ANNUAL REPORT | 2022
CONTENTS
Brief Profile of Steamships Group . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . 4
Chairman’s Report . . . . . . . . . . . . . . . . . . . . . 6
Directors’ Review . . . . . . . . . . . . . . . . . . . . . 8
Review of Operations - LOGISTICS . . . . . . . . . . . 10
Consort Express Lines . . . . . . . . . . . . . . . 10
Pacific Towing . . . . . . . . . . . . . . . . . . . 11
Joint Venture Port Services . . . . . . . . . . . . . 12
EastWest Transport . . . . . . . . . . . . . . . . . 13
Review of Operations - PROPERTY AND HOSPITALITY . 14
Coral Sea Hotels . . . . . . . . . . . . . . . . . . 14
Pacific Palms Property . . . . . . . . . . . . . . . 15
Sustainability . . . . . . . . . . . . . . . . . . . . . . . 16
Corporate Governance . . . . . . . . . . . . . . . . . . 17
Financial Section . . . . . . . . . . . . . . . . . . . . . 18
Statements of Comprehensive Income . . . . . . . 18
Statements of Changes in Equity . . . . . . . . . . 19
Statements of Financial Position . . . . . . . . . . 20
Statements of Cash Flows . . . . . . . . . . . . . 21
Notes to the Financial Statements . . . . . . . . . 22
Independent Auditor’s Report . . . . . . . . . . . . . . 58
Directors’ Report . . . . . . . . . . . . . . . . . . . . . 64
Stock Exchange Information . . . . . . . . . . . . . . . 69
Company Directory . . . . . . . . . . . . . . . . . . .
IBC
BRIEF PROFILE OF STEAMSHIPS GROUP
With over 105 years of operations in Papua New Guinea, Steamships Trading Company Limited
(Steamships) is a committed investor in Papua New Guinea. The Group is a well-established
business conglomerate with diverse commercial interests and listings on both the Australian
and PNG’s National 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.
Customer Focus – Our customers are the final judges
of our success or failure. We understand and respond
to the needs of our customers.
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.
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.
Over a century after it was founded, Steamships is still
showing it has the resources and capacity, vision and
capability to meet the dynamic needs of a growing country.
Integral to this vision are the following business strategies:
•
•
•
•
•
•
The long-term development of a diversified range of
businesses in which shareholder value can be created,
Employment of staff who we believe will further our
strategic objectives and will be committed to the group
for the long term and providing them with rewarding
careers,
Operational excellence in the way we conduct our
business,
Doing business in a sustainable manner, and
Commitment to the highest standards of corporate
governance.
The Group employs over 3,100 PNG citizens and non-
citizens in diverse divisions grouped under the operating
categories of Logistics, Property and Hospitality and
Commercial and Investments. 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.
2 Steamships Annual Report 2022
BRIEF PROFILE OF STEAMSHIPS GROUP
STEAMSHIPS’ ORGANISATIONAL STRUCTURE
STEAMSHIPS TRADING COMPANY
LOGISTICS
PROPERTY AND COMMERCIAL AND
HOSPITALITY
INVESTMENTS
Consort Express
Lines
Pacific
Towing
EastWest
Transport
Port
Services
Pacific Palms
Property
Coral Sea
Hotels
Colgate
Palmolive JV
JV Port Services
(x16 JV LO Entities)
Harbourside
Development JV
Croesus
Pacific
Rumana JV
Wonye JV
Wonye No.2 JV
Viva No. 31 JV
Portside Business
Park JV
Steamships Annual Report 2022 3
FINANCIAL HIGHLIGHTS
2022 FINANCIAL HIGHLIGHTS (including discontinued operations)
2022
K’000
2021
K’000
Change
%
Revenue (including discontinued operations)
Profit attributable to shareholders
Cash generated from operations
Net cash inflow before financing
Shareholders’ funds
External Borrowings
Earnings per share (toea)
Dividends per share (toea)
Shareholders’ funds per share
Underlying profit attributable to shareholders (Refer page 8)
Underlying earnings per share
Gearing ratio
Interest cover
Dividend cover
631,262
57,985
183,519
30,096
1,027,010
263,084
563,929
90,550
187,261
9,386
1,004,684
266,065
187
120
33.12
76,075
245
292
100
32.40
67,681
218
16.5%
16.7%
53.8
23.0
1.6 2.5
12%
(36%)
(2%)
221%
2%
(1%)
(36%)
20%
2%
12%
12%
1%
134%
(36%)
4 Steamships Annual Report 2022
FINANCIAL HIGHLIGHTS
SUMMARY OF PAST PEFORMANCE
2013
K’000
2014
K’000
2015
K’000
2016
K’000
2017
K’000
2018
K’000
2019
K’000
2020
K’000
2021
K’000
2022
K’000
INCOME STATEMENT (including discontinued operations)
Revenue
930,934 941,708 773,535
732,701 705,687 648,106 585,168 540,406 563,929 631,262
Profit before tax
Share of associates profit
Income tax expense
Minority interests
Net profit attributable to shareholders
Equity adjustment
Dividends paid or provided for the year
Earnings retained this year
79,747 134,789 136,042
3,062
3,843
9,697
(37,710)
(38,487)
(14,042)
(2,415)
(11,490)
38,609
98,979
88,655
114,011
118,686
5,865
62,686 112,493
5,628
7,525
(54,420)
(35,677) (32,621)
5,828
3,926
(4,664)
69,529
41,516
84,210
(8,994)
(57,365)
47,652
-
(43,411)
45,244
2,206
(48,062)
53,123
-
-
(40,291) (32,559)
8,957
43,919
-
(26,357)
43,172
61,284
5,010
63,813
4,026
(18,928) 11,198
(182)
78,855
2,629
49,995
-
-
(44,962) (17,055)
61,800
5,033
79,786
88,248
5,062
6,288
(1,694) (26,633)
(1,456)
(1,066)
57,985
90,550
2,950
-
(35,659) (35,659)
22,326
57,841
Underlying profit attributable to shareholders
(adjusted for significant items)
128,367 108,808
80,651
71,721
61,775
43,304
31,505
36,927
67,081
76,075
BALANCE SHEET
SHARE CAPITAL & RESERVES
Issued Capital
Retained Earnings
Shareholders’ funds
Non-controlling interests
EQUITY
Fixed Assets / Investment Properties
Investments in Associated Companies
Future Income Tax Benefit
Goodwill
Other assets
TOTAL ASSETS
24,200
24,200
24,200
24,200
24,200
24,200
689,777 711,764 764,887
808,806 817,764 896,105 860,843 922,643 980,484 1,002,810
713,977 735,964 789,087 833,006 841,964 920,305 885,043 946,843 1,004,684 1,027,010
24,200
24,200
24,200
24,200
22,907
17,059
736,884 766,737 836,602 881,837 878,154 940,028 902,790 963,826 1,020,929 1,044,069
16,983
36,190
19,723
17,747
16,245
47,515
30,773
48,831
1,066,393 1,115,123 1,072,955 1,068,892 997,125 890,576 970,928 945,075 933,983 947,451
45,458
39,367
41,586
66,445
2,571
2,020
2,311
36,680
80,491
76,433 76,433
76,433
284,200 294,800 470,810 360,385 428,703 464,635 444,331
1,565,111 1,628,807 1,627,298 1,536,708 1,469,373 1,504,778 1,451,643 1,488,213 1,516,989 1,515,693
36,458
33,193
31,471
36,914
33,521
21,081
80,491
80,491
93,617
352,549 366,479 400,480
36,992
1,010
76,433
65,276
1,683
76,433
67,196
30,250
80,002
Current Liabilities
Non-Current Liabilities
TOTAL LIABILITIES
184,646 221,560 352,541 148,286 229,779 198,688 359,424
230,390 190,621 541,292
470,225 369,659 212,209 400,567 294,608 297,372 112,200
597,837 671,449 249,404
828,227 862,070 790,696 654,871 591,219 564,750 548,853 524,387 496,060 471,624
NET ASSETS
736,884 766,737 836,602 881,837 878,154 940,028 902,790 963,826 1,020,929 1,044,069
RATIOS
Current assets to current liabilities
Borrowings to shareholders funds
Gearing
Tangible net asset backing per share (Kina)
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 %
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%
43.1%
24.38
12.8%
12.5%
10.2%
155
319
260
53.7%
1.16
57.0%
34.6%
25.84
11.5%
10.1%
8.6%
130
272
231
52.2%
1.00
50.2%
33.1%
25.74
5.9%
4.9%
7.3%
110
134
199
21.6%
1.15
39.7%
28.2%
27.85
11.1%
7.6%
4.7%
165
224
140
62.1%
1.83
35.4%
19.5%
26.65
8.5%
5.6%
3.6%
80
161
102
10.1%
1.40
32.1%
13.7%
28.62
14.6%
8.3%
3.9%
80
254
119
78.4%
1.42
26.1%
16.5%
30.46
16.0%
9.0%
6.7%
100
292
218
63.8%
0.68
25.2%
16.7%
31.21
9.2%
5.6%
7.4%
120
187
245
38.5%
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 2022 5
CHAIRMAN’S REPORT
“As the effects of COVID-19 receded, businesses and the economy in Papua New Guinea
slowly recovered during 2022. Demand for goods and services increased throughout the year
with an anticipated post-COVID downturn not materialising. Steamships performance in 2022
was solid. Profit attributable to shareholders declined primarily due to property impairments
during the year. A strong underlying performance means the Group is in a good position to
benefit from Papua New Guinea’s encouraging economic growth prospects”. Geoff Cundle,
Chairman.
The organisational restructuring undertaken in response to
the COVID disruption positioned Steamships to take
advantage of improving economic conditions in 2022.
Demand
improved
for shipping and property rental
and both sectors finished the year strongly. Steamships’
hospitality group, Coral Sea Hotels, which was deeply
impacted by border closures and restrictions on domestic
travel in 2020 and 2021 saw a return to normality in
2022 and outperformed expectations. The hospitality
and property sectors will continue to contend with excess
supply, primarily in Port Moresby, until absorbed by stronger
economic growth.
Group revenue grew by 12% in 2022, attributable to Coral
Sea Hotels and Consort’s improved performance combined
with modest growth in other logistics businesses.
Profit attributable to shareholders decreased 36% to K58.0
million primarily due to property impairments during the
year. Underlying profit (before exceptional items) showed a
12% improvement over 2021 increasing to K76.1 million.
Tax payments increased on improved operating profits.
6 Steamships Annual Report 2022
Pacific Palms Properties experienced stronger demand
for residential units in the second half of the year and
a consequent rise in rental reversions. Coral Sea Hotels
outperformed expectation with a post-COVID recovery in
the domestic market. The national election did have the
anticipated negative impact upon mid-year activity. Food
and beverage margins were compressed by rising input
inflation.
Coastal shipping continued to be a highly competitive
market, however the strong global and domestic shipping
market benefitted Consort and Joint Venture Port Services.
Improved schedule
reliability and customer service
strengthened Consort’s market position. Project and charter
activity was subdued and prospects for 2023 depend upon
progress with the major resource projects. Increased harbour
towage and salvage work improved the Pacific Towing
result. EastWest Transport experienced lower aviation fuel
cartage and warehousing activity.
Pacific Palms Property’s new development, Harbourside
South, continued construction and is scheduled for phased
completion in 2023.
CHAIRMAN’S REPORT
Steamships improved underlying result reflected the resilient
growth of the non-resource sector of the Papua New Guinea
economy which is forecast for improved growth of 4.6%
in 2023 - an important indicator as Papua New Guinea
strives to support its growing population. There is growing
optimism that early-works activity for the Papua LNG project
and broader infrastructure investment should gain traction
in 2023. Steamships is well positioned to benefit from the
improving economic conditions. It remains committed to
continuous improvement in productivity and vigilant in
identifying opportunities for growth.
Papua New Guinea is our home and principal place of
business, and we will continue to actively contribute to its
economic and social development. I thank all our staff for
their commitment and personal sacrifices during what has
been a challenging few years for the entire country.
Steamships Annual Report 2022 7
DIRECTORS’ REVIEW
2022 was a stronger than expected year for Steamships as the PNG economy recovered well
from the constraints imposed as a result of the COVID-19 pandemic in 2020-21. Demand for
the Group’s products and services was robust throughout the year.
The Company however was not immune to the supply chain
constraints and inflationary pressure that prevailed globally
and these limited the progress of various property projects
and new investments.
Steamships’ sales revenue, on a continuing basis, increased
12% to K631.3 million against last year’s K563.9 million,
with improved revenue across the various businesses.
Depreciation in 2022 was K95.3 million against K93.8
million in 2021, and interest on net borrowings (excluding
capitalised interest) was K1.2 million against K4.0 million in
2021. Capital expenditure for the year was K129.2 million
against K89.7 million in 2021.
The group’s net operating cash flow generation decreased
by 2% to K183.5 million against K187.3 million in 2021.
The cash balance at year end is K52.9 million.
A final dividend of 70 toea per share has been proposed
and will be paid after the Annual General meeting on 15th
June 2023, subject to Steamships’ ability to secure foreign
exchange for non-PNG shareholders. As there was an
interim dividend paid during the year of 50 toea per share,
the total dividend for the year is 120 toea per share (2021:
100 toea per share). The dividend is unfranked and there is
no conduit foreign income.
2022
K000’s
2021
K000’s
Change
Net Profit attributable to shareholders
57,985
90,550
(36%)
Add back/(less) impact of significant items (post tax and minority interests)
Impairment of properties
Recognition of tax losses previously not recognised, net of deferred tax movements
Total impact of significant items
18,090
-
18,090
-
(22,869)
(22,869)
Underlying profit attributable to shareholders
76,075
67,681
12%
8 Steamships Annual Report 2022
DIRECTORS’ REVIEW
Significant items
In 2018 the Company entered into a lease to build and
operate the Cassowary Hotel in Kiunga. Although demand
for rooms at the hotel has seen periods of strength (notably
COVID-19 related quarantine), the current environment
(and outlook) is weak and the hotel is operating at a loss.
Discussion with the relevant Parties to provide support,
whilst initially promising, have failed to reach a mutually
satisfactory agreement, resulting in the Company making an
impairment.
The Blaikie Apartments in Lae suffered damage as a result of
the earthquake in September 2022, resulting in the Company
making an impairment. The Company has lodged a claim
with its insurer and will record the insurance proceeds upon
finalisation of the claim.
The details are as follow:
Impairment of Cassowary Hotel
Impairment of Blaikie Apartments
Less Tax Effect
Total
Coral Sea Hotels
PGK’000
21,832
4,010
(7,752)
18,090
Coral Sea Hotels (CSH) was successful in attracting guests
in greater numbers, post COVID-19, as international and
domestic travel restrictions were lifted early in the year. The
national election did have the anticipated negative impact
upon mid-year activity. Food and beverage margins were
compressed by rising input inflation. CSH continues to
expand the food and beverage offering with the opening of
new outlets (Enzo’s Pizzas) and new menu offerings. CSH
will continue to expand the Enzo’s brand in the coming
years with more outlets nationwide.
Pacific Palms Property
Pacific Palms Property’s (PPP) also experienced stronger
demand, notably in residential units, in 2022 with overall
occupancy increasing across the portfolio, with increasing
rents seen later in the year. The new development in Port
Moresby, Harbourside South, continued construction and is
scheduled for phased completion in 2023.
Logistics
The integration of the logistics businesses, comprising
Consort Express Lines shipping (CEL), EastWest Transport
(EWT), Joint Venture Port Services (JVPS) and Pacific Towing,
continued throughout the year with the aim of offering an
improved service for customers. Additional shipping, towing
and trucking capacity was added to meet the demand for
services together with more investment in IT systems.
The general cartage activity of EWT, together with depot
operations, however remained disappointing. Fuel transport
recovered, especially with the increased air traffic following
the lifting of COVID-19 restrictions. The plan for 2023 is
to strive for improved door-to-door business integrated with
CEL.
Pacific Towing provided a consistently reliable harbour
towage service throughout the year. Returns were bolstered
by salvage operations early in the year.
Commercial
The results of Colgate-Palmolive (PNG) Limited, a PNG
incorporated joint venture, also improved following the
lifting of the various COVID-19 restrictions. Inflationary
pressure and supply chain disruptions however proved
challenging. Volume sales in the Home Care category were
adversely impacted. Overall, sales revenue grew year-on-
year, albeit at a lower margin.
Trading Outlook
There is growing optimism that early-works activity for the
Papua LNG project and broader infrastructure investment
should gain traction in 2023. Steamships is well positioned to
benefit from the improving economic conditions. It remains
committed to continuous improvement in productivity and
vigilant in identifying opportunities for growth.
Steamships Annual Report 2022 9
REVIEW OF OPERATIONS - LOGISTICS
CONSORT EXPRESS LINES
Consort’s liner performance in 2022 was broadly in line
with the expectations laid out at the start of the year with
improved volumes compared to 2021. Consort’s project and
charter business again performed in line with expectation.
The impact of COVID-19 on the domestic shipping
market remained minimal throughout 2022, with demand
consistent throughout the 12-month period.
There is renewed optimism within the logistics market that
resource projects will materialise in 2023, pushing domestic
shipping volumes upwards. Several oil and gas tenders have
been circulated which are expected to come online in mid-
to-late 2023. Consort continues to further differentiate itself
through improved systems and customer service and plans
to invest in additional container and vessel assets in 2023.
Consort operates a fleet of 10 coastal vessels, all
of which are PNG flagged, and is PNG’s only
domestic operator that is ISO accredited for safety,
environment and quality.
LINER SERVICES
Consort connects 13 ports around PNG to the
main international gateway ports of Lae and Port
Moresby. The Company has scheduled services to
the North Coast, South Coast, New Guinea Islands,
Bougainville and Western Province. Consort proudly
serves the people of PNG by providing an important
supply link to many of the communities on its routes.
The Company carries 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 cargo.
In addition to owning and operating ships, Consort
manages PNG’s largest fleet of containers offering
customers easy access to a wide range of container
types.
PROJECT CHARTERS
Consort provides short and long-term vessel charters
specialising in shallow water river shipping, and
develops, implements, and supports intermodal
logistics solutions linked to land-based services such
as road transport, cargo handling, storage, customs
clearance, lay down areas and warehousing.
10 Steamships Annual Report 2022
REVIEW OF OPERATIONS - LOGISTICS
PACIFIC TOWING
Pacific Towing is PNG’s leader in the provision
of a diverse range of marine services, enjoying
a reputation for excellence and reliability across
the region. The company is a full member of the
International Salvage Union and the International
Spill Control Organisation. Core services include
towage, mooring, salvage and commercial diving.
Although primarily operating
in PNG waters,
Pacific Towing also services broader Oceania. The
company operates a fleet of 25 vessels (15 tugs and
10 associated support vessels) and has fast responder
salvage capability. Vessels are located in five ports
across PNG (being Port Moresby, Lae, Rabaul,
Kimbe and Madang) and in Honiara, Solomon
Islands. Pacific Towing is the only marine services
and towage company in PNG to be ISO accredited
for Quality, Safety and Environment.
The volume of harbour towage was steady throughout
2022 and remained consistent with 2021 figures. Non-
harbour operations had a quiet year, with a lack of salvage
opportunities of note reflecting a generally quieter salvage
market worldwide.
Pacific Towing continues its strategy of developing local
talent, recruiting cadets graduating from the Maritime
Academy of Fiji. These deck and engine cadets are now
at work on tugs aiming to eventually progress into masters
and chief engineers. The Maritime Cadetship Programme
continues to produce high quality female cadets who are
now proudly joining the Pacific Towing fleet.
Pacific Towing has committed to a re-fleeting programme
that will phase out older tugs over the next five years. The
newer tugs offer greater power and manoeuvrability, and,
by the end of the five-year re-fleeting plan, all ports will be
serviced by tugs with azimuth stern drive propulsion. Pacific
Towing purchased two new tugs in 2022 with increased
tonnage to follow in 2024/25.
Steamships Annual Report 2022 11
REVIEW OF OPERATIONS - LOGISTICS
JOINT VENTURE PORT SERVICES
JVPS performed in line with expectation and continued to
focus on offering a safe, reliable, and cost-effective service
to all customers. Security continues to be a strong focus and
technology has been deployed as a solution where possible
including biometric payroll, increased levels of surveillance,
and improved cargo tracking.
Joint Venture Hire Company, which hires out heavy
machinery on wet and dry leases, continued to provide a
reliable service to all ports and to external customers. In
2023, the focus will be on ensuring that JVPS provides an
efficient and cost-effective service as part of Steamships
Logistics. A key aspect of this will be to ensure CargoWise
is effectively used to control and track cargo movements.
throughout
the country
Joint Venture Port Services
(JVPS) operate 16
including
businesses
in the principal ports of Port Moresby and Lae,
secondary ports elsewhere on the mainland and
on Bougainville, New Ireland and New Britain. The
core port businesses offer a full range of stevedoring
and handling facilities. With a fleet of specialist
equipment, the businesses handle all types of
containers, as well as project cargo, break-bulk, RO-
RO, LO-LO, grains, and cement. The stevedoring
companies are joint ventures between Steamships
and local landowner groups at the respective ports
around the country. Each joint venture employs a
local workforce and is structured in a manner so
that a significant share of earnings is returned to
the community in which the joint ventures operate.
JVPS is the only group of stevedoring and handling
companies in PNG to be ISO accredited for Quality,
Safety and Environment. The business continues to
work hard to provide a seamless logistics solution for
customers in PNG.
12 Steamships Annual Report 2022
REVIEW OF OPERATIONS - LOGISTICS
EASTWEST TRANSPORT
for
localised workshop
East West Transport (EWT) is one of Papua New
Guinea’s largest trucking companies, providing
a range of transport related activities. It is ISO
accredited
Environmental Management,
Occupational Health & Safety and Quality. Based
in Port Moresby, EWT has operations in Lae, Kimbe,
Rabaul, Madang, Wewak, Alotau, and Kavieng. The
company has a sizable fleet of prime movers, heavy
and light trucks, forklifts and reach stackers ranging
from 2.5 to 80 tons in capacity. All equipment
is supported by
facilities,
safety teams, recovery vehicles, and emergency
response teams. EWT’s activities include bulk fuel,
containerised cargo, break-bulk cargo, and depot
services such as equipment hire, warehousing and
bonded or unbonded yard storage. EWT also offers a
licensed customs cargo clearance service in Lae and
Port Moresby with the ability to clear cargo in any
location where EWT has a presence. The division
capitalises on its close relationships with sister
companies in shipping and stevedoring by offering
specialised end-to-end and door-to-door logistics
and project solutions for the mining, oil and gas
sectors and new or existing commercial sectors.
Following trends in 2021, this was another challenging
year for EWT. General transport did however see a slight
pickup in revenue throughout 2022. Fuel cartage regained
some ground with aviation fuel volumes increasing as travel
restrictions eased in Papua New Guinea both locally and
internationally.
EWT has continued to focus on cost savings and ways to
improve customer service. There has been a particular
focus on improving operations in Lae and more effectively
integrating EWT’s operations with Consort to provide ‘door-
to-door’ delivery across the network. This has been enabled
through systems integration using CargoWise, a transport
platform that has now been rolled out at EWT following
its use in Consort. Pressure on rates is expected to remain
intense. EWT is focused on defending its market share and
modest growth is expected by more effectively providing a
‘door-to-door’ service as part of Steamships Logistics.
Steamships Annual Report 2022 13
REVIEW OF OPERATIONS - PROPERTY AND HOSPITALITY
CORAL SEA HOTELS
Coral Sea Hotels (CSH) remains the largest hotel
group in Papua New Guinea, managing seven hotels
throughout the country. The group comprises of the
Grand Papua Hotel, Gateway Hotel and Apartments,
Ela Beach Hotel and Apartments in Port Moresby,
Huon Gulf Hotel in Lae, Highlander Hotel and
Apartments in Mount Hagen, Bird of Paradise Hotel
in Goroka and Cassowary Hotel in Kiunga. The
group also operates several food and beverage (F&B)
outlets including ENZO’s Pizza, Ela Beach Bakery,
and Harbourside Bakery.
The hotel industry within PNG was severely impacted by
the COVID-19 pandemic in the past couple of years, with
many hotels closing down temporarily or permanently due
to travel restrictions and decreased demand. However,
with the ongoing vaccine rollout and the easing of travel
restrictions both locally and internationally, CSH saw a
strong bounce back in room occupancy and demand in
Food & Beverage outlets throughout 2022.
The Grand Papua Hotel (GPH) was once again the recipient
of the ‘World Luxury Hotel Award’ and for the first time
the ‘World Travel Award’, cementing GPH as the leading
business hotel in Papua New Guinea. The hotel will be
undergoing significant refurbishment over the next two years
during which public areas, guestrooms, and restaurants
will all be comprehensively upgraded. The Grand Papua
Hotel is now officially an affiliate franchise of the Radisson
Hotel Group. Customers benefit from access to Radisson’s
global loyalty programme and brand presence. This ongoing
affiliation is testament to the high level of service the hotel
offers its guests.
14 Steamships Annual Report 2022
Targeted investment into training and Food & Beverage
continues as part of CSH’s overall strategy. The new precinct
at Ela Beach Hotel, offering a bakery, ENZO’s, SALT
Restaurant and Beachside Bar continues to perform well.
The expansion of the ENZO’s chain continues with a new
store opened at Courts in September 2022. Several new
outlets are planned across Port Moresby in 2023.
the hospitality
industry being
Despite
significantly
oversupplied with hotel rooms in Port Moresby, Coral Sea
Hotels remain confident that the resource projects will
drive demand later in 2023 and beyond. The focus for CSH
continues to be delivering a consistent, high-quality, and
affordable service across all hotels and restaurants. In line
with this, Coral Sea Hotels continues to invest in upgrading
all its hotels throughout Papua New Guinea and exploring
future business opportunities.
REVIEW OF OPERATIONS - PROPERTY AND HOSPITALITY
PACIFIC PALMS PROPERTY
With a portfolio of over 200 properties across
Industrial
Residential, Commercial, Retail, and
asset classes in Port Moresby, Lae, Madang, Wewak,
Goroka, Mount Hagen, and Rabaul, Pacific Palms
Property (PPP) is one of the premier property
developers and managers in PNG.
The division continues to develop and operate
Residential, Commercial, Retail, and
Industrial
properties located in Port Moresby, Lae, Madang,
Wewak, Goroka, Mt. Hagen and Rabaul. PPP’s
strategy of making investments of scale and quality
in diversified real estate asset classes and quality in
both established and upcoming locations results in
stable revenues, net operating income, and cashflow.
In 2021, the global pandemic caused both occupancy
and rents to drop particularly in Port Moresby residential
and upmarket properties in general. By the end of 2022,
occupancy had improved across all asset classes. PPP’s
joint-venture projects in Mount Hagen, Madang and Port
Moresby are performing to expectation. PPP’s flagship
development, the Harbourside East and West precinct
in Port Moresby, finished the year at full commercial
occupancy, anchored by the tenancies of Santos (Oil Search)
and Westpac, and the mix of food and beverage offerings
has been well received. The construction of Harbourside
South continues to progress despite challenges presented by
COVID-19 and global supply chains. Upon completion, the
fully integrated Harbourside precinct will offer a range of
premium commercial, retail and residential units for lease.
The Harbourside Precinct has demonstrated the capabilities
of PPP’s Property Development team to offer end-to-end
project management of large-scale projects from feasibility
studies to handover. PPP has shown it has the ability to
operate market-leading properties. Steamships, Pacific
Palms Properties and Coral Sea Hotels have now moved
into the newly renovated @345 on Stanley Esplanade as of
October 2022.
The three-story building has become the long-term home
for Steamships (corporate head office and shared services),
Coral Sea Hotels and PPP. Both Harbourside South and @345
were built to industry leading green building standards and
will be amongst the first buildings in PNG and in the Pacific
Islands to be EDGE certified. EDGE (“Excellence in Design
for Greater Efficiencies”) is an IFC initiative to recognise
energy efficiencies and quantify financial benefits delivered
to tenants. The second half of 2022 has seen a pick-up in
rates as COVID wanes globally and the PNG economy
opens up again. With its existing portfolio of ready for
occupancy properties and its land bank of properties with
clean titles, PPP is well positioned to benefit from an uptick
in demand for real estate once resource projects ramp up.
Steamships Annual Report 2022 15
SUSTAINABILITY
Steamships’ ambition is to be a responsible private sector partner for sustainable development (SD)
within Papua New Guinea. In September 2022, the Steamships Board approved the adoption of
a five pillar approach to our sustainability strategy with the focus areas as People, Communities,
Climate, Waste, and Water. Steamships’ commitment to the principles of Sustainable Development
is essential to delivering value and social impact to Papua New Guinea.
Our people are our most important asset, and the health,
safety, and wellbeing of our staff is a top priority for the
company. Our annual workplace culture survey identified
our strong performance across key pillars
including
opportunity, wellbeing, and leadership, and was used
to inform recommendations for management to make
continued improvements.
With zero fatalities recorded across our operating businesses
in 2022, the company is focused on maintaining this safety
standard whilst working towards “Target 2”, which would
see each operating division halve its incident rate each year.
Each business unit is developing its own Target 2 action plan
with central Steamships support. Our annual Safety Day was
held in September with the theme of Target 2, and had a
special focus on Vehicular Safety and Moving Objects. The
Safety Day was attended by the Steamships executive and
safety teams and senior management from all divisions.
External parties, including three key clients, were also
invited to share their knowledge and observations.
improving
We continue to run health-related training and support
voluntary health
the
initiatives aimed at
health awareness and practices of our staff and of local
communities. With gender-based violence unfortunately
a serious and pervasive problem in Papua New Guinean
society, we maintain our support of Bel Isi PNG, a family
violence support NGO, to provide support services for our
staff, and other charities working to provide safe spaces for
survivors of family and sexual violence.
Steamships’ Community Grants Program
remains a
cornerstone of our approach to sustainable development.
In 2022, we continued to support longstanding partnerships
with organisations including Buk Bilong Pikinini, Femili
PNG, Sago Network and the Salvation Army. These ongoing
funding commitments are based on continued successful
project delivery on the part of our partner organisations,
which are carrying out valuable work across our community
engagement focus areas – social welfare (prioritising
women, children and the most marginalised), health and
education. We are also delighted to have contributed
funding to impactful new projects by Sea Women of
Melanesia, the Conflict Islands Conservation Initiative and
Gateway Children’s Fund.
to promote conservation and climate action in protected
areas across the country. Steamships is a representative of
the private sector stakeholder group on the Fund’s steering
committee and has contributed to the Fund’s governance
framework and grant-making process.
The appointment of an in-house sustainability team has
enabled us to increase our focus on the environmental
sustainability of our business activities. We continue to
keep an eye on the future, and in particular for opportunities
to support Papua New Guinea’s national sustainable
development goals relating to electrification and clean
energy
transition. Waste reduction, segregation, and
diversion has been another focus area in late 2022 and
moving into 2023. Five of our six operating businesses are
ISO accredited for Safety, Quality, and Environment, with
the remaining business targeting certification in 2023. A
focus for 2022 and 2023 is expanding the scope of our
environmental data collection, establishing a solid baseline
with a view to setting science-based targets for emissions
reduction in the near- to medium-term. It is the intention
of the Board of Directors to pass a net zero resolution in
2023. Our focus remains on outcome-orientated actions.
Responsible and sustainable energy consumption continues
to be encouraged through the regular monitoring and
reporting of energy use, water use, and environmental
emissions at an operational level.
Steamships is proud to engage with cross-sector external
partners on projects that bring community benefit and
support sustainable development within Papua New Guinea.
One valuable new initiative in 2022 was the Company’s
engagement with the PNG Biodiversity and Climate Fund, a
new fund currently incubated within UNDP and which aims
Steamships publishes an Annual SD report to complement
this Annual Report. The Annual SD Report is prepared with
reference to the updated standards of the Global Reporting
Initiative (GRI), a worldwide corporate
transparency
initiative. The report is available on the Steamships website
at www.steamships.com.pg.
16 Steamships Annual Report 2022
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:
•
•
•
Providing high-quality products and services to meet
customers’ needs;
Maintaining high standards of business ethics and
corporate governance;
Ensuring the safety and wellbeing of employees and
others with whom the Group has contact; and
•
Promoting sustainable business practice.
Steamships 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 2022 Annual
Report or on the Steamships’ website. Steamships believes
it complied with the Australian Stock Exchange Corporate
Governance Principles (the fourth edition) during the
twelve months ended 31 December 2022, except where
noted in the Corporate Governance Report.
Steamships’ Corporate Governance Report can be found
at https://www.steamships.com.pg/about-us/corporate-
governance
Steamships Annual Report 2022 17
STATEMENTS OF COMPREHENSIVE INCOME
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s)
Continuing Operations
Revenue
Other income
Operating expenses
OPERATING PROFIT
Finance income
Finance costs
Share of profit of associates and joint ventures
PROFIT BEFORE INCOME TAX
Income tax (expense) / credit
PROFIT FROM CONTINUING OPERATIONS
PROFIT FROM DISCONTINUED OPERATIONS
Consolidated
Parent Entity
Note
2022
2021
2022
2021
3(a)
3(a)
3(b)
3(e)
3(e)
4(b)
5(a)
25
631,262
563,929
-
-
(550,301)
(476,543)
80,961
13,537
(14,712)
6,288
86,074
(26,633)
59,441
-
87,386
9,817
(13,835)
5,062
88,430
(1,694)
86,736
4,880
1,032
2,036
(4,831)
(1,763)
85
-
-
(1,678)
815
(863)
-
7,323
38,305
(1,226)
44,402
98
-
-
44,500
(276)
44,224
-
PROFIT FOR THE YEAR
59,441
91,616
(863)
44,224
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
attributable to:
59,441
91,616
(863)
44,224
Non-controlling interests
Shareholders
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
attributable to owners arises from:
Continuing operations
Discontinued operations
1,456
57,985
59,441
57,985
-
57,985
Basic and Diluted Earnings per share
Continuing & discontinued (toea)
Continuing (toea)
Discontinued (toea)
3(f)
3(f)
3(f)
187t
187t
-
1,066
90,550
91,616
85,670
4,880
90,550
292t
276t
16t
-
(863)
(863)
-
44,224
44,224
(863)
44,224
-
-
(863)
44,224
These Statements of Comprehensive Income are to be read in conjunction with the accompanying notes.
18 Steamships Annual Report 2022
STATEMENTS OF CHANGES IN EQUITY
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s)
Consolidated
Share
Capital
Retained
Earnings
Other
Total Capital Controlling
Reserves and Reserves
Interest
Total
Equity
Non-
BALANCE AT 1 JANUARY 2021
24,200
962,938
(40,295)
946,843
16,983
963,826
Profit for the year
Other
Dividends paid 2021
-
-
-
90,550
2,950
(35,659)
-
-
-
90,550
2,950
1,066
91,616
-
2,950
(35,659)
(1,804)
(37,463)
BALANCE AT 31 DECEMBER 2021
24,200
1,020,779
(40,295)
1,004,684
16,245
1,020,929
Profit for the year
Dividends paid 2022
-
-
57,985
(35,659)
-
-
57,985
1,456
59,441
(35,659)
(642)
(36,301)
BALANCE AT 31 DECEMBER 2022
24,200
1,043,105
(40,295)
1,027,010
17,059
1,044,069
Parent Entity
Share
Capital
Retained
Earnings
BALANCE AT 1 JANUARY 2021
24,200
Profit for the year
Dividends paid 2021
-
-
62,260
44,224
(35,659)
(35,659)
Total
Equity
86,460
44,224
BALANCE AT 31 DECEMBER 2021
24,200
70,825
95,025
Profit for the year
Dividends paid 2022
-
-
(863)
(863)
(35,659)
(35,659)
BALANCE AT 31 DECEMBER 2022
24,200
34,303
58,503
These Statements of Changes in Equity is to be read in conjunction with the accompanying notes.
There is no other comprehensive income.
Steamships Annual Report 2022 19
STATEMENTS OF FINANCIAL POSITION
Steamships Trading Company Limited As At 31 December 2022 (Amounts in Kina 000’s)
Consolidated
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Income tax receivable
Asset held for sale
Non-current assets
Property, plant and equipment
Investment properties
Investments in related companies
Due from related companies
Income tax receivable
Intangible assets
Deferred tax assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Lease liabilities
Provisions for other liabilities and charges
Due to related companies
Due to minority shareholder
Borrowings
Non-current liabilities
Lease 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
Note
2022
6
7
8
5(e)
10
10
11
4(a)
9
5(e)
12
5(c)
13
14
15
9
16
16
14
5(c)
15
16
17
53,436
147,620
28,463
12,088
3,001
244,608
558,555
388,896
45,458
199,723
-
76,433
2,020
1,271,085
1,515,693
108,038
2,667
5,635
2,902
160
240,022
359,424
57,245
24,379
10,576
20,000
112,200
471,624
1,044,069
24,200
1,002,810
1,027,010
17,059
1,044,069
2021
(Restated)
63,788
178,295
23,009
10,000
8,234
283,326
558,568
375,415
39,367
167,682
13,627
76,433
2,571
1,233,663
1,516,989
91,804
2,080
48,239
2,787
160
53,618
198,688
59,474
18,470
9,928
209,500
297,372
496,060
1,020,929
24,200
980,484
1,004,684
16,245
1,020,929
Parent Entity
2022
2 0 2 1
-
35,908
-
38
-
35,946
25,068
-
51,752
8,909
-
-
1,657
87,386
123,332
1,677
-
-
63,152
-
-
64,829
-
-
-
-
-
64,829
58,503
24,200
34,303
58,503
-
58,503
-
39,514
-
64
-
39,578
23,592
-
51,752
9,399
-
-
661
85,404
124,982
-
-
-
29,957
-
-
29,957
-
-
-
-
-
29,957
95,025
24,200
70,825
95,025
-
95,025
These Statements of Financial Position are to be read in conjunction with the accompanying notes.
For and on behalf of the Board:
31 March 2023
G.L. Cundle
Chairman
R.P.N. Bray
Managing Director
Comparative period amounts have been restated to conform to presentations in the current year.
20 Steamships Annual Report 2022
STATEMENTS OF CASH FLOWS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s)
Consolidated
Parent Entity
Note
2022
2021
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
628,260
549,665
4,552
4,626
Payments to suppliers and employees
(437,595)
(357,467)
Interest received
Interest and other finance costs paid
Income tax paid
13,526
(14,712)
(5,960)
9,817
(13,835)
(919)
Net cash from operating activities
19(a)
183,519
187,261
-
85
-
(117)
4,520
-
98
-
(164)
4,560
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
(129,152)
(89,743)
(3,578)
(578)
Proceeds from sale of property, plant and equipment
Proceeds from disposal of subsidiaries, net of disposed cash
Investment in term deposits
6,338
-
-
-
(44,056)
8,063
Loans issued to associated companies
(33,307)
(52,327)
-
-
-
-
Dividends received
2,698
188
1,032
Net cash (used in) / from investing activities
(153,423)
(177,875)
(2,546)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
Repayments of borrowings
Loans received from subsidiaries
Loans from / (repaid) to associated companies
Lease repayments
Dividends paid
30,000
(30,000)
-
115
(2,250)
-
(42,523)
-
-
-
33,685
26,854
(2,077)
(5,987)
-
-
-
-
(36,301)
(37,463)
(35,659)
(35,659)
Net cash used in financing activities
(38,436)
(88,050)
(1,974)
(8,805)
NET DECREASE 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
16
(8,340)
61,254
52,914
53,436
(522)
52,914
(78,664)
139,918
61,254
63,788
(2,534)
61,254
-
-
-
-
-
-
-
-
-
-
-
-
These Statements of Cash Flows are to be read in conjunction with the accompanying notes.
Steamships Annual Report 2022 21
-
-
-
4,823
4,245
-
-
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
1.
Summary of significant accounting policies
o
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 2023.
The Board of Directors has the power to amend the
financial statements after their issue.
(a) Basis of preparation
The financial statements have been prepared in
accordance with the Papua New Guinea Companies
Act 1997 (as amended) and comply with International
IFRS
Financial Reporting Standards
Interpretations Committee (IFRS IC) interpretations
applicable to companies reporting under IFRS and
other generally accepted accounting practice in Papua
New Guinea. The financial statements have been
prepared under the historical cost convention.
(IFRS) and
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 Company’s
accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where
assumptions and estimates are significant to the
financial statements are disclosed in Note 1(z).
(i)
Standards,
effective in the year ended 31 December 2022
amendment
interpretations
and
following
standards, amendments and
The
interpretations
to existing standards became
applicable for the first time during the accounting
period beginning 31 December 2022:
•
A number of narrow-scope amendments to IFRS 3,
IAS 16, IAS 37 and some annual improvements on
IFRS 1, IFRS 9, IAS 41 and IFRS 16 (effective 1.1.22).
o
o
3,
to
IFRS
Amendments
‘Business
combinations’ update a reference in IFRS 3
to the Conceptual Framework for Financial
Reporting without changing the accounting
requirements for business combinations.
Amendments to IAS 16, ‘Property, plant
and equipment’ prohibit a company from
deducting from the cost of property, plant
and equipment amounts
from
selling items produced while the company
is preparing the asset for its intended use.
Instead, a company will recognise such sales
proceeds and related cost in profit or loss.
received
o
Amendments to IAS 37, ‘Provisions, contingent
liabilities and contingent assets’ specify which
costs a company includes when assessing
whether a contract will be loss-making.
22 Steamships Annual Report 2022
Annual
improvements make minor
amendments to IFRS 1, ‘First-time Adoption
of IFRS’, IFRS 9, ‘Financial instruments’, IAS
41, ‘Agriculture’ and the Illustrative Examples
accompanying IFRS 16, ‘Leases’.
•
•
Amendment to IFRS 16, ‘Leases’ – COVID-19
related rent concessions (effective 1.4.21). On 31
March 2021, the IASB published an additional
amendment to extend the date of the practical
expedient from 30 June 2021 to 30 June 2022.
IFRIC Agenda Decision - Lessor forgiveness of
lease payments (IFRS 9 and IFRS 16). In October
2022 the IASB finalised the IFRIC agenda decision
on lessor forgiveness of lease payments. The
agenda decision addresses the accounting from
the perspective of the lessor, and in particular:
o
o
how the expected credit loss (‘ECL’) model
in IFRS 9 should be applied to the operating
lease receivable when the lessor expects to
forgive payments due from the lessee under
the lease contract before the rent concession
is granted.
apply
in
whether
to
derecognition
lease
requirements
modification requirements in IFRS 16 when
accounting for the rent concession.
the
IFRS 9 or
the
The above changes did not have any material impact
on the Group.
(ii) Standards, amendments and
interpretations
issued but not yet effective for the year ended 31
December 2022 or adopted early.
following
standards,
amendments
The
and
interpretations
to existing standards have been
published and are mandatory for the entity’s accounting
periods beginning on or after 1 January 2023 or later
periods, but the entity has not early adopted them:
•
•
Narrow scope amendments to IAS 1, Practice
statement 2 and IAS 8 (effective 1.1.23). The
amendments aim to improve accounting policy
disclosures and to help users of the financial
statements to distinguish between changes in
accounting estimates and changes in accounting
policies.
Amendment to IAS 12 – Deferred tax related
to assets and liabilities arising from a single
transaction (effective 1.1.23). These amendments
require companies to recognise deferred tax
on transactions that, on initial recognition, give
rise to equal amounts of taxable and deductible
temporary differences.
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
•
•
•
Amendment to IFRS 16 - Leases on sale and
leaseback (effective 1.1.24). These amendments
include requirements for sale and leaseback
transactions in IFRS 16 to explain how an entity
accounts for a sale and leaseback after the date
of the transaction. Sale and leaseback transactions
where some or all the lease payments are variable
lease payments that do not depend on an index or
rate are most likely to be impacted.
Amendment to IAS 1 - Non current liabilities with
covenants (effective 1.1.24). These amendments
clarify how conditions with which an entity must
comply within twelve months after the reporting
period affect the classification of a liability. They
also add new disclosure requirements in relation
to covenants.
IFRS 17 ‘Insurance contracts” (effective 1.1.23)
replaces IFRS 4. IFRS 17 will fundamentally
change the accounting by all entities that issue
insurance contracts and investment contracts with
discretionary participation features.
(iii) Comparative information
Where necessary comparative figures have been
adjusted to conform to changes in presentation in
the current year and comparative purposes.
(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 Steamships
Trading Company Limited as at 31 December 2022
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 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.
The acquisition method of accounting is used to
account for business combinations by the Group (refer
to note 1(d).
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.
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
investment.
Dividends receivable from associates are recognised as
a reduction in the carrying amount of the investment.
the carrying amount of
the
When the Group’s share of losses in an associate equal
or exceeds its interest in the associate, including any
other unsecured long-term receivables, the Group
does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the
associate.
Unrealised gains on transactions between the Group
and its associates are eliminated to the extent of the
Group’s interest in the associates. Unrealised losses
are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed
where necessary to ensure consistency with the
policies adopted by the Group.
(iii) Joint ventures
Joint venture entities
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.
Interests in joint ventures are accounted for using the
equity method after initially being recognised at cost as
for associates.
Steamships Annual Report 2022 23
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
(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
the subsidiary. Acquisition-related
interest
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.
in
24 Steamships Annual Report 2022
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.
Predecessor accounting is applied for business
combinations among entities under common
control, including acquisitions of entities and
amalgamations of entities under common control.
Under this method, the financial statements of the
combined entity are presented as if the businesses
had been combined from the date when the
combining entities were amalgamated. Assets
and liabilities of the acquired or amalgamated
entity are stated at predecessor carrying values.
Fair value measurement is not required and no
new goodwill arises in predecessor accounting.
Any difference between the consideration given
and the aggregate book value of the assets and
liabilities of the acquired or amalgamated entity at
the date of the transaction is included in equity in
retained earnings.
(e) Revenue recognition
Revenue which represents income arising in
the course of the Group’s ordinary activities
is recognised by reference
to each distinct
performance obligation promised in the contract
with the customer when or as the Group transfers
the control of the goods or services promised in
a contract to the customer. Depending on the
substance of the respective contract with the
customer, the control of the promised goods or
services may transfer over time or at a point in
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
time. A contract with a customer exists when the
contract has commercial substance, the Group
and its customer have approved the contract and
intend to perform their respective obligations, the
Group’s and the customer’s rights regarding the
goods or services to be transferred and the payment
terms can be identified, and it is probable that the
Group will collect the consideration to which it
will be entitled to in exchange of those goods or
services. At the inception of each contract with
a customer, the Group assesses the contract to
identify distinct performance obligations, being
the units of account that determine when and how
revenue from the contract with the customer is
recognised. A performance obligation is a promise
to transfer a distinct good or service (or a series of
distinct goods or services that are substantially the
same and that have the same pattern of transfer)
to the customer that is explicitly stated in the
contract and implied in the Group’s customary
business practices. A good or service is distinct if:
-
-
the customer can either benefit from the good
or service on its own or together with other
readily available resources; and
the good or service is separately identifiable
from other promises in the contract (e.g.
the good or service is not integrated with,
or highly interrelated with, other goods or
services promised in the contract)
If a good or service is not distinct, the Group
combines it with other promised goods or services
until the Group identifies a distinct performance
obligation consisting of a distinct bundle of goods
or services.
As disclosed in Note 26, revenue from external
customers comes from the logistics business,
property and hospitality business, and commercial
business.
Revenue from the logistics business includes
revenue from providing the following services:
freight and shipping activities, land transport
activities, towage and salvage activities, and sale
of goods.
Revenue from freight and shipping services, land
transport services and towage services is recognised
over time as the performance obligation (in this
case transport or towage activity) is performed
taking into consideration the days of shipment. In
case of sale of goods (such as containers), revenue
is recognised at a point of time.
Payment terms for freight and shipping services
and land transport services are typically 30 days;
payment terms for towage services are typically
within 30 days after completion of service delivery.
Salvage revenue is recognised over time as the
performance obligation (in this case salvaging
activity) is performed, based on the days of
provision of service, or at a point of time (upon
completion of the salvage job), depending on the
nature of the salvage activity and the contractual
terms. The Group recognises salvage revenue over
time if the customer simultaneously receives and
consume the benefits provided by the Group’s
performance as the Group performs. In such cases,
the Group typically has a right to payment based
on work performed until the reporting date. The
Group recognises salvage revenue at a point in
time when the customer does not simultaneously
receive and consume the benefits provided by
the Group’s performance as the Group performs
and has no enforceable right to payment for
performance completed to date.
Payment terms for salvage work vary between
one and three months. Where salvage work
is completed but the amount of proceeds is
not known at the reporting date, revenue is
determined on the basis of expected proceeds
taking
into account estimation uncertainty.
The estimated amount of consideration will be
recognised as revenue only to the extent that it is
highly probable that a significant reversal in the
amount of cumulative revenue recognised will not
occur when the uncertainty associated with the
consideration is subsequently resolved.
to
incurs costs needed
The Company
fulfil
salvage contracts and defers these costs incurred
directly related to salvage work, if their recovery
is considered probable based on management’s
assessment. If management’s assessment suggests
the expenses is not expected to be recovered, the
estimated unrecoverable portion is expensed when
incurred. Probability of recoverability of initially
recognised deferred salvage costs is assessed at
the end of each reporting period. In the reporting
period when management’s assessment suggests
that these expenses will not likely be recovered by
revenues i.e. the related contract asset is deemed
impaired, the estimated unrecoverable portion is
expensed. Deferred salvage costs are amortised
in profit or loss on a systematic basis consistent
with the pattern of recognition of the associated
revenue.
Revenue from the hotels business from provision
of services is recognised over time based on the
days of provision of service; payments for provided
Steamships Annual Report 2022 25
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
services are made upon service delivery. Revenue
from sale of goods in hotels business is recognised
at a point in time upon delivery of goods under
typical credit term of 30 days or in cash. Lease
income from the property business is recognised
on a straight-line basis over the term of the lease.
Revenue from the commercial business relates to
sale of goods and is recognised when the goods are
accepted by the customers, under typical payment
terms of 30 days after the delivery of goods.
The following other income is recognised across
the Group as follows:
Interest income
Interest income is recognised using the effective
interest method.
Dividend income
Dividends are recognised when the right to receive
payment is established.
(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.
(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.
(f) Income tax
(j) Non-current assets held for resale
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 on temporary
differences arising between the tax bases of
assets and liabilities and their carrying amounts
in the financial statements. Deferred tax is not
recognised if it arises from the initial recognition
of goodwill or the initial recognition of an asset or
liability in a transaction which is not a business
combination and at the time of the transaction,
affects neither accounting profit nor taxable profit
(tax loss). 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 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 an original maturity of up to 3 months. Bank
overdrafts are shown in current liabilities in the
statement of financial position.
26 Steamships Annual Report 2022
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
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
assets in the statement of financial position. The
liabilities of a disposal group classified as held for
sale are presented separately from other liabilities
in the statement of financial position.
A discontinued operation is a component of the
entity that has been disposed of or is classified as
held for sale and that represents a separate major
line of business or geographical area of operations,
is part of a single coordinated plan to dispose of
such a line of business or area of operations, or
is a subsidiary acquired exclusively with a view
to resale. The results of discontinued operations
are presented separately in the statement of
comprehensive income.
(k) Financial assets
The Group classifies all of its financial assets in
the measurement category ‘Financial assets at
amortised cost’.
The Group classifies
its financial assets at
amortised cost when the asset is held within a
business model whose objective is to collect the
contractual cash flows and the contractual terms
give rise to cash flows that are solely payments of
principal and interest (“SPPI”). Financial assets of
the Group that fall under this category are trade
and other receivables, bank balances, deposits
and cash, and loans to related companies.
At initial recognition, the Group measures a
financial asset at its fair value plus transaction costs
that are directly attributable to the acquisition
of the financial asset. Interest income from these
financial assets is included in finance income
using the effective interest rate method. Any gain
or loss arising on derecognition is recognised
directly in profit or loss and presented in other
gains and losses together with foreign exchange
gains and losses.
As of 31 December 2022 and 31 December
2021, the Group had no financial instruments
classified as financial assets at fair value through
other comprehensive income (“FVOCI”) - Equity
instruments or financial assets at fair value through
profit or loss (“FVTPL”).
Regular way purchases and sales of financial
assets are recognised on trade-date, the date on
which the Group commits to purchase or sell the
asset. Financial assets are derecognised when the
rights to receive cash flows from the financial
assets have expired or have been transferred and
the Group has transferred substantially all the risks
and rewards of ownership.
Financial assets are classified as current assets for
those having maturity dates of not more than 12
months after the end of the reporting period, and
the balance is classified as non-current.
Impairment of financial assets
The Group recognises an allowance for expected
credit losses (“ECLs”) for all debt instruments and
financial guarantee contracts issued. ECLs are
based on the difference between the contractual
cash flows due in accordance with the contract
and all the cash flows that the Group expects to
receive, discounted at an approximation of the
original effective interest rate. The expected cash
flows will include cash flows from the sale of
collateral held or other credit enhancements that
are integral to the contractual terms. For financial
guarantee contracts, the ECL is the difference
between expected payments to reimburse the
holder of the guarantee debt instruments less any
amounts the company expects to recover from the
other party.
ECL is measured based on either the general
3-stage approach or the simplified approach.
The general 3-stage approach is applied for loans
to related parties and financial guarantee contracts
issued.
For credit exposures for which there has not been
a significant increase in credit risk since initial
recognition, ECLs are provided for credit losses
that result from default events that are possible
within the next 12-months (a 12-month ECL). For
those credit exposures for which there has been
a significant increase in credit risk since initial
recognition, a loss allowance is required for credit
losses expected over the remaining life of the
exposure, irrespective of the timing of the default
(a lifetime ECL).
trade receivables,
the Group applies a
For
simplified approach in calculating ECLs. The
Group does not track changes in credit risk, but
instead recognises a loss allowance based on
lifetime ECLs at each reporting date. The Group
has established a provision matrix that is based on
its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and
the economic environment.
Collective assessment
To measure ECL, trade receivables and other
receivables have been grouped based on shared
credit risk characteristics, such as days past due.
Steamships Annual Report 2022 27
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
Individual assessment
Trade receivables, other receivables and amounts
due from related parties which are in default or
credit-impaired are assessed individually.
(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. Land is not depreciated. Depreciation on
other items of property, plant and equipment 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:
Buildings
Ships
Plant and fittings
Motor vehicles
2 – 4%
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 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
28 Steamships Annual Report 2022
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.
is capitalised and assessed
Goodwill
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
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
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
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
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
departures 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.
(iii) Termination benefits
are
benefits
Termination
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 recoverable amount, which
is determined as the higher of an asset’s fair
value less costs to sell and its value in use. For
the purpose of assessing impairment, assets are
grouped at the lowest levels for which there are
separately identifiable cash flows (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 3.92% (2021 – 4.13%).
(u) Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
Steamships Annual Report 2022 29
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
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. 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 statement of financial position.
(x) Leases
Leases are recognised as a right-of-use asset and
a corresponding liability at the date at which the
leased asset is available for use by the Group.
Each lease payment is allocated between the
liability and finance cost. The finance cost is
charged to 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. The right-of-use asset is depreciated over
the shorter of the asset’s useful life and the lease
term on a straight-line basis.
Assets and liabilities arising from a lease are
initially measured on a present value basis. Lease
liabilities include the net present value of the
following lease payments:
•
•
•
•
fixed payments
in-substance
fixed payments), less any lease incentives
receivable;
(including
variable lease payments that are based on an
index or a rate;
amounts expected to be payable by the lessee
under residual value guarantees;
the exercise price of a purchase option if the
lessee is reasonably certain to exercise that
option, and
•
payments of penalties for terminating the
30 Steamships Annual Report 2022
lease, if the lease term reflects the lessee
exercising that option.
The lease payments are discounted using the
interest rate implicit in the lease, if that rate can be
determined, or the group’s incremental borrowing
rate.
Right-of-use assets are measured at cost comprising
the following:
•
•
the amount of the initial measurement of lease
liability;
any lease payments made at or before the
commencement date less any lease incentives
received;
• any initial direct costs, and
•
restoration costs.
Payments associated with short-term leases and
leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise IT-
equipment and small items of office furniture.
Extension and termination options are included
in a number of property and equipment leases
across the Group. These terms are used to
maximise operational flexibility
terms of
managing contracts. The majority of extension and
termination options held are exercisable only by
the Group and not by the respective lessor.
in
In determining the lease term, management
considers all facts and circumstances that create
an economic incentive to exercise an extension
option, or not exercise a termination option.
Extension options (or periods after termination
options) are only included in the lease term if
the lease is reasonably certain to be extended
(or not terminated). The assessment is reviewed
if a significant event or a significant change in
circumstances occurs which affects this assessment
and that is within the control of the lessee.
(y) Rounding of amounts
Amounts in the financial statements have been
rounded off to the nearest thousand Kina.
(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
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
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.
These calculations require the use of estimates as
further detailed in Note 12.
(ii) Estimated impairment of property, plant and
equipment
The Group tests the recoverable amount of
property, plant and equipment when impairment
indicators are identified. Where an indicator of
impairment is identified, the recoverable amount
is determined using the higher of fair value less
cost to sell and its value in use. Fair value is
information,
determined using market-based
while value in use is determined using a pre-tax
cashflow projections and discount rate. Refer to
Note 10.
(iii) Deferred tax assets relating to carry forward
tax losses
losses
is complex and
The analysis of the recognition and recoverability
of the deferred tax assets relating to carry forward
tax
judgmental and
estimating future taxable income is based on
assumptions that are affected by expected future
market or economic conditions. For management’s
judgments in relation to recoverability of deferred
tax assets, refer to Note 5.
(iv) Incremental borrowing rate relating to lease
liabilities
the weighted average
As disclosed in Note 14, management assessed
interest rate on
that
collateralized borrowings obtained from financial
institutions during 2022 and previous years of
4.5% approximates the incremental borrowing
rate at the date of initial adoption of IFRS 16 and at
31 December 2022. Therefore, this rate has been
used for discounting lease payments arising from
state land leases and property leases. In making
this judgment, management considered the period
of leases (including extension and termination
options), the quality of leased assets compared to
assets used as collateral for relevant borrowings
and made an assessment whether any adjustments
to the weighted average rate on borrowings are
needed to reflect differences in secured assets,
lease periods compared to maturity of borrowings,
and other
incremental
borrowing rate. Based on assessment performed,
management concluded that the average weighted
interest rate on borrowings of approximately 4.5%
p.a. approximates the rate that the Group would
expect to borrow to acquire the right-of-use assets
in relation to land leases and property leases. If
the incremental borrowing rate were 1% higher/
(lower), lease liabilities as of 31 December 2022
would be K4.5 million lower and K9.3 million
higher, respectively (2021: K5.0 million lower and
K9.4 million higher).
factors affecting
the
(v) Net current liabilities
The financial statements for the year ended 31
December 2022 have been prepared on a going
concern basis which contemplates the realisation
of assets and settlement of liabilities in the normal
course of business as they become due.
As at 31st December 2022 the Company has a
Net Current Liability position of K114.8 million.
This arises due to the maturity of the Company’s
loan facilities with Westpac PNG Limited and
ANZ Banking Group (PNG) Limited in August and
November 2023, respectively. The drawn balances
from non-current
are
liabilities to current liabilities. The Company is
confident that these loan facilities will be renewed
on or before maturity. Alternatively, the Company
will use a combination of operating cash flows and
facilities with other banks to meet all its current
liabilities.
re-classified
therefore
2. Financial risk management
The Group’s activities expose it to a variety of financial
risks including market risk (including currency, and
Steamships Annual Report 2022 31
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
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 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.
At 31 December 2022, 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 K3.6
million (2021: K3.6 million) lower/higher, mainly
as a result of higher/lower interest expense on
floating rate borrowings.
(b) Credit risk
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.
The Group has the following types of financial
assets that are subject to the expected credit
loss model: trade receivables, other receivables
(including intercompany receivables) and loans to
related parties. While cash and cash equivalents
are also subject to the impairment requirements of
IFRS 9, impairment loss is immaterial.
respectively and
The Group applies the IFRS 9 simplified approach
to measuring expected credit losses, for all
financial assets, other than loans to related parties
and other receivables. To measure the expected
credit losses, trade receivables have been grouped
based on shared credit risk characteristics and the
days past due. The expected loss rates are based on
the payment profiles of sales over a period of 36
months before 31 December 2022 or 31 December
2021
the corresponding
historical credit losses experienced within this
period. The historical loss rates are adjusted to
reflect current and forward- looking information
on macroeconomic factors affecting the ability of
the customers to settle the receivables. The Group
has analysed GDP and employment rate of PNG
to be the most relevant factors, and accordingly
adjusts the historical loss rates based on expected
changes in these factors. Management concluded
that the impairment provision for trade receivables
is not materially affected by changes in GDP and
employment rate.
For loans to related parties and other receivables,
the Group applies a ‘three-stage’ model for
impairment based on changes in credit quality
since initial recognition, as summarised below:
•
A financial instrument that is not credit-
impaired on initial recognition is classified in
‘Stage 1’ and has its credit risk continuously
monitored by the Group.
The Group has no significant concentration
•
If a significant increase in credit risk (‘SICR’)
32 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
initial recognition
since
the
financial instrument is moved to ‘Stage 2’ but is
not yet deemed to be credit impaired.
identified,
is
•
•
If the financial instrument is credit-impaired,
the financial instrument is then moved to ‘Stage
3’.
Financial instruments in Stage 1 have their ECL
measured at an amount equal to the portion
of lifetime expected credit losses that result
from default events possible within the next 12
months. Loans in Stages 2 or 3 have their ECL
measured based on expected credit losses on a
lifetime basis.
Forward- looking information incorporated in the
model includes GDP Growth (%) of Papua New
Guinea economy.
The Group considers a loan or other receivable to
have experienced a significant increase in credit
risk when one or more of the following quantitative
and qualitative criteria have been met: delay in
payment of over 30 days, early signs of cash flow/
liquidity problems, significant adverse changes in
business, financial and/or economic conditions in
which related party operates, actual or expected
forbearance or restructuring, significant change in
collateral value (for collateralised loans).
The Group defines a financial instrument as in
default, which is fully aligned with the definition of
credit- impaired, when it meets one or more of the
following criteria: delay in payment of over 90 days,
significant financial difficulty of related party (such
as long-term forbearance, insolvency, or probability
of bankruptcy). A loan or other receivable is
considered to no longer be in default (i.e. to have
cured) when it no longer meets any of the default
criteria at the reporting date.
The Expected Credit Loss (ECL) is measured on either
a 12-month (12M) or Lifetime basis depending on
whether a significant increase in credit risk has
occurred since initial recognition or whether an
asset is considered to be credit-impaired.
All of the Group’s loans to related parties as at
31 December 2022 and 31 December 2021 are
classified in ‘Stage 1’. Further, management assessed
that no material impairment provision on loans to
related parties is necessary given the following:
•
•
•
•
Loans to related parties are repayable on
demand and the Group expects to be able to
recover the outstanding balance of related
loans, if demanded;
Loans to related parties have not had significant
increase in credit risk since the loans were first
recognised;
There are no historic losses or write offs on
these loans;
As a result, impairment provision is based on
12-month expected credit losses, which results
in immaterial impairment provision.
Similarly, the Group’s other receivables as at 31
December 2022 and 31 December 2021 are
classified in ‘Stage 1’, as they are either current or
overdue up to 30 days, and the Group has not noted
a significant increase in credit risk.
(c) Liquidity risk
liquidity
risk management
Prudent
implies
maintaining sufficient cash and the availability of
funding through an adequate amount of committed
credit facilities. The Group manages liquidity risk
by maintaining sufficient bank balances to fund its
operations and the availability of funding through
committed credit facilities.
Management monitors rolling forecasts of the
Group’s liquidity reserve on the basis of expected
cash flows.
Undrawn finance facilities as of 31 December were
as follows:
2022
K’000
2021
K’000
Undrawn Facilities
274,900
273,000
The table on top of page 34 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.
Steamships Annual Report 2022 33
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
Less than
1 year
K’000
Between 1
& 2 years
K’000
Between 2
& 5 years
K’000
Over 5
years
K’000
Total
K’000
Carrying
amount
K’000
At 31 December 2022
Borrowings
Borrowings from minority shareholders
Borrowings from related parties
Trade and other payables
Lease liabilities
At 31 December 2021
Borrowings
Borrowings from minority shareholders
Borrowings from related parties
Trade and other payables
Lease liabilities
(248,073)
(990)
(20,814)
(160)
(2,960)
(108,038)
(5,296)
(364,527)
-
-
-
-
-
-
(5,296)
(6,286)
(12,125)
(32,939)
(115,725)
(115,725)
-
-
-
-
(56,031)
(217,976)
(160)
(2,843)
(91,804)
(4,809)
-
-
-
(4,809)
(155,647)
(222,785)
-
-
-
-
-
-
-
-
(13,258)
(13,258)
(117,891)
(117,891)
(269,877)
(260,022)
(160)
(2,960)
(108,038)
(138,442)
(519,477)
(160)
(2,902)
(108,038)
(59,912)
(431,034)
(274,007)
(263,118)
(160)
(2,843)
(91,804)
(140,767)
(509,581)
(160)
(2,787)
(91,804)
(61,554)
(419,423)
The Group does not hold derivative financial instruments.
(d) Capital risk management
The Group’s objectives when managing capital are to
safeguard the Group’s ability to continue as a going
concern in order to provide returns to shareholders
and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing
ratio. This ratio is calculated as net debt divided by total
capital. Net debt is calculated as external borrowings
and unsecured loans less cash and cash equivalents.
Net debt for the purposes of the gearing ratio does not
include lease liabilities, trade and other payables and
provisions for other liabilities and charges. 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:
2022
K’000
2021
K’000
Total external borrowing
and unsecured loans
Less: Cash & Cash
equivalents
Net debt
Total equity
Total capital
Gearing ratio
263,084
266,065
53,436
209,648
1,044,069
1,253,717
17%
63,788
202,277
1,020,929
1,223,206
17%
34 Steamships Annual Report 2022
to
is subject
to certain covenants
The Group
its external borrowings.
related primarily
Non-compliance with such covenants may
result in negative consequences for the Group
including declaration of default. The Group was
in compliance with covenants as at 31 December
2022 and 31 December 2021, as well as during
respective years.
(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 Group does not hold any financial assets at
fair value.
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
3. Operating results
(a) Revenue and other income comprises:
Revenue from contracts with customers
- Revenue from sale of goods
- Revenue from provision of services
Lease income
Dividend income
Total Revenue
Consolidated
Parent Entity
2022
2021
2022
2021
63,334
459,154
108,774
-
53,578
404,464
105,887
-
631,262
563,929
-
-
-
-
-
-
1,032
1,032
7,323
7,323
Other income (net)*
-
-
2,036
38,305
* Other income includes royalties, management fees and gain on sale of a subsidiary.
The Group’s revenue from contracts with customers are recognised at a point in time and over time. Most of the revenue from the
provision of services is recognised over time, while revenue from sale of goods is recognised at a point in time. Further disaggregation
of revenue by segment is provided at Note 26.
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied)
as of 31 December 2022 that relates mostly to shipping and freight services which commenced in late 2022 and will be finalised
within January 2023 is K2.8million (2021: K1.8 million).
(b) Expenses comprise:
Cost of sales
Staff costs (note 3c)
Depreciation and amortisation
Impairment of properties
Impairment / (Reversal of impairment) of vessels
Fixed Assets write off
Electricity and fuel
Insurance
Security cost
Motor vehicle expenses
Other operating expenses/ (income) -net
Total operating expenses
(c) Staff costs:
Wages and salaries
Retirement benefit contributions
Accommodation and other benefits
Number of staff employed by the Group at year end:
Full Time
2,705
2,507
113,742
132,189
-
-
-
-
93,774
2,102
2,088
113,327
148,887
95,279
25,842
767
-
51,869
7,405
13,017
29,669
64,239
-
(4,370)
100
34,680
6,639
12,063
18,536
69,190
550,301
476,543
114,375
5,175
29,337
148,887
110,209
5,062
16,918
132,189
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,729
4,831
(862)
1,226
-
-
-
-
-
-
-
-
-
-
Steamships Annual Report 2022 35
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
3. Operating results (continued)
Consolidated
Parent Entity
2022
2021
2022
2021
(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 provided
Impairment of properties
Donations
After crediting:
1,141
489
1,461
25,842
1,353
1,046
1,083
5,379
-
1,103
Gain on sale of property, plant and equipment
Bad and doubtful debts released
(534)
(968)
(2,063)
(1,484)
-
-
-
-
-
-
-
(e) Cost of financing – net:
Interest expense*
Interest income
Net finance costs
14,712
(13,537)
1,175
13,835
(9,817)
4,018
-
(85)
(85)
-
-
-
-
-
-
-
-
(98)
(98)
*The interest expense excludes capitalised interest which is Knil in 2022 (2021: Knil).
(f) Earnings per share
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 and discontinued)
Basic earnings per share (continuing)
Basic earnings per share (discontinued)
4.
Investments in subsidiaries, associates and joint ventures
Consolidated
2022
2021
57,985
31,008
187 toea
187 toea
-
90,550
31,008
292 toea
276 toea
16 toea
Consolidated
Parent Entity
2022
2021
2022
2021
(a) Investments are accounted for in accordance with the policy set out in Note 1(c) and relate to:
Investments in subsidiary companies (note 21)
Investments in associates (note 22)
Investments in joint ventures (note 23)
(b) Share of after tax profit in associates and joint ventures
Share of profit in associates
Share of profit in joint ventures
-
5,593
39,865
45,458
249
6,039
6,288
-
51,752
51,752
5,541
33,826
39,367
199
4,863
5,062
-
-
-
-
51,752
51,752
-
-
-
-
-
-
36 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
5.
Income tax
(a) Income tax expense / (credit)
Current tax
Deferred tax
Adjustments for current and deferred tax of prior periods
Tax losses utilised in current year - previously unrecognised
Recognition of deferred tax asset for previously
unrecognised tax losses
Consolidated
Parent Entity
2022
2021
2022
2021
30,710
(6,549)
3,654
(1,182)
-
26,633
25,128
178
14,488
(25,600)
(12,500)
1,694
166
(979)
(2)
-
-
257
(149)
168
-
-
(815)
276
(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
25,822
26,529
Non-taxable income - dividends
Expenses not deductible for tax
Tax losses utilised in current year – previously unrecognised
Income not assessable for tax
-
185
(1,182)
(1,846)
-
146
(25,600)
(1,966)
Adjustments for current and deferred tax of prior periods
3,654
14,488
Recognition of deferred tax asset for previously unrecognised
tax losses
Others
(c) The deferred tax (liability)/asset comprises:
Provisions
Tax losses
Lease liabilities
Prepayments and consumables
Property, plant and equipment
Right-of-use assets
Deferred tax asset
Deferred tax liability
-
-
26,633
(12,500)
597
1,694
14,754
-
17,972
(11,800)
(33,158)
(10,127)
(22,359)
2,020
(24,379)
(22,359)
13,301
12,500
18,466
(8,147)
(34,582)
(17,437)
(15,899)
2,571
(18,470)
(15,899)
(503)
(310)
13,350
(2,197)
-
-
-
(2)
-
-
(815)
934
-
-
-
723
-
1,657
1,657
-
1,657
-
-
(11,045)
168
-
-
276
-
-
-
-
661
-
661
661
-
661
Steamships Annual Report 2022 37
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
5.
Income tax (continued)
(d) The gross movement on the deferred tax account is as follows:
Consolidated
Provisions and accruals
Tax losses
Lease liabilities
Prepayments & consumables
Property, plant and equipment
Right-of-use assets
Total
Parent Company
Property, plant and equipment
Loan receivable
Total
(e) Income tax (receivable)/ payable is represented as by:
At 1 January
Income tax provision
Prior year under/(over) provisions
Utilisation of previously unrecognised tax losses - Note 5(b)
Utilisation of previously recognised tax losses
Utilisation of interest withholding tax
Others
Tax payments made
Classified as:
- Current
- Non-current
6. Cash and cash equivalents
Cash and short-term deposits
Beginning
Balance
Charge to
profit
Ending
Balance
13,301
12,500
18,466
(8,147)
(34,582)
(17,437)
(15,899)
1,453
(12,500)
(494)
(3,653)
1,424
7,310
(6,460)
661
-
661
62
934
996
14,754
-
17,972
(11,800)
(33,158)
(10,127)
(22,359)
723
934
1,657
Consolidated
Parent Entity
2022
2021
2022
2021
(23,627)
30,710
2,000
(1,182)
(11,355)
(1,822)
(852)
(5,960)
(12,088)
(12,088)
-
(12,088)
(23,923)
25,128
-
(25,600)
-
-
1,687
(919)
(23,627)
(10,000)
(13,627)
(23,627)
(64)
166
15
-
-
(13)
(25)
(117)
(38)
(38)
-
(38)
(325)
257
168
-
-
-
-
(164)
(64)
(64)
-
(64)
Consolidated
Parent Entity
2022
2021
2022
2021
53,436
53,436
63,788
63,788
-
-
-
-
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 banks resident in Papua New Guinea who have appropriate long term credit ratings.
38 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
7. Trade and other receivables
Trade receivables
Trade receivables related parties (Note 18)
Provision for impairment
Other receivables
Prepayments
(i) Credit losses
Consolidated
Parent Entity
2022
2021
2022
2021
73,373
42,192
(11,163)
104,402
28,772
14,446
147,620
80,908
42,214
(12,736)
110,386
51,315
16,594
178,295
-
35,905
-
35,905
3
-
35,908
-
39,489
-
39,489
25
-
39,514
As at 31 December 2022 and 31 December 2021, loss allowance was determined as follows for trade receivables:
31 December 2022
Current
More than 30 More than 60 More than 90
days past due
days past due
days past due
Total
Expected credit loss rate
0.01%-0.05%
0.05%-0.15%
0.15%-2%
2%-80%
9.95%
Gross carrying amount - trade receivables
57,507
30,170
Loss allowance
17
26
9,812
63
14,704
11,057
112,193
11,163
31 December 2021
Current
More than 30 More than 60 More than 90
days past due
days past due
days past due
Total
Expected credit loss rate
Gross carrying amount - trade receivables
Loss allowance
0.1%-1%
84,718
353
1-5%
13,925
304
5-20%
20-80%
10.6%
5,675
431
15,698
11,648
120,016
12,736
Movement in the provision for impairment of trade receivables is as follows:
Opening balance
Impairments recognised during the year
Provision released
Write off
Total
Consolidated
Parent Entity
2022
12,736
1,461
(2,947)
(87)
11,163
2021
2022
2021
11,359
5,379
(1,484)
(2,518)
12,736
-
-
-
-
-
-
-
-
-
-
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.
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.
(ii) Other receivables and prepayments
Other receivables generally arise from transactions outside the usual operating activities of the Group. These mostly include
receivables for rental bonds, re-insurance receivables and other tax receivables (such as GST receivables) and other non-financial
assets. These receivables are not interest bearing. Collateral is not normally obtained.
As at 31 December 2022 and 31 December 2021, most of the Group’s other receivables are current and classified as Stage 1 for
impairment provisioning purposes. The amount of other receivables overdue more than 30 days is not material, and the impairment
provision based on expected loss model is immaterial.
Prepayments relate to advance payments for expenses not yet incurred.
Steamships Annual Report 2022 39
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
8.
Inventories
Finished goods
Provision for obsolescence
Consolidated
Parent Entity
2022
2021
2022
2021
28,607
(144)
28,463
23,153
(144)
23,009
-
-
-
-
-
-
Inventories recognised as an expense during the year ended 31 December 2022 and included in cost of sales and cost of providing
services amounted to K21.0 million (2021: K20.1 million). The provision for obsolescence of inventories during the year increased
by KNil (2021: by K1.4 million decrease).
9. Loans to/(from) related companies
Non-Current
John Swire & Sons Limited
Colgate Palmolive (PNG) Limited
Huhu Rural LLG
Pacific Rumana Limited
Harbourside Development Limited
Viva No.31 Limited
Wonye Limited
Wakang Inc.
Croesus Re PCC Limited
Loans to subsidiaries
Loans from associates and joint ventures:
Stevedoring associates
Loans from subsidiaries
Consolidated
Parent Entity
2022
2021
2022
2021
8,409
500
1,035
26,930
160,833
2,000
-
16
-
8,899
500
955
28,930
123,333
2,000
2,851
16
198
8,409
500
8,899
500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
199,723
167,682
-
-
199,723
167,682
8,909
-
8,909
9,399
-
9,399
(2,902)
(2,787)
-
-
(2,902)
(2,787)
-
(63,152)
(63,152)
-
(29,957)
(29,957)
The loans to Harbourside Development Limited and Harbourside South are secured and earn interest at 6.5%. The loan to Pacific
Rumana Limited is unsecured and earns interest at 9%. The loan from stevedoring associates is unsecured and incurs interest at 2%.
40 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
10. Property, plant and equipment
Property
Ships
Plant and
Vehicles
Right-of-use
Assets
Total
Consolidated
2022
Cost
Accumulated depreciation
(including impairment losses)
Net book value
Opening value
Additions
Disposals
Impairments
Depreciation
Closing value
2021
Cost
539,613
295,993
347, 635
42,417
1,225,658
(234,091)
305,522
(156,083)
139,910
(243,179)
(33,750)
(667,103)
104,456
8,667
558,555
332,662
108,415
2,274
(120)
(4,010)
58,883
(140)
(767)
(25,284)
(26,481)
305,522
139,910
84,940
43,164
(136)
32,551
826
(142)
-
(21,832)
(23,512)
104,456
(2,736)
8,667
558,568
105,147
(538)
(26,609)
(78,013)
558,555
537,534
237,250
311,994
41,733
1,128,511
Accumulated depreciation
(including impairment losses)
Net book value
Opening value
Additions
Lease agreements made during the year
Disposals
Impairment
Asset held for sale
Depreciation
Closing value
(204,872)
332,662
306,491
44,633
-
-
-
-
(18,462)
332,662
(128,835)
(227,054)
(9,182)
(569,943)
108,415
84,940
32,551
558,568
121,554
12,232
-
-
4,370
(3,247)
(26,494)
108,415
91,255
22,363
-
-
-
-
(28,678)
84,940
44,439
563,739
-
530
(8,820)
-
-
(3,598)
32,551
79,228
530
(8,820)
4,370
(3,247)
(77,232)
558,568
The Group is committed to its plan to sell cargo vessels within 12 months from the reporting date. As the sales are considered highly
probable, the vessels are available for immediate sale and actions were taken to locate potential buyers (including active marketing
of the vessel for sale) prior to 31 December 2022 and 2021 respectively, these vessels are classified within line ‘Assets held for sale’
as at 31 December 2022 and 2021.
Steamships Annual Report 2022 41
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
10. Property, plant and equipment (continued)
Parent Entity
2022
Cost
Accumulated depreciation (including impairment losses)
Net book value
Opening value
Additions
Disposals
Transfers
Depreciation
Closing value
2021
Cost
Accumulated depreciation (including impairment losses)
Net book value
Opening value
Additions
Impairments
Depreciation
Closing value
Property
Plant and
Vehicles
Total
81,987
(58,608)
23,379
22,240
2,882
-
(6)
(1,737)
23,379
79,104
(56,864)
22,240
23,875
125
-
(1,760)
22,240
7,313
(5,624)
1,689
1,352
696
-
6
(365)
1,689
6,617
(5,265)
1,352
1,227
453
-
(328)
1,352
89,300
(64,232)
25,068
23,592
3,578
-
-
(2,102)
25,068
85,721
(62,129)
23,592
25,102
578
-
(2,088)
23,592
(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:
Consolidated
Parent Entity
2022
2021
2022
2021
Property
Ships and plant and vehicles
Total assets in the course of construction
34,103
6,812
40,915
13,240
59,750
72,990
-
-
-
-
-
-
The cost of additions in 2022 did not include any capitalised borrowing costs (2021: nil) in relation to qualifying assets. The Group
used capitalization rate of 3.92% (2021: 4.13%) p.a. to determine the amount of borrowing costs eligible for capitalisation.
(b) Impairment losses
During the year the Directors performed an impairment review on certain assets with impairment indicators. As a result of this
assessment, impairments of K25.8 million and K0.8 million were recognised in relation to certain properties and an individual vessel
respectively (2021: K4.4 million impairment reversal on vessels).
The property impairments comprised of:
•
K21.8 million impairment of the Cassowary Hotel right of use asset. The recoverable amount was determined based on value-in-
use calculations. The calculations use pre-tax cashflow projections based on financial budgets approved by management covering
a three year period. Beyond the three year period, revenue and cost growth is set at 4% for the remainder of the lease period.
A discount rate of 13.5% has been adopted.
•
K4.0 million impairment of a building reflecting earthquake damage to a building. The Group has lodged a claim with its insurer
with any insurance proceeds being recognised upon finalisation of the claim.
Apart from the impairment provided for vessels and properties, there are no other further conditions that indicate impairment of
property, plant and equipment as at 31 December 2022 in other businesses of the Group.
42 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
10. Property, plant and equipment (continued)
(c) Right-of-use assets
The recognised right-of-use assets relate to properties leased by the Group for its use (i.e. leased buildings). The movement of
right-of-use assets classified under property, plant and equipment is provided below:
As at 31 December 2022
Opening net book amount
Lease agreements made during the year
Disposal
Depreciation
Impairment
Closing net book amount
At cost
Accumulated depreciation and impairment losses
As at 31 December 2021
Opening net book amount
Lease agreements made during the year
Disposal
Depreciation
Closing net book amount
At cost
Accumulated depreciation
Properties
Total
PGK’000
PGK’000
32,551
826
(142)
(2,736)
(21,832)
8,667
42,417
(33,750)
8,667
44,439
530
(8,820)
(3,598)
32,551
41,733
(9,182)
32,551
32,551
826
(142)
(2,736)
(21,832)
8,667
42,417
(33,750)
8,667
44,439
530
(8,820)
(3,598)
32,551
41,733
(9,182)
32,551
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
Disposal
Right of use of assets movement
Depreciation
Closing value
Consolidated
Parent Entity
2022
2021
2022
2021
580,814
550,067
(191,918)
(174,652)
388,896
375,415
375,415
30,780
(33)
-
(17,266)
388,896
381,336
10,515
-
106
(16,542)
375,415
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Steamships Annual Report 2022 43
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
11. Investment properties (continued)
(a) Right-of-use assets
The recognised right-of-use assets relate state land leases related to properties owned by the Group (including investment
properties). The breakdown of right-of-use assets classified under investment properties is provided below:
As at 31 December 2022
Opening net book amount
Terminated
Depreciation
Closing net book amount
At cost
Accumulated depreciation
As at 31 December 2021
Opening net book amount
Lease agreements made during the year
Terminated
Depreciation
Closing net book amount
At cost
Accumulated depreciation
State Land
Leases
25,663
(142)
(435)
25,086
26,781
(1,695)
25,086
25,987
107
-
(431)
25,663
26,923
(1,260)
25,663
Total
25,663
(142)
(435)
25,086
26,781
(1,695)
25,086
25,987
107
-
(431)
25,663
26,923
(1,260)
25,663
2022
2021
(b) 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
108,774
(2,516)
(21,035)
105,887
(2,970)
(10,431)
(c) Valuation basis
Properties include commercial and residential properties occupied by Group businesses together with commercial and residential
investment properties which are available for external lease. An analysis of the carrying amount and estimated range of fair values
for each category of property is shown below. Fair values have been estimated internally, based on market evidence of property
values, supported by independent professional valuations from previous years, adjusted by observable market trends related to PNG
residential and commercial properties, as well as land values, on an annual basis.
Included in properties are the following:
Investment properties
Other properties (note 10)
Total
NBV
Lower
Higher
Valuation Range
388,896
305,522
694,418
1,395,683
419,168
1,814,851
1,737,527
523,960
2,261,487
The management has utilised certain historical facts and available relevant market data in reaching their opinion as to the valuation
of the properties up to the date of valuation, including use of comparable sales and capitalisation rates.
(d) Non-current assets pledged as security
Refer to note 16 for information on non-current assets pledged as security by the Group.
44 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
11. Investment properties (continued)
(e) 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
12. Intangible assets
Opening balance
Disposal of Subsidiary
Closing balance
Consolidated
Parent Entity
2022
2021
2022
2021
69,326
75,838
17,185
162,349
85,706
88,094
18,290
192,090
-
-
-
-
-
-
-
-
Consolidated
Parent Entity
2022
2021
2022
2021
76,433
-
76,433
76,433
-
76,433
-
-
-
-
-
-
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to operating segment. The goodwill balance
of K76.4 million (2021: K76.4 million) is attributable to various business acquisitions in the logistics segments including Pacific Towing
(K67.4 million) and New Britain Shipping (K9 million). 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% for New Britain Shipping and
5% for Pacific Towing (2021: 3% for New Britain Shipping and 5% for Pacific Towing). A pre-tax discount rate of 13.4% per annum
(2021: 12.0% per annum) has been used and reflects specific risks relating to the operating segment. The recoverable amount of the
Pacific Towing CGU and New Britain Shipping CGU exceed their carrying amounts by K23.2 million (2021: K23.1 million) and K9.1
million (2021: K12.1 million), respectively. Management believes that growth rate of revenue of 5% p.a. for the CGUs is appropriate,
as approved three-year financial budgets are based on conservative assumptions.
Management determined the budgeted gross margin based on past performance and its market expectations. If the revised growth
rate beyond three years had been 1% lower than management’s estimates the Group would need to reduce the carrying value
of goodwill of Pacific Towing by K0.5 million and the carrying value goodwill of New Britain Shipping by KNil. The CGUs’ carrying
amount would exceed the value in use at a growth rate lower than 4.03% p.a. for Pacific Towing and 2.7% p.a. for New Britain
Shipping.
The discount rates used are pre-tax and reflect specific risks relating to the relevant CGUs. If the revised estimated pre-tax discount
rate applied to the discounted cash flows of the Pacific Towing CGU and New Britain Shipping CGU had been 1% higher than
management’s estimates, the recoverable amounts of goodwill of Pacific Towing and New Britain Shipping would exceed their
carrying amounts by K4.6 million and K6.8 million, respectively. The CGUs’ carrying amount would be equal to value in use at a
discount rate of approximately 17.1% p.a. and 24% p.a. respectively.
13. Trade and other payables
Trade payables
Trade payables - related parties (Note 18)
Accruals
Other payables
Consolidated
Parent Entity
2022
2021
2022
2021
32,979
6,323
51,520
17,216
108,038
23,287
488
51,330
16,699
91,804
-
-
1,677
-
1,677
-
-
-
-
-
All trade and other payables are due and payable within 12 months and are recorded at their fair value.
14. Lease Liabilities
As disclosed in Note 10 and 11, the right-of-use assets and related lease liabilities are recognised in relation to the following types
of assets: state land leases related to properties owned by the Group (including its investment properties) and properties (i.e.
buildings leased by the Group for its use).
Steamships Annual Report 2022 45
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
14. Lease Liabilities (continued)
State land leases
Properties
Total lease liabilities
2022
26,155
33,757
59,912
2021
26,464
35,090
61,554
Total lease liabilities as of 31 December 2022 include current liabilities of K2.7 million (31 December 2021: K2.1 million) and non-
current liabilities of K57.2 million (31 December 2021: K59.4 million).
Minimum lease payments:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Total
Less: Unexpired finance charges
Present value of lease liabilities:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Total
5,296
17,421
115,725
138,442
(78,530)
59,912
2,667
13,967
43,278
59,912
Interest on lease liabilities recognised in profit or loss by the Group amounts to PGK2.7M (2021: PGK3.3M).
Movement in net lease liabilities as per below:
Opening
Lease agreements made during the year
Disposal during the year
Finance costs
Repayment
61,554
826
(218)
2,693
(4,943)
59,912
4,869
18,067
117,831
140,767
(79,213)
61,554
2,080
13,127
46,347
61,554
73,090
655
(9,371)
3,167
(5,987)
61,554
The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 31 December 2021 and 31 December
2022 was 4.5% p.a. Management assessed that weighted average interest rate on borrowings obtained from financial institutions
during 2022 and previous years approximates incremental borrowing rate at the date of initial adoption of IFRS 16 and at 31
December 2022. For related management’s judgments refer to Note 1(z).
The Group recognised expenses relating to short-term leases and expenses relating to leases of low-value assets that are not short-
term leases of K5.3M and KNil for the year ended 31 December 2022 (K7.5 million and K9.8 million), respectively. These expenses
are included in operating expenses.
The Group’s leases have no variable payments.
15. Provisions for other liabilities and charges
Opening value
Charged to profit and loss
Utilised during year
Closing value
Current
Non-current
Employee
15,157
8,362
(7,824)
15,695
5,119
10,576
15,695
Insurance
Claims
43,010
(4,107)
2022
Total
58,167
4,255
(38,387)
(46,211)
516
516
-
516
16,211
5,635
10,576
16,211
2021
Total
65,335
8,443
(15,611)
58,167
48,239
9,928
58,167
A description of employee provisions is disclosed in note 1(p). During the year the disputed insurance claim was settled resulting
in the utilisation / reversal of the associated provision and reinsurance receivable.
46 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
16. Borrowings
Current:
Bank overdrafts (secured)
Bank loans
Other loans (unsecured)
Non-current:
Bank loans (secured)
Total Borrowings
Consolidated
Parent Entity
2022
2021
2022
2021
522
239,500
160
240,182
20,000
20,000
260,182
2,534
51,084
160
53,778
209,500
209,500
263,278
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 3.92% (2021: 4.13%). Bank overdrafts are interest-only with no agreed repayment schedule. Bank loans
are secured loans with varying 1 to 3 year terms. The effective interest rate on other loans is 2% (2021: 2%).
The fair value of borrowings approximates their carrying amounts. Borrowing terms, margins and credit risk factors approximate
currently obtainable levels for similar facilities.
17. Issued capital
Consolidated
Parent Entity
2022
2021
2022
2021
(a) Issued and paid up capital
Ordinary shares
24,200
24,200
24,200
24,200
(b) Number of shares
Number of shares (000’s)
Ordinary shares
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.
(c) Dividends
The Directors advise that a dividend of 70 toea per share will be paid immediately after the Annual General Meeting on 15th June
2023. 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. During the year the Company paid dividends totalling 115 toea per share
which relate to the final dividend of 2021 at 65t per share amounting to K20.15 million, and interim dividend for 2022 financial year
of K15.5 million at 50t per share.
Steamships Annual Report 2022 47
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
18. Related party disclosures
(a) Loss of control:
In September 2021 Steamships sold its wholly-owned subsidiary Croesus Holdings Ltd, and indirect wholly-owned subsidiary,
Croesus Re PCC Ltd, both incorporated in the Isle of Man, to its ultimate parent company, John Swire & Sons Ltd. at the net
book value of the two entities.
(b) Interest in subsidiaries, associates and joint ventures:
These are set out in notes 21, 22 and 23 respectively.
(c) Remuneration:
Income received or due and receivable both by Directors and general managers in connection with the management of the
Group companies is shown in the Directors’ Report.
Consolidated
Parent Entity
2022
2021
2022
2021
Key management personnel disclosure
Salary and wages
Other short-term benefits
(d) Material transactions:
Sales of goods and services
- Associates and joint ventures
- Key management
- Associated groups
- Other shareholders
Lease and rental income
- Associates and joint ventures
- Associated groups
- Other Shareholders
Dividend received
- Associates and joint ventures
Management fee received
- Associates and joint ventures
- Associated groups
- Other shareholders
Interest received
- Associates and joint ventures
Royalties received
- Associates and joint ventures
Shipping and towage services
- Associates and joint ventures
- Associated groups
Cartage and storage services
- Associates and joint ventures
- Associated groups
Purchase of goods and services
- Associates and joint ventures
- Associated groups
- Key management
Management fees and recharges
- Associated groups
48 Steamships Annual Report 2022
14,651
932
13,112
958
277
158
7,700
313
-
2,503
-
159
10
5,948
-
-
1,715
-
226
2,688
3,436
-
377
2
-
-
12,368
8,411
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,036
1,811
2,036
1,811
-
-
44,867
26,825
-
7,438
-
8,539
-
(341)
-
(59)
(603)
-
(12,072)
(41,045)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
18. Related party disclosures (continued)
Purchase of assets
- Associated groups
Lease rental expense
- Associates and Joint ventures
- Associated groups
Finance Cost
- Associates and joint ventures
Dividends paid
- Other shareholders (minority interest)
- Controlling shareholder
- Significant shareholder
Loans to/(from) related companies
- Associates and joint ventures
Consolidated
Parent Entity
2022
2021
2022
2021
(13,348)
(15,214)
-
-
-
(330)
-
-
-
-
-
-
-
-
-
-
(642)
(25,717)
(9,942)
(1,804)
(25,717)
(9,942)
-
(25,717)
(9,942)
-
(25,717)
(9,942)
35,580
61,226
All transactions with related parties are made on normal commercial terms and conditions.
Balances with related companies:
Associates and joint ventures:
Stevedoring associates (note 9)
Basiloc Limited (note 16)
Due from related Companies:
Colgate Palmolive Limited (note 9)
Harbourside Development Limited (note 9)
Subsidiary Companies (note 9)
Pacific Rumana Limited (note 9)
Huhu Rural LLG (note 9)
Viva No. 31 Limited (note 9)
Wonye Limited (note 9)
Wakang Inc. (note 9)
John Swire & Sons Limited (note 9)
Croesus Re PCC Limited (note 9)
(2,902)
(160)
(2,787)
(160)
500
160,833
-
26,930
1,035
2,000
-
16
8,409
-
500
123,333
-
28,930
955
2,000
2,851
16
8,899
198
Total due from related companies (note 9)
199,723
167,682
Balances receivable / (payable) from / to related companies:
-
-
-
-
-
-
500
500
-
-
-
-
-
-
-
8,409
-
8,909
-
-
-
-
-
-
-
8,899
-
9,399
Receivables
Colgate Palmolive Limited
John Swire & Sons Limited (note 7)
Harbourside Development Limited (note 7)
Wonye Limited (note 7)
Swire Shipping (note 7)
Total trade receivables from related companies (Note 7)
Payables
John Swire & Sons Limited (note 13)
Swire Shipping (note 13)
Total trade payables from related companies (Note 13)
2,035
33,870
908
429
4,950
42,192
(6,064)
(259)
(6,323)
2,995
2,035
36,494
33,870
2,995
36,494
100
11
2,614
42,214
(272)
(216)
(488)
-
-
-
-
-
-
35,905
39,489
-
-
-
-
-
-
Steamships Annual Report 2022 49
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
19. Reconciliation of cash flows
Consolidated
Parent Entity
2022
2021
2022
2021
(a) Cash generated from operations
Profit / (Loss) from continuing operations after tax
Depreciation and impairment
Dividend and interest income
Net gain on sale of fixed assets
Impairment of properties and vessels
Gain on disposal of a subsidiary
59,441
95,279
-
(534)
26,609
-
91,616
93,774
-
(2,063)
-
-
Share of profit of associates and joint ventures
(6,288)
(5,062)
Adjustment on dividend
Lease Disposals
Loan write-off
Change in operating assets and liabilities
(Increase)/decrease in trade debtors and other receivables
Increase in inventory
(Increase)/decrease in deferred tax asset
Decrease in operating assets
Increase in trade creditors and other payables
Increase/(decrease) in other operating liabilities
Decrease in income tax receivable
Increase in deferred tax liability
Net cash inflow from operating activities
(b) Net debt reconciliation
(173)
(103)
777
29,017
(5,454)
551
-
9,989
(43,040)
11,539
5,909
183,519
-
-
-
(14,854)
(5,727)
(1,561)
-
30,115
(3,000)
296
3,727
(863)
2,102
(1,032)
-
-
-
-
-
-
-
-
-
(996)
3,606
-
1,677
26
-
187,261
4,520
Net debt as at 31 December 2020
Repayments
Lease agreements made during the year
Disposal during the year
Finance costs
Payment of lease liabilities
Net debt as at 31 December 2021
Proceeds from borrowings
Repayments
Lease agreements made during the year
Disposal during the year
Finance costs
Lease payments
Net debt as at 31 December 2022
20. Retirement benefit plans
Lease
liabilities
Bank
Loans
(73,090)
-
(655)
9,371
(3,167)
5,987
(61,554)
-
-
(826)
218
(2,693)
4,943
(59,912)
(302,000)
42,523
-
-
(1,107)
-
(260,584)
(30,000)
30,000
-
-
1,084
-
(259,500)
Other
Loans
(5,024)
2,077
-
-
-
-
(2,947)
(115)
-
-
-
-
-
(3,062)
44,224
2,088
(7,323)
-
-
(36,494)
-
-
-
-
-
-
(149)
1,953
-
-
261
-
4,560
Total
(380,114)
44,600
(655)
9,371
(4,274)
5,987
(325,085)
(30,115)
30,000
(826)
218
(1,609)
4,943
(322,474)
The total cost of retirement benefits of the Group in 2022 was K5.2 million (2021: K5.1 million). 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 parent entity does not employ staff directly; consequently, there was no charge during the year.
50 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
21. Subsidiaries and transactions with non-controlling interests
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):
Equity Holdings(1) Equity Holdings(1)
Name of Entity
Country of Incorporation
Class of Shares
2022
2021
Croesus Limited
Kavieng Port Services Limited
Kiunga Stevedoring Company Limited
Lae Port Services Limited(5)
Madang Port Services Limited
Morobe Terminals Limited(4)
Motukea United Limited
New Britain Shipping Limited(2)
Oro Port Services Limited
Palm Stevedoring & Transport Limited
Port Services PNG Limited(5)
Steamships Limited
United Stevedoring Limited(3)
Windward Apartments Limited
Pacific Towing SI Limited
Sandaun Agency & Stevedoring Limited(6)
Gazelle Port Services Limited(7)
Portside Business Park Limited(8)
Wonye No. 2 Limited(9)
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Solomon Islands
Papua New Guinea
Papua New Guinea
Papua New Guinea
Papua New Guinea
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
60
100
51.5
60
50.5
64.1
50
100
66.7
54
100
70
100
100
100
100
100
100
100
60
100
51.5
60
50.5
64.1
50
100
66.7
54
100
70
100
100
100
100
100
100
(1) The portion of ownership is equal to the proportion of voting power held.
(2)
Consolidated by virtue of control over the operating decisions and returns. As at 31 December 2022, Steamships Trading
Company Limited still has control over this entity.
(3) United Stevedoring Limited became a subsidiary in May 2019.
(4) Morobe Terminals Limited became a subsidiary in May 2019 and is in liquidation.
(5) Lae Port Services and Port Services PNG Limited are in liquidation.
(6)
Incorporated since 9 March 2012 and is 100% owned by Steamships Limited. This Company is operating as an agency of
Consort. JV Port Services will assume control of the management in 2022 with its 3-year Stevedoring license validity.
(7)
(8)
(9)
Incorporated on 21 July 2021 and is domiciled in Rabaul. The company is still under start-up phase.
Previously known as Motukea Industrial Park Limited, this company was incorporated on 30 April 2020 and is still under start-up
phase.
Incorporated on 8 October 2021 and is still under start-up phase.
Shares in subsidiary companies have been stated at cost or fair value on acquisition less dividends received from pre-acquisition
profits.
Steamships Annual Report 2022 51
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
21. Subsidiaries and transactions with non-controlling interests (continued)
The summarised financial information of the Group’s largest subsidiaries with non-controlling interest as at 31 December 2022 and
31 December 2021 is as follows:
2022
Madang Port Services Limited
New Britain Shipping Limited
Motukea United Limited
Kavieng Port Services Limited
United Stevedoring Limited
2021
Madang Port Services Limited
New Britain Shipping Limited
Motukea United Limited
Kavieng Port Services Limited
United Stevedoring Limited
Ownership
Interest %
Assets
Liabilities
60
50
64.1
60
70
60
50
64.1
60
70
5,974
19,996
2,810
4,552
3,308
5,439
19,456
2,906
3,989
2,908
975
1,297
1,129
868
2,307
508
1,690
1,050
919
2,398
Carrying
Value
4,999
18,699
1,681
3,684
1,001
4,931
17,766
1,856
3,070
510
Revenue
Profit
5,654
12,668
9,344
5,813
17,687
4,764
12,017
7,674
4,787
15,898
294
1,397
502
598
117
274
1,602
15
338
440
22. 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
2022
2021
2022
2021
5,541
366
(117)
(197)
5,593
5,529
285
(86)
(187)
5,541
-
-
-
-
-
-
-
-
-
-
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:
2022
Ownership
Interest %
Assets
Liabilities
Makerio Stevedoring Limited
Nikana Stevedoring Limited
Riback Stevedoring Limited
45
45
49
2,501
3,314
2,501
8,316
1,132
1,591
-
2,723
Carrying
Value
1,369
1,723
2,501
5,593
2,100
2,355
-
4,455
Revenue
Profit
2021
Ownership
Interest %
Assets
Liabilities
Carrying
Value
Revenue
Makerio Stevedoring Limited
Nikana Stevedoring Limited
Riback Stevedoring Limited
45
45
49
1,499
1,841
2,501
5,841
161
139
-
300
1,338
1,702
2,501
5,541
840
781
-
1,621
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.
52 Steamships Annual Report 2022
117
157
(25)
249
Profit
/(loss)
183
138
(122)
199
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
23. Investment in joint ventures
(a) Movement in carrying amounts
Opening value
Share of profits before tax
Income tax expense
Dividends received
Closing value
2022
2021
33,826
8,627
(2,588)
-
39,865
31,463
6,947
(2,084)
(2,500)
33,826
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.
2022
Colgate Palmolive (PNG) Limited
Harbourside Development Limited
Pacific Rumana Limited
Viva No. 31 Limited
Wonye Limited
2021
Colgate Palmolive (PNG) Limited
Harbourside Development Limited
Pacific Rumana Limited
Viva No. 31 Limited
Wonye Limited
Ownership
Interest
%
50
50
50
50
50
Ownership
Interest
%
50
50
50
50
50
Assets
Liabilities
Carrying
Value
Revenue
Profit
/Loss
24,133
5,756
18,377
415,015
381,068
5,259
10,490
51,516
1,262
7,160
37,355
14,161
506,413
432,601
39,865
-
3,997
3,330
34,545
10,706
2,180
84
3,258
50,773
4,421
358
421
(98)
937
6,039
Assets
Liabilities
Carrying
Value
Revenue
Profit
24,133
10,177
13,956
159,022
159,380
3,663
10,490
28,559
87
7,062
15,335
225,867
192,041
(358)
3,576
3,428
13,224
33,826
36,236
10,705
2,180
862
3,258
4,351
218
254
(187)
227
53,241
4,863
The Group’s share of the capital commitments of joint ventures at 31 December 2022 is K37.0 million (2021: K74.5 million).
Other than those disclosed in note 27, there are no contingent liabilities arising from the Group’s interests in the joint ventures.
Steamships Annual Report 2022 53
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
24. Business Combinations and Transactions with Non-Controlling Interests
On 7 April 2021, the Registrar of Companies approved the amalgamation of Pacific Towing (PNG) Limited with Steamships Ltd. The
effective date of amalgamation was 31 December 2020. Pacific Towing (PNG) Limited was amalgamated into the Company using
the short-form amalgamation process under section 235 of the Companies Act 1997. The name of the amalgamated company is
Steamships Ltd. Under the amalgamation, the Company took control of all the assets of Pacific Towing (PNG) Limited and assumed
the responsibility for their liabilities.
The amalgamations were accounted in the 2021 financial year based on predecessor accounting with book value accounting
used for the purposes of the transaction. Amalgamation had no impact on the Group’s assets, liabilities, equity, and profit or loss
account, as amalgamated entities have been fully controlled by the Group and consolidated prior to the amalgamation and after the
amalgamation. Further, amalgamation had no impact on the Group’s cash flows.
25. Discontinuing Activities
On 28 September 2021, the Group disposed of its 100% interest in Croesus Holdings Ltd, and its indirect wholly owned subsidiary,
Croesus Re PCC Limited. The 31 December 2021 results (K’000) from the discontinued activities are derived from:
(a) Profit for the period:
Revenue
Other operating income / (expenses) - net
Profit before tax
Profit after tax
(b) An analysis of the cash flows of discontinued operations is as follows:
Operating cash flows
Investing cash flows
Financing cash flows
Net cash flows
Opening balance
Cash disposed on sale of Croesus Re and Croesus Holdings Ltd
Closing cash flow balance
(c) Details of the sale of subsidiary are as follows:
Total disposal consideration receivable (Note 18)
Carrying amount of net assets sold
Gain on sale before income tax
Gain on sale after income tax
The parent company has recognised gain of K36.5M on the sale of subsidiary in 2021 (Note 3).
2021
746
4,134
4,880
4,880
2021
(7,340)
5,406
-
(1,934)
45,990
44,056
-
2021
36,494
36,494
-
-
54 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
25. Discontinuing Activities (continued)
(d) Assets and liabilities of disposed subsidiary on the transaction date are presented below:
Cash and cash equivalents
Prepayments and other receivables
Total assets
Accounts payable and accruals
Insurance reserves
Borrowings
Total liabilities
Net assets
26. Segmental reporting
(a) Description of segments
2021
44,056
5,152
49,208
189
3,395
9,130
12,714
36,494
The Board monitors the business from a product perspective and has identified three reportable segments. A brief description of
each segment is outlined below:
•
Property and hospitality – consist 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 include new assets in the course of construction.
•
Logistics – consists of shipping and land-based freight transport and related services divisions.
• Commercial and investment – consists of commercial, head office administration function and insurance activities.
Steamships Annual Report 2022 55
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
26. Segmental reporting (continued)
(b) Segment information
The segment information provided to the Board for the reportable segments for the year ended 31 December 2022 is as follows:
2022
External revenue
Interest revenue
Interest expense
Segment results
Share of joint ventures and associates profit
Total tax (expense) / benefit
Profit from continuing operations
Segment assets
Segment liabilities
Net assets
Total assets include investments in joint ventures and associates
Capital expenditure
Depreciation
2021
External revenue
- from continued operations
- from discontinued operations
Interest revenue
Interest expense
Segment results
Share of joint ventures and associates profit
Income tax (expense) / credit
Profit from continuing operations
Profit from discontinued operations
Segment assets
Segment liabilities
Net assets
Total assets include investments in joint ventures and associates
Capital expenditure
Depreciation
Property
and
Hospitality
Logistics
Commercial and
Investments
(and eliminations)
Total
248,595
380,337
705
2,185
54,537
-
(16,361)
38,176
199
(4,414)
41,612
-
(12,484)
29,128
2,330
12,633
(12,483)
(16,363)
6,288
2,212
(7,863)
631,262
13,537
(14,712)
79,786
6,288
(26,633)
59,441
696,098
423,173
396,422
1,515,693
(1,367)
(217,099)
(253,158)
(471,624)
694,731
206,074
143,264
1,044,069
21,488
33,453
44,237
5,593
94,517
47,669
18,377
1,182
3,373
45,458
129,152
95,279
240,286
321,168
-
494
(2,276)
81,739
-
(14,433)
67,306
-
-
371
(5,010)
23,520
-
(5,633)
17,887
-
2,475
746
8,952
(6,549)
(21,891)
5,062
18,372
1,543
4,880
563,929
746
9,817
(13,835)
83,368
5,062
(1,694)
86,736
4,880
697,144
351,345
468,500
1,516,989
(101,584)
(173,189)
(221,287)
(496,060)
595,560
178,156
247,213
1,020,929
19,870
41,419
45,908
5,541
47,672
43,193
13,956
652
4,673
39,367
89,743
93,774
56 Steamships Annual Report 2022
NOTES TO THE FINANCIAL STATEMENTS
Steamships Trading Company Limited Year Ended 31 December 2022 (Amounts in Kina 000’s unless otherwise stated)
26. Segmental reporting (continued)
These figures include non-controlling interests share of operating profits and assets.
Revenue from the hotels and property business mostly relates to the provision of services and is recognised over time. A minor
portion represents revenue from the sale of goods and is recognised at a point in time. Similarly, revenue from the logistics
business mostly relates to the provision of services and is recognised over time. Revenue from the commercial segment relates to
sale of goods and is recognised at a point in time.
(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 two insignificant business operations in the Solomon Islands and Fiji.
27. Contingent liabilities
There were contingent liabilities at the Balance Sheet date as follows:
(a)
Steamships Trading Company Limited holds a 50% interest in an associated company, Colgate Palmolive (PNG) Ltd, (“CP
(PNG) Ltd”). In 2022 CP (PNG) Ltd received a notice from PNG Customs seeking to reassess the historic rate of import
duty applied to a specific product, known as soap noodles, resulting in an additional duty of K11.1 million and an intention
to apply the higher rate on future imports. CP (PNG) Ltd has disputed the interpretation of the product characteristics by
PNG Customs and formally appealed against this higher assessed rate of duty. The appeal process remains in progress.
To the extent that any of the additional duty is deemed payable by CP (PNG) Ltd following the appeal process, the Group’s
share of profits from associates and the equity accounted investment in CP (PNG) Ltd will be reduced by 50% of the
amount payable, net of any tax effect.
(b)
The parent entity has given a secured guarantee in respect of the bank overdrafts and loans of certain subsidiaries, associates
and joint ventures.
The parent entity has given letters of comfort of continuing financial support in respect of certain subsidiaries, associates and
joint ventures.
No losses are anticipated in respect of these guarantees.
(c)
An appropriate provision has been made for ongoing legal proceedings at 31 December 2022 where a loss is considered
probable. Based on information available at 31 December 2022, other than matters noted above, the Group estimates there
were no material contingent liabilities at period end.
28. Commitments
(a) Capital commitments
Contracts outstanding for capital expenditure:
- less than 12 months
- 1-5 years
29. Subsequent events
Consolidated
Parent Entity
2022
2021
2022
2021
135
-
135
9,842
-
9,842
-
-
-
-
-
-
On 9th February 2023 the Company entered into a revolving credit facility agreement with Kina Bank Limited for K60 million for
three years. Security for the facility is provided by the existing Common Terms Deed, which provides security for financial obligations
with the Company’s banks.
The Directors advised that a dividend of 70 toea per share will be paid immediately after the Annual General Meeting on 15th
June 2023. 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.
Steamships Annual Report 2022 57
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of Steamships Trading Company Limited
Report on the audit of the financial statements of the Company and the Group
Our opinion
We have audited the financial statements of Steamships Trading Company Limited (the Company), which comprise the
statements of financial position as at 31 December 2022, and the statements of comprehensive income, statements of changes
in equity and statements of cash flows for the year then ended, and the notes to the financial statements which 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 2022 or from time to time during the financial
year.
In our opinion, the accompanying financial statements:
•
•
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 2022, and their
financial performance and cash flows for the year then ended.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics
for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
Our firm carries out other services for the Group in the areas of taxation and other non-audit services. The provision of these
other services has not impaired our independence as auditor of the Company and the Group.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the management structure of the Company and the Group, their accounting
processes and controls and the industries in which they operate.
PricewaterhouseCoopers, PwC Haus, Level 6, Harbour City, Konedobu, PO Box 484
Port Moresby, Papua New Guinea
T: +675 321 1500 / +675 305 3100, www.pwc.com/pg
58 Steamships Annual Report 2022
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of Steamships Trading Company Limited
Materiality
Audit scope
Key audit matters
•
Amongst other relevant topics,
we communicated the following
key audit matter to the Audit
and Risk Committee:
• Goodwill impairment
assessment
•
This matter is further described
in the Key audit matter section
of our report.
•
•
•
•
For the purpose of our
audit of the Group we used
overall group materiality of
approximately 5% of the
Group’s profit before tax and
property impairments for the
year ended 31 December 2022.
We applied this threshold,
together with qualitative
considerations, to determine
the scope of our audit and
the nature, timing and extent
of our audit procedures
and to evaluate the effect of
misstatements on the financial
statements as a whole.
We chose Group profit before
tax and property impairments
because, in our view, it is
the metric against which the
performance of the Group is
most commonly measured
and is a generally accepted
benchmark.
We selected 5% based on our
professional judgement noting
that it is also within the range of
commonly acceptable related
thresholds
•
•
•
•
We (PwC Papua New Guinea)
conducted audit work over the
Group’s significant operations
including the significant
subsidiaries included in the
Group consolidation sufficient
to express an opinion on the
financial statements as a whole.
All subsidiaries of the Group at
the year end are incorporated
and operating in Papua New
Guinea with the exception
of one subsidiary which has
operations in the Solomon
Islands.
All significant associates of the
Group are incorporated and
operating in Papua New Guinea
and audited by PwC Papua New
Guinea.
Our audit focused on where
the directors made subjective
judgements; for example,
significant accounting estimates
involving assumptions and
inherently uncertain future
events.
Steamships Annual Report 2022 59
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of Steamships Trading Company Limited
Key audit matter
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements for the current period. The key audit matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matter described below to be a key matter to be communicated in our report. Further, commentary
on the outcomes of the particular audit procedures is made in that context.
Key audit matter
How our audit addressed the key matter
Goodwill impairment assessment
(Refer to note 12 of the financial statements)
The Group has goodwill totalling K76.4 million at 31
December 2022. In accordance with the accounting
policy in note 1(n) of the financial statements,
the Group has assessed the goodwill balance for
impairment at 31 December 2022.
The Group has calculated the value of the respective
cash generating units which the goodwill relates to
based on financial models comprising cash flow
projections. The cash flow projections use a number of
forward looking assumptions, including revenue and
cost growth, and the value calculation is sensitive to
these.
We considered this a key audit matter because of the
significant judgements around future revenues and
costs, and the discount rate to be applied in determining
the recoverable amount of the cash generating units.
We have considered and tested the financial models
used by the Group to determine the values of the
cash generating units. We compared the models with
the previous year’s models and found them to be
consistently structured and consistent with the basis of
preparation required by accounting standards. Together
with our valuation expert we reviewed the financial
models methodology used in determining the value of
the respective cash generating units.
We compared the forecast revenues and expenditures in
the financial models to approved budgets and obtained
an understanding of the Group’s budgeting procedures
upon which forecasts are based. We also evaluated the
reliability of estimates made by comparing forecasts
made in prior years to actual outcomes.
We benchmarked certain assumptions with external
forecasts, and the discount rate with our expectation
based on the overall Weighted Average Cost of
Capital (WACC) of the Group. Together with our
valuation expert we reviewed the methodology used in
determining the discount rate applied in the financial
models.
We performed sensitivity analysis on assumptions to
ascertain the extent of change that would be required in
key assumptions for the respective goodwill balances to
be impaired. We determined that the calculations were
more sensitive to inflation assumptions and discount
rates and focused our testing on these assumptions.
60 Steamships Annual Report 2022
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of Steamships Trading Company Limited
Information other than the financial statements and auditor’s report
The directors are responsible for the annual report which includes other information. Our opinion on the financial statements
does not cover the other information included in the annual report and we do not express any form of assurance conclusion
on the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information
that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial statements
The directors are responsible, on behalf of the company for the preparation of financial statements that give a true and fair view
in accordance with International Financial Reporting Standards and other generally accepted accounting practice in Papua
New Guinea and the Companies Act 1997 and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that give a true and fair view and are free from material misstatement, whether due to fraud
or error .
In preparing the financial statements, the directors are responsible for assessing the ability of the Group to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
As part of an audit in accordance with International Standards on Auditing, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
•
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
Steamships Annual Report 2022 61
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of Steamships Trading Company Limited
Auditor’s responsibilities for the audit of the financial statements (continued)
•
•
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial statements. We are responsible for the direction, supervision and
performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements for the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulations preclude public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
62 Steamships Annual Report 2022
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of Steamships Trading Company Limited
Report on other legal and regulatory requirements
The Companies Act 1997 requires that 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 2022:
• We have obtained all the information and explanations that we have required;
•
In our opinion, proper accounting records have been kept by the Company as far as appears from an examination of those
records.
Who we report to
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
Jonathan Grasso
Partner
Registered under the Accountants Act 1996
Port Moresby
31 March 2023
Steamships Annual Report 2022 63
DIRECTORS’ REPORT
Steamships Trading Company Limited Year ended 31 December 2022
Steamships Trading Company Limited and Subsidiary Companies
The Directors submit their Annual Report for the year ended 31 December 2022 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 8. The Group continues to operate in the
segments of Hotels and Property, Logistics and Commercial & Investments.
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 K57,985,000 (2021: K90,550,000).
Dividend
The Directors advise that a dividend of 70 toea per share will be paid after the Annual General Meeting on 15th June 2023.
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.
64 Steamships Annual Report 2022
DIRECTORS’ REPORT
Steamships Trading Company Limited Year ended 31 December 2022
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
Chairman since 2015
Managing Director 2013 to 2015
Member of the Remuneration and Nomination 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 General Manager of Steamships Shipping & Transport from 1989-1992. He was the Managing Director of
Steamships Trading Company Limited from 1st January 2013 to 12th January 2015. He is the Chairman and Chief Executive
Officer of John Swire and Sons (Australia) Pty Limited.
P. J. Aitsi MBE
Director from 1st July 2021
Director 2014 to 2018
Peter Aitsi is a senior Papua New Guinean business leader with over 30 years of experience from having led and managed
a number of PNG’s leading companies. He was appointed by the Bank of Papua New Guinea as a Statutory Manager for
Comrade Trustee Services Limited in February 2022 and was also Deputy Chair of the Superannuation & Life Insurance Review
Committee from 2021 to 2023. Peter has a long-standing involvement with community organisations such as Transparency
International PNG, Badili Club of PNG, and Leadership PNG. He continues to serve on several boards of both listed and
unlisted companies; Steamships Trading Company, Chair of MiBank PNG, Chair of PNG Property Developers Association and
Chair of media company PNGFM Ltd. He studied Banking and Finance at the PNG Institute of Banking and Finance in Port
Moresby (now IBBM), he is a member of the Australian Institute of Directors and a member of the PNG Institute of Directors
(PNGID) and was awarded the Male Director of the Year in 2018. In 2004 he was accorded a Queens award as a Member of
the British Empire (MBE) in recognition for his contributions to the development of PNG media and his long standing voluntary
service to various community organisations.
R.P.N. Bray
Managing Director from 20th September 2020
Member of the Strategic Planning Committee
Member of the Remuneration and Nomination Committee
Director since 2018
Appointed Chief Operating Officer on 27th August 2018, Mr Bray was previously Marine Services Director of Singapore based
Swire Pacific Offshore Pte Ltd. He was responsible for Swire Pacific Offshore’s subsea, renewables, logistics, seismic, salvage
and oil spill divisions. He was formally Chief Operating Officer of Swire Oilfield Services and held various senior operational
and commercial positions in Cathay Pacific Airways Ltd in his earlier career. He holds directorship of various Steamships
Trading Company subsidiaries, joint ventures, and associated companies. He sits on a number of charitable advisory boards
and a number of PNG business groupings, including the PNG Property Developers Association, the United Nations Biodiversity
& Climate Fund for PNG, and the Business Council’s Energy Working Group. He graduated with a Bachelor of Science from
Bristol University (UK) and holds a Master of Marine Sciences from Nanyang Technical University (Singapore).
Steamships Annual Report 2022 65
DIRECTORS’ REPORT
Steamships Trading Company Limited Year ended 31 December 2022
L.M. Bromley
Chairperson of the Audit and Risk Committee since July 2021
Member of the Strategic Planning Committee since July 2021
Member of the Remuneration and Nomination Committee since July 2021
Director since 2019
Ms Bromley has been a Senior Executive of the Bromley Group of Companies for over 12 years. She is currently a Director
of the Bromley Group’s various commercial operating Companies some of which include Heli Niugini Ltd, Maps Tuna Ltd,
Hoia Investments Ltd and Western Drilling Ltd in Papua New Guinea, PT Sayap Garuda Indah and PT Air Bali in Indonesia,
Allway Logistics Limited and Merit Logistic Services Limited in Hong Kong, Aerolift (Singapore) Pte. Ltd. in Singapore and AAB
Holdings Pty Ltd Group of Companies in Australia and is responsible for the aviation operation, logistic support and group
investment functions. She is the Managing Director of Merit Finance Limited which serves as the Bromley Group’s treasury
arm. Ms Bromley also consults on the Bromley Group’s property development and property management Companies through
advisory roles in Papua New Guinea and Australia. She is a Director of Viva No 31 Ltd, a Steamships Trading Company joint
venture Company, and has previously held positions on the Divisional Boards of EastWest Transport and Steamships shipping.
She graduated from Bond University in Australia and holds a Bachelor of Commerce and a Bachelor of Laws.
D.H. Cox OL, OBE
Managing Director 2004 to 2012
Member of the Audit and Risk Committee
Member of the Strategic Planning Committee
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 Asia-Pacific business environment and holds an MBA in International Hospitality & BSc (Hons) in Accounting
& Business Management.
Lady W.T. Kamit CBE
Member of the Audit and Risk Committee
Director since 2005
Lady Winifred Kamit is a senior partner at Dentons PNG. Lady Kamit is a Director of Bunowen Services Ltd, Kamchild Limited,
Dentons Administration Services Ltd, Post Courier Limited and its subsidiaries and Brian Bell Group. Lady Kamit also serves
on a number of non-government and charitable organisations, including Anglicare PNG Inc.
66 Steamships Annual Report 2022
DIRECTORS’ REPORT
Steamships Trading Company Limited Year ended 31 December 2022
J.B. Rae-Smith
Director since 2019
Mr Rae-Smith is Chairman of Swire Energy Services and United States Cold Storage, a Director and Chairman of the Audit and
Risk Committee of Swire Shipping Co Pte Ltd and Swire Bulk Pte Ltd and Vice President of the United Kingdom Chamber of
Shipping. He joined the Swire Group in 1985 and has worked with the Group in Australia, Papua New Guinea, Japan, Taiwan,
Hong Kong, the United States, Singapore, and the United Kingdom. He was a Director of Swire Pacific Limited, a company
listed in Hong Kong, from January 2013 to August 2016 and was the Executive Director of the Marine Services Division from
2005 to 2016, the Trading & Industrial Division between 2008 and 2016 and Chairman of the Swire Group Charitable Trust. In
addition, he has also been a Director of the Standard P&I Club, Deputy Chairman of the Hong Kong Ship Owners Association,
Chairman of the Lloyds Asian Ship Owners Committee, and a Director of the Singapore Environmental Council.
M.R. Scantlebury
Managing Director from September 2018 to September 2020
Finance Director & Company Secretary from June 2016 to September 2018 and from September 2020 to present
Mr Scantlebury is a chartered accountant and was previously Director of the Office for Financial Planning at Swire Pacific Ltd
in Hong Kong and he has held various senior finance and commercial positions in the Swire group in his career. He holds
Directorship of various Steamships Trading Company subsidiaries, joint ventures, and associated companies.
Steamships Annual Report 2022 67
DIRECTORS’ REPORT
Steamships Trading Company Limited Year ended 31 December 2022
Remuneration of Directors
Directors remuneration received or receivable from the Company as directors during the year, is as follows:
GL Cundle (Chairman)
LM Bromley
DH Cox
Lady WT Kamit
JB Rae Smith
PJ Aitsi
JH Woodrow
GJ Dunlop
Sir MR Bromley
G Aopi
2022
K’000
223
249
224
174
126
124
63
-
-
-
2021
K’000
243
201
244
189
133
40
133
139
125
70
1,183
1,517
The directors fees vary in accordance with the required duties on various sub-committees of the board.
* Executive Directors receive no fees for their service as Directors during the year.
Remuneration of Employees
The number of employees whose remuneration and other benefits was within the specified bands are as follows:
Remuneration
K’000
2022
No.
2021
No.
Remuneration
K’000
2022
No.
2021
No.
Remuneration
K’000
2022
No.
2021
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
250-270
270-280
280-290
11
4
9
7
5
6
6
1
4
2
5
2
3
3
3
4
5
1
5
10
5
7
7
4
4
3
5
4
4
3
2
4
4
5
1
1
290-300
300-310
310-340
340-360
360-370
370-380
380-390
390-400
410-420
420-430
430-440
440-450
460-470
480-490
500-510
530-540
540-550
560-570
1
2
4
3
2
2
-
-
5
-
-
-
-
-
-
-
-
-
1
2
1
1
1
2
1
-
1
1
2
1
-
-
1
2
1
-
570-580
600-610
620-630
650-660
660-670
710-720
720-730
770-780
810-820
820-830
840-850
850-860
910-1000
1,000-1,100
1,100-2,000
2,000-2,900
7
6
-
-
-
2
-
-
-
-
-
-
3
1
4
2
-
7
-
-
-
4
-
-
3
-
1
1
3
2
1
2
For and on behalf of the Board:
Port Moresby
31 March 2023
G.L. Cundle
Chairman
R.P.N. Bray
Managing Director
68 Steamships Annual Report 2022
STOCK EXCHANGE INFORMATION
Steamships Trading Company Limited Year ended 31 December 2022
Shares are listed on the Australian Securities Exchange and the Port Moresby Stock Exchange.
All shares carry equal voting rights.
Shareholdings
At 28 February 2023, there were 361 shareholders.
271 Holding
Holding
68
Holding
18
Holding
11
Holding
4
-
1
-
1,001
-
5,001
-
10,001
100,000 -
1,000 units
5,000 units
10,000 units
100,000 units
over
The number of shareholders holding less than a marketable parcel was 48.
The 20 largest shareholders were:
Number of shares
JS&S (PNG) LIMITED
BERNE NO 132 NOMINEES PTY LTD <722124 A/C>
NATIONAL SUPERANNUATION FUND LIMITED
BERNE NO 132 NOMINEES PTY LTD <657243 A/C>
JOHN E GILL OPERATIONS PTY LIMITED
HYLEC INVESTMENTS PTY LIMITED
BOND STREET CUSTODIANS LIMITED
MR RAMESH MAHTANI
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
BUDLEAF PTY LTD
INTERCONTINENTAL ASSETS PTY LIMITED
PRAFUL PATEL INVESTMENTS PTY LTD PRAFUL & ANITA PATEL S/ A/C
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MRS LUCY ANN KING
MS JENNIFER MAY FORBES
CUSTODIAL SERVICES LIMITED
MRS JUDITH SCOTTHOLLAND
MRS MARY PATRICIA HAUGHTON
MR PETER JAMES HAYMAN
22,362,651
5,760,000
1,859,446
446,494
54,727
32,500
23,067
21,700
19,348
18,606
16,470
15,000
12,048
10,767
10,348
10,000
8,768
8,161
8,161
7,500
%
72.12
18.58
6.00
1.44
0.18
0.10
0.07
0.07
0.06
0.06
0.05
0.05
0.04
0.03
0.03
0.03
0.03
0.03
0.03
0.02
30,705,762
99.02
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.
Steamships Annual Report 2022 69
70 Steamships Annual Report 2022
Steamships Annual Report
Steamships Annual Report
COMPANY DIRECTORY
COMPANY DIRECTORY
CHAIRMAN
G. L. Cundle §&
MANAGING DIRECTOR
R.P.N. Bray §&
FINANCE DIRECTOR
M. R. Scantlebury
NON-EXECUTIVE DIRECTORS
P. J. Aitsi MBE
L.M. Bromley +§&
D. Cox OL, OBE +&
Lady W.T. Kamit, CBE +
J.B. Rae Smith
+ Member of the Audit and Risk Committee
§ Member of the Remuneration and Nomination Committee
& Member of the Strategic Planning Committee
SECRETARY
M.R. Scantlebury
REGISTERED OFFICE
Level 2, @345, Stanley Esplanade, Section 20, Allotments 3, 4 and 5
Granville, Port Moresby, National Capital District
Papua New Guinea
Telephone: +675 313 7400 / 79987000
P.O. Box 1
Port Moresby, National Capital District, 121
Papua New Guinea
AUDITORS
PricewaterhouseCoopers
P.O. Box 484
Port Moresby, NCD
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 PNGX Markets Limited
and the Australian Securities Exchange Limited
A. R. B. N.
055 836 952
S
T
E
A
M
S
H
I
P
S
T
R
A
D
I
N
G
C
O
M
P
A
N
Y
L
I
M
I
T
E
D
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
2
Level 2, @345, Stanley Esplanade, Section 20, Allotments 3, 4 and 5
Granville, Port Moresby, National Capital District, Papua New Guinea
P.O. Box 1, Port Moresby, National Capital District, 121, Papua New Guinea
P: +675 313 7400 / 79987000
steamships.com.pg