
100
51
68
60
50
50
100
50
80
50
54
100
100
*The portion of ownership is equal to the proportion of voting power held.
** Consolidated by virtue of control over the operating decisions and returns.
Shares in subsidiary companies have been stated at cost or fair value on acquisition less dividends received from pre-acquisition
profits.
The major non-controlling interest is in Consort Express Lines Limited. The loss after tax attributable to non controlling interest in
this entity was K26.1M (2012:K5.4M profit) and the accumulated non-controlling interest in the entity at 31 December 2013 was
K16.8M (2012:K43.0M). Consort Express Lines Limited paid a total dividend during 2013 of K0.6M (2012:K0.6M).
Steamships Annual Report 2013 89
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
22. subsidiaries and transactions with non-controlling interests (continued)
(b) Transactions with non-controlling interests
On 1 October 2013, Steamships Trading Company Limited acquired the remaining 32% shares of Laga Industries Limited for a
purchase consideration of K26.1M. The carrying amount of the non-controlling interest in Laga Industries on the date of acquisition
was K17.1M. The group recognised a decrease in non-controlling interest of K17.1M. and a decrease in equity attributable to
owners of the parent of K9.0M. The effect of changes in the ownership interest of Laga Industries on the equity attributable to
owners of Steamships Trading Company Limited during the year is summarised as follows:
Consolidated
Parent Entity
2013
2012
2013
2012
Carrying amount of non-controlling interests acquired
Consideration paid to non-controlling interests
Excess of consideration paid recognised in the transactions
with non-controlling interests reserve within equity
17,104
26,098
8,994
-
-
-
- -
- -
- -
23. investment in associates
(a) Movement in carrying amounts
Opening value
Share of profits before tax
Income tax expense
Dividends received/receivable
Transfers/sales
Closing value
Consolidated
Parent Entity
2013
2012
2013
2012
12,177
6,538
(2,184)
(82)
-
16,449
6,905
7,946
(2,478)
(185)
(11)
12,177
- -
- -
- -
- -
- -
- -
The equity method is used to account for all interests in associates on a consolidated basis.
90 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
23. investment in associates (continued)
(b) Summarised financial information of equity accounted associates.
The Group’s share of the results of its principal associates and its aggregated assets (including goodwill) and liabilities are as follows:
2013
Makerio Stevedoring Limited
Nikana Stevedoring Limited
Riback Stevedoring Limited
United Stevedoring Limited
2012
Makerio Stevedoring Limited
Nikana Stevedoring Limited
Riback Stevedoring Limited
United Stevedoring Limited
Ownerships
Interest
%
23
23
25
12
Ownerships
Interest
%
23
23
25
12
Assets
Liabilities
Carrying
Value
Revenue
Profit
842
1,247
182
110
660
1,137
462
329
118
207
17,499
2,881
14,618
10,997
4,014
172
138
34
2,022
15
19,760
3,311
16,449
13,810
4,354
Assets
Liabilities
Carrying
Value
Revenue
Profit
937
1,090
330
158
607
932
580
442
287
175
14,732
4,124
10,608
10,242
4,997
403
373
30
2,551
9
17,162
4,985
12,177
13,815
5,468
The Stevedoring Companies provide stevedoring services to various shipping entities in the Group.
All associated companies are incorporated and operate in Papua New Guinea.
There are no contingent liabilities relating to the Group’s interest in the associates.
Steamships Annual Report 2013 91
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
24. investment in joint ventures
(a) Movement in carrying amounts
Opening value
Share of profits before tax
Income tax expense
Dividends received/receivable
Transfers/sales (note 25)
Closing value
Consolidated
Parent Entity
2013
2012
2013
2012
26,510
7,634
(2,291)
(5,840)
(10,991)
15,022
21,540
12,480
(3,760)
(3,750)
-
26,510
20,190
20,190
- -
- -
- -
(139) -
20,051
20,190
The interest in joint ventures are accounted for in the financial statements using the equity method of accounting.
(b) Information relating to the joint ventures are set out below.
2013
Assets
Liabilities
Ownerships
Interest
%
Pacific Towing Limited (note 25)
100
-
-
Colgate Palmolive (PNG) Limited
Harbourside Development
50
50
16,844
9,681
61,067
53,208
Carrying
Value
-
7,163
7,859
Revenue
Profit
-
4,637
32,766
-
706
-
77,911
62,889
15,022
32,766
5,343
2012
Pacific Towing Limited
Colgate Palmolive (PNG) Limited
Harbourside Development
Ownerships
Interest
%
Assets
Liabilities
Carrying
Value
Revenue
Profit
50
50
50
14,238
16,652
3,544
8,695
51,671
43,812
10,694
17,508
7,957
7,859
35,627
-
4,733
3,987
-
82,561
56,051
26,510
53,135
8,720
Pacific Towing Limited became a wholly owned subsidiary during the year.
Colgate Palmolive (PNG) Limited is a long held investment providing investment returns to the Group.
Harbourside Development is a property development company that is currently developing a commercial investment property in
Port Moresby. The Group’s share of the capital commitments at 31 December 2013 is K43.5M (2012:K89.1M).
There are no contingent liabilities arising from the Group’s interests in joint ventures.
Joint ventures have been presented separately from associates consistent with IFRS 11 and 12 which became effective 1 January
2013.
92 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
25. Business combinations
2013
Acquisition of the remaining shares of Pacific Towing Limited
On 1 December 2013, the Group acquired a further 50% of the issued share capital, and obtained control, of Pacific Towing
Limited. Together with the 50% of the issued share capital already held, this gave Steamships Trading Company Limited control of
100% of Pacific Towing Limited. Pacific Towing Limited is a company incorporated in Papua New Guinea whose business includes
harbor tug boat operations, tug boat charter, diving and marine salvage activities.
Recognised amounts of identifiable assets acquired and liabilities assumed
Cash
Trade & other receivables
Inventories
Property, ships and equipment
Deferred tax asset
Trade payables
Accruals and provisions
Net identifiable assets acquired
Goodwill arising
Total consideration
Satisfied by:
Cash consideration
Existing interest at fair value
Net cash outflow arising on acquisition:
Cash consideration
Less: cash and cash equivalents acquired
Cash outflow per cash flow statement
Fair value
3,086
20,250
984
18,004
1,572
(2,149)
(10,997)
30,750
67,331
98,081
51,621
46,460
98,081
51,621
3,086
48,535
The carrying value of the Group’s 50% interest in Pacific Towing Limited before the acquisition was K11.0M. The Group recognised
a gain of K35.5M as a result of remeasuring this interest, which is included in other income in the consolidated income statement.
The goodwill arising on the acquisition of Pacific Towing Limited amounting to K67.3M (which is not tax-deductible) consists of the
benefit of port access and relationships with customers, none of which is subject to contractual arrangements.
Acquisition related costs (included in operating expenses) in the consolidated statement of comprehensive income for the year
ended December 31, 2013 amounted to K0.7M.
The acquisition of the controlling interest in Pacific Towing Limited contributed K2.6M revenue and K0.5M profit before tax to the
Group’s results for the period between the date of acquisition and 31 December 2013.
Steamships Annual Report 2013 93
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
25. Business combinations (continued)
Acquisition of Kimbe Shipping and Transport
On 1 March 2013, the Group acquired, through New Britain Shipping Ltd, the trade and fixed assets of Kimbe Shipping and
Transport Limited, as road transport operator and container storage, equipment hire and workshop services provider. The
acquisition complimented the Group’s presence in Kimbe.
Recognised amounts of identifiable assets acquired and liabilities assumed
Property and equipment
Net identifiable assets acquired
Goodwill arising
Total consideration
Satisfied by:
Cash consideration
Contingent consideration
Total purchase consideration
Net cash outflow arising on acquisition:
Cash consideration
Less: cash and cash equivalents acquired
Cash outflow per cash flow statement
Fair value
9,000
9,000
9,000
18,000
18,000
-
18,000
18,000
-
18,000
The goodwill of K9.0M is attributable to the increased market access in New Britain. It is not tax-deductible.
The acquisition contributed K7.5M in revenue and K0.2M in profit before tax to the Groups results for the period between the
date of acquisition and 31 December 2013.
other
If the acquisition of the additional shares in Pacific Towing Limited and the acquisition of the Kimbe Shipping and Transport business
had occurred at the beginning of the year, the consolidated revenue and profit before tax of the Group would have been higher by
K31.7M and K6.7M respectively.
2012
There were no acquisitions in the year ending 31 December 2012.
94 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
26. segmental reporting
(a) Description of segments
The Board considers the business from a product perspective and have identified four reportable segments. A brief description of
each segment is outlined below:
•
•
•
•
Commercial – consists of the retail arm of the Group and is involved in the manufacture and distribution of food products
and general IT retail sales and service.
Hotels and property – consists of the hotels owned and operated by the Group and also its property leasing division. The
assets are stated at historical cost net of accumulated depreciation and includes new assets in the course of construction.
Logistics – consists of shipping and land based freight transport and related services divisions.
Finance and investment – consists of the head office administration function.
(b) Segment information
The segment information provided to the Board for the reportable segments for the year ended 31 December 2013 is as follows:
2013
External revenue
Intersegmental revenue
Interest revenue
Interest expense
Depreciation and amortisation
Impairment losses
Gain on sale of properties
Fair value loss on financial asset
Commercial
Hotels &
Property
Logistics
Finance &
Investment
Total
229,434
995
-
(8)
(7,023)
(2,487)
-
-
260,270
39,564
-
(7)
(40,808)
-
-
-
441,093
12,502
34
(5,773)
(57,364)
(103,940)
-
-
137
-
72
930,934
53,061
106
(12,008)
(17,796)
(1,458)
(106,653)
-
-
(106,427)
-
(20,307)
(20,307)
Segment results
(16,456)
133,160
(57,707)
21,677
Share of joint ventures and associate’s profit
Total tax expense
Profit from continuing operations
Segment assets
Segment liabilities
Net assets
706
4,057
(11,693)
122,155
21,599
100,556
-
(35,807)
97,353
822,810
40,699
782,111
8,991
19,122
-
698
(29,594)
22,375
80,674
9,697
(11,930)
78,441
443,560
122,754
320,806
177,850
641,400
(463,550)
1,566,375
826,452
739,923
Total assets includes investments in joint ventures
and associates of
7,162
-
16,450
7,859
31,471
Capital expenditure
13,425
118,297
117,998
926
250,646
Steamships Annual Report 2013 95
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
26. segmental reporting (continued)
Commercial
Hotels &
Property
Logistics
Finance &
Investment
Total
2012
External revenue
Intersegmental revenue
Interest revenue
Interest expense
259,003
2,748
72
(30)
261,546
36,878
-
(718)
Depreciation and amortisation
(7,643)
(38,416)
Impairment Losses
Gain on sale of properties
Fair value loss on financial asset
Segment results
Share of joint ventures and associate’s profit
Total tax expense
Profit from continuing operations
Segment assets
Segment liabilities
Net assets
-
97
-
13,706
3,988
(4,112)
13,582
143,056
24,336
118,720
-
48,465
-
227,305
-
(68,191)
159,114
669,796
7,759
662,037
465,761
18,995
63
(5,593)
(46,931)
(4,000)
211
-
36,808
10,200
(11,042)
35,966
480,609
164,516
316,093
-
-
-
(15,304)
(1,389)
-
164
(24,800)
(12,245)
-
1,931
(10,314)
986,310
58,621
135
(21,645)
(94,379)
(4,000)
48,937
(24,800)
265,574
14,188
(81,414)
198,348
198,190
533,540
(335,350)
1,491,651
730,151
761,500
Total assets includes investments in joint ventures
and associates of
7,957
-
22,871
7,859
38,687
Capital expenditure
13,670
101,382
85,116
2,478
202,646
These figures include non-controlling interests share of operating profits and assets.
(c) Geography
The Group operates almost wholly in Papua New Guinea. It is not practical to provide a segment analysis by geographical region
within Papua New Guinea. The Group has one insignificant business operation in the Solomon Islands.
96 Steamships Annual Report 2013
notes to the FinAnCiAL stAtements
Steamships Trading Company Limited Year ended 31 December 2013 (Amounts in Kina 000’s)
27. contingent liabilities
There were contingent liabilities at the Balance Sheet date as follows:
(a) The parent entity has given a secured guarantee in respect of the bank overdrafts of certain subsidiaries.
(b) The parent entity has given letters of continuing financial support in respect of certain subsidiaries, associates and joint
ventures.
No losses are anticipated in respect of these guarantees.
28. commitments
(a) Capital commitments
Contracts outstanding for capital expenditure:
- less than 12 months
- 1-5 years
(b) Lease commitments: group as lessee
Consolidated
Parent Entity
2013
2012
2013
2012
47,400
-
47,400
127,126
3,716
130,842
- -
- -
- -
The Group leases various properties under non-cancellable operating leases. The leases have varying terms and renewal rights. On
renewal, the terms of the lease are renegotiated.
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
5,075
449
-
5,524
6,390
24
-
6,414
- -
- -
- -
- -
29. subsequent events
On 1 January 2014 Palm Stevedoring and Transport Limited was established with operations in Alotau, of which Steamships
Trading Company holds a 33% share, Consort Express Lines Limited a 33% share and an external party 33%.
In February 2014 the Directors declared a final dividend of 135 toea per share payable immediately after the Annual General
Meeting on 19 May 2014.
Steamships Annual Report 2013 97
inDePenDent AUDitoR’s RePoRt
to the shareholders of Steamships Trading Company Limited
Report on the financial statements
We have audited the accompanying financial statements of Steamships Trading Company Limited (the Company), which
comprise the balance sheets as at 31 December 2013, the statements of comprehensive income, statements of changes
in equity and statements of cash flows for the year then ended, and the notes to the financial statements that include a
summary of significant accounting policies and other explanatory information for both the Company and the Group. The
Group comprises the Company and the entities it controlled at 31 December 2013 or from time to time during the financial
year.
Directors’ responsibility for the financial statements
The Directors are responsible for the preparation of these financial statements such that they give a true and fair view in
accordance with generally accepted accounting practice in Papua New Guinea and the Companies Act 1997 and for such
internal controls as the Directors determine are necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. These standards require that we comply with relevant ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers the internal controls relevant to the Company and the Group’s preparation of financial statements that give
a true and fair view of the matters to which they relate, in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company and the Group’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
opinion
In our opinion, the accompanying financial statements:
1.
2.
comply with International Financial Reporting Standards and other generally accepted accounting practice in Papua
New Guinea; and
give a true and fair view of the financial position of the Company and the Group as at 31 December 2013, and their
financial performance and cash flows for the year then ended.
98 Steamships Annual Report 2013
inDePenDent AUDitoR’s RePoRt
to the shareholders of Steamships Trading Company Limited
report on other legal and regulatory requirements
The Companies Act 1997 requires in carrying out our audit we consider and report on the following matters. We confirm in
relation to our audit of the financial statements for the year ended 31 December 2013:
1.
we have obtained all the information and explanations that we have required;
2.
3.
in our opinion, proper accounting records have been kept by the Company as far as appears from an examination of
those records; and
we have no relationship with, or interests in, the Company or any of its subsidiaries other than in our capacities as
auditor, taxation advisor, and reviewer on specific human resources matter. These services have not impaired our
independence as auditor of the Company and the Group.
restriction on distribution or use
This report is made solely to the Company’s shareholders, as a body, in accordance with the Companies Act 1997. Our
audit work has been undertaken so that we might state to the Company’s shareholders those matters which we are required
to state to them in an auditor’s report and for no other purpose. We do not accept or assume responsibility to anyone other
than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for the opinions we have
formed.
PricewaterhouseCoopers
Grant Burns
Partner
Port Moresby
28 March 2014
Stephen Beach
Partner
Registered under the Accountants Registration Act 1996
Steamships Annual Report 2013 99
DiReCtoRs’ RePoRt
Steamships Trading Company Limited Year ended 31 December 2013
steamships trading company Limited and subsidiary companies
The Directors submit their Annual Report for the year ended 31 December 2013 for the Company and its subsidiaries.
Principal activities and review of operations
Full details of the Group’s activities are given in the Directors’ Review on page 12. The Group continues to operate in the
segments of Commercial, Hotels and Property and Logistics.
The Directors believe that there will be no significant changes in the Group’s activities for the foreseeable future.
changes in accounting Policies
There are no changes in Accounting Policies in the year.
result
The Group operating profit for the year attributable to shareholders was K117,050,000 (2012: K177,700,000).
dividend
The Directors advise that a final dividend of 135 toea per share will be paid immediately after the Annual General Meeting
on 19 May 2014. The exchange rate Kina to Australian Dollar applying on 1 May 2014 will be used to calculate the
dividends to shareholders resident outside Papua New Guinea.
rounding off
Amounts in the Directors’ Report and accounts have been rounded off to the nearest thousand Kina.
100 Steamships Annual Report 2013
DiReCtoRs’ RePoRt
Steamships Trading Company Limited Year ended 31 December 2013
experience & interests register
Directors have disclosed the following experience and interests in shares in the Company and provided general disclosure of
companies in which the Director is to be regarded as interested as set out below:
W.L. rothery
Member of the Remuneration Committee
Member of the Strategic Planning Committee
Director since 1997
Chairman since 2006
Mr Rothery is Chief Executive and a Chairman of John Swire & Sons Pty Ltd, as well as a Director of several other Swire
subsidiary companies. He has been with the Swire Group for 34 years and has been based in Asia, the Middle East and for
24 years in Australia.
g. aopi cBe
Director since 1997
Mr Aopi is an Executive Director of Oil Search Ltd, where he is also Executive General Manager of External & Government
Affairs and Sustainability. He has substantial public service and corporate experience in Papua New Guinea currently
serving as the Chairman of the PNG Chamber of Mines and Petroleum. He is a Director of Port Moresby Stock Exchange
Ltd, Marsh Ltd, Bank of South Pacific Limited, CDI Foundation, Wahinemo Ltd and various other private companies. He is a
former Chairman of Telikom PNG Ltd and Independent Public Business Corporation.
t. Blackburn
Director since 2011
Mr Blackburn is Managing Director of The China Navigation Company Pte Ltd (a Swire Group company) and Chairman
of Mandarin Shipping Ltd and a Director of Altus Logistics Pte Ltd. He was Director & General Manager (2009-2011) of
Hong Kong Aero Engine Services, a Director of James Finlay Ltd (2005-2009) and from 1994 to 2005 worked for various
subsidiaries and associates of John Swire & Sons Ltd, including Steamships Shipping & Transport.
sir michael Bromley KBe
Member of the Audit and Risk Committee
Member of the Remuneration Committee
Member of the Strategic Planning Committee
Director, 1986 to 1996
Director since 2000
Sir Michael Bromley has extensive international business experience from over 40 years of operating and advising
companies in countries including Singapore, Indonesia, Australia, Russia, China and Papua New Guinea, principally in
retail and logistics operations. He is Chairman of Heli Niugini Ltd and AAB Holdings Pty Ltd, and a Director of Pegasus Print
Group Pty Ltd, Fasteners & More Pty Ltd, New Guinea Energy Limited, Sonway Asia Ltd, Chemica Ltd, Sig No.1 Ltd, Glock
No. 1 Ltd, Broman Ltd, Maps Tuna Ltd, Sek No. 35 Ltd, Hoia Investment Ltd and Venture Ltd.
Beneficial Shares Held: 5%
d.H. cox oL
Managing Director 2004 to 2012
Director since 2003
Mr Cox joined Steamships as a Manager in 1992, rising to become Managing Director from 2004-2012. He has extensive
experience in the PNG business environment. He is also a Director of Telikom PNG Ltd.
Steamships Annual Report 2013 101
DiReCtoRs’ RePoRt
Steamships Trading Company Limited Year ended 31 December 2013
g.L. cundle
Managing Director from 2013
Director from 2013
Mr Cundle was appointed Steamships Managing Director on 1 January 2013. He joined the Swire Group in 1979 and
has extensive corporate experience having worked with the Group in various divisions in Hong Kong, Australia, Korea,
Japan and Papua New Guinea. He was a Non-Executive Director of Steamships in 2006-2007 and Steamships Shipping
General Manager from 1989-1992. He is a director of various Steamships Trading Company subsidiaries, joint ventures and
associated companies.
g.J. dunlop
Member of the Audit and Risk Committee
Member of the Strategic Planning Committee
Managing Director 2000 to 2003
Director since 1995
Mr Dunlop is a chartered accountant with extensive experience in the Pacific region. He is a Director of John Swire & Sons
(PNG) Ltd and Group companies, City Pharmacy Group Ltd, Credit Corporation (PNG) Ltd, Hardware Haus Pty Ltd and
Mainland Holdings Ltd.
J.W.J. Hughes-Hallett cmg, sBs
Director since 2010
Mr Hughes-Hallet originally joined the Swire Group in 1976 and has extensive corporate experience through working with
the Group in Hong Kong, Taiwan, Japan, Australia and London. He is Chairman of John Swire & Sons Ltd and a Director of
Swire Pacific Ltd, Cathay Pacific Ltd, Swire Properties Ltd and HSBC Holdings Ltd.
Lady Winifred Kamit cBe
Chairperson of the Audit and Risk Committee
Director since 2005
Lady Winifred Kamit is a former Senior Partner, and currently a consultant at Gadens Lawyers in Port Moresby. She is a
Councillor of the Papua New Guinea Institute of National Affairs and Chairperson of Coalition for Change PNG. She is a
Director & Secretary of Bunowen Services Ltd and Gadens Administration Services Ltd, and a Director of Newcrest Mining
Ltd, Nautilus Minerals Niugini Ltd, Kamchild Ltd and ANZ Banking Group (PNG) Ltd.
s.c. Pelling
Finance Director & Company Secretary
Mr Pelling is a chartered accountant who was previously Finance Director for agricultural operations in Africa with James
Finlay Ltd, a wholly-owned subsidiary of John Swire & Sons Ltd. He is a Director of John Swire & Sons (PNG) Ltd and
various Steamships Trading Company subsidiaries, joint ventures and associated companies.
102 Steamships Annual Report 2013
DiReCtoRs’ RePoRt
Steamships Trading Company Limited Year ended 31 December 2013
remuneration of directors
Directors remuneration received or receivable from the Company as directors during the year, is as follows:
W.L. Rothery
D.H. Cox OL
G. Aopi, CBE
T Blackburn
Sir Michael Bromley, KBE
G.L Cundle *
G.J. Dunlop
J.W.J Hughes- Hallett CMG, SBS
Lady Winifred T. Kamit, CBE
S. C. Pelling *
2013
K’000
211
84 -
84
84
211
- -
169
84
148
- -
2012
K’000
211
84
84
211
169
84
148
* Managing Director and Finance Director receive no fees for their service as Directors during the year.
remuneration of employees
The number of employees whose remuneration and other benefits was within the specified bands are as follows:
Remuneration
K’000
2013
no.
2012
no.
Remuneration
K’000
2013
no.
2012
no.
Remuneration
K’000
2013
no.
2012
no.
110-120
120-130
130-140
140-150
150-160
160-170
170-180
180-190
190-200
200-210
210-220
220-230
230-240
240-250
250-260
260-270
270-280
280-290
290-300
300-310
310-320
330-340
350-360
-
12
12
9
9
6
3
5
8
5
1
6
3
8
4
5
3
2
2
1
1
5
3
1
1
5
3
9
4
5
6
3
4
2
4
5
6
2
-
3
2
5
1
-
1
1
360-370
370-380
380-390
390-400
400-410
410-420
420-430
430-440
440-450
450-460
460-470
470-480
480-490
490-500
510-520
520-530
530-540
540-550
550-560
560-570
570-580
590-600
600-610
1
3
4
-
3
2
2
1
-
1
1
3
-
-
3
2
-
1
3
-
2
-
-
3
1
2
4
5
2
1
5
2
3
2
-
3
2
1
1
3
-
-
1
-
2
4
610-620
630-640
650-660
660-670
670-680
680-690
690-700
740-750
750-760
770-780
790-800
830-840
840-850
880-890
890-900
920-930
940-950
1,020-1,030
1,050-1,060
1,120-1,130
1,660-1670
1
1
1
2
-
2
-
1
3
1
-
1
1
1
-
-
1
-
1
-
1
-
-
1
-
1
2
1
-
-
1
1
-
-
-
1
1
-
1
-
1
-
In addition, an amount of NIL (2012:5.9M) was paid to SCL Nominees Limited for management services. Details of auditors’
remuneration and donations are shown in Note 3 to the accounts.
For and on behalf of the Board:
Port Moresby
28 March 2014
W. L Rothery
Chairman
G.L. Cundle
Managing Director
Steamships Annual Report 2013 103
STOCK ExCHANGE INFORMATION
Steamships Trading Company Limited Year ended 31 December 2013
Shares are listed on the Australian Securities Exchange and the Port Moresby Stock Exchange. All shares carry equal voting
rights.
shareholdings
At 15 February 2014, there were 422 shareholders.
315 Holding
Holding
80
Holding
14
Holding
13
1
1,001
5,001
10,001
-
-
-
-
1,000 units
5,000 units
10,000 units
and over
6 shareholders held less than a marketable parcel.
The 20 largest shareholders were:
Number of shares
John Swire & Sons (PNG) Limited
Bell Potter Nominees Ltd
National Superannuation Fund Ltd
John E Gill Operations Pty Ltd
Kelvinside Pty Ltd
Malcolm Burns Reid
Mr Ramesh Mahtani
Hylec Investments Pty Ltd
Intercontinental Assets Pty Ltd
Capital Nominees Limited
Bryce Family Super Fund
Engoordina Pty Ltd
Derrick Charles Whitaker
Jennifer May Forbes
Miss Shirin Moayyad
Custodial Services Limited
Mary Patricia Haughton
Mrs Judith Scottholland
Citicorp Nominees Pty Limited
Mrs Robyn A Gostelow
22,362,651
6,201,000
1,859,446
54,727
25,000
22,867
21,700
20,494
15,000
12,767
12,243
11,078
10,348
10,000
10,000
8,768
8,161
8,161
8,112
7,393
30,689,916
%
72.12
20.00
6.00
0.18
0.08
0.07
0.07
0.07
0.05
0.04
0.04
0.04
0.03
0.03
0.03
0.03
0.03
0.03
0.03
0.02
98.97
applicable Legislation
The Company is incorporated in Papua New Guinea and is not generally subject to Australian Corporations Law including,
in particular, Chapter 6 of the Australian Corporations Law dealing with the acquisition of shares (including substantial
shareholdings and takeovers). The Company is subject to the requirements of the Papua New Guinea Companies Act 1997,
Securities Act 1997 and the Takeovers Code. The Companies Act and the Securities Act regulate the issue and buy-back of
shares and contain provisions as to the trading in securities, provisions as to financial benefits to related parties, substantial
shareholders provisions, remedies in cases of oppression or injustice and actions by, and access to, records by shareholders.
The Takeovers Code regulates offers where a person already holds more than 20% of the voting rights in a company or
where a person becomes the holder of more than 20% of the voting rights in a manner permitted by the Code.
A code offer, which can either be a full offer or a partial offer, must be extended to all holders of voting securities in the
Company. The Code also contains compulsory purchase and sale provisions if more than 90% of the shares are acquired
under an offer.
104 Steamships Annual Report 2013
Steamships Annual Report
ComPAnY DiReCtoRY
cHairman
W. L. Rothery §&
executiVe directors
managing director
G. L. Cundle, §
Finance director
S. C. Pelling
non-executiVe directors
G. Aopi, CBE
T. Blackburn
Sir Michael Bromley, KBE §+&
G. J. Dunlop +&
J.W.J Hughes- Hallett CMG, SBS
Lady W. T. Kamit, CBE +
D. Cox OL (Managing director to 31/12/12)
+ Member of the Audit and Risk Committee
§ Member of the Remuneration Committee
& Member of the Strategic Planning Committee
secretary
S. C. Pelling
registered oFFice
Champion Parade
Telephone: +675 322 0222
P.O. Box 1
Port Moresby
Papua New Guinea
auditors
PricewaterhouseCoopers
P.O. Box 484
Port Moresby
Papua New Guinea
sHare registrars
Computershare Investor Services Pty Limited
GPO Box 2975
Melbourne VIC 3001
AUSTRALIA
Telephone: (Aus) 1300 85 05 05
(Overseas)
Fax:
+61 (0)3 9415 4000
+61 3 9473 2500
stocK excHange
Shares are listed on both the Port Moresby Stock Exchange
Limited and the Australian Securities Exchange Limited.
a. r. B. n.
055 836 952
Steamships Annual Report 2013 105
106 Steamships Annual Report 2013