Strength in Fluidity.

Transcription

1 Strength in Fluidity. ASL Marine Holdings Ltd Annual Report 2003

2 CONTENTS FOUNDER S MESSAGE 3 CHAIRMAN S MESSAGE 5 BOARD OF DIRECTORS 8 EXECUTIVE OFFICERS 11 OPERATIONS REVIEW 14 FINANCIAL HIGHLIGHTS 16 CORPORATE GOVERNANCE 18 CORPORATE INFORMATION 24

3 Binding Success ASL Marine is like the bamboo where once it is established, the roots bind deeply and are extremely tough. Backed by a foundation established over the last 29 years, the Group has what it takes to grow into a bigger player in the marine industry today.

4 "Though the bamboo forest is dense, water flows through it freely." Zen saying

5 ASL Marine Holdings Ltd Annual Report FOUNDER S MESSAGE We started operations in 1974 as "Ang Sin Liu Hardware" where we traded scrapped steel material. Subsequently, we rode on the construction boom in the 1980s and incorporated Ang Sin Liu Construction (Pte) Ltd in 1982 to undertake building construction works. In 1986, we purchased the lease at No. 19 Pandan Road, the current location of our Singapore shipyard, to undertake ship-breaking activities. At that time, we decided to utilise the land further by expanding into shipbuilding and shiprepair, and successfully constructed our first barge in This was followed by our first tugboat in In 1989, we decided to tap the growing market for shipchartering and began to provide shipchartering of barges and tugboats and marine logistics services. From our humble beginnings, I am very pleased to witness the transformation of the ASL Marine Group from a scrapped steel material trader to an integrated marine company with core business in shipbuilding, shiprepair and shipchartering. Our successful SGX Mainboard listing in March this year, and our recent strong full-year financial performance are strong indicators of the future success that we will stand to enjoy. Ang Sin Liu, Founder

6 ADAPTIVE ASL Marine s willingness to adapt to the winds of change has enabled it to emerge as a strong player in the marine industry today. Notice that the stiffest tree is most easily cracked, while the bamboo or willow survives by bending with the wind. - Bruce Lee

7 ASL Marine Holdings Ltd Annual Report CHAIRMAN S MESSAGE Dear Shareholders It is indeed my pleasure to present ASL Marine's first annual report as a publicly-listed company. I would like to express my deepest appreciation to all of you for your strong support during our Initial Public Offering in March this year. The year ended 30 June 2003 was an exceptional year for us, having achieved stellar growth in the midst of global uncertainties and a sluggish domestic economy. Although the second half of the financial year was particularly challenging due to the Iraq war and the spread of SARS in Asia, I am very pleased that we have been able to surmount the difficulties to emerge stronger and more dynamic. It bears testimony to the Group's unique strengths of enterprising and flexible management that is deeply rooted in our core values of hard work, prudence and professionalism. Just like the tenacity and fluidity of the "bamboo". While remaining firmly entrenched and focused on its core strengths, ASL Marine's agility and adaptability to the winds of change have enabled it to stay ahead in the marketplace and achieved consistent growth and profitability over the last 29 years. FINANCIAL REVIEW For FY2003, the Group achieved 28% growth in net attributable profit to $9.1 million, while revenue rose 22% to $78.9 million. All three divisions continued to register profitability with shiprepair and shipchartering achieving the highest profit growth. Revenue from the shipbuilding division rose 33% to $35.1 million. The higher revenue was recognised from the construction of nine tugboats and 24 barges in FY2003 as compared to five tugboats and 29 barges in FY2002.

8 06 CHAIRMAN S MESSAGE (continued) However, gross profit was lower at $2.2 million due to competitive pricing for some projects and higher steel prices in the later part of FY2003. Although the shiprepair division saw lower revenue of $14.1 million, gross profit increased by 60% to $5.6 million as gross margin soared due to the higher proportion of higher value-added repair jobs. For the shipchartering division, revenue rose 38% to $29.7 million due to robust demand from existing and new customers in the marine and offshore infrastructure sector. In addition, gross profit rose 59% to $6.2 million as a result of the better pricing that was achieved. In view of our improved financial performance, the Directors have recommended a first and final tax-exempt dividend of 1.4 cents per ordinary share. MOVING INTO FY2004 Industry Outlook In the last few years, the local marine industry has been seeing increasing buoyancy. According to the Association of Singapore Marine Industry, the Singapore marine sector achieved a record turnover of $4.4 billion in FY2002. The Group's order books for FY2004 are expected to remain healthy with some spillover into FY2005. Against this backdrop of a positive industry outlook, we are confident that ASL Marine, with its track record and established reputation, will be able to ride on the strong growth momentum of the marine industry. New Contracts As it stands, the Group has a healthy current order book which should positively impact its bottomline in FY2004. As at 30 June 2003, the Group has secured an order book amounting to some $70.7 million, with $58.2 million from shipbuilding and $12.5 million from shipchartering. Expansion of Drydocking Facility The building of our drydocking facility in the Batam shipyard is progressing smoothly and we expect to commence operations in the second half of FY2004. With this new facility, the capacity and capability of our shipyard, especially in shiprepair, will be further boosted. This additional facility is expected to contribute positively to our bottomline in FY2004 and more significantly thereafter. Focus on Energy Sector In this current year, the Group will also be focusing on the energy transportation sector as an area for growth. For a start, through our joint venture associate, ASL Energy, the Group has secured a five-year shipchartering contract worth some $127 million to provide logistical support to various coal concessions in Kalimantan, which is the largest coal producing region in the Indonesia peninsula. Geographical Expansion As part of our ongoing strategy to expand geographical coverage, the Group is looking to strengthen its presence in regional markets, where the Group sees business opportunities in marine infrastructure activities such as the building of terminals and land reclamation projects, offshore oil and gas and energy sectors. CONCLUSION We are upbeat about our prospects for FY2004 given the favourable market trends and new contracts secured. Even as we continue to drive for further sustainable long term growth, we look to the continued support of our good and valued customers, business partners, suppliers, investors and very importantly, our employees. To all of you, on behalf of the Board, I would like to express our sincere appreciation. Ang Kok Tian Chairman and Managing Director

9 QUIET STRENGTH It is this quiet strength residing in ASL Marine that helps it to withstand many economic storms. The bamboo that bends is stronger than the oak that resists. - Japanese Proverb

10 08 BOARD OF DIRECTORS 2. Andre Yeap Poh Leong 4. David Hwang Soo Chin 6. Ang Kok Eng 5. Ang Ah Nui 3. Ang Kok Tian 1. Ang Kok Leong 7. Damian Hong Chin Fock

11 ASL Marine Holdings Ltd Annual Report Ang Kok Tian, aged 42, Chairman and Managing Director Mr Ang was appointed an Executive Director of our Company in October 2000, and Chairman of the Board and Managing Director in January Mr Ang has been with the Group for more than 15 years and has extensive knowledge and experience in the industry and is instrumental in developing the shipbuilding, shiprepairs and shipchartering business of our Group. Mr Ang is in charge of our Group's business strategies and direction, corporate plans and policies as well as the general management of our Group. In particular, he is in charge of our shipbuilding and shiprepair division and is responsible for all aspects of the shipyard s operations, including estimations, negotiations and contract finalisation. Mr Ang began his career at Ang Sin Liu Hardware, handling administration, purchasing and marketing for the company. He graduated from the National University of Singapore in 1986 where he received his Bachelor s Degree in Science. Ang Ah Nui, aged 40, Deputy Managing Director Mr Ang was appointed an Executive Director of our Company in October 2000 and Deputy Managing Director in January Mr Ang, having been with our Group for more than 15 years, has extensive industry knowledge and experience and is instrumental in seeking new markets for our business. Mr Ang is jointly responsible for our Group's business strategies and direction, corporate plans and policies, and for the general management of our Group's shipchartering operations, including business development and operations. Ang Kok Eng, aged 36, Executive Director Mr Ang was appointed an Executive Director of our Company in October Mr Ang is responsible for developing marketing strategies, identifying new business/markets and customers for Asia. Mr Ang joined the Group on 1 December 1994 and was responsible for the operations of our shipyard in PT ASL Shipyard Indonesia, coordinating with management on the execution of new projects; accounts reporting and negotiating for new projects. He was also in charge of our Group's management information systems. Prior to joining our Group, Mr Ang was the Product Manager of Navystar Industrial Co. Ltd, a toy manufacturing company based in Hong Kong and the PRC. He graduated from the University of Michigan, USA in 1992 with a Bachelor of Science Degree in Electrical Engineering. Ang Kok Leong, aged 35, Executive Director Mr Ang was appointed an Executive Director of our Company in October Mr Ang is responsible for developing marketing strategies, identifying new businesses/markets and customers for Europe and Middle East. Mr Ang joined our Group on 1 January 1995 as a Marketing Executive in the shipbuilding division. He graduated from Carnegie Mellon University in 1994 with a Bachelor of Science Degree in Industrial Management.

12 10 BOARD OF DIRECTORS (continued) David Hwang Soo Chin, aged 55, Independent Director Mr Hwang joined the Board in January Mr Hwang is currently the Group Managing Director and Chief Executive Officer of The Central Package Group, a provider of packaging products and solutions with operations in the PRC, Singapore, Batam and Malaysia. Mr Hwang was employed by leading packaging companies from Australia and the United Kingdom in various senior positions during the period In , he was appointed Executive Director of Tuan Sing Holdings Limited to oversee its manufacturing and construction activities. In , Mr Hwang worked in a major Indonesian Group where he was responsible for the Group's Retail and Property operations in Indonesia. Between , Mr Hwang was appointed Group Managing Director and Chief Executive Officer of Tuan Sing Holdings Limited. He was also appointed as Chairman of SPP Limited, Gul Technologies Ltd and Vice-Chairman of the Grand Hotel Group Ltd which is listed on the Australian Stock Exchange. He holds a Bachelor of Engineering (Chemical) and a Diploma in Computer Science from the University of Queensland and is currently a Fellow member of the Singapore Institute of Directors. Andre Yeap Poh Leong, aged 42, Independent Director Mr Yeap joined the Board in January Prior to starting his own practice under the name "Andre Yeap & Co", Mr Yeap had worked in various law firms in Singapore. He was a Senior Litigation Partner at Allen & Gledhill where he had worked from 1987 to 2000, before joining the partnership of Lee & Lee in His practice focuses on banking, commercial and corporate litigation with special emphasis on securities and stock-broking related litigation as well as construction litigation, including ship and oil-rig matters, both in Court and in arbitration. He was appointed Senior Counsel on 4 January He graduated from the National University of Singapore with a Bachelor's Degree in Law and is a member of the Singapore International Arbitration Centre. Damian Hong Chin Fock, aged 55, Independent Director Mr Hong joined the Board in May Mr Hong is currently an external consultant to KPMG Tax Services Pte Ltd and Allen & Gledhill. Mr Hong also sits on the Boards of Prima Limited and Eng Wah Organisation Limited as an independent director. Mr Hong was employed by the Inland Revenue Authority of Singapore before joining KPMG in He retired from KPMG as Tax Principal in He graduated from University of Singapore with a Bachelor's Degree in Social Science.

13 ASL Marine Holdings Ltd Annual Report EXECUTIVE OFFICERS Tan Thiam Hee, aged 34, Group Financial Controller and Company Secretary Mr Tan joined the Company in May 2003 and is responsible for overseeing the finance and accounting functions of the Group, including corporate secretarial and legal matters. Prior to joining the Company, Mr Tan has about seven years of accounting and financial management experience in a publicly-listed and diversified Group, Hua Kok International Ltd, which has business spanning across industries such as building construction, manufacturing and trading. His work experience covered both Singapore and overseas, including China, Indonesia, Malaysia and Australia. Previously, he worked as an Auditor in public accounting firms for about three years. Mr Tan holds a Bachelor of Accountancy and a Master of Business Administration from Nanyang Technological University. He is a member of the Institute of Certified Public Accountants of Singapore and the Singapore Institute of Directors. Lim Soon Teck, aged 52, Operations Manager (Shipbuilding and Shiprepair) Mr Lim has been with the Group since May 1996 as project manager in our Shipyard Operations Division. He is responsible for our Group's shiprepairs, shipbuilding and other marine engineering services including estimation, production scheduling, facilities planning and others. Mr Lim spent the first 10 years of his career with Maroil Shipbuilding and Engineering Pte Ltd where he held the position of Estimating/Technical Manager. Subsequently, he joined Marine Technic Pte Ltd as an Operations Manager where he spent 5 years. He then joined Dynamic Marine Pte Ltd for two years as a Project Estimator before joining Conan Wu & Associates sometime in 1991 as Site Superintendant. Tay Kes Siong, aged 53, General Manager (Shipchartering) Mr Tay joined our Group in October 2002 as and is responsible for managing the shipping operations of our Group, including overall fleet scheduling and maintenance. Mr Tay has more than 30 years of experience in the shipping and marine industry. Prior to joining our Group, Mr Tay was a Marine Surveyor and Director of Marine Management Surveyors and Services Pte Ltd where he was responsible for marine surveys and consultancy, sea trials, compass adjustments and cargo survey. He also carried out the role of superintendant and was responsible for shipping agencies and services. Lewis Roger Martin, aged 53, Marketing Manager (Shipchartering) Mr Lewis joined our Group in July 1999 and is responsible for its sales and marketing functions, including client relationship management. Mr Lewis has over 32 years of experience in the shipping industry. He was appointed Shipping Manager cum Purchaser of M J Batty Pte Ltd in Subsequently, he joined Wallem Towage & Salvage Pte Ltd in 1974 where he spent 8 years as its Shipping/Operations Manager. In 1979, he was appointed as Shipbroker of Wallem Shipping (S) Pte Ltd. He then joined Ban Choon Shipping Pte Ltd in 1984 as the Shipping/Yard Manager where he spent 14 years, prior to joining our Group.

14 12 EXECUTIVE OFFICERS (continued) Lee You Bom, aged 55, Marketing Manager (Shipbuilding and Shiprepair) Mr Lee has been with the Group since June 2001 and is responsible for its sales and marketing functions, including client relationship management. Mr Lee has more than 25 years of experience in the management of shipbuilding and shiprepair operations. Between 1978 and 1982, Mr Lee was a Manager with Tacoma Shipbuilding & Engineering Co Ltd and Maritime Consultants Co Ltd in Korea. From 1982 to 1997, he was with Otto Industrial Co Pte Ltd covering a wide spectrum of management functions. Prior to joining our Group, he was in P.T. Batamas (a subsidiary of Otto Industrial Co Pte Ltd) between 1997 to 2001 as Production/Marketing Manager. Mr Lee holds a Bachelor of Marine Engineering from National Fisheries University of Pusan, Korea in 1972 and Master of Marine Engineering from Korea Maritime University in 1975.

15 REGENERATIVE To stay at the forefront of the industry, ASL Marine regenerates its systems from time to time, giving total commitment to enhancing the service standard and turnaround time. Bamboo regenerates itself eternally. -Anonymous

16 14 OPERATIONS REVIEW As an integrated marine company, our core business is in shipyard operations and shipchartering. Shipyard Operations At our 37,219 sqm shipyard in Singapore and 300,000 sqm shipyard in Batam, Indonesia, our niche lies in building and repairing vessels of up to 110 m in length, including tugboats, barges and tankers. Shipbuilding The shipbuilding division continued to be the main contributor, accounting for 44% of Group's total revenue. In the year under review, our shipbuilding operations registered a 33% increase in revenue to $35.1 million compared with $26.5 million in FY2002. The significant increase in revenue was primarily due to the revenue recognised for the construction of nine tugboats and 24 barges in FY2003, compared to five tugboats and 29 barges in FY2002. However, due to lower margins for later projects which were secured amidst an intense competitive environment and higher steel prices in later part of FY2003, gross profits from shipbuilding activities ebbed 44% to $2.2 million for FY2003 compared to $3.9 million in FY2002. This accounts for 16% of the Group's total gross profit. Going forward, the Group will ride the tide on two fronts. Firstly, by leveraging on the heightened demand for offshore support vessels and secondly, fulfilling operators' replacement requirements for ageing vessels. There is also increased demand for newbuildings in view of stricter safety and performance standards set by port and maritime authorities. In a bid to make a strong push into the oil and gas market, ASL Marine will focus on building bigger and more powerful vessels. These include highly manoeuvrable tugboats equipped with stronger bollard pull to facilitate the berthing of huge tankers and container ships such as VLCCs (Very Large Crude Carriers) and ULCCs (Ultra Large Crude Carriers). As at 30 June 2003, the Group has an outstanding order book for shipbuilding of approximately $58.2 million. These contracts are expected to be significantly completed in FY2004. Shiprepair and other marine related services Although revenue for shiprepair and other marine related services slipped 15% to $14.1 million for FY2003, our shiprepair operations turned in a sterling performance with a 60% surge in gross profit to $5.6 million - making this business segment one of our main profit contributors. Our gross profit margin almost doubled from 21% in FY2002 to 40% in FY2003. The increase was largely brought about by a higher proportion of higher value-added repair jobs which generally commanded higher margins. To date, the Group has effectively managed the complementary strengths of its Batam and Singapore shipyards to great advantage, thereby enabling the Group to enjoy a stable market share for shipbuilding and shiprepair services.

17 ASL Marine Holdings Ltd Annual Report The Batam shipyard operations will increasingly play a critical role in maintaining the Group's price competitiveness vis a vis competitors. With the expected completion of the Batam floating dock in the second half of FY2004, ASL Marine will further strengthen its current shipbuilding and shiprepair capabilities. Coupled with the Group's stronghold in newbuildings and the shiprepair market in the region, we will be in a strong position to tap opportunities for sustainable growth. Shipchartering Our current fleet of 107 tugboats and barges, as compared to 100 a year ago, mainly service the marine and offshore infrastructure sector, and our vessels are deployed in the Asia Pacific and the Middle East. Our shipchartering and rental operations registered a commendable 38% growth to $29.7 million for FY2003. Gross profit increased to $6.2 million on the back of an improvement in gross margin from 18% in FY2002 to 21% in FY2003. The improvement in gross margin was due to better pricing from marine and offshore infrastructure projects. As at 30 June 2003, the Group's current order book for shipchartering stands at $12.5 million. Amongst them is a $4 million contract to transport rocks for the Changi Outfall Project to develop for the Singapore Deep Tunnel Sewage System (DTSS). The contract, which commenced in June 2003, should be completed by the first half of FY2005. More recently, the $127 million contract for ASL Energy to provide 20 sets of tugboats and barges to carry coal within Indonesia waters for a period of five years, commenced on 1 September With the increasingly buoyant marine industry, and as part of our ongoing strategy to expand geographical coverage, the Group is looking to strengthen its presence in regional markets, where the Group sees business opportunities in the provision of shipbuilding, shiprepair and shipchartering services to marine infrastructure activities such as the building of terminals and land reclamation projects, offshore oil and gas and energy sectors. This endeavour will be supported by the Group's plan to increase its fleet size by 45 vessels by FY2005.

18 16 FINANCIAL HIGHLIGHTS REVENUE NET PROFIT ($ Million) ($ Million) FY2000 FY2001 FY2002 FY2003 FY2000 FY2001 FY2002 FY2003 REVENUE BY OPERATIONS 25.6% 33.4% 17.8% 37.7% 41.0% 44.5% FY2002 FY2003 ($ Million) Shipbuilding : 26.5 Shiprepairs : 16.5 Shipcharter & Rental : 21.6 ($ Million) Shipbuilding : 35.1 Shiprepairs : 14.1 Shipcharter and Rental : 29.7

19 ASL Marine Holdings Ltd Annual Report GROSS PROFIT BY OPERATIONS 34.2% 34.7% 31.1% 44.3% 15.5% 40.2% FY2002 FY2003 ($ Million) Shipbuilding : 3.9 Shiprepairs : 3.5 Shipcharter and Rental : 4.0 ($ Million) Shipbuilding : 2.2 Shiprepairs : 5.6 Shipcharter and Rental : 6.2 GROWTH IN CHARTER FLEET SIZE Number of Vessels FY2000 FY2001 FY2002 FY2003

20 18 CORPORATE GOVERNANCE ASL Marine Holdings Ltd. ("ASL Marine" or the "Company") is committed to achieving a high standard of corporate governance which conforms with the principles set out in the Code of Corporate Governance ("Code") prescribed by the Singapore Exchange Securities Trading Limited ("SGX-ST"). The Board of directors (the "Board") is pleased to report on the compliance of the Company with the Code. BOARD OF DIRECTORS Principle 1 : Board's conduct of its affairs Principle 2 : Board's composition and balance Principle 3 : Chairman and Chief Executive Officer The Board comprises seven members, of whom four are executive directors and three are independent non-executive directors. The experience, knowledge and expertise of the existing members are considered sufficient to effectively lead and control the Company, taking into account the scope and nature of its operations. Directors' information, including their experience and qualifications, are set out on pages 8 to 10 in the section titled "Board of Directors" of this annual report. The key role of the Board is to protect and enhance shareholders' value. To fulfill this, the Board reviews and advises on overall strategy and objectives, sets goals, supervises executive management, monitors business performance and goal achievement, and assumes responsibility for corporate governance of the Company and the Group. The Board conducts regular meetings to discuss the business of the Group. In accordance with the prevailing procedures of the Company, the Board is responsible for approving financial results, distribution of dividends and material acquisitions and investment proposals. Commencing from financial year 30 June 2004, the Board will meet at least four times a year. For effective and efficient execution of its responsibilities, the Board has established and delegated certain functions to the Audit Committee ("AC"), Nominating Committee ("NC") and Remuneration Committee ("RC"). The chairman and the managing director of the Company is Mr Ang Kok Tian, who leads management in setting marketing strategies, objectives and missions and is responsible for the day-to-day operations of the Group. Mr Ang ensures complete, adequate and timely flow of information between management and directors, arranges for Board meetings, prepares meeting agendas, and oversees the Company's compliance with corporate governance guidelines. All major decisions are made by the Board and in the event of conflict of interests, the independent directors' opinions and decisions are sought. Mr Ang's performance and remuneration are reviewed annually by the NC and RC, whose members comprise independent non-executive directors. Hence, the Board believes that, taking into account the corporate structure and scope of the Group's operations, there are adequate safeguards in place against an uneven concentration of power and authority in a single individual.

21 ASL Marine Holdings Ltd Annual Report The Company's Articles of Association allow a Board meeting to be conducted by telephone conference. The attendance of the directors at Board and Committee meetings for the financial year ended 30 June 2003 is as follows:- BOARD AND COMMITTEE MEETINGS ATTENDANCE Name of Director Board Meeting AC Meeting NC Meeting RC Meeting No. of No. of No. of No. of No. of No. of No. of No. of meetings meetings meetings meetings meetings meetings meetings meetings held while attended held while attended held while attended held while attended a member a member a member a member Ang Kok Tian (resigned as member of AC, NC and RC on 16 May 2003) Ang Ah Nui 1 1 NA NA NA NA NA NA Ang Kok Eng 1 1 NA NA NA NA NA NA Ang Kok Leong 1 1 NA NA NA NA NA NA David Hwang Soo Chin Andre Yeap Poh Leong Damian Hong Chin Fock (appointed on 16 May 2003) The directors are provided with information and updates of the Group from time to time including any changes in legislation, rules and guidelines that affect the Company or the directors in discharging their duties. Training will be made available to the directors when necessary. ACCESS TO INFORMATION Principle 6 : Access to information The Board is furnished with complete and adequate information in a timely manner to allow the directors to discharge their duties properly. Meeting papers are circulated to each director approximately 5 days before the Board meeting. The directors, in furtherance of their duties, are given access to independent professional advisers when necessary, and are provided with the names and contact details of the Company's senior management and the company secretary for independent and separate access. The company secretary attends Board meetings and ensures Board procedures are followed. NOMINATING COMMITTEE Principle 4 : Board membership Principle 5 : Board performance The NC was established on 29 January It currently comprises three independent non-executive directors, Mr Andre Yeap Poh Leong, Mr David Hwang Soo Chin and Mr Damian Hong Chin Fock. Mr Andre Yeap is the chairman of the NC. The operations of the NC are regulated by its terms of reference, which were approved and are subject to review by the Board. The functions of the NC includes recommendations to the Board on appointments of directors, and directors' re-appointment/re-election having regard to their contribution and performance. The NC is also tasked to assess the independence of the directors annually.

22 20 CORPORATE GOVERNANCE (continued) The NC assesses the performance and effectiveness of the Board as a whole, and the contribution of each individual director to the effectiveness of the Board. The NC decides whether the directors are able to and has been adequately carrying out their duties as directors of the Company particularly when the directors have multiple board representations. The assessment process involves evaluation against performance criteria proposed by the NC and approved by the Board. The performance criteria include those suggested in the guidance notes of the Code. At present, Article 91 of the Company's Articles of Association requires every director (other than the managing director or joint managing director) to retire from office once every 3 years, and for this purpose, one-third of the directors (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation at each annual general meeting. A retiring director shall be eligible for re-election. Furthermore, pursuant to Article 97, any director appointed by the Board shall hold office until the next annual general meeting but shall then be eligible for re-election at that meeting. DIRECTORS' INFORMATION Principle 4 : Board membership Name of director Date first Audit Nominating Remuneration (Board appointment) appointed/last Committee Committee Committee re-elected as director Ang Kok Tian 4 Oct 00 / 12 Nov (Chairman and Managing Director) Ang Ah Nui (Deputy Managing Director) 4 Oct 00 /18 Sep Ang Kok Eng (Executive Director) 18 Oct 02 /12 Nov Ang Kok Leong (Executive Director) 18 Oct 02 /12 Nov David Hwang Soo Chin (Independent Non-executive Director) 17 Jan 03 / - Chairman Member Member Andre Yeap Poh Leong (Independent Non-executive Director) 17 Jan 03 /- Member Chairman Member Damian Hong Chin Fock (Independent Non-executive Director) 16 May 03 /- Member Member Chairman Mr Ang Kok Tian, Mr Ang Ah Nui, Mr Ang Kok Eng and Mr Ang Kok Leong are substantial shareholders of the Company. Please refer to the section titled "Statistics of Shareholdings" on pages 74 to 75 for details of their shareholding interests in the Company. At the forthcoming annual general meeting, Mr Ang Ah Nui will be retiring pursuant to Article 91 of the Company's Articles of Association and Mr Andre Yeap Poh Leong, Mr David Hwang Soo Chin and Mr Damian Hong Chin Fock will cease to hold office pursuant to Article 97 of the Company's Articles of Association. All of them, being eligible for re-election, have offered themselves for re-election. More particulars of the directors are set out on pages 8 to 10 in the section titled "Board of Directors" of this annual report. REMUNERATION COMMITTEE Principle 7 : Procedures for developing remuneration policies Principle 8 : Level and mix of remuneration The RC was established on 29 January It currently comprises three independent non-executive directors, Mr Damian Hong Chin Fock, Mr David Hwang Soo Chin and Mr Andre Yeap Poh Leong. Mr Damian Hong is the chairman

23 ASL Marine Holdings Ltd Annual Report of the RC. In discharging their duties, the members have access to advice from the internal human resources personnel, and if required, advice from external experts. The operations of the RC are regulated by its terms of reference, which were approved and are subject to review by the Board. The RC recommends, in consultation with the chairman of the Board, an appropriate framework for the Board and key executives, and determines specifically the remuneration package for each executive director of the Company. These recommendations are to be submitted to the Board for endorsement. In setting the remuneration packages, the RC takes into consideration pay and employment conditions within the industry and in comparable companies, and takes into account the Company's performance and individual performance. The RC also recommends remuneration for the non-executive directors having made reference to the effort and time spent and their level of responsibility. The remuneration of each non-executive director is subject to shareholders' approval at the annual general meeting. A member of the RC who is interested in a decision to be made or whose remuneration is being reviewed shall not participate or be involved in making any recommendations when his own remuneration is being discussed. On 17 January 2003, separate service agreements have been signed with Mr Ang Kok Tian, Mr Ang Ah Nui, Mr Ang Kok Eng and Mr Ang Kok Leong. There are no existing or proposed service contracts entered into or to be entered into by our directors with the Company or any of the subsidiaries which provide for benefits upon termination of employment. REMUNERATION AND BENEFITS OF DIRECTORS AND TOP FIVE EXECUTIVES Principle 9 : Disclosure on remuneration The following table shows the ranges of remuneration received by the directors for the financial year ended 30 June 2003 and its breakdown in percentage terms: Name of director Remuneration band Fee Salary Bonus Benefits % % % % Ang Kok Tian Below $250, Ang Ah Nui Below $250, Ang Kok Eng Below $250, Ang Kok Leong Below $250, David Hwang Soo Chin Below $250, Andre Yeap Poh Leong Below $250, Damian Hong Chin Fock Below $250, The following table shows the ranges of remuneration received by the top five executives for the financial year ended 30 June 2003 and its breakdown in percentage terms: Name of executive Remuneration band Salary Bonus Benefits % % % Nancy Goh Below $250, (resigned on 16 May 2003) Tay Kes Siong Below $250, Roger Lewis Martin Below $250, Lim Soon Teck Below $250, Lee You Bom Below $250,

24 22 CORPORATE GOVERNANCE (continued) Except for Mr Ang Kok Tian, Mr Ang Ah Nui, Mr Ang Kok Eng and Mr Ang Kok Leong, the Company and its subsidiaries do not have any employee who is an immediate family member of a director or the chief executive officer whose remuneration exceeds $150,000 during the year. AUDIT COMMITTEE Principle 11 : Audit Committee The AC was established on 29 January It comprises three independent non-executive directors, Mr David Hwang Soo Chin, Mr Andre Yeap Poh Leong and Mr Damian Hong Chin Fock. Mr David Hwang is the chairman of the AC. The Board is of the opinion that the members of the AC have sufficient accounting or financial management expertise or experience to discharge their duties. The operations of the AC are regulated by its terms of reference, which were approved and are subject to review by the Board. The duties of the AC include the following: - To review with the internal auditor, external auditors and management, the Company's general policies and control procedures, interested person transactions, as well as any financial information presented to shareholders; - To review the audit plans of the Company's internal and external auditors; - To review the internal and external auditors' evaluation of the Group's system of internal controls; - To review the internal and external auditors' reports; - To review the co-operation given by the Company's officers to the internal and external auditors; - To review the scope and results of the internal audit procedures; - To review the adequacy of the internal control procedures; - To review the scope and results of external audit and its cost effectiveness and the independence and objectivity of the external auditors; - To nominate and review the appointment or re-appointment of external auditors; and - To review the financial statements of the Company and of the Group, accounting principles and policies thereto and management of financial matters before endorsement by the Board. The AC has explicit authority to investigate any matter within the scope of its duties, and power to obtain independent professional advice. It has been given full access to and co-operation by management and reasonable resources to discharge its duties properly and full discretion to invite other directors or executives to attend its meetings. At least once annually, the AC meets the external and internal auditors without the presence of management. In the five months since its establishment during the financial year under review, the AC met twice. Commencing from financial year 30 June 2004, the AC is scheduled to meet at least four times a year. The AC oversees the scope and results of external audit, and the independence and objectivity of the external auditors annually. For the financial year under review, the AC has reviewed all non-audit services provided by the Company's external auditors, KPMG, and is satisfied with their independence and objectivity. The AC has recommended to the Board the re-appointment of KPMG as the Company's external auditors at the forthcoming annual general meeting. INTERNAL CONTROLS AND AUDITS Principle 12 : Internal controls Principle 13: Internal audit The Company has an adequately resourced internal audit function within the Company's corporate office. Mr Mark Chan Wing Seng, an associate member of the Australian Society of Certified Public Accountants with a Bachelor's Degree in Accounting from Edith Cowen University, Australia and a Masters in Commerce from the University of New South Wales, has been appointed internal auditor on 26 June 2003.

25 ASL Marine Holdings Ltd Annual Report Commencing from financial year 30 June 2004, internal audit reports on any material non-compliance and internal control weakness and recommendations on the actions to be taken to resolve the non-compliance and/or improve the internal control will be submitted to the AC for review semi-annually. The Company's external auditors also report to the AC on any material internal control weaknesses noted during the course of their audit. The AC reviews the internal and external auditors' reports, and if required, will make recommendations to the Board and monitors the implementation of any improvements in the internal control systems. While no system can provide absolute assurance against material loss or financial misstatement, the Group's internal controls are designed to provide reasonable assurance that assets are safeguarded, that proper accounting records are maintained, and that financial information used within the business and for publication are reliable. The Group will be adopting a more contemporary approach towards risk management whereby business risks will be periodically and systematically assessed and managed within an established framework to achieve an optimal risk portfolio to maximize shareholders' value. Accordingly, the Board is of the view that that Group currently has adequate internal control systems. The AC is responsible for the adequacy of the internal audit function, its resources and its standing. The internal auditor reports functionally to the AC and administratively to the Group Financial Controller. The internal auditor has unrestricted access to all records, properties, functions and co-operation from management and staff necessary to effectively discharge his responsibilities, and is independent of the activities he audits. The AC has reviewed the internal audit functions and risk assessment. The AC has also reviewed the external auditors' audit plan, report and management letter. The internal auditor, who works cordially with the external auditors, has an appropriate standing within the Company. Reporting to the AC, the internal auditor has adopted the "Statements of Auditing" issued by the Institute of Certified Public Accountants of Singapore to carry out internal audit review in accordance with the annual audit plan which is formulated through the risk assessment approved by the AC, and performs checks and compliance tests of the Company's systems of internal control including financial and operational controls and risk management. In the financial year under review, the AC is of the opinion that there has been adequate internal audit function. COMMUNICATION WITH SHAREHOLDERS Principle 10 : Accountability Principle 14 : Communication with shareholders Principle 15 : Greater shareholder participation The Board is accountable to the shareholders while management is accountable to the Board. Management presents to the Board management accounts and reports on a regular basis. The Board is mindful of its obligations to provide its shareholders with timely disclosure of material information presented in a fair and objective manner. Financial results, annual reports, circulars and other material announcements are released through MASNET. In addition, annual reports and circulars are sent to every shareholder by post. All such information is also available at the Group's corporate website at Shareholders are given the right to vote on resolutions at general meetings. Each distinct issue will be carried in a separate resolution. Proxy form is sent with notice of general meeting to all shareholders so that those shareholders who cannot attend the general meeting in person can appoint a proxy or proxies to attend and vote on their behalf. The external auditors and chairmen of the Audit Committee, Nominating Committee and Remuneration Committee will be present at annual general meetings to address questions raised by shareholders.

26 24 CORPORATE GOVERNANCE (continued) INTERESTED PERSON TRANSACTIONS The Company has adopted an internal policy in respect of any transactions with interested persons and has set out the procedures for review and approval of the interested person transactions entered into by the Group. In accordance with Rule 907 of the Listing Manual of SGX-ST, there are no material interested person transactions entered into by the Group for the financial year ended 30 June DEALINGS IN THE COMPANY'S SECURITIES The Company has adopted an internal code of best practices in relation to dealings in the Company's securities which officers are required to observe. The Company's internal code is modeled after the Best Practices Guide issued by SGX-ST. Under the code, officers are not allowed to deal in the Company's securities during the period commencing one month before the announcement of the Company's results and ending on the date of announcement of the results, and whenever they are in possession of undisclosed material information. CORPORATE INFORMATION DIRECTORS Ang Kok Tian (Chairman) Ang Ah Nui Ang Kok Eng Ang Kok Leong David Hwang Soo Chin Andre Yeap Poh Leong Damian Hong Chin Fock AUDIT COMMITTEE David Hwang Soo Chin (Chairman) Andre Yeap Poh Leong Damian Hong Chin Fock NOMINATING COMMITTEE Andre Yeap Poh Leong (Chairman) Damian Hong Chin Fock David Hwang Soo Chin REMUNERATION COMMITTEE Damian Hong Chin Fock (Chairman) David Hwang Soo Chin Andre Yeap Poh Leong COMPANY SECRETARY Tan Thiam Hee REGISTERED OFFICE 19 Pandan Road Singapore Telephone: Facsimile: Website: SHARE REGISTRAR M & C Services Private Limited 138 Robinson Road #17-00 The Corporate Office Singapore Telephone: Facsimile: AUDITORS KPMG Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore Partner in charge of audit: Tan Huay Lim (appointed since 1999) PRINCIPAL BANKERS United Overseas Bank Limited The Development Bank of Singapore Limited SOLICITORS Ang & Partners

27 ASL MARINE HOLDINGS LTD Annual Report 2003 CONTENTS DIRECTORS' REPORT 26 STATEMENT BY DIRECTORS 35 AUDITORS' REPORT 36 BALANCE SHEETS 37 PROFIT AND LOSS ACCOUNTS 39 STATEMENTS OF CHANGES IN EQUITY 40 CONSOLIDATED STATEMENT OF CASH FLOWS 41 NOTES TO THE FINANCIAL STATEMENTS 43 STATISTICS OF SHAREHOLDINGS 74 NOTICE OF ANNUAL GENERAL MEETING 76 PROXY FORM 79

28 26 DIRECTORS REPORT FOR THE YEAR ENDED 30 JUNE 2003 We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 30 June DIRECTORS The directors in office at the date of this report are as follows:- Ang Kok Tian Ang Ah Nui Ang Kok Eng (Appointed on 18 October 2002) Ang Kok Leong (Appointed on 18 October 2002) Hwang Soo Chin (Appointed on 17 January 2003) Andre Yeap Poh Leong (Appointed on 17 January 2003) Hong Chin Fock (Appointed on 16 May 2003) ADMISSION OF THE COMPANY TO THE OFFICIAL LIST OF THE SINGAPORE EXCHANGE SECURITIES TRADING LIMITED The Company was converted into a public limited company on 29 January 2003 and changed its name from ASL Marine Holdings Pte Ltd to ASL Marine Holdings Ltd. The Company s shares were listed on the Main Board of the Singapore Exchange Securities Trading Limited ( SGX-ST ) on 17 March PRINCIPAL ACTIVITIES The principal activities of the Company during the financial year have been those relating to an investment holding company. The principal activities of the subsidiaries are set out in note 4 to the accompanying financial statements. There have been no significant changes in such activities of the Group or of the Company during the financial year. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES (a) During the financial year, there were the following acquisitions of subsidiaries pursuant to the Restructuring Exercise (the Restructuring Exercise ) entered into by the Company and its subsidiaries shareholders effective from 1 July 2002 in connection with the initial public offering of the Company s shares on the SGX-ST:- The Company acquired the entire issued and paid-up share capital of the following companies by the allotment and issue at par of 14,799,995 ordinary shares of $1 each in the capital of the Company by way of a one-for-one share swap at par value credited as fully paid upon issue:

29 ASL Marine Holdings Ltd Annual Report Name of Companies Issued and paid-up share capital $ ASL Shipyard Pte Ltd and its subsidiary, PT ASL Shipyard Indonesia 9,999,995 ASL Project Services Pte Ltd 500,000 Capitol Marine Pte Ltd 2,000,000 Capitol Offshore Pte Ltd 2,000,000 Capitol Shipping Pte Ltd 100,000 Capitol Tug & Barge Pte Ltd 100,000 Lightmode Pte Ltd 100,000 14,799,995 (b) In addition, the Company incorporated the following wholly-owned subsidiaries:- Name of Subsidiaries Issued and paid-up share capital $ Capitol Logistics Pte Ltd 100,000 Capitol Navigation Pte Ltd 100,000 (c) During the financial year, the Company disposed the following subsidiary:- Group s Share Effective of Net Tangible Equity Interest Assets Name of Subsidiary Disposed Disposed Consideration % $ $ Kenwell Offshore Pte Ltd 70 96, ,000 Except as disclosed above, there were no other acquisitions or disposals of subsidiaries by the Company and its subsidiaries during the financial year.

30 28 FINANCIAL RESULTS The results of the Group and of the Company for the financial year are as follows:- The Group The Company $ $ Profit after taxation 9,089,508 3,600,733 Accumulated profits brought forward 17,179,226 Accumulated profits carried forward 26,268,734 3,600,733 TRANSFERS TO AND FROM RESERVES AND PROVISIONS Material transfers to and from reserves are as set out in the statements of changes in equity of the Group and of the Company. Material movements in provisions are as set out in the accompanying financial statements. ISSUES OF SHARES AND DEBENTURES By an ordinary resolution passed at an extraordinary general meeting of the Company held on 21 September 2002, the authorised share capital of the Company was increased from $100,000 to $20,000,000 by the creation of an additional 19,900,000 ordinary shares of $1.00 each, ranking pari passu with the existing shares of the Company. The Company issued 2 ordinary shares of $1.00 each at par for cash on 21 September Subsequently, by an ordinary resolution passed at an extraordinary general meeting of the Company held on 25 November 2002, the authorised share capital of the Company was further increased from $20,000,000 to $50,000,000 by the creation of an additional 30,000,000 ordinary shares of $1.00 each, ranking pari passu with the existing shares of the Company. At an extraordinary general meeting of the Company held on 17 January 2003, the shareholders approved the allotment and issue of 14,799,995 ordinary shares of $1.00 each as consideration for the acquisition of the subsidiaries pursuant to the Restructuring Exercise. At a subsequent extraordinary general meeting of the Company held on 23 January 2003, the shareholders approved inter-alia the following:- (i) (ii) the sub-division of each ordinary share of $1.00 each in the existing authorised and issued and paid-up share capital into 10 ordinary shares of $0.10 each; and the issue of 50,000,000 new ordinary shares of $0.10 each at a premium of $0.11 per share pursuant to the initial public offering of the Company s shares. Except for the above, the Company and its subsidiaries did not issue any other shares or debentures during the financial year.

31 ASL Marine Holdings Ltd Annual Report DIRECTORS' INTERESTS According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act ), particulars of interests of directors who held office at the end of the financial year in shares or debentures in the Company are as follows:- Holdings in the name of the director, spouse or infant children Other holdings in which the director is deemed to have an interest At beginning At beginning of the year/ of the year/ date of At end date of At end appointment of the year appointment of the year The Company Ordinary shares of **$0.10 each, fully paid Ang Kok Tian *1 42,180,000 2 ***105,820,000 Ang Ah Nui *1 42,180,000 2 ***105,820,000 Ang Kok Eng *1 17,760,000 4 ***130,240,000 Ang Kok Leong *1 17,760,000 4 ***130,240,000 * During the financial year, pursuant to the Restructuring Exercise, the Company issued new ordinary shares to Ang Kok Tian, Ang Ah Nui, Ang Kok Eng and Ang Kok Leong in exchange for their previous holdings of shares in the respective subsidiaries in accordance with the terms of the Restructuring Exercise. ** During the financial year, the authorised share capital of the Company, previously divided into 100,000 ordinary shares of $1 each, had been increased to 50,000,000 ordinary shares by the creation of an additional 49,900,000 ordinary shares of $1 each. In addition, the authorised and issued and paid-up share capital of ordinary shares of $1 each were subdivided into ordinary shares of $0.10 each. *** Ang Kok Tian, Ang Ah Nui, Ang Kok Eng and Ang Kok Leong are brothers. Each of the brothers is deemed to be interested in the shares held by the other and their father and sister. By virtue of Section 7 of the Act, Ang Kok Tian, Ang Ah Nui, Ang Kok Eng and Ang Kok Leong are deemed to have interests in the shares of the Company and all wholly-owned subsidiaries of the Company at the beginning of the financial year, or date of appointment, if later, and at the end of the financial year. Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares or debentures of the Company or of related corporations either at the beginning of the financial year, or date of appointment, if later, or the end of the financial year. There was no change in any of the above mentioned directors interests in the Company or in the related corporations between the end of the financial year and 21 July 2003.