psa international annual report 2015 building in the healthcare sector. ... seven years of...

P S A I N T E R N AT I O N A L—

A N N U A L R E P O R T 2 0 1 5

I T I N E R A R Y

1 Mission & Values

Charting Paths of Progress4 Group Chairman’s Message6 Group CEO’s Message

Delivering Growth Through Diversity 10 Board of Directors12 Senior Management Council

Going Places with Strong Relationships 16 Global Footprint18 Group Financial Highlights

A Journey to Remember22 Operations Review

Moving Hearts and Minds 26 Navigating by True North27 People Pave the Way28 The Wheels of Change in Motion

30 Financial Review

88 Corporate Directory

To be the port operator of choice in the world’s gateway hubs, renowned for best-in-class services and successful partnerships.

Committed to Excellence We set new standards by continuously

improving results and innovating in every aspect of our business.

Dedicated to Customers We help our customers, external and internal,

succeed by anticipating and meeting their needs.

Focused on People We win as a team by respecting, nurturing

and supporting one another.

Integrated Globally

We build our strength globally by embracing diversity and optimising operations locally.

Every journey is a voyage of discovery, where we shore up memories of our explorations into the unknown, or revisit the familiar and create new recollections. Some memories are captured for posterity through snapshots and journal entries, while others return home with us physically in

the form of souvenirs or priceless mementos. As an operator of some of the world’s most bustling ports, PSA contributes silently to countless memories and stories, as the goods of the world

move through our terminals, reaching people from all around the globe. So welcome aboard PSA’s Annual Report 2015, and let us take you on a journey into the heart of The World’s Port of Call.

P S A I N T E R N A T I O N A L

Boldly blazing new trails into uncharted territories, seasoned adventurers undertake their journeys with meticulous planning, careful navigation and seamless cooperation with their teams. Similarly, as we foray into regions unknown to grow our global footprint, we embrace the spirit of collaboration by building strong teams and fostering mutually beneficial partnerships. We traverse changing tides with confidence, staying true to our shared beliefs and values – to create connections and build trust by listening, understanding and communicating alongside.

64.10 million TEUs (a decline of 2.0% over 2014). PSA Singapore Terminals (PSA ST) contributed 30.62 million TEUs while terminals outside Singapore achieved 33.48 million TEUs. Group revenue and net profit were S$3.57 billion and S$1.27 billion respectively.

Despite the economic difficulties, PSA, maintaining a long term view continued to invest, expanding its global network to provide a greater level of connectivity for its customers. In China, we struck a partnership with Beibu Gulf Port Group and Pacific International Lines to operate a world-class terminal facility in Qinzhou City. Over in India, Kakinada Container Terminal in Andhra Pradesh heralds PSA’s expanding footprint in India.

For Singapore, 2015 was a significant year marking the nation’s 50th anniversary of independence. In timely celebration of this national milestone, our flagship PSA ST officially opened Pasir Panjang Terminal Phases 3 and 4.

Besides our continual investments in the upgrading of PSA terminal facilities to better serve our customers, we continue forging ahead on R&D and securing a pipeline of skilled maritime personnel. During the year, PSA signed a Memorandum of Understanding with Singapore’s Ministry of Transport to develop an autonomous truck platooning system which will alleviate trucking manpower shortage and increase cargo transportation by the industry.

The year 2015 confounded the world with an onslaught of perplexing complexities and uncertainties that culminated in a general loss of confidence on all fronts. It bewildered governments, policy makers, central bankers, business leaders

and investors alike. The unusual and extreme volatility that persisted was a bane to all market and business operators.

Escalation of geopolitical tensions in Europe and the Middle East and the rise of extremism threatened to destabilise the global economy, sparking security concerns and added to the erosion of market confidence. A combination of oversupply and weak demand forced oil prices to their lowest levels in the past decade. Some countries turned increasingly inwards and protectionistic, further depressing international trade.

Economies almost everywhere registered anaemic or lower growth, including China which had been for the past decade one of the key growth engines of the global market place.

The container shipping industry has not been spared the global downside risks as it continues to grapple with softening trade and demand, excess tonnage capacity and depressed freight rates.

Amidst this troubling economic landscape, and despite anticipating and preparing for the then oncoming storm, PSA was nevertheless adversely affected albeit to a lesser extent than would be otherwise. PSA’s portfolio of terminals Group-wide handled a throughput of

GROUP CHAIRMAN’S MESSAGE

JOURNEY WITH THE WORLD’S PORT OF CALL

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encourage a spirit of volunteerism and promote eldercare knowledge amongst Singapore-based employees. In view of Singapore’s ageing population and manpower crunch, PSA hopes to contribute towards capacity building in the healthcare sector.

In less than a year since H@H began, PSA had committed over 2,900 staff manhours for volunteer assignments and training with our four program partners – St Luke’s ElderCare (SLEC), HCA Hospice Care, NUHS and Lions Befrienders. In addition, we also donated S$1.5 million to SLEC towards the establishment of new training and eldercare facilities.

Amid reflections of the journey that saw Singapore develop from a third to first world nation in five decades, we traced the growth of the Port of Singapore and PSA in short vignettes which were aired on Channel NewsAsia. Concurrently, keeping in mind that a nation’s future is just as important, we sponsored in The Straits Times, a series of thought-provoking essays envisioning Singapore’s development in another half a century.

With PSA’s staunch support of providing education opportunities for the underprivileged, the seventh batch of Howe Yoon Chong PSA bond-free scholarships were awarded to 16 deserving students, bringing the number of scholarship holders to over 110 since the program’s inception in 2009. Furthermore, an additional S$1 million was injected to the endowment fund by PSA, with the aim of extending this benefit to more young Singaporeans in the years to come.

In Europe, our flagship PSA Antwerp continues their good work with the New Belgica social project, which provides unemployed young persons with training and employment opportunities by building a full-scale museum replica of the famous Belgian ship ‘The Belgica’ which sank in 1899.

PSA redoubled its commitment towards environmental sustainability by taking part in “Go Green”, a coordinated campaign among several major terminal operators and the Port of Rotterdam Authority for the first time to promote environmental awareness and sustainability. Around the world, PSA staff took part in a wide range of activities, from community and terminal clean-ups to water conservation, donation drives and recycling.

As we enter 2016, the ongoing turbulence and continuing decline in market confidence portend another troubling year. I foresee the road ahead of us teeming with thorns and thistles, trials and tribulations and perhaps not a few unwelcome surprises. It is a journey that will undoubtedly test our mettle but we remain undaunted, because the challenges inspire courage and the difficulties breed determination; both of which PSA assuredly possesses.

We have come a long way, with over five decades of port management and container handling experience behind us, a close-knit network of supportive partners and 30,000 people working alongside one another to serve our customers.

I am confident, as ‘One PSA’, we will forge ahead in spite of the headwinds that may blow our way, and be there to welcome brighter days in the not distant future.

FOCK SIEW WAH Group Chairman

Separately, in a bid to improve the knowledge and skill sets of future generations of maritime workers, PSA has partnered two polytechnics in Singapore to provide enhanced industry-related courses, scholarships and employment opportunities for their students.

Our enduring commitment towards providing uncompromising and constant care was again recognised by the industry when PSA International was honored with the “Terminal Operator Award” for the 14th time at the Lloyd’s List Asia Awards and “Best Global Container Terminal Operating Company” at the Asian Freight, Logistics and Supply Chain Awards; while PSA ST was chosen as “Best Container Terminal – Asia (Over 4M TEUs)” at the same event. The terminal also clinched the “Seaport Operator of the Year” title at the Supply Chain Asia Awards.

Our overseas terminals also made their mark in 2015 as Pusan Newport International Terminals won the “Emerging Terminal Operator Award” for a second time at the Seatrade Maritime Awards Asia, and Mersin International was “Port Operator of the Year” for the fifth year running at the Turkey Logistics Awards.

I would like to thank our valued customers and partners for continuing to place their trust and confidence in us. On behalf of the Board, I would also like to convey our gratitude to the management, unions and staff for their dedication, hard work and committed efforts towards working as a cohesive team in the face of the many vexing challenges.

My grateful appreciation to the PSA International Board of Directors for their astute insights and invaluable contributions; in particular, my special thanks to Dr Tan Chin Nam who retired in June 2015 after seven years of distinguished service, and Steven Terrell Clontz who joined us from 1 January 2015.

Beyond the financial facts and figures, the portfolio and profits, the soul of a company lies in its governance and in the manner in which it gives back to the local communities in which it operates.

We are glad to be providing employment to 30,000 direct and contract staff in our terminals around the world. They in turn catalyse the creation of many more jobs in the supply chain, supporting people in the local communities.

Besides contributing towards employment, we are active in discharging our Corporate Social Responsibility (CSR) in the communities we operate in around the world.

In conjunction with Singapore’s golden jubilee, July 2015 saw the launch of the PSA Health@Home (H@H) CSR initiative that seeks to

PSA INTERNATIONAL ANNUAL REPORT 2015

5

The abundance of shipping capacity and the persistently low bunker prices encouraged a shift towards direct calls, impacting transhipment volumes at our flagship PSA Singapore Terminals (ST) which handled 30.62 million TEUs, a decline of 8.7%. PSA’s terminals outside Singapore contributed 33.48 million TEUs, a rise of 5% over 2014.

We take the tough business conditions in our stride and remain confident that PSA has in place the right fundamentals in portfolio, process and people to pursue our long term goals and strategies.

In 2015, PSA continued to grow organically in a number of locations and also through the acquisition of new port projects in China and

India. Operations started from October at Beibu Gulf-PSA Container Terminal in Qinzhou; while over in Andhra Pradesh, Kakinada Container Terminal was officially launched in November to serve East India’s vast agricultural, seafood and commodity hinterland.

During the year, PSA ST added three berths in its expansion of PPT phases 3 and 4. At the same time, our other flagship in Antwerp oversaw the development of Deurganckdock which will enable all MSC operations to shift out of Delwaidedock to the Left Bank of Scheldt River in 2016.

In my four short years with the ports and maritime industry, I have traversed the optimistic post-Global Financial Crisis period; marveled at the massive impact of the rapidly changing mega liner alliances; witnessed a spate of port congestion

around the globe caused by the arrival of mega ships and the inadequacy of some berth facilities; mulled over protracted dips in crude oil prices to 11-year lows; and, in the last six months, been confronted with a global economy that has lost much of its growth momentum resulting in anaemic trade flows.

These are difficult, uncertain times, but also challenging and exciting. I am convinced that this unprecedented pace of change and high volatility will persist for a while and will elementally shake up how industry players collaborate or compete in this dynamic environment. This is vexing the best minds in our industry and we will need to ride out these turbulent waves together.

Against this backdrop, globally in 2015, PSA handled 64.10 million TEUs of containers, a 2.0% drop from the year before.

GROUP CEO’S MESSAGE


6

Track. Other HR initiatives also continued to provide employees with greater international exposure as well as groom the next generation of PSA leaders.

A team of PSA senior leaders also reviewed our high-performing terminals to gather strategic insights, and distil the most effective management practices for application in the rest of the PSA global family.

At PSA Singapore Terminals, an extensive review of organisational structure was conducted in early preparation to face the next lap of challenges. The organisational changes, which were effected from 1 January 2016, were designed to make the company more agile and responsive for optimal business delivery.

Looking back at the various triumphs and lessons in 2015, we are truly thankful to our customers for their continued patronage. I want to assure them of our unwavering focus on improving our service, facilities and productivity. We will invest, upgrade, work alongside our customers and partners, and give of our best to them in anticipation of better times ahead.

For 2015, I am particularly encouraged by the launch and rapid uptake of our latest CSR initiative, PSA Health@Home in Singapore, by our colleagues and friends. Through this initiative, we all have the opportunity to be trained and volunteer systematically in a broad range of societal eldercare needs.

I am also grateful to our Group Chairman and the Board of Directors for their experienced stewardship and wise counsel, which have helped steer PSA through the year of challenging developments. Last but not least, let me convey heartfelt appreciation to my management colleagues, unions and staff for their staunch support and contributions. In 2015, as one PSA, we had managed to achieve many milestones, making progressive but fundamental changes internally, and readying our facilities and re-shaping our relationships with our customers externally.

In the new year, the uncertain times ahead present both impetus as well as opportunity for us to ride the momentum of change to our advantage. As the Chinese idiom goes – we have readied ourselves and look forward to seizing the East wind (“万事具备,

只欠东风”), as we continue in our pursuit of the goals that bring us ever closer to Making Global Championship Real for PSA.

TAN CHONG MENG Group CEO

In the Middle East, PSA’s connectivity was bolstered with the completion and start-up of Saudi Global Ports in Dammam in April. Similarly, PSA Marine made strides globally with the commencement of towage operations for Oman LNG LLC from January 2015, and the acquisition into a European marine services operation that supports offshore wind installations in late 2015.

Elsewhere, PSA Panama International Terminal started its Phase 2 expansion work in April 2015, while over in India, the laying of the foundation stone in October signified a construction milestone for our new Bharat Mumbai Container Terminals. In 2016, the East Med Hub expansion in Mersin Port, Turkey, and PSA Sines’ Phase 2+ development in Portugal are expected to be completed. Similarly, the start of operations is expected later in 2016 for PSA’s investment in Buenaventura, Colombia as well as the New Priok Container Terminal 1 in Jakarta, Indonesia.

We believe all these investments today will put us in good stead to respond to future trade growth in developing markets and to support the still-unfolding drama of mega liner alliancing. For the latter, PSA stands prepared with our mega vessel-ready facilities to deliver future customer expectations.

In terms of process, we achieved several milestones.

The PSA Process Council completed documenting 83 key practices that comprehensively define our operations and will be incorporating the lessons learnt into standard operating procedures, as well as the PSA Global Terminal Operating System being developed in-house. A new department, Group Technology, was set up at the Corporate Centre to drive automation and technologies of the future for the PSA Group. In parallel, the Terminal Design and Development Committee was established to provide strategic inputs to ensure PSA terminals are designed fit-for-purpose and in alignment with overarching business considerations.

Two more Centres of Expertise (CoEs) were established, bringing the total number of CoEs to 12. These will spearhead critical minority skill sets and ensure continued competency development and innovation within each CoE discipline, which will ultimately benefit our customers and partners.

Further raising the bar, PSA’s Group Innovation Awards 2015 received well over a hundred entries from our business and functional units from around the world.

Our terminals have started preparations for the implementation of Amendment to SOLAS, requiring, from 1 July 2016, all containers to have a verified gross mass before being loaded onto a vessel. We are reviewing its impact from operations, systems, equipment, commercial and regulatory perspectives, and are working closely with customers and the authorities of the various countries in which we operate.

PSA, together with other members of the Global Ports Group comprising leading port operators and authorities engaged the World Shipping Council in a dialogue on the impact mega ships have on port facilities and productivity, and other landside hinterland infrastructure.

People continue to play a key strategic role in PSA’s long term growth.

Signature in-house workshops were progressively cascaded, among them the Fish! and Fish+ suite for leadership values alignment, training sessions on coaching and teaming, and the accelerated skilling up of leaders in programs such as GM Fast


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Places of transit often bring travellers from diverse backgrounds together, united by a shared destination. The same holds true for PSA – we draw from a rich diversity of talent globally to grow from strength to strength, bound by common goals and a shared commitment to excellence.

BOARD OF DIRECTORS

Fock Siew Wah

Group ChairmanMain Committees Chairman, EXCO Chairman, LDCC

Tan Chong Meng

Main Committee Member, EXCO

Supervisory Committees Member: Southeast Asia; Northeast Asia; Middle East South Asia; Europe, Mediterranean & The Americas; Marine Services

Kua Hong Pak

Main Committees Chairman, Audit

Member, EXCO

Supervisory Committee Chairman, Southeast Asia

Notes: Dr Tan Chin Nam stepped down as PSA Board Director on 10 June 2015, after having served seven years.

EXCO – Executive CommitteeLDCC – Leadership Development &

Compensation Committee


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Tommy Thomsen Steven Terrell Clontz

Frank Wong

Main Committees Member, EXCO Member, LDCC

Supervisory Committee Chairman, Northeast Asia

Chan Lai Fung

Supervisory Committees Member: Europe, Mediterranean & The Americas; Marine Services

Davinder Singh

Main Committee Member, LDCC

Supervisory Committee Member, Southeast Asia

Kaikhushru Shiavax Nargolwala

Main Committee Member, EXCO

Supervisory Committee Chairman, Middle East South Asia

Main Committee Member, Audit

Supervisory Committee Chairman, Europe, Mediterranean & The Americas

Main Committee Member, Audit

Supervisory Committee Member, Middle East South Asia


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SENIOR MANAGEMENT COUNCIL

Tan Chong Meng

Roger Tan

Ong Kim Pong David Yang

Lee Chen Yong


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Caroline Lim

Goh Mia Hock

Oh Bee Lock

Lim Pek Suat

Terence Tan

Wan Chee Foong


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Globe-trotting chroniclers choose roads less travelled, in the pursuit of unique and enriching experiences. Along the way, new relationships and discoveries broaden their world view, while deepening their understanding of human and social dynamics. In the same way, PSA connects the world through an extensive network of ports, by building meaningful and lasting relationships with our global partners and customers.

GLOBAL FOOTPRINT

1 SINGAPORE PSA SINGAPORE TERMINALS

2 THAILAND EASTERN SEA LAEM CHABANG TERMINAL

3 VIETNAM SP-PSA INTERNATIONAL PORT

4 INDONESIA NEW PRIOK CONTAINER TERMINAL ONE

5 CHINA DALIAN TERMINALS

FUZHOU TERMINALS

GUANGZHOU CONTAINER TERMINAL

TIANJIN TERMINALS

PSA DONGGUAN CONTAINER TERMINAL

LYG-PSA CONTAINER TERMINAL

BEIBU GULF-PSA INTERNATIONAL CONTAINER TERMINAL

6 SOUTH KOREA INCHEON CONTAINER TERMINAL

PUSAN NEWPORT INTERNATIONAL TERMINAL

7 JAPAN HIBIKI CONTAINER TERMINAL

NORTHEAST ASIA

SOUTHEAST ASIA

3

2

4

7

5

6

1

16


12 INDIA

TUTICORIN CONTAINER TERMINAL

CHENNAI INTERNATIONAL TERMINALS

BHARAT MUMBAI CONTAINER TERMINALS

BHARAT KOLKATA CONTAINER TERMINALS

KAKINADA CONTAINER TERMINAL

13 SAUDI ARABIA SAUDI GLOBAL PORTS

8 BELGIUM PSA ANTWERP

PSA ZEEBRUGGE

9 ITALY VOLTRI TERMINAL EUROPA

VENICE CONTAINER TERMINAL

10 PORTUGAL SINES CONTAINER TERMINAL

11 TURKEY MERSIN INTERNATIONAL PORT

14 ARGENTINA EXOLGAN CONTAINER TERMINAL

15 PANAMA PSA PANAMA INTERNATIONAL TERMINAL

16 COLOMBIA SOCIEDAD PUERTO INDUSTRIAL AGUADULCE

MIDDLE EASTSOUTH ASIA

EUROPE &MEDITERRANEAN

THE AMERICAS

8

9

10

15

11

13

12

16

14

17


4,000

3,000

2,000

REVENUE ($ million)

1,000

50

20

40

60

70

30

20132012 2014 2015

10

0 0

THROUGHPUT (million TEUs)

GROUP FINANCIAL HIGHLIGHTS

TEUs – Twenty-foot Equivalent UnitsAll amounts in Singapore dollars 2015 2014 2013 2012

THROUGHPUT (MILLION TEUs)Singapore 30.6 33.6 32.2 31.3Overseas 33.5 31.9 29.6 28.8Global 64.1 65.4 61.8 60.1

CONSOLIDATED INCOME STATEMENT ($ MILLION)Revenue 3,573 3,830 3,723 3,575Operating Expenses (2,270) (2,403) (2,296) (2,223)Operating Profit 1,303 1,427 1,428 1,351Other Income 46 155 184 131Profit from Operations 1,349 1,582 1,612 1,482Finance Costs (174) (171) (178) (185)Share of Profit of Associates 188 171 186 182Share of Profit of Joint Ventures 173 131 106 55Profit before Income Tax 1,535 1,713 1,726 1,534Income Tax Expense (219) (264) (253) (247)Profit for the year 1,316 1,449 1,474 1,287Non-controlling Interests (48) (47) (48) (31)Profit attributable to Owner of the Company 1,268 1,402 1,425 1,257

CONSOLIDATED FINANCIAL POSITION ($ MILLION)Total Assets 17,147 17,758 17,147 15,951Total Liabilities 6,590 6,837 6,781 6,395Total Equity 10,556 10,921 10,367 9,556

FINANCIAL RATIOSOperating Margin1 36.5% 37.3% 38.3% 37.8%Return on Average Total Assets2 8.5% 9.3% 10.0% 9.3%Return on Average Total Equity3 12.3% 13.6% 14.8% 14.0%Total Debt/Equity (times)4 0.44 0.44 0.47 0.48

Economic Value Added ($ million) 609 650 601 451

Earnings per Share ($) 2.09 2.31 2.35 2.07

1 Operating profit expressed as a percentage of revenue2 Profit for the year, add back finance costs, expressed as a percentage of average total assets3 Profit for the year, expressed as a percentage of average total equity4 Total debt divided by total equity

20132012 2014 2015


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GEOGRAPHICAL CONTRIBUTION

20142015SEGMENT REVENUE

SEGMENT NON-CURRENT ASSETS

Southeast Asia49%

Others7%

Europe & Mediterranean

24%

Southeast Asia59%

Northeast Asia10%

20142015

Others

7%

Europe & Mediterranean25%

Southeast Asia60%

Northeast Asia8%

Others

13%

Europe & Mediterranean

19%

Southeast Asia48%

Northeast Asia20%

Others

9%

Europe & Mediterranean20%Northeast Asia22%


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From ticket stubs to scribbled travelogues, avid travellers love to log each memorable journey with the elements that trace their passage through space and time. Bound within their journal is a treasure trove of knowledge and experiences for reflection, that also serve as inspiration for future adventures. Likewise, PSA’s transformation story from a single port to a Global Terminal Operator is a journey to remember, yielding decades of experiences and a sterling track record in port operations.

SOUTHEAST ASIA

In 2015, mega vessel calls at PSA Singapore Terminals (ST) increased almost 6% to over 1,300 in 2015. With more such ships coming into service, three additional berths came on stream under Pasir Panjang Terminal’s (PPT) Phases 3 and 4 expansion. This project is specifically designed to serve the next generation of mega container vessels. When all phases of PPT are fully completed in 2017, and together with PSA container facilities in Tanjong Pagar, Keppel and Brani, the Port of Singapore will be able to handle up to 50 million TEUs of containers annually, reinforcing the nation’s status as an International Maritime Centre.

PSA has been gearing up its port productivity to stay ahead of growing business complexity stemming from the advent of mega alliances and vessel upsizing. PSA ST is exploring Autonomous Truck Platooning technology, comprising one human-driven truck with one or more driverless trucks following behind, in collaboration with the Singapore Ministry of Transport. Additionally, its Automated Guided Vehicle (AGV) project has expanded with live testing of more vehicle units at two PPT container berths.

Besides investing in technologies, PSA continues to develop new talent pipelines through partnerships with two local polytechnics. Cemented in a Memorandum of Understanding in October 2015, PSA ST and Republic Polytechnic have joined forces to equip students with industry skills as well as provide greater awareness of industry employment opportunities. PSA also partnered Singapore Polytechnic to develop a Specialist Diploma on Port Management and Operations – a 12-month work-study Earn and Learn Program set to launch in June 2016.

For its consistency in service excellence, PSA ST was voted “Best Container Terminal Asia (over 4 million TEUs)” by customers and industry professionals at the Asian Freight, Logistics and Supply Chain Awards 2015. The terminal was also named “Sea Port Operator of the Year” for the eighth year running at the Supply Chain Asia Awards 2015.

Elsewhere in Southeast Asia, PSA terminals in Thailand performed reasonably well in the face of economic headwinds on trade. In Vietnam, SP-PSA International Port continues to explore liner opportunities. 2015 also saw construction and equipment deliveries underway at PSA’s latest Southeast Asian venture – New Priok Container Terminal One in Jakarta, Indonesia. It is expected to be operational by end of 2016.

NORTHEAST ASIA

In June 2015, PSA inked a joint venture agreement with Beibu Gulf Port Group and Pacific International Lines to operate Beibu Gulf-PSA International Container Terminal (BPCT) in Qinzhou. The terminal, which commenced operations in the fourth quarter of 2015, marks a milestone for PSA as the sole global terminal operator in the Guangxi-Beibu Gulf region. BPCT supports the vast hinterlands of China’s southwest region and is an important gateway under China’s ‘One Belt, One Road’ initiative to facilitate key shipping connections to ASEAN, East Africa and the Mediterranean.

Despite the slowdown in the economy, PSA’s port projects in China turned in modest growth of 4.1% compared to the year before. In particular, several new shipping, shuttle and rail services commenced

in Fuzhou, strengthening our terminals’ domestic links as well as connectivity on the Far East-Europe route. Fuzhou Container Terminal-Jiangyin achieved a creditable 14.5% increase, handling combined throughput of over 1 million TEUs. PSA’s Tianjin Terminals managed over 4 million TEUs or 8.3% growth, while LYG-PSA Container Terminal reported throughput increase of 8.9%.

Demonstrating PSA’s unceasing commitment to provide efficient and value-added services, Fuzhou International Container Terminal garnered two awards during the year, including “Top Ten Container Terminals in China” for the sixth time at the 11th China International Shipping Festival; Dalian Port Container Terminal also won the “Top 10 Container Terminals–Comprehensive Service Award” and “Best Productivity Award–Container Terminal” at the 12th China Logistics Award – attesting to the terminal’s continuous strive for service excellence.

Over in South Korea, PSA maintained solid footing with positive growth. Of particular note was Pusan Newport International Terminal which handled close to 2.4 million TEUs, an increase of 31.1% compared to the year before. The terminal’s sterling performance and exceptional service levels enabled it to clinch the “Emerging Terminal Operator Award” for the second consecutive year at the Seatrade Maritime Awards Asia 2015.

MIDDLE EAST SOUTH ASIA

PSA’s throughput for the region grew by 14% compared to the year before, largely boosted by Bharat Kolkata Container Terminal in India which handled more than half a million TEUs in its first full year of operations. Further south, Tuticorin Container Terminal achieved close to 500,000 TEUs for the year while Chennai International Terminals (CITPL) moved almost 670,000 TEUs. CITPL also welcomed a new train shuttle service that links the terminal to Concor’s Inland Container Depot in Tondiarpet.

Over in Maharashtra, construction of Bharat Mumbai Container Terminals in Jawaharlal Nehru Port is on track and is expected to be operational by end of 2017. The largest container terminal in India, it will serve the region’s important industrial and manufacturing centres located in the country’s northwestern hinterland with a population in excess of 400 million.

PSA’s presence in India was strengthened with the addition of Kakinada Container Terminal (KCT). Located strategically in Andhra Pradesh and connected to key cities in the region, KCT is well-positioned to support East India’s agricultural, seafood and commodity hinterlands. The terminal handled its first vessel in January 2016.

Over in the Kingdom of Saudi Arabia, Saudi Global Ports in Dammam started commercial operations in April 2015. Featuring the deepest berths in the region at 16 metres, the terminal welcomed the 8000-TEU container ship M/V OOCL Europe on her first call to the port in December.

EUROPE & THE MEDITERRANEAN

In 2015, PSA terminals in Europe and the Mediterranean reached a record throughput of 14.6 million TEUs, an increase of 2.7% versus a market contraction of 3.3% across the region.

OPERATIONS REVIEW


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MSC PSA European Terminal (MPET) in Antwerp enjoyed strong volumes due to the start of 2M services in January, reaching 7 million TEUs or 20% growth. Major upgrading works were initiated as Deurganckdock was expanded to be able to accommodate all MPET services in 2016. It also received five new mega quay cranes with 25-row outreach, with four more due to arrive before the end of 2016. When upgrading is complete, MPET will be capable of handling 9 million TEUs per annum on a single platform, making it the single largest container terminal in Europe.

Concurrently, PSA Antwerp has invested in additional infrastructure, cranes and equipment at its Noordzee and Europa Terminals to cater to the expanding needs of its customers. Its Hinterland Network was widened to cover over 20 destinations in five countries, namely Belgium, Netherlands, Germany, France and Poland.

In Italy, PSA Venice achieved exceptional growth at 34%, partly due to a new direct service. PSA Voltri Prà also performed creditably, handling almost 1.27 million TEUs or 8.1% more than the year before. The terminal marked a milestone with the arrival of 14,000-TEU vessel MSC Bettina. To provide better customer service, four gooseneck cranes with 25-row outreach and 50-metre lifting height were ordered in 2015 and are expected to be commissioned in the first half of 2016, while an additional four will arrive by the end of the year.

PSA Sines in Portugal grew by a commendable 8.5% to reach 1.3 million TEUs in spite of the country’s continued anaemic growth. Following the completion of Phase 2 development in March 2015, the terminal initiated a new expansion phase to create a feeder berth and strengthen its position as a major maritime hub in the region.

Over in Turkey, expansion works which commenced at Mersin International Port (MIP) are expected to complete by mid 2016. The East Med Hub project will enable MIP to accommodate vessels of 15.5-metre draft and achieve an annual handling capacity of 2.6 million TEUs. The terminal continues to set the national

benchmark for operational excellence as it was recognised as “Port Operator of the Year” at the 2015 Turkey Logistics Awards for the fifth year running.

THE AMERICAS

Exolgan Container Terminal in Argentina handled 468,000 TEUs in 2015, an increase of 8.2% over the year before. During the year, initiatives were put in place to improve operational efficiency, including the implementation of a new terminal operating system and the commissioning of a 10th quay crane.

Over in Panama, groundbreaking for PSA Panama International Terminal’s Phase 2 expansion took place in May 2015. Upon its completion in 2017, the terminal will be able to berth 18,000-TEU vessels and handle up to 2 million TEUs annually.

Situated in the Port of Buenaventura, Colombia, construction of Sociedad Puerto Industrial Aguadulce (SPIA) is underway, with targeted commencement of operations in the third quarter of 2016. SPIA will be the first port of call for southbound shipping services to and from the west coast of South America.

PSA MARINE

In 2015, PSA Marine continued to expand its global portfolio, partnering Njord Offshore Ltd to operate a fleet of crew transfer vessels servicing the offshore wind market in Europe. The collaboration allows PSA Marine to tap on growth opportunities in the region’s offshore renewable energy market.

In Singapore, PSA Marine took further steps to engage and work alongside the port and shipping community to reach a new pilotage service level standard – 90% of pilotage jobs to be serviced within 30 minutes of the service required time. The company will continue to optimise resources to achieve higher and sustainable productivity.

Illustration by Caroline Lim © 2016 Caroline LimReproduced with permission from the copyright owner. Not to be reproduced without permission.


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From a cross-country trip to an anniversary vacation, the most endearing and enduring memories of travel are often those spent in the inspiring company of others. At PSA, we appreciate our people and encourage them to express their appreciation of others, through an empowering culture that motivates them to stretch and shine.

PSA International’s Board of Directors is committed to their role in overseeing the organisation’s business affairs. The Board’s insight and acumen have been invaluable in providing guidance in various matters on strategic planning, focusing on growth and financial performance.

The Board meets every quarter to decide business direction, review investment opportunities and approve budgets and audited accounts. A majority voting system determines the outcome. In the event of a tie in votes, the Chairman holds the deciding vote.

The following Committees support the Board:

• EXECUTIVECOMMITTEE(EXCO)The EXCO develops and reviews long-term strategies for the PSA Group. It is responsible for the approval of major acquisitions, loans, divestments, capital expenditures, provision of guarantees, investment policies, customer contracts, tenders and purchase contracts.

• AUDITCOMMITTEE(AC)The AC identifies and mitigates significant risk areas through regular reviews of the effectiveness of control procedures. It assesses the reliability of management reporting and compliance with applicable laws and regulations, and reviews the statutory accounts.

• LEADERSHIPDEVELOPMENT&COMPENSATION COMMITTEE (LDCC)The LDCC oversees leadership development, talent management and remuneration. It ensures that the PSA Group has in place appropriate programs and consistent policies for grooming leaders, developing global talent and preparing potential successors for key leadership positions. It also reviews the performance and approves the remuneration of PSA senior management.

• SUPERVISORYCOMMITTEES(SCs)The SCs are responsible for aligning management resources for the better management of PSA’s global portfolio of terminals. There are five SCs: Southeast Asia SC, Northeast Asia SC, Middle East South Asia SC, Europe, Mediterranean & The Americas SC and Marine Services SC. Each SC plans and reviews growth strategies and approves major capital expenditures, customer contracts, tenders and purchase contracts for PSA entities under its business purview.

As a leading port operator, the PSA Group consistently upholds the call for business integrity in its commercial practices by adhering to the PSA Code of Business Ethics & Conduct.

NAVIGATING BY TRUE NORTH


26

People are PSA’s most important asset and a key enabler as we strive towards being a global champion.

THELEADERSHIPJOURNEY

Leadership development has been a continued priority, with signature in-house designed leadership programs such as LeaderFish! and LeaderFish+, tailored to align leadership creeds with passion, purpose and performance.

Dovetailed with executive leadership programs, holistic feedback tools like RED / TEAM RED 360°, coaching and mentoring, HBDI Profiling and more, there is an arsenal of resources supporting the leader’s development journey.

We have progressively rolled out our in-house coaching program to senior leaders globally, and our flagships are cascading the workshops to sustain the coaching culture. In tandem, the mentoring program prepares each level of leaders to groom, guide and plan for the next generation.

THEWORLDISYOUROYSTER

To raise our global capabilities and leverage Learning and Development as a competitive edge for business success, we have consolidated our global learning thrust on a common platform, a move which articulates our mission to be the leading port-learning institute of the world.

In transforming the global port industry, we aspire to play a key role by developing the next generation of port leaders, professionals and specialists – through innovative teaching methods founded upon years of experience and expertise, and groundbreaking research that pushes the boundaries.

The common learning platform will carry PSA’s signature leadership, culture and team effectiveness programs, provide customised solutions and enhanced skills training and support start-ups and projects. Terminal excellence studies were conducted across our global business units to encourage the sharing of ideas, and from there we gleaned productivity best practices to sharpen our global capabilities – in the service of reaching higher levels of service and performance.

THE GLOBAL CITIZEN

Talent diversity and integration is vital for organisational ability. For cross-cultural exposure, several development programs were created to harness the powerful synergies across our global network.

The Short-Term International Development Experience (STRIDE) program is one such example, where employees undertake a major business project at an overseas port, allowing for the cross-fertilisation of ideas. Participants have described the program as a truly immersive and multi-dimensional learning opportunity that has developed them immeasurably.

The Managed Open Resourcing (MOR) scheme facilitates optimal development and deployment worldwide. Business needs and personal aspirations are matched via the e-Individual Development Plan (eIDP – a tool aiding transparent development discussions), with HR and the regions and functions as coordinators.

The bespoke GM Fast Track program has also been designed to accelerate the learning curve for PSA leaders heading new port projects, while the POMP (Port Operations and Management Program) provides a holistic span of learning across key aspects of the business.

THE CULTURE CHANGE MOVEMENT

For culture and engagement, Fish! and Fish+ have taken the PSA world by storm, becoming a movement involving close to 15,000 employees across the globe. Technological innovations have taken employee appreciation, motivation and recognition to new heights, with the creation of the Fishapp (a tool for staff to express appreciation to one another) and an online Fishop (a reward-recognition platform). These PSA innovations target employee engagement and facilitated the sending of close to 120,000 messages of appreciation in just one year of launch. By successfully encouraging teaming and motivation across different levels of the organisation, the culture of Fish! and Fish+ have helped to strengthen staff cohesion and make real the belief that PSA is a great place to work.

In late 2015, an Employee Opinion Poll (EOP) was conducted to determine the level of employee engagement at PSA. We were heartened that the overall participation rate across our global business units was a record high of 88%, a rise of 7% over the previous poll’s rating. Overall employee satisfaction was close to 80%, rising from 76%. There was again resounding confidence in the leadership, with 76% indicating that PSA was well-led, rising from 75%. In addition, the Fish! and Fish+ culture change movement was voted the best HR initiative for the fourth consecutive time.

We are greatly encouraged by the EOP results, which serve as a quantitative and qualitative measure of the progress made in creating a great workplace culture, or what we term, a great “Smell of the Place” at PSA – shorthand for describing an environment that promotes Stretch (passion and purpose), Support (people development, service excellence), Self-Discipline (commitment) and Trust (teamwork, strong relationships).

THE MORAL COMPASS

No learning journey is complete without a tool for navigation, and the moral compass of PSA is The Code – Business Ethics and Conduct. The Code is the reference which aligns all PSA staff on our values – which are the preservation of integrity and trust, while exercising ethical decision-making in all our endeavours. For while the paths we travel may twist and turn, amidst the challenges that beset the industry, guided by The Code, we safely tread upon the straight and narrow.

PEOPLE PAVE THE WAY


27

Wherever PSA operates in the world, we aspire to be a positive force in the local communities, by contributing back to society in ways big and small, to bring about change for the better.

2015 was a significant year for us as Singapore – from where PSA can trace its roots and heritage – commemorated its 50th anniversary of independence, under the banner of “SG50”.

On 9 July, in conjunction with the Golden Jubilee celebrations, we launched PSA Health@Home (H@H), a new corporate social responsibility (CSR) program which seeks to encourage a spirit of volunteerism and promote eldercare knowledge amongst Singapore-based staff. Under the initiative, employees are given time-off from work and a transport allowance, for eldercare training and to volunteer with our four H@H program partners comprising established healthcare and welfare organisations. They are St Luke’s ElderCare (SLEC), HCA Hospice Care, National University Health System (NUHS) and Lions Befrienders. In addition, H@H aims at sustaining these volunteerism efforts by supporting staff who volunteer on a regular basis after retirement, whereupon they would receive a small monthly stipend from PSA.

In tandem with the launch of H@H, PSA inked a five-year Memorandum of Understanding with SLEC and donated S$1.5 million towards the establishment of three new eldercare service, training and innovation centres. In return, SLEC provides training and volunteering opportunities to PSA employees, as well as imparts healthcare and eldercare knowledge to staff nearing retirement, to equip them with basic caregiving and active-ageing skills.

During the year, PSA collaborated with Mediacorp to produce short TV vignettes as part of the SG50 celebrations. Screened on Channel NewsAsia, the vignettes showcased the history and development of the Singapore Port and PSA.

Concurrently, we partnered Singapore Press Holdings to publish a series of 20 futurist-themed essays in The Straits Times. Leading thinkers in industry, politics and economics from Singapore and around the world contributed their ideas, including our Group CEO Tan Chong Meng. While the opinion pieces are topically diverse, they are bound together by the common thread of envisioning Singapore’s future 50 years hence. These were subsequently compiled into a commemorative book titled “2065”.

Education continues to be a key CSR focus at PSA. For the seventh year, Howe Yoon Chong PSA bond-free scholarships were awarded to 16 deserving students from underprivileged families who achieved commendable grades while contributing actively to their local communities. The bond-free scholarships pay for tuition and other compulsory fees, as well as provide book and living allowances. Since its inception in 2009, the program has made a difference to the lives of over 110 students. In 2015, PSA also injected an additional S$1 million to the scholarship endowment fund to benefit more young Singaporeans in the future.

In further support of education, S$100,000 was donated to the Kwa Geok Choo Law Library for the fifth year.

Throughout 2015, PSA supported a wide spectrum of causes within the local community that made our SG50 celebrations infinitely more meaningful. The beneficiaries – spanning from charity and healthcare organisations, to education, arts and culture institutions – included Assisi Hospice; Asian Civilisations Museum; Singapore Cord Blood Bank; Singapore Symphony Orchestra; Singapore Chinese Orchestra; Singapore Lyric Opera; Singapore Table Tennis Association, and many others.

In particular, we continued our engagement with the community in the areas of special needs and youth development. More than 800 participants attended the annual PSA Charity Fair fundraiser

THE WHEELS OF CHANGE IN MOTION


28

and all proceeds went to the Muscular Dystrophy Association Singapore. For the third year running, PSA also lent a helping hand to The Haven, a shelter for children and youths from disadvantaged families, by organising a host of experiential learning activities and funding improvement works for the residential home.

PSA also sponsored various education and youth development projects initiated by the Children’s Charities Association of Singapore, WorldSkills Singapore, and several institutions of higher learning – such as the adoption of Institute of Technical Education College East’s PSA Study Corner and a laboratory in Ngee Ann Polytechnic. We also continued to be a principal sponsor of Singapore’s National Day Parade (NDP). As a tribute to the Port’s significance in the nation’s history, PSA was one of nine organisations which participated exclusively in the Vintage Parade segment – a special highlight of NDP 2015.

Elsewhere in Asia, PSA terminals adopted various projects to benefit the local communities.

In Thailand, staff of Eastern Sea Laem Chabang Terminal visited the Baan Ang Sua-dam School in the province of Chachoengsao, to aid the school in improving its infrastructure and surrounding environment.

Over in China, employees of Dalian Container Terminal organised educational activities for children of an impoverished rural village, as well as raised funds to purchase equipment for the local school and stationery items for the children. Similarly, Tianjin Port Pacific International Container Terminal jointly coordinated a fundraising drive with Tianjin Port Group and Tianjin Dongjiang Bonded Port Union, with proceeds going towards building a field for a local primary school. LYG-PSA Container Terminal in Lianyungang held fundraising activities for underprivileged families in its locality. Guangzhou Container Terminal continued its active support of a school for autistic children with special needs through financial contributions, active volunteerism and coordination of events, such as an annual sports meet.

In India, Chennai International Terminals started the “Windows To Our Soul” initiative as staff worked hand in hand to improve the living conditions at a children’s home in the municipal town of Arakkonam. PSA Sical employees in Tuticorin organised a Children’s Day celebration for the children of Arumugasamy Anbu Ashram orphanage. The terminal also organised a free health screening for all staff under the “Be Well Hospitals” program.

Over in Europe, PSA Antwerp’s partnership with the New Belgica project reached its fourth year. The terminal co-funded the costs of recruitment, training and purchase of shipbuilding materials for the social project, which focuses on reintegration and education, providing unemployed youngsters with training and employment opportunities through the building of a full-scale museum replica of the eponymous vessel ‘The Belgica’, which sank in 1899. Separately during the year, staff from the terminal continued their participation in the annual 1000-kilometre cycling event organised by the Belgian Cancer Foundation, to raise funds for the organisation. To cultivate altruism among its employees, PSA Antwerp also provided financial support towards selected CSR projects initiated by its staff.

PSA Sines in Portugal focused its efforts towards local community projects, from rebuilding social facilities in schools, to sponsoring cultural festivals and supporting major sports events and teams. In Turkey, Mersin International Port continued its collaboration with Mersin University Conservatory to provide music education for gifted youths in MIP Kids’ Music Academy. The terminal also supported the ‘Lend a Hand to My Disability Project’ with the renovation of a special education sports facility, as well as contributed towards repairs and refurbishment of local schools.

Over in Argentina, Exolgan Container Terminal financially supported 1,200 students through school at various education levels. A champion for youth development, the terminal also disbursed seven university scholarships during the year, and collaborated with local NGOs to organise port visits, sports and cultural activities for hundreds of young people.

Besides working towards supporting the local communities in which PSA has a presence, we are also committed towards engaging in sustainable industry practices.

In 2015, PSA together with Shanghai International Port Group, APM Terminals, DP World, Hutchison Port Holdings and the Port of Rotterdam Authority joined forces for the first time in a coordinated effort for ‘Go Green’, an industry initiative seeking to promote environmental awareness and make a sustainable difference in the communities in which we operate. During the week-long campaign, employees at PSA terminals around the world organised various projects that support preserving or enhancing their local environments, such as planting trees and corals; cleaning up terminals, offices, local parks and beaches; and creating gardens or green spaces. Other activities included recycling drives, nature walks, and energy-saving seminars and talks at the workplace.

For port operations, PSA Singapore Terminals continued to work towards long-term sustainability with cleaner, energy-efficient equipment and processes. At its latest Pasir Panjang Terminal Phases 3 and 4 expansion, electrically-powered automated Rail Mounted Gantry cranes were deployed to support its container operations. It also demonstrated its commitment to green energy technologies by installing prototype ultralight and bendable solar film modules at the newest Pasir Panjang Terminal Building 3. These modules help reduce reliance on conventional fuels and contribute towards a smaller carbon footprint.

PSA’s sustained CSR efforts reflect our deep commitment to the local communities, and the belief that it is our responsibility to actively improve lives and the environment – in our endeavour to leave a positive legacy as the World’s Port of Call wherever we may be.


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Directors’ Statement

Independent Auditors’ Report

Group Financial Statements

32

34

35

DIRECTORS’ STATEMENTYear ended 31 December 2015

We are pleased to submit this annual report to the member of the Company together with the audited financial statements for the financial year ended 31 December 2015.

In our opinion:

(a) the financial statements set out on pages 35 to 87 are drawn up so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of the financial performance, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue.

Directors

The directors in office at the date of this statement are as follows:

Mr Fock Siew Wah (Group Chairman)Mr Tan Chong Meng (Group Chief Executive Officer)Ms Chan Lai Fung Mr Davinder Singh s/o Amar SinghMr Frank Kwong Shing WongMr Kaikhushru Shiavax NargolwalaMr Kua Hong PakMr Steven Terrell Clontz (Appointed on 1 January 2015)Mr Tommy Thomsen

Directors’ interests

According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants and share options in related corporations are as follows:

Name of director and corporationin which interests are held

Holdings atbeginning of the year/date of appointment

Holdings at end of the year

Fock Siew WahSingapore Telecommunications Limited– Ordinary shares 3,240 3,240

Chan Lai FungSingapore Telecommunications Limited– Ordinary shares 1,550 1,550

Davinder Singh s/o Amar SinghSingapore Airlines Limited– S$500 million 3.22% Notes due 2020 S$500,000 S$500,000Singapore Technologies Engineering Ltd– Ordinary shares 59,237 70,237Singapore Telecommunications Limited– Ordinary shares 1,800 1,800

Frank Kwong Shing WongMapletree Greater China Commercial Trust Management Ltd.– Unit holdings in Mapletree Greater China Commercial Trust 1,165,000# 1,165,000#

Olam International Limited– US$300 million 4.50% Notes due 2020 US$1,000,000# US$1,000,000#


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Name of director and corporationin which interests are held

Holdings atbeginning of the year/date of appointment

Holdings at end of the year

Kaikhushru Shiavax NargolwalaMapletree Logistics Trust Management Ltd. – Unit holdings in Mapletree Logistics Trust 200,000# 200,000#

Neptune Orient Lines Limited– S$280 million 4.65% Notes due 2020 (Callable from 2015) S$500,000# S$750,000#

Singapore Telecommunications Limited– Ordinary shares 400,000# 400,000#

SIA Engineering Company Limited– Ordinary shares 34,000# 34,000#

Kua Hong PakSingapore Telecommunications Limited– Ordinary shares 3,027 3,027

Steven Terrell Clontz StarHub Ltd– Ordinary shares 51,700 62,900

# Held in trust by trustee company on behalf of the director.

Except as disclosed in this statement, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year.

Neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Share options

During the financial year, there were:

(i) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries; and

(ii) no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries.

As at the end of the financial year, there were no unissued shares of the Company or its subsidiaries under option.

Auditors

The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.

On behalf of the Board of Directors

Fock Siew Wah Tan Chong MengDirector Director

1 March 2016

DIRECTORS’ STATEMENTYear ended 31 December 2015


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Member of the CompanyPSA International Pte Ltd

Report on the financial statements

We have audited the accompanying financial statements of PSA International Pte Ltd (the Company) and its subsidiaries (the Group), which comprise the statements of financial position of the Group and the Company as at 31 December 2015, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 35 to 87.

Management’s responsibility for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of assets.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and the financial performance, changes in equity and cash flows of the Group for the year ended on that date.

Report on other legal and regulatory requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

KPMG LLPPublic Accountants andChartered Accountants

Singapore1 March 2016

INDEPENDENT AUDITORS’ REPORTYear ended 31 December 2015


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Group CompanyNote 2015 2014 2015 2014

$’000 $’000 $’000 $’000

Assets

Property, plant and equipment 3 5,751,866 4,905,030 777 897

Intangible assets 4 662,510 653,176 1,585 1,067

Subsidiaries 5 – – 8,648,150 8,692,004

Associates 6 3,496,955 4,456,394 – –

Joint ventures 7 2,177,264 1,847,489 – –

Financial assets 8 1,253,480 1,710,628 – –

Other non-current assets 9 11,409 16,303 – –

Deferred tax assets 10 16,925 13,792 7,556 7,324

Non-current assets 13,370,409 13,602,812 8,658,068 8,701,292

Inventories 57,268 55,218 – –

Trade and other receivables 11 598,084 591,333 145,617 278,785

Cash and bank balances 14 3,120,856 3,508,208 2,181,827 2,555,549

Current assets 3,776,208 4,154,759 2,327,444 2,834,334

Total assets 17,146,617 17,757,571 10,985,512 11,535,626

Equity

Share capital 15 1,135,372 1,135,372 1,135,372 1,135,372

Accumulated profits 9,460,903 9,493,607 6,811,533 7,555,432

Other reserves 16 (314,521) 18,523 (83) 670

Equity attributable to owner of the Company 10,281,754 10,647,502 7,946,822 8,691,474

Non-controlling interests 274,517 273,130 – –

Total equity 10,556,271 10,920,632 7,946,822 8,691,474

Liabilities

Borrowings 17 3,596,930 4,325,116 1,914,748 2,576,070

Provisions 18 40,649 42,468 – –

Other non-current obligations 19 105,977 102,310 – –

Deferred tax liabilities 10 325,854 353,461 – –

Non-current liabilities 4,069,410 4,823,355 1,914,748 2,576,070

Trade and other payables 20 1,334,104 1,312,713 406,729 262,197

Borrowings 17 998,627 490,425 706,679 –

Current tax payable 188,205 210,446 10,534 5,885

Current liabilities 2,520,936 2,013,584 1,123,942 268,082

Total liabilities 6,590,346 6,836,939 3,038,690 2,844,152

Total equity and liabilities 17,146,617 17,757,571 10,985,512 11,535,626

STATEMENTS OF FINANCIAL POSITIONAs at 31 December 2015

The accompanying notes form an integral part of these financial statements.


35

Note 2015 2014$’000 $’000

Revenue 22 3,573,205 3,829,999

Other income 23 156,907 154,585

Staff and related costs 24 (835,212) (844,466)

Contract services (364,321) (410,694)

Running, repair and maintenance costs (340,715) (395,107)

Other operating expenses (360,910) (290,522)

Property taxes (32,064) (31,526)

Depreciation and amortisation (448,317) (430,352)

Profit from operations 25 1,348,573 1,581,917

Finance costs 26 (174,233) (170,692)

Share of profit of associates, net of tax 188,069 170,763

Share of profit of joint ventures, net of tax 172,709 131,133

Profit before income tax 1,535,118 1,713,121

Income tax expense 27 (218,964) (264,150)

Profit for the year 1,316,154 1,448,971

Profit attributable to:

Owner of the Company 1,268,465 1,401,801

Non-controlling interests 47,689 47,170


CONSOLIDATED INCOME STATEMENTYear ended 31 December 2015



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2015 2014$’000 $’000


Other comprehensive income

Items that are or may be reclassified subsequently to income statement:

Exchange differences of foreign operations 228,929 111,708

Exchange differences on monetary items forming part of net investment in foreign operations 29,703 22,078

Exchange differences on hedge of net investment in a foreign operation (147,014) (113,685)

Effective portion of changes in fair value of cash flow hedges (31,882) (32,077)

Net change in fair value of cash flow hedges reclassified to income statement 33,151 (1,991)

Net change in fair value of available-for-sale financial assets (457,147) 174,134

Net change in fair value of available-for-sale financial assets reclassified to income statement on recognition of impairment loss 95,400 –

Share of reserves in associates (133,541) (106,994)

Share of reserves in joint ventures 29 1,722

Reserves reclassified to income statement on disposal of subsidiaries and joint ventures – 1,597

Income tax on other comprehensive income 46,598 (17,653)

Other comprehensive income for the year, net of tax (335,774) 38,839

Total comprehensive income for the year 980,380 1,487,810

Total comprehensive income attributable to:

Owner of the Company 935,421 1,440,664

Non-controlling interests 44,959 47,146

Total comprehensive income for the year 980,380 1,487,810


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEYear ended 31 December 2015


37

Sharecapital

Capitalreserve

Insurance reserve

Foreigncurrency

translationreserve

Hedgingreserve

Fair valuereserve

Accumulated profits

Totalattributableto owner of

the Company

Non-controllinginterests

Totalequity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2014 1,135,372 33,309 97,357 (641,924) (5,732) 496,650 8,941,806 10,056,838 309,670 10,366,508

Total comprehensive income for the yearProfit for the year – – – – – – 1,401,801 1,401,801 47,170 1,448,971

Other comprehensive incomeExchange differences of foreign operations – – – 111,732 – – – 111,732 (24) 111,708Exchange differences on monetary items forming part of net investment

in foreign operations – – – 22,078 – – – 22,078 – 22,078Exchange differences on hedge of net investment in a foreign operation – – – (113,685) – – – (113,685) – (113,685)Effective portion of changes in fair value of cash flow hedges – – – – (32,077) – – (32,077) – (32,077)Net change in fair value of cash flow hedges reclassified to income statement – – – – (1,991) – – (1,991) – (1,991)Net change in fair value of available-for-sale financial assets – – – – – 174,134 – 174,134 – 174,134Share of reserves in associates – (7,229) – (84,324) 383 (15,824) – (106,994) – (106,994)Share of reserves in joint ventures – – – 579 1,143 – – 1,722 – 1,722Reserves reclassified to income statement on disposal of subsidiaries – 744 – 1,145 (87) (205) – 1,597 – 1,597Income tax on other comprehensive income – – – – 176 (17,829) – (17,653) – (17,653)Total other comprehensive income – (6,485) – (62,475) (32,453) 140,276 – 38,863 (24) 38,839Total comprehensive income for the year – (6,485) – (62,475) (32,453) 140,276 1,401,801 1,440,664 47,146 1,487,810

Transactions with owner, recorded directly in equityContributions by and distributions to owner of the CompanyCapital contribution by non-controlling shareholders of subsidiaries – – – – – – – – 5,030 5,030Dividends paid to non-controlling shareholders of subsidiaries – – – – – – – – (39,496) (39,496)Final tax exempt dividend declared and paid of $0.08 per share – – – – – – (50,000) (50,000) – (50,000)Interim tax exempt dividends declared and paid of $1.32 per share – – – – – – (800,000) (800,000) – (800,000)Total contributions by and distributions to owner of the Company – – – – – – (850,000) (850,000) (34,466) (884,466)

Changes in ownership interests in subsidiariesDisposals of subsidiaries – – – – – – – – (49,220) (49,220)Total changes in ownership interests in subsidiaries – – – – – – – – (49,220) (49,220)

At 31 December 2014 1,135,372 26,824 97,357 (704,399) (38,185) 636,926 9,493,607 10,647,502 273,130 10,920,632

The accompanying notes form an integral part of these financial statements.The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2015


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Sharecapital

Capitalreserve

Insurance reserve

Foreigncurrency

translationreserve

Hedgingreserve

Fair valuereserve

Accumulated profits


the Company


Totalequity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2014 1,135,372 33,309 97,357 (641,924) (5,732) 496,650 8,941,806 10,056,838 309,670 10,366,508


Other comprehensive incomeExchange differences of foreign operations – – – 111,732 – – – 111,732 (24) 111,708Exchange differences on monetary items forming part of net investment

in foreign operations – – – 22,078 – – – 22,078 – 22,078Exchange differences on hedge of net investment in a foreign operation – – – (113,685) – – – (113,685) – (113,685)Effective portion of changes in fair value of cash flow hedges – – – – (32,077) – – (32,077) – (32,077)Net change in fair value of cash flow hedges reclassified to income statement – – – – (1,991) – – (1,991) – (1,991)Net change in fair value of available-for-sale financial assets – – – – – 174,134 – 174,134 – 174,134Share of reserves in associates – (7,229) – (84,324) 383 (15,824) – (106,994) – (106,994)Share of reserves in joint ventures – – – 579 1,143 – – 1,722 – 1,722Reserves reclassified to income statement on disposal of subsidiaries – 744 – 1,145 (87) (205) – 1,597 – 1,597Income tax on other comprehensive income – – – – 176 (17,829) – (17,653) – (17,653)Total other comprehensive income – (6,485) – (62,475) (32,453) 140,276 – 38,863 (24) 38,839Total comprehensive income for the year – (6,485) – (62,475) (32,453) 140,276 1,401,801 1,440,664 47,146 1,487,810

Transactions with owner, recorded directly in equityContributions by and distributions to owner of the CompanyCapital contribution by non-controlling shareholders of subsidiaries – – – – – – – – 5,030 5,030Dividends paid to non-controlling shareholders of subsidiaries – – – – – – – – (39,496) (39,496)Final tax exempt dividend declared and paid of $0.08 per share – – – – – – (50,000) (50,000) – (50,000)Interim tax exempt dividends declared and paid of $1.32 per share – – – – – – (800,000) (800,000) – (800,000)Total contributions by and distributions to owner of the Company – – – – – – (850,000) (850,000) (34,466) (884,466)

Changes in ownership interests in subsidiariesDisposals of subsidiaries – – – – – – – – (49,220) (49,220)Total changes in ownership interests in subsidiaries – – – – – – – – (49,220) (49,220)

At 31 December 2014 1,135,372 26,824 97,357 (704,399) (38,185) 636,926 9,493,607 10,647,502 273,130 10,920,632


39

Sharecapital

Capitalreserve

Insurance reserve

Foreigncurrency

translationreserve

Hedgingreserve

Fair valuereserve

Accumulated profits


the Company


Totalequity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2015 1,135,372 26,824 97,357 (704,399) (38,185) 636,926 9,493,607 10,647,502 273,130 10,920,632


Other comprehensive incomeExchange differences of foreign operations – – – 231,659 – – – 231,659 (2,730) 228,929Exchange differences on monetary items forming part of net investment

in foreign operations – – – 29,703 – – – 29,703 – 29,703Exchange differences on hedge of net investment in a foreign operation – – – (147,014) – – – (147,014) – (147,014)Effective portion of changes in fair value of cash flow hedges – – – – (31,882) – – (31,882) – (31,882)Net change in fair value of cash flow hedges reclassified to income statement – – – – 33,151 – – 33,151 – 33,151Net change in fair value of available-for-sale financial assets – – – – – (457,147) – (457,147) – (457,147)Net change in fair value of available-for-sale financial assets reclassified

to income statement on recognition of impairment loss – – – – – 95,400 – 95,400 – 95,400Share of reserves in associates – 1,756 – (115,616) 314 (19,995) – (133,541) – (133,541)Share of reserves in joint ventures – – – 909 (880) – – 29 – 29Income tax on other comprehensive income – – – – (176) 46,774 – 46,598 – 46,598Total other comprehensive income – 1,756 – (359) 527 (334,968) – (333,044) (2,730) (335,774)Total comprehensive income for the year – 1,756 – (359) 527 (334,968) 1,268,465 935,421 44,959 980,380

Transactions with owner, recorded directly in equityContributions by and distributions to owner of the CompanyCapital contribution by non-controlling shareholders of subsidiaries – – – – – – – – 12,878 12,878Dividends paid to non-controlling shareholders of subsidiaries – – – – – – – – (57,619) (57,619)Special tax exempt dividend declared and paid of $1.15 per share – – – – – – (700,000) (700,000) – (700,000)Interim tax exempt dividend declared and paid of $0.99 per share – – – – – – (600,000) (600,000) – (600,000)Total contributions by and distributions to owner of the Company – – – – – – (1,300,000) (1,300,000) (44,741) (1,344,741)

Changes in ownership interests in subsidiariesAcquisitions of non-controlling interests without a change in control – – – – – – (1,169) (1,169) 1,169 –Total changes in ownership interests in subsidiaries – – – – – – (1,169) (1,169) 1,169 –

At 31 December 2015 1,135,372 28,580 97,357 (704,758) (37,658) 301,958 9,460,903 10,281,754 274,517 10,556,271


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2015



40

Sharecapital

Capitalreserve

Insurance reserve

Foreigncurrency

translationreserve

Hedgingreserve

Fair valuereserve

Accumulated profits


the Company


Totalequity

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 1 January 2015 1,135,372 26,824 97,357 (704,399) (38,185) 636,926 9,493,607 10,647,502 273,130 10,920,632


Other comprehensive incomeExchange differences of foreign operations – – – 231,659 – – – 231,659 (2,730) 228,929Exchange differences on monetary items forming part of net investment

in foreign operations – – – 29,703 – – – 29,703 – 29,703Exchange differences on hedge of net investment in a foreign operation – – – (147,014) – – – (147,014) – (147,014)Effective portion of changes in fair value of cash flow hedges – – – – (31,882) – – (31,882) – (31,882)Net change in fair value of cash flow hedges reclassified to income statement – – – – 33,151 – – 33,151 – 33,151Net change in fair value of available-for-sale financial assets – – – – – (457,147) – (457,147) – (457,147)Net change in fair value of available-for-sale financial assets reclassified

to income statement on recognition of impairment loss – – – – – 95,400 – 95,400 – 95,400Share of reserves in associates – 1,756 – (115,616) 314 (19,995) – (133,541) – (133,541)Share of reserves in joint ventures – – – 909 (880) – – 29 – 29Income tax on other comprehensive income – – – – (176) 46,774 – 46,598 – 46,598Total other comprehensive income – 1,756 – (359) 527 (334,968) – (333,044) (2,730) (335,774)Total comprehensive income for the year – 1,756 – (359) 527 (334,968) 1,268,465 935,421 44,959 980,380

Transactions with owner, recorded directly in equityContributions by and distributions to owner of the CompanyCapital contribution by non-controlling shareholders of subsidiaries – – – – – – – – 12,878 12,878Dividends paid to non-controlling shareholders of subsidiaries – – – – – – – – (57,619) (57,619)Special tax exempt dividend declared and paid of $1.15 per share – – – – – – (700,000) (700,000) – (700,000)Interim tax exempt dividend declared and paid of $0.99 per share – – – – – – (600,000) (600,000) – (600,000)Total contributions by and distributions to owner of the Company – – – – – – (1,300,000) (1,300,000) (44,741) (1,344,741)

Changes in ownership interests in subsidiariesAcquisitions of non-controlling interests without a change in control – – – – – – (1,169) (1,169) 1,169 –Total changes in ownership interests in subsidiaries – – – – – – (1,169) (1,169) 1,169 –

At 31 December 2015 1,135,372 28,580 97,357 (704,758) (37,658) 301,958 9,460,903 10,281,754 274,517 10,556,271


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Note 2015 2014$’000 $’000

Cash flows from operating activities


Adjustments for:

Depreciation and amortisation 448,317 430,352

Impairment made for:

Financial assets 95,400 –

Property, plant and equipment 13,678 34,373

Loans to joint ventures – 24,874

Dividend income from financial assets (71,810) (70,008)

(Gain)/loss on disposal of:

Subsidiaries – 42,561

Property, plant and equipment (19,176) (12,244)

Share of profit of associates, net of tax (188,069) (170,763)

Share of profit of joint ventures, net of tax (172,709) (131,133)

Finance costs 26 174,233 170,692

Interest income (47,402) (60,694)

Income tax expense 218,964 264,150

Net fair value loss on fair value hedge 1,820 228

1,769,400 1,971,359

Changes in working capital:

Inventories (1,897) 89

Trade and other receivables (2,202) (76,516)

Trade and other payables (32,812) 35,522

Cash generated from operations 1,732,489 1,930,454

Income tax paid (220,302) (245,708)

Net cash from operating activities 1,512,187 1,684,746

Cash flows from investing activities

Dividends received 366,010 329,034

Interest received 48,019 60,413

Purchase of property, plant and equipment and intangible assets (1,229,682) (985,383)

Proceeds from disposal of property, plant and equipment and intangible assets 29,165 40,192

Purchase of financial assets – (47,160)

Proceeds from financial assets – 229,658

Investments in and loans to joint ventures (289,317) (186,421)

Repayment of loans to joint ventures – 4,884

Repayment of loan to associates 1,110,133 –

Acquisition of a subsidiary, net of cash acquired 31 (7,845) –

Disposals of subsidiaries, net of cash disposed 31 – 22,075

Net cash from/(used in) investing activities 26,483 (532,708)


CONSOLIDATED STATEMENT OF CASH FLOWSYear ended 31 December 2015



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Note 2015 2014$’000 $’000

Cash flows from financing activities

Proceeds from bank loans 952,053 78,653

Repayment of bank loans and notes (1,234,010) (105,948)

Payment of finance lease liabilities (113,702) (6,548)

Interest paid (173,657) (170,385)

Dividends paid to owner of the Company (1,300,000) (850,000)

Dividends paid to non-controlling shareholders of subsidiaries (57,619) (39,496)

Capital contribution by non-controlling shareholders of subsidiaries 12,878 5,030

Repayment of loans from non-controlling shareholders of subsidiaries (7,482) (4,885)

Net cash used in financing activities (1,921,539) (1,093,579)

Net (decrease)/increase in cash and bank balances (382,869) 58,459

Cash and bank balances at beginning of the year 3,508,208 3,458,854

Effect of exchange rate fluctuations on cash held (4,483) (9,105)

Cash and bank balances at end of the year 14 3,120,856 3,508,208


CONSOLIDATED STATEMENT OF CASH FLOWSYear ended 31 December 2015


43

NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2015

These notes form an integral part of the financial statements.

The financial statements were authorised for issue by the Board of Directors on 1 March 2016.

1 Domicile and activities

PSA International Pte Ltd (the Company) is incorporated in the Republic of Singapore and has its registered office at 460 Alexandra Road, PSA Building, #38-00, Singapore 119963.

The principal activities of the Company are investment holding and the provision of consultancy services on port management, port operations and information technology. The principal activities of the subsidiaries are mainly those of providers of port and marine services.

The immediate and ultimate holding company during the financial year is Temasek Holdings (Private) Limited, a company incorporated in the Republic of Singapore.

The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the Group and individually as Group entities) and the Group’s interests in associates and joint ventures.

2 Summary of significant accounting policies

2.1 Basis of preparation

The financial statements have been prepared in accordance with the Singapore Financial Reporting Standards (FRS) under the historical cost basis except for certain financial assets and liabilities that are carried at fair value and/or amortised cost as disclosed in the accounting policies set out below.

These financial statements are presented in Singapore dollars, which is the Company’s functional currency. All financial information presented in Singapore dollars have been rounded to the nearest thousand, unless otherwise presented.

On 1 January 2015, the Group has adopted the new and revised FRS and Interpretations of FRS (INT FRS) that are mandatory for the financial year beginning 1 January 2015. The adoption of these FRS and INT FRS has no significant financial impact to the Group. The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by Group entities.

The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Critical judgement in applying accounting policies

Impairment of available-for-sale financial assets

The Group recognises impairment losses on available-for-sale financial assets when there has been a significant or prolonged decline in their fair value below their cost. The determination of what is significant or prolonged requires judgement. In making this judgement, the Group evaluates, among other factors, historical share price movements and the duration and extent to which the fair value of the financial asset is less than its cost.


44


Critical accounting estimates

Impairment of property, plant and equipment and intangible assets

The Group has made significant investments in tangible and intangible assets in its port business. Changes in technology or changes in the intended use of these assets may cause the estimated period of use or value of these assets to change.

Assets that have an infinite useful life are tested for impairment annually. Assets that are subject to depreciation and amortisation are reviewed to determine whether there is any indication that the carrying values of these assets may not be recoverable and have suffered an impairment loss. If any such indication exists, the recoverable amounts of the assets are estimated in order to determine the extent of the impairment loss, if any. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Such impairment loss is recognised in the income statement.

Management judgement is required in the area of asset impairment, particularly in assessing: (1) whether an event has occurred that may indicate that the related asset values may not be recoverable; (2) whether the carrying value of an asset can be supported by the net present value of future cash flows which are estimated based upon the continued use of the asset in the business; and (3) the appropriate key assumptions to be applied in preparing cash flow projections including whether these cash flow projections are discounted using an appropriate rate.

Depreciation and amortisation

Depreciation and amortisation of non-financial assets constitute significant operating costs for the Group. The costs of these non-financial assets are charged as depreciation or amortisation expense over the estimated useful lives of the respective assets using the straight-line method. The Group periodically reviews changes in technology and industry conditions, asset retirement activities and residual values to determine adjustments to estimated remaining useful lives and depreciation or amortisation rates.

Actual economic lives may differ from estimated useful lives. Periodic reviews could result in a change in depreciable or amortisable lives and therefore depreciation or amortisation expense in future periods.

Residual values of the port assets are estimated after considering the price that could be recovered from the sale of the port assets and the expected age and condition at the end of their useful lives, after deducting the estimated costs of disposal.

2.2 Basis of consolidation

Business combinations

Business combinations are accounted for under the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in the income statement. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date and included in the consideration transferred. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in the income statement.


45


Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it 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 financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The accounting policies of subsidiaries have been adjusted where necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Loss of control

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the income statement. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

Associates and joint ventures

Associates are those entities in which the Group has significant influence, but not control or joint control, over their financial and operating policies. Significant influence is presumed to exist when the Group holds 20% or more of the voting power of another entity. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Associates and joint ventures are accounted for in the consolidated financial statements under the equity method and are recognised initially at cost. The cost of the investments includes transaction costs.

Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the post-acquisition results and reserves of equity-accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. The latest audited financial statements of the associates and joint ventures are used and where these are not available, unaudited financial statements are used. Any differences between the unaudited financial statements and the audited financial statements obtained subsequently are adjusted for in the subsequent financial year.

The Group’s investments in equity-accounted investees include goodwill on acquisition and other intangible assets acquired from business combinations. Where the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest is reduced to zero and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Transactions with non-controlling interests

The Group elects on a transaction-by-transaction basis whether to measure non-controlling interests, which are present ownership interests and entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation, at fair value or at the proportionate share of the recognised amounts of the acquiree’s identifiable net assets. All other non-controlling interests are measured at fair value at acquisition date.

Changes in the Group’s ownership interest in a subsidiary that do not result in a change in control are accounted for as transactions with owners in their capacity as owners and therefore the carrying amounts of assets and liabilities are not changed and goodwill and bargain purchase gain are not recognised as a result of such transactions. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary.

Any difference between the adjustment to non-controlling interests and the fair value of consideration paid or received is recognised directly in equity and presented as part of equity attributable to owner of the Company.


46


Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Accounting for subsidiaries, associates and joint ventures

Investments in subsidiaries, associates and joint ventures are stated in the Company’s statement of financial position at cost less accumulated impairment losses.

2.3 Foreign currencies

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are recognised in the income statement, except for differences arising on the retranslation of available-for-sale equity instruments and a financial liability designated as a hedge of the net investment in a foreign operation that is effective (see note 2.13), which are recognised in other comprehensive income.

Foreign operations

The assets and liabilities of foreign operations, excluding goodwill and fair value adjustments arising on acquisition, are translated to Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at the average exchange rates for the year.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2005, the exchange rates at the date of acquisition were used.

Foreign currency differences are recognised in other comprehensive income and presented within equity in foreign currency translation reserve. However, if the operation is not a wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the foreign currency translation reserve is reclassified to the income statement as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to the income statement.

Net investment in a foreign operation

Foreign exchange gains and losses arising from monetary items, that in substance form part of the Group’s net investment in a foreign operation, are recognised in other comprehensive income, and are presented within equity in the foreign currency translation reserve. When the net investment is disposed of, the relevant amount in the foreign currency translation reserve is reclassified to the income statement as an adjustment to the gain or loss arising on disposal.


47


2.4 Property, plant and equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, and any other costs directly attributable to bringing the assets to a working condition for their intended use, and an estimated cost of dismantling and removing the items and restoring the site on which they are located when the Group has an obligation to remove the assets or restore the site, and capitalised borrowing costs, where applicable.

Cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The gain or loss on disposal of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognised net in the income statement.

Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.

Depreciation

Depreciation is recognised in the income statement on a straight-line basis to write down the cost of property, plant and equipment to its estimated residual value over the estimated useful life (or lease term, if shorter) of each component of an item of property, plant and equipment.

Estimated useful lives are as follows:

Leasehold land 20 to 80 yearsBuildings 10 to 40 yearsWharves, hardstanding and roads 5 to 40 yearsPlant, equipment and machinery 3 to 25 yearsFloating crafts 10 to 20 yearsDry-docking costs 2.5 to 5 yearsMotor vehicles 3 to 10 yearsComputers 3 to 5 years

No depreciation is provided on capital work-in-progress until the related property, plant and equipment is ready for use. Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.

2.5 Intangible assets

Intangible assets with finite useful lives are stated at cost less accumulated amortisation and accumulated impairment losses. Intangible assets with infinite useful lives or not ready for use are stated at cost less accumulated impairment losses.


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Port use rights

The expenditure incurred in relation to the right to operate a port is capitalised as port use rights. Port use rights are amortised in the income statement on a straight-line basis over their estimated useful lives of 48 to 84 years (the period of the operating rights being available).

Goodwill

Goodwill arising on the acquisition of subsidiaries is presented in intangible assets. Goodwill arising on the acquisition of associates and joint ventures is presented together with investments in associates and joint ventures.

Goodwill represents the excess of: • the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree,over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in the income statement.

Goodwill is measured at cost less accumulated impairment losses and is subject to testing for impairment, as described in note 2.6.

Software development costs

Development expenditure attributable to projects, where the technical feasibility and commercial viability of which are reasonably assured, is capitalised and amortised over the time period for which the tangible benefits of the projects are expected to be realised. Software development costs are not amortised until the completion date and when the software is ready for use. Amortisation is charged to the income statement on a straight-line basis over an estimated useful life of 3 years.

Computer software

Computer software, which is acquired by the Group, where it is not an integral part of the related hardware, is treated as an intangible asset. Computer software is amortised in the income statement on a straight-line basis over its estimated useful life of 3 years, from the date on which it is ready for use.

2.6 Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. Goodwill and other non-financial assets with infinite useful lives or not yet available for use are tested for impairment at each reporting date.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit (CGU) exceeds its recoverable amount. A CGU is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

Impairment losses are recognised in the income statement unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs) and then to reduce the carrying amount of the other assets in the CGU (group of CGUs) on a pro rata basis.


49


An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Goodwill that forms part of the carrying amount of an investment in an associate or a joint venture is not recognised separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate or a joint venture is tested for impairment as a single asset when there is objective evidence that the investment in an associate or a joint venture may be impaired.

2.7 Non-derivative financial assets

A financial asset is recognised when the Group becomes a party to the contractual provisions of the asset. Financial assets are derecognised when the Group’s contractual rights to the cash flows from the financial assets expire, or it transfers the financial asset to another party without retaining control or transfers substantially all the risk and rewards of ownership of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial assets are measured according to the following categories:

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables comprise cash and cash equivalents, trade and other receivables and other non-current assets which are subsequently measured at amortised cost using the effective interest method, less any impairment losses.

Cash and cash equivalents comprise cash balances, bank deposits and bank overdrafts. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts which are repayable on demand and which form an integral part of the Group’s cash management.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity. Held-to-maturity investments are subsequently measured at amortised cost using the effective interest method, less any impairment losses.

Available-for-sale financial assets

The Group’s investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (see note 2.8) and foreign exchange gains and losses on available-for-sale debt instruments, are recognised in other comprehensive income and presented within equity in the fair value reserve. When the financial asset is derecognised, the cumulative gain or loss in fair value reserve is reclassified to the income statement.

Financial assets carried at cost

Investments in unquoted equity securities are classified as financial assets carried at cost only when the equity instruments do not have a quoted market price in an active market and whose fair value cannot be reliably measured because the range of possible fair value estimates is wide and the probabilities of the various estimates within the range cannot be reasonably assessed.


50


2.8 Impairment of financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of loans and receivables is calculated as the difference between the carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value. An impairment loss in respect of a financial asset carried at cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset.

All individually significant loans and receivables are assessed for specific impairment. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.

All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in fair value reserve is reclassified to the income statement.

Impairment losses for loans and receivables and available-for-sale debt securities are reversed through the income statement if the subsequent increase in fair value can be related objectively to an event occurring after the impairment loss was recognised. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. Impairment losses once recognised in the income statement in respect of available-for-sale equity securities are not reversed through the income statement. Any subsequent increase in fair value of such assets is recognised in other comprehensive income and presented within equity in the fair value reserve. Impairment losses for financial assets carried at cost are not reversed.

2.9 Financial guarantees

Financial guarantee contracts issued by the Company to external parties on behalf of entities within the Group are accounted for as insurance contracts. A provision is recognised based on the Company’s estimate of the ultimate cost of settling all claims incurred but unpaid at the reporting date. The provision is assessed by reviewing individual claims and tested for adequacy by comparing the amount recognised and the amount that would be required to settle the guarantee contract.

2.10 Leases

When entities within the Group are lessees of finance leases

Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Leased assets are depreciated over the shorter of the lease term and their useful lives. Lease payments are apportioned between finance cost and reduction of the lease liability. The finance cost is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions even though the arrangement is not in the legal form of a lease.

When entities within the Group are lessees of operating leases

Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expenses, over the term of the lease. Contingent rentals are charged to the income statement in the financial year in which they are incurred.


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When entities within the Group are lessors of operating leases

Assets leased out under operating leases are included in leasehold buildings and are depreciated over the period of the land lease. Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term of the operating lease with the lessee.

2.11 Inventories

Inventories mainly comprise stores and consumables which are valued at cost of purchase (including cost incurred in bringing the inventories to their present location and condition) on a weighted average cost method less any applicable allowance for obsolescence. When inventories are consumed, the carrying amount of these inventories is recognised as an expense in the year in which the consumption occurs.

2.12 Non-derivative financial liabilities

The Group classifies non-derivative financial liabilities into the other financial liabilities category. A financial liability is recognised when the Group becomes a party to the contractual provisions of the liability. Financial liabilities are derecognised when the Group’s contractual obligations specified in the contract expire or are discharged or cancelled.

Non-derivative financial liabilities comprise borrowings and trade and other payables, and are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

2.13 Derivative financial instruments and hedging activities

The Group holds derivative financial instruments to hedge its foreign exchange, fuel price and interest rate risk exposures. The use of hedging instruments is governed by the Group’s policies which provide written principles on the use of financial instruments consistent with the Group’s risk management strategy.

Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.

Derivatives are recognised initially at fair value and attributable transaction costs are recognised in the income statement when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as follows:

Cash flow hedges

Changes in the fair value of the derivative designated as a hedging instrument of a cash flow hedge is recognised in other comprehensive income and presented within equity in the hedging reserve to the extent the hedge is effective. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in the income statement.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the balance in equity is reclassified to the income statement.

The cumulative gain or loss previously recognised in other comprehensive income and presented within equity in the hedging reserve remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in other comprehensive income is reclassified to the carrying amount of the asset when it is recognised. In other cases, the amount recognised in other comprehensive income is transferred to the income statement in the same period that the hedged item affects the income statement.


52


Fair value hedges

Changes in the fair value of a derivative designated as a hedging instrument of a fair value hedge are recognised in the income statement. The hedged item is also stated at fair value in respect of the risk being hedged; the gain or loss attributable to the hedged risk is recognised in the income statement and the carrying amount of the hedged item is adjusted.

Hedge of net investment in a foreign operation

Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are recognised in other comprehensive income and presented within equity in the foreign currency translation reserve, to the extent that the hedge is effective. The ineffective foreign currency differences are recognised in the income statement.

If the hedging instrument no longer meets the criteria for hedge accounting, hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in foreign currency translation reserve is reclassified to the income statement as an adjustment to the gain or loss on disposal when the investment in the foreign operation is disposed.

Economic hedges

Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognised in the income statement as part of foreign currency gains and losses.

Separable embedded derivatives

Changes in the fair value of separable embedded derivatives are recognised immediately in the income statement.

2.14 Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an expense in the income statement when incurred.

Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligations in respect of defined benefit plans are calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine the present value.

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

2.15 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.


53


2.16 Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

2.17 Revenue recognition

Income from services

Income from services rendered is recognised as and when such services are rendered, provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be reliably measured.

Dividend income

Dividend income is recognised when the right to receive payment is established.

Interest income

Interest income is recognised as it accrues, using the effective interest method, except where the collection is contingent upon certain conditions being met, then such income is recognised when received.

2.18 Finance costs

Finance costs comprise interest expense on borrowings which includes reclassifications of net losses previously recognised in other comprehensive income and the unwinding of the discount on provisions. All borrowing costs are recognised in the income statement using the effective interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of a qualifying asset which necessarily takes a substantial period of time to be prepared for its intended use or sale.

2.19 Income tax expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries, associates and joint ventures to the extent that they probably will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.


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2.20 Non-current assets held for sale or distribution

Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale or distribution rather than through continuing use, are classified as held for sale or distribution. Immediately before classification as held for sale or distribution, the assets (or components of a disposal group) are remeasured in accordance with the Group’s accounting policies. Thereafter, the assets (or disposal group) are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets and deferred tax assets, which continue to be measured under different rules in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale or distribution and subsequent gains or losses on remeasurement are recognised in the income statement. Gains are not recognised in excess of any cumulative impairment loss.

2.21 Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Executive Committee and Senior Management Council of the Company to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.


55


3 Property, plant and equipment

Leasehold land Buildings

Wharves, hardstanding

and roads

Plant,equipment and

machinery

Floatingcrafts and dry-docking costs

Motorvehicles Computers

Capitalwork-in-progress Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Group

CostAt 1 January 2014 1,303,913 653,727 2,304,527 4,295,133 359,794 18,323 116,802 433,491 9,485,710Reclassifications 24,425 15,076 142,294 376,296 32,153 3,379 20,457 (614,080) –Additions – 943 11,709 27,151 52,460 687 1,498 958,078 1,052,526Disposals – (7,415) (4,164) (126,219) (21,863) (537) (2,276) – (162,474)Disposals of subsidiaries – (56,172) (194,804) (202,502) – (316) (2,031) (57,814) (513,639)Transferred to intangible assets – – – – – – – (2,919) (2,919)Translation differences on consolidation (244) (25,412) (20,110) (89,759) – (72) (1,682) (1,818) (139,097)At 31 December 2014 1,328,094 580,747 2,239,452 4,280,100 422,544 21,464 132,768 714,938 9,720,107Reclassifications 28,995 47,325 143,448 340,382 43,681 562 17,060 (621,453) –Additions – 523 2,633 33,967 8,667 591 2,069 1,232,132 1,280,582Acquisition of a subsidiary – – – – 21,819 – – – 21,819Disposals (4,417) (1,192) (5,219) (72,944) (32,672) (1,184) (6,803) – (124,431)Transferred to intangible assets – – – – – – – (2,894) (2,894)Translation differences on consolidation (105) (8,644) 4,454 (21,340) 3,003 (3) (412) (275) (23,322)At 31 December 2015 1,352,567 618,759 2,384,768 4,560,165 467,042 21,430 144,682 1,322,448 10,871,861

Accumulated depreciation and impairment lossesAt 1 January 2014 648,458 346,557 994,277 2,467,930 166,962 12,148 105,641 – 4,741,973Depreciation charge for the year 45,497 25,402 95,454 207,530 31,003 2,243 9,924 – 417,053Disposals – (5,021) (2,274) (104,599) (19,827) (529) (2,276) – (134,526)Disposals of subsidiaries – (22,110) (65,887) (62,725) – (112) (1,607) – (152,441)Impairment losses – 5,589 28,784 – – – – – 34,373Translation differences on consolidation – (15,051) (10,185) (64,443) – (60) (1,616) – (91,355)At 31 December 2014 693,955 335,366 1,040,169 2,443,693 178,138 13,690 110,066 – 4,815,077Depreciation charge for the year 44,669 24,207 98,295 217,537 34,946 2,569 13,116 – 435,339Disposals (4,417) (1,167) (1,119) (70,475) (29,281) (1,184) (6,799) – (114,442)Impairment losses/(reversal of impairment losses) 1,270 9,515 (3,333) 6,226 – – – – 13,678Translation differences on consolidation – (5,447) (1,768) (22,141) 59 (10) (350) – (29,657)At 31 December 2015 735,477 362,474 1,132,244 2,574,840 183,862 15,065 116,033 – 5,119,995

Carrying amountsAt 1 January 2014 655,455 307,170 1,310,250 1,827,203 192,832 6,175 11,161 433,491 4,743,737At 31 December 2014 634,139 245,381 1,199,283 1,836,407 244,406 7,774 22,702 714,938 4,905,030At 31 December 2015 617,090 256,285 1,252,524 1,985,325 283,180 6,365 28,649 1,322,448 5,751,866


56

3 Property, plant and equipment

Leasehold land Buildings

Wharves, hardstanding

and roads

Plant,equipment and

machinery

Floatingcrafts and dry-docking costs

Motorvehicles Computers

Capitalwork-in-progress Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Group

CostAt 1 January 2014 1,303,913 653,727 2,304,527 4,295,133 359,794 18,323 116,802 433,491 9,485,710Reclassifications 24,425 15,076 142,294 376,296 32,153 3,379 20,457 (614,080) –Additions – 943 11,709 27,151 52,460 687 1,498 958,078 1,052,526Disposals – (7,415) (4,164) (126,219) (21,863) (537) (2,276) – (162,474)Disposals of subsidiaries – (56,172) (194,804) (202,502) – (316) (2,031) (57,814) (513,639)Transferred to intangible assets – – – – – – – (2,919) (2,919)Translation differences on consolidation (244) (25,412) (20,110) (89,759) – (72) (1,682) (1,818) (139,097)At 31 December 2014 1,328,094 580,747 2,239,452 4,280,100 422,544 21,464 132,768 714,938 9,720,107Reclassifications 28,995 47,325 143,448 340,382 43,681 562 17,060 (621,453) –Additions – 523 2,633 33,967 8,667 591 2,069 1,232,132 1,280,582Acquisition of a subsidiary – – – – 21,819 – – – 21,819Disposals (4,417) (1,192) (5,219) (72,944) (32,672) (1,184) (6,803) – (124,431)Transferred to intangible assets – – – – – – – (2,894) (2,894)Translation differences on consolidation (105) (8,644) 4,454 (21,340) 3,003 (3) (412) (275) (23,322)At 31 December 2015 1,352,567 618,759 2,384,768 4,560,165 467,042 21,430 144,682 1,322,448 10,871,861

Accumulated depreciation and impairment lossesAt 1 January 2014 648,458 346,557 994,277 2,467,930 166,962 12,148 105,641 – 4,741,973Depreciation charge for the year 45,497 25,402 95,454 207,530 31,003 2,243 9,924 – 417,053Disposals – (5,021) (2,274) (104,599) (19,827) (529) (2,276) – (134,526)Disposals of subsidiaries – (22,110) (65,887) (62,725) – (112) (1,607) – (152,441)Impairment losses – 5,589 28,784 – – – – – 34,373Translation differences on consolidation – (15,051) (10,185) (64,443) – (60) (1,616) – (91,355)At 31 December 2014 693,955 335,366 1,040,169 2,443,693 178,138 13,690 110,066 – 4,815,077Depreciation charge for the year 44,669 24,207 98,295 217,537 34,946 2,569 13,116 – 435,339Disposals (4,417) (1,167) (1,119) (70,475) (29,281) (1,184) (6,799) – (114,442)Impairment losses/(reversal of impairment losses) 1,270 9,515 (3,333) 6,226 – – – – 13,678Translation differences on consolidation – (5,447) (1,768) (22,141) 59 (10) (350) – (29,657)At 31 December 2015 735,477 362,474 1,132,244 2,574,840 183,862 15,065 116,033 – 5,119,995

Carrying amountsAt 1 January 2014 655,455 307,170 1,310,250 1,827,203 192,832 6,175 11,161 433,491 4,743,737At 31 December 2014 634,139 245,381 1,199,283 1,836,407 244,406 7,774 22,702 714,938 4,905,030At 31 December 2015 617,090 256,285 1,252,524 1,985,325 283,180 6,365 28,649 1,322,448 5,751,866


57


Plant, equipment and

machineryMotor

vehicles Computers

Capital work-in- progress Total

$’000 $’000 $’000 $’000 $’000

Company

CostAt 1 January 2014 177 650 1,234 1,287 3,348Reclassifications – – 100 (100) –Additions – – 367 162 529Disposals (2) – (71) – (73)Transferred to intangible assets – – – (952) (952)At 31 December 2014 175 650 1,630 397 2,852Additions 58 427 177 – 662Disposals – (303) (5) – (308)Transferred to intangible assets – – – (363) (363)At 31 December 2015 233 774 1,802 34 2,843

Accumulated depreciation At 1 January 2014 62 510 1,074 – 1,646Depreciation charge for the year 33 69 280 – 382Disposals (2) – (71) – (73)At 31 December 2014 93 579 1,283 – 1,955Depreciation charge for the year 49 127 243 – 419Disposals – (303) (5) – (308)At 31 December 2015 142 403 1,521 – 2,066

Carrying amountsAt 1 January 2014 115 140 160 1,287 1,702At 31 December 2014 82 71 347 397 897At 31 December 2015 91 371 281 34 777

Impairment loss

At 31 December 2015, the recoverable amounts of the property, plant and equipment of certain subsidiaries, estimated based on their respective value in use or fair value less costs to sell, were lower than their carrying values. Accordingly, a net impairment loss of $13.7 million (2014: $34.4 million) was recognised in other operating expenses in the income statement.

Leased property, plant and equipment

At 31 December 2014, the net carrying amount of leased property, plant and equipment of the Group was $100.6 million.


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4 Intangible assets

Goodwill on consolidation

Computer software

Software development

costs

Capital work-in- progress

Port use rights

Total intangible

assets$’000 $’000 $’000 $’000 $’000 $’000

Group

CostAt 1 January 2014 539,721 34,722 83,916 2,475 193,758 854,592Reclassifications – 684 9,539 (10,223) – –Additions – 1,241 268 10,944 62 12,515Disposals – (2,807) (10,965) – (930) (14,702)Disposals of subsidiaries – (1,280) – (90) – (1,370)Transferred from property, plant and

equipment – 2,919 – – – 2,919Translation differences on consolidation (2,671) (2,500) (1,100) (5) (1,820) (8,096)At 31 December 2014 537,050 32,979 81,658 3,101 191,070 845,858Reclassifications – 833 2,925 (3,758) – –Additions – 2,679 128 4,818 – 7,625Acquisition of a subsidiary 7,392 – – – – 7,392Disposals – (198) – – (1,121) (1,319)Transferred from property, plant and

equipment – 2,894 – – – 2,894Translation differences on consolidation (1,821) (870) (960) 27 7,482 3,858At 31 December 2015 542,621 38,317 83,751 4,188 197,431 866,308

Accumulated amortisation and impairment losses

At 1 January 2014 61,109 29,714 78,200 – 31,536 200,559Amortisation charge for the year – 4,623 4,683 – 3,993 13,299Disposals – (2,806) (10,961) – (930) (14,697)Disposals of subsidiaries – (983) – – – (983)Translation differences on consolidation (1,196) (2,371) (1,023) – (906) (5,496)At 31 December 2014 59,913 28,177 70,899 – 33,693 192,682Amortisation charge for the year – 3,958 4,944 – 4,076 12,978Disposals – (198) – – (1,121) (1,319)Translation differences on consolidation (509) (717) (58) – 741 (543)At 31 December 2015 59,404 31,220 75,785 – 37,389 203,798

Carrying amountsAt 1 January 2014 478,612 5,008 5,716 2,475 162,222 654,033At 31 December 2014 477,137 4,802 10,759 3,101 157,377 653,176At 31 December 2015 483,217 7,097 7,966 4,188 160,042 662,510


59


Computer software

Software development

costs Total$’000 $’000 $’000

Company

CostAt 1 January 2014 1,583 411 1,994Transferred from property, plant and equipment 952 – 952At 31 December 2014 2,535 411 2,946Additions 786 – 786Transferred from property, plant and equipment 363 – 363At 31 December 2015 3,684 411 4,095

Accumulated amortisation At 1 January 2014 894 411 1,305Amortisation charge for the year 574 – 574At 31 December 2014 1,468 411 1,879Amortisation charge for the year 631 – 631At 31 December 2015 2,099 411 2,510

Carrying amountsAt 1 January 2014 689 – 689At 31 December 2014 1,067 – 1,067At 31 December 2015 1,585 – 1,585

Impairment testing for cash-generating units (CGUs) containing goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s port and marine businesses in the country of operation, which represents the lowest level within the Group at which the goodwill is monitored for internal management purposes. At 31 December 2015, the carrying value of goodwill primarily relates to the Group’s port and marine business CGUs in Europe of $473.4 million (2014: $467.3 million). The remaining goodwill relates to the Group’s port business CGUs in Asia.

The recoverable amounts of these port and marine business CGUs were based on the value in use approach. They were determined by discounting the future cash flows generated from the continuing use of these units. The cash flow projections were done as part of the financial budgets approved by management. Key assumptions include the expected growth in revenues and gross margin, timing of future capital expenditures, growth rates and market development expectations in the port and marine businesses based on both external sources and internal sources (historical data). The discount rates were based on country specific risk adjusted discount rates and ranged from 5.00% to 7.00% (2014: 6.00% to 7.50%).

Judgement is required to determine key assumptions adopted in the cash flow projections and changes to the key assumptions can significantly affect these cash flow projections and therefore the results of the impairment tests.


60


5 Subsidiaries

Company2015 2014

$’000 $’000

Equity investments, at cost 1,161,422 1,120,481Loans to subsidiaries 7,785,374 7,870,169

8,946,796 8,990,650Impairment losses (298,646) (298,646)

8,648,150 8,692,004

The loans to subsidiaries form part of the Company’s net investments in these subsidiaries. The loans were unsecured and settlement was neither planned nor likely to occur in the foreseeable future. Accordingly, these loans were stated at cost less accumulated impairment losses.

The loans were principally denominated in Singapore dollars, US dollars and Hong Kong dollars, and comprised:

(a) $1,778.6 million (2014: $1,661.0 million) loans bearing fixed interest rates ranging from 3.80% to 4.63% (2014: 3.80% to 4.63%) per annum; and

(b) $199.0 million (2014: $324.2 million) loans bearing floating interest rates ranging from 0.86% to 5.69% (2014: 0.77% to 5.37%) per annum and the interest rates repriced at intervals of six months.

The remaining loans to subsidiaries were interest-free.

Details of significant subsidiaries are as follows:

Name of subsidiaryCountry of

incorporationEffective percentage

held by the Group2015 2014

% %

PSA Corporation Limited Singapore 100 100PSA Marine (Pte) Ltd Singapore 100 100PSA Antwerp N.V. Belgium 100 100

6 Associates

Group2015 2014

$’000 $’000

Investments in associates 3,496,955 3,381,452Loans to associates 7,128 1,087,558


3,496,955 4,456,394


61


The loans to associates form part of the Group’s net investments in these associates. These loans were stated at cost less accumulated impairment losses. The loans were unsecured and partly repaid during the year.

At 31 December 2014, the loans were principally denominated in US dollars and comprised $1.08 billion loans which bore floating interest rates of 3.23% to 3.25% per annum and the interest rates were repriced at intervals of three months.

Details of significant associates are as follows:

Name of associateCountry of



% %

Hutchison Port Holdings Limited British Virgin Islands 20.0 20.0Hutchison Ports Investments S.à r.l. Luxembourg 20.0 20.0

The reconciliation of the FRS financial statements of the associates modified for fair value adjustments, with the carrying amounts of the investments in associates in the consolidated financial statements is as follows:

Group2015 2014

$’000 $’000

At 1 January 4,456,394 4,326,791Group’s share of:– profit for the year 188,069 170,763– other comprehensive income (133,541) (106,994)– total comprehensive income 54,528 63,769Dividends received during the year (158,217) (106,696)Repayment of loans (1,110,133) –Translation differences on consolidation 254,383 172,530At 31 December 3,496,955 4,456,394

The Group’s investments in associates relate mainly to its investment in Hutchison Port Holdings Limited and Hutchison Ports Investments S.à r.l., which has been included in the port business reportable segment.

The Group’s share of contingent liabilities of the associates was $114.9 million (2014: $117.8 million).

7 Joint ventures

Group2015 2014

$’000 $’000

Investments in joint ventures 1,778,823 1,613,580Loans to joint ventures 423,315 258,783


2,177,264 1,847,489


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The loans to joint ventures form part of the Group’s net investments in these joint ventures. The loans were unsecured and settlement was neither planned nor likely to occur in the foreseeable future. Accordingly, these loans were stated at cost less accumulated impairment losses.

The loans were principally denominated in US dollars and Renminbi, and comprised:

(a) $289.4 million (2014: $147.1 million) loans bearing fixed interest rates at 6.00% (2014: ranging from 4.73% to 6.00%) per annum; and

(b) $132.9 million (2014: $105.6 million) loans bearing floating interest rates ranging from 2.34% to 6.15% (2014: 1.12% to 6.15%) per annum.

The remaining loans to joint ventures were interest-free.

Details of significant joint ventures are as follows:

Name of joint ventureCountry of



% %

Fujian Jiangyin International Container Terminal Co., Ltd. People’s Republic of China 39.0 39.0Lianyungang New Oriental Container Terminal Co., Ltd. People’s Republic of China 49.0 49.0Mersin Uluslararasi Liman Isletmeciligi A.S. Turkey 50.0 50.0Sociedad Puerto Industrial Aguadulce S.A. Colombia 46.3 45.7Tianjin Port Pacific International Container Terminal Co., Ltd. People’s Republic of China 49.0 49.0

The Group’s share of commitments of the joint ventures was as follows:

Group2015 2014

$’000 $’000

(a) Capital commitments which have been authorised and contracted but not provided for in the financial statements 56,206 252,261

(b) Non-cancellable operating lease commitments: Within 1 year 2,054 4,662 Between 1 and 5 years 5,751 4,376 After 5 years 15,886 13,898

The Group does not have any individually material joint venture.


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8 Financial assets

Group2015 2014

$’000 $’000

Quoted trust units, available-for-sale 678,402 824,856Quoted equity securities, available-for-sale 520,224 830,916Unquoted equity securities, at cost 55,225 55,241Impairment losses (371) (385)

54,854 54,8561,253,480 1,710,628

9 Other non-current assets

Group2015 2014

$’000 $’000

Loans to joint venture partners 21,310 21,310Allowance for doubtful receivables (21,310) (21,310)

– –Other receivables 6,330 7,103Non-current portion of loans and receivables 6,330 7,103Hedging instruments 3,515 7,616Transferable corporate club memberships 1,564 1,584

11,409 16,303

10 Deferred tax

Movements in deferred tax assets and liabilities of the Group (prior to offsetting of balances) during the year were as follows:

Provisions Other items Total$’000 $’000 $’000

Group

Deferred tax assetsAt 1 January 2014 63,940 15,700 79,640Recognised in income statement 36 (717) (681)Recognised in other comprehensive income – 176 176Disposals of subsidiaries (1,000) (969) (1,969)Translation differences on consolidation (1,643) (1,060) (2,703)At 31 December 2014 61,333 13,130 74,463Recognised in income statement (2,359) 6,074 3,715Recognised in other comprehensive income – (176) (176)Translation differences on consolidation (306) (704) (1,010)At 31 December 2015 58,668 18,324 76,992


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Property, plant and equipment

Fair value reserve Other items Total

$’000 $’000 $’000 $’000

Group

Deferred tax liabilitiesAt 1 January 2014 250,877 93,162 30,443 374,482Recognised in income statement 46,302 – (2,208) 44,094Recognised in other comprehensive income – 17,829 – 17,829Disposals of subsidiaries (4,850) – (12,967) (17,817)Translation differences on consolidation (2,890) – (1,566) (4,456)At 31 December 2014 289,439 110,991 13,702 414,132Recognised in income statement 26,672 – (6,481) 20,191Recognised in other comprehensive income – (46,774) – (46,774)Translation differences on consolidation (1,187) – (441) (1,628)At 31 December 2015 314,924 64,217 6,780 385,921

Deferred tax assets and liabilities of the Company were attributable to the following:

Company2015 2014

$’000 $’000

Deferred tax assetsProvisions 7,965 8,007

Deferred tax liabilitiesProperty, plant and equipment 355 220Unremitted income 54 463

409 683

Deferred tax assets and liabilities are offset when there is legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The amounts determined after appropriate offsetting were included in the statements of financial position as follows:

Group Company2015 2014 2015 2014

$’000 $’000 $’000 $’000

Deferred tax assets 16,925 13,792 7,556 7,324

Deferred tax liabilities 325,854 353,461 – –

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of tax losses amounting to $72.3 million (2014: $96.5 million). The tax losses are subject to agreement by the tax authorities and compliance with tax regulations in the respective countries in which certain subsidiaries operate. Deferred tax assets have not been recognised in respect of these tax losses because there is no indication that future taxable profit will be available against which certain subsidiaries of the Group can utilise the benefits.


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11 Trade and other receivables


$’000 $’000 $’000 $’000

Trade and accrued receivables 12 314,777 387,042 – 1,583Deposits and other receivables 13 106,062 86,842 4,873 4,091Amounts due from: Subsidiaries – – 129,163 260,191 Associates 15,954 792 – – Joint ventures 66,032 77,131 11,043 12,053 Related corporations 14,153 19,031 – –Current portion of loans and receivables 516,978 570,838 145,079 277,918Advances and prepayments 81,106 19,825 538 197Hedging instruments – 670 – 670

598,084 591,333 145,617 278,785

The amounts due from subsidiaries, associates, joint ventures and related corporations were unsecured, interest-free and repayable on demand.

12 Trade and accrued receivables

Group Company2015 2014 2015 2014

$’000 $’000 $’000 $’000

Trade and accrued receivables 347,372 427,312 – 1,583Allowance for doubtful receivables (32,595) (40,270) – –

314,777 387,042 – 1,583

The Group’s primary exposure to credit risk arises through its trade receivables. Concentration of credit risk relating to trade receivables is limited due to the Group’s internationally dispersed customers. Due to the nature of the Group’s business, credit risk is not concentrated in any specific geographical region but concentrated in companies exposed to business cyclical fluctuations that are commonly found in the shipping industry. The Group’s historical experience in the collection of accounts receivable falls within the recorded allowances. Due to these factors, management believed that no additional credit risk beyond amounts provided for collection losses was inherent in the Group’s trade receivables.

13 Deposits and other receivables

Group Company2015 2014 2015 2014

$’000 $’000 $’000 $’000

Deposits 5,522 3,331 – –Other receivables 102,668 85,639 4,873 4,091Allowance for doubtful receivables (2,128) (2,128) – –

100,540 83,511 4,873 4,091106,062 86,842 4,873 4,091

The Group’s other receivables included an amount recoverable from a third party of $7.4 million (2014: $8.0 million) arising from an existing customer’s termination of contract in a foreign subsidiary.


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14 Cash and bank balances

Group Company2015 2014 2015 2014

$’000 $’000 $’000 $’000

Cash at bank and in hand 415,610 415,871 37,787 32,854Fixed deposits 2,705,246 3,092,337 2,144,040 2,522,695

3,120,856 3,508,208 2,181,827 2,555,549

15 Share capital

Company2015 2014

No. of shares No. of shares(’000) (’000)

Issued and fully-paid:At 1 January and 31 December 607,372 607,372

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

Capital management

The Group defines capital as share capital and all components of equity. The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue to provide returns for shareholders and to support the Group’s stability and growth. The Group regularly reviews and manages its capital structure to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

There were no changes to the Group’s approach to capital management during the year.

Certain subsidiaries within the Group are subject to externally imposed capital requirements as required by law. These subsidiaries have complied with the requirements during the financial year. The Company and the rest of its subsidiaries are not subject to any externally imposed capital requirements.

16 Other reserves


$’000 $’000 $’000 $’000

Capital reserve (a) 28,580 26,824 – –Insurance reserve (b) 97,357 97,357 – –Foreign currency translation reserve (c) (704,758) (704,399) – –Hedging reserve (d) (37,658) (38,185) (83) 670Fair value reserve (e) 301,958 636,926 – –

(314,521) 18,523 (83) 670


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(a) Capital reserve

The capital reserve comprises the Group’s share of capital reserve of associates and joint ventures.

(b) Insurance reserve

The insurance reserve relates to a sum transferred from the former Port of Singapore Authority to PSA Corporation Limited in 1997 as part of the vesting of property, rights and liabilities. This reserve is to cover potential past liabilities and for funding future potential liabilities in relation to the port related activities undertaken by PSA Corporation Limited.

(c) Foreign currency translation reserve

The foreign currency translation reserve comprises:

(i) all foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the functional currency of the Company;

(ii) the effective portion of the cumulative net change in fair value of foreign currency loans used to hedge the Group’s net investment in foreign operations;

(iii) foreign exchange differences on monetary items which form part of the Group’s net investment in foreign operations; and

(iv) the Group’s share of foreign currency translation reserve of associates and joint ventures.

(d) Hedging reserve

The hedging reserve comprises:

(i) the effective portion of the cumulative net change in fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred; and

(ii) the Group’s share of hedging reserve of associates and joint ventures.

(e) Fair value reserve

The fair value reserve comprises:

(i) the cumulative net changes in the fair values of available-for-sale financial assets until the investments are derecognised or impaired; and

(ii) the Group’s share of fair value reserve of associates and joint ventures.


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17 Borrowings


$’000 $’000 $’000 $’000

Non-currentUnsecured fixed and floating rate notes 2,617,536 3,150,783 1,914,748 2,444,277Secured bank loans 432,368 286,271 – –Unsecured bank loans 537,471 766,660 – 131,793Finance lease liabilities – 102,571 – –Loans from non-controlling shareholders

of subsidiaries 9,555 18,831 – –3,596,930 4,325,116 1,914,748 2,576,070

CurrentUnsecured fixed rate notes 706,679 300,000 706,679 –Secured bank loans 23,238 88,729 – –Unsecured bank loans 268,710 94,566 – –Finance lease liabilities – 7,130 – –

998,627 490,425 706,679 –Total borrowings 4,595,557 4,815,541 2,621,427 2,576,070

Total borrowings comprise:Total unsecured fixed and floating rate notes 3,324,215 3,450,783 2,621,427 2,444,277Total secured bank loans (a) 455,606 375,000 – –Total unsecured bank loans 806,181 861,226 – 131,793Total finance lease liabilities (b) – 109,701 – –Total loans from non-controlling shareholders

of subsidiaries (c) 9,555 18,831 – –4,595,557 4,815,541 2,621,427 2,576,070

(a) Secured bank loans

The loans were secured by mortgages on the borrowing subsidiaries’ property, plant and equipment and port use rights with a carrying amount of $704.1 million (2014: $548.5 million).

(b) Finance lease liabilities

Finance lease liabilities were payable as follows:

2015 2014Principal Interest Total Principal Interest Total

$’000 $’000 $’000 $’000 $’000 $’000

Group

Payable within 1 year – – – 7,130 4,563 11,693Payable between 1 and 5 years – – – 32,139 15,032 47,171Payable after 5 years – – – 70,432 9,821 80,253Total – – – 109,701 29,416 139,117

At 31 December 2014, the effective interest rate of finance lease liabilities was 4.30% per annum.


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(c) Loans from non-controlling shareholders of subsidiaries

The loans from non-controlling shareholders were unsecured and bore floating interest rates. Interest rates repriced at intervals within six months.

(d) Terms and debt repayment schedule

The terms and conditions of outstanding loans and borrowings were as follows:

Effectiveinterest

rate

2015 2014Year of

maturityFace value

Carrying amount

Face value

Carrying amount

% $’000 $’000 $’000 $’000

Group

Unsecured fixed and floating rate notes 0.86 – 5.90 2016 – 2025 3,326,880 3,324,215 3,453,240 3,450,783

Secured bank loans 1.80 – 11.00 2016 – 2025 455,606 455,606 375,000 375,000Unsecured bank loans 0.21 – 3.86 2016 – 2022 806,181 806,181 861,226 861,226Loans from non-controlling

shareholders of subsidiaries 1.98 2027 9,555 9,555 18,831 18,8314,598,222 4,595,557 4,708,297 4,705,840

Company

Unsecured fixed and floating rate notes 0.86 – 5.90 2016 – 2025 2,626,880 2,621,427 2,453,240 2,444,277

Unsecured bank loans – – – – 131,793 131,7932,626,880 2,621,427 2,585,033 2,576,070

18 Provisions

Compensation sum

Site restoration

costs Total$’000 $’000 $’000

Group

At 1 January 2014 43,702 2,100 45,802Provisions made – 216 216Translation differences on consolidation (3,550) – (3,550)At 31 December 2014 40,152 2,316 42,468Provisions reversed – (309) (309)Translation differences on consolidation (1,510) – (1,510)At 31 December 2015 38,642 2,007 40,649

The compensation sum relates to a provision made by a subsidiary arising from an existing customer’s termination of contract with a third party. The estimated amount provided was based on actual claim made against the foreign subsidiary. A corresponding recoverable amount of $7.4 million (2014: $8.0 million) from another third party was included in other receivables (see note 13).

The provision for site restoration relates to a provision made by a subsidiary to restore its leased site to its original condition by end of the lease term. The provision was based on external quotation and reviewed annually at each balance sheet date. These costs were included as part of the carrying amount of property, plant and equipment.


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19 Other non-current obligations

Group2015 2014

$’000 $’000

Hedging instruments 11,518 –Amounts due to joint ventures 10,212 12,119Loan from non-controlling shareholder of a subsidiary 24,059 24,059Other non-current obligations 60,188 66,132

105,977 102,310

The loan from non-controlling shareholder of a subsidiary forms part of the shareholder’s investment in the subsidiary. The loan was unsecured, interest-free and settlement was neither planned nor likely to occur in the foreseeable future. Accordingly, it was stated at cost.

20 Trade and other payables


$’000 $’000 $’000 $’000

Trade payables and accrued operating expenses 777,666 868,866 76,271 77,111Deposits and other payables 21 494,192 373,594 34,904 30,415Amounts due to: Subsidiaries – – 294,736 153,968 Joint ventures 5,545 4,761 – – Related corporations 2,538 2,307 – –Other financial liabilities at amortised cost 1,279,941 1,249,528 405,911 261,494Advances 37,922 30,438 735 703Hedging instruments 16,241 32,747 83 –

1,334,104 1,312,713 406,729 262,197

The amounts due to subsidiaries, joint ventures and related corporations were unsecured, interest-free and repayable on demand.

21 Deposits and other payables

Group Company2015 2014 2015 2014

$’000 $’000 $’000 $’000

Deposits 7,952 6,890 – –Accrued capital expenditure 321,725 213,004 – –Other payables 164,515 153,700 34,904 30,415

494,192 373,594 34,904 30,415

The Group’s other payables included interest payable of $39.7 million (2014: $39.1 million) and other sundry creditors.


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22 Revenue

This comprises revenue from container handling, marine services, operation of multi-purpose terminals, warehousing and logistics related services, consultancy fees but excludes intra-group transactions.

23 Other income

Group2015 2014

$’000 $’000

Dividend income from financial assets 71,810 70,008Interest income from: Associates 7,712 34,028 Cash and bank balances 32,152 20,897 Joint ventures 6,924 4,998 Trade and other receivables 614 771Gain on disposal of property, plant and equipment, net 19,176 12,244Exchange gain, net – 2,458Others 18,519 9,181

156,907 154,585

24 Staff and related costs

Group2015 2014

$’000 $’000

Wages and salaries 748,584 760,755Contributions to defined contribution plans 86,628 83,711

835,212 844,466

25 Profit from operations

Profit from operations included the following items:

Group2015 2014

$’000 $’000

Impairment made for: Financial assets 95,400 – Property, plant and equipment, net 13,678 34,373 Loans to joint ventures – 24,874Loss on disposal of subsidiaries – 42,561Exchange loss, net 192 –Operating lease expense 23,636 25,372Net fair value loss on fair value hedge 1,820 228


72


26 Finance costs

Group2015 2014

$’000 $’000

Interest paid or payable to: Banks and other financial institutions 30,851 33,017 Fixed and floating rate notes holders 143,234 137,453 Non-controlling shareholders of subsidiaries 148 222

174,233 170,692

27 Income tax expense

Group2015 2014

$’000 $’000

Current tax expenseCurrent year 205,633 221,520Over provided in prior years (3,145) (2,145)

202,488 219,375

Deferred tax expense Movements in temporary differences 16,476 44,775Income tax expense 218,964 264,150

Tax reconciliation

Profit before income tax 1,535,118 1,713,121Share of profit of associates, net of tax (188,069) (170,763)Share of profit of joint ventures, net of tax (172,709) (131,133)Profit before income tax excluding share of profit

of associates and joint ventures, net of tax 1,174,340 1,411,225

Tax calculated using Singapore tax rate of 17% (2014: 17%) 199,638 239,908Effect of different tax rates in other countries (3,762) 3,792Tax rebates and incentives (29,184) (17,252)Income not subject to tax (3,498) (9,590)Expenses not deductible for tax purposes 45,022 39,309Effects of unrecognised tax benefits 2,206 3,185Withholding tax 11,687 6,943Over provided in prior years (3,145) (2,145)Income tax expense 218,964 264,150


73


28 Operating segments

The Group is organised into business units based on their services and has two reportable operating segments as follows:

• Port business: The provision of container handling, operation of multi-purpose terminals and other port related services.• Marine business: The provision of marine services.

The Executive Committee and Senior Management Council of the Company monitor the operating results of the business units separately for the purpose of making strategic decisions. Performance is measured based on segment operating profit which includes items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Inter-segment pricing is determined on an arm’s length basis. Segment capital expenditure is the total costs incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.

Information about reportable segments

Port business

Marine business

Total reportable segments

Jointarrangements Total

$’000 $’000 $’000 $’000 $’000

Group

2015Revenue Total revenue 4,351,811 312,031 4,663,842 (1,069,538) 3,594,304Inter-segment revenue (7,572) (13,527) (21,099) – (21,099)External revenue 4,344,239 298,504 4,642,743 (1,069,538) 3,573,205

Operating profit 1,573,489 105,674 1,679,163 (313,165) 1,365,998

Material itemDepreciation and amortisation 574,203 40,385 614,588 (167,321) 447,267

Segment assets 13,677,890 399,844 14,077,734 (1,325,893) 12,751,841

Segment liabilities 1,535,698 71,698 1,607,396 (290,460) 1,316,936

2014Revenue Total revenue 4,495,469 311,452 4,806,921 (955,733) 3,851,188Inter-segment revenue (7,200) (13,989) (21,189) – (21,189)External revenue 4,488,269 297,463 4,785,732 (955,733) 3,829,999

Operating profit 1,704,267 102,374 1,806,641 (261,089) 1,545,552

Material itemDepreciation and amortisation 539,978 36,550 576,528 (147,132) 429,396

Segment assets 13,371,302 378,126 13,749,428 (1,232,771) 12,516,657

Segment liabilities 1,442,759 72,485 1,515,244 (222,811) 1,292,433

The capital expenditure for port and marine business segments was $1.50 billion (2014: $1.14 billion) and $27.3 million (2014: $100.9 million) respectively.


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Reconciliations of reportable segment operating profit, assets and liabilities

Group2015 2014

$’000 $’000

Operating profitOperating profit for reportable segments 1,365,998 1,545,552Other income 156,907 154,585Impairment made for financial assets (95,400) –Impairment made for property, plant and equipment (13,678) (34,373)Impairment made for loans to joint ventures – (24,874)Corporate expenses (65,254) (58,973)Share of profit of associates, net of tax 188,069 170,763Share of profit of joint ventures, net of tax 172,709 131,133Finance costs (174,233) (170,692)Profit before income tax 1,535,118 1,713,121

Segment assetsSegment assets for reportable segments 12,751,841 12,516,657Cash and bank balances 3,120,856 3,508,208Financial assets 1,253,480 1,710,628Deferred tax assets 16,925 13,792Hedging instruments 3,515 8,286

17,146,617 17,757,571

Segment liabilitiesSegment liabilities for reportable segments 1,316,936 1,292,433Corporate liabilities 111,976 108,252Borrowings 4,595,557 4,815,541Loan from non-controlling shareholder of a subsidiary 24,059 24,059Current tax payable 188,205 210,446Deferred tax liabilities 325,854 353,461Hedging instruments 27,759 32,747

6,590,346 6,836,939


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Geographical information

The Group operates principally in Southeast Asia, Europe and Mediterranean, and Northeast Asia. Contributions from the other individual overseas operations are not significant and are therefore presented in aggregate as “others”. Segment revenue is based on geographical location of the operations. Segment assets are based on the geographical location of the assets.

Group2015 2014

$’000 $’000

RevenueSoutheast Asia 2,723,187 2,877,786Europe and Mediterranean 1,095,915 1,203,524Northeast Asia 479,234 399,944Others 344,407 304,478

4,642,743 4,785,732Joint arrangements (1,069,538) (955,733)

3,573,205 3,829,999

Non-current assets*Southeast Asia 4,706,761 4,179,104Europe and Mediterranean 1,835,704 1,712,003Northeast Asia 1,961,675 1,851,541Others 1,219,979 784,746

9,724,119 8,527,394Joint arrangements (3,298,334) (2,952,885)

6,425,785 5,574,509

* Non-current assets presented consist of property, plant and equipment, intangible assets and other non-current assets.

29 Financial risk management

Overview

Risk management is integral to the whole business of the Group. Exposure to credit, liquidity and market risks (including interest rate, currency and price risks) arises in the normal course of the Group’s business. The Group has written risk management policies and guidelines. In addition, the Group has established processes to monitor and manage major exposures. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

Credit risk

The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. Cash and fixed deposits are placed with banks and financial institutions which are regulated. Investments and transactions involving hedging instruments are allowed only with counterparties that are of certain credit standing.

At 31 December 2015, there was no significant concentration of credit risk. The maximum exposure to credit risk was represented by the carrying amount of each financial asset, including hedging instruments, in the statements of financial position.


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The ageing of loans and receivables (excluding deposits, other receivables and other non-current assets), net of allowance for doubtful receivables at the reporting date was:

Group Company2015 2014 2015 2014

$’000 $’000 $’000 $’000

Not past due 376,403 439,317 140,206 273,827Past due less than 30 days 25,223 31,968 – –Past due 30 - 120 days 6,900 8,629 – –Past due more than 120 days 2,390 4,082 – –

410,916 483,996 140,206 273,827

The change in allowance for doubtful receivables during the year was as follows:

Trade and accrued receivables Other non-current assets 2015 2014 2015 2014

$’000 $’000 $’000 $’000

Group

At 1 January 40,270 45,468 21,310 21,310Allowance reversed (5,978) (3,027) – –Allowance utilised (1,703) (59) – –Translation differences on consolidation 6 (112) – –Disposals of subsidiaries – (2,000) – –At 31 December 32,595 40,270 21,310 21,310

The principal risk to which the Company is exposed is credit risk in connection with the guarantee contracts it has issued. The credit risk represents the loss that would be recognised upon a default by the parties to which the guarantees were given on behalf of. To mitigate these risks, management continually monitors the risks and has established processes including performing credit evaluations of the parties it is providing guarantees on behalf of.

At 31 December 2015, the Company has issued guarantees on behalf of its subsidiaries and joint ventures which amounted to $31.5 million (2014: $428.4 million). These guarantees would become immediately payable by the Company in the event of default by these subsidiaries and joint ventures.

Liquidity risk

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. The following are the expected contractual undiscounted cash inflows/(outflows) of non-derivative financial liabilities and hedging instruments, including interest payments and excluding the impact of netting agreements:


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Cash flowsCarrying amounts

Contractual cash flows

Within 1 year

Between 1 and 5 years

After 5 years

$’000 $’000 $’000 $’000 $’000

Group

31 December 2015Non-derivative financial liabilitiesInterest-bearing liabilities 4,586,002 (5,201,693) (1,114,966) (2,721,894) (1,364,833)Loans from non-controlling shareholders

of subsidiaries 9,555 (10,501) (189) (757) (9,555)Trade and other payables 1,279,941 (1,279,941) (1,279,941) – –

Hedging instruments– Assets (3,515) 3,300 1,785 1,515 –– Liabilities 27,759 (27,751) (16,233) (9,873) (1,645)

5,899,742 (6,516,586) (2,409,544) (2,731,009) (1,376,033)

31 December 2014Non-derivative financial liabilitiesInterest-bearing liabilities 4,796,710 (5,548,232) (662,016) (3,220,743) (1,665,473)Loans from non-controlling shareholders

of subsidiaries 18,831 (19,623) (205) (9,863) (9,555)Trade and other payables 1,249,528 (1,249,528) (1,249,528) – –

Hedging instruments– Assets (8,286) 8,290 4,167 4,123 –– Liabilities 32,747 (32,747) (32,747) – –

6,089,530 (6,841,840) (1,940,329) (3,226,483) (1,675,028)

Company

31 December 2015Non-derivative financial liabilitiesInterest-bearing liabilities 2,621,427 (3,004,986) (771,293) (1,293,733) (939,960)Trade and other payables 405,911 (405,911) (405,911) – –

Hedging instruments– Liabilities 83 (83) (83) – –

3,027,421 (3,410,980) (1,177,287) (1,293,733) (939,960)

31 December 2014Non-derivative financial liabilitiesInterest-bearing liabilities 2,576,070 (3,077,233) (110,556) (1,880,620) (1,086,057)Trade and other payables 261,494 (261,494) (261,494) – –

Hedging instruments– Assets (670) 670 670 – –

2,836,894 (3,338,057) (371,380) (1,880,620) (1,086,057)

The table above indicates the periods in which the hedging instruments that are cash flow hedges are expected to impact the income statement.


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Market risk

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates, equity prices and fuel prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

(a) Interest rate risk

The Group’s exposure to changes in interest rates relates primarily to the Group’s interest-earning financial assets and interest-bearing financial liabilities. The Group’s objective is to maintain a balance of fixed and floating rate exposures as well as a balanced maturity period. At the reporting date, the interest rate profile of the interest-bearing financial assets and liabilities was:

Group Company2015 2014 2015 2014

$’000 $’000 $’000 $’000

Fixed rateCash and bank balances 2,705,246 3,092,337 2,144,040 2,522,695Borrowings (3,301,758) (3,443,937) (2,480,005) (2,312,290)

(596,512) (351,600) (335,965) 210,405Floating rateCash and bank balances 415,610 415,871 37,787 32,854Borrowings (1,293,799) (1,371,604) (141,422) (263,780)

(878,189) (955,733) (103,635) (230,926)

Hedging

The Group has raised funding with issuance of debt capital market instruments and bank loans to diversify funding sources. Interest rate swaps have been entered to achieve an appropriate mix of fixed and floating rate exposures within the Group’s policy.

Fair value hedge

A portion of the fixed rate Singapore dollar notes with a notional amount of $150.0 million (2014: $150.0 million) has been hedged against the exposure to changes in the fair value of the notes. In connection with this, the Group entered into interest rate swap contracts to receive fixed rate interest and pay variable rate on the $150.0 million (2014: $150.0 million) notes. The Group is therefore exposed to market fluctuations in interest rates on the $150.0 million (2014: $150.0 million) notes and the corresponding interest rate swap contracts. The net fair value of the swaps as at 31 December 2015 comprised assets of $3.5 million (2014: $7.6 million).

Cash flow hedge

A portion of the floating rate bank loans amounting to $140.8 million has been hedged against the exposure to market fluctuations in interest rate payments. In connection with these loans, the Group entered into interest rate swap contracts to receive variable rate interest and pay fixed rate on the notional amounts. Both the floating rate bank loans and interest rate swaps have the same terms and conditions. The net fair value of the swaps as at 31 December 2015 comprises liabilities of $0.9 million.

Sensitivity analysis

At 31 December 2015, it is estimated that a general increase of 100bps in interest rates would decrease the Group’s profit before tax by approximately $8.9 million (2014: $11.1 million). A general decrease of 100bps in interest rates would have the equal but opposite effect on the Group’s profit before tax. The general increase of 100bps in interest rates would have no significant impact on the Group’s equity. This analysis assumes that all other variables, in particular foreign currency rates, remain constant and does not take into account the associated tax effects and share of non-controlling interests.


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(b) Foreign currency risk

The Group is exposed to foreign currency risk on sales, purchases, bank deposits, bank loans and fixed and floating rate notes that are denominated in a currency other than the functional currencies of the Group entities. The functional currencies of the Group entities are primarily Singapore dollar and Euro. In respect of other monetary assets and liabilities held in currencies other than the functional currencies of the Group entities, the Group monitors the net exposure.

The Group’s US dollar and Hong Kong dollar denominated unsecured bank loans, fixed and floating rate notes amounting to $2.15 billion (2014: $2.97 billion) are designated as hedging instruments for the Group’s investments in its associated companies.

The Group’s and Company’s significant exposures to foreign currencies (excluding the US dollar and Hong Kong dollar denominated unsecured bank loans, fixed and floating rate notes designated as hedging instruments for the Group’s investments in its associated companies) were as follows:

31 December 2015 31 December 2014HK Dollar US Dollar HK Dollar US Dollar

$’000 $’000 $’000 $’000

Group

Financial assets – 678,402 – 824,856Cash and bank balances 24,566 489,900 9,382 92,074Trade and other receivables – 6,527 – 11,173Interest-bearing liabilities – (466,554) – –Trade and other payables (11,077) (70,561) (10,741) (96,287)

13,489 637,714 (1,359) 831,816

Company

Loans to subsidiaries 41,047 901,917 146,885 2,242,736Cash and bank balances 15,811 474,817 7,395 59,868Interest-bearing liabilities (364,514) (2,256,913) (340,044) (2,236,026)Trade and other payables (11,076) (20,950) (10,739) (22,343)

(318,732) (901,129) (196,503) 44,235


At 31 December 2015, it is estimated that a 10% strengthening in the Singapore dollar against the Hong Kong dollar and the US dollar would decrease the Group’s profit before tax by approximately $1.35 million (2014: increase by $0.1 million) and increase the Group’s profit before tax by approximately $4.1 million (2014: decrease by $0.7 million) respectively. A 10% strengthening in the Singapore dollar against the US dollar would decrease the Group’s other comprehensive income by approximately $67.8 million (2014: $82.5 million). A 10% weakening in the Singapore dollar against the respective currencies would have the equal but opposite effect on the Group’s profit before tax and other comprehensive income.

At 31 December 2015, it is estimated that a 10% strengthening in the Singapore dollar against the Hong Kong dollar and the US dollar would increase the Company’s profit before tax by approximately $31.8 million (2014: $19.7 million) and $90.1 million (2014: decrease by $4.4 million) respectively. A 10% weakening in the Singapore dollar against the respective currencies would have the equal but opposite effect on the Company’s profit before tax.

This analysis assumes that all other variables, in particular interest rates, remain constant and does not take into account the associated tax effects and share of non-controlling interests.


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(c) Equity price risk

Equity security price risk is the risk of changes in fair value of the Group’s investments due to changes in the underlying equity securities prices. The risk is concentrated in the Group’s investments in equity securities.


At 31 December 2015, it is estimated that a 10% increase in the underlying equity prices would increase equity by $119.9 million (2014: $165.6 million). A 10% decrease in the underlying equity prices would have the equal but opposite effect on the Group’s equity. This analysis assumes that all other variables, in particular foreign currency rates, remain constant and does not take into account the associated tax effects and share of non-controlling interests.

30 Fair values

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods.

(a) Quoted equity securities and trust units

Fair value is based on quoted bid prices at the reporting date, without any deduction for transaction costs.

(b) Hedging instruments

The fair value of interest rate swaps and fuel forward contracts is based on broker quotes. These quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date.

(c) Fixed rate interest-bearing borrowings

Fair value is calculated based on quoted offer price or discounted expected future principal and interest cash flows using market interest rates.

(d) Floating rate interest-bearing borrowings

The Group believes that the carrying amounts of floating rate interest-bearing loans, which are repriced at least semi-annually, reflect the corresponding fair values.

(e) Finance lease liabilities

The fair value of finance lease liabilities is estimated as the present value of future cash flows, discounted at market interest rates for homogeneous lease agreements. The estimated fair values reflect changes in interest rates.

(f) Non-derivative financial assets and liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market interest rates at the reporting date.

(g) Other financial assets and liabilities

The notional amounts of financial assets and liabilities with a maturity of less than one year (including cash and bank balances, trade and other receivables, trade and other payables, current borrowings) are assumed to approximate their fair values because of the short period to maturity.


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Fair values versus carrying amounts

The fair values of financial assets and financial liabilities, together with the carrying amounts were as follows:

NoteLoans and

receivablesAvailable-

for-saleHedging

instruments

Other financial liabilities

Total carrying amounts

Fair values

$’000 $’000 $’000 $’000 $’000 $’000

Group

31 December 2015Financial assets 8 – 1,198,626 – – 1,198,626 1,198,626Other non-current assets 9 6,330 – – – 6,330 6,330Hedging instruments 9 – – 3,515 – 3,515 3,515Trade and other receivables 11 516,978 – – – 516,978 516,978Cash and bank balances 14 3,120,856 – – – 3,120,856 3,120,856

3,644,164 1,198,626 3,515 – 4,846,305 4,846,305

Unsecured fixed and floating rate notes 17 – – – (3,324,215) (3,324,215) (3,455,273)

Secured bank loans 17 – – – (455,606) (455,606) (455,606)Unsecured bank loans 17 – – – (806,181) (806,181) (806,181)Loans from non-controlling

shareholders of subsidiaries 17 – – – (9,555) (9,555) (9,555)Hedging instruments 19, 20 – – (27,759) – (27,759) (27,759)Trade and other payables 20 – – – (1,279,941) (1,279,941) (1,279,941)

– – (27,759) (5,875,498) (5,903,257) (6,034,315)

31 December 2014Financial assets 8 – 1,655,772 – – 1,655,772 1,655,772Other non-current assets 9 7,103 – – – 7,103 7,103Hedging instruments 9, 11 – – 8,286 – 8,286 8,286Trade and other receivables 11 570,838 – – – 570,838 570,838Cash and bank balances 14 3,508,208 – – – 3,508,208 3,508,208

4,086,149 1,655,772 8,286 – 5,750,207 5,750,207

Unsecured fixed and floating rate notes 17 – – – (3,450,783) (3,450,783) (3,646,511)

Secured bank loans 17 – – – (375,000) (375,000) (375,000)Unsecured bank loans 17 – – – (861,226) (861,226) (861,226)Finance lease liabilities 17 – – – (109,701) (109,701) (109,701)Loans from non-controlling

shareholders of subsidiaries 17 – – – (18,831) (18,831) (18,831)Trade and other payables 20 – – – (1,249,528) (1,249,528) (1,249,528)Hedging instruments 20 – – (32,747) – (32,747) (32,747)

– – (32,747) (6,065,069) (6,097,816) (6,293,544)


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NoteLoans and

receivablesHedging

instruments

Other financial liabilities

Total carrying amounts

Fair values

$’000 $’000 $’000 $’000 $’000

Company

31 December 2015Trade and other receivables 11 145,079 – – 145,079 145,079Cash and bank balances 14 2,181,827 – – 2,181,827 2,181,827

2,326,906 – – 2,326,906 2,326,906

Unsecured fixed and floating rate notes 17 – – (2,621,427) (2,621,427) (2,739,124)Trade and other payables 20 – – (405,911) (405,911) (405,911)Hedging instruments 20 – (83) – (83) (83)

– (83) (3,027,338) (3,027,421) (3,145,118)

31 December 2014Trade and other receivables 11 277,918 – – 277,918 277,918Hedging instruments 11 – 670 – 670 670Cash and bank balances 14 2,555,549 – – 2,555,549 2,555,549

2,833,467 670 – 2,834,137 2,834,137

Unsecured fixed and floating rate notes 17 – – (2,444,277) (2,444,277) (2,612,175)Unsecured bank loans 17 – – (131,793) (131,793) (131,793)Trade and other payables 20 – – (261,494) (261,494) (261,494)

– – (2,837,564) (2,837,564) (3,005,462)

Fair value hierarchy

The tables below analyse fair value measurements for financial assets and financial liabilities, by valuation method. The different levels have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

• Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).


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Financial assets and financial liabilities carried at fair value

Level 1 Level 2 Total$’000 $’000 $’000

Group

31 December 2015Available-for-sale financial assets 1,198,626 – 1,198,626Hedging instrument assets – 3,515 3,515

1,198,626 3,515 1,202,141

Non-derivative financial liabilities – (152,788) (152,788)Hedging instrument liabilities – (27,759) (27,759)

– (180,547) (180,547)

31 December 2014Available-for-sale financial assets 1,655,772 – 1,655,772Hedging instrument assets – 8,286 8,286

1,655,772 8,286 1,664,058

Non-derivative financial liabilities – (156,506) (156,506)Hedging instrument liabilities – (32,747) (32,747)

– (189,253) (189,253)

Company

31 December 2015Hedging instrument liabilities – (83) (83)

31 December 2014Hedging instrument assets – 670 670

Financial assets and financial liabilities not carried at fair value but for which fair values are disclosed*


Group

31 December 2015Other non-current assets – 6,330 6,330

Unsecured fixed and floating rate notes – (3,455,273) (3,455,273)Secured bank loans – (455,606) (455,606)Unsecured bank loans – (806,181) (806,181)Loans from non-controlling shareholders of subsidiaries – (9,555) (9,555)

– (4,726,615) (4,726,615)


84



Group

31 December 2014Other non-current assets – 7,103 7,103

Unsecured fixed and floating rate notes – (3,646,511) (3,646,511)Secured bank loans – (375,000) (375,000)Unsecured bank loans – (861,226) (861,226)Finance lease liabilities – (109,701) (109,701)Loans from non-controlling shareholders of subsidiaries – (18,831) (18,831)

– (5,011,269) (5,011,269)

Company

31 December 2015Unsecured fixed and floating rate notes – (2,739,124) (2,739,124)

31 December 2014Unsecured fixed and floating rate notes – (2,612,175) (2,612,175)Unsecured bank loans – (131,793) (131,793)

– (2,743,968) (2,743,968)

* Excludes financial assets and financial liabilities whose carrying amounts measured on the amortised cost basis approximate their fair values due to their short-term nature and where the effect of discounting is immaterial.

31 Acquisition and disposals of subsidiaries

(a) Acquisition of a subsidiary

The Group acquired equity interest in a subsidiary in Europe during 2015. The total cash consideration was $7.8 million. The acquisition of the subsidiary has no significant impact to the Group’s net profit for the year. The following table summarises the recognised amounts of identifiable assets acquired and liabilities assumed at the date of acquisition.

Group2015

$’000

Property, plant and equipment 21,819Inventories 153Trade and other payables (21,519)Total identifiable net assets 453


85


(b) Disposals of subsidiaries

The Group disposed equity interests in certain subsidiaries in Europe during 2014. The effects of the disposals on the financial position of the Group were as follows:

Group2014

$’000

Property, plant and equipment 361,198Intangible assets 387Cash and bank balances 14,077Other current assets 26,367Current liabilities (47,894)Non-current liabilities (117,405)Net assets derecognised 236,730Non-controlling interests (49,220)Accounted for as investments in joint ventures (109,928)Accounted for as loans to joint ventures (13,433)Accounted for as amounts due to joint ventures 12,967Net assets disposed 77,116Reclassification of reserves 1,597Loss on disposal (42,561)Total consideration received 36,152Cash and bank balances disposed (14,077)Disposals of subsidiaries, net of cash disposed 22,075

32 Commitments

As at the reporting dates, the Group had the following commitments:

Group2015 2014

$’000 $’000

(a) Capital commitments which have been authorised and contracted but not provided for in the financial statements 1,571,373 1,211,284

(b) Non-cancellable operating lease commitments: Within 1 year 15,299 15,588 Between 1 and 5 years 38,433 49,185 After 5 years 14,080 17,600

The Group leases equipment and office premises under operating leases. The leases run over various periods with some leases containing an option to renew the lease upon expiry. Lease terms are reviewed at renewal of leases.


86


33 Related parties

Key management personnel compensation

Key management personnel of the Group are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The Board of Directors and Senior Management Council of the Company are considered as key management personnel of the Group.

The compensation paid or payable to key management personnel comprised:

Group2015 2014

$’000 $’000

Directors’ fees 3,458 1,730Senior Management Council remuneration 22,070 21,788

25,528 23,518

Other related party transactions

Other than disclosed elsewhere in the financial statements, transactions with related parties were as follows:

Group2015 2014

$’000 $’000

Provision of servicesRelated corporations 221,919 262,201Joint ventures 73,533 51,149

Purchase of servicesRelated corporations (26,583) (32,700)Joint ventures (78,430) (5,469)

34 New standards and interpretations not adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015, and have not been applied in preparing these financial statements. The Group has yet to assess the full impact of these standards and will apply these standards as and when they become effective.


87

CORPORATE DIRECTORYCORPORATE DIRECTORYPSA HEADQUARTERSPSA International Pte Ltd 38th Floor, PSA Building, 460 Alexandra Road, Singapore 119963 Tel +65 6279 4010Fax +65 6274 4677 www.globalpsa.com

SOUTHEAST ASIA PSA South East Asia 36th Floor, PSA Building, 460 Alexandra Road, Singapore 119963 Tel +65 6274 7111Fax +65 6274 4261

SINGAPORE Singapore Terminals Singapore TerminalsPSA Corporation Limited36th Floor, PSA Building460 Alexandra RoadSingapore 119963 Tel +65 6274 7111Fax +65 6279 5463www.singaporepsa.com

Multi-Purpose Terminal33 Harbour Drive1st Floor, Pasir Panjang Terminal Building 2Singapore 117606Tel +65 6771 6161Fax +65 6771 6182

THAILAND Eastern Sea Laem Chabang Terminal Eastern Sea Laem Chabang Terminal Co LtdLaem Chabang Port, B3Toong Sukhla, SrirachaChonburi, 20230Tel +66 033 005 688Fax +66 038 490 095 www.esco.co.th

VIETNAM SP-PSA International PortSP-PSA International Port Co LtdRoad #3, Phu My 1 Industrial Zone,Phu My Town, Tan Thanh DistrictBa Ria – Vung Tau ProvinceTel +84 64 392 4567Fax +84 64 392 4555www.sp-psa.com.vn

INDONESIA New Priok Container Terminal OneKirana Two Office Tower 9F,Jl. Boulevard Timur No. 88, Kelapa Gading, Jakarta Utara 14240Tel +62 212 962 9690

NORTHEAST ASIA CHINA PSA China OfficeUnit 2601, Office Tower A, Phoenix Place, 5A Shuguang Xili, Chaoyang District, Beijing, 100028Tel +86 10 5762 3600 Fax +86 10 5762 3611

Dalian TerminalsDalian Container Terminal Co LtdDayaowan Container Terminal Phase IDalian, 116601Tel +86 411 8759 5088Fax +86 411 8759 5089www.dct.com.cn

Dalian Port Container Terminal Co LtdDayaowan Container Terminal Phase IIXingang, Bonded Port ZoneDalian, 116601Tel +86 411 8759 5088Fax +86 411 8759 5089www.dpcmterminal.com

FCT-JiangyinFuzhou International Container Terminal Co LtdFujian Jiangyin International Container Terminal Co LtdXin Jiang Road, JiangyinFuqing Fujian, 350309Tel +86 591 8596 6888 Fax +86 597 8596 6666 www.fict-fuzhou.com.cn

Fuzhou Qingzhou Container Terminal Co Ltd113 Luoxing Road MaweiFujian Fuzhou, 350015Tel +86 591 8368 2473 Fax +86 591 8398 6897 www.fqct-fuzhou.com.cn

Guangzhou Container Terminal Guangzhou Container Terminal Co Ltd1 Huangpu Xingang Road Guangzhou Economic and Technological Development ZoneGuangdong, 510730Tel +86 20 8225 6328 Fax +86 20 8225 6233www.gct.com.cn

Tianjin TerminalTianjin Port Pacific International Container TerminalTianjin Dongjiang Free Trade Zone,3889 Meizhou Road, Tianjin 300463Tel +86 22 2560 3502Fax +86 22 2560 3502www.tpct.cc

Tianjin Port Alliance International Container TerminalTACT Business BuildingNo. 1068 Lin Hai RoadTanggu District, Tianjin City 300461Tel +86 22 25702990 Fax +86 22 25702990

Dongguan Container TerminalPSA Dongguan Container Terminal Co LtdHumen Port Avenue, Shatian Xidatan Section,Dongguan, Guangdong 523990Tel +86 769 8866 6181www.psa-dgct.com

LYG-PSA Container TerminalLYG-PSA Container Terminal LtdLianyungang Miaoling Port ZoneJiangsuTel +86 518 8176 8555www.lyg-psa.com

Beibu Gulf-PSA International Container TerminalBeibu Gulf-PSA International Container Terminal Co., LtdQinzhou Port Bonded ZoneGuangxiwww.globalpsa.com

SOUTH KOREAPSA Korea#1017 Gwanghwamun Officia, 92 Saemunan-ro, Jongno-gu, Seoul, Korea 110-999Tel +82 2 7398840Fax +82 2 7398843

Incheon Container TerminalIncheon Container Terminal Co. Ltd#135 Chukhang-daero 118beon-gilJung-gu, Incheon Tel +82 32 890 8901Fax +82 32 890 8989www.psa-ict.co.kr

Pusan Newport International TerminalPusan Newport International Terminal330 Sinhangnam-ro, Gangseo-guBusan 618-821Tel +82 51 290 8001Fax +82 51 290 8002www.pnitl.com

JAPAN Hibiki Container TerminalHibiki Container Terminal Co., Ltd.Chisaki, 3-chome,Hibiki-machi, Wakamatsu-kuKitakyushu City Tel +86 10 5762 3600Fax +86 10 5762 3611

MIDDLE EAST SOUTH ASIA PSA Middle East South AsiaPSA Building, 460 Alexandra Road, Singapore 119963 Tel +65 6279 5189Fax +65 6279 5186

INDIA PSA IndiaWindsor, Unit No.604, 6th floor,Off CST Road, Vidyanagari Marg,Kalina, Santacruz (E), Mumbai 400098Tel +91 22 61273311Fax +91 22 61273312

Tuticorin Container TerminalPSA SICAL Terminals Limited Tuticorin ContainerTerminal BuildingBerth No.7 Harbour EstateTuticorin, 628004 Tel +91 461 238 2099Fax +91 461 238 2066www.psasical.co.in

Chennai International TerminalsChennai International Terminals Pvt. Ltd.Regus Citi Centre, Level 6, Chennai Citi Centre10/11 Dr. Radhakrishnan SalaiChennai 600 004Tel +91 44 25613000 Fax +91 44 25613111www.citpl.co.in

Bharat Kolkata Container TerminalsBharat Kolkata Container Terminals Pvt Ltd6A Middleton Street,8th Floor, Chhabildas TowerKolkata 700071 Tel +91 (33) 4037 3800Fax +91 (33) 4037 3801www.bkct.co.in

Bharat Mumbai Container TerminalsBharat Mumbai Container Terminals Pvt. Ltd.Windsor, Unit No.604, 6th floor,Off CST Road, Vidyanagari Marg, Kalina,Santacruz (E), Mumbai 400 098 Tel +91 22 6127 3311Fax +91 22 6127 3312www.globalpsa.com

Kakinada Container TerminalKakinada Container Terminal Pvt. Ltd. Kakinada Deep Water PortBeach Road, VakalapudiKakinada 533007Andhra Pradesh Tel +91 22 6127 3311Fax +91 22 6127 3312www.globalpsa.com

SAUDI ARABIA Saudi Global PortsSaudi Global Ports LLCPort Gate Complex,Office No.9-2nd Floor,Port Road, Al Khalidiah,Dammam Tel +966 3510 3751Fax +966 3857 4248www.saudiglobalports.com.sa

EUROPE AND MEDITERRANEANPSA EuropeNapelsstraat 79, 2000 Antwerp Tel +32 3 2606111 Fax +32 3 2606271

BELGIUM PSA AntwerpPSA Antwerp NVNapelsstraat 792000, Antwerp Tel +32 3 260 6257 Fax +32 3 260 6268 www.psa-antwerp.be

PSA ZeebruggeCaxtonweg Q140 – 143, 8380 Zeebrugge Tel +32 50 252134Fax +32 50 547520www.psa-zeebrugge.be

ITALY Voltri Terminal Europa (PSA Voltri Prà)Voltri Terminal Europa S.p.APorto di Pra-Voltri16158 GenoaTel +39 010 6996 402 Fax +39 010 6132 308 www.vte.it

Southern European Container HubSouthern European Container HubCalata Sanità, Palazzina Uffici16126 Genova PortoTel +39 010 6483184Fax +39 010 6483146www.sech.it

Venice Container Terminal (PSA Venice)Vecon S.p.AVenice Container TerminalPorto Commerciale Molo B – Palazzina Uffici Vecon30175 Marghera (VE) Tel +39 (0)41 2582781Fax +39 (0)41 5380944www.vecon.it

PORTUGAL Sines Container Terminal (PSA Sines)PSA Sines – Terminais de Contentores, S.A.Terminal de Contentores de SinesApartado 1957520-903 Sines Tel +351 26 987 0600Fax +351 26 987 0614www.psasines.pt

TURKEY Mersin International PortMersin International PortYenimahalle 101 Cad. 5307 Sk. No:533100 Mersin Tel +90 324 241 29 00Fax +90 324 232 4671www.mersinport.com.tr

AMERICAS PANAMA PSA Panama International TerminalPSA Panama International TerminalFormer Rodman Naval Station Panama City Tel +507 378 3800 Fax +507 378 3801www.psa.com.pa

ARGENTINA Exolgan Container TerminalAlberti 1780Dock Sud, Avellaneda,Buenos Aires Tel +54 11 4229 0001Fax +54 11 4229 0031www.exolgan.com

COLOMBIASociedad Puerto Industrial AguadulceAvenida Carrera 9 No.113-52 Torres Unidas 2 – Office 507Bogota Tel +571 378 3820 Ext: 211Fax +571 637 0533 Ext. 237www.puertoaguadulce.com

MARINE SINGAPOREPSA Marine70 West Coast Ferry RoadSingapore 126800Tel +65 6777 2288Fax +65 6379 9800 www.psamarine.com


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