ANNUAL REPORT 2015
CONTENTS
Brief Profile of Steamships Trading Company Limited . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . 4
Chairman’s Report . . . . . . . . . . . . . . . . . . . . . 6
Directors’ Review . . . . . . . . . . . . . . . . . . . . . 7
Review of Operations - LOGISTICS . . . . . . . . . . . . 8
Consort Express Lines . . . . . . . . . . . . . . . . 8
Pacific Towing . . . . . . . . . . . . . . . . . . . . 9
Transport & Port Services . . . . . . . . . . . . . 10
Review of Operations - PROPERTY . . . . . . . . . . . 11
Coral Sea Hotels . . . . . . . . . . . . . . . . . . 11
Pacific Palms Property . . . . . . . . . . . . . . . 12
Review of Operations - COMMERCIAL . . . . . . . . . 13
Laga Industries . . . . . . . . . . . . . . . . . . . 13
Colgate Palmolive . . . . . . . . . . . . . . . . . 13
Sustainability . . . . . . . . . . . . . . . . . . . . . . . 14
Corporate Governance . . . . . . . . . . . . . . . . . . 14
Financial Section . . . . . . . . . . . . . . . . . . . . . 15
Statements of Comprehensive Income . . . . . . . 15
Statement of Changes in Equity . . . . . . . . . . 16
Balance Sheets . . . . . . . . . . . . . . . . . . . 17
Statements of Cash Flows . . . . . . . . . . . . . 18
Notes to the Financial Statements . . . . . . . . . 19
Independent Auditor’s Report . . . . . . . . . . . 50
Directors’ Report . . . . . . . . . . . . . . . . . . 52
Stock Exchange Information . . . . . . . . . . . . 56
Company Directory . . . . . . . . . . . . . . . . . . .
IBC
Steamships Annual Report 2015 1
BRIEF PROFILE OF STEAMSHIPS GROUP
Steamships Trading Company (Steamships) is a committed investor in Papua New Guinea
with a near 100 year history. The group 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 group 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.
•
•
People Development – We value a working
environment that fosters innovation and encourages
personal development and learning.
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.
Steamships is aware of its prominent 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 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 and satisfaction of its
customers, the local communities and the environment in
which it operates.
Ninety-seven years on, Steamships is still showing it has
the resources and capacity, vision and capability to meet
the dynamic needs of a growing country.
The Group employs over 4,000 PNG citizens and
non-citizens in 6 diverse divisions grouped under
the 3 operating categories of Logistics, Property and
Commercial.
Steamships core values include the following:
•
•
•
•
Safety – We prioritise safety awareness and
compliance to ensure our business operations are
conducted safely.
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.
Customer Focus – Our customers are the final judges
of our success or failure. We understand and respond
to the needs of our customers.
2 Steamships Annual Report 2015
BRIEF PROFILE OF STEAMSHIPS TRADING COMPANY LTD
BRIEF PROFILE OF STEAMSHIPS TRADING COMPANY LTD
STEAMSHIPS’ ORGANISATIONAL STRUCTURE
STEAMSHIPS’ ORGANISATIONAL STRUCTURE
STEAMSHIPS TRADING COMPANY
LOGISTICS
PROPERTY
COMMERCIAL
X3 JV Property
Development Co’s
Steamships Annual Report 2015 3
Steamships Annual Report 2015 3
FINANCIAL HIGHLIGHTS
2015 FINANCIAL HIGHLIGHTS
Revenue (including discontinued operations)
Profit attributable to shareholders
Cash generated from operations
Net cash inflow/(outflow) before financing
Shareholders’ funds
External Borrowings
Earnings per share (toea)
Dividends per share (toea)
Shareholders’ funds per share (toea)
Underlying profit attributable to shareholders
Underlying earnings per share (toea)
Gearing ratio
Interest cover
Dividend cover
2015
K’000
773,535
98,979
202,821
121,601
789,087
644,667
319
130
2,545
80,651
260
43.5%
6.3
2.5
2014
K’000
941,708
88,655
222,512
13,193
735,964
700,883
286
140
2,373
108,808
351
47.8%
5.8
2.0
Change
%
-18%
12%
-8%
822%
7%
-8%
12%
-7%
7%
-26%
-26%
-9%
9%
20%
4 Steamships Annual Report 2015
SUMMARY OF PAST PEFORMANCE
2006
K’000
2007
K’000
2008
K’000
2009
K’000
2010
K’000
2011
K’000
2012
K’000
2013
K’000
2014
K’000
2015
K’000
FINANCIAL HIGHLIGHTS
INCOME STATEMENT (including discontinued operations)
Revenue
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
333,966 404,592 462,972
91,208 111,615
53,502
16,837
15,029
15,115
(32,808)
(27,869)
(18,357)
(5,418)
(4,211)
(2,781)
90,226
74,157
47,479
159
1,467
1,467
0
0
0
(45,272)
(38,760)
(31,008)
45,113
36,864
17,938
495,976 789,918 920,357 986,310 930,934
79,747
120,602 180,834 233,967 265,574
13,859
14,188
16,732
9,697
11,416
(67,727)
(81,414) (14,042)
(34,637) (53,935)
(6,137) (21,870)
(20,648) 38,609
(21,838)
96,560 116,445 158,261 177,700 114,011
(1,061)
0
(8,994)
0
(88,373) (57,365)
(58,916)
47,652
89,327
98,284
0
0
(45,272) (31,008)
85,437
51,288
0
0
0
0
3,843
941,708 773,535
134,789 136,042
3,062
(38,487) (37,710)
(2,415)
(11,490)
98,979
88,655
0
0
2,206
0
(43,411) (40,311)
60,874
45,244
*Underlying profit attributable to
shareholders
BALANCE SHEET
SHARE CAPITAL & RESERVES
Issued Capital
Retained Earnings
Shareholders’ funds
Minority Shareholder’s Interest
EQUITY
Fixed Assets / Investment Properties
Investments in Associated Companies
Future Income Tax Benefit
Goodwill
Current assets
TOTAL ASSETS
Current Liabilities
Non-Current Liabilities
TOTAL LIABILITIES
35,067
49,926
67,770
85,120 113,597 153,566 156,213 128,367 108,808
80,651
24,200
24,200
24,200
353,883 428,157 554,349 652,978 689,777
24,200
24,200
24,200
24,200
24,200
218,833 254,230 302,595
711,764 764,887
243,033 278,430 326,795 378,083 452,357 578,549 677,178 713,977 735,964 789,087
47,515
254,127 292,114 345,131 421,937 515,208 653,914 761,500 736,884 766,737 836,602
11,094
18,336
24,200
13,684
24,200
43,854
62,851
75,365
84,322
22,907
30,773
227,773 263,276 353,261
33,337
22,225
16,839
4,150
5,358
12,944
3,568
7,578
3,568
98,006 137,623 154,508
664,196 786,510 938,709 1,023,861 1,066,393 1,115,123 1,072,955
31,471
28,445
36,458
38,687
17,939
33,193
21,081
0
36,914
0
7,305
33,521
80,491
17,183
80,491
93,617
17,183
17,183
366,479 400,480
203,480 294,203 299,634 411,920 352,549
359,130 432,050 552,834 910,103 1,122,595 1,283,971 1,491,651 1,565,111 1,628,807 1,627,298
15,416
9,282
17,183
98,517 134,941 122,562
85,141
4,995
6,486
190,621 541,292
671,449 249,404
105,003 139,936 207,703 488,166 607,386 630,057 730,151 828,227 862,070 790,696
236,847 273,055 283,445 370,396 230,390
251,319 334,331 346,612 359,755 597,837
NET ASSETS
254,127 292,114 345,131 421,937 515,208 653,914 761,500 736,884 766,737 836,602
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)
EPS (toea)
Underlying EPS (toea)
Earnings retained %
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
89.7%
46.5%
20.75
12.2%
16.0%
18.0%
185
368
414
41.8%
1.92
95.2%
47.8%
22.13
9.4%
12.0%
14.8%
140
286
351
51.0%
0.74
81.7%
43.5%
24.38
12.8%
12.5%
10.2%
130
319
260
61.5%
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 2015 5
CHAIRMAN’S REPORT
Trading conditions remained challenging across all sectors in 2015 as anticipated. Whilst
cocoa and copra prices remained firm, coffee and palm oil prices continued to decline
which together with the arguably overvalued Kina took their toll on the non-resource sector
of the economy which supports the vast majority of Papua New Guinea’s citizens.
The collapse in oil and gas prices brings uncertainty to
anticipated projects but the quality of PNG resources
should mean that it is a question of when not if
development will commence. Signs of early works on
the Total SA-led Papuan LNG project, and on the delayed
feasibility study for the Wafi-Golpu gold project in Morobe
Province will be a welcome relief if they materialise. Also
encouraging is the reopening of the Ok Tedi copper mine
in March 2016.
Hitherto government infrastructure expenditure has kept
PNG’s economy ticking over since the completion of the
PNG LNG Project in 2014. With a national budget deficit
due to reduced revenues there is a more restrained 2016
outlook which combined with subdued gas and mining
investment will likely see another difficult year in 2016.
With Port Moresby hosting the APEC economic leaders
meeting in November 2018 there will be many related
satellite events in the lead up years and we can expect
to see more activity. This will be supplemented by the
recently secured ACP Group Leaders Summit to be hosted
by PNG in 2016.
A continued lack of foreign currency is restricting imports
and making further domestic capital investment difficult;
a sovereign bond ‘circuit breaker’ is hoped to replenish
reserves.
Within Steamships the logistics businesses undertook a
significant restructuring in 2015 with the merger of our two
shipping divisions into one, and the merger of our two land
side logistics divisions into one. Both of these initiatives
foresaw the need to reduce structural costs to enhance
competitiveness. Investment in newer marine tonnage in
2014 paid dividends in the year improving cost efficiency
and reliability.
Our property division remained largely resilient by
virtue of its investments in scale and strategic locations;
these attributes have positioned the business to ride
out the stresses created by over-supply in some sectors.
Unfortunately we suffered a material fire loss at the Central
Waigani complex, albeit fully insured – redevelopment
works are expected to complete by the end of 2017.
Our Hotels division continues to invest significantly in
the upgrade of its product and service standards to better
attract and retain custom in an increasingly competitive
market. The division implemented some, and continues to
review, expansion plans for leisure dining in anticipation of
increasing disposable incomes over the medium term.
Management of the transition of Laga from a manufacturer
of a variety of consumer goods to a business more focused
upon ice cream manufacturing, sales and distribution was
achieved during the year by new management, applying a
more disciplined and structured approach to delivering the
basics .
The overall pace of capital investment was consciously
decelerated in 2015 as the economic downturn is digested.
This has allowed a strengthening of the balance sheet
through reduced gearing and positions Steamships well to
capitalise on opportunities that could arise.
Steamships remain confident in the longer term prospects
for the PNG economy. In the short term a degree of caution
will continue to be exercised and disciplines applied that
have assisted Steamships over 97 years to navigate the
occasional bumpy road on PNG’s journey of development.
Steamships will continue to invest in the training and
development of its staff despite the slowdown. We intend
to be well positioned for when the economy regathers
steam and our team can continue to grow Steamships. I
thank all our staff for their commitment and hard work
which have been and will remain critical to the success of
Steamships .
GL Cundle
Chairman
31 March 2016
6 Steamships Annual Report 2015
DIRECTORS’ REVIEW
The Directors of Steamships Trading Company Limited advise a profit after tax and minority
interests of K99.0 million for the 12 months to December 2015, compared to a profit of
K88.7 million for the same period in 2014 (a 11.6% increase). However, adjusting for
significant items the underlying profit attributable to shareholders decreased 25.9% from
K108.8 million in 2014 to K80.7 million in 2015 as shown below:
Net profit attributable to shareholders
Add back/(less) impact of significant (post tax and minority interest)
Unrealised gain on change in control of Pacific Rumana
Impairment of coastal slipway
Impairment of fleet and equipment (post highway closure)
Gain on sale of Datec (PNG) Ltd
Trade Winds impairment
Laga office and amenities impairment
Laga inventory impairment
Other
Total impact of significant items
2015
Km’s
99.0
(18.9)
1.3
(0.7)
-
0.9
(1.0)
-
-
(18.3)
2014
Km’s
Change
88.7
11.6%
-
-
15.7
(7.1)
4.0
4.6
1.5
1.5
20.2
Underlying profit attributable to shareholders
80.7
108.8
-25.9%
The year on year result reflects the expected continued
weakening in economic conditions; the latter half of the
year in particular was adversely effected not only by the
continued collapse in oil prices (withering resources sector
investment), but also by the affects of the El Nino with its
consequent impact on our riverine shipping activity in the
Western Gulf. As a consequence 2015 sales declined 12%
to K773.5 million against last year’s K879.3 million on a
continuing basis.
Depreciation in 2015 was K102.1 million (excluding
impairments) against K104.7 million in 2014, and interest
on borrowings (excluding capitalised interest) was K26.0
million against K28.9 million in 2014. Capital expenditure
for the 12 months was K109.7 million (with capitalised
interest of K1.5 million) against K201.3 million (with
capitalised interest of K4.9 million) in 2014 reflecting a
conscious slowdown in project activity in the economic
climate. The group’s net operating cash flow generation
declined 8.8% to K202.8 million against K222.5 million in
2014 .
A final dividend of 35 toea per share will be paid after
the annual general meeting on the 13th of May 2015,
subject to our ability to secure foreign exchange for non
PNG shareholders. This brings the total dividend for the
year to 130 toea per share (2014 = 140 toea per share)
representing 50% of profit after tax as adjusted for non-
cash exceptional items. The dividend is unfranked and
there is no conduit foreign income.
As a result of reduced capital spend borrowings declined
8% to K645 million and gearing improved 9% to 43.5%.
Interest cover remains at a comfortable 6.3 times. Certain
of the Group’s banking facilities mature at the end of 2016
and the Directors are currently negotiating renewals of all
the Group’s facilities for a further three to five year period
under a Common Terms Deed, together with refinancing of
joint venture borrowing arrangements where possible off
balance sheet .
Steamships Annual Report 2015 7
REVIEW OF OPERATIONS - LOGISTICS
CONSORT EXPRESS LINES
During 2015 the group merged its shipping interests
together with the sale of Steamships Coastal
Shipping to Consort Express Lines. The combined
division operates a fleet of 21 coastal vessels (7
geared, multi-purpose deep water vessels and 14
shallow water landing craft, tugs and barges). All
are PNG flagged and manned with all safety and
technical specifications maintained according to
Lloyds international standards.
LINER SERVICES
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 to 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.
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, Kieta). These stevedoring
companies are partnerships between Consort
and local landowner companies and provide
significant employment opportunities for the nearby
communities .
PROJECT CHARTERS
Consort provides short and long term vessel charters
specialising in shallow water river shipping, and
together with the Transport & Port Services Division
develops, implements and supports intermodal
logistics solutions linked to land based services
such as road transport, cargo handling, storage,
agencies, customs clearance, lay down areas and
warehousing.
8 Steamships Annual Report 2015
As expected the continued slowing activity levels across
our logistics businesses forced a 2015 assessment to
reduce structural costs and enhance competitiveness. As
a result on the 1st July 2015, in the face of significantly
reduced marine project charters and reduced liner margins
in the face of competition for limited cargos, the group
merged its shipping interests together with the sale of
Steamships Coastal Shipping to Consort Express Lines. The
combination targets efficiency alignment and synergistic
cost savings in the competitive economic environment.
Consort Express Lines had to effect a painful short notice
move from its Port Moresby main wharf to Motukea in
September 2015 following PNG Ports acquisition of the
same, whilst the long awaited and delayed completion
of the 1st stage Lae Tidal Basin and redevelopment of the
Kimbe wharf brought much needed congestion relief to
shipping liner operations towards the latter part of the year.
The investment in two larger capacity 8,000 dwt vessels
(Gazelle Coast and Bougainville Coast) at the end of 2014
and early 2015 has enabled improved and more reliable
scheduling, despite congestion challenges. Consort also
continues to invest in the expansion and upgrading of its
container fleet with 2,000 new boxes delivered in 2015.
As in 2014, it was a challenging year for Project Charters as
demand for landing craft was weak with the continued fall
in exploratory activity for resource companies as a result of
weakening oil prices. This was particularly disappointing
given the anticipated developments on the Papuan LNG,
Pn’yang, Stanley and Frieda projects, and the division’s
2014 investment in new shallow draft and double bottom
capacity for the same. The El Nino weather event started
to be felt in July 2015 and almost immediately Ok Tedi
moved their operations into care and maintenance mode,
substantially impacting the economy of Kiunga. Our
‘Kiunga Chief’ remained employed but spent several
months stranded on the Fly River, as did certain of our liner
vessels, as water levels dropped; relief has only come in
early 2016. The Directors nonetheless remain confident
that the division is well placed to capitalise on demand as
it manifests and pleasingly as the year ended we saw our
first vessel go on charter to Total.
Stevedoring tonnages for its associates were broadly level
on 2014 with cost savings delivering an overall better
contribution .
The year culminated with the retirement of a long serving
General Manager and the appointment of a new General
Manager from his previous role as Chief Operating Officer
and architect of the shipping merger.
REVIEW OF OPERATIONS - LOGISTICS
PACIFIC TOWING
Pacific Towing 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 complemented
by a comprehensive range of commercial dive
services. As an ancillary service the company
also provides life raft leasing & servicing and is
developing fire services capability.
Pacific Towing is headquartered in Port Moresby
and operates 11 tugs and 12 associated support
vessels, 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.
The division enhanced its salvage capability at the start
of 2015 through a cooperation agreement with Perrott
Salvage, and acquired the life raft sales & servicing
business of Steamships Coastal Shipping mid-year to
which expanded services are now being offered. A work
experience program has also been developed with Hong
Kong Salvage & Towage which will see two employees
placed for a month in Hong Kong in early 2016. Pacific
Towing’s divers likewise attend the Professional Diving
Academy in Sydney.
During 2015 one salvage (POAVOSA WISDOM) was
settled albeit the same was already materially accrued
within the fair value accounting of the 50% Svitzer
acquisition in late 2013. In 2015 a further three salvages
were responded to (HELENE RICKMERS, FOXHOUND and
TAO MARINER) which when settled are expected to realise
a profit of approximately K3 million.
Pacific Towing experienced a 21% decline in its principal
harbour towage jobs, but positive non-harbour towage,
salvage and diving activity meant that the division posted a
respectable result .
At the end of 2015 Pacific Towing secured the purchase of
a 62tbp tug, KEERA, to position the business with Puma
Fuels for their intended introduction of Suezmax vessels,
while also increasing capacity for salvages and long haul
towage opportunities.
Steamships Annual Report 2015 9
REVIEW OF OPERATIONS - LOGISTICS
TRANSPORT & PORT SERVICES
As reported last year in early 2015 a decision was taken
to close the Highlands Highway operations of East West
Transport due to over overcapacity and unsustainable
margins. Consequently in May 2015 the residual transport
business, which focuses on customs clearances, town
cartage and fuel distribution in seven locations was
merged with that of the eight Steamships Joint Venture
Port Services businesses to form a new combined division
called Transport and Port Services (together operating in ten
locations, seven being complementary).
Competition in the transport market remains fierce with the
ongoing excess of equipment; this was exacerbated in the
year by certain traditionally Lae based transport operators
establishing a presence in Port Moresby. The Kimbe
operation was as expected also negatively affected by a
reduction in fertiliser imports for 2015 as palm oil growers
sought to reduce input costs.
JV Port Services volumes remained broadly static in 2015,
however, the business faces uncertainty in respect of the
International Terminal Operator concession tender issued
by PNG Ports in the latter part of the year. JV Port Services
were, in our and our joint venture land owner partners’
view, unfairly excluded despite many decades of service to
PNG at comparable international efficiency and tariff rate
levels under challenging infrastructure circumstances. The
business now foresees a junior partnership role in these
ports alongside an overseas operator.
The division moves into 2016 with a formidable array of
experience through a strong, well trained employee base
of 1,300 staff and a significant range of fit for purpose
equipment, and thus is well placed to meet the challenges
head on.
During 2015 the group combined the management
of its transport and port services interests together
again with the objective of securing efficiency
alignment and synergistic cost savings in the
competitive economic environment.
EAST WEST TRANSPORT (EWT)
EWT is one of the country’s main multifaceted
transport and logistics companies with a presence
in Lae, Port Moresby, Kimbe, Rabaul, Madang,
Wewak and Kavieng. The division has a sizable
fleet of prime movers, heavy trucks, light trucks,
forklifts and reach stackers 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. The Division
capitalises on its close relationship with its sister
shipping company by offering specialised project
solutions for the mining, oil and gas sectors.
JV PORT SERVICES (JVPS)
Our eight JVPS businesses offer a full range of
stevedoring and handling facilities. They operate
in the ports of Port Moresby, Lae, Alotau, 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 locations.
The stevedoring companies are joint ventures
between Steamships and local landowner groups
at the respective ports. Each joint venture employs
a local workforce and is structured in a manner so
that a share of earnings is able to filter back into the
community.
10 Steamships Annual Report 2015
REVIEW OF OPERATIONS - PROPERTY
CORAL SEA HOTELS
Coral Sea Hotels (CSH) operates nine hotel and
apartment complexes offering full hotel facilities
and serviced apartments as well as extensive
meeting, conference and banqueting facilities.
Investment was maintained in the upgrade of room
standards, Project Cambridge, with the Ela Beach Hotel
being the initial beneficiary. The project will be extended
to the Gateway through 2016 and then to other properties.
CSH remains the largest hotel group in PNG,
offering 646 hotel rooms and 135 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.
Margin declined as average revenue per available asset
for both rooms and apartments declined 6% and 7%
respectively on the prior year with the impact of a slower
economy on business travel, growing competition in Port
Moresby and Lae, budget constraints on government
department expenditure and reduced consumer
discretionary spend in restaurants all being contributory
factors. The Port Moresby hotels did however benefit from
the Steamships Gold sponsorship of the Pacific Games and
designation as “Preferred Accommodation Provider of the
Event”.
Investment in complementary food & beverage facilities
saw the opening of the Grand Papua Douglas Street Café
mid-year and the Jacksons Bar & Gaming in early 2016. In
addition Coral Sea Hotels is partnering with the Ok Tedi
Development Foundation to build and operate a new 45
bed hotel (the Cassowary) in Kiunga due to open in 2017.
Significant investment continues in staff training to
enhance the quality of service offering for customers,
together with the introduction of a website booking engine
and a free wi-fi service through most of the division’s hotels
in the year. A Pacific Privilege membership scheme was
launched mid-year with strong uptake. A number of 2015
World Luxury Hotel Awards in the Australasia and Oceania
category are testament to all these initiatives.
Plans for 2016 onwards include redevelopment of the
Melanesian and Huon Gulf Hotels in Lae, extensions for
the Highlander Hotel in Mt Hagen and a new restaurant
outlet for the Grand Papua Hotel. The year is expected to
remain competitive, especially in Port Moresby with the
opening of a new Hotel mid-year.
Steamships Annual Report 2015 11
REVIEW OF OPERATIONS - PROPERTY
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 (inclusive of its joint
venture arrangements) of 25,488m2 of commercial
property, 193,184m2 of industrial property,
36,949m2 of retail property and 160 residential
townhouses and apartments.
In recent years Pacific Palms Property has focused
investment in developments of scale and quality in good
strategic locations. These attributes have largely positioned
the business to ride out stresses created by over-supply in
some property sectors in Port Moresby and consequently
revenues held firm in 2015.
Residential rates continue to compress but occupancy
for Pacific Palms remains strong reflecting the quality of
product, especially the new Windward East apartments
which remained full throughout the year. A refurbishment
of the original Windward West apartments is nearing
completion which will see 26 upgraded apartments back in
the market by early 2016.
The Retail category was steady throughout the year except
for the unfortunate electrical fire that broke out in our new
Central Waigani development in July 2015 with extensive
damage to the rear of the property; both the build and
loss of profits are fully insured and a rebuild should be
completed by the end of 2016.
In the Industrial category at the end of 2015 a second
phase development at Baruni was completed, together with
a refurbishment of the initial phase that was damaged in
early year civil unrest – when the new coastal and Gerehu
link roads are completed, together with the continuing
port move to Motukea, it is anticipated this will become
an increasingly attractive location. During the year the
government ‘commandeered’ a significant proportion of
our Coastal Wharf facility for the new Paga Hill ring road
development for which compensation is expected.
The Commercial category saw the commissioning in June
2015 of our joint venture Harbourside Development and
by the end of 2015 a 99% occupancy had been secured
for both commercial and food & beverage outlets, albeit
the latter have been slow to complete fit outs. Within this
development Pacific Palms launched its own short stay and
serviced offices offering daily, weekly and monthly options
including administrative services.
Prospects for 2016 are expected to be relatively stable for
all categories albeit demand for older residential units is
expected to remain under pressure and leasing of industrial
units in Baruni will likely be slow until road works are
complete. A selective disposal of less strategic properties is
being undertaken and the division is partnering in two joint
ventures to develop mixed use retail/commercial centres
in Madang and Hagen to open in mid-2016 and the end
of 2017 respectively. The Directors are also considering
plans to commence a complementary Harbourside South
development.
12 Steamships Annual Report 2015
REVIEW OF OPERATIONS - COMMERCIAL
LAGA INDUSTRIES
Headquartered in Lae, Laga Industries is one
of PNG’s largest consumer goods businesses
manufacturing and distributing ice creams,
vegetable oils, drink powders, condiments and
spirits .
Brands include Gala Ice Cream, distributed from
the Gala Parlours found in most leading retail
supermarkets, Laga and Highlands Meadow oils,
Kools drinking powders, and Trade Winds spirits
including popular ready-to-drink (RTD) premixed
beverages. Laga Industries also bottles pure drinking
water.
Operationally, the Division has a fully integrated
production facility in Lae and has a freezer and
dry goods distribution facility in Port Moresby,
with sales offices in Madang, Wewak, Goroka, Mt
Hagen, Kimbe, Kavieng, Rabaul and Buka.
Laga Industries saw a significant turnaround in fortunes
following the appointment of a new General Manager who
oversaw a ‘back to basics’ approach and the completion
of an ice cream production facility transformation with
a K10 million investment in a new plant and freezer
capacity. Aside from securing a significant gross margin
improvement through improved formulation this
doubled ice cream production capacity to become the
largest facility in the Pacific, setting a positive sales and
distribution challenge for 2016.
The Food services category continued to perform well with
line extensions under review.
Vegetable oil is a commoditised product but Laga’s
Highlands Meadow Grand continues to command loyalty;
the strategy to cease domestic bottling and transition to
overseas sourcing finally bedded down in the year with
out-of-stocks only arising due to foreign exchange issues.
2016 sees the introduction of a second supplier to diversify
risk .
A divestment of the Trade Winds business failed at the end
of 2015 and management are now reviewing alternative
options .
Aside from continuing unreliable power and
telecommunications, the overhead base of the business
was significantly cut through the year, helping the division
in the face of increased competition.
While the division remains short of producing the returns
desired for the shareholders, 2015 was an important step
in re-establishing the business as PNG’s premier consumer
goods operator.
2016 is expected to see a continuing tight consumer
market and thus modest growth is anticipated, however,
new product development and production efficiency
opportunities will be pursued across all areas and
investment in physical and human assets will achieve
these .
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 .
Colgate Palmolive, a PNG joint venture, saw improved
trade volumes in Oral, Personal and Fabric Care
categories, with only the Home Care category seeing sales
compression. Margins improved principally with declining
soap chip costs .
A continuing improvement in in-store execution and an
enhanced distribution presence in second tier markets
had a positive impact on sales. The division continued
to strengthen supply chain processes and stock control
avoiding product availability problems seen in past years.
Marketing focus was maintained on consumer education
programmes in all media to promote the health benefits
of oral and personal hygiene. The “Bright Smiles, Bright
Futures” campaign for Colgate toothpaste involved a
direct interaction between Colgate Palmolive’s oral health
ambassadors and 245,000 consumers (the majority being
schoolchildren) across PNG, up from 146,000 in 2014.
Like Laga Industries 2016 is expected to see a continuing
tight consumer market and thus modest growth is
anticipated.
Steamships Annual Report 2015 13
SUSTAINABILITY
Steamships remains committed to the principles of Sustainable Development. Our People
remain our key asset and focus on their health, safety and security is paramount in all we do.
Steamships will continue to invest in the training and
development of its staff despite the slower economy.
We intend to be well positioned for when the economy
regathers steam and our team can continue to grow
Steamships .
We continue to promote community engagement
initiatives and are acutely aware of the need to minimise
our environmental footprint. We continue for a second
year to report against the Global Reporting Initiative
measures at the C level.
Steamships’ full annual Sustainability Report can be
found at http://www.steamships.com.pg/sustainability/
sustainability-reporting
CORPORATE 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:
•
•
Ensuring the safety and wellbeing of employees and
others with whom the Group has contact;
Providing high-quality products and services to meet
customers’ needs;
• Maintaining high standards of business ethics and
corporate governance; and
•
Promoting sustainable business practice.
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 2015 Annual
Report or on the Steamships’ website.
Steamships believes it complied with the Australian Stock
Exchange Corporate Governance Principles (the third
edition) during the twelve months ended 31 December
2015, except where noted in the annual Corporate
Governance Report.
Steamships’ full annual Board approved Corporate
Governance Report can be found at http://www.
steamships.com.pg/aboutus/corporategoverance
14 Steamships Annual Report 2015
STATEMENTS OF COMPREHENSIVE INCOME
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
Consolidated
Parent Entity
Note
2015
2014
2015
2014
Continuing Operations
Revenue
Other income
Operating expenses
OPERATING PROFIT
Finance income/(costs) - net
Share of profit of associates and joint ventures
PROFIT BEFORE INCOME TAX
Income tax expense
3(a)
3(a)
3(b)
3(e)
4(b)
5(a)
PROFIT FROM CONTINUING OPERATIONS
Profit after tax from discontinued operations
24
TOTAL COMPREHENSIVE INCOME FOR THE YEAR*
Attributable to:
Non-controlling interests
Shareholders
Basic and Diluted Earnings per share
Continuing & discontinued (toea)
Continuing (toea)
773,535
48,285
879,267
11,674
(660,082)
(730,630)
161,738
(25,696)
3,062
139,104
(37,710)
101,394
-
101,394
2,415
98,979
101,394
160,311
(28,808)
3,844
135,347
(37,295)
98,052
2,093
100,145
11,490
88,655
100,145
286t
279t
3(f)
3(f)
319t
319t
38,044
5,432
(4,142)
39,334
72
-
39,406
(519)
38,887
-
78,347
21,568
(4,706)
95,209
417
-
95,626
(70)
95,556
-
38,887
95,556
-
38,887
38,887
-
95,556
95,556
* There is no other comprehensive income for the consolidated group or the parent entity.
These Statements of Comprehensive Income are to be read in conjunction with the accompanying notes.
Steamships Annual Report 2015 15
STATEMENT OF CHANGES IN EQUITY
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
Share
Capital
Retained
Earnings
Other
Total Capital Controlling
Reserves & Reserves
Interest
Total
Equity
Non-
BALANCE AT 1 JANUARY 2014
24,200
698,771 (8,994)
713,977
22,907
736,884
Profit for the year
Dividends paid 2014
-
-
88,655
(66,668)
-
-
88,655
11,490
100,145
(66,668)
(3,624)
(70,292)
BALANCE AT 31 DECEMBER 2014
24,200
720,758
(8,994)
735,964
30,773
766,737
Profit for the year
Dividends paid 2015
Equity adjustment due to deconsolidation
-
-
-
98,979
(48,062)
2,206
-
-
-
98,979
2,415
101,394
(48,062)
(2,795)
(50,857)
2,206
17,122
19,328
BALANCE AT 31 DECEMBER 2015
24,200
773,881
(8,994)
789,087
47,515
836,602
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.
There is no other comprehensive income.
16 Steamships Annual Report 2015
BALANCE SHEETS
Steamships Trading Company Limited As At 31 December 2015 (Amounts in Kina 000’s)
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
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 assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Provisions for other liabilities and charges
Loans from related companies
Loan from minority shareholder
Borrowings
Income tax payable
Non-current liabilities
Deferred tax liabilities
Provisions for other liabilities and charges
Borrowings
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Capital and reserves attributable to the
Company’s shareholders
Non-controlling interests
TOTAL EQUITY
Consolidated
Parent Entity
Note
2015
2014
2015
6
7
8
9
10
11
4(a)
9
12
5(c)
13
14
9
15
15
5(e)
5(c)
14
15
16
11,538
147,830
41,008
159,755
360,131
731,596
341,359
36,458
40,349
80,491
36,914
1,267,167
1,627,298
89,456
9,970
26,690
22,933
390,836
1,407
541,292
33,426
11,770
204,208
249,404
790,696
836,602
24,200
764,887
789,087
47,515
836,602
15,273
160,551
37,060
-
212,884
714,630
400,493
33,193
153,595
80,491
33,521
1,415,923
1,628,807
101,181
12,411
13,579
17,615
42,014
3,821
190,621
32,106
11,836
627,507
671,449
862,070
766,737
24,200
711,764
735,964
30,773
766,737
1,660
1,705
-
-
3,365
26,160
-
195,360
5,712
-
182
227,414
230,779
-
-
182,592
-
-
-
182,592
-
-
-
-
182,592
48,187
24,200
23,987
48,187
-
48,187
2014
765
3,376
-
-
4,141
26,820
-
128,319
5,712
-
701
161,552
165,693
17
-
108,110
-
-
-
108,127
-
-
-
-
108,127
57,566
24,200
33,366
57,566
-
57,566
These Balance Sheets are to be read in conjunction with the accompanying notes.
For and on behalf of the Board:
31 March 2016
G.L. Cundle
Chairman
P.W. Langslow
Managing Director
Steamships Annual Report 2015 17
STATEMENTS OF CASH FLOWS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
Consolidated
Parent Entity
Note
2015
2014
2015
2014
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
797,587
933,365
1,966
Payments to suppliers and employees
(525,266)
(631,622)
(2,148)
Interest received
Interest and other finance costs paid
13,952
(41,194)
Income tax paid
5(e)
(42,258)
91
(28,899)
(50,423)
72
-
-
2,303
(2,288)
417
-
-
Net cash provided by/(used in) operating activities
18
202,821
222,512
(110)
432
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant & equipment
(108,116)
(201,328)
Proceeds from sales of property, plant & equipment
Loans repaid/(extended) to associated companies
Dividends received
Proceeds from sale of subsidiary
8,608
13,219
5,067
-
11,414
(50,494)
2,122
28,967
-
-
11,024
38,044
-
Net cash (used in)/provided by investing activities
(81,222)
(209,319)
49,068
(610)
-
(46,164)
78,337
34,795
66,358
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayments of borrowings
Dividends paid
9,208
(75,612)
(50,857)
92,626
(16,490)
-
-
-
-
(70,292)
(48,063)
(66,668)
Net cash (used in)/ provided by financing activities
(117,261)
5,844
(48,063)
(66,668)
NET INCREASE IN CASH HELD
NET CASH AT BEGINNING OF THE YEAR
NET CASH AT END OF THE YEAR
CASH COMPRISES:
Cash and cash equivalents
Bank overdrafts
6
15
4,338
(10,941)
(6,603)
11,538
(18,141)
(6,603)
19,037
(29,978)
(10,941)
895
765
1,660
15,273
1,660
(26,214)
(10,941)
-
1,660
122
643
765
765
-
765
These Statements of Cash Flows are to be read in conjunction with the accompanying notes.
18 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (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
31 March 2016.
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 2015
The following new standards and amendments were
applicable for the first time during the accounting
period beginning 1 January 2015, but did not have a
significant impact.
•
•
ii.
Annual improvements 2012 (effective 1 July
2014) makes minor changes to IFRS 2, IFRS 3,
IFRS 8, IFRS 13, IAS 16, IAS 37 and IAS 39.
Annual improvements 2013 (effective 1 July
2014) makes minor changes to IFRS 1, IFRS 3,
IFRS 13 and IAS 40.
New standards, amendment and interpretations
issued but not yet effective for the year ended 31
December 2015 or adopted early
A number of new 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
2016 or later periods, but the entity has not early
adopted them. None of these is expected to have
a significant effect in the consolidated financial
statements, but their potential full impact has yet to
be assessed.
•
•
Amendment to IFRS 11 “Joint arrangements”
on acquisition of an interest in a joint operation
(effective 1 January 2016). These amendments
provide new guidance on how to account for the
acquisition of an interest in a joint operation that
constitutes a business .
Amendments to IAS 27 “Separate financial
statements” on the equity method (effective
1 January 2016). These amendments allow
entities to use the equity method to account for
investments in subsidiaries, joint ventures and
associates in their separate financial statements.
•
•
•
•
•
Amendments to IFRS 10 “Consolidated financial
statements” and IAS 28 “Investments in associates
and joint ventures” (original effective date of
1 January 2016 now postponed ) in relation to
the sale or contribution of assets between an
investor and its associate or joint venture. The
main consequence of the amendments is that a
full gain or loss is recognised when a transaction
involves a business (whether it is housed in
a subsidiary or not). A partial gain or loss is
recognised when a transaction involves assets
that do not constitute a business, even if these
assets are housed in a subsidiary.
Annual improvements 2014 (effective 1 January
2016) makes minor changes to IFRS 5, IFRS 7,
IAS 19, and IAS 34.
Amendments to IAS 1 “Presentation of Financial
Statements” (effective 1 January 2016) clarify
guidance in IAS 1 on materiality and aggregation,
the presentation of subtotals, the structure
of financial statements and the disclosure of
accounting policies. The amendments form a part
of the IASB’s Disclosure Initiative, which explores
how financial statement disclosures can be
improved.
Amendment to IFRS 10 and IAS 28 (effective 1
January 2016) on investment entities applying
the consolidation exemption. The amendments
to IFRS 10 clarify that the exception from
preparing consolidated financial statements is
available to intermediate parent entities which
are subsidiaries of investment entities. The
exception is available when the investment entity
parent measures its subsidiaries at fair value. The
amendments to IAS 28 allow an entity which is
not an investment entity, but has an interest in an
associate or joint venture which is an investment
entity, a policy choice when applying the equity
method of accounting.
IFRS 15 “Revenue from contracts with customers”
(effective 1 January 2018) is a converged standard
from the IASB and FASB on revenue recognition.
The standard will improve the financial reporting
of revenue and improve comparability of the top
line in financial statements globally.
IFRS 9, “Financial Instruments” (effective 1
January 2018) replaces the guidance in IAS
39 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, relaxes
the requirements for hedge accounting and
introduces an expected credit losses model that
replaces the current incurred loss impairment
model.
Steamships Annual Report 2015 19
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
•
IFRS 16, “Leases” (effective 1 January 2019) replaces
IAS 17 “Leases” and removes the classification of
leases as either operating or finance leases, treating
all leases as finance leases. All leases will be brought
onto the balance sheet except for leases less than 12
months or leases of low-value assets.
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 (z).
(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 2015 and the results of all 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
20 Steamships Annual Report 2015
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 13).
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.
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.
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
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 re-measured 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.
(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 re-
measured 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.
Steamships Annual Report 2015 21
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
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.
Freight - Freight revenue is recognised as the
service has been provided.
Interest income - Interest income is recognised
using the effective interest method.
Dividend income - Dividends are recognised
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 benefit 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
measured at amortised cost using the effective
interest method, less provision for impairment. A
provision is established when there is objective
22 Steamships Annual Report 2015
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 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 .
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
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
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
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:
Land and buildings
Ships
Plant and fittings
Motor vehicles
0 - 10%
5 - 10%
10 - 33%
20 - 33%
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 buildings
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
Steamships Annual Report 2015 23
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
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 the Note 11. 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.
(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
24 Steamships Annual Report 2015
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
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.
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
(iii) Termination benefits
(u) Segment reporting
Termination benefits are payable when
employment is terminated by the Group before
the normal retirement date, or whenever an
employee accepts voluntary redundancy
in exchange for these benefits. The Group
recognises termination benefits at the earlier
of the following dates: (a) when the Group can
no longer withdraw the offer of those benefits;
and (b) when the entity recognises costs for a
restructuring that is within the scope of IAS 37
and involves the payment of termination benefits.
In the case of an offer made to encourage
voluntary redundancy, the termination benefits
are measured based on the number of employees
expected to accept the offer. Benefits falling
due more than 12 months after the end of the
reporting period are discounted to their present
value.
(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 depreciation or 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 5.7% (2014 – 5.7%).
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
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..
(w) Goods and services tax (GST)
Revenues, expenses and assets are recognised
net of the amount of associated GST unless an
exempted item. 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) Leases
Leases under which the Group assumes
substantially all the risks and rewards incidental
to ownership have been classified as finance
leases and are capitalised. The asset and
corresponding liability are recorded at inception
of the lease at the fair value of the leased asset,
at amounts equivalent to the discounted present
value of minimum lease payments including
residual values.
The finance cost is charged to the profit or loss
over the lease period so as to produce a constant
periodic rate of interest on the remaining balance
of the liability for each period.
Capitalised leased assets are depreciated over
their expected lives in accordance with rates
established for other similar assets.
Operating lease payments are representative of
the pattern of benefits derived from the leased
assets and accordingly are charged to the profit
and loss account in the periods in which they are
incurred.
(y) Rounding of amounts
Amounts in the financial statements have been
rounded off to the nearest thousand Kina.
Steamships Annual Report 2015 25
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
(z) 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
agreement from a third party, and where the
Group has a contractual obligation for dry
docking costs, the cost of future dry dockings
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
(i.e. Special or Interim), repairs considered
necessary, its age and docking history. Docking
intervals are assumed to be every 4 to 5 years.
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, 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 freight market and consequent
vehicle replacement policy gave rise to an
impairment charge in 2014 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 from observable inputs while
value in use has been determined using a post-
tax discount rate of 16% (pre-tax approximately
21%).
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 a mix of fixed
and variable rate interest. It is not the Group’s
policy to hedge cash flow and interest rate risk.
26 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
At 31 December 2015, if interest rates on
PNG Kina-denominated borrowings had been
1% higher/lower with all other variables held
constant, post-tax profit for the year would have
been K4,089,000 (2014: K4,580,000) lower/
higher, mainly as a result of higher/lower interest
expense on floating rate borrowings.
(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. Where
credit limits were exceeded during the reporting
period management has made provision for
amounts considered uncollectible.
(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 .
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
were as follows:
2015
K’000
2015
K’000
2014
K’000
2014
K’000
Undrawn Facilities
83,000
56,000
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.
1 year
K’000
& 2 years
K’000
& 5 years
K’000
years
K’000
Total
K’000
Steamships Annual Report 2015 27
Steamships Annual Report 2015 27
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
(d) Capital risk management
(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).
If one or more of the significant inputs is not
based on observable market data, the instrument
is included in level 3.
The parent entity does not hold any financial
assets other than cash and receivables.
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:
Total external borrowing &
unsecured loans
Less: Cash & Cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
2015
K’000
2014
K’000
644,667
700,715
11,538
633,129
836,602
15,273
685,442
766,737
1,469,731
1,452,179
43%
47%
28 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
3. Operating results
(a) Revenue and other income comprises:
Revenue from sale of goods
Revenue from provision of services
Dividend income
Total Revenue
Other income *
Consolidated
Parent Entity
2015
2014
2015
2014
114,754
658,781
-
114,729
764,538
-
773,535
879,267
-
-
38,044
38,044
-
-
78,347
78,347
48,285
11,674
5,432
21,568
* Other income principally represents a gain on deconsolidation of K18.8M and an insurance claim of K27.5M (2014: a gain of K7M
on the sale of Datec Limited on a consolidated basis and a gain of K17M for the parent entity).
(b) Expenses comprise:
Cost of sales
Staff costs (note 3c)
Depreciation and amortisation
Impairment of fixed assets
Impairment of other assets
Impairment of goodwill
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:
135,708
158,760
102,142
29,441
916
-
57,959
175,156
660,082
115,926
7,645
35,189
158,760
187,369
162,680
104,723
20,865
9,725
4,010
78,989
162,269
730,630
120,986
7,453
34,241
162,680
Full Time
4,292
4,159
-
-
-
-
2,214
2,613
-
-
-
-
-
-
-
-
1,928
4,142
2,093
4,706
-
-
-
-
-
-
-
-
-
-
Steamships Annual Report 2015 29
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
3. Operating results (continued)
Consolidated
Parent Entity
2015
2014
2015
2014
(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
Impairment of fixed assets*
Impairment of goodwill
Impairment of other assets
Loss on sale of property, plant and equipment
After crediting:
Gain on deconsolidation
Gain on sale of property, plant and equipment
Gain on disposal of subsidiary
Net foreign exchange transaction gains
Insurance receivable*
995
675
1,099
1,618
29,441
-
916
-
18,867
1,595
-
38
27,500
1,050
679
1,764
2,366
20,865
4,010
9,725
3,365
-
-
7,079
1,455
-
* The impairment includes a property fire loss for which an insurance recovery is expected.
(e) Cost of financing – net:
Expense*
Income
Net finance costs
* The interest expense excludes capitalised interest of K1.5M.
(f) Earnings per share
39,648
(13,952)
25,696
28,899
(91)
28,808
-
(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 & discontinued operations)
Basic earnings per share (continuing operations)
98,979
31,008
319t
319t
88,655
31,008
286t
279t
30 Steamships Annual Report 2015
10
10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,548
-
-
-
(417)
(417)
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
4.
Investments in subsidiaries, associates and joint ventures
Consolidated
Parent Entity
2015
2014
2015
2014
(a) Investments are accounted for in accordance with the policy set out in Note 1(c) and relate to:
Investments in subsidiary companies (note 20)
Investments in associates (note 21)
Investments in joint ventures (note 22)
(b) Share of after tax profit in associates and joint ventures
Share of profit in associates
Share of profit in joint ventures
5.
Income Tax
(a) Income tax expense
Current tax
Deferred tax
-
20,607
15,851
36,458
3,039
23
3,062
-
171,537
108,268
17,636
15,557
33,193
-
23,823
195,360
-
20,051
128,319
1,808
2,036
3,844
-
-
-
-
-
-
Consolidated
Parent Entity
2015
2014
2015
2014
39,783
(2,073)
37,710
45,339
(8,044)
37,295
-
519
519
-
70
70
(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 on profit before income tax
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
Tax losses
Prepayments
Property, plant and equipment
Comprising of
Deferred tax asset
Deferred tax liability
41,731
-
6,967
(1,737)
(8,665)
(586)
37,710
10,108
26,729
(8,891)
(24,458)
3,488
36,914
(33,426)
3,488
40,604
-
4,596
(448)
(2,373)
(5,084)
37,295
14,318
19,773
(2,284)
(30,392)
1,415
33,521
(32,106)
1,415
11,822
(11,413)
110
28,688
(28,871)
(38)
-
-
-
519
-
-
-
182
182
182
-
182
-
-
291
70
5
-
-
696
701
701
-
701
Steamships Annual Report 2015 31
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
5.
Income tax (continued)
(d) The gross movement on the deferred tax account is as follows:
Consolidated
Provisions
Tax losses
Prepayments
Property, plant and equipment
Total
Parent Company
Provisions
Property, plant and equipment
Total
(e) Income tax payable is represented as by:
At 1 January
Income tax provision
Income tax under/over provided
De-recognition of subsidiary
Others
Tax payments made
At 31 December
6. Cash and cash equivalents
Cash and short term deposits
Beginning
Balance
Charge to
profit
Ending
Balance
14,318
19,773
(2,284)
(30,392)
1,415
5
696
701
(4,210)
6,956
(6,607)
5,934
2,073
(5)
(514)
(519)
10,108
26,729
(8,891)
(24,458)
3,488
-
182
182
Consolidated
Parent Entity
2015
2014
2015
2014
3,821
39,783
(586)
(610)
1,257
(42,258)
1,407
7,713
45,339
3,032
-
(1,840)
(50,423)
3,821
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
Parent Entity
2015
2014
2015
2014
11,538
11,538
15,273
15,273
1,660
1,660
765
765
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
32 Steamships Annual Report 2015
Consolidated
Parent Entity
2015
2014
2015
2014
79,075
(6,082)
72,993
74,837
147,830
104,227
(5,305)
98,922
61,629
160,551
-
-
-
1,705
1,705
-
-
-
3,376
3,376
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
7. Trade and other receivables (continued)
Consolidated
Parent Entity
2015
2014
2015
2014
(i) Impaired trade receivables
As at 31 December 2015, trade receivables of K6.1M (2014: K5.3M) 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
777
5,305
6,082
Movement in the provision for impairment of trade receivables is as follows:
Opening balance
Impairments recognised during the year
Provision released
Total
5,305
1,099
(322)
6,082
1,084
4,221
5,305
6,415
1,764
(2,874)
5,305
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 the balance outstanding.
(ii) Past due but not impaired
As at 31 December 2015, trade receivables of K3M (2014: K2.9M) 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
586
2,481
3,067
546
2,310
2,856
-
-
-
-
-
-
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 three months. Collateral is not normally obtained.
Prepayments relate to advance payments for expenses not yet incurred.
Steamships Annual Report 2015 33
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
8.
Inventories
Raw materials
Work in progress
Finished goods
Provision for obsolescence
Consolidated
Parent Entity
2015
2014
2015
2014
3,650
25
40,659
(3,326)
41,008
2,720
-
37,380
(3,040)
37,060
-
-
-
-
-
-
-
-
-
-
Inventories recognised as an expense during the year ended 31 December 2015 and included in cost of sales and cost of providing
services amounted to K80.3M (2014: K77.3M). The provision for obsolescence of inventories during the year increased by K0.3M
(2014: by K1.7M increase).
9. Loans to/(from) related companies
Consolidated
Parent Entity
2015
2014
2015
2014
Current
Harbourside Development Limited
159,755
-
Non-Current
Harbourside Development Limited
Colgate Palmolive (PNG) Limited
Kelton Investments Limited
Pacific Rumana Limited
Loans to subsidiaries
Current
Loans from associates and joint ventues:
Consort Express Lines Limited’s associates
Loans from subsidiaries
-
-
500
-
-
500
5,212
5,712
-
-
500
-
-
500
5,212
5,712
-
500
-
39,849
40,349
-
152,305
500
790
-
153,595
-
40,349
153,595
(26,690)
(26,690)
-
(13,579)
(13,579)
-
-
-
-
-
(182,592)
(108,110)
(26,690)
(13,579)
(182,592)
(108,110)
The loan to Harbourside Development Limited is secured and at a commercial fixed rate of 6.5% p.a. maturing in December 2016
at which point the Directors intend to refinance with an external bank. The loan to Pacific Rumana Limited is unsecured and at a
commercial variable rate of 9.25%.
34 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
10. Property, plant & equipment
Property
Ships
Plant and
Vehicles
Total
Consolidated
2015
Cost
Accumulated depreciation (including impairment losses)
Net book value
Opening value
Additions
Disposals
Depreciation
Impairment of fixed assets
Transfers from investment properties
Closing value
2014
Cost
479,944
(86,338)
312,797
510,953
1,303,694
(173,008)
(312,752)
(572,098)
393,606
139,789
198,201
731,596
355,626
36,510
-
157,699
201,305
714,630
13,338
(6,003)
49,925
(2,777)
99,773
(8,780)
(19,369)
(25,245)
(49,641)
(94,255)
580
20,259
393,606
-
-
(611)
-
139,789
198,201
(31)
20,259
731,596
Accumulated depreciation (including impairment losses)
(108,659)
(287,323)
(213,596)
(609,578)
464,285
445,022
414,901
1,324,208
355,626 157,699
201,305
714,630
Net book value
Opening value
Additions
Sale of Subsidiary
Disposals
Depreciation
Transfers
Impairment losses
Closing value
Parent
2015
Cost
Accumulated depreciation
Net book value
Opening value
Additions
Transfers
Depreciation
Closing value
376,605
-
(150)
-
(14,075)
(6,754)
-
-
-
355,626
157,699
73,206
(48,657)
24,549
25,370
997
(147)
(1,671)
24,549
-
-
-
-
-
-
-
-
114,566
68,497
231,564
66,102
722,735
134,599
-
(10,778)
(10,928)
(251)
(13,900) (14,152)
(25,113)
(50,818)
-
(20,865)
201,305
5,686
(4,075)
1,611
1,450
695
9
(543)
1,611
(90,006)
(6,754)
(20,865)
714,630
78,892
(52,732)
26,160
26,820
1,692
(138)
(2,214)
26,160
Steamships Annual Report 2015 35
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
10. Property, plant & equipment (continued)
Property
Ships
Plant and
Vehicles
Total
Parent
2014
Cost
Accumulated depreciation
Net book value
Opening value
Additions
Disposals
Depreciation
Closing value
74,580
(49,210)
25,370
27,296
224
(109)
(2,041)
-
-
-
-
-
-
-
6,118
(4,668)
80,698
(53,878)
1,450 26,820
1,648
386
(12)
(572)
28,944
610
(121)
(2,613)
26,820
25,370 -
1,450
(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 are in the course of construction:
Property (classified as investment properties in note 11)
Ships
Plant and vehicles
Total assets in the course of construction
Consolidated
Parent Entity
2015
2014
2015
2014
52,733
6,649
20,068
79,450
34,918
31,531
20,892
87,341
-
-
-
-
-
-
-
The cost of additions in 2015 includes capitalised borrowing costs of K1.5M (2014: K4.9M) in relation to qualifying assets.
(b) Impairment losses
During the year the Directors performed an impairment review on all key assets of the Group. As a result of this assessment the
impaired charge includes Knil (2014: K20.9M) impairment on vehicles and K24.9M (2014: K3.9M) on plant and buildings. The latter
principally arose from fire damage to a building in 2015.
During 2014 impairment losses have been recognised in relation to property, plant and vehicles. A decision to close the Highlands
Highway operations of East West Transport led to an impairment charge for vehicles, while a change in manufacturing strategy
resulted in an impairment charge for plant.
There are no other further conditions that indicate impairment of property, plant and equipment as at 31 December 2015.
36 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
11. 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 in ‘Property’ within note 10.
Cost
Accumulated depreciation
Net book value
Opening value
Additions
De-recognition of subsidiary
Disposals
Transfers to property, plant & equipment
Impairment
Depreciation
Closing value
(a) Amounts recognised in profit/loss for investment properties
Rental income
Repairs and maintenance attributable to rental
properties under non-cancellable leases
Operating expenses directly attributable to rental
properties under non-cancellable leases
(b) Valuation basis
Consolidated
Parent Entity
2015
2014
2015
2014
469,342
(127,983)
341,359
400,493
9,889
(5,738)
(5,728)
(20,259)
(29,410)
(7,888)
341,359
497,697
(97,204)
400,493
343,658
66,729
-
(1,932)
6,754
-
(14,716)
400,493
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Consolidated
Parent Entity
2015
2014
2015
2014
125,104
112,927
(949)
(3,607)
(2,535)
(11,408)
-
-
-
-
-
-
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 2015 for a selected sample of representative properties
and discounted value in use assessments for hotel properties.
Included in properties are the following:
Investment properties
Other properties (note 10)
Total
NBV
341,359
393,606
734,965
Valuation Range
Lower
Higher
758,730
872,823
1,631,553
947,987
1,090,538
2,038,525
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, including use of comparable sales and capitalisation rates.
(c) Non-current assets pledged as security
Refer to note 15 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:
Within one year
Later than one year but not later than five years
Later than five years
Consolidated
Parent Entity
2015
2014
2015
2014
142,686
144,072
183,876
470,634
110,728
116,264
148,385
375,377
-
-
-
-
-
-
-
-
Steamships Annual Report 2015 37
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
12. Intangible assets
Opening value
Disposal of subsidiary
Impairment during the year
Closing value
Consolidated
Parent Entity
2015
2014
2015
2014
80,491
-
-
80,491
93,617
(9,116)
(4,010)
80,491
-
-
-
-
-
-
-
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to operating segment. The goodwill balance
of K80.5M (2014: K80.5M) is attributable to various business acquisitions in the logistics and commercial segments including
Consort (K0.5M), Laga Industries (K3.6M), Pacific Towing (K67.4M) 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 5.1%. A post-tax discount rate of 16.0% (2014: 15.9%) has been used and reflects specific risks relating to the
operating segment.
13. Trade and other payables
Trade Payables
Accruals
Other payables
Consolidated
Parent Entity
2015
2014
2015
2014
48,737
38,418
2,301
89,456
49,921
34,036
17,224
101,181
-
-
-
-
-
-
17
17
All trade and other payables are due and payable within 12 months and are recorded at their carrying value.
14. Provisions for other liabilities and charges
Opening value
Charged to profit & loss
Write off during sale of business unit
Employee
18,409
7,451
-
Dry
Dock
4,146
3,158
-
Other
1,692
-
-
2015
Total
24,247
10,609
-
Utilised during year
(7,967)
(3,457)
(1,692)
(13,116)
Closing value
Current
Non-current
17,893
6,123
11,770
17,893
3,847
3,847
-
3,847
-
-
-
-
21,740
9,970
11,770
21,740
A description of employee and dry dock provisions is disclosed in note 1p.
2014
Total
22,193
18,445
(2,326)
(14,065)
24,247
12,411
11,836
24,247
38 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
15. Borrowings
Current:
Bank overdrafts (secured)
Bank loans (secured)
Other loans (unsecured)
Other loans (secured)
Non-current:
Other loans (secured)
Bank loans (secured)
Total Borrowings
Consolidated
Parent Entity
2015
2014
2015
2014
18,141
237,695
22,933
135,000
413,769
-
204,208
204,208
617,977
26,214
15,800
17,615
-
59,629
135,000
492,507
627,507
687,136
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 5.7% (2014: 5.7%). Bank overdrafts are interest-only with no agreed repayment schedule.
Bank loans are secured loans with varying terms. The effective interest rate on other loans is 5.7% (2014: 6.2%).
The fair value of borrowings approximates their carrying amounts. Borrowing terms, margins and credit risk factors approximate
currently obtainable levels for similar facilities.
Certain borrowing facilities mature in 2016 and the Directors are currently negotiating renewal terms under a Common Deed
Terms agreement with underlying bilateral facilities. It is anticipated that renewals will be secured for a 3 to 5 year term.
16. Issued capital
Consolidated
Parent Entity
2015
2014
2015
2014
(a) Issued and paid up capital
Ordinary shares
24,200
24,200
24,200
24,200
(b) Number of shares
Number of shares
Ordinary shares
Number of shares (000’s)
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 2015 39
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
17. 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 20, 21 and 22 respectively.
(c) Directors:
G.L. Cundle, P.W. Langslow and S.C.Pelling are directors of John Swire & Sons (PNG) Limited.
(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.
Consolidated
Parent Entity
2015
2014
2015
2014
Key management personnel disclosure
Wages and salaries
Other short term benefits
Long-term benefits
(e) Material transactions:
Sales of goods and services
- Associates & joint ventures
- Key Management
- Associated Groups
Lease and rental income
- Associated Groups
Dividends received
- Subsidiaries, associates & joint ventures
Management fees income
- Associates & joint ventures
- Key Management
Purchase of goods and services
- Associates & joint ventures
- Associated Groups
- Shareholders of associated companies
Management fees paid
- Associates & joint ventures
- Other shareholders
Purchase of assets
- Associates & joint ventures
Lease rental expense
- Other Shareholders
Container/Charter hire fee
- Other Shareholders
40 Steamships Annual Report 2015
9,931
1,159
21
60,575
278
45,237
1,338
5,067
-
-
(43,236)
(5,105)
-
(421)
-
(1,138)
(6,672)
10,258
1,415
342
56,981
21
29,146
3,287
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,935
38,044
78,337
868
6
(31,653)
(106)
-
(100)
(1,548)
(830)
(291)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(145)
(15,334)
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
17. Related party disclosures (continued)
Finance Cost
- Other shareholders
Dividends paid
- Other shareholders (minority interest)
- Controlling shareholder
- Significant shareholder
Loans to/(from) related companies
- Other shareholders
Insurance premiums
- Affiliated party
Loans from related companies:
Associates and joint ventures:
Consort associates (note 9)
Consort shareholders (note 15)
Basilok Limited (note 15)
Loans to related companies:
Colgate Palmolive Limited (note 9)
Harbourside Development Limited (note 9)
Kelton Investments (note 9)
Subsidiary Companies (note 9)
Pacific Rumana Limited (note 9)
All transactions with related parties are made on normal commercial terms and conditions.
Consolidated
Parent Entity
2015
2014
2015
2014
-
(3,533)
(2,795)
(34,605)
(9,608)
(3,624)
(48,080)
(13,367)
-
-
-
-
(34,605)
(9,608)
(48,080)
(13,367)
(106,628)
(62,586)
(11,474)
(14,396)
-
-
-
-
-
-
-
-
-
-
(26,690)
(22,773)
(160)
(13,579)
(17,455)
(160)
500
159,755
-
-
39,849
500
152,305
790
-
-
500
-
-
5,212
-
500
-
-
5,212
-
Steamships Annual Report 2015 41
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
18. Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the year after tax
Depreciation and impairment
Dividend and interest income
Net loss (gain) on sale of fixed assets
Goodwill impairment
Gain on sale of investment
Gain on deconsolidation
Share of profit of associates and joint ventures
Income tax expense
Consolidated
Parent Entity
2015
2014
2015
2014
101,394
131,583
-
(1,595)
-
-
(18,867)
(3,062)
37,710
100,145
127,689
38,887
2,215
95,556
2,613
(91)
(38,044)
(78,347)
3,365
4,010
(7,097)
-
(3,844)
37,295
139
-
-
-
-
-
-
-
(17,548)
-
-
-
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
(8,548)
(3,948)
(3,393)
(12,431)
(1,184)
(13,744)
(2,414)
1,320
(1,939)
28,818
(12,440)
(37,391)
(14,005)
(2,507)
(3,892)
4,396
(3,843)
(1,717)
-
519
-
17
-
-
-
-
70
-
(195)
-
-
-
Net cash inflow from operating activities
202,821
222,512
(110)
432
19. Retirement benefit plans
The total cost of retirement benefits of the Group in 2015 was K7.6M (2014: K7.4M). 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 expatriates. 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
42 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
20. Investment in subsidiaries
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
Equity
Holdings*
2015
Equity
Holdings*
2014
Consort Express Lines Limited
Papua New Guinea
Ordinary
70.2
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 Port Services Limited
Papua New Guinea
Ordinary
Pacific Towing (PNG) Limited
Papua New Guinea
Ordinary
Pacific Rumana Limited***
Papua New Guinea
Ordinary
Pacific Rumana Mobile Investments Limited
Papua New Guinea
Ordinary
Palm Stevedoring & Transport 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
60
100
51
100
60
-
50
100
100
-
79.8
56.7
54
100
100
51
60
100
51
100
60
50
50
100
100
50
79.8
50.3
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. As at December 31, 2015 Steamships Trading
Company still has control over this entity.
*** Loss of management control from 1 January 2015 (refer to note 22).
**** Amalgamated to Steamships Limited on 30 November 2015.
Shares in subsidiary companies have been stated at cost or fair value on acquisition less dividends received from pre-acquisition
profits.
Steamships Trading Company Limited has granted a call option to a minority shareholder of Consort Express Lines in the event of
any recovery under a charter performance guarantee to enforce a proportional equity capital buy back. At 31 December 2015 the
performance guarantee obligations were substantially met.
Steamships Annual Report 2015 43
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
21. Investment in associates
(a) Movement in carrying amounts
Opening value
Share of profits before tax
Income tax expense
Dividends received
Closing value
Consolidated
Parent Entity
2015
2014
2015
2014
17,636
4,341
(1,302)
(68)
20,607
16,449
2,583
(775)
(621)
17,636
-
-
-
-
-
-
-
-
-
-
The equity method is used to account for all interests in associates on a consolidated basis.
(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:
2015
Makerio Stevedoring Limited
Nikana Stevedoring Limited
Riback Stevedoring Limited
United Stevedoring Limited
2014
Makerio Stevedoring Limited
Nikana Stevedoring Limited
Riback Stevedoring Limited
United Stevedoring Limited
Ownerships
Interest
%
31.7
31.7
34.4
16.9
Ownerships
Interest
%
23.3
23.3
25.1
12.4
Assets
Liabilities
1,374
1,230
25,597
421
28,622
469
177
7,004
365
8,015
Assets
Liabilities
916
933
18,437
179
20,465
138
48
2,510
134
2,830
Carrying
Value
905
1,053
18,593
56
20,607
Carrying
Value
779
885
15,927
45
Revenue
Profit
447
326
10,924
2,770
14,467
194
167
2,667
11
3,039
Revenue
Profit
686
364
8,620
2,208
291
198
1,311
8
17,636
11,878
1,808
The associates provide stevedoring services to various external and Group shipping entities.
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.
44 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
22. Investment in joint ventures
(a) Movement in carrying amounts
Opening value
Share of profits before tax
Income tax expense
Dividends received
New joint ventures
Closing value
Consolidated
Parent Entity
2015
2014
2015
2014
15,557
33
(10)
(5,000)
5,271
15,851
15,021
2,907
(871)
(1,500)
-
15,557
20,051
20,051
-
-
-
3,772
23,823
-
-
-
-
20,051
The interest in joint ventures is accounted for in the financial statements using the equity method of accounting.
(b) Information relating to the joint ventures is set out below.
Ownership
Interest
%
Assets
Liabilities
Carrying
Value
Revenue
Profit
2015
Colgate Palmolive (PNG) Limited
Harbourside Development
Pacific Rumana Limited
Viva No. 31 Limited
50
50
50
50
12,391
9,596
4,220
3,772
7,196
5,127
1,805
-
5,195
4,469
2,415
3,772
37,016
2,496
3,026
7,375
-
(3,390)
917
-
23
29,979
14,128
15,851
47,417
2014
Ownership
Interest
%
Assets
Liabilities
Carrying
Value
Revenue
Profit
Colgate Palmolive (PNG) Limited
Harbourside Development
50
50
11,393
3,695
7,859
-
7,698
7,859
32,989
2,036
-
-
19,252
3,695
15,557
32,989
2,036
Viva No. 31 Limited is a new joint venture company and is currently developing a commercial property in Madang. Colgate
Palmolive (PNG) Limited is a long held investment providing investment returns to the Group. Harbourside Development is a
property investment company that also has commercial property in Port Moresby. Starting 1 January 2015, the Company no
longer controls the governing of financial and operating policies of Pacific Rumana Limited due to increased participation of the
Joint Venture partner, accordingly the Company has recognised the deconsolidated related interests of Pacific Rumana Limited and
instead recognised the equity accounted investment at fair value. A gain on deconsolidation of K18.9M was recognised for which
no consideration was received. The Group’s share of the capital commitments of joint ventures at 31 December 2015 is K2.2M
(2014: K11.1 M).
There are no contingent liabilities arising from the Group’s interests in the joint ventures.
Steamships Annual Report 2015 45
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
23. Business combinations
Increase in shareholding in Consort Express Lines
On 1 July 2015, the Group merged Steamships Coastal Shipping (SCS), a division of Steamships Limited, with Consort Express
Lines Limited (CELL) and increased its shareholding from 51 % to 70.2%.
The equity (merged assets) contributed by SCS amounted to K63.5M, with the fair value of these net assets amounting to K58.5M
resulting in goodwill recorded of K5.0M. The goodwill is attributable to existing project charter arrangements. Internal goodwill is
eliminated on consolidation.
24. Discontinued Operations
On 31 July 2014, the Group disposed of its 100% interest in Datec (PNG) Ltd to Telikom PNG Ltd.
The 31 December 2014 results from the discontinued activities were derived from:
a) Profit & loss for the period were:
Revenue
Operating expenses
Profit before tax
Profit after tax
7 Months
2014
62,441
(59,156)
3,285
2,093
b) The subsequent sale for cash consideration of K36M resulted in a capital gain for the Group of K7M (parent K17M).
c) Cash flows for the period were:
Operating cash flows
Investing cash flows
Financing cash flows
10,814
2,048
(4,998)
7,864
46 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
25. 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 the manufacture and distribution of consumer products.
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 2015 is as follows:
Commercial
Hotels &
Property
Logistics
Finance &
Investment
Total
2015
External revenue
Intersegmental revenue
Interest revenue
Interest expense
114,754
822
-
(2)
273,024
31,493
-
(8)
382,747
3,010
773,535
3,157
255
-
13,697
35,472
13,952
(9,721)
(29,917)
(39,648)
Depreciation and amortisation
(4,834)
(43,229)
(51,596)
(2,483)
(102,142)
Segment results
Share of joint ventures and associates profit
Total tax expense
Profit from continuing operations
3,086
2,495
(2,015)
3,566
107,838
(2,472)
(33,864)
71,502
6,594
3,039
(20)
9,613
18,524
136,042
-
3,062
(1,811)
(37,710)
16,713
101,394
Segment assets
Segment liabilities
Net assets
Total assets includes investment in joint ventures
and associates
96,326
730,913
507,575
292,484
1,627,298
(74,954)
(358,506)
(238,795)
(118,441)
(790,696)
21,372
5,195
372,407
10,656
268,780
173,913
836,602
20,607
-
36,458
Capital expenditure
7,145
55,501
36,598
10,418
109,662
Steamships Annual Report 2015 47
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
26. Segmental reporting (continued)
2014
External revenue
Intersegmental revenue
Interest revenue
Interest expense
Depreciation and amortisation
Impairment losses
Gain on sale of properties
Commercial
Hotels &
Property
Logistics
Finance &
Investment
Total
119,147
661
-
(8)
(6,991)
(4,562)
-
278,621
34,822
-
(3,709)
(40,277)
(3,568)
-
481,332
5,332
16
(7,033)
(58,250)
(22,460)
167
-
75
879,267
40,815
91
(18,149)
(28,899)
(1,306)
(106,824)
-
(30,590)
-
11,107
-
Segment results
(15,458)
116,886
Share joint ventures and associates profit
Total tax expense
Profit from continuing operations
Segment assets
Segment liabilities
Net assets
2,036
4,521
(8,901)
85,739
(5,923)
79,816
-
(37,459)
79,427
23,265
1,808
(3,987)
21,086
6,810
-
(370)
6,440
131,503
3,844
(37,295)
98,052
780,428
504,616
294,535
1,665,318
(137,050)
(139,273)
(616,335)
(898,581)
643,378
365,343
(321,800)
766,737
Total assets includes investment in joint ventures
and associates
7,698
7,859
17,636
-
33,193
Capital expenditure
10,094
59,418
130,790
1,026
201,328
These figures include non-controlling interests share of operating profits and assets but exclude discontinued operations.
(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.
48 Steamships Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2015 (Amounts in Kina 000’s)
26. 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.
27. 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
2015
2014
2015
2014
8,936
-
8,936
25,404
23,433
48,837
-
-
-
-
-
-
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
2,513
2,779
-
-
-
-
2,513
2,779
-
-
-
-
-
-
-
-
28. Subsequent events
In March 2016 the Directors declared a final dividend of 35 toea per share payable immediately after the Annual General Meeting
on 13 May 2016 amounting to K10.8M.
Steamships Annual Report 2015 49
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 2015, the statements of comprehensive income, statement 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 2015 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 2015, and their
financial performance and cash flows for the year then ended.
50 Steamships Annual Report 2015
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 2015:
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 relationships with or interests in the Company or any of its subsidiaries other than in our capacities as
auditor and tax advisor. 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
Registered under the Accountants Act 1996
Port Moresby
31 March 2016
Steamships Annual Report 2015 51
DIRECTORS’ REPORT
Steamships Trading Company Limited Year ended 31 December 2015
Steamships Trading Company Limited and Subsidiary Companies
The Directors submit their Annual Report for the year ended 31 December 2015 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 7. 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 K98,979,000 (2014: K88,655,000).
Dividend
The Directors advise that a final dividend of 35 toea per share will be paid immediately after the Annual General Meeting on
13 May 2016. This brings the total dividend declared for the year to 130 toea per share. Dividends payable to shareholders
resident outside of Papua New Guinea will be converted to Australian Dollars at the prevailing rate which the Company is
able to secure .
Rounding Off
Amounts in the Directors’ Report and accounts have been rounded off to the nearest thousand Kina.
52 Steamships Annual Report 2015
DIRECTORS’ REPORT
Steamships Trading Company Limited Year ended 31 December 2015
Experience & Interests Register
Directors serving at the date of this report 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:
G.L. Cundle
Appointed Chairman on 28th February 2015 following W.L. Rothery’s retirement
Managing Director from 1st January 2013 to 12th January 2015
Member of the Remuneration Committee
Member of the Strategic Planning Committee
Director since 2013
Mr Cundle 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 John Swire & Sons
(PNG) Ltd. He was the Managing Director of Steamships Trading Company Limited from 1st January 2013 to 12th January
2015 .
P. Aitsi MBE
Director since 17th November 2014
Mr Aitsi is currently the PNG Country Manager for Newcrest Mining Limited and serves as a director for various Newcrest
PNG entities including the position of Chairman of Lihir Gold Limited. He was formerly the country manager for GHD
(an engineering firm), former chairman of Transparency International PNG (currently a board member) and the founder
Chairman of Digicel Foundation. He also serves on the boards of PNGFM, City Pharmacy Group, Leadership PNG and
IPBC.
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.
Sir M.R. 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, Venture Ltd and Viva No.31 Ltd.
Relevant Interest in the Company’s shares: 19.99%
Steamships Annual Report 2015 53
DIRECTORS’ REPORT
Steamships Trading Company Limited Year ended 31 December 2015
D.H. Cox OL, OBE
Managing Director 2004 to 2012
Member of the Audit & Risk Committee (wef 2015)
Member of the Strategic Planning Committee (wef 2015)
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.
G.J. Dunlop
Chairman 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 City Pharmacy
Group Ltd, Credit Corporation (PNG) Ltd, Hardware Haus Pty Ltd and Mainland Holdings Ltd.
Lady W.T. Kamit CBE
Member 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, ANZ Banking Group (PNG) Ltd and South Pacific Post Ltd.
P.W. Langslow
Managing Director from 12th January 2015
Mr Langslow joined the Swire group in September 1984 and has been with Cathay Pacific since 1985. Prior to his present
appointment, he has held a number of positions in the airline, including country and regional management roles in India,
Italy, Canada and Taiwan, as well General Manager Inflight Services and General Manager Airports. He is a director of John
Swire & Sons (PNG) Ltd and various Steamships Trading Company subsidiaries, joint ventures and associate companies.
S.C. Pelling
Finance Director & Company Secretary since 2012
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.
B.N. Swire
Director from 1 January 2015
Mr. Swire joined John Swire & Sons in 1985 and has since worked at various times in Hong Kong, Papua New Guinea and
Japan, concentrating on the Group’s marine businesses. He returned to the London Head Office in 1994 and is now the
Chairman of John Swire & Sons Ltd., as well as the Non-Executive Chairman of the China Navigation Co. Ltd., and of Swire
Oilfield Services Ltd., and a Non-Executive Director of Swire Pacific Offshore Ltd.
Direct and indirect beneficial interest 4.47%
J.H. Woodrow
Director from 7 September 2015
Mr Woodrow is Managing Director of the China Navigation Company Pte Limited (Swire Shipping). He was formerly
Director Cargo for Cathay Pacific (2013-2015) and General Manager Cargo Sales & Marketing for Cathay Pacific (2010-
2013). He joined John Swire and Sons in September 1990 and spent 15 years in the sea freight industries in Japan and
Australia. He was also a director of various companies across Asia including Air Hong Kong Ltd, Air China Cargo Ltd, Cathay
Pacific China Cargo Holdings Ltd, Cathay Pacific Services Limited.
54 Steamships Annual Report 2015
DIRECTORS’ REPORT
Steamships Trading Company Limited Year ended 31 December 2015
Remuneration of Directors
Directors remuneration received or receivable from the Company as Directors during the year, is as follows:
P. Aitsi
G. Aopi
T.J. Blackburn (retired)
M.R. Bromley
D.H.Cox
G.L. Cundle (Chairman)
G.J.Dunlop
J.W. Hughes-Hallett (retired)
W.T. Kamit
P.W. Langslow *
S.C. Pelling *
W.L. Rothery (retired)
B.N. Swire
J.H. Woodrow
2015
K’000
89
89
44
221
177
221
199
-
133
-
-
-
89
44
1,306
2014
K’000
11
99
99
152
99
-
129
99
197
-
-
246
-
-
1,131
* Executive Directors receive no fees for their services as Directors during the year.
Remuneration of Employees
The number of employees other than Directors, whose remuneration and other benefits was within the specified bands are
as follows:
Remuneration
K’000
2015
No.
2014
No.
Remuneration
K’000
2015
No.
2014
No.
Remuneration
K’000
2015
No.
2014
No.
100-110
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
320-330
7
12
6
2
3
4
6
4
-
4
2
2
3
-
1
2
5
2
1
1
1
1
3
-
13
14
6
5
9
7
6
2
3
2
5
3
2
3
1
1
6
6
1
2
1
-
330-340
340-350
350-360
360-370
370-380
380-390
390-400
400-410
410-420
420-430
430-440
440-450
450-460
460-470
470-480
490-500
500-510
520-530
530-540
540-550
550-560
560-570
580-590
2
-
2
1
1
2
4
2
-
4
1
1
-
1
1
2
2
1
2
1
1
-
1
1
1
3
6
2
-
1
1
4
5
-
2
1
-
1
1
2
1
2
2
-
2
1
590-600
600-610
610-620
620-630
630-640
650-660
670-680
680-690
700-710
710-720
730-740
740-750
750-760
790-800
820-830
890-900
950-960
970-980
1,030-1,040
1,050-1,060
1,070-1,080
1,700-1,800
1
-
2
1
1
-
-
-
-
-
1
1
-
-
2
1
2
1
-
1
-
-
-
1
1
-
-
1
1
1
2
1
-
-
1
2
-
-
1
1
1
-
1
1
For and on behalf of the Board:
Port Moresby
31 March 2016
G.L. Cundle
Chairman
P.W. Langslow
Managing Director
Steamships Annual Report 2015 55
STOCK EXCHANGE INFORMATION
Steamships Trading Company Limited Year ended 31 December 2015
Shares are listed on the Australian Securities Exchange and the Port Moresby Stock Exchange.
The Company has only one class of ordinary shares and all shares carry equal voting rights.
Shareholdings
At 29 February 2016, there were 383 shareholders.
275 Holding
Holding
80
Holding
13
Holding
14
1
1,001
5,001
10,001
-
-
-
-
1,000 shares
5,000 shares
10,000 shares
and over
The number of shareholders holding less than a marketable parcel was 14.
The 20 largest shareholders were:
Number of shares
John Swire & Sons (PNG) Limited
Bell Potter Nominees Ltd
National Superannuation Fund Ltd
Berne No 132 Nominees Pty Ltd
John E Gill Operations Pty Ltd
Citicorp Nominees Pty Limited
Kelvinside Pty Ltd
Malcolm Burns Reid
Mr Ramesh Mahtani
Hylec Investments Pty Ltd
HSBC Custody Nominees (Australia) Limited
Intercontinental Assets Pty Ltd
Engoordina Pty Ltd
Derrick Charles Whitaker
Jennifer May Forbes
Miss Shirin Moayyad
Mr Ian H Bryce & Rev Gail D Bryce
Custodial Services Limited
Mary Patricia Haughton
Mrs Judith Scottholland
22,362,651
5,760,000
1,859,446
446,494
54,727
30,192
25,000
23,067
21,700
20,494
18,070
15,000
11,078
10,348
10,000
10,000
9,178
8,768
8,161
8,161
%
72.12
18.58
6.00
1.44
0.18
0.10
0.08
0.07
0.07
0.07
0.06
0.05
0.04
0.03
0.03
0.03
0.03
0.03
0.03
0.03
30,712,535
99.05
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.
56 Steamships Annual Report 2015
Steamships Annual Report
COMPANY DIRECTORY
CHAIRMAN
G. L. Cundle §&
MANAGING DIRECTOR
P.W. Langslow
FINANCE DIRECTOR
S. C. Pelling
NON-EXECUTIVE DIRECTORS
P. Aitsi MBE
G. Aopi CBE
Sir M.R. Bromley KBE §+&
D. Cox OL, OBE +&
G. J. Dunlop +&
Lady W. T. Kamit, CBE +
B.N. Swire
J. H. Woodrow
+ Member of the Audit and Risk Committee
§ Member of the Remuneration Committee
& Member of the Strategic Planning Committee
SECRETARY
S. C. Pelling
REGISTERED OFFICE
Level 5, Harbourside West, Stanley Esplanade
Telephone: +675 313 7400
P.O. Box 1
Port Moresby, NCD
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