PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED (Incorporated in the Republic of Singapore on 16 March 1967) (UEN/Company Registration No.

Transcription

1 PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED INFORMATION MEMORANDUM DATED 23 JUNE 2014 PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED (Incorporated in the Republic of Singapore on 16 March 1967) (UEN/Company Registration No N) S$1,000,000,000 Multicurrency Medium Term Note Programme (the Programme ) This Information Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Information Memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of notes (the Notes ) to be issued from time to time by Pacific International Lines (Private) Limited (the Issuer or PIL ) pursuant to the Programme may not be circulated or distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA ), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: (a) (b) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except: (1) to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or (in the case of such corporation) where the transfer arises from an offer referred to in Section 276(3)(i)(B) of the SFA or (in the case of such trust) where the transfer arises from an offer referred to in Section 276(4)(i)(B) of the SFA; (2) where no consideration is or will be given for the transfer; (3) where the transfer is by operation of law; (4) as specified in Section 276(7) of the SFA; or (5) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore. Application has been made to the Singapore Exchange Securities Trading Limited (the SGX-ST ) for permission to deal in and quotation for any Notes which are agreed at the time of issue thereof to be so listed on the SGX-ST. Such permission will be granted when such Notes have been admitted to the Official List of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any of the statements made or opinions expressed or reports contained herein. Admission to the Official List of the SGX-ST and quotation of any Notes on the SGX-ST is not to be taken as an indication of the merits of the Issuer, its subsidiaries, its associated companies (if any), the Programme or such Notes. An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks, please see Risk Factors on page 79 of this Information Memorandum. Arrangers

2 TABLE OF CONTENTS Pages NOTICE 1 FORWARD-LOOKING STATEMENTS 5 DEFINITIONS 6 CORPORATE INFORMATION 11 SUMMARY OF THE PROGRAMME 13 TERMS AND CONDITIONS OF THE NOTES 19 THE ISSUER 47 DIRECTORS 68 SELECTED CONSOLIDATED FINANCIAL INFORMATION 71 RISK FACTORS 79 PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS 97 CLEARING AND SETTLEMENT 98 SINGAPORE TAXATION 100 SUBSCRIPTION, PURCHASE AND DISTRIBUTION 105 APPENDICES I. GENERAL AND OTHER INFORMATION 107 II. III. IV. AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS OF PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS OF PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS OF PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER V. AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS OF PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER i

3 NOTICE Credit Suisse (Singapore) Limited, DBS Bank Ltd. and Standard Chartered Bank (the Arrangers ) have been authorised by the Issuer to arrange the Programme described herein. Under the Programme, the Issuer may, subject to compliance with all relevant laws, regulations and directives, from time to time issue Notes denominated in Singapore dollars and/or any other currencies. This Information Memorandum contains information with regard to the Issuer, its subsidiaries and associated companies (if any), the Programme and the Notes. The Issuer, having made all due and careful enquiries, confirms that this Information Memorandum contains all information which is material in the context of the Programme or the issue and offering of the Notes, that the information contained in this Information Memorandum is true and accurate in all material respects, that the opinions, expectations and intentions expressed in this Information Memorandum have been carefully considered, are based on all relevant considerations and facts existing at the date of this Information Memorandum and are fairly, reasonably and honestly held by the Issuer, and that there are no other facts the omission of which in the context of the Programme or the issue and offering of the Notes would make any such information or expressions of opinion, expectation or intention misleading in any material respect. Notes may be issued in series having one or more issue dates and the same maturity date, and on identical terms (including as to listing) except (in the case of Notes other than variable rate notes (as described under Summary of the Programme )) for the issue dates, issue prices and/or the dates of the first payment of interest, or (in the case of variable rate notes) for the issue prices and rates of interest. Each series may be issued in one or more tranches on the same or different issue dates. The Notes will be issued in bearer form and may be listed on a stock exchange. The Notes will initially be represented by either a Temporary Global Note (as defined herein) or a Permanent Global Note (as defined herein) which will be deposited on the issue date with either CDP (as defined herein) or a common depositary for Euroclear Bank S.A./N.V. ( Euroclear ) and Clearstream Banking, société anonyme ( Clearstream, Luxembourg ) or otherwise delivered as agreed between the Issuer and the relevant Dealer(s) (as defined herein). Subject to compliance with all relevant laws, regulations and directives, the Notes may have maturities of such tenor as may be agreed between the Issuer and the relevant Dealer(s) and may be subject to redemption or purchase in whole or in part. The Notes will bear interest at a fixed, floating, variable or hybrid rate or may not bear interest or may be such other notes as may be agreed between the Issuer and the relevant Dealer(s). The Notes will be repayable at par, at a specified amount above or below par or at an amount determined by reference to a formula, in each case with terms as specified in the Pricing Supplement (as defined herein) issued in relation to each series or tranche of Notes. Details applicable to each series or tranche of Notes will be specified in the applicable Pricing Supplement which is to be read in conjunction with this Information Memorandum. The maximum aggregate principal amount of the Notes to be issued, when added to the aggregate principal amount of all Notes outstanding (as defined in the Trust Deed referred to herein) shall be S$1,000,000,000 (or its equivalent in any other currencies) or as may be increased in accordance with the provisions of the Programme Agreement (as defined herein). No person has been authorised to give any information or to make any representation other than those contained in this Information Memorandum and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer, any of the Arrangers or any of the Dealers. Save as expressly stated in this Information Memorandum, nothing contained herein is, or may be relied upon as, a promise or representation as to the future performance or policies of the Issuer or any of its subsidiaries or associated companies (if any). Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme may be used for the 1

4 purpose of, and does not constitute an offer of, or solicitation or invitation by or on behalf of the Issuer, any of the Arrangers or any of the Dealers to subscribe for or purchase, the Notes in any jurisdiction or under any circumstances in which such offer, solicitation or invitation is unlawful, or not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. The distribution and publication of this Information Memorandum or any such other document or information and the offer of the Notes in certain jurisdictions may be restricted by law. Persons who distribute or publish this Information Memorandum or any such other document or information or into whose possession this Information Memorandum or any such other document or information comes are required to inform themselves about and to observe any such restrictions and all applicable laws, orders, rules and regulations. The Notes have not been, and will not be, registered under the Securities Act (as defined herein) or with any securities regulatory authority of any state or other jurisdiction of the United States and are subject to U.S. tax law requirements and restrictions. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in the U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder). Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme shall be deemed to constitute an offer of, or an invitation by or on behalf of the Issuer, any of the Arrangers or any of the Dealers to subscribe for or purchase, any of the Notes. This Information Memorandum and any other documents or materials in relation to the issue, offering or sale of the Notes have been prepared solely for the purpose of the initial sale by the relevant Dealer(s) of the Notes from time to time to be issued pursuant to the Programme. This Information Memorandum and such other documents or materials are made available to the recipients thereof solely on the basis that they are persons falling within the ambit of Section 274 and/or Section 275 of the SFA and may not be relied upon by any person other than persons to whom the Notes are sold or with whom they are placed by the relevant Dealer(s) as aforesaid or for any other purpose. Recipients of this Information Memorandum shall not reissue, circulate or distribute this Information Memorandum or any part thereof in any manner whatsoever. Neither the delivery of this Information Memorandum (or any part thereof) nor the issue, offering, purchase or sale of the Notes shall, under any circumstances, constitute a representation, or give rise to any implication, that there has been no change in the prospects, results of operations or general affairs of the Issuer or any of its subsidiaries or associated companies (if any) or in the information herein since the date hereof or the date on which this Information Memorandum has been most recently amended or supplemented. The Arrangers and the Dealers have not separately verified the information contained in this Information Memorandum. None of the Arrangers, any of the Dealers or any of their respective officers, employees or agents is making any representation or warranty, expressed or implied, as to the merits of the Notes or the subscription for, purchase or acquisition thereof, or the creditworthiness or financial condition or otherwise of the Issuer or its subsidiaries or associated companies (if any). Further, none of the Arrangers nor any of the Dealers makes any representation or warranty as to the Issuer, its subsidiaries or associated companies (if any) or as to the accuracy, reliability or completeness of the information set out herein (including the legal and regulatory requirements pertaining to Sections 274, 275 and 276 or any other provisions of the SFA) and the documents which are incorporated by reference in, and form part of, this Information Memorandum. Neither this Information Memorandum nor any other document or information (or any part thereof) delivered or supplied under or in relation to the Programme or the issue of the Notes is intended to provide the basis of any credit or other evaluation and should not be considered 2

5 as a recommendation by the Issuer, any of the Arrangers or any of the Dealers that any recipient of this Information Memorandum or such other document or information (or such part thereof) should subscribe for or purchase any of the Notes. A prospective purchaser shall make its own assessment of the foregoing and other relevant matters including the financial condition and affairs and the creditworthiness of the Issuer and its subsidiaries and associated companies (if any), and obtain its own independent legal or other advice thereon, and its investment shall be deemed to be based on its own independent investigation of the financial condition and affairs and its appraisal of the creditworthiness of the Issuer and its subsidiaries and associated companies (if any). Accordingly, notwithstanding anything herein, none of the Arrangers, the Dealers or any of their respective officers, employees or agents shall be held responsible for any loss or damage suffered or incurred by the recipients of this Information Memorandum or such other document or information (or such part thereof) as a result of or arising from anything expressly or implicitly contained in, referred to in or omitted from this Information Memorandum or such other document or information (or such part thereof) and the same shall not constitute a ground for rescission of any purchase or acquisition of any of the Notes by a recipient of this Information Memorandum or such other document or information (or such part thereof). To the fullest extent permitted by law, none of the Arrangers or any of the Dealers accept any responsibility for the contents of this Information Memorandum or for any other statement, made or purported to be made by any of the Arrangers or Dealers or on its behalf in connection with the Issuer or the issue and offering of the Notes. Each Arranger and Dealer accordingly disclaims all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Information Memorandum or any such statement. The following documents published or issued from time to time after the date hereof shall be deemed to be incorporated by reference in, and to form part of, this Information Memorandum: (1) any annual reports, audited consolidated annual financial statements and/or unaudited consolidated half-year financial statements of the Issuer and its subsidiaries and associated companies (if any) and (2) any supplement or amendment to this Information Memorandum issued by the Issuer. This Information Memorandum is to be read in conjunction with all such documents which are incorporated by reference herein and, with respect to any series or tranche of Notes, any Pricing Supplement in respect of such series or tranche. Any statement contained in this Information Memorandum or in a document deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Information Memorandum to the extent that a statement contained in this Information Memorandum or in such subsequent document that is also deemed to be incorporated by reference herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Information Memorandum. Copies of all documents deemed incorporated by reference herein are available for inspection at the specified office of the Principal Paying Agent (as defined herein) or, as the case may be, the Non-CDP Paying Agent (as defined herein). Any purchase or acquisition of the Notes is in all respects conditional on the satisfaction of certain conditions set out in the Programme Agreement and the issue of the Notes by the Issuer pursuant to the Programme Agreement. Any offer, invitation to offer or agreement made in connection with the purchase or acquisition of the Notes or pursuant to this Information Memorandum shall (without any liability or responsibility on the part of the Issuer, any of the Arrangers or any of the Dealers) lapse and cease to have any effect if (for any other reason whatsoever) the Notes are not issued by the Issuer pursuant to the Programme Agreement. 3

6 Certain figures included in this Information Memorandum have been subject to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. The attention of recipients of this Information Memorandum is drawn to the restrictions on resale of the Notes set out under the section Subscription, Purchase and Distribution on pages 105 to 106 of this Information Memorandum. Any person(s) who is invited to purchase or subscribe for the Notes or to whom this Information Memorandum is sent shall not make any offer or sale, directly or indirectly, of any Notes or distribute or cause to be distributed any document or other material in connection therewith in any country or jurisdiction except in such manner and in such circumstances as will result in compliance with any applicable laws and regulations. It is recommended that persons proposing to subscribe for, purchase or otherwise acquire any of the Notes consult their own legal and other advisers before subscribing for, purchasing or acquiring the Notes. Any decision to invest in and purchase and/or subscribe for Notes should be made on the basis of the Conditions (as defined herein) and the information contained in this Information Memorandum. Prospective purchasers of the Notes are advised to consult their own tax advisors concerning the tax consequences of the acquisition, ownership or disposition of the Notes. 4

7 FORWARD-LOOKING STATEMENTS All statements contained in this Information Memorandum that are not statements of historical fact constitute forward-looking statements. Some of these statements can be identified by forward-looking terms such as expect, believe, plan, intend, estimate, anticipate, may, will, would and could or similar words. However, these words are not the exclusive means of identifying forward-looking statements. All statements regarding the expected financial position, business strategy, plans and prospects of the Issuer and/or the Group (as defined herein) (including statements as to the Issuer s and/or the Group s revenue and profitability, prospects, future plans and other matters discussed in this Information Memorandum regarding matters that are not historical facts and including the financial forecasts, profit projections, statements as to the expansion plans of the Issuer and/or the Group, expected growth in the Issuer and/or the Group and other related matters), if any, are forward-looking statements and accordingly, are only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Issuer and/or the Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others: changes in general political, social and economic conditions; changes in currency exchange and interest rates; demographic changes; changes in competitive conditions; and other factors beyond the control of the Issuer and/or the Group. Some of these factors are discussed in greater detail in this Information Memorandum, in particular, but not limited to, discussion under the section Risk Factors. Given the risks and uncertainties that may cause the actual future results, performance or achievements of the Issuer or the Group to be materially different from the results, performance or achievements expected, expressed or implied by the financial forecasts, profit projections and forward-looking statements in this Information Memorandum, undue reliance must not be placed on those forecasts, projections and statements. The Issuer, the Arrangers and the Dealers do not represent or warrant that the actual future results, performance or achievements of the Issuer or the Group will be as discussed in those statements. Neither the delivery of this Information Memorandum (or any part thereof) nor the issue of any Notes by the Issuer shall under any circumstances constitute a continuing representation or create any suggestion or implication that there has been no change in the prospects, results of operations or general affairs of the Issuer, the Group or any statement of fact or information contained in this Information Memorandum since the date of this Information Memorandum or the date on which this Information Memorandum has been most recently amended or supplemented. Further, the Issuer, the Arrangers and the Dealers disclaim any responsibility, and undertake no obligation, to update or revise any forward-looking statements contained herein to reflect any changes in the expectations with respect thereto after the date of this Information Memorandum or to reflect any change in events, conditions or circumstances on which any such statements are based. 5

8 DEFINITIONS The following definitions have, where appropriate, been used in this Information Memorandum: Agency Agreement : The Agency Agreement dated 23 June 2014 between (1) the Issuer, as issuer, (2) the Principal Paying Agent, as principal paying agent, (3) the Non-CDP Paying Agent, as non-cdp paying agent, and (4) the Trustee, as trustee, as amended, varied or supplemented from time to time. Agent Bank : In relation to any Series of Notes, the person appointed as agent bank for that series and as specified in the applicable Pricing Supplement. Agent Bank Agreement : An agent bank agreement between the Issuer, the Trustee and the relevant Agent Bank made pursuant to Clause 2.5 of the Programme Agreement substantially in the form set out in Appendix 6 to the Programme Agreement. Arrangers : Credit Suisse (Singapore) Limited, DBS Bank Ltd. and Standard Chartered Bank. Business Day : In respect of each Note, (a) a day (other than a Saturday, Sunday or gazetted public holiday) on which Euroclear, Clearstream, Luxembourg and the Depository, as applicable, are operating, (b) a day (other than a Saturday, Sunday or gazetted public holiday) on which banks and foreign exchange markets are open for general business in Singapore and in the country of the Principal Paying Agent s and (in the case of Non-CDP Notes) the Non-CDP Paying Agent s specified office and (c) (if a payment is to be made on that day) (i) (in the case of Notes denominated in Singapore dollars) a day (other than a Saturday or Sunday) on which banks and foreign exchange markets are open for general business in Singapore, (ii) (in the case of Notes denominated in Euros) a day (other than a Saturday, Sunday or a gazetted public holiday) on which the TARGET System is open for settlement in Euros and (iii) (in the case of Notes denominated in a currency other than Singapore dollars and Euros) a day (other than a Saturday or Sunday) on which banks and foreign exchange markets are open for general business in Singapore and the principal financial centre for that currency. CDP orthe Depository : The Central Depository (Pte) Limited. Companies Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time. 6

9 Conditions : In relation to the Notes of any Series, the terms and conditions applicable thereto, which shall be substantially in the form set out in Part II of Schedule 1 to the Trust Deed, as modified, with respect to any Notes represented by a Global Note, by the provisions of such Global Note, shall incorporate any additional provisions forming part of such terms and conditions set out in the Pricing Supplement(s) relating to the Notes of such Series and shall be endorsed on the Definitive Notes subject to amendment and completion as referred to in the first paragraph appearing after the heading Terms and Conditions of the Notes as set out in Part II of Schedule 1 to the Trust Deed, and any reference to a particularly numbered Condition shall be construed accordingly. Couponholders : The holders of the Coupons. Coupons : The interest coupons appertaining to an interest bearing Definitive Note. Dealers : Persons appointed as dealers under the Programme. Definitive Note : A definitive Note, in bearer form, being substantially in the form set out in Part I of Schedule 1 to the Trust Deed and having, where appropriate, Coupons attached on issue. Directors : The directors (including alternate directors, if any) of the Issuer as at the date of this Information Memorandum. DWT : Deadweight tons. Euro : The currency of the member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended from time to time. FY : Financial year ended or ending 31 December. Global Note : A global Note representing Notes of one or more Tranches of the same Series, being a Temporary Global Note and/or, as the context may require, a Permanent Global Note, in each case without Coupons. Group : The Issuer and its subsidiaries. HKSE : The Stock Exchange of Hong Kong Limited. IMO : International Maritime Organization. Issuer : Pacific International Lines (Private) Limited. ISM Code : International Safety Management Code. ISO : International Organization for Standardization. 7

10 ISPS Code : International Ship and Port Facility Security Code. Issue Documents : The Trust Deed, the Agency Agreement, the Depository Agreement and the Deed of Covenant. ITA : Income Tax Act, Chapter 134 of Singapore, as amended or modified from time to time. Latest Practicable Date : 17 June MAS : The Monetary Authority of Singapore. Non-CDP Paying Agent : Deutsche Bank AG, Hong Kong Branch. Noteholders : The holders of the Notes. Notes : The multicurrency medium term notes of the Issuer issued or to be issued pursuant to the Programme Agreement and constituted by the Trust Deed (and shall, where the context so admits, include the Global Notes and the Definitive Notes). Paying Agent : The Principal Paying Agent and the Non-CDP Paying Agent, or such other or further institutions as may from time to time be appointed by the Issuer as paying agent for the Notes and Coupons. Permanent Global Note : A Global Note representing Notes of one or more Tranches of the same Series, either on issue or upon exchange of interests in a Temporary Global Note, being substantially in the form set out in Schedule 3 to the Trust Deed. PIL Enterprises : PIL Enterprises Pte. Ltd. PIL Logistics : PIL Logistics Pte. Ltd. PRC : The People s Republic of China. Pricing Supplement : In relation to any Tranche or Series, a pricing supplement supplemental to this Information Memorandum, specifying the relevant issue details in relation to such Tranche or, as the case may be, Series, substantially in the form of Appendix 2 to the Programme Agreement. Principal Paying Agent : Deutsche Bank AG, Singapore Branch. Programme : The S$1,000,000,000 Multicurrency Medium Term Note Programme established by the Issuer pursuant to the Programme Agreement. 8

11 Programme Agreement : The Programme Agreement dated 23 June 2014 made between (1) the Issuer, as issuer, (2) the Arrangers, as arrangers, and (3) Credit Suisse (Singapore) Limited, DBS Bank Ltd. and Standard Chartered Bank, as dealers, as amended, varied or supplemented from time to time. Securities Act : Securities Act of 1933 of the United States, as amended. Series : (1) (in relation to Notes other than variable rate notes) a Tranche, together with any further Tranche or Tranches, which are (a) expressed to be consolidated and forming a single series and (b) identical in all respects (including as to listing) except for their respective issue dates, issue prices and/or dates of the first payment of interest and (2) (in relation to variable rate notes) Notes which are identical in all respects (including as to listing) except for their respective issue prices and rates of interest. SFA : Securities and Futures Act, Chapter 289 of Singapore, as amended or modified from time to time. SGX-ST : Singapore Exchange Securities Trading Limited. Shares : Ordinary shares in the capital of the Issuer. Singamas : Singamas Container Holdings Limited. SOLAS : The International Convention for the Safety of Life at Sea. subsidiary : Any company which is for the time being a subsidiary (within the meaning of Section 5 of the Companies Act, Chapter 50 of Singapore). TARGET System : The Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET 2) System which was launched on 19 November 2007 or any successor thereto. Temporary Global Note : A Global Note representing Notes of one or more Tranches of the same Series on issue, being substantially in the form set out in Schedule 2 to the Trust Deed. TEU : Twenty-foot equivalent unit. This is the container shipping industry s standard for measuring container size, ship capacity and volume. One 20-foot container would be one TEU. Tranche : Notes which are identical in all respects (including as to listing). 9

12 Trust Deed : The Trust Deed dated 23 June 2014 made between (1) the Issuer, as issuer, and (2) the Trustee, as trustee, as amended, varied or supplemented from time to time. Trustee : DB International Trust (Singapore) Limited. United States or U.S. : United States of America. S$ and cents : Singapore dollars and cents respectively. US$ or US dollars : United States dollars. % or per cent. : Per cent. Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations. Any reference to a time of day in this Information Memorandum shall be a reference to Singapore time unless otherwise stated. Any reference in this Information Memorandum to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act or the SFA or any statutory modification thereof and used in this Information Memorandum shall, where applicable, have the meaning ascribed to it under the Companies Act or, as the case may be, the SFA. 10

13 CORPORATE INFORMATION Board of Directors : Mr Teo Woon Chang Yun Chung Mr Teo Chew Peter Chang Mr Teo Siong Seng Mr Tan Chor Kee Mr Teo Cho Keng Mr Teo Tiou Seng (Tony) Mr Kuan Kim Kin Mr Tay Kian Phuan William Mr Teo Teng Seng Mr Teo Choo Wee Ms Teo Lay Seng (Lisa) Mrs Lim Jock Fong (Yvonne) Company Secretary : Ms Lin Xin Yue Eunice Registered Office : 140 Cecil Street, #03-00 PIL Building Singapore Auditors to the Issuer : Ernst & Young LLP 1 Raffles Quay, One Raffles Quay (North Tower), #18-00 Singapore Arrangers and Dealers of the Programme : Credit Suisse (Singapore) Limited 1 Raffles Link #03/#04-01 South Lobby Singapore DBS Bank Ltd. 12 Marina Boulevard, Level 42 Marina Bay Financial Centre Tower 3 Singapore Standard Chartered Bank Marina Bay Financial Centre, Tower 1 8 Marina Boulevard, Level 20 Singapore Legal Advisers to the Arrangers, the Trustee and Paying Agents : Allen & Gledhill LLP One Marina Boulevard #28-00 Singapore Legal Advisers to the Issuer : WongPartnership LLP 12 Marina Boulevard, Level 28 Marina Bay Financial Centre Tower 3 Singapore Principal Paying Agent : Deutsche Bank AG, Singapore Branch One Raffles Quay #16-00 South Tower Singapore

14 Non-CDP Paying Agent : Deutsche Bank AG, Hong Kong Branch Level 52, International Commerce Centre 1 Austin Road West Kowloon, Hong Kong Trustee for the Noteholders : DB International Trust (Singapore) Limited One Raffles Quay #16-00 South Tower Singapore

15 SUMMARY OF THE PROGRAMME The following summary is derived from, and should be read in conjunction with, the full text of this Information Memorandum (and any relevant supplement to this Information Memorandum), the Trust Deed, the Agency Agreement and the relevant Pricing Supplement. Issuer : Pacific International Lines (Private) Limited. Arrangers : Credit Suisse (Singapore) Limited, DBS Bank Ltd. and Standard Chartered Bank. Dealers : Credit Suisse (Singapore) Limited, DBS Bank Ltd., Standard Chartered Bank and/or such other Dealers as may be appointed by the Issuer in accordance with the Programme Agreement. Trustee : DB International Trust (Singapore) Limited. Principal Paying Agent : Deutsche Bank AG, Singapore Branch. Non-CDP Paying Agent : Deutsche Bank AG, Hong Kong Branch. Description : S$1,000,000,000 Multicurrency Medium Term Note Programme. Programme Size : The maximum aggregate principal amount of the Notes outstanding at any time shall be S$1,000,000,000 (or its equivalent in other currencies) or as may be increased in accordance with the provisions of the Programme Agreement. Currency : Subject to compliance with all relevant laws, regulations and directives, Notes may be issued in Singapore dollars or any other currency agreed between the Issuer and the relevant Dealer(s). Purpose : Please refer to the section Purpose of the Programme and Use of Proceeds. Method of Issue : Notes may be issued from time to time under the Programme on a syndicated or non-syndicated basis. Each Series may be issued in one or more Tranches, on the same or different issue dates. The specific terms of each Series or Tranche will be specified in the relevant Pricing Supplement. Issue Price : Notes may be issued at par or at a discount, or premium, to par. Maturities : Subject to compliance with all relevant laws, regulations and directives, Notes may have maturities of such tenor as may be agreed between the Issuer and the relevant Dealer(s). 13

16 Mandatory Redemption : Unless previously redeemed or purchased and cancelled, each Note will be redeemed at its redemption amount on the maturity date shown on its face. Interest Basis : Notes may bear interest at fixed, floating, variable or hybrid rates or such other rates as may be agreed between the Issuer and the relevant Dealer(s) or may not bear interest. Fixed Rate Notes : Fixed Rate Notes will bear a fixed rate of interest which will be payable in arrear on specified dates and at maturity. Floating Rate Notes : Floating Rate Notes which are denominated in Singapore dollars will bear interest to be determined separately for each Series by reference to S$ SIBOR or S$ SWAP RATE (or in any other case such other benchmark as may be agreed between the Issuer and the relevant Dealer(s)), as adjusted for any applicable margin. Interest periods in relation to the Floating Rate Notes will be agreed between the Issuer and the relevant Dealer(s) prior to their issue. Floating Rate Notes which are denominated in other currencies will bear interest to be determined separately for each Series by reference to such other benchmark as may be agreed between the Issuer and the relevant Dealer(s). Variable Rate Notes : Variable Rate Notes will bear interest at a variable rate determined in accordance with the Conditions of the Notes. Interest periods in relation to the Variable Rate Notes will be agreed between the Issuer and the relevant Dealer(s) prior to their issue. Hybrid Notes : Hybrid Notes will bear interest, during the fixed rate period to be agreed between the Issuer and the relevant Dealer(s), at a fixed rate of interest which will be payable in arrear on specified dates and, during the floating rate period to be agreed between the Issuer and the relevant Dealer(s), at the rate of interest to be determined by reference to S$ SIBOR or S$ SWAP RATE (or such other benchmark as may be agreed between the Issuer and the relevant Dealer(s)), as adjusted for any applicable margin (provided that if the Hybrid Notes are denominated in a currency other than Singapore dollars, such Hybrid Notes will bear interest to be determined separately by reference to such benchmark as may be agreed between the Issuer and the relevant Dealer(s)), in each case payable at the end of each interest period to be agreed between the Issuer and the relevant Dealer(s). 14

17 Zero Coupon Notes : Zero Coupon Notes may be issued at their nominal amount or at a discount to it and will not bear interest other than in the case of late payment. Form and Denomination of Notes : The Notes will be issued in bearer form only and in such denominations as may be agreed between the Issuer and the relevant Dealer(s). Each Tranche or Series of Notes may initially be represented by a Temporary Global Note or a Permanent Global Note. Each Temporary Global Note may be deposited on the relevant issue date with CDP, a common depositary for Euroclear and Clearstream, Luxembourg and/or any other agreed clearing system and will be exchangeable, upon request as described therein, either for a Permanent Global Note or Definitive Notes (as indicated in the applicable Pricing Supplement). Each Permanent Global Note may be exchanged, unless otherwise specified in the applicable Pricing Supplement, upon request as described therein, in whole (but not in part) for Definitive Notes upon the terms therein. Custody of the Notes : Notes which are to be listed on the SGX-ST may be cleared through CDP. Notes which are to be cleared through CDP are required to be kept with CDP as authorised depository. Notes which are cleared through Euroclear and/or Clearstream, Luxembourg are required to be kept with a common depositary on behalf of Euroclear and Clearstream Luxembourg. Status of the Notes : The Notes and Coupons of all Series will constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of the Issuer from time to time. Redemption and Purchase : If so provided on the face of the Note and the relevant Pricing Supplement, Notes may be redeemed (either in whole or in part) prior to their stated maturity at the option of the Issuer and/or the holders of the Notes. Further, if so provided on the face of the Note and the relevant Pricing Supplement, Notes may be purchased by the Issuer (either in whole or in part) prior to their stated maturity at the option of the Issuer and/or the holders of the Notes. 15

18 Redemption upon Change of Control at the option of the Noteholders : If at any time the Chang Family (as defined below) ceases to own (directly or indirectly) at any one time (1) (so long as the shares of the Issuer are not listed on the SGX-ST or any other stock exchange) at least 51 per cent. of the Issuer s issued or fully paid-up capital for the time being, or (2) if the shares of the Issuer are listed on the SGX-ST or such other stock exchange, at least 30 per cent. of the Issuer s issued or fully paid up capital for the time being, then: (i) the Issuer shall within 30 days of such occurrence notify the Noteholders of the occurrence of such event (the Notice ) and the holder of any Note shall have an option to require the Issuer to redeem such Note which shall be exercisable within 30 days from the date of the Notice (the Option Period ); (ii) to exercise such option, the holder must deposit such Note (together with all unmatured Coupons) with any Paying Agent at its specified office, together with a duly completed option exercise notice (the Exercise Notice ) in the form obtainable from any Paying Agent, within the Option Period. Any Note so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. For the avoidance of doubt, such option shall be deemed to have lapsed on the expiry of the Option Period if the Exercise Notice is not received by the Issuer within the Option Period; and (iii) if the holder of any Note serves an Exercise Notice on the Issuer in accordance with paragraph (ii) above, the Issuer shall, within 120 days after the expiry of the Option Period under paragraph (i) above redeem such Note at its Redemption Amount, together with interest accrued to the date fixed for redemption. For the purposes of this paragraph: (1) Chang Family means collectively: (a) Mr Teo Woon Tiong (a.k.a YC Chang, bearing Singapore NRIC No: S D), members of his immediate family and his siblings immediate families (each of the aforesaid including their respective personal representatives and next-of-kin shall hereinafter be referred to as the Individual Members ); and 16

19 (b) all companies and corporations (including their respective successors-in-title and permitted assigns) operating or trading under any name or style in which any one or more of the Individual Members whether singly or jointly, directly or indirectly, hold or control more than 51 per cent. of the issued or fully paid up capital. (2) immediate family means, in relation to a person, that person s spouse, child, adopted child, step-child, sibling and parent. Negative Pledge : The Issuer has covenanted with the Trustee in the Trust Deed that so long as any of the Notes remains outstanding the Issuer will not create or permit to subsist any mortgage, charge, pledge, lien or other form of encumbrance or security interest ( Security ) upon the whole or any part of its undertakings, assets, property or revenues, present or future, to secure any freely transferable securities (as defined below) or to secure any guarantee of or indemnity in respect of any freely transferable securities, unless, at the same time or prior to such Security being given, the obligations of the Issuer under the Notes and the Trust Deed (i) are secured pari passu therewith, or (ii) have the benefit of such other security, guarantee, indemnity or other arrangement which are not materially prejudicial to the interests of the Noteholders, or as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders. Notwithstanding the foregoing, this Condition shall not apply to any Security created with the prior approval of the Noteholders by way of any Extraordinary Resolution. For the purposes of this paragraph, freely transferable securities means any present or future indebtedness in the form of, or represented by, bonds, debentures, notes or other debt securities which are for the time being, or are capable of being, quoted, listed, ordinarily dealt in or traded on any stock exchange or over the counter or other securities market, having an original maturity of more than 365 days from its date of issue. 17

20 Financial Covenants : The Issuer has further covenanted with the Trustee in the Trust Deed that so long as any of the Notes remains outstanding, it will ensure that: (i) its Consolidated Total Equity (as defined in the Conditions) shall at all times be at least US$800,000,000; and (ii) the Consolidated Free Liquid Assets (as defined in the Conditions) of the Group shall at all times be more than US$75,000,000. Events of Default : See Condition 9 of the Notes. Taxation : All payments in respect of the Notes and the Coupons by the Issuer shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Singapore or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In such event, the Issuer shall pay such additional amounts as will result in the receipt by the Noteholders and the Couponholders of such amounts as would have been received by them had no such deduction or withholding been required, save for certain exceptions. For further details, please see the section Singapore Taxation herein. Listing : Each Series of the Notes may, if so agreed between the Issuer and the relevant Dealer(s), be listed on the SGX-ST or any stock exchange(s) as may be agreed between the Issuer and the relevant Dealer(s), subject to all necessary approvals having been obtained. Selling Restrictions : For a description of certain restrictions on offers, sales and deliveries of Notes and the distribution of offering material relating to the Notes, see the section Subscription, Purchase and Distribution herein. Further restrictions may apply in connection with any particular Series or Tranche of Notes. Governing Law : The Programme and any Notes issued under the Programme will be governed by, and construed in accordance with, the laws of Singapore. 18

21 TERMS AND CONDITIONS OF THE NOTES The following is the text of the terms and conditions which, subject to completion and amendment and as supplemented or varied in accordance with the provisions of the relevant Pricing Supplement, will be endorsed on the Notes in definitive form issued in exchange for the Global Note(s) representing each Series. Either (i) the full text of these terms and conditions together with the relevant provisions of the Pricing Supplement or (ii) these terms and conditions as so completed, amended, supplemented or varied (and subject to simplification by the deletion of non-applicable provisions), shall be endorsed on such Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in the relevant Pricing Supplement. Those definitions will be endorsed on the definitive Notes. References in the Conditions to Notes are to the Notes of one Series only, not to all Notes that may be issued under the Programme, details of the relevant Series being shown on the face of the relevant Notes and in the relevant Pricing Supplement. Any investment decision to invest in and purchase and/or subscribe for Notes should be made on the basis of these Conditions and the information contained in the Information Memorandum. The Notes are constituted by a Trust Deed (as amended and supplemented from time to time, the Trust Deed ) dated 23 June 2014 made between (1) Pacific International Lines (Private) Limited (the Issuer ) and (2) DB International Trust (Singapore) Limited (the Trustee, which expression shall wherever the context so admits include such company and all other persons for the time being the trustee or trustees of the Trust Deed), as trustee for the Noteholders (as defined below), and (where applicable) the Notes are issued with the benefit of a deed of covenant (as amended and supplemented from time to time, the Deed of Covenant ) dated 23 June 2014, relating to the Notes executed by the Issuer. These terms and conditions (the Conditions ) include summaries of, and are subject to, the detailed provisions of the Trust Deed, which includes the form of the Notes and Coupons referred to below. The Issuer has entered into an Agency Agreement (as amended and supplemented from time to time, the Agency Agreement ) dated 23 June 2014 made between (1) the Issuer, (2) Deutsche Bank AG, Singapore Branch, as principal paying agent (in such capacity, the Principal Paying Agent ), (3) Deutsche Bank AG, Hong Kong Branch, as non-cdp paying agent (in such capacity, the Non-CDP Paying Agent and, together with the Principal Paying Agent, the Paying Agents ) and (4) the Trustee, as trustee. The Noteholders and the holders of the coupons (the Coupons ) appertaining to the interest-bearing Notes (the Couponholders ) are bound by and are deemed to have notice of all of the provisions of the Trust Deed, the Agency Agreement, the relevant Agent Bank Agreement (as defined in the Trust Deed) and the Deed of Covenant. For the purposes of these Conditions, all references to the Principal Paying Agent shall, with respect to a Series of Notes to be cleared through a clearing system other than the CDP System (as defined in the Trust Deed), be deemed to be a reference to the Non-CDP Paying Agent and all such references shall be construed accordingly. Copies of the Trust Deed, the Agency Agreement, the relevant Agent Bank Agreement and the Deed of Covenant are available for inspection at the principal office of the Trustee for the time being and at the respective specified offices of the Paying Agents for the time being. 1. Form, Denomination and Title (a) Form and Denomination (i) The Notes of the Series of which this Note forms part (in these Conditions, the Notes ) are issued in bearer form in each case in the Denomination Amount shown hereon. 19

22 (ii) (iii) This Note is a Fixed Rate Note, a Floating Rate Note, a Variable Rate Note, a Hybrid Note or a Zero Coupon Note (depending upon the Interest Basis shown on its face). Notes are serially numbered and issued with Coupons attached, save in the case of Notes that do not bear interest in which case references to interest (other than in relation to default interest referred to in Condition 6(f)) in these Conditions are not applicable. (b) Title (i) (ii) (iii) (iv) Title to the Notes and the Coupons appertaining thereto shall pass by delivery. Except as ordered by a court of competent jurisdiction or as required by law, the holder of any Note or Coupon shall be deemed to be and may be treated as the absolute owner of such Note or of such Coupon, as the case may be, for the purpose of receiving payment thereof or on account thereof and for all other purposes, whether or not such Note or Coupon shall be overdue and notwithstanding any notice of ownership, theft, loss or forgery thereof or any writing thereon made by anyone, and no person shall be liable for so treating the holder. For so long as any of the Notes is represented by a Global Note and such Global Note is held by a common depositary for Euroclear Bank S.A./N.V. ( Euroclear ) and Clearstream Banking, société anonyme ( Clearstream, Luxembourg ) and/or The Central Depository (Pte) Limited (the Depository ), each person who is for the time being shown in the records of Euroclear, Clearstream, Luxembourg and/or the Depository as the holder of a particular principal amount of such Notes (in which regard any certificate or other document issued by Euroclear, Clearstream, Luxembourg and/or the Depository as to the principal amount of such Notes standing to the account of any person shall be conclusive and binding for all purposes save for manifest error) shall be treated by the Issuer, the Principal Paying Agent, the Non-CDP Paying Agent, the Agent Bank (as defined below), all other agents of the Issuer and the Trustee as the holder of such principal amount of Notes other than with respect to the payment of principal, premium, interest, distribution, redemption, purchase and/or any other amounts in respect of the Notes, for which purpose the bearer of the Global Note shall be treated by the Issuer, the Principal Paying Agent, the Non-CDP Paying Agent, the Agent Bank, all other agents of the Issuer and the Trustee as the holder of such Notes in accordance with and subject to the terms of the Global Note (and the expressions Noteholder and holder of Notes and related expressions shall be construed accordingly). Notes which are represented by the Global Note and held by Euroclear, Clearstream, Luxembourg and/or the Depository will be transferable only in accordance with the rules and procedures for the time being of Euroclear, Clearstream, Luxembourg and/or the Depository. In these Conditions, Global Note means the relevant Temporary Global Note representing each Series or the relevant Permanent Global Note representing each Series, Noteholder means the bearer of any Definitive Note (as defined in the Trust Deed) and holder (in relation to a Definitive Note or Coupon) means the bearer of any Definitive Note or Coupon, Series means (1) (in relation to Notes other than Variable Rate Notes) a Tranche, together with any further Tranche or Tranches, which are (A) expressed to be consolidated and forming a single series and (B) identical in all respects (including as to listing) except for their respective issue dates, issue prices and/or dates of the first payment of interest and (2) (in relation to Variable Rate Notes) Notes which are identical in all respects (including as to listing) except for their respective issue prices and rates of interest and Tranche means Notes which are identical in all respects (including as to listing). 20

23 (v) Words and expressions defined in the Trust Deed or used in the applicable Pricing Supplement (as defined in the Trust Deed) shall have the same meanings where used in these Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of inconsistency between the Trust Deed and the applicable Pricing Supplement, the applicable Pricing Supplement will prevail. 2. Status The Notes and Coupons of all Series constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and shall at all times rank pari passu, without any preference or priority among themselves, and pari passu with all other present and future unsecured obligations (other than subordinated obligations and priorities created by law) of the Issuer from time to time outstanding. 3. Negative Pledge and Financial Covenants (a) Negative Pledge The Issuer has covenanted with the Trustee in the Trust Deed that so long as any of the Notes remains outstanding the Issuer will not create or permit to subsist any mortgage, charge, pledge, lien or other form of encumbrance or security interest ( Security ) upon the whole or any part of its undertakings, assets, property or revenues, present or future, to secure any freely transferable securities (as defined below) or to secure any guarantee of or indemnity in respect of any freely transferable securities, unless, at the same time or prior to such Security being given, the obligations of the Issuer under the Notes and the Trust Deed (i) are secured pari passu therewith, or (ii) have the benefit of such other security, guarantee, indemnity or other arrangement which are not materially prejudicial to the interests of the Noteholders, or as shall be approved by an Extraordinary Resolution (as defined in the Trust Deed) of the Noteholders. Notwithstanding the foregoing, this Condition shall not apply to any Security created with the prior approval of the Noteholders by way of any Extraordinary Resolution. For the purposes of these Conditions, freely transferable securities means any present or future indebtedness in the form of, or represented by, bonds, debentures, notes or other debt securities which are for the time being, or are capable of being, quoted, listed, ordinarily dealt in or traded on any stock exchange or over the counter or other securities market, having an original maturity of more than 365 days from its date of issue. (b) Financial Covenants The Issuer has further covenanted with the Trustee in the Trust Deed that so long as any of the Notes remains outstanding, it will ensure that: (i) (ii) its Consolidated Total Equity shall at all times be at least US$800,000,000; and the Consolidated Free Liquid Assets of the Group shall at all times be more than US$75,000,000. For the purposes of these Conditions: (1) Consolidated Free Liquid Assets means the unsecured amount (expressed in United States dollars) for the time being equal to the aggregate of the current market value of: (A) cash at bank and on hand and cash equivalents; 21

24 (B) deposits in banks or financial institutions; and (C) debt securities rated at least A by S&P or Fitch or A2 by Moody s respectively, in each case on a Group basis as shown in the latest audited consolidated annual financial statements of the Group (which have been prepared in accordance with generally accepted accounting principles in Singapore) (2) Consolidated Total Equity means the amount (expressed in United States dollars) for the time being, which is shown as Total Equity (on a Group basis) in the latest audited consolidated annual financial statements of the Group (which have been prepared in accordance with generally accepted accounting principles in Singapore) and which, for the avoidance of doubt, shall include (without limitation): (A) (B) (C) share capital, capital reserve, revaluation reserve, fair value reserve, hedging reserve, foreign currency reserve, share options reserve, other reserve, revenue reserve; any other reserves that may appear in the Group s latest audited consolidated annual financial statements from time to time; and the amounts attributable to the non-controlling interests of the Group. (3) Fitch means Fitch Ratings Ltd and/or its successors; (4) Moody s means Moody s Investors Service and/or its successors; and (5) S&P means Standard & Poor s Rating Services, a division of The McGraw Hill Companies, and/or its successors. 4. (I) Interest on Fixed Rate Notes (a) Interest Rate and Accrual Each Fixed Rate Note bears interest on its Calculation Amount (as defined in Condition 4(II)(d)) from the Interest Commencement Date in respect thereof and as shown on the face of such Note at the rate per annum (expressed as a percentage) equal to the Interest Rate shown on the face of such Note payable in arrear on each Interest Payment Date or Interest Payment Dates shown on the face of such Note in each year and on the Maturity Date shown on the face of such Note if that date does not fall on an Interest Payment Date. The first payment of interest will be made on the Interest Payment Date next following the Interest Commencement Date (and if the Interest Commencement Date is not an Interest Payment Date, will amount to the Initial Broken Amount shown on the face of such Note), unless the Maturity Date falls before the date on which the first payment of interest would otherwise be due. If the Maturity Date is not an Interest Payment Date, interest from the preceding Interest Payment Date (or from the Interest Commencement Date, as the case may be) to the Maturity Date will amount to the Final Broken Amount shown on the face of the Note. 22

25 Interest will cease to accrue on each Fixed Rate Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of the Redemption Amount shown on the face of the Note is improperly withheld or refused, in which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in Condition 6(f) to the Relevant Date (as defined in Condition 7). (b) Calculations In the case of a Fixed Rate Note, interest in respect of a period of less than one year will be calculated on the Day Count Fraction shown on the face of the Note. (II) (a) Interest on Floating Rate Notes or Variable Rate Notes Interest Payment Dates Each Floating Rate Note or Variable Rate Note bears interest on its Calculation Amount from the Interest Commencement Date in respect thereof and as shown on the face of such Note, and such interest will be payable in arrear on each interest payment date ( Interest Payment Date ). Such Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Date(s) or, if no Specified Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each date which (save as mentioned in these Conditions) falls the number of months specified as the Interest Period on the face of the Note (the Specified Number of Months ) after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date (and which corresponds numerically with such preceding Interest Payment Date or the Interest Commencement Date, as the case may be), provided that the Agreed Yield (as defined in Condition 4(II)(c)) in respect of any Variable Rate Note for any Interest Period (as defined below) relating to that Variable Rate Note shall be payable on the first day of that Interest Period. If any Interest Payment Date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a business day (as defined below), then if the Business Day Convention specified is (1) the Floating Rate Business Day Convention, such date shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month, in which event (i) such date shall be brought forward to the immediately preceding business day and (ii) each subsequent such date shall be the last business day of the month in which such date would have fallen had it not been subject to adjustment, (2) the Following Business Day Convention, such date shall be postponed to the next day that is a business day, (3) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a business day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding business day or (4) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding business day. The period beginning (and including) on the Interest Commencement Date and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date is herein called an Interest Period. 23

26 Interest will cease to accrue on each Floating Rate Note or Variable Rate Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of the Redemption Amount is improperly withheld or refused, in which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in Condition 6(f) to the Relevant Date. (b) Rate of Interest - Floating Rate Notes (i) Each Floating Rate Note bears interest at a floating rate determined by reference to a Benchmark as stated on the face of such Floating Rate Note, being (in the case of Notes which are denominated in Singapore dollars) SIBOR (in which case such Note will be a SIBOR Note) or Swap Rate (in which case such Note will be a Swap Rate Note) or in any case (or in the case of Notes which are denominated in a currency other than Singapore dollars) such other Benchmark as is set out on the face of such Note. Such floating rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of such Note. The Spread is the percentage rate per annum specified on the face of such Note as being applicable to the rate of interest for such Note. The rate of interest so calculated shall be subject to Condition 4(V)(a) below. The rate of interest payable in respect of a Floating Rate Note from time to time is referred to in these Conditions as the Rate of Interest. (ii) The Rate of Interest payable from time to time in respect of each Floating Rate Note will be determined by the Agent Bank on the basis of the following provisions: (1) in the case of Floating Rate Notes which are SIBOR Notes: (A) (B) the Agent Bank will, at or about the Relevant Time on the relevant Interest Determination Date in respect of each Interest Period, determine the Rate of Interest for such Interest Period which shall be the offered rate for deposits in Singapore dollars for a period equal to the duration of such Interest Period which appears on the Reuters Screen ABSIRFIX01 Page under the caption ABS SIBOR FIX - SIBOR AND SWAP OFFER RATES - RATES AT 11:00 HRS SINGAPORE TIME and under the column headed SGD SIBOR (or such other replacement page thereof for the purpose of displaying SIBOR or such other Screen Page as may be provided hereon) and as adjusted by the Spread (if any); if no such rate appears on the Reuters Screen ABSIRFIX01 Page under the column headed SGD SIBOR (or such other replacement page thereof or if no rate appears on such other Screen Page as may be provided hereon) or if the Reuters Screen ABSIRFIX01 Page (or such other replacement page thereof or such other Screen Page as may be provided hereon) is unavailable for any reason, the Agent Bank will request the principal Singapore offices of each of the Reference Banks to provide the Agent Bank with the rate at which deposits in Singapore dollars are offered by it at approximately the Relevant Time on the Interest Determination Date to prime banks in the Singapore interbank market for a period equivalent to the duration of such Interest Period commencing on such Interest Payment Date in 24

27 an amount comparable to the aggregate principal amount of the relevant Floating Rate Notes. The Rate of Interest for such Interest Period shall be the arithmetic mean (rounded up, if necessary, to four decimal places) of such offered quotations and as adjusted by the Spread (if any), as determined by the Agent Bank; (C) (D) if on any Interest Determination Date two but not all the Reference Banks provide the Agent Bank with such quotations, the Rate of Interest for the relevant Interest Period shall be determined in accordance with (B) above on the basis of the quotations of those Reference Banks providing such quotations; and if on any Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such quotations, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to four decimal places) of the rates quoted by the Reference Banks or those of them (being at least two in number) to the Agent Bank at or about the Relevant Time on such Interest Determination Date as being their cost (including the cost occasioned by or attributable to complying with reserves, liquidity, deposit or other requirements imposed on them by any relevant authority or authorities) of funding, for the relevant Interest Period, an amount equal to the aggregate principal amount of the relevant Floating Rate Notes for such Interest Period by whatever means they determine to be most appropriate and as adjusted by the Spread (if any) or if on such Interest Determination Date one only or none of the Reference Banks provides the Agent Bank with such quotation, the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to four decimal places) of the prime lending rates for Singapore dollars quoted by the Reference Banks at or about the Relevant Time on such Interest Determination Date and as adjusted by the Spread (if any); (2) in the case of Floating Rate Notes which are Swap Rate Notes: (A) (B) the Agent Bank will, at or about the Relevant Time on the relevant Interest Determination Date in respect of each Interest Period, determine the Rate of Interest for such Interest Period as being the rate which appears on the Reuters Screen ABSFIX01 Page under the caption SGD SOR rates as of 11:00hrs London Time under the column headed SGD SOR (or such replacement page thereof for the purpose of displaying the swap rates of leading reference banks) at or about the Relevant Time on such Interest Determination Date and for a period equal to the duration of such Interest Period and as adjusted by the Spread (if any); if on any Interest Determination Date no such rate is quoted on Reuters Screen ABSFIX01 Page (or such other replacement page as aforesaid) or Reuters Screen ABSFIX01 Page (or such other replacement page as aforesaid) is unavailable for any reason, the Agent Bank will determine the Rate of Interest for such Interest Period as being the rate (or, if there is more than one rate which is published, the arithmetic mean of those rates (rounded up, if necessary, to four decimal places)) for a period equal to the duration 25

28 of such Interest Period published by a recognised industry body where such rate is widely used (after taking into account the industry practice at that time), or by such other relevant authority as the Agent Bank may select; and (C) if on any Interest Determination Date the Agent Bank is otherwise unable to determine the Rate of Interest under paragraphs (b)(ii)(2)(a) and (b)(ii)(2)(b) above, the Rate of Interest shall be determined by the Agent Bank to be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to four decimal places) of the rates quoted by the Singapore offices of the Reference Banks or those of them (being at least two in number) to the Agent Bank at or about a.m. (Singapore time) on the first business day following such Interest Determination Date as being their cost (including the cost occasioned by or attributable to complying with reserves, liquidity, deposit or other requirements imposed on them by any relevant authority or authorities) of funding, for the relevant Interest Period, an amount equal to the aggregate principal amount of the relevant Floating Rate Notes for such Interest Period by whatever means they determine to be most appropriate and as adjusted by the Spread (if any), or if on such day one only or none of the Singapore offices of the Reference Banks provides the Agent Bank with such quotation, the Rate of Interest for the relevant Interest Period shall be the rate per annum equal to the arithmetic mean (rounded up, if necessary, to four decimal places) of the prime lending rates for Singapore dollars quoted by the Singapore offices of the Reference Banks at or about a.m. (Singapore time) on such Interest Determination Date and as adjusted by the Spread (if any); (3) in the case of Floating Rate Notes which are not SIBOR Notes or Swap Rate Notes or which are denominated in a currency other than Singapore dollars, the Agent Bank will determine the Rate of Interest in respect of any Interest Period at or about the Relevant Time on the Interest Determination Date in respect of such Interest Period as follows: (A) if the Primary Source (as defined below) for the Floating Rate is a Screen Page, subject as provided below, the Rate of Interest in respect of such Interest Period shall be: (aa) the Relevant Rate (as defined below) (where such Relevant Rate on such Screen Page is a composite quotation or is customarily supplied by one entity); or (bb) the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear on that Screen Page, in each case appearing on such Screen Page at the Relevant Time on the Interest Determination Date, and as adjusted by the Spread (if any); (B) if the Primary Source for the Floating Rate is Reference Banks or if paragraph (b)(ii)(3)(a)(aa) applies and no Relevant Rate appears on the Screen Page at the Relevant Time on the Interest Determination Date or if paragraph (b)(ii)(3)(a)(bb) applies and fewer than two Relevant Rates appear on the Screen Page at the Relevant Time on the Interest Determination Date, subject as provided below, the Rate 26

29 of Interest shall be the rate per annum which the Agent Bank determines to be the arithmetic mean (rounded up, if necessary, to four decimal places) of the Relevant Rates that each of the Reference Banks is quoting to leading banks in the Relevant Financial Centre (as defined below) at the Relevant Time on the Interest Determination Date and as adjusted by the Spread (if any); and (C) if paragraph (b)(ii)(3)(b) applies and the Agent Bank determines that fewer than two Reference Banks are so quoting Relevant Rates, the Rate of Interest shall be the Rate of Interest determined on the previous Interest Determination Date. (iii) (iv) On the last day of each Interest Period, the Issuer will pay interest on each Floating Rate Note to which such Interest Period relates at the Rate of Interest for such Interest Period. For the avoidance of doubt, in the event that the Rate of Interest in relation to any Interest Period is less than zero, the Rate of Interest in relation to such Interest Period shall be equal to zero. (c) Rate of Interest - Variable Rate Notes (i) (ii) Each Variable Rate Note bears interest at a variable rate determined in accordance with the provisions of this paragraph (c). The interest payable in respect of a Variable Rate Note on the first day of an Interest Period relating to that Variable Rate Note is referred to in these Conditions as the Agreed Yield and the rate of interest payable in respect of a Variable Rate Note on the last day of an Interest Period relating to that Variable Rate Note is referred to in these Conditions as the Rate of Interest. The Agreed Yield or, as the case may be, the Rate of Interest payable from time to time in respect of each Variable Rate Note for each Interest Period shall, subject as referred to in paragraph (c)(iv) below, be determined as follows: (1) not earlier than 9.00 a.m. (Singapore time) on the ninth business day nor later than 3.00 p.m. (Singapore time) on the third business day prior to the commencement of each Interest Period, the Issuer and the Relevant Dealer (as defined below) shall endeavour to agree on the following: (A) (B) (C) whether interest in respect of such Variable Rate Note is to be paid on the first day or the last day of such Interest Period; if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the first day of such Interest Period, an Agreed Yield in respect of such Variable Rate Note for such Interest Period (and, in the event of the Issuer and the Relevant Dealer so agreeing on such Agreed Yield, the Interest Amount (as defined below) for such Variable Rate Note for such Interest Period shall be zero); and if interest in respect of such Variable Rate Note is agreed between the Issuer and the Relevant Dealer to be paid on the last day of such Interest Period, a Rate of Interest in respect of such Variable Rate 27

30 Note for such Interest Period (an Agreed Rate ) and, in the event of the Issuer and the Relevant Dealer so agreeing on an Agreed Rate, such Agreed Rate shall be the Rate of Interest for such Variable Rate Note for such Interest Period; and (2) if the Issuer and the Relevant Dealer shall not have agreed either an Agreed Yield or an Agreed Rate in respect of such Variable Rate Note for such Interest Period by 3.00 p.m. (Singapore time) on the third business day prior to the commencement of such Interest Period, or if there shall be no Relevant Dealer during the period for agreement referred to in (1) above, the Rate of Interest for such Variable Rate Note for such Interest Period shall automatically be the rate per annum equal to the Fall Back Rate (as defined below) for such Interest Period. (iii) The Issuer has undertaken to the Principal Paying Agent and the Agent Bank that it will as soon as possible after the Agreed Yield or, as the case may be, the Agreed Rate in respect of any Variable Rate Note is determined but not later than a.m. (Singapore time) on the next following business day: (1) notify or cause the Relevant Dealer to notify the Principal Paying Agent and the Agent Bank of the Agreed Yield or, as the case may be, the Agreed Rate for such Variable Rate Note for such Interest Period; and (2) cause such Agreed Yield or, as the case may be, Agreed Rate for such Variable Rate Note to be notified by the Principal Paying Agent to the relevant Noteholder at its request. (iv) For the purposes of sub-paragraph (ii) above, the Rate of Interest for each Interest Period for which there is neither an Agreed Yield nor Agreed Rate in respect of any Variable Rate Note or no Relevant Dealer in respect of the Variable Rate Note(s) shall be the rate (the Fall Back Rate ) determined by reference to a Benchmark as stated on the face of such Variable Rate Note(s), being (in the case of Variable Rate Notes which are denominated in Singapore dollars) SIBOR (in which case such Variable Rate Note(s) will be SIBOR Note(s)) or Swap Rate (in which case such Variable Rate Note(s) will be Swap Rate Note(s)) or (in any other case or in the case of Variable Rate Notes which are denominated in a currency other than Singapore dollars) such other Benchmark as is set out on the face of such Variable Rate Note(s). Such rate may be adjusted by adding or subtracting the Spread (if any) stated on the face of such Variable Rate Note. The Spread is the percentage rate per annum specified on the face of such Variable Rate Note as being applicable to the rate of interest for such Variable Rate Note. The rate of interest so calculated shall be subject to Condition 4(V)(a) below. The Fall Back Rate payable from time to time in respect of each Variable Rate Note will be determined by the Agent Bank in accordance with the provisions of Condition 4(II)(b)(ii) above (mutatis mutandis) and references therein to Rate of Interest shall mean Fall Back Rate. (v) If interest is payable in respect of a Variable Rate Note on the first day of an Interest Period relating to such Variable Rate Note, the Issuer will pay the Agreed Yield applicable to such Variable Rate Note for such Interest Period on 28

31 the first day of such Interest Period. If interest is payable in respect of a Variable Rate Note on the last day of an Interest Period relating to such Variable Rate Note, the Issuer will pay the Interest Amount for such Variable Rate Note for such Interest Period on the last day of such Interest Period. (vi) For the avoidance of doubt, in the event that the Rate of Interest in relation to any Interest Period is less than zero, the Rate of Interest in relation to such Interest Period shall be equal to zero. (d) Definitions As used in these Conditions: Agent Bank means in relation to any Series of Notes, the person appointed as the agent bank pursuant to the terms of the Agency Agreement and as specified in the applicable Pricing Supplement; Benchmark means the rate specified as such in the applicable Pricing Supplement; business day means, in respect of each Note, (i) a day (other than a Saturday, Sunday or a gazetted public holiday) on which Euroclear, Clearstream, Luxembourg and the Depository, as applicable, are operating, (ii) a day (other than a Saturday, Sunday or a gazetted public holiday) on which banks and foreign exchange markets are open for general business in Singapore and in the country of the Principal Paying Agent s and (in the case of Non-CDP Notes) the Non-CDP Paying Agent s specified office(s) and (iii) (if a payment is to be made on that day) (1) (in the case of Notes denominated in Singapore dollars) a day (other than a Saturday, Sunday or a gazetted public holiday) on which banks and foreign exchange markets are open for general business in Singapore, (2) (in the case of Notes denominated in Euros) a day (other than a Saturday, Sunday or a gazetted public holiday) on which the TARGET System is open for settlement in Euros and (3) (in the case of Notes denominated in a currency other than Singapore dollars and Euros) a day (other than a Saturday, Sunday or a gazetted public holiday) on which banks and foreign exchange markets are open for general business in Singapore and the principal financial centre for that currency; Calculation Amount means the amount specified as such on the face of any Note, or if no such amount is so specified, the Denomination Amount of such Note as shown on the face thereof; Euro means the currency of the member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community, as amended from time to time; Interest Commencement Date means the Issue Date or such other date as may be specified as the Interest Commencement Date on the face of such Note; Interest Determination Date means, in respect of any Interest Period, that number of business days prior thereto as is set out in the applicable Pricing Supplement or on the face of the relevant Note; Primary Source means the Screen Page specified as such in the applicable Pricing Supplement and (in the case of any Screen Page provided by any information service other than the Reuters Monitor Money Rates Service ( Reuters )) agreed to by the Agent Bank; 29

32 Reference Banks means the institutions specified as such hereon or, if none, three major banks selected by the Agent Bank in the interbank market that is most closely connected with the Benchmark; Relevant Currency means the currency in which the Notes are denominated; Relevant Dealer means, in respect of any Variable Rate Note, the Dealer party to the Programme Agreement referred to in the Agency Agreement with whom the Issuer has concluded or is negotiating an agreement for the issue of such Variable Rate Note pursuant to the Programme Agreement; Relevant Financial Centre means, in the case of interest to be determined on an Interest Determination Date with respect to any Floating Rate Note or Variable Rate Note, the financial centre with which the relevant Benchmark is most closely connected or, if none is so connected, Singapore; Relevant Rate means the Benchmark for a Calculation Amount of the Relevant Currency for a period (if applicable or appropriate to the Benchmark) equal to the relevant Interest Period; Relevant Time means, with respect to any Interest Determination Date, the local time in the Relevant Financial Centre at which it is customary to determine bid and offered rates in respect of deposits in the Relevant Currency in the interbank market in the Relevant Financial Centre; Screen Page means such page, section, caption, column or other part of a particular information service (including, but not limited to, the Bloomberg agency and Reuters) as may be specified hereon for the purpose of providing the Benchmark, or such other page, section, caption, column or other part as may replace it on that information service or on such other information service, in each case as may be nominated by the person or organisation providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Benchmark; and TARGET System means the Trans-European Automated Real-Time Gross Settlement Express Transfer (known as TARGET 2) System which was launched on 19 November 2007 or any successor thereto. (III) Interest on Hybrid Notes (a) Interest Rate and Accrual Each Hybrid Note bears interest on its Calculation Amount from the Interest Commencement Date in respect thereof and as shown on the face of such Note. (b) Fixed Rate Period (i) In respect of the Fixed Rate Period shown on the face of such Note, each Hybrid Note bears interest on its Calculation Amount from the first day of the Fixed Rate Period at the rate per annum (expressed as a percentage) equal to the Interest Rate shown on the face of such Note payable in arrear on each Interest Payment Date or Interest Payment Dates shown on the face of the Note in each year and on the last day of the Fixed Rate Period if that date does not fall on an Interest Payment Date. 30

33 (ii) (iii) (iv) The first payment of interest will be made on the Interest Payment Date next following the first day of the Fixed Rate Period (and if the first day of the Fixed Rate Period is not an Interest Payment Date, will amount to the Initial Broken Amount shown on the face of such Note), unless the last day of the Fixed Rate Period falls before the date on which the first payment of interest would otherwise be due. If the last day of the Fixed Rate Period is not an Interest Payment Date, interest from the preceding Interest Payment Date (or from the first day of the Fixed Rate Period, as the case may be) to the last day of the Fixed Rate Period will amount to the Final Broken Amount shown on the face of the Note. Where the due date of redemption of any Hybrid Note falls within the Fixed Rate Period, interest will cease to accrue on the Note from the due date for redemption thereof unless, upon due presentation and subject to the provisions of the Trust Deed, payment of principal (or Redemption Amount, as the case may be) is improperly withheld or refused, in which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in Condition 6(f) to the Relevant Date. In the case of a Hybrid Note, interest in respect of a period of less than one year will be calculated on the Day Count Fraction shown on the face of the Note during the Fixed Rate Period. (c) Floating Rate Period (i) In respect of the Floating Rate Period shown on the face of such Note, each Hybrid Note bears interest on its Calculation Amount from the first day of the Floating Rate Period, and such interest will be payable in arrear on each interest payment date ( Interest Payment Date ). Such Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Date(s) or, if no Specified Interest Payment Date(s) is/are shown hereon, Interest Payment Date shall mean each date which (save as mentioned in these Conditions) falls the number of months specified as the Interest Period on the face of the Note (the Specified Number of Months ) after the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the first day of the Floating Rate Period (and which corresponds numerically with such preceding Interest Payment Date or the first day of the Floating Rate Period, as the case may be). If any Interest Payment Date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a business day, then if the Business Day Convention specified is (1) the Floating Rate Business Day Convention, such date shall be postponed to the next day which is a business day unless it would thereby fall into the next calendar month, in which event (i) such date shall be brought forward to the immediately preceding business day and (ii) each subsequent such date shall be the last business day of the month in which such date would have fallen had it not been subject to adjustment, (2) the Following Business Day Convention, such date shall be postponed to the next day that is a business day, (3) the Modified Following Business Day Convention, such date shall be postponed to the next day that is a business day unless it would thereby fall into the next calendar month, in which event such date shall be brought forward to the immediately preceding business day or (4) the Preceding Business Day Convention, such date shall be brought forward to the immediately preceding business day. 31

34 (ii) (iii) (iv) The period beginning on (and including) the first day of the Floating Rate Period and ending on (but excluding) the first Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date is herein called an Interest Period. Where the due date of redemption of any Hybrid Note falls within the Floating Rate Period, interest will cease to accrue on the Note from the due date for redemption thereof unless, upon due presentation thereof, payment of principal (or Redemption Amount, as the case may be) is improperly withheld or refused, in which event interest will continue to accrue (as well after as before judgment) at the rate and in the manner provided in Condition 6(f) to the Relevant Date. The provisions of Condition 4(II)(b) shall apply to each Hybrid Note during the Floating Rate Period as though references therein to Floating Rate Notes are references to Hybrid Notes. (IV) Zero Coupon Notes Where a Note the Interest Basis of which is specified to be Zero Coupon is repayable prior to the Maturity Date and is not paid when due, the amount due and payable prior to the Maturity Date shall be the Early Redemption Amount (as defined in Condition 5(h) of such Note (determined in accordance with Condition 5(h)). As from the Maturity Date, the rate of interest for any overdue principal of such a Note shall be a rate per annum (expressed as a percentage) equal to the Amortisation Yield (as defined in Condition 5(h)). (V) (a) Calculations Determination of Rate of Interest and Calculation of Interest Amounts The Agent Bank will, as soon as practicable after the Relevant Time on each Interest Determination Date determine the Rate of Interest and calculate the amount of interest payable (the Interest Amounts ) in respect of each Calculation Amount of the relevant Floating Rate Notes, Variable Rate Notes or (where applicable) Hybrid Notes for the relevant Interest Period. The amount of interest payable in respect of any Floating Rate Note, Variable Rate Note or (where applicable) Hybrid Note shall be calculated by multiplying the product of the Rate of Interest and the Calculation Amount, by the Day Count Fraction shown on the Note and rounding the resultant figure to the nearest sub-unit of the Relevant Currency. The determination of any rate or amount, the obtaining of each quotation and the making of each determination or calculation by the Agent Bank shall (in the absence of manifest or proven error) be final and binding upon all parties. (b) Notification The Agent Bank will cause the Rate of Interest and the Interest Amounts for each Interest Period and the relevant Interest Payment Date to be notified to the Principal Paying Agent, the Trustee and the Issuer as soon as possible after their determination but in no event later than the fourth business day thereafter. In the case of Floating Rate Notes, if so required by the Issuer, the Agent Bank will also cause the Rate of Interest and the Interest Amounts for each Interest Period and the relevant Interest Payment Date to be notified to Noteholders in accordance with Condition 15 as soon as possible after their determination. The Interest Amounts and the Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of 32

35 an extension or shortening of the Interest Period by reason of any Interest Payment Date not being a business day. If the Floating Rate Notes, Variable Rate Notes or, as the case may be, Hybrid Notes become due and payable under Condition 9, the Rate of Interest and Interest Amounts payable in respect of the Floating Rate Notes, Variable Rate Notes or, as the case may be, Hybrid Notes shall nevertheless continue to be calculated as previously in accordance with this Condition but no publication of the Rate of Interest and Interest Amounts need to be made unless the Trustee requires otherwise. (c) Determination or Calculation by the Trustee If the Agent Bank does not at any material time determine or calculate the Rate of Interest for an Interest Period or any Interest Amount, the Trustee shall do so. In doing so, the Trustee shall apply the foregoing provisions of this Condition, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and, in all other respects, it shall do so in such manner as it shall deem fair and reasonable in all the circumstances. (d) Agent Bank and Reference Banks The Issuer will procure that, so long as any Floating Rate Note, Variable Rate Note or Hybrid Note remains outstanding, there shall at all times be three Reference Banks (or such other number as may be required) and, so long as any Floating Rate Note, Variable Rate Note, Hybrid Note or Zero Coupon Note remains outstanding, there shall at all times be an Agent Bank. If any Reference Bank (acting through its relevant office) is unable or unwilling to continue to act as a Reference Bank or the Agent Bank is unable or unwilling to act as such or if the Agent Bank fails duly to establish the Rate of Interest for any Interest Period or to calculate the Interest Amounts, the Issuer will appoint another bank with an office in the Relevant Financial Centre to act as such in its place. The Agent Bank may not resign its duties without a successor having been appointed as aforesaid. 5. Redemption and Purchase (a) Final Redemption Unless previously redeemed or purchased and cancelled as provided below, this Note will be redeemed at its Redemption Amount on the Maturity Date shown on its face (if this Note is shown on its face to be a Fixed Rate Note, Hybrid Note (during the Fixed Rate Period) or Zero Coupon Note) or on the Interest Payment Date falling in the Redemption Month shown on its face (if this Note is shown on its face to be a Floating Rate Note, Variable Rate Note or Hybrid Note (during the Floating Rate Period)). (b) Purchase at the Option of Issuer If so provided hereon, the Issuer shall have the option to purchase all or any of the Fixed Rate Notes, Floating Rate Notes, Variable Rate Notes or Hybrid Notes at their Redemption Amount on any date on which interest is due to be paid on such Notes and the Noteholders shall be bound to sell such Notes to the Issuer accordingly. To exercise such option, the Issuer shall give irrevocable notice to the Noteholders within the Issuer s Purchase Option Period shown on the face hereof. Such Notes may be held, resold or surrendered to the Principal Paying Agent for cancellation. The Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and

36 In the case of a purchase of some only of the Notes, the notice to Noteholders shall also contain the certificate numbers of the Notes to be purchased, which shall have been drawn by or on behalf of the Issuer in such place and in such manner as may be agreed between the Issuer and the Trustee, subject to compliance with any applicable laws. So long as the Notes are listed on any Stock Exchange (as defined in the Trust Deed), the Issuer shall comply with the rules of such Stock Exchange in relation to the publication of any purchase of such Notes. (c) Purchase at the Option of Noteholders (i) (ii) Each Noteholder shall have the option to have all or any of his Variable Rate Notes purchased by the Issuer at their Redemption Amount on any Interest Payment Date and the Issuer will purchase such Variable Rate Notes accordingly. To exercise such option, a Noteholder shall deposit any Variable Rate Notes to be purchased with the Principal Paying Agent at its specified office together with all Coupons relating to such Variable Rate Notes which mature after the date fixed for purchase, together with a duly completed option exercise notice in the form obtainable from the Principal Paying Agent within the Noteholders VRN Purchase Option Period shown on the face hereof. Any Variable Rate Notes so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. Such Variable Rate Notes may be held, resold or surrendered to the Principal Paying Agent for cancellation. The Variable Rate Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and 11. If so provided hereon, each Noteholder shall have the option to have all or any of his Fixed Rate Notes, Floating Rate Notes or Hybrid Notes purchased by the Issuer at their Redemption Amount on any date on which interest is due to be paid on such Notes and the Issuer will purchase such Notes accordingly. To exercise such option, a Noteholder shall deposit any Notes to be purchased with the Principal Paying Agent at its specified office together with all Coupons relating to such Notes which mature after the date fixed for purchase, together with a duly completed option exercise notice in the form obtainable from the Principal Paying Agent within the Noteholders Purchase Option Period shown on the face hereof. Any Notes so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. Such Notes may be held, resold or surrendered to the Principal Paying Agent for cancellation. The Notes so purchased, while held by or on behalf of the Issuer, shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Conditions 9, 10 and 11. (d) Redemption at the Option of the Issuer If so provided hereon, the Issuer may, on giving irrevocable notice to the Noteholders falling within the Issuer s Redemption Option Period shown on the face hereof, redeem all or, if so provided, some of the Notes at their Redemption Amount or integral multiples thereof and on the date or dates so provided. Any such redemption of Notes shall be at their Redemption Amount, together with interest accrued to (but excluding) the date fixed for redemption. 34

37 The Issuer shall notify the Principal Paying Agent or the Non-CDP Paying Agent (as the case may be) and the Trustee of any early redemption at least five Business Days prior to the latest date on which the Issuer is to give notice to the Noteholders in accordance with this Condition. All Notes in respect of which any such notice is given shall be redeemed on the date specified in such notice in accordance with this Condition. In the case of a partial redemption of the Notes, the notice to Noteholders shall also contain the certificate numbers of the Notes to be redeemed, which shall have been drawn by or on behalf of the Issuer in such place and in such manner as may be agreed between the Issuer and the Trustee, subject to compliance with any applicable laws. So long as the Notes are listed on any Stock Exchange, the Issuer shall comply with the rules of such Stock Exchange in relation to the publication of any redemption of such Notes. (e) Redemption at the Option of Noteholders (i) (ii) If so provided hereon, the Issuer shall, at the option of the holder of any Note, redeem such Note on the date or dates so provided at its Redemption Amount, together with interest accrued to (but excluding) the date fixed for redemption. To exercise such option, the holder must deposit such Note (together with all unmatured Coupons) with the Principal Paying Agent at its specified office, together with a duly completed option exercise notice in the form obtainable from the Principal Paying Agent or the Issuer (as applicable) within the Noteholders Redemption Option Period shown on the face hereof. Any Note so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. If at any time the Chang Family (as defined below) ceases to own (directly or indirectly) at any one time (1) (so long as the shares of the Issuer are not listed on the SGX-ST (as defined in the Trust Deed) or any other stock exchange) at least 51 per cent. of the Issuer s issued or fully paid-up capital for the time being, or (2) if the shares of the Issuer are listed on the SGX-ST or such other stock exchange, at least 30 per cent. of the Issuer s issued or fully paid up capital for the time being, then: (A) (B) (C) the Issuer shall within 30 days of such occurrence notify the Noteholders of the occurrence of such event (the Notice ) and the holder of any Note shall have an option to require the Issuer to redeem such Note which shall be exercisable within 30 days from the date of the Notice (the Option Period ); to exercise such option, the holder must deposit such Note (together with all unmatured Coupons) with any Paying Agent at its specified office, together with a duly completed option exercise notice (the Exercise Notice ) in the form obtainable from any Paying Agent, within the Option Period. Any Note so deposited may not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the Issuer. For the avoidance of doubt, such option shall be deemed to have lapsed on the expiry of the Option Period if the Exercise Notice is not received by the Issuer within the Option Period; and if the holder of any Note serves an Exercise Notice on the Issuer in accordance with Condition 5(e)(ii)(B), the Issuer shall, within 120 days after the expiry of the Option Period under Condition 5(e)(ii)(A) redeem such Note at its Redemption Amount, together with interest accrued to the date fixed for redemption. 35

38 For the purposes of Condition 5(e)(ii): (aa) Chang Family means collectively: (I) Mr Teo Woon Tiong (a.k.a YC Chang, bearing Singapore NRIC No: S D), members of his immediate family and his siblings immediate families (each of the aforesaid including their respective personal representatives and next-of-kin shall hereinafter be referred to as the Individual Members ); and (II) all companies and corporations (including their respective successors-in-title and permitted assigns) operating or trading under any name or style in which any one or more of the Individual Members whether singly or jointly, directly or indirectly, hold or control more than 51 per cent. of the issued or fully paid up capital. (bb) immediate family means, in relation to a person, that person s spouse, child, adopted child, step-child, sibling and parent. (f) Redemption for Taxation Reasons If so provided hereon, the Notes may be redeemed at the option of the Issuer in whole, but not in part, on any Interest Payment Date or, if so specified hereon, at any time on giving not less than 30 nor more than 60 days notice to the Noteholders (which notice shall be irrevocable), at their Redemption Amount or (in the case of Zero Coupon Notes) Early Redemption Amount (together with interest accrued to (but excluding) the date fixed for redemption), if (i) the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 7, or increase the payment of such additional amounts, as a result of any change in, or amendment to, the laws (or any regulations, rulings or other administrative pronouncements promulgated thereunder) of Singapore or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws, regulations, rulings or other administrative pronouncements, which change or amendment is made public on or after the Issue Date or any other date specified in the Pricing Supplement, and (ii) such obligations cannot be avoided by the Issuer taking reasonable measures available to it, provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Principal Paying Agent a certificate signed by a duly authorised officer of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal, tax or any other professional advisers of recognised standing to the effect that the Issuer has or is likely to become obliged to pay such additional amounts as a result of such change or amendment. (g) Purchases The Issuer or any of its related corporations may at any time purchase Notes at any price (provided that they are purchased together with all unmatured Coupons relating to them) in the open market or otherwise, provided that in any such case such purchase or purchases is in compliance with all relevant laws, regulations and directives. 36

39 Notes purchased by the Issuer or any of its related corporations may be surrendered by the purchaser through the Issuer to the Principal Paying Agent for cancellation or may at the option of the Issuer or relevant related corporation be held or resold. For the purposes of these Conditions, directive includes any present or future directive, regulation, request, requirement, rule or credit restraint programme of any relevant agency, authority, central bank department, government, legislative, minister, ministry, official public or statutory corporation, self-regulating organisation, or stock exchange. (h) Early Redemption of Zero Coupon Notes (i) (ii) (iii) The Early Redemption Amount payable in respect of any Zero Coupon Note, the Early Redemption Amount of which is not linked to an index and/or formula, upon redemption of such Note pursuant to Condition 5(f) or upon it becoming due and payable as provided in Condition 9, shall be the Amortised Face Amount (calculated as provided below) of such Note unless otherwise specified hereon. Subject to the provisions of sub-paragraph (iii) below, the Amortised Face Amount of any such Note shall be the scheduled Redemption Amount of such Note on the Maturity Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (which, if none is shown hereon, shall be such rate as would produce an Amortised Face Amount equal to the issue price of the Notes if they were discounted back to their issue price on the Issue Date) compounded annually. If the Early Redemption Amount payable in respect of any such Note upon its redemption pursuant to Condition 5(f) or upon it becoming due and payable as provided in Condition 9 is not paid when due, the Early Redemption Amount due and payable in respect of such Note shall be the Amortised Face Amount of such Note as defined in sub-paragraph (ii) above, except that such sub-paragraph shall have effect as though the date on which the Note becomes due and payable were the Relevant Date. The calculation of the Amortised Face Amount in accordance with this sub-paragraph will continue to be made (as well after as before judgment) until the Relevant Date, unless the Relevant Date falls on or after the Maturity Date, in which case the amount due and payable shall be the scheduled Redemption Amount of such Note on the Maturity Date together with any interest which may accrue in accordance with Condition 4(IV). Where such calculation is to be made for a period of less than one year, it shall be made on the basis of the Day Count Fraction shown on the face of the Note. (i) Mandatory Redemption upon Illegality In the event that (i) it has become unlawful for the Issuer to perform or comply with any one or more of its obligations under any of the Issue Documents or any of the Notes or (ii) any of the Issue Documents or any of the Notes ceases for any reason (or is claimed by the Issuer not) to be the legal and valid obligations of the Issuer, binding upon it in accordance with its terms (each an Illegality Event ), the Issuer shall redeem all (and not some only) of the Notes at their Redemption Amount or (in the case of Zero Coupon Notes) Early Redemption Amount together with interest accrued to the date fixed for redemption on the date falling not later than seven days after the occurrence of such Illegality Event. The Issuer shall forthwith notify the Trustee, the Paying Agents and (in accordance with Condition 15) the Noteholders of such Illegality Event. 37

40 (j) Cancellation All Notes purchased by or on behalf of the Issuer or any of its related corporations may be surrendered for cancellation by surrendering each such Note together with all unmatured Coupons to the Principal Paying Agent at its specified office and, if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith (together with all unmatured Coupons attached thereto or surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold. 6. Payments (a) Principal and Interest Payments of principal and interest in respect of the Notes will, subject as mentioned below, be made against presentation and surrender of the relevant Notes or Coupons, as the case may be, at the specified office of the Principal Paying Agent by a cheque drawn in the currency in which payment is due on, or, at the option of the holders, by transfer to an account maintained by the payee in that currency with, a bank in the principal financial centre for that currency. (b) Payments subject to law etc. All payments are subject in all cases to any applicable fiscal or other laws, regulations and directives, but without prejudice to the provisions of Condition 7. No commission or expenses shall be charged to the Noteholders or Couponholders in respect of such payments. (c) Appointment of Agents The Principal Paying Agent and the Non-CDP Paying Agent and their respective specified offices are listed below. The Issuer reserves the right at any time to vary or terminate the appointment of the Principal Paying Agent or the Non-CDP Paying Agent and to appoint additional or other Principal Paying Agents or Non-CDP Paying Agents, provided that it will at all times maintain a Paying Agent having a specified office in Singapore and, where applicable, a Non-CDP Paying Agent. Notice of any such change or any change of any specified office will promptly be given to the Noteholders within the period specified in the Agency Agreement in accordance with Condition 15. The Agency Agreement may be amended by the Issuer, the Paying Agents and the Trustee, without the consent of any holder, for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained therein or in any manner which the Issuer, the Paying Agents and the Trustee may mutually deem necessary or desirable and which does not, in the reasonable opinion of the Issuer, the Paying Agents and the Trustee, adversely affect the interests of the holders. (d) Unmatured Coupons (i) Fixed Rate Notes and Hybrid Notes should be surrendered for payment together with all unmatured Coupons (if any) relating to such Notes (and, in the case of Hybrid Notes, relating to interest payable during the Fixed Rate Period), failing which an amount equal to the face value of each missing unmatured Coupon (or, in the case of payment not being made in full, that proportion of the amount of such missing unmatured Coupon which the sum of principal so paid bears to the total principal due) will be deducted from the Redemption Amount due for payment. Any amount so 38

41 deducted will be paid in the manner mentioned above against surrender of such missing Coupon within a period of three years from the Relevant Date for the payment of such principal (whether or not such Coupon has become void pursuant to Condition 8). (ii) (iii) (iv) Subject to the provisions of the relevant Pricing Supplement upon the due date for redemption of any Floating Rate Note, Variable Rate Note or Hybrid Note, unmatured Coupons relating to such Note (and, in the case of Hybrid Notes, relating to interest payable during the Floating Rate Period) (whether or not attached) shall become void and no payment shall be made in respect of them. Where any Floating Rate Note, Variable Rate Note or Hybrid Note is presented for redemption without all unmatured Coupons relating to it (and, in the case of Hybrid Notes, relating to interest payable during the Floating Rate Period), redemption shall be made only against the provision of such indemnity as the Issuer may require. If the due date for redemption or repayment of any Note is not a due date for payment of interest, interest accrued from the preceding due date for payment of interest or the Interest Commencement Date, as the case may be, shall only be payable against presentation (and surrender if appropriate) of the relevant Note. (e) Non-business days Subject as provided in the relevant Pricing Supplement or subject as otherwise provided in these Conditions, if any date for the payment in respect of any Note or Coupon is not a business day, the holder shall not be entitled to payment until the next following business day and shall not be entitled to any further interest or other payment in respect of any such delay. (f) Default Interest If on or after the due date for payment of any sum in respect of the Notes, payment of all or any part of such sum is not made against due presentation of the Notes or, as the case may be, the Coupons, the Issuer shall pay interest on the amount so unpaid from such due date up to the day of actual receipt by the relevant Noteholders or, as the case may be, Couponholders (as well after as before judgment) at a rate per annum determined by the Principal Paying Agent to be equal to one per cent. per annum above (in the case of a Fixed Rate Note or a Hybrid Note during the Fixed Rate Period) the Interest Rate applicable to such Note, (in the case of a Floating Rate Note or a Hybrid Note during the Floating Rate Period) the Rate of Interest applicable to such Note or (in the case of a Variable Rate Note) the variable rate by which the Agreed Yield applicable to such Note is determined or, as the case may be, the Rate of Interest applicable to such Note, or in the case of a Zero Coupon Note, as provided for in the relevant Pricing Supplement. So long as the default continues then such rate shall be re-calculated on the same basis at intervals of such duration as the Principal Paying Agent may select, save that the amount of unpaid interest at the above rate accruing during the preceding such period shall be added to the amount in respect of which the Issuer is in default and itself bear interest accordingly. Interest at the rate(s) determined in accordance with this paragraph shall be calculated on the Day Count Fraction shown on the face of the Note and the actual number of days elapsed, shall accrue on a daily basis and shall be immediately due and payable by the Issuer. 39

42 7. Taxation All payments in respect of the Notes and the Coupons by the Issuer shall be made free and clear of, and without deduction or withholding for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Singapore or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In such event, the Issuer shall pay such additional amounts as will result in the receipt by the Noteholders and the Couponholders of such amounts as would have been received by them had no such deduction or withholding been required, except that no such additional amounts shall be payable in respect of any Note or Coupon presented for payment: (a) (b) (c) by or on behalf of a holder who is subject to such taxes, duties, assessments or governmental charges by reason of his being connected with Singapore otherwise than by reason only of the holding of such Note or Coupon or the receipt of any sums due in respect of such Note or Coupon (including, without limitation, the holder being a resident of, or a permanent establishment in, Singapore); more than 30 days after the Relevant Date except to the extent that the holder thereof would have been entitled to such additional amounts on presenting the same for payment on the last day of such period of 30 days; or by or on behalf of a holder who could lawfully avoid (but has not so avoided) such deduction or withholding by complying or procuring compliance with any statutory requirements or by making or procuring that any third party makes a declaration of non-residence or other similar claim for exemption to any tax authority in the place where the relevant Note or Coupon is presented for payment. As used in these Conditions, Relevant Date in respect of any Note or Coupon means the date on which payment in respect thereof first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the date falling seven days after that on which notice is duly given to the Noteholders in accordance with Condition 15 that, upon further presentation of the Note or Coupon being made in accordance with the Conditions, such payment will be made, provided that payment is in fact made upon presentation, and references to principal shall be deemed to include any premium payable in respect of the Notes, all Redemption Amounts, Early Redemption Amounts and all other amounts in the nature of principal payable pursuant to Condition 5, interest shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 4 and any reference to principal and/or premium and/or Redemption Amounts and/or interest and/or Early Redemption Amounts shall be deemed to include any additional amounts which may be payable under these Conditions. 8. Prescription The Notes and Coupons shall become void unless presented for payment within three years from the appropriate Relevant Date for payment. 9. Events of Default If any of the following events ( Events of Default ) occurs, the Trustee at its discretion may (but is not obliged to), and if so requested in writing by holders of at least 25 per cent. in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution shall, in each case, subject to it being indemnified and/or secured and/or 40

43 pre-funded to its satisfaction, give notice to the Issuer that the Notes are immediately repayable, whereupon the Redemption Amount of such Notes or (in the case of Zero Coupon Notes) the Early Redemption Amount of such Notes together with accrued interest to the date of payment shall become immediately due and payable: (a) (b) (c) (d) the Issuer does not pay any principal, interest or any other sum payable by it under any of the Notes at the place at and in the currency in which it is expressed to be payable when due and such default continues for a period of five business days (other than a failure to pay caused by any defect or mistake or delay (due to compliance checks) in transfer of funds between banks (i) which is remedied within 10 business days of such due date and (ii) where proof of payment satisfactory to the Trustee has been delivered to it within such remedy period); the Issuer does not perform any one or more of its obligations (other than the payment obligation of the Issuer referred to in paragraph (a)) under the Trust Deed or any of the Notes and such default is not remedied within 30 days of the Trustee giving written notice of the failure to perform or comply to the Issuer; any representation, warranty or statement by the Issuer in any of the Issue Documents or any of the Notes or in any document delivered under any of the Issue Documents or any of the Notes is not complied with in any respect or is or proves to have been incorrect in any respect when made or deemed repeated and the circumstances resulting in such non-compliance or incorrectness is not remedied within 30 days of the Trustee giving written notice of such non-compliance or incorrectness to the Issuer; (i) any other indebtedness of the Issuer in respect of borrowed moneys (1) becomes due and payable prior to its normal maturity by reason of any actual default or event of default on the part of the Issuer, however described, not being disputed in good faith, or (2) is not paid when due after giving effect to any applicable grace period unless payment due is disputed in good faith or (ii) the Issuer fails to pay when due any amount payable by it under any present or future guarantee for, or indemnity in respect of, any indebtedness for borrowed moneys, provided however that no Event of Default will occur under this Condition 9(d) unless and until the aggregate amount of the indebtedness in respect of which one or more of the events mentioned above in this Condition 9(d) has/have occurred exceeds US$70,000,000 (or its equivalent in other currency or currencies); (e) (f) (g) the Issuer becomes insolvent or stops or suspends making payments with respect to all or any material part of its debts or announces an intention to do so; any steps are taken or negotiations commenced by the Issuer with its creditors with a view to the general readjustment or rescheduling of all or substantially all of its indebtedness which will not include the renegotiation or restructuring of individual loan transactions or any solvent reconstruction or reorganisation; all or a material part of the assets of the Issuer is the subject of any form of execution, attachment, injunction, arrest, sequestration or distress in respect of a sum of, or sums aggregating US$70,000,000 (or its equivalent in other currency or currencies) or more which is not released, discharged or stayed within 120 days of the occurrence thereof and such event materially and adversely affects the Issuer s ability to perform or comply with its obligations under the Notes or the Issue Documents; 41

44 (h) (i) (j) (k) (l) (m) (n) any administrative or other receiver is appointed over the whole or a substantial part of the assets of the Issuer or security over the whole or a substantial part of the assets of the Issuer is enforced and not released or otherwise discharged within 120 days unless the same is being disputed in good faith and by appropriate proceedings; an application is made for the winding up of the Issuer and such application is not discharged or withdrawn within 120 days, an order is made by any court of competent jurisdiction or an effective resolution is passed for the winding up of the Issuer or a notice is issued convening a meeting for the purpose of passing any such resolution unless, in any case, the same is disputed in good faith by the Issuer and by appropriate proceedings; the Issuer ceases or suspends any substantial part of its core business as presently conducted or any governmental authority or other competent authority takes any action with a view to the cessation of such core business as presently conducted, in each case, where such cessation or suspension materially and adversely affects the Issuer s ability to perform its obligations under any of the Notes or the Issue Documents, other than (i) for the purpose of and followed by a reconstruction, amalgamation, reorganisation, merger or consolidation on terms approved by the Noteholders by way of an Extraordinary Resolution, or (ii) as permitted by Clause of the Trust Deed; all or a substantial part of the assets of the Issuer are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any government authority and the same materially and adversely affects the Issuer s ability to perform its obligations under any of the Notes or the Issue Documents; any event occurs which, in any country or territory in which it carries on business or to the jurisdiction of whose courts any part of its assets is located, any event which appears in that country or territory to correspond with, or has an analogous or equivalent effect to, any of the events mentioned in paragraph (e), (f), (g), (h), (i) or (k). any action, condition or thing (including the obtaining of any necessary consent) at any time required to be taken, fulfilled or done for any of the purposes stated in Clause 14.2 of the Trust Deed is not taken, fulfilled or done, or any such consent ceases to be in full force and effect without modification or any condition in or relating to any such consent is not complied with (unless that consent or condition is no longer required or applicable); and the Issuer is declared by the Minister of Finance to be a declared company under the provisions of Part IX of the Companies Act, Chapter 50 of Singapore. In these Conditions, subsidiary has the meaning ascribed to it in Section 5 of the Companies Act, Chapter 50 of Singapore. 10. Enforcement of Rights At any time after an Event of Default shall have occurred, the Trustee may at its discretion and without further notice, institute such proceedings against the Issuer as it may think fit to enforce repayment of the Notes, together with accrued interest, and to enforce the provisions of the Issue Documents but it shall not be bound to take any such proceedings unless (a) it shall have been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by Noteholders holding not less than 25 per cent. in principal amount of the Notes outstanding and (b) it shall have been indemnified and/or 42

45 secured and/or pre-funded by the Noteholders to its satisfaction. No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound to do so, fails or neglects to do so within a reasonable period and such failure or neglect shall be continuing. 11. Meeting of Noteholders and Modifications The Trust Deed contains provisions for convening meetings of Noteholders of a Series to consider any matter affecting their interests, including modification by Extraordinary Resolution of the Notes of such Series (including these Conditions insofar as the same may apply to such Notes) or any of the provisions of the Trust Deed. The Trustee or the Issuer at any time may, and the Trustee upon the request in writing by Noteholders holding not less than one-tenth of the principal amount of the Notes of any Series for the time being outstanding and after being indemnified and/or secured and/or pre-funded to its satisfaction against all costs and expenses shall, convene a meeting of the Noteholders of that Series. An Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders of the relevant Series, whether present or not and on all relevant Couponholders, except that any Extraordinary Resolution proposed, inter alia, (a) to amend the dates of maturity or redemption of the Notes or any date for payment of interest or Interest Amounts on the Notes, (b) to reduce or cancel the principal amount of, or any premium payable on redemption of, the Notes, (c) to reduce the rate or rates of interest in respect of the Notes or to vary the method or basis of calculating the rate or rates of interest or the basis for calculating any Interest Amount in respect of the Notes, (d) to vary any method of, or basis for, calculating the Redemption Amount or the Early Redemption Amount including the method of calculating the Amortised Face Amount, (e) to vary the currency or currencies of payment or denomination of the Notes, (f) to take any steps that as specified hereon may only be taken following approval by an Extraordinary Resolution to which the special quorum provisions apply or (g) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass the Extraordinary Resolution, will only be binding if passed at a meeting of the Noteholders of the relevant Series (or at any adjournment thereof) at which a special quorum (provided for in the Trust Deed) is present. The Trustee may agree, without the consent of the Noteholders or Couponholders, to (i) any modification of any of the provisions of the Trust Deed which in the opinion of the Trustee is of a formal, minor or technical nature or is made to correct a manifest error or to comply with mandatory provisions of Singapore law or is required by Euroclear, Clearstream, Luxembourg, the Depository and/or any other clearing system in which the Notes may be held and (ii) any other modification (except as mentioned in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the provisions of the Trust Deed which is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders. Any such modification, authorisation or waiver shall be binding on the Noteholders and the Couponholders and, if the Trustee so requires, such modification, authorisation or waiver shall be notified to the Noteholders as soon as practicable. In connection with the exercise of its functions (including but not limited to those in relation to any proposed modification, waiver or authorisation) the Trustee shall have regard to the interests of the Noteholders as a class and shall not have regard to the consequences of such exercise for individual Noteholders or Couponholders. 43

46 Whenever in the Issue Documents (including these Conditions) or by law the Trustee shall have discretion or permissive power, it is hereby acknowledged by the Issuer that the Trustee may decline to exercise the same in the absence of approval by the Noteholders and need not exercise such discretion or take any other action unless it has been indemnified and/or secured and/or prefunded to its satisfaction. These Conditions may be amended, modified, or varied in relation to any Series of Notes by the terms of the relevant Pricing Supplement in relation to such Series. 12. Replacement of Notes and Coupons If a Note or Coupon is lost, stolen, mutilated, defaced or destroyed it may be replaced, subject to applicable laws, at the specified office of the Principal Paying Agent, or at the specified office of such other Principal Paying Agent as may from time to time be designated by the Issuer for the purpose and notice of whose designation is given to Noteholders in accordance with Condition 15, on payment by the claimant of the fees and costs incurred in connection therewith and on such terms as to evidence, undertaking, security and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed Note or Coupon is subsequently presented for payment, there will be paid to the Issuer on demand the amount payable by the Issuer in respect of such Note or Coupon) and otherwise as the Issuer may require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued. 13. Further Issues The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further notes having the same terms and conditions as the Notes of any Series and so that the same shall be consolidated and form a single Series with such Notes, and references in these Conditions to Notes shall be construed accordingly. 14. Indemnification of the Trustee The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking proceedings to enforce repayment unless indemnified and/or secured and/or pre-funded to its satisfaction. The Trust Deed also contains a provision entitling the Trustee or any corporation related to it to enter into business transactions with the Issuer or any of its subsidiaries without accounting to the Noteholders or Couponholders for any profit resulting from such transactions. Each Noteholder shall be solely responsible for making and continuing to make its own independent appraisal and investigation into the financial condition, creditworthiness, condition, affairs, status and nature of the Issuer, and it is hereby agreed that the Trustee shall not at any time have any responsibility for the same and each Noteholder shall not rely on the Trustee in respect thereof. The Trustee shall not be liable to the Noteholders or the Couponholders for any action taken or omitted by it except to the extent that a court of competent jurisdiction determines that the Trustee s gross negligence, wilful misconduct or fraud was the primary cause of any loss to the Noteholders or as the case may be, the Couponholders. 44

47 15. Notices Notices to the holders will be valid if published in a daily newspaper of general circulation in Singapore (or, if the holders of any Series of Notes can be identified, notices to such holders will also be valid if they are given to each of such holders). It is expected that such publication will be made in The Business Times. Notices will, if published more than once or on different dates, be deemed to have been given on the date of the first publication in such newspaper as provided above. Couponholders shall be deemed for all purposes to have notice of the contents of any notice to the holders in accordance with this Condition 15. Until such time as any Definitive Notes are issued, there may, so long as the Global Note(s) is or are held in its or their entirety on behalf of Euroclear, Clearstream, Luxembourg and/or the Depository, be substituted for such publication in such newspapers the delivery of the relevant notice to Euroclear, Clearstream, Luxembourg and/or (subject to the agreement of the Depository) the Depository for communication by it to the Noteholders, except that if the Notes are listed on the SGX-ST and the rules of such exchange so require, notice will in any event be published in accordance with the previous paragraph. Any such notice shall be deemed to have been given to the Noteholders on the seventh day after the day on which the said notice was given to Euroclear, Clearstream, Luxembourg and/or the Depository. Notices to be given by any Noteholder pursuant hereto (including to the Issuer) shall be in writing and given by lodging the same, together with the relative Note or Notes, with the Principal Paying Agent or Non-CDP Paying Agent. Whilst the Notes are represented by a Global Note, such notice may be given by any Noteholder to the Principal Paying Agent or, as the case may be, the Non-CDP Paying Agent through Euroclear, Clearstream, Luxembourg and/or the Depository in such manner as the Principal Paying Agent or, as the case may be, the Non-CDP Paying Agent and Euroclear, Clearstream, Luxembourg and/or the Depository may approve for this purpose. Notwithstanding the other provisions of this Condition, in any case where the identity and addresses of all the Noteholders are known to the Issuer, notices to such holders may be given individually by recorded delivery mail to such addresses and will be deemed to have been given when received at such addresses. 16. Governing Law and Jurisdiction (a) Governing Law The Notes and the Coupons are governed by, and shall be construed in accordance with, the laws of Singapore. (b) Jurisdiction The courts of Singapore are to have non-exclusive jurisdiction to settle any disputes that may arise out of or in connection with the Trust Deed, the Notes or the Coupons and accordingly any legal action or proceedings arising out of or in connection with the Trust Deed, the Notes or the Coupons may be brought in such courts. The Issuer has in the Trust Deed irrevocably submitted to the jurisdiction of such courts. 45

48 17. Contracts (Rights of Third Parties) Act No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore. Principal Paying Agent Deutsche Bank AG, Singapore Branch One Raffles Quay #16-00 South Tower Singapore Non-CDP Paying Agent Deutsche Bank AG, Hong Kong Branch Level 52, International Commerce Centre 1 Austin Road West Kowloon, Hong Kong 46

49 THE ISSUER 1. HISTORY AND OVERVIEW 1.1 History The Issuer was incorporated in 1967 in Singapore and has developed from a coastal ship-owner/operator to become one of the largest ship-owners and leading container operators in the world. The Group s shipping operations began with four coastal vessels and expanded quickly. The Group launched its first service to Jakarta and Bangkok in In the late 1960s, the Group launched its first dry cargo breakbulk sailing from the PRC to the Arabian Gulf, the Red Sea and East Africa. Within a decade, it owned and operated more than 60 Tweendeckers, multi-purpose semi containers, breakbulk vessels and livestock carriers. Between the late 1980s and mid 1990s, the Group made the transition from predominantly breakbulk into wholly containerised shipping operations. In 1981, the Group launched its Intra Asia services to East Asia, Hong Kong, Korea and Japan. In 1989, the Group opened its first container manufacturing factory in Shanghai and launched its full container service between South East Asia and the PRC with Singapore as a transhipment hub. The Group launched its full container service to the Red Sea ports, calling at Singapore, Colombo and the Red Sea ports in The Group has expanded its shipping operations over the years by launching the following services: : The Far East - Europe service and the Far East - Transpacific (Canada) service; : The East Coast of South America service; : Extension of the Group s Red Sea Gulf service to Mundra, India; : The Indian Ocean Mozambique service, second South West Africa service and second East Africa service; : Extension of the Group s China - Transpacific service to Canada; : The West Coast South America service; : Extension of the Group s China - Transpacific service to Oceania; : The second string to East Africa; : Extension of the Group s Africa network to Congo, Congo DRC and Angola; and : Extension of the Group s West Coast South America service to Ecuador and Guatemala and the Group s Africa network to Liberia, Sierra Leone and Guinea. More recently, the Group introduced its Multi-Purpose Service to cater to the ever-evolving shipping market. The Group s Multi-Purpose Service carries containers and general/breakbulk cargo, as well as project cargo ranging from industrial products, oil rigs/heavy equipment, to transportation units such as rail locomotives and rolling stock, amongst others. Through the Group s Multi-Purpose Service, the Group is able to offer a direct link for project and general/ breakbulk cargo between the Far East to Africa and Asia. 47

50 1.2 Overview The key business operations of the Group are shipping and container manufacturing. In addition to its container shipping and container manufacturing businesses, the Group also engages in other incidental and related business activities such as container terminal operation, depot operation, land-based logistics setup and supply chain management. As at the Latest Practicable Date, the Issuer was recently ranked 16th amongst the top containership operators in the world based on the total TEU capacity of its operating fleet 1. The Group currently has an operating fleet of 177 vessels (comprising 127 vessels owned by the Group and 50 chartered vessels) with a total shipping capacity of over 357,000 TEUs for its container vessels and over 1,300,000 DWT for its bulk carrier and multi-purpose vessels. The Group is a charterer of container vessels on a net basis, charter-hiring more vessels than it charters out at any point in time. As at the Latest Practicable Date, it has on order six container vessels and two multi-purpose vessels to be delivered by the end of 2014 and another six container vessels to be delivered by the end of The vessels on order are of varying sizes ranging from 3,900 TEUs for container vessels to 27,000 DWT for multi-purpose vessels. Over the years, the Issuer has diversified into logistics-related activities such as supply chain management, consolidation and distribution facilities, warehousing, container depot operations, trucking as well as having interest in ship-agencies worldwide and container manufacturing. The Group s container shipping services has a global coverage to more than 500 locations in about 100 countries, with a dedicated network of feeder services mainly in Asia to complement the Group s container shipping services. The Group also has a significant presence and strong foothold in emerging markets such as Africa, the PRC, India and the Middle East. The Group s container manufacturing business is carried out through its listed subsidiary, Singamas. The Group is the largest shareholder of Singamas, with the Issuer holding 39 per cent. of the shares in Singamas. Singamas is the world s second largest container manufacturer with an estimated global market share of approximately 21 per cent. as of December 2013 and a major operator of container depots and terminals in the Asia-Pacific region. Singamas was incorporated in 1988 and has been listed on the HKSE since CORPORATE STRUCTURE The Group recently undertook an internal restructuring exercise to streamline the businesses and assets of the Group into two segments, namely (a) the shipping related businesses (including container shipping and container manufacturing), and (b) the enterprise related businesses (including realty, travel, and port and terminal). The disposal of PIL Realty (Private) Limited and PIL Travels (Private) Limited to PIL Enterprises was completed on 15 May 2014 and the restructuring exercise is expected to be completed in July 2014 with the transfer of BMT Pacific Ltd. from the Issuer to PIL Enterprises Source: The Alphaliner Top 100 Operated fleets as at the Latest Practicable Date. The contributions of PIL Travels (Private) Limited and PIL Realty (Private) Limited to the Issuer s FY2013 accounts are shown in note 12 of the audited consolidated annual financial statements of the Issuer and its subsidiaries for the financial year ended 31 December

51 The following chart sets out an overview of the Group s corporate structure and investments as at the Latest Practicable Date: PIL Holdings Pte. Ltd. Pacific International Lines (Private) Limited PIL Enterprises Pte. Ltd. Shipping 1 Container Manufacturing Logistics and Others PIL Realty (Private) Limited 100% Advance Container Lines (Pte) Ltd 100% Singamas Container Holdings Limited 39% PIL Logistics Pte. Ltd. 100% PIL Travels (Private) Limited 100% 1 associated company 3 PST Management Pte. Ltd. 100% Various other subsidiaries and associated companies Various other subsidiaries and associated companies Pacific Ship Investment (Pte) Ltd. 100% PDL International Pte Ltd. 60% 2 Pacific International Lines (China) Ltd. 100% Various other subsidiaries and associated companies 1 Includes Shipowner / Operator / Charterer / Shipping Agencies. 2 Includes direct and indirect interests per cent. stake in BMT Pacific Ltd., pending transfer from the Issuer to PIL Enterprises in July COMPETITIVE STRATEGIES AND STRENGTHS OF THE GROUP 3.1 Strategies The Group aims to be a global leader in the container shipping and manufacturing industries through the following business strategies: Focus on Africa and other emerging markets The Group has targeted certain emerging markets as major areas for expansion for its container shipping business, in particular, the Africa and Red Sea/Middle East markets where the Group has a long history of operations, long-standing commercial relationships with the local customers and service providers. The establishment of the Far East to Africa route in 1967 was a strategic response to an increase in demand arising from the PRC s growing investments and infrastructure projects in Africa. 49

52 The Group sees the African market as an emerging market with potential for further growth. The Group first entered the African market in the late 1967, where it gained local knowledge and started to build a reputation as a leading shipping operator with general cargo/ conventional vessels in Africa. The group fully containerised the services to Africa in the mid-90s. The Group has since established a strong foothold in Africa with a total of 10 main services from Asia and the Gulf/Indian sub-continent to Africa and three dedicated feeder services on the Africa coast. Within the short span, the Group has grown to be one of the leading carriers from Asia to Africa. The African network was further strengthened by operating dedicated feeders to challenging African ports including Matadi in Congo DRC, Pemba in Mozambique, Mtwara and Zanzibar in Tanzania, Massawa in Eritrea and Berbera in Somalia. The Group is also one of the very few carriers that are able to offer through bill of lading to their customers from major gateway ports to most landlocked countries in Central Africa and South Sudan. The investment of 13 multi-purpose vessels further complement the existing African services with monthly sailing to East and West Africa. The successful implementation of the Group s strategy has seen the revenue contribution from the African sector growing from approximately 34 per cent. in FY2010 to 40 per cent. in FY2013. To further enhance its competiveness in Africa, the Group will be taking delivery of 12 units of 3,900 TEUs vessels (the Africamax vessels ) (of which eight will be owned by the Group and four will be chartered through a sale-and-leaseback arrangement) which are designed with the maximum size allowable in African ports and equipped with onboard cranes to facilitate cargo operations at ports without shore cranes. The Africamax vessels are fuel efficient and were acquired at competitive prices. The Group believes that the latest acquisition of the 12 vessels will enhance the strategic growth of the Asia-Africa route. The Group will be taking delivery of six Africamax vessels by the end of 2014 (of which two will be chartered through a sale-and-leaseback arrangement) and another six Africamax vessels by the end of 2015 (of which two will be chartered through a sale-and-leaseback arrangement). The Group entered the Red Sea/Middle East trade in 1967 with the general cargo/conventional vessels and fully containerised the service to the region in The Group has a total of three main services from Asia and Gulf/Indian sub-continent and two dedicated intra-red Sea feeders. Six of the 6,600 TEUs vessels (which are the largest size vessels owned) are being deployed in Red Sea. The Group is one of the leading carriers in the region and has established an extensive network in Saudi Arabia, Jordan, Egypt, Yemen as well as Sudan, Djibouti, Ethiopia, Eritrea and Somalia. The Group has built a track record of uninterrupted service from Asia to Jordan even during the Iraq/Kuwait war in The Group entered the East Coast of South America trade in 2005 and further expanded to the West Coast of South America in With the coverage of both coasts, the Group is placed in a strategic position to enjoy growth in the region and increase trade flow between Asia and Latin America. The Group focuses on plying routes that it considers as positive contributors to global container trade growth with significant growth potential. Modernisation of fleet The Group has adopted a two-pronged fleet modernisation strategy focusing on acquisition of modern vessels which are fuel efficient and eco-friendly with designs well-suited for various 50

53 trade routes and the retrofitting of existing vessels to allow slow steaming, thereby minimising bunker consumption and carbon footprint. The Group believes that a modernised fleet should lower its operating costs, and improve its operating efficiency and the overall competitiveness of the Group in its various trade routes. Optimal and flexible vessel deployment The Group s strategy is to maintain a 2 3 owned and 1 3 chartered-in vessel ratio, which it believes will allow for flexibility to adapt in both favourable and adverse market conditions through on-hire or off-hire of its chartered-in vessels. Decentralisation of trade, equipment and cost management to regional offices The Group has set up regional offices to service and manage its operations in its key markets in the PRC, India, Africa, the Middle East/Red Sea and Latin America. The regional offices are responsible for among other things, stowage planning, equipment management, cost control and sales and marketing on a regional basis. The Group s regional offices are located in the same or similar time zones as the Group s agents and the markets they service. This enables the Group to provide faster responses, instructions and approvals to its agents. The close proximity of the regional offices to their markets also enables decision-making to be more timely and closely aligned with local market conditions and practices. Global agency network The Group has also established dedicated agent offices globally, allowing for efficient management of sales, operations and costs, thereby maximising the Group s revenue while maintaining close contact with key customers. The Group s agent offices allow it to provide its customers and vessels with an assured quality of service and to ensure that their requirements will be given priority attention. Strengthen existing relationships with key customers and broaden its customer base The Group has strong relationships with its existing customers, and its strategy is to strengthen these existing relationships as well as broaden its customer base by attracting new customers. To achieve this, it plans to continue developing the breadth and flexibility of its services and at the same time, be committed to providing high quality and comprehensive services to its customers. The Group also aims to improve the coordination of its marketing and branding activities across its various business lines and develop its after-sales initiatives in order to better serve its existing customers and attract new customers in the market. In addition, the Group is focused on building more long-term relationships with customers, thereby maintaining a stable business volume and generating steady cash flow. Leveraging on its network of offices and representatives globally, the Group maintains an integrated marketing presence in most of its customers key markets. The Group believes that this extensive network not only helps it to serve existing customers but also enables it to identify potential new customers and business opportunities. Development of new products to further strengthen the product portfolio The Group aims to continue to diversify the product range of its container manufacturing business by developing specialised containers that offer considerably higher margins as compared to traditional dry freight containers. The Group believes that both the prices and the demand for such containers are less prone to fluctuations in global trade. The Group currently offers a wide range of specialised niche segment products in addition to its traditional dry freight containers, including collapsible flatrack containers, open top containers, refrigerated 51

54 containers, bitutainers, tank containers, U.S. domestic containers and other specialised containers. The Group intends to continue to refine its manufacturing processes for its existing specialised container portfolio as well as seek out opportunities for new products in the growing market for specialised containers. The Group will rely on its dedicated in-house research and development team which works closely with the Group s customers and manufacturing facilities to stay abreast of current market trends. Lean management with flat hierarchy organisational structure The Group operates on a flat hierarchy organisational structure where top management adopts a hands-on approach to the Group s business. This structure also reduces bureaucracy, thereby facilitating quick decision-making to seize business opportunities, operate effectively and minimise time required for problem resolution in challenging market conditions. 3.2 Competitive Strengths The Group believes that the following represent the Group s key strengths: Strong track record as an established shipping operator The Group has a strong track record as a container operator and in container manufacturing. The Group has been in container shipping since 1967 and is now a leading container shipping service provider and container manufacturer. The Group is ranked 16th amongst the top containership operators in the world based on the total TEU capacity of its operating fleet 1, with a turnover of over US$4.5 billion in FY2013. The Group offers a wide range of services to a large customer base and its large and diverse fleet can respond expeditiously to changing customer needs. The Group is also known for its track record in the Asia-Africa and the Middle East routes, where it has an established network and customer base, and a long and successful operating history. The Group believes that its brand name is well regarded and its good reputation among customers results from its reliability and integrity in business, both of which are the essence of its enterprise culture. Extensive marketing and operating network The Group has an extensive network of branches, joint ventures and representative offices that spans the entire globe. This network of offices, which covers more than 30 countries, has developed in line with the Group s expansion over the years. Most of the Group s overseas agents have represented the Group for decades. The Group also has a particularly significant presence in the emerging markets of Africa, the PRC, the Middle East and India. The Group is one of the top three carriers from Asia to West Africa and has an estimated market share of 14 per cent. of the Far East to West Africa route 3. The Group maintains an integrated marketing presence in most of its customers key global markets throughout the world. The Group believes that this extensive network not only helps the Group to serve existing customers but also enables the Group to identify potential new customers and business opportunities. Experienced management team The Group believes that an experienced management team is of the utmost importance in the volatile and cyclical shipping industry. The Group s senior management at the corporate level is led by the Chairman, Mr Chang Yun Chung, who having more than 60 years of experience in the shipping industry, focuses on providing the overall strategy and direction of the Group. The Group is also led by Mr Teo Siong Seng ( SS Teo ), the son of Mr Chang Yun Chung, who succeeded him as the Managing Director in 1992 after working under his tutelage for over 13 3 Alphaliner, Volume 2014, Issue

55 years. Mr SS Teo was deeply involved in the development of Singapore as an international maritime centre and was nominated by the public and the private sector to spearhead the Singapore Maritime Foundation ( SMF ) in During his five-year tenure at SMF, Mr SS Teo started several initiatives within the maritime industry, including the MaritimeONE initiative launched in April 2007 by the Maritime and Port Authority of Singapore, the Singapore Maritime Foundation, the Association of Singapore Marine Industries and the Singapore Shipping Association. Members of the Issuer s management team, many of whom have risen from within the Group, have extensive experience in the container shipping business, with a proven track record of managing the Group through many shipping cycles. World s second largest container manufacturer The Group is the largest shareholder of Singamas, with the Issuer holding 39 per cent. of the shares in Singamas. The Group s relationship with Singamas assures the quality and availability of container equipment at reasonable market pricing and the timely delivery of containers. With 25 years of operating history, Singamas is the world s second largest maker of shipping container boxes with all of its production facilities based in the PRC. To complement its primary business of manufacturing containers, Singamas also operates 11 container depots and terminals (eight in the PRC, two in Hong Kong and one in Thailand) and a logistics company in Xiamen. Its depots and terminals offer container storage and handling services, dry and refrigerated container maintenance and repair, container freight station, cargo stuffing and other container related services. The total yard size of its depots and terminals is approximately 1,145,000 sq. m. with a total storage capacity of about 142,600 TEUs. Mr SS Teo is also the Chairman and Chief Executive Officer of Singamas and holds two per cent. of the shares in Singamas. Diverse customer base The Group s shipping business has a diverse customer base, ranging from multinationals to small and medium-sized importers and exporters. The Group s shipping business top 10 customers contributed less than five per cent. of the Group s total revenue for FY2013, ensuring that the Group s overall revenue stream is less susceptible to shocks from any of its customer s markets. The Group s key customers include BHP Billiton Marketing Asia, China National Petroleum Corporation, Dole Asia Holdings Pte Ltd, Exxon Mobil Chemical Asia Pacific, Fonterra Brands (New Zealand) Ltd, New Zealand, Olam International Limited, SCG Trading Company Limited, Thailand, Sinochem International (Overseas) Pte Ltd., Singapore, Wilmar International Limited and Zespri Group Limited. 4. BUSINESS SECTORS The key business operations of the Group are shipping and container manufacturing. In addition to its container shipping and container manufacturing businesses, the Group also engages in other incidental and related business activities such as container terminal operation, depot operation, land based logistics setup and supply chain management. 53

56 Turnover by business sectors The following chart provides a breakdown of turnover for each of the Group s business sectors from FY2010 to FY2013: Gross Turnover (in US$ million) Turnover by business sector FY2010 FY2011 FY2012 FY2013 Shipping 2,474 2,460 2,916 3,108 Container manufacturing 1,331 1,784 1,508 1,254 Others Total 3,919 4,372 4,545 4, Shipping Overview The Group s container shipping business offers regular and reliable container services to most ports in the world with the exception of the East Coast of North America. The Group s container shipping services covers whole of the Far East to Europe, the Black Sea, the West Coast of Canada and North America, the Indian sub-continent, the Red Sea and the Gulf, East Africa, South Africa, West Africa, Australia, New Zealand, the Pacific Islands and the East and West Coast of South America. The Group s shipping services sail to more than 500 locations in about 100 countries, with a focus on Asia-Africa and the Middle East. It also has a dedicated network of feeder services covering a comprehensive range of ports in South East Asia, the Bay of Bengal, the East Coast of India and the Pacific Islands. As a testament to the Group s commitment to serve the growing trade between the PRC and South America, the Group has in recent years launched a fixed-day weekly service linking the Far East to the West Coast of South America, complementing the Group s existing services to the east coast of South America. The Group is also committed to servicing both the Australian and New Zealand markets with established services such as the Sino - Australia service and New Zealand service, effectively linking the Far East to Oceania. The Group is established on the Indian sub-continent and was involved in launching the first container shipping service linking the PRC directly with India in The Group also has an established track record and extensive expertise in handling cargo in and out of the PRC, with numerous regular sailings in and out of more than nine ports in the PRC. The Group has also expanded its business portfolio by introducing its Multi-Purpose Service which meets the demand of existing customers that require solutions for the shipment of project and breakbulk shipments from Far East to Africa and Asia. The following table provides a summary of the volume from the Group s shipping business from FY2010 to FY2013: FY2010 FY2011 FY2012 FY2013 Volume ( 000 TEUs) 1,811 1,882 2,021 2,270 54

57 Vessel fleet Between early 2009 and early 2014, the Group saw the total slot capacity of its fleet grow by more than 14 per cent. annually and the Group s share of the shipping industry s global TEU box capacity has also improved steadily. Today, the Group is the largest privately held shipping company in South East Asia and is ranked 16th amongst the top containership operators in the world based on the total TEU capacity of its operating fleet 4. As at the Latest Practicable Date, the Group operates a total of 155 container vessels, out of which the Group owns 105 container vessels and charters 50 container vessels, with a total capacity of approximately 357,895 TEUs and is a charterer of container vessels on a net basis, charter-hiring more vessels than it charters out at any point in time. The Group s Multi-Purpose Service carries containers and general/breakbulk cargo, as well as project cargo ranging from industrial products, oil rigs/heavy equipment, to transportation units like rail locomotives and rolling stock, among others. The Group s Multi-Purpose Service offers a direct link between the Far East to Africa and Asia for project and breakbulk shipments. The Group owns and operates 11 multi-purpose vessels of 17,500-27,000 DWTs. In addition, the Group also owns four Capesize bulk carrier ships, each of 180,000 DWTs, five Superamax geared bulk carriers, each of 57,000 DWTs and two multi-purpose vessels, each of 24,000 DWTs. These ships are on time charter to various operators. A breakdown of the age of the Group s fleet is set out in the table below: Container vessels Age of Vessels (Years) Status of Vessel Number of Vessels Total Capacity ( 000 TEUs) Up to 5 Owned ,676 Chartered 6 11, Owned 32 71,573 Chartered 19 45, Owned 25 36,238 Chartered 15 42,124 more than 15 Owned 16 19,891 Chartered 10 17,103 Total ,895 4 Source: The Alphaliner Top 100 Operated fleets as at the Latest Practicable Date. 55

58 The average age of the Group s owned container vessels is about nine years, compared with the industry average of about 12 years 5. Bulk carrier and multi-purpose vessels Age of Vessels (Years) Status of Vessel Number of Vessels Deadweight Capacity (DWT) Up to 5 Owned 19 1,257,248 More than 5 Owned 3 52,479 Total 22 1,309,727 The average age of the Group s owned bulk carrier and multi-purpose vessels is about one year and six years respectively, compared with the industry average of about 13 years and 19 years 6 respectively. Newbuilding programme The Group has an ongoing newbuilding programme, under which the Group s technical division continuously explores the acquisition of new vessels with a view to sustainable fleet renewal and to facilitate the opening up of new trade routes. Under the newbuilding programme, the Group has taken delivery of five new vessels in 2011, 12 new vessels in 2012, 18 new vessels in 2013 and one new vessel in 2014 as at the Latest Practicable Date. The Group s technical division participates fully in both newbuildings and refurbishment efforts and has in-house expertise to handle on-site supervision of newbuilding activities, such as plan approval, construction, sea trials and delivery. Specifications of the vessels ordered are customised to meet the specific needs of the Group s various trade requirements with the aim of building vessels that are fuel efficient with reduced emissions and which are operationally efficient. Shipyards selected by the Group are carefully scrutinised for their financial health, track records and capability of building the ships the Group requires. The Group s decision to build or charter a vessel is subject to, among other factors, market conditions, chartering environment, cost of finance and availability of niche vessels for the Group s trades. The vessels which have been ordered by the Group are generally equipped with the latest technology resulting in better emission and fuel economy standards. Through its newbuilding programme, the Group aims to continuously update its vessels to remain at the forefront of the global shipping industry. The Group has also implemented an ongoing fleet upgrading/modernisation programme, whereby the latest practical technologies are applied to maximise efficiency and reliability of the Group s existing vessels. Any aspect of a vessel which is identified during its operations as being capable of being improved upon will be applied proactively to newbuildings as well. 5 6 Worldyards.com Pte. Ltd. Worldyards.com Pte. Ltd. 56

59 The Group aims to maintain a quality fleet of vessels through continued fleet renewal and expansion. Under the Group s newbuilding programme, the Group is committed to accept delivery of the following vessels as set out in the table below: Year Number of Vessels Total Capacity multi-purpose vessels 54,000 DWT 6 container ships 23,400 TEUs container ships 23,400 TEUs Principal routes and services The principal routes of the Group s container shipping services are classified based on the main markets where the shipments are to be received, and can be broadly categorised under Africas (South, East and West Africa), Red Sea and Gulf, Indian Sub-Continent, Australasia (Australia, New Zealand and Pacific Islands), Americas (Transpacific and South America), Europe and Intra Asia. The Group operates mainly in the major north-south routes in the Africas, Red Sea, Middle East, Indian Sub-Continent, Australasia, Americas and Intra Asia markets. From FY2010 to FY2013, the bulk of the Group s volume was attributable to the Africas, Red Sea and Gulf and Australasia routes. The Group is one of the leading container shipping service providers in the Africas, Red Sea, Gulf and Australasia routes. The table below illustrates volume (by percentage) in the Group s principal routes from FY2010 to FY2013: Volume FY2010 (1) FY2011 (1) FY2012 (1) FY2013 (1) (%) (%) (%) (%) Africa Australia Red Sea and Gulf Europe and Black Sea South America Transpacific India Intra Asia Total (1) Percentage based on actual bill of lading. Africa and other emerging markets The Group has a significant presence in emerging markets such as Africa, the PRC, the Red Sea/Middle East and India. During the late 1960s, the Group launched its first dry cargo breakbulk sailing from the PRC to the Arabian Gulf, Red Sea and East Africa. Since then, the Group has sought to expand its services in Africa and other emerging markets. In 1990, the Group launched its full container service to the Red Sea ports, calling at Singapore, Colombo and the Red Sea ports. In 1995, the Group opened its first office in the PRC. In 2008, the Group extended its Red Sea and Gulf service to Mundra, India. In 2010, the Group launched its Indian Ocean Mozambique service, its second South West Africa service and second East Africa service. In 2012, the Group launched its second string to East Africa and extended the 57

60 African network to the Democratic Republic of Congo, the Republic of Congo, and Angola. In 2013, the Group extended its West Coast of South America service to Ecuador and Guatemala, and expanded its Africa coverage to the North African countries of Liberia, Sierra Leone and Guinea. The Group has established a strong foothold in Africa with a total of 10 main services from Asia and the Indian sub-continent to Africa. The Group is also one of the most significant carriers in the Red Sea region, calling at virtually every port with container handling capacity. In addition, the Group s Multi-Purpose Service plies the emerging Far East - West Africa route, carrying containers and general cargo, as well as project cargo ranging from industrial products, oil rigs/heavy equipment, to transportation units such as rail locomotives and rolling stock. To complement its main services, the Group also operates three feeder services within Africa from: (i) (ii) (iii) Pointe Noire in the Republic of the Congo, covering ports in Gabon and the Democratic Republic of Congo (Matadi); Dar-es-salaam in Tanzania, covering Pemba, Mtwara and Zanzibar; and Lome in Togo, covering ports in Guinea (Conakry), Sierra Leone (Freetown) and Liberia (Monrovia). To further enhance its competitiveness in Africa, the Group will be taking delivery of 12 Africamax vessels (of which eight will be owned by the Group and four will be chartered through a sale-and-leaseback arrangement) which are designed with the maximum size allowable in African ports and equipped with cargo cranes to facilitate cargo operations at ports without shore cranes. The Africamax vessels are fuel efficient and were acquired at relatively competitive prices. The Group will be taking delivery of six Africamax vessels by the end of 2014 and another six Africamax vessels by the end of To further complement its African services, the Group currently has one bonded inland terminal in Nigeria (under construction), one container depot in Tanzania and one container depot in Egypt and is exploring other projects such as bonded off-dock container freight stations in Tanzania and cold storage facilities in Ghana. Customers The Group maintains a diverse customer base which ranges from multinational companies to sole proprietors, serving key industries such as petrochemicals, mining, steel, FMCGs (fast moving consumer goods), electronics, general household products, construction materials, fresh fruits, meat, cooking oil and grains. The Group benefits from a diverse customer base with the top 10 customers of the Group s shipping business contributing less than five per cent. of the Group s total turnover for FY2013, ensuring that its revenue stream is not overly reliant on a few customers. Trade Management The Group s trade objective is to produce profitable results through optimal load factor, effective pricing policy and efficient cost management. The Group s trade management team is based in Singapore and is supported by regional offices in key locations such as the PRC, India, the Middle East and Africa, as well as a comprehensive network of agents. Key marketing strategies and policies are formulated by the Group s trade management team, and communicated to its regional offices and sales agents within its network. Operationally, all pricing decisions are controlled and/or coordinated by the Group s trade management team in Singapore. 58

61 Competition The Group competes against global and regional shipping operators depending on the shipping route. With respect to routes from Far East to Africa, the Group considers the A.P. Moller-Maersk A/S group of companies ( Maersk ), CMA CGM S.A. and Mediterranean Shipping Company S.A. ( MSC ) to be its major competitors. With respect to routes from Asia to Red Sea, the Group considers APL Ltd., Evergreen Marine Corp. (Taiwan) Ltd. and MSC to be its major competitors. With respect to routes from Asia to Oceania, the Group considers Orient Overseas Container Line Ltd., Maersk and ANL Container Line Pty Ltd to be its major competitors. Insurance The Group adopts a holistic approach in the arrangement of its insurance program. The Group works closely with internal and external stakeholders to ensure that its programs are in line with generally accepted industry best practices. The Group s insurance programs are categorised into the following areas: (i) (ii) (iii) Protection and Indemnity ( P&I ); Hull and Machinery ( H&M ); and War Risks ( WR ). The Group s programs are placed with both local and international insurance markets with sound financial standings. For the Group s fleet of vessels, it maintains its P&I insurance with The Standard Club, Britannia Steam Ship Insurance Association Limited and North of England P&I Association Limited to cover risks including oil pollution risks and all third-party liabilities commonly insured against by shipping companies in connection with their ownership or operation of owned or chartered-in vessels. The Group s vessels H&M insurance, which covers the physical loss or damage to vessels while in transit over water as well as liability exposures due to collision and strike, hull interests and increased value portion is maintained with several H&M underwriters. The Group s lead underwriter is HDI Gerling Industrie Versicherung AG, rated A+ stable by both Standard & Poor s and A.M. Best Company as at the Latest Practicable Date. P&I liabilities and H&M damage caused by war or warlike conditions are covered by the underwriters at Lloyd s of London. Management Systems (Quality, Health, Safety and Environmental) The Group maintains a high quality management system to provide its clients with the most reliable and qualified services and also to ensure the safety of life, the protection of the environment and the safety of its vessels. The Group possesses an International Safety Management ( ISM ) Code Document of Compliance, issued by Nippon Kaiji Kyokai ( NK ) as a recognised organisation appointed by flag states such as Singapore for ISM verification and certification. In addition, the Group also possesses Documents of Compliance issued by the Marine Department of Malaysia and Biro 59

62 Klasifikasi Indonesia (BKI). As at the Latest Practicable Date, 17 Singapore-registered ships (including one new vessel to be delivered on 19 June 2014) managed by the Group were awarded Green Ship Certificates under the Maritime and Port Authority of Singapore s Green Ship Programme. The Group ensures that its vessels comply with all relevant current national and international regulations related to maritime safety and environmental protection. All the ships managed and operated by the Group are compliant with the relevant International Maritime Organization (IMO) Conventions, Codes (such as the ISM Code and the International Ship and Port Facility Security (ISPS) Code) and standards pertaining to safety, pollution prevention. In addition to relevant statutory certificates, each of the Group s vessels possesses a Safety Management Certificate and an International Ship Security Certificate issued by the classification societies recognised by the various flag states under which the vessels are registered. The validity of these certificates and documents are maintained by ensuring that the verification and renewal surveys, inspections and audits are carried by external surveyors and auditors, within the required time periods. The condition of the Group s vessels, equipment and systems are maintained using a comprehensive planned maintenance system, including dry-docking as required. These conditions are closely monitored by various departments in the Group s head office in Singapore as well as by assigned superintendents. Ship management services The Group s vessels are operated by multinational crews mainly from the PRC, India, Myanmar, the Philippines, Sri Lanka and Indonesia, with manning offices in Yangon and Chennai. The Group employs a manning manager in Manila to oversee the activities of its crewing agents, Wallem Maritime Services Inc., ( WMSI ). The Group conducts VIDEOTEL computer-based training onboard its vessels as well as ashore in its Singapore, Philippines, Myanmar offices (through its agency) and Chennai office. In addition, onboard training is conducted by training superintendents who sail onboard the Group s vessels for short voyages (approximately seven days) at six-monthly intervals. Shore-based training for the Group s seafarers is also conducted at the Group s Philippines and Myanmar offices (through its agency). In November 2013, the Group launched an internet web-based E-Learning system for company operation procedures training for seafarers who are on leave for pre-joining and familiarisation training. Ship maintenance The fleet owned by the Group comprises of standard series types of vessels that facilitates maintenance and supply of spare parts. The Group s technical division is responsible for, among other things, technical management, dry-docking, newbuilding supervision, refurbishment, logistics support, procurement activities, technical consulting, sea personnel safety and health, sea transportation safety and quality, sea security and environmental protection. The division s primary objective is to ensure the minimum downtime of the Group s vessels. The Group aims to limit unscheduled instances of off-hire through strict inspection and maintenance policies and by the performance of repairs by its crew while vessels are underway. The Group also has procedures in place to deal with unscheduled repairs, which typically arise as a result of accidents, to ensure the repairs are properly completed and monitored correctly. The Group deals with reputable contractors at various ports as well as reputable and reliable shipyards for ship repairs. 60

63 The Group s practice is to drydock each vessel at 30-month intervals, with the exception of new vessels, which are equipped with the state-of-the-art machinery monitoring systems, that are drydocked once every five years (in line with industry standards) to maximise the vessel s availability for commercial operations. Major maintenance as well as other repair and maintenance activities, especially those that cannot be carried out when the vessel is in active service, will normally be carried out during drydocking. The downtime is also used to carry out any required mandatory inspections of the vessel which also provides a more cost-effective process due to the controlled environment of a drydock. The Group maintains a list of shipyards that it employs for drydocking. All drydocking proposals are reviewed internally to ensure proper evaluation of quotations from shipyards based on operational and business cost factors, including past experience of deviation from safety and quality specifications and vessel positioning costs. Safety management system The Group developed and implemented its Safety Management System ( SMS ) in compliance with the ISM Code since 1 November The SMS include, among other things: a safety and environmental protection policy that is implemented and maintained on board the Group s vessels; instructions and procedures to ensure safe operation of the vessels and protection of the environment in compliance with the relevant international and flag state legislation; procedures for reporting accidents, or to prepare for and respond to emergency situations; and procedures for external and internal audits and management reviews. The effectiveness and adequacy of the policies, processes and procedures in the SMS are closely monitored through shipboard internal audits which are scheduled at seven to nine month intervals even though the prescribed requirement is once every 12 months. In order to achieve continual improvement of the proficiencies of the Group s shipboard personnel and the effective application of the SMS, a training team of ex-masters and Chief Engineers (who have long service with the Group) sail with the ships to monitor, inspect and carry out structured training of the ship s personnel based on identified needs. Each of the Group s vessels has been issued a Safety Management Certificate under the approved classification society of NK or Lloyd s Register, certifying that the SMS of the ship has been audited and that it complies with the requirements of the ISM Code. Security management The ISPS Code, which came into effect on 1 July 2004, is an international framework for involving co-operation between contracting governments, government agencies, administrations, and the shipping and port industries to assess, detect and take counter measures in order to prevent future acts of terrorism within the maritime industry. As the regulations under the ISPS Code apply to all of the Group s vessels, the Group has, among other things, installed an automatic identification system on its vessels to enhance vessel-to-vessel and vessel-to-shore identifications and communications, and an onboard ship security alert system. The Group has also developed vessel security plans, conducted shore-to-ship security exercises, and complied with the relevant flag state security certification requirements. 61

64 A vessel security plan, which includes a detailed ship security assessment, is implemented on board each ship to provide instructions and procedures to the ship security officer (master) in relation to the ship s physical security and the procedural practices to be undertaken to prevent and respond to security threats such as terrorism, piracy/hijacking, stowaway and unauthorised access to the ship. Various accessories and equipment are placed on board for self-protective measures as recommended by the Best Management Practices against Piracy (for the shipping industry), BMP4. In addition, security of all of the Group s vessels transiting or calling on ports in piracy high risk areas, such as in the Indian Ocean, is enhanced through the engagement of armed security guards on board the vessels. All of the Group s vessels possess valid International Ship Security Certificates that attest to the vessels compliance with SOLAS security requirements and the ISPS Code. All of the Group s ship masters and Chief Officers have also undergone a Ship Security Officer s course conducted by approved institutions and have been issued with certificates of proficiency. Information technology systems The Group has invested in a server-centric Shipping Enterprise System (also referred to as webcsm System ) which is a browser-based platform that caters for both internal access to the webcsm System via Local Area Network ( LAN ) and external access to the webcsm System via Wide Area Network through the public internet or Multiprotocol Label Switching ( MPLS ) private network. The webcsm System caters to the day-to-day business operations of the Group and provides a platform for the Group s e-business interfacing with external customers, terminals, portals, port authority as well as interfacing internally with the Group s financial system. The webcsm System enables the Group s worldwide network to operate online, in real-time and seamlessly 24 hours a day, 365 days a year. The webcsm System, which is accessible in over 360 locations around the world and has over 3,000 active users, allows the Group s network of agents on every continent to complete cargo booking and documentation online at any time of the day. The webcsm System also serves as a centralised database that allows the Group to improve its productivity through, inter alia, better tracking of its equipment, more efficient management of its vessel slot capacity and minimising data entry efforts via centralised data collections and interfacing with various users. It also allows the Group to provide better customer service, enabling customers to track the status of their cargos via the webcsm System. 4.2 Container Manufacturing Overview Singamas, a 39 per cent. owned subsidiary of the Group which is listed on the HKSE, has invested in 11 container manufacturing factories in the PRC. Singamas is the world s second largest container manufacturer with an estimated market share of approximately 21 per cent. 7 Singamas has 25 years of operating history and a production capacity of one million TEUs. Singamas produces a wide range of container-related products including dry freight containers, collapsible flatrack containers, open top containers, refrigerated containers, 53-foot U.S. domestic containers, bitutainers, tank containers, other specialised containers, offshore containers and container parts. In FY2013, Singamas sold approximately 542,000 TEUs of containers. Sales from Singamas container manufacturing business amounted to US$1,254 million for FY2013, which accounted for 98 per cent. of Singamas total sales, and sales from Singamas logistics business for FY2013 amounted to US$29 million, which accounted for two per cent. of Singamas total sales. The accounts of Singamas are consolidated into the accounts of the Group. 7 Singamas FY2013 Annual Results Presentation. 62

65 The following table provides a summary of the sales volume and turnover from the Group s container manufacturing business from FY2010 to FY2013: FY2010 FY2011 FY2012 FY2013 Sales Volume ( 000 TEUs) Turnover (US$ 000,000) 1,331 1,784 1,508 1,254 Growth in container manufacturing is primarily driven by the following three factors: containerised trade, sustainable replacement demand and, following the global financial crisis, the adoption of slow steaming by shipping companies. Over the past 10 years, container trade has grown at a rate much higher than that of global gross domestic product ( GDP ). The Group believes that the expected increase in intra-asian trade will help contribute to the growth in demand for containers in the medium term. The useful life of a typical dry freight container is approximately 15 years, although significant refurbishment typically begins in year nine or ten, which is costly. Ship liners and leasing companies, as a result, tend to dispose of containers which have been used for 10 years. In 2009, new container production was almost at a standstill due to the global financial crisis, and as a result, the global supply of containers decreased at a faster than normal rate. Since then, current replacement rates have remained irregular, thus the Group believes that this trend will create pent up demand for new containers as the replacement of existing containers become increasingly necessary. In addition, the increasing trend towards slow steaming and extra slow steaming will continue to impact the container manufacturing industry. In an effort to reduce fuel costs and redeploy idle fleet capacity, many shipping lines have chosen to utilise slow steaming as it is estimated that for a 6,600 TEU ship, a reduction in speed from 24 knots to 20 knots per hour cuts fuel consumption by 45 per cent. To compensate for the decrease in shipping speeds, the Group expects that there will be a likely increase in the demand for shipping capacity, which will translate into larger ship loads, more vessels on service lines and higher demand for larger vessels. This in turn will likely lead to greater demand for shipping containers to service the additional shipping capacity. Products Singamas manufactures a wide range of marine containers including dry freight containers, refrigerated containers, 53-foot U.S. domestic containers, tank containers, offshore containers and other specialised containers. Manufacturing of dry freight containers have been, and will continue to be Singamas core business, constituting a significant proportion of its sales. In response to anticipated customer demand, Singamas has continually sought to diversify its product range of specialised containers for a variety of uses and to satisfy its customers needs. Singamas aims to continue to diversify the product range of its container manufacturing business by developing specialised containers that offer considerably higher margins as compared to traditional dry freight containers. Singamas believes that both prices and demand for such containers are also less prone to fluctuations in global trade. Singamas intends to continue to refine its manufacturing processes for its existing specialised container portfolio as well as seek opportunities for new products in the growing market for specialised containers. Singamas will rely on its dedicated in-house research and development team who works closely with Singamas customers and manufacturing facilities to stay abreast of current market trends. 63

66 On 19 February 2014, the Group entered into a joint venture with Petopa Holding Limited, Container Investment Fund I LLC, Global Energy & Transport LLC and Montesol AS to acquire the issued share capital of Modex Holding Limited ( Modex ). The Group currently owns 26 per cent. of the issued share capital of Modex. The Modex Group (the group of companies headed by Modex) is principally engaged in the manufacturing of Det Norske Veritas certified cargo carrying units, cabins and equipment of offshore oil and gas operations. The Modex Group also engages in the business of selling and leasing cargo and modules for the offshore industry. The joint venture will diversify Singamas business and expertise into a specialised and high growth market. Dry freight containers Dry freight containers of 20 feet or 40 feet in length are the most widely used form of container which basic design has remain unchanged for many years. Dry freight containers are fitted with a steel roof, end and side panels, wooden floors and steel doors. These containers make up nearly 90 per cent. of the world s container fleet by TEUs and are used to carry a wide range of semi-finished and finished manufactured goods, raw materials and agricultural produce. Singamas 20-foot, 40-foot and 40-foot high cube dry freight containers each has a gross weight of 30,480 kilograms, 32,500 kilograms and 32,500 kilograms respectively with an allowable stacking weight on vessels of 216,000 kilograms and are ISO 668, ISO 830, ISO 6346, ISO 1161 and ISO 1496/1 certified. While Singamas is required to comply with ISO standards for its dry freight containers, each of Singamas customers also has their own product specifications and designs that it is expected to follow. Refrigerated containers Singamas also produces 20-foot, 20-foot high cube, 40-foot and 40-foot high cube refrigerated containers, or reefers, for transporting goods that require protection from heat or cold, temperature control or ventilation. Reefers carry frozen and chilled food produce, such as meat, fish, fruit and vegetables. Reefers have insulated stainless steel side and roof panels, aluminium floors and an external temperature-control unit affixed to the front of the container. Certain reefers are equipped with modified atmosphere technology and controlled atmosphere technology in order to ensure that cargo arrives at its destination in optimum condition. While reefers have an integral refrigeration unit, they rely on external power, from electrical power points at a land based site, a container ship or on quay. When being transported over the road on a trailer they can be powered from diesel powered generators which are attached to the containers during road journeys. Singamas 20-foot, 20-foot high cube, 40-foot and 40-foot high cube reefers have a gross weight of 30,480 kilograms, 30,480 kilograms, 34,000 kilograms and 34,000 kilograms, respectively, all with an allowable stacking weight of 216,000 kilograms, and are ISO TC-104, ISO 668, ISO 6346, ISO 1161 and ISO 1496/2 certified. As with dry freight containers, each of Singamas customers have their own product specifications and designs that Singamas is expected to follow in addition to the applicable ISO standards. Tank containers Singamas also produces tank containers used for the bulk transport of liquids, powders and foodstuffs. Tank containers are equipped to carry both hazardous and non-hazardous cargo with accessories to facilitate filling and emptying with built-in safety devices. Access to the tank is often required at the top of the tank, typically at a height of 2.6 metres. Singamas currently offers its customers a full frame tank container with a gross weight of 36,000 kilograms and a swap body tank container with a gross weight of 39,000 kilograms. 64

67 Offshore containers Singamas offers a wide range of offshore containers including standard offshore cargo containers, baskets, half heights, mud skips, chemical tanks and custom built cabins for accommodation, workshop, laboratory or any special purposes. Other specialised containers In addition to the containers discussed above, Singamas also produces a variety of specialised containers to meet the diverse needs of its international and domestic customers. These containers include, but are not limited to, the following: (1) platform containers used to carry heavy and bulky semi-finished goods as well as out-of-gauge cargo; (2) open-top containers used to carry heavy or bulky finished products, whose handling and loading can only be performed with a crane or a rolling bridge; (3) log carriers used to transport raw timber; (4) generator containers used as mobile electricity generators; (5) bitutainers designed for carrying bitumen in liquid form; (6) gas pack containers used for gas cylinder storage and transportation; (7) flatrack containers used for the carriage of items which are heavy, bulky and those which are over height or over width; (8) bulk containers used for holding free-flowing dry cargo such as cement, grains and ores; (9) live seafood containers used for the transportation of live seafood products to market; (10) half-height containers which are best suited for transporting products that are dense and not weather sensitive; (11) 53-foot containers used for U.S. domestic transport; and (12) trash containers which are both water and odour tight and are used for the hauling and storage of non-hazardous waste products. Principal manufacturing facilities Singamas manufacturing facilities currently consist of 11 factories located in the PRC with 16 production lines. The Group believes the strategic location of its factories near major shipping ports or logistics centres allows it to take advantage of reduced transportation costs for the delivery of containers to its customers and enables Singamas to possess multi-location delivery capabilities. Singamas manufacturing facilities are situated on properties held by the respective factories under 50-year land use rights granted by the PRC government. Singamas acquired a large plot of land at Qidong in December 2010 to build two environmentally friendly and energy saving container factories adjacent to one another. Both factories are located near to the Chongqi Bridge, which connects Qidong to the Chongming Island of Shanghai. These factories represent a rare opportunity to acquire prime riverfront land in close proximity to Shanghai. The two factories can also take advantage of the Yangtze River to satisfy the container demand in Central and Western PRC, maintaining Singamas competitive position in the region. The dry freight and specialised containers factory commenced production in July The refrigerated container factory commenced production in April These two factories are well-poised with good logistic back-up to satisfy new demand and replacement demand in the near future. Production process Singamas production process is vertically integrated for better control over production costs and less reliance on external contractors and fabricators. Having its own fabrication yard at each of its 11 factories also gives Singamas greater flexibility in manufacturing to customers specifications and in designing prototypes. The dry freight container is Singamas core product and its production process comprises six main stages, namely fabrication, sub-assembly, general assembly, painting and finishing, final inspection and delivery. 65

68 Quality control Singamas performs strict quality control inspections on every container Singamas manufactures with its in-house inspectors. Quality control inspections are performed at every stage of the manufacturing process. The inspection is carried out in respect of, among others, the quality of the protective paint coatings, the quality of the welding, water tightness and the structural integrity of the containers. Singamas internal inspection is augmented by inspections carried out by the classification societies in the marine industry which, in its case, have principally been the American Bureau of Shipping and the Bureau Veritas. Every container Singamas manufactures for shipping purposes is required to be certified for use by a major classification society. In addition, Singamas suppliers, such as those for paint, also inspect completed containers in respect of the quality of their supplies and to make recommendations on the method of production, especially when Singamas receives new customer specifications. For the purpose of facilitating inspections, the classification societies and suppliers have inspectors assigned to its various factory premises. Singamas subjects any prototype produced from customers new specifications to testing according to the standards set by the ISO before commencing mass production. Competition The Group considers China International Marine Containers (Group) Ltd. ( CIMC ) to be its major competitor. CIMC is a state owned enterprise that is listed on the HKSE and the Shenzhen Stock Exchange. While the two companies directly compete against one another for the same group of customers, Singamas believe each company s focus is distinct from the other. The Group believes that Singamas competes primarily on service and manufacturing flexibility. This tends to appeal to the container leasing companies who place a premium on service and flexibility. CIMC, on the other hand, competes primarily on price, and its economies of scale and governmental support allow CIMC to offer customers a competitive pricing structure. Generally speaking, shipping lines tend to be more price sensitive than leasing companies and as a result, are the focus of CIMC s marketing efforts. In addition to CIMC, Singamas competes against several smaller players in the industry such as CXIC Group Containers Co., Ltd. and Dong Fang International Container Co., Ltd., among others. The Group expects the market to remain an oligopoly as Singamas has the competitive strength to preserve a number of entry barriers to the container manufacturing market. 4.3 Other Businesses The Group also provides supply chain management solutions through one of its subsidiary companies, PIL Logistics. PIL Logistics, established in 2000, is a third party logistics provider with its headquarters in Singapore and its operations spread over major cities in the PRC and South East Asia. These solutions include a range of services from customs clearance, trucking, warehousing and sea transportation. 66

69 PIL Logistics seeks to meet the business requirements of its customers by formulating and managing the customers logistics processes. Through PIL Logistics unique capability in the Asia Pacific region coupled with joint ventures and strategic partnerships around the world, PIL Logistics is able to execute seamless end-to-end logistics solutions to and from countries within the Asia Pacific region. As a leading logistics provider, PIL Logistics had over the last decade introduced suites of logistics services that include transportation, depot services, warehousing services, value-adding activities and consulting. Through the combination of these different services, PIL Logistics had created different products that cater for the needs of different industries and customer groups. These products include Trade+, Forward Hubbing, Order Centralization, Transport Optimization and Export Suite. The major customers include Air Products and Chemicals Inc., Domino Printing Sciences plc, Dow Chemical Company, Flint Hills Resources, Hilti Corporation, Motul Group and Sumitomo Chemical Co., Ltd. 67

70 DIRECTORS Board of Directors The Board of Directors of the Issuer (the Board ) comprises: Name Position Teo Woon Chang Yun Chung Teo Chew Peter Chang Teo Siong Seng Tan Chor Kee Teo Cho Keng Teo Tiou Seng (Tony) Kuan Kim Kin Tay Kian Phuan William Teo Teng Seng Teo Choo Wee Teo Lay Seng (Lisa) Lim Jock Fong (Yvonne) Chairman Deputy Chairman Managing Director Deputy Managing Director Senior Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director Mr Teo Woon Chang Yun Chung ( YC Chang ) Mr YC Chang started his shipping career in Singapore in He founded PIL in 1967 and was its Managing Director till He is currently the Chairman of PIL and has directorships in certain associated companies and subsidiaries of the Group. In recognition of his invaluable contributions and devotion to Singamas during his term of office, he was appointed Honorary Chairman of Singamas. Mr Teo Chew Peter Chang Mr Peter Chang joined PIL in 1974 and the Board in He is currently the Deputy Chairman of PIL. Mr Peter Chang also holds director positions in other enterprises such as PIL Realty (Private) Limited, PIL Travels (Private) Limited and other companies whose activities include realty investment/management, travel services, port and terminal services, logistics services, oil trading, container trade, and other business development such as aerospace, energy, security system and biometric technologies. Mr Teo Siong Seng Mr SS Teo joined PIL in 1979 and the Board in He is currently the Managing Director of PIL and the son of Mr YC Chang. He graduated from Glasglow University in the United Kingdom in 1979 with a First Class Honours degree in Naval Architecture & Ocean Engineering. Mr Teo is also the Chairman and Chief Executive Officer of Singamas. Mr Teo is also an Independent Non-Executive Director of China Shipping Container Lines Co., Ltd. Mr 68

71 Teo was appointed as a Nominated Member of Parliament in January 2013 for the second term representing the Singapore Commerce sector. Mr Teo was appointed the Honorary Consul of the United Republic of Tanzania with jurisdiction over the territory of the Republic of Singapore on 19 August Mr Tan Chor Kee Mr Tan Chor Kee joined PIL in 2000 and the Board in He is currently the Deputy Managing Director of PIL. He graduated from the University of Singapore with a First Class Honours degree in Mechanical Engineering and has more than 35 years of experience in shipping particularly in equipment management, cost control, corporate planning, logistics operations, agency and shipping business. He also has four years of experience working in Hong Kong as Managing Director and concurrently as Regional Representative of North Asia covering Japan, Korea, Taiwan and the PRC. Mr Tan is also the Non-Executive Director of Singamas. Mr Teo Cho Keng Mr Teo Cho Keng joined PIL in 1969 and the Board in He is presently the Senior Executive Director (Technical) of PIL. Mr Teo graduated from the University of Singapore with a Second Class Honours degree in Mechanical Engineering. He oversees the Technical Division of PIL which is responsible for the smooth and efficient running of the PIL fleet, monitoring ships maintenance, hull performance and energy efficiency, maintenance of class/port state control requirements and compliance with new regulations, pre-purchase inspection for second-hand vessels and supervising the construction of new ship building projects. Mr Teo Tiou Seng (Tony) Mr Tony Teo joined PIL in 1987 and the Board in He is presently an Executive Director of PIL. He holds an MBA from the University of Western Ontario, Richard Ivey School of Business. Mr Teo is also an Executive Director of Singamas and the Managing Director of Pacific International Lines (Hong Kong) Limited. Mr Teo has been in the shipping business since 1977 and has more than 26 years and 5 years of working experience in container transport business and passenger liner business respectively. Mr Teo has served the Singapore Association in Hong Kong as Chairman in 2005 through 2007 and his services have helped to foster a sense of community among Singaporeans living in Hong Kong. In this regard, he was awarded a Certificate of Appreciation by the Singapore International Foundation. Mr Kuan Kim Kin ( K K Kuan ) Mr K K Kuan joined PIL in 1994 and the Board in He is currently the Executive Director (Finance) of PIL. Mr Kuan is a fellow member of The Chartered Institute of Management Accountants (United Kingdom). Prior to joining PIL, he held a number of senior financial and accounting positions across diverse business groups, including two public listed companies in Malaysia. He is also a Non-Executive Director of Singamas. Mr Tay Kian Phuan William Mr Tay joined PIL in 2001 and the Board in He is currently the Executive Director, of the Corporate Division. He holds a Masters of Science (Marine Technology) and a Bachelor of Science (Honors) (Naval Architecture) from the University of Newcastle Upon Tyne in the United Kingdom. He also attended the Stanford Executive Program at Stanford University in California, U.S. Mr Tay has over 35 years of experience in shipping, particularly in shipping 69

72 business, corporate planning, ship agency and container leasing/trading. He has six years of experience working in North America, including, as Owner s Representative for U.S./Canada of a major containership operator, and, as President/Chief Operating Officer of a national ship agency company in the U.S. Mr Teo Teng Seng ( TS Teo ) Mr TS Teo joined PIL in 1993 and the Board in He is currently an Executive Director of PIL. He holds a MBA from the University of Washington and a Bachelor of Science in Electrical Engineering (Honors) conferred by University of Tennessee. Mr TS Teo is also the Managing Director of PIL Logistics, a wholly owned subsidiary of PIL, with businesses in the PRC, Thailand and Vietnam. His responsibilities as Managing Director of PIL Logistics include providing strategic direction to guide the business into the future with planned goals, objectives and tactical plan. He also refines go-to-market strategies including value propositions, services, solutions, marketing and branding. He further oversees and identifies new areas of growth for PIL Logistics and builds international strategic partners to facilitate the growth of the company. Mr Teo Choo Wee Mr Teo Choo Wee joined PIL in 2002 and the Board in He is presently the Executive Director (Fleet Management) of PIL. He graduated from the University of Strathclyde in the United Kingdom with a First Class Honours degree in Mechanical Engineering. Mr Teo has more than 10 years of experience in the shipping industry and he oversees the Fleet Division of PIL which is responsible for crew management, bunkering, marine insurance and purchasing/supply etc. Other key duties include bunker risk management, S&P of vessels. He was the Acting CEO of PST Management Pte. Ltd. ( PSTM ) - trustee manager of Pacific Shipping Trust ( PST ) from December 2009 until March In March 2012, Mr Teo was appointed CEO of PSTM, which assumed the business of PST after its winding up in November He is also a Director of Dalian Shipbuilding Industry Marine Services Co., Ltd (DSIMS) and Dalian Shipbuilding Industry Ship Recycling Co., Ltd (DSISR). Both companies are joint ventures between PIL, Dalian Shipbuilding Industry Co., Ltd. (DSIC) and Angang Steel Company Limited. Ms Teo Lay Seng (Lisa) Ms Lisa Teo started her career with PIL s subsidiary, Advance Container Lines (Pte) Ltd ( ACL ), in 1997 and joined the Board in She is currently an Executive Director of Corporate Development (Corporate Division) of PIL. Ms Teo graduated with a Bachelor of Commerce in 1997 from the University of Melbourne and subsequently obtained a Master of Science in Marketing from the National University of Singapore in Her portfolio includes directorships in various subsidiaries of PIL and Maya Corporation Pte. Ltd. She is an elected Council Member of the Singapore Shipping Association ( SSA ) and had served as Chairperson of its Young Executives Group ( ). Ms Teo has been appointed as Honorary Treasurer of SSA Council from July She is also a Committee Member of the Singapore Chinese Chamber of Commerce Industry s Young Entrepreneurs Network. Mrs Lim Jock Fong (Yvonne) Mrs Yvonne Lim joined PIL in 1983 and the Board in She is currently the Executive Director (Liner) of PIL. Prior to that, she was General Manager (Liner) from June 2006 to February Mrs Lim started her career with PIL in the Accounts Department and in 1988, she was transferred to join the shipping division handling the Multi-Purpose Service and the container shipping business. She has vast experience in the agency and shipping business especially in the field of trade management, new market research and development as well as agency setup. 70

73 SELECTED CONSOLIDATED FINANCIAL INFORMATION CONSOLIDATED INCOME STATEMENTS For the financial year ended 31 December (audited) (audited) (audited 1 ) (audited) US$ 000 US$ 000 US$ 000 US$ 000 Continuing Operations Turnover 3,919,044 4,371,755 4,545,403 4,515,857 Other operating income 8,985 42, ,630 54,223 Changes in inventories of finished goods and work in progress 64,501 (35,322) 14,760 (26,421) Raw material and consumables used (1,111,590) (1,297,273) (1,210,669) (991,427) Investment and interest income 3,917 8,898 6,258 7,740 Staff costs (170,169) (180,947) (198,208) (193,816) Depreciation (140,120) (160,650) (183,611) (219,144) Amortisation of intangible assets (895) (698) (487) (244) Write-back/(allowance) of impairment losses 14,208 1,142 (7,759) (318) Gain/(loss) on disposal of shares in subsidiaries 2, (2,178) 25,157 (Loss)/gain on disposal of shares in associates (3) 4,191 2,244 Gain on disposal of shares in other investments Fair value changes in other investments 1,747 (2,407) 392 (115) Fair value changes in derivative financial instruments 7, ,262 10,786 Foreign exchange differences (34,417) (15,690) 924 (13,559) Shipping expenses (1,940,748) (2,482,776) (2,562,761) (2,891,437) Administration and non-shipping expenses (221,005) (245,293) (236,696) (246,357) Finance costs (43,598) (59,813) (70,735) (81,762) Share of results of associates 18,846 16,136 12,885 15,300 (Loss)/profit before taxation from continuing operations 379,061 (38,341) 215,852 (33,224) Taxation (21,067) (60,272) (34,941) (30,134) (Loss)/profit from continuing operations, net of tax 357,994 (98,613) 180,911 (63,358) Discontinued Operations Loss from discontinued operations, net of tax (2,735) (2,768) (Loss)/profit for the year 357,994 (98,613) 178,176 (66,126) Attributable to: Equity holders of the Company (Loss)/profit from continuing operations 277,644 (212,883) 119,687 (101,047) Loss from discontinued operations (2,735) (2,768) (Loss)/profit attributable to equity holders of the company 277,644 (212,883) 116,952 (103,815) Non-controlling interests Profit from continuing operations 80, ,270 61,224 37,689 1 Restated to conform with changes in presentation in FY

74 CONSOLIDATED BALANCE SHEETS AS AT 31 DECEMBER (audited 2 ) (audited 2 ) (audited) (audited) US$ 000 US$ 000 US$ 000 US$ 000 Non-Current Assets Fixed assets 3,140,947 3,447,279 4,021,240 4,261,503 Intangible assets 6,259 7,089 6,862 6,750 Subsidiaries Associates 102,801 99,591 92,179 93,811 Other investments 22,934 22,780 37,894 47,847 Deferred tax assets Deferred transaction costs 4,370 5,822 7,418 9,898 Prepayments 18,782 23,132 19,739 18,005 Long-term debtors 54 Long-term fixed deposits, secured 6 3,296,456 3,605,916 4,185,574 4,438,152 Current Assets Other investments 4,485 2,121 2,358 1,240 Stocks 340, , , ,042 Trade debtors 399, , , ,676 Other debtors 268, , , ,934 Deferred transaction costs 268 1,100 2,156 2,316 Prepayments 8,608 13,005 13,754 14,307 Derivative financial instruments 4,113 3,533 1,649 7,423 Amounts due from related companies 86,959 70,489 16,149 15,908 Short-term fixed deposits, secured 1,558 1, ,358 Fixed deposits with banks 116,435 12,610 54,411 4,121 Cash at bank and on hand 336, , , ,416 1,567,407 1,559,184 1,584,907 1,412,741 Assets of disposal group classified as held for sale 143,601 1,567,407 1,559,184 1,584,907 1,556,342 72

75 (audited 2 ) (audited 2 ) (audited) (audited) US$ 000 US$ 000 US$ 000 US$ 000 Current Liabilities Derivative financial instruments 10,864 1, Trade creditors 552, , , ,043 Amounts due to bankers 587, , , ,055 Other creditors and accruals 187, , , ,193 Amounts due to related companies 13,316 9,928 12,013 17,572 Notes 226,095 Provision for taxation 12,307 15,893 9,075 7,276 1,363,291 1,391,298 1,477,537 1,760,782 Liabilities directly associated with disposal group classified as held for sale 1,111 1,363,291 1,391,298 1,477,537 1,761,893 Non-Current Liabilities Derivative financial instruments 12,377 21,335 13,982 1,347 Amounts due to bankers 1,015,768 1,321,051 1,642,592 1,913,789 Notes 217, ,426 Long-term creditors 81,122 36,986 92, ,105 Other long-term creditors 1, Deferred tax liabilities 3,009 4,137 10,496 9,640 1,113,374 1,600,611 1,978,063 2,024,988 Net Assets 2,387,198 2,173,191 2,314,881 2,207,613 Equity attributable to equity holders of the Company Share capital 376, , , ,127 Capital reserve 25,173 26,013 33,664 31,705 Revaluation reserve 84,743 97,749 98,064 Fair value reserve (5,998) (7,763) 308 1,171 Hedging reserve (4,855) (3,902) 664 5,407 Foreign currency translation reserve 29,645 32,137 43,693 17,956 Share options reserve 2,632 2,743 2,425 1,920 Other reserve 7 (66) 1, Revenue reserve 1,436,557 1,218,209 1,329,468 1,221,675 Reserves of disposal group classified as held for sale 117,766 1,944,031 1,741,247 1,885,769 1,774,310 Non-controlling interests 443, , , ,303 Total equity 2,387,198 2,173,191 2,314,881 2,207,613 2 Restated to conform with changes in presentation in FY

76 Financial Summary and Overview Current trading The shipping industry remains challenged, consistent with the experience in 2013, driven by an imbalance between supply and demand, with supply outpacing demand resulting in depressed freight rates and low new container orders. From 1 January 2014 to the Latest Practicable Date, the Group had one new vessel delivered and disposed of three older vessels, which coupled with depressed freight rates has impacted the financial performance of the Group and is expected to result in a loss for the Group. FY2013 versus FY2012 Income Statement Turnover The Group recorded turnover of US$4,516 million in 2013, a marginal decline of US$30 million from the previous year. This was due mainly to a 16.8 per cent. decrease in turnover generated by Singamas (represented by the invoiced sales of containers) as a result of soft demand for new container owing to lower growth in global trade. This was partially offset by a 6.5 per cent. increase in shipping turnover (represented by freight and charter hire) from US$2,917 million to US$3,108 million. The increase was driven by an approximately 12.3 per cent. increase in volume, primarily as a result of the addition of 21 vessels, though offset by declining freight rates in comparison to the previous year. The table below shows the Group s turnover by business segment, as a percentage of total turnover, for 2012 and 2013: US$ 000 % US$ 000 % Freight and charter hire 2,916,697 64% 3,107,618 69% Invoiced sales of containers 1,507,777 33% 1,253,731 28% Others 120,929 3% 154,508 3% Total turnover 4,545, % 4,515, % Other operating income Other income of US$54 million in 2013 comprised mainly gains on disposal of fixed assets of US$35 million which was lower than the US$69 million gain reported in The majority of the assets that were disposed were container boxes. Shipping expenses Shipping expenses increased by 12.8 per cent. to US$2,891 million in 2013 from US$2,563 million in 2012, primarily due to the growth in the operating fleets of owned and chartered-in vessels and bunker costs. The largest components of the shipping expenses are bunker costs and terminal charges, representing 33.1 per cent. (US$957 million) and 21.4 per cent. (US$620 million) respectively of the total shipping expenses in

77 Finance costs Finance cost increased 15.6 per cent. from US$71 million in 2012 to US$82 million in The increase was due to additional bank loans to fund the newbuilding project and the Group s flagship office building, PIL Building which is located in the Central North Bund of Shanghai, Hongkou district at Shanghai International Shipping and Financial Service Center. Interest on loans increased 14.3 per cent. from US$49 million in 2012 to US$56 million in Discontinued operations Discontinued operations relates to the disposal of two of the Group subsidiaries, namely PIL Realty and PIL Travels, as a result of the restructuring of the Group, outlined in the business section of this Information Memorandum. The disposal was completed on 15 May Loss/Profit after income tax The Group reported a net loss of US$66 million in 2013, down from a net profit of US$178 million in This was largely due to depressed freight rates for most of the year coupled with softer than expected new container orders as a result of oversupply of tonnage in a sluggish recovering global economy. Balance Sheet Total assets of the Group amounted to US$5,994 million as at 31 December 2013, an increase of 3.9 per cent. compared to the previous year. This was primarily attributable to 21 vessel additions during the year, 18 of which were new deliveries. Fixed assets increased 6.0 per cent. from US$4,021 million to US$4,262 million. The newbuilding programme was implemented in a cyclical low of the shipbuilding sector and the Group placed orders for eco-design vessels which would provide operational savings in the form of lower bunker consumption. Total liabilities of the Group amounted to US$3,787 million as at 31 December 2013, an increase of 9.6 per cent. compared to the previous year. In view of the Group s newbuilding programme, the Group took on additional debt to fund asset acquisitions, resulting in increased bank borrowing and increased trade creditors, which were in line with the increased lifting volume in shipping activities. As at 31 December 2013, the Group had approximately US$2,950 million of total debt outstanding. The table below sets out certain information in respect of the Group s total debt as at 31 December 2013: Secured Loans Unsecured Loans Notes Finance lease commitments Hire purchase creditors (US$ 000) (US$ 000) (US$ 000) (US$ 000) (US$ 000) Amount repayable in 2014, or on demand 281, , ,095 25, Amount repayable in: ,495 35,000 26, ,499 70,000 26, ,030 59,000 30, ,619 11, Later than ,146 4, Total 2,031, , , ,

78 Approximately 68.9 per cent. of the Group s total debt consists of term loans secured primarily vessels. On 14 April 2014, the Notes were redeemed in full, which was financed by a new term loan amounting to US$310 million and repayments will commence on 24 September 2015 and continue until 24 September FY2012 versus FY2011 Income Statement Turnover In 2012, the Group recorded turnover of US$4,545 million, an increase of 4.0 per cent. from the previous year as shipping volume and average freight rates for the Group s container shipping business increased by about 7.4 per cent. and approximately 10 per cent. year-on-year, respectively. This resulted in a 18.6 per cent. increase from the Group s shipping business, which was partially offset by a decline in turnover from Singamas, by 15.5 per cent. year-on-year to US$1,508 million in 2012 due to lower average selling price of the dry freight containers. The table below shows the Group s turnover by business segment, as a percentage of total turnover, for 2011 and 2012: (restated) US$ 000 % US$ 000 % Freight and charter hire 2,460,253 56% 2,916,697 64% Invoiced sales of containers 1,783,741 41% 1,507,777 33% Others 127,761 3% 120,929 3% Total turnover 4,371, % 4,545, % Other operating income Other income recorded US$103 million in 2012 and was per cent. higher than US$43 million in This comprised mainly gains on disposal of fixed assets of US$69 million which was higher than the gain of US$26 million reported in Shipping expenses Shipping expenses increased by 3.2 per cent. to US$2,563 million in 2012 from US$2,483 million in 2011 primarily due to the increase in operating vessels and bunker prices. Bunker costs and terminal charges represented 35.1 per cent. (US$900 million) and 21.4 per cent. (US$548 million) respectively of the total shipping expenses in Finance costs Finance costs increased by 18.3 per cent. from US$60 million in 2011 to US$71 million in The increase was primarily due to additional bank loans to fund the newbuilding project which resulted in a 28.9 per cent. increase on interest on loans from US$38 million in 2011 to US$49 million in Profit/Loss after income tax The Group reported a net profit of US$178 million, a turnaround from a net loss of US$99 million in This was driven by the increase in freight and charter hire turnover year-on-year and relatively stable shipping expenses. 76

79 Balance Sheet Total assets of the Group amounted to US$5,770 million as at 31 December 2012, an increase of 11.7 per cent. over the preceding year-end balance of US$5,165 million, mainly due to the acquisition of two new subsidiaries and the addition of new vessels. Total liabilities of the Group amounted to US$3,456 million as at 31 December 2012, an increase of 15.5 per cent. over the preceding year-end balance of US$2,992 million. FY2011 versus FY2010 Income Statement Turnover The Group recorded turnover of US$4,372 million in 2011, an increase of 11.6 per cent. from the previous year of US$3,919 million. The turnover from the Group s shipping business decreased 0.6 per cent. from US$2,474 million in 2010 to US$2,460 million in The turnover from Singamas increased 34.0 per cent. primarily as a result of the increased volume and higher average selling prices secured US$ 000 % US$ 000 % Freight and charter hire 2,474,106 63% 2,460,253 56% Invoiced sales of containers 1,331,105 34% 1,783,741 41% Others 113,833 3% 127,761 3% Total turnover 3,919, % 4,371, % Other operating income Other income of US$43 million in 2011 comprised mainly gains on disposal of fixed assets of US$26 million compared to the US$2 million gain reported in Shipping expenses Shipping expenses increased 27.9 per cent. to US$2,483 million in 2011 from US$1,941 million in 2010 primarily due to higher bunker costs. Bunker costs and terminal charges represented 38.2 per cent. (US$949 million) and 19.6 per cent. (US$486 million) respectively of the total shipping expenses in Finance costs Finance cost increased by 36.4 per cent. from US$44 million in 2010 to US$60 million in 2011, primarily due to the interest expense arising from the Singamas CNY Notes issued on 14 April Loss/ Profit after income tax The Group reported a net loss of US$99 million, down from a net profit of US$358 million in 2010, which was largely due to a glut of tonnage in an economy which was recovering from the financial crisis in This kept the demand weak over the course of 2011, resulting in depressed freight rates. 77

80 Balance Sheet Total assets of the Group amounted to US$5,165 million as at 31 December 2011, an increase of 6.2 per cent. year-on-year, driven by a 9.7 per cent. increase in fixed assets from US$3,141 million in 2010 to US$3,447 million in Total liabilities of the Group amounted to US$2,992 million as at 31 December 2011, an increase of 20.8 per cent. year-on-year from US$2,477 million which was reported in This is primarily due to the financing of new vessels. 78

81 RISK FACTORS Prior to making an investment or divestment decision, prospective investors in or existing holders of the Notes should carefully consider all the information set forth in this Information Memorandum including the risk factors set out below. The risk factors set out below do not purport to be complete or comprehensive of all the risk factors that may be involved in the business, assets, financial condition, performance or prospects of the Issuer, its subsidiaries and the Group or the properties owned by the Group or any decision to purchase, own or dispose of the Notes. Additional risk factors which the Issuer is currently unaware of may also impair its business, assets, financial condition, performance or prospects. If any of the following risk factors develop into actual events, the business, assets, financial condition, performance or prospects of the Issuer and/or the Group could be materially and adversely affected. In such cases, the ability of the Issuer to comply with its obligations under the Trust Deed and the Notes may be adversely affected. Limitations of this Information Memorandum This Information Memorandum does not purport to nor does it contain all information that a prospective investor in or existing holder of the Notes may require in investigating the Issuer or the Group, prior to making an investment or divestment decision in relation to the Notes issued under the Programme. Neither this Information Memorandum nor any document or information (or any part thereof) delivered or supplied under or in relation to the Programme or the Notes (or any part thereof) is intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, any of the Arrangers or any of the Dealers that any recipient of this Information Memorandum or any such other document or information (or such part thereof) should subscribe for or purchase or sell any of the Notes. This Information Memorandum is not, and does not purport to be, investment advice. A prospective investor should make an investment in the Notes only after it has determined that such investment is suitable for its investment objectives. Determining whether an investment in the Notes is suitable is a prospective investor s responsibility, even if the investor has received information to assist it in making such a determination. Each person receiving this Information Memorandum acknowledges that such person has not relied on the Issuer, its subsidiaries and/or its associated companies, any of the Arrangers, any of the Dealers or any person affiliated with each of them in connection with its investigation of the accuracy or completeness of the information contained herein or of any additional information considered by it to be necessary in connection with its investment or divestment decision. Any recipient of this Information Memorandum contemplating subscribing for or purchasing or selling any of the Notes should determine for itself the relevance of the information contained in this Information Memorandum and any such other document or information (or any part thereof) and its investment or divestment should be, and shall be deemed to be, based solely on its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and the Group, the terms and conditions of the Notes and any other factors relevant to its decision, including the merits and risks involved. A prospective investor should consult with its legal, tax and financial advisers prior to deciding to make an investment in the Notes. 79

82 The forward-looking information in this Information Memorandum may prove inaccurate This Information Memorandum contains forward-looking statements. These forward-looking statements are based on a number of assumptions which are subject to uncertainties and contingencies, many of which are outside of the Issuer s control. Please see the section Forward-Looking Statements on page 5 of this Information Memorandum. RISKS RELATING TO NOTES Limited Liquidity of the Notes issued under the Programme There can be no assurance regarding the future development of the market for the Notes issued under the Programme or the ability of the Noteholders, or the price at which the Noteholders may be able, to sell their Notes. The Notes may have no established trading market when issued, and one may never develop. Even if a market for the Notes does develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. The lack of liquidity may have a severely adverse effect on the market value of Notes. Although the issue of additional Notes may increase the liquidity of the Notes, there can be no assurance that the price of such Notes will not be adversely affected by the issue in the market of such additional Notes. Fluctuation of the Market Value of Notes Trading prices of the Notes are influenced by numerous factors, including the operating results and/or financial condition of the Issuer, its subsidiaries and/or its associated companies (if any), political, economic, financial and any other factors that can affect the capital markets, the industry, the Issuer, its subsidiaries and/or its associated companies (if any) generally. Adverse economic developments, in Singapore as well as countries in which the Issuer, its subsidiaries and/or its associated companies (if any) operate or have business dealings, could have a material adverse effect on the operating results and/or the financial condition of the Issuer, its subsidiaries and/or its associated companies. Interest Rate Risk Noteholders may suffer unforeseen losses due to fluctuations in interest rates. Generally, a rise in interest rates may cause a fall in the price of the Notes, resulting in a capital loss for the Noteholders. However, the Noteholders may reinvest the interest payments at higher prevailing interest rates. Conversely, when interest rates fall, the price of the Notes may rise. The Noteholders may enjoy a capital gain but interest payments received may be reinvested at lower prevailing interest rates. Inflation Risk Noteholders may suffer erosion on the return of their investments due to inflation. Noteholders would have an anticipated rate of return based on expected inflation rates on the purchase of the Notes. An unexpected increase in inflation could reduce the actual returns. 80

83 Performance of contractual obligations by the Issuer is dependent on other parties The ability of the Issuer to make payments in respect of the Notes may depend upon the due performance by the other parties to the Programme Agreement, the Trust Deed and the Agency Agreement of their obligations thereunder including the performance by the Trustee and the Paying Agents of their respective obligations. Whilst the non-performance of any relevant party will not relieve the Issuer of its obligations to make payments in respect of the Notes, the Issuer may not, in such circumstances, be able to fulfill its obligations to the Noteholders and the Couponholders. The Notes may not be a suitable investment for all investors Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: (i) (ii) (iii) (iv) (v) have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes, the merits and risks of investing in the relevant Notes and the information contained or incorporated by reference in this Information Memorandum or any applicable supplement to this Information Memorandum; have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the relevant Notes and the impact such investment will have on its overall investment portfolio; have sufficient financial resources and liquidity to bear all of the risks of an investment in the relevant Notes, including Notes with principal or interest payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor s currency; understand thoroughly the terms of the relevant Notes and be familiar with the behaviour of any relevant indices and financial markets; and be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. Some Notes are complex financial instruments and such instruments may be purchased as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of such Notes and the impact this investment will have on the potential investor s overall investment portfolio. The Notes may be subject to optional redemption by the Issuer An optional redemption feature is likely to limit the market value of the Notes. During any period when the Issuer may elect to redeem Notes, the market value of such Notes generally will not rise substantially above the price at which they can be redeemed. This may also be true prior to any redemption period. The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time. 81

84 Notes may be issued at a substantial discount or premium The market values of securities issued at a substantial discount or premium from their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities. Modification The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority. Singapore Taxation Risk The Notes to be issued from time to time under the Programme, during the period from the date of this Information Memorandum to 31 December 2018 are, pursuant to the ITA and the MAS Circular FSD Cir 02/2013 entitled Extension and Refinement of Tax Concessions for Promoting the Debt Market issued by MAS on 28 June 2013, intended to be qualifying debt securities for the purposes of the ITA, subject to the fulfilment of certain conditions more particularly described in the section Singapore Taxation. However, there is no assurance that such Notes will continue to enjoy the tax concessions in connection therewith should the relevant tax laws or MAS circulars be amended or revoked at any time. RISKS RELATING TO THE ISSUER S AND THE GROUP S BUSINESS, FINANCIAL CONDITION AND/OR RESULTS OF OPERATIONS Risks relating to the Group s Container Shipping Business The Group s container shipping business operates in an industry that is highly cyclical in nature and subject to seasonal fluctuations which has impacted and may continue to impact its financial performance The container shipping industry is highly cyclical and subject to seasonal fluctuations primarily due to changes in the supply of and demand for shipping capacity which result in the volatility of sales, profitability and vessel values. The demand for ships, freight rates and charter rates are influenced by global and regional economic conditions, developments in international trade, changes in seaborne and other transportation patterns, weather patterns, crop yields, armed conflicts, canal closures, port congestions, fuel prices, foreign exchange fluctuations, embargoes and strikes, among other factors. Demand for the transportation of commodities, manufactured goods and consumer products in containers, may decline and is affected by, among other things, general economic conditions, the demand for cargoes (which may be due to seasonal fluctuations), commodity prices, environmental concerns, weather and competition from alternative sources of supply for those commodities, manufactured goods and consumer products. Given the recent challenges in the shipping industry, the Group reported losses in both 2011 and In 2014, the industry remains challenged, consistent with the dynamics in 2013, the supply and demand imbalance remains, with supply outpacing demand against a similar backdrop of a slowly recovering global economy, resulting in freight rates remaining depressed 82

85 and low new container orders. From 1 January 2014 to the Latest Practicable Date, the Group had one new vessel delivered and disposed of three older vessels in 2014, which coupled with depressed freight rates impacted the financial performance of the Group and is expected to result in a loss for the Group to the Latest Practicable Date. Furthermore, there can be no assurance that there will not be an unexpected increase in the delivery of newbuildings that operate in the container shipping market. Many of the factors influencing the supply of and demand for shipping capacity are outside the Group s control, and the nature, timing and degree of changes in industry conditions are unpredictable. Decreases in the demand for shipping services or increases in the supply of capacity could lead to significantly lower freight rates and/or charter rates, reduced volume or a combination of the aforesaid, which could have an adverse effect on the Group s business, financial condition, performance, results of operations and/or prospects and could adversely affect the Issuer s ability to make payments under the Notes. The Group s container shipping business operates in a highly competitive industry The container shipping industry in which the Group operates in is highly fragmented among many global and regional carriers, owners and operators of container ships and is characterised by intense competition. The container shipping business is characterised by large fixed investments in ships, containers, information technology networks and worldwide sales and operational presence. Participants in this industry have a propensity to reduce freight rates to variable cost levels in an economic downturn as many consider their cost structure to be largely fixed. The container shipping industry is also underpinned by economies of scale. Participants with larger fleets, larger total volumes and larger sized ships enjoy cost per unit advantages. The Group faces competition from participants who enjoy larger economies of scale by virtue of their larger market shares, larger fleet, larger volumes and larger individual ship sizes. In addition, existing or new competitors acquiring ships at distressed prices may result in increased competition and higher pressure on margins which may have an adverse effect on the Group s business, financial condition, performance, results of operations and/or prospects. The Group s container shipping business operates in a highly regulated industry that may require it to incur additional costs in meeting new regulations or limit its ability to do business The shipping industry is highly regulated and the operations of the Group s container shipping business are affected by extensive and evolving environmental protection laws and other regulations in the form of numerous international conventions, national, state and local laws and national and international regulations in force in the jurisdictions in which the Group s vessels operate, as well as in the country or countries in which such vessels are registered. Compliance with such laws and regulations may entail significant expenses, including expenses for ship modifications and changes in operating procedures. The Group may also incur substantial costs in order to comply with existing and future environmental and health and human safety requirements, including, among others, obligations relating to air emissions, maintenance and inspection, development and implementation of emergency procedures and insurance coverage. The Group may also face substantial liability for penalties, fines, damages and remediation costs associated with hazardous substance spills or other discharges into the environment involving the Group s shipping operations under such laws and regulations. These expenses, costs and penalties could have an adverse effect on the Group s business, financial condition, performance, results of operations and/or prospects. 83

86 The Group s container shipping business is exposed to volatility in fuel oil prices The price of fuel oil is unpredictable and influenced by events that are not within the Group s control. Volatility in fuel oil prices translates into volatility in bunker prices. In 2013 and 2012, bunker costs represented 33.1 and 35.1 per cent. of the Group s shipping expenses, respectively. A significant increase in fuel oil prices will negatively impact the Group s earnings on its container shipping business as the Group may not be able to fully pass on the increased cost to its customers and this may have an adverse effect on the Group s profitability. From time to time, the Group may enter into financial transactions to hedge its forecast fuel oil exposure. There is no assurance that such hedging transactions entered into by the Group will adequately mitigate the negative impact of rising fuel oil prices on the Group s profitability. Such hedging transactions could also potentially result in significant negative settlements. The Group operates in a capital intensive industry that relies on the availability of sizeable amounts of debt and it may experience limited availability of funds As at 31 December 2013, the Group had approximately US$2,950 million of total borrowings (including finance lease commitments and hire purchase creditors). While the Group has unutilised banking facilities and available funds, there can be no assurance that the Group will be able to refinance borrowings as and when such borrowings becomes due on commercially reasonable terms or at all. The Group may be required to meet its funding needs by procuring financing on terms which restrict the Group in certain ways. Additionally, the Group s level of borrowings means that a material portion of its expected cash flow may be set aside for the payment of interest on its borrowings, thereby reducing the funds available to the Group for use in its general business operations. The Group s level of borrowings, coupled with the current global economic climate, may also result in accelerated demands for payment or calls by lenders on events of default. This may restrict the Group s ability to obtain additional financing for capital expenditure, acquisitions or general corporate purposes and may cause the Group to be particularly vulnerable in the current or any future general economic downturn. In addition, in the event the Group is required to restructure its borrowings or provide funding to any of its subsidiaries, associated companies or joint ventures to optimise the capital management structure within the Group, it may have to incur additional borrowings. The Group cannot assure holders of the Notes that it will be able to obtain additional financing for its needs, either on a short-term, or a long-term basis on terms favourable to the Group or at all. The factors that could affect the Group s ability to procure financing include the cyclicality of the Group s businesses and market disruption risks which could adversely affect the liquidity, interest rates and the availability of funding sources. In addition, further consolidation in the banking industry may also reduce the availability of credit as the merged banks seek to reduce their combined exposure to a particular company, sector or geographical region. If the capital and credit markets continue to experience volatility and the availability of funds remains limited, the Group will incur increased financing costs associated with its debt and/or other debt instruments. Moreover, it is possible that the Group s ability to access the capital and credit markets may be limited by these or other factors at a time when the Group would like, or need, to do so, which could have an impact on the Group s ability to grow its business, refinance maturing debt, and/or react to changing economic and business conditions. 84

87 Political, economic and other risks in the markets where the Group s container shipping business has operations may cause serious disruptions to its business The Group s vessels ply ports in various countries around the world, with a focus on emerging markets including Africa and Latin America. As such, the Group s container shipping business is subject to political, economic and social conditions of the countries where these ports are located. For example, the Group may be exposed to risks of political unrest, war and economic and other forms of instability, such as natural disasters, epidemics, widespread transmission of communicable or infectious diseases, acts of God, terrorist attacks and other events beyond its control which may adversely affect local economies, infrastructures and livelihoods. These events can result in disruption to the Group s or the Group s customers business and seizure of, or damage to, the Group s or the Group s customers assets. Such events could also cause the partial or complete closure of particular ports and sea passages, such as the Suez or Panama canals, potentially resulting in higher costs, vessel delays and cancellations on some lines. Furthermore, these events could lead to reductions in, or in the growth rate of, world trade, which could reduce demand for the Group s vessels and/or services and adversely affect its business, financial condition, performance, results of operations and/or prospects. In addition, the political, economic or social conditions in any of these countries may have an effect on the Group s customers business and financial conditions which may affect the creditworthiness of the Group s customers and hence affect the stability of income flow to the Group. The Group is exposed to risks associated with the failure to declare or misdeclaration of illegal or dangerous cargo by the Group s customers The Group s container shipping business provides services including the shipping of certain dangerous or hazardous cargo. The shipping of dangerous cargo may potentially be a major hazard unless such cargo has been properly identified to the Group and packed and secured in accordance with the International Maritime Dangerous Goods ( IMDG ) Code. The IMDG Code was developed as a uniform international code for the transport of dangerous goods by sea covering such matters as packing, container traffic and stowage, with particular reference to the segregation of incompatible substances. Although the Group has put in place measures which aim to ensure that dangerous cargo are fully declared and stowed on its vessels in accordance with the IMDG Code, there can be no assurance that some customers will not misdeclare or fail to declare such dangerous cargo. The failure or misdeclaration of dangerous cargo may result in container explosions and fires, damage to or loss of vessels, equipment or cargo or loss of life. Any such event may expose the Group to losses and liabilities, loss of income, increased costs and damage to its reputation. In addition, the Group is required to comply with local laws and regulations. In the event of non-compliance, the Group may be exposed to fines, penalties or even litigation, which may adversely affect the Group s business, financial condition, performance, results of operations and/or prospects. Maritime claimants could arrest the Group s vessels Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against that vessel (and, in some jurisdictions, any vessel owned or controlled by the same owner) for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a vessel and commencing foreclosure proceedings. This would apply even if the Group s vessels are chartered out (whether on a time charter basis or otherwise). The arrest or attachment of one or more of the Group s vessels may interrupt the Group s cashflow and may result in the Group having to pay a substantial sum of money to have the arrest lifted. 85

88 The Group s vessels may be exposed to attacks by pirates or terrorist attacks The Group s vessels may be attacked, destroyed, hijacked or seized by pirates or terrorists. The Somalian coast and the Straits of Malacca, in particular, are known to be areas where pirates operate. Although measures have been taken to ensure the safety of the Group s vessels and their crew members, there is no assurance that such measures will be effective. In the event that the Group s vessels are attacked, destroyed, hijacked or seized by pirates or subject to terrorist attacks, resulting in damage and/or loss to its vessels which exceeds its existing insurance coverage or which is not covered by the existing insurance policies the Group has taken up, its business, financial condition, performance, results of operations and/or prospects may be adversely affected. The Group s operations may be adversely affected if there is any significant downtime of vessels or equipment In the event of any extensive servicing or repair, there will be a prolonged and significant downtime of the Group s vessels or equipment, resulting in major disruptions to its operations. In the event the Group is affected by such prolonged and significant downtime of its vessels or equipment, its business, financial condition, performance, results of operations and/or prospects may be adversely affected. The Group s insurance coverage may not be sufficient to cover its liabilities arising from the inherent risks associated with its business activities The Group may not always be able to obtain insurance for its operating risks, nor may it be practical to cover/insure against all risks in all geographical areas. The Group s business operations subject it to inherent risks, such as equipment defects, malfunctions and failures, accidents, equipment misuse and natural disasters. These events may cause a disruption or cessation in the Group s operations, and may adversely affect its business, financial condition, performance, results of operations and/or prospects. These risks could expose the Group to substantial liability for personal injury, wrongful death, product liability, property damage, pollution and other environmental damage. Although the Group s protection and indemnity insurance insures it against the risks of damage to and/or loss of vessels as well as equipment which are carried onboard its vessels sustained in collisions, there can be no assurance that all risks can be adequately covered/insured against all potential liabilities or that any insured sum will be paid. In the event of damages or losses in excess of the Group s insurance coverage, the Group may be required to make material compensation payments. This may adversely affect the Group s business, financial condition, performance, results of operations and/or prospects. The Group s insurance may not be adequate to cover all potential liabilities or risks to which it may be subject to. Furthermore, there is no assurance that insurance will be generally available in the future or, even if available, that the contributions/premiums will not increase or remain commercially justifiable. The occurrence of any of these events may result in the interruption of the Group s operations, damage to its reputation and subject the Group to significant losses or liabilities. If the Group incurs substantial liability and the insurance does not, or is insufficient to, cover its liability, its business, financial condition, performance, results of operations and/or prospects may be adversely affected. There can be no assurance that the Group has or can maintain sufficient insurance to cover losses that may result from its operations in its container shipping business The operation of any ocean-going vessel has an inherent risk of sinking, collision, other catastrophic maritime disaster, environmental pollution, leaks or spills, personal injury, loss of life, losses to, stranding of or damage to cargo and property, business interruption caused by 86

89 war, terrorist activities, mechanical failure, human error, political action, labour strikes, adverse weather conditions, fire and other circumstances or events. Any of these events could result in the Group experiencing direct losses and liabilities, loss of income, increased costs and damage to its reputation. While the Group has procured insurance for its container shipping operations against risks commonly insured against by claimants, no insurance can compensate for all potential losses and there can be no assurance that the insurance coverage the Group has will be adequate or that its insurers will pay a particular claim. The Group s insurance policies do not cover political risks and risks arising from damage caused by wear and tear. In addition, there are some standard market exclusions to the insurance coverage for the Group s container shipping business. These market exclusions would exclude loss or damage to a vessel or customer s cargoes and to the extent where the loss or damage would fall within these exclusions, the Group s business, financial condition, performance, results of operations and/or prospects may be adversely affected. The container shipping industry is subject to increased inspection procedures and new security regulations, which may cause disruption to the Group s business International container shipping is subject to security and customs inspections and related procedures in countries of origin, destination, and trans-shipment points. These inspection procedures may result in cargo seizure, delays in the loading, off-loading, trans-shipment or delivery of containers and the levying of customs duties, fines or other penalties against exporters or importers and, in some cases, charterers. Since the terrorist attacks of 11 September 2001, some governmental authorities have increased container inspection rates of all imported containers. Government investment in non-intrusive container scanning technology has grown and there is interest in electronic monitoring technology, including so-called e-seals and smart containers, that would enable remote, centralised monitoring of containers during shipment to identify tampering with or opening of the containers, along with potentially measuring other characteristics such as temperature, air pressure, motion, and the presence of chemicals, biological agents and radiation. Changes to the inspection procedures and container security may result in additional costs and obligations on carriers and may, in certain cases, render the shipment of certain types of goods by container uneconomical or impractical. Additional costs may arise from current inspection procedures or future proposals that may not be fully recoverable from customers through higher rates or security surcharges. An increase in security and customs inspections and related procedures may materially and adversely affect the Group s business, financial condition, performance, results of operations and/or prospects. The Group s operations may be affected by failures or equipment breakdowns at its ports of call The Group s operations may be affected by breakdowns of port and container handling equipment at its ports of call. The occurrence of such events at its ports of call, could result in delays in the delivery, distribution or repositioning of its containers, increased costs and loss of business opportunities. Prolonged delays in the delivery of its containers as a result of such breakdowns or failures may have a material adverse effect on the Group s business, financial condition, results and/or operations. 87

90 The costs of maintaining the Group s vessels may increase with the age of such vessels As the vessels owned by the Group age, the costs to operate and maintain them in operation increases. Further, any hidden problems or latent defects, when detected, may be expensive to repair and if not detected, may result in accidents or other incidents for which the Group may become liable to third parties. Further, if the Group s vessels suffer damage, they may need to be repaired at a drydocking facility and its vessels could have a higher than normal off-hire days due to an unexpected drydocking. The costs of drydock repairs are unpredictable and can be substantial. The Group may have to pay drydocking costs that its insurance does not cover. This would increase costs, and reduce revenues while the vessel is off-hire and may have a material adverse effect on the Group s business, financial condition, performance, results of operations and/or prospects. Government requisitions of the Group s vessels during periods of emergency or war could disrupt the Group s business A government could requisition for title or seize the Group s vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. Also, a government could requisition one or more of the Group s vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of the Group s vessels could adversely affect its business, financial condition, performance, results of operations and/or prospects. Risks relating to the Group s Container Manufacturing Business The Group s container manufacturing business is highly dependent on regional and global economic trends The two major groups of customers of the Group s container manufacturing business are international container leasing companies and shipping lines. As there is a strong correlation between the condition of global and regional economies and global containerised cargo volume, the Group is highly dependent on regional and global economic trends as well as on the industries and geographical markets in which the Group operates in. In addition, the operations of the Group s container manufacturing business s customers are also highly cyclical and sensitive to macroeconomic factors. Any significant decrease in the level of economic activity or growth in the global or regional economy may adversely affect the Group s business, financial condition, performance, results of operations and/or prospects. The Group s container manufacturing business is dependent on the continued growth of international trade volumes, especially import and export volumes to and from the PRC The demand for containers is partially tied to international trade. A substantial portion of the Group s containers is used in trade involving goods being shipped from the PRC to the U.S., Europe or other regions. The willingness and ability of international consumers to purchase the PRC s goods is dependent on political support in the U.S., Europe and other countries, and absence of government-imposed barriers to international trade in goods and services. For example, international consumer demand for the PRC s goods is related to price; if the price differential between the PRC goods and domestically-produced goods were to decrease due to increased tariffs on the PRC goods, demand for the PRC goods could decrease, which could result in reduced demand for containers. In addition, an increased use of quotas or other technical barriers to restrict trade from or to the PRC could similarly impact the demand for the Group s products. The current regime of relatively free trade may not continue. 88

91 On 14 May 2014, the Department of Commerce of the U.S. announced the initiation and commencement of preliminary phase antidumping duty and countervailing duty investigations in relation to the imports from the PRC of closed van containers generally measuring 53-foot in exterior length, and which are designed for intermodal transport of goods other than bulk liquids within North America (the 53-foot Domestic Dry Containers ). The investigations were instituted in response to a petition alleging that the 53-foot Domestic Dry Containers are subsidised by the government of the PRC and sold in the U.S. at less than fair value. Singamas is one of the subjects under the investigations. On 6 June 2014, the U.S. International Trade Commission (the Commission ) preliminarily determined that there was a reasonable indication that imports of 53-foot Domestic Dry Containers from the PRC materially retarded the establishment of the domestic industry in the U.S. and materially injure, or threaten material injury to, the domestic industry in the U.S. The Department of Commerce is scheduled to announce its preliminary countervailing duty determination in July 2014 and its preliminary antidumping duty determination in October 2014, unless the statutory deadlines are extended. The Group s sales revenue in relation to the 53-foot Domestic Dry Containers exported to the U.S. was approximately US$69,689,000 in 2013, which amounted to approximately 5.43 per cent. of the container manufacturing turnover and 1.54 per cent. of the Group s consolidated turnover in If the final determination from the Department of Commerce and the Commission is affirmative, the tariff on imports of 53-foot Domestic Dry Containers will increase, which may accordingly result in an increase in the price of such containers offered by the Group to customers in the U.S. This may affect the Group s sales of such containers in the U.S., which may have an adverse effect on the Group s business, financial condition, performance, results of operations and/or prospects. In addition, container manufacturing has, historically, been concentrated at the origin for containerised trade. The volumes of international trade and the PRC s imports and exports may be affected by changes and developments in the global economy, labour costs in the PRC as well as other financial and political conditions beyond the Group s control. In particular, an economic downturn in the PRC and/or a shift in the global manufacturing base away from the PRC would have an adverse effect on the Group s business, financial condition, performance, results of operations and/or prospects. The Group s container manufacturing business may experience substantial fluctuations in raw material costs The Group s ability to secure reliable and adequate supply of raw materials is critical to its container manufacturing business and its operations. The key raw material in the Group s container manufacturing business is steel. The cost of steel fluctuates in line with changes in its global supply and demand. Shortages in the supply of steel and other raw materials the Group s container manufacturing business uses may result in increases in the price of these raw materials or impact the Group s ability to obtain such raw materials. In addition, the Group s ability to pass increased costs due to an increase in the prices of steel and other raw materials along to the Group s customers may be limited by pressures from competition and customer resistance. The Group may not be able to recover the increases in the cost of steel and other raw materials by raising its prices and this may have an adverse effect on the Group s profitability. The operating results of the Group s container manufacturing business are highly sensitive to pricing pressures Decreases in prices for the products of the Group s container manufacturing business may adversely impact the Group s ability to respond to competition and to other market conditions or to otherwise take advantage of business opportunities. To the extent one or more of the Group s competitors offer more competitive pricing of its products, the Group s ability to retain its customers could be materially and adversely affected. 89

92 Higher energy costs worldwide and shortage or disruption of power supplies in the PRC may adversely affect the operations of the Group s container manufacturing business The Group s container manufacturing business consumes a significant amount of electrical power, natural gas and fuel oil in its operations. With the rapid development of the PRC economy, demand and prices for power supplies have continued to increase. Substantial increases and volatility in energy costs could cause the Group to experience a significant increase in operating costs. Moreover, various regions across the PRC have experienced shortages or disruptions in power supplies, especially during summer peak season or acute weather conditions. The Group cannot give any assurance that there will be sufficient power supplies available to the Group to meet the Group s future requirements. Increases in the costs of electricity, natural gas and fuel oil, shortages or disruptions in their supplies may disrupt the Group s normal operations, and which may result in the Group s business, financial condition, performance, results of operations and/or prospects to be adversely affected. Consolidation and concentration in the container shipping industry could decrease the demand for the products of the Group s container manufacturing business The Group s container manufacturing business sells its containers to container leasing companies and shipping lines. The shipping industry has been consolidating for a number of years, and there may be further consolidation. Consolidation of major container shipping lines could create efficiencies and decrease the demand for additional containers because they may be able to fulfil a larger portion of their needs through their existing container fleets. Any such decrease in the demand for container products would harm the Group s business, financial condition, performance, results of operations and/or prospects. Failure to implement future technological advances in the container manufacturing industry could render the Group s products and manufacturing process uncompetitive The operating results of the Group s container manufacturing business depend to a significant extent on its ability to continue to introduce innovative products and improve its manufacturing process, applications, plants and equipment. Future technological advances in the container manufacturing industry may result in the availability of new products or increase the efficiency of existing manufacturing and distribution systems, which may prove more advantageous than the Group s existing technology for commercialisation of container products and may render the Group s products and manufacturing process uncompetitive or obsolete. As a result, we may need to invest in significant research and development to maintain the Group s market position, keep pace with technological advances in the container manufacturing industry and effectively compete in the future. The Group is unable to predict which of the many possible future products and manufacturing processes will meet the evolving industry standards and consumer demands and the Group cannot give any assurance that the Group s research and development efforts in this regard will be successful. The Group s failure to further refine and enhance its products, improve manufacturing technology and to keep pace with evolving technologies and industry standards could cause the Group s products to become uncompetitive or obsolete, which could in turn reduce the Group s market share and cause the Group s revenue and net income to decline. The Group s insurance coverage for its container manufacturing business may not adequately protect the Group against the possible risk of loss The operations of the Group s container manufacturing business are subject to risks inherent in the course of the production processes, discharges or releases of hazardous substances and other environmental risks, mechanical failure of equipment at the Group s facilities and natural disasters. In addition, many of these operating and other risks may cause personal injury and loss of life, severe damage to or destruction of the Group s properties and the 90

93 properties of others and environmental pollution, and may result in suspension of operations and the imposition of civil or criminal penalties. While the Group believes its container manufacturing business has maintained insurance coverage in amounts consistent with industry norms, including product liability and business interruption insurance, there can be no assurance that the Group s insurance policies will be adequate to cover the losses that may be incurred by the Group. If the Group suffers a large uninsured loss or any insured loss suffered significantly exceeds the insurance coverage the Group maintains, the Group s business, financial condition, performance, results of operations and/or prospects may be adversely affected. Other Risks relating to the Group The Issuer is not subject to the same disclosure and other requirements as companies listed on the SGX-ST and other stock exchanges The Issuer and its subsidiaries (other than Singamas whose shares are listed on the HKSE) are private limited companies and their shares are not listed for quotation on the SGX-ST or on any other stock exchange. As such, the Issuer and such subsidiaries are not subject to disclosure and other requirements which are typically imposed on companies whose shares are listed for quotation on a stock exchange, for instance, the Issuer may not be required to put in place certain internal policies and procedures that are required of listed companies. Although the Issuer is still subject to various reporting requirements under the SGX-ST Listing Manual (to the extent that the reporting obligations are applicable to the Issuer as an issuer of debt securities) and the Trust Deed, investors may find that there is less available information on the Issuer and its subsidiaries in the public domain as compared to a company whose shares are listed for quotation on the SGX-ST or on any other stock exchange. The Issuer only prepares consolidated financial statements on a semi-annual basis. Under the Trust Deed, the Issuer has undertaken to furnish its financial statements to the Trustee on a semi-annual basis, 180 days after the close of the relevant financial period. As investors may find that there is less available information on the Issuer and its subsidiaries in the public domain as compared to a company whose shares are listed for quotation on the SGX-ST or on any other stock exchange, such investors may find that their ability to assess the financial condition of the Issuer and its subsidiaries on a continuous basis may be less optimal as compared to other companies which are listed on the SGX-ST or other stock exchanges. The Issuer has operations in countries that are currently subject to U.S. and international trade restrictions, economic embargoes and sanctions The U.S. and other jurisdictions, including the European Union and the United Nations, have comprehensive or broad economic sanctions targeting certain countries, including Cuba, Sudan, Iran, Syria, Myanmar, Liberia, Zimbabwe and North Korea. The Group has a particularly significant presence in the emerging markets of Africa, the PRC, the Middle East and India, with a total of 10 main services from Asia and the Indian sub-continent to Africa. The Group is also one of the most significant carriers in the Red Sea region, calling at virtually every port with container handling capacity. In particular, the Group operates in Iran, Sudan and Myanmar, which are sanctioned countries. The Group has a third party agent in Iran and a joint venture with a local shipping company in Sudan, which is appointed as its local agent. The Group also has two local partners in Myanmar, which are appointed as its local agent and crew agency respectively. There can be no assurance that entities with whom the Group now, or in the future may, engage in transactions and employ will not be subject to U.S. and international sanctions. There can also be no assurance that the countries in which the Group currently operates will not be subject to further and more restrictive sanctions in the future, or that the Office of Foreign Assets Control of the U.S. Department of the Treasury or other U.S. and international government agencies will not impose sanctions on other countries or entities with which the Group currently operates or may in the future operate. As a result of its business activities with countries that are subject to international sanctions, the Issuer may be subject 91

94 to negative media or investor attention and investors may incur reputational or other risks. In addition, there can be no assurance that the Group will not make future or additional investments in countries subject to U.S. or international sanctions, or itself become subject to sanctions. Further, if more sanctions are imposed on countries in which the Group does business, this could have a negative impact on its operations in these countries. If the Group were to increase its business in or with these countries, particularly relative to its total business, this could have a negative impact on its ability to raise money in international capital markets and on the international marketability of its securities. The Group may be adversely affected by any possible loss of major customers There can be no assurance that the Group will be able to continue to retain its major customers or that its customers will maintain or increase their current level of business with the Group. In the event any of the Group s major customers ceases to have business dealings with it or materially reduces the level of business activities with it, the Group s business, financial condition, performance, results of operations and/or prospects will be adversely affected. The Group is subject to international environmental regulations The Group is subject to a wide variety of environmental regulations in multiple jurisdictions. Compliance with environmental rules and regulations at the national, provincial and local levels is an important aspect of the ability of the Group to continue its operations. Non-compliance with these regulations may result in penalties being unpaid or compliance with such regulations may necessitate significant expense. The Issuer cannot guarantee that the Group will not incur significant additional costs and liabilities (which may include liabilities incurred by businesses before acquisition of such businesses by the Group) in complying with existing or new environmental laws and regulations. Also, countries in which the Group operates in may in the future adopt tighter and more stringent environmental laws, regulations and enforcement policies than those applicable at present. The Group is in compliance with such rules and regulations, including pollution prevention regulations and standards. However, in June 2012, one of the vessels operated by the Issuer was found by the U.S. Coast Guard in the American Samoa port of Pago Pago to have infringed the International Convention for the Prevention of Pollution from Ships (MARPOL). The Group s vessel had discharged untreated waste water generated in the machinery space into the sea. Following the incident, the Issuer was fined US$2,202,120 and was required to comply with an Environmental Compliance Programme pursuant to which all vessels managed and operated by the Issuer calling at U.S. ports or territories are required to comply with certain specific environmental protection and pollution prevention requirements. There are no prescribed penalties for non-compliance with the Environmental Compliance Programme. However, in the event any penalties are imposed, the Group s business, financial condition, performance, results of operations and/or prospects may be adversely affected. The Issuer and/or the Group are exposed to interest rate risk Some of the Issuer s and/or the Group s existing and future debts and borrowings may carry floating interest rates, and consequently, the interest cost to the Issuer and/or the Group for such debts and borrowings will be subject to fluctuations in interest rates. In addition, the Issuer and/or the Group are and may in future be subject to market disruption clauses contained in their loan agreements with banks. Such clauses will generally provide that to the extent that the banks may face difficulties in raising funds in the interbank market or are paying materially more for interbank deposits than the displayed screen rates, they may pass on the higher cost of funds to the borrower, notwithstanding the margins agreed. Where appropriate, the Issuer and/or the Group may seek to minimise their interest rate risk exposure by entering into interest rate swap contracts to swap floating interest rates for fixed interest rates over the 92

95 duration of certain of their debts and borrowings. However, the Issuer s and/or the Group s hedging policy may not adequately cover their exposure to interest rate fluctuations and this may result in a large interest expense and an adverse effect on the Issuer s and/or the Group s business, financial condition, performance, results of operations and/or prospects. The Group may not be able to generate sufficient cash flows to meet its debt service obligations The Group s ability to make scheduled payments on, or to refinance its obligations with respect to, its indebtedness, including the Notes, will depend on the Group s financial and operating performance, which in turn will be affected by general economic conditions and by financial, competitive, regulatory and other factors beyond the Group s control. The Group s business may not generate sufficient cash flow from operations and future sources of capital may not be available to the Group in an amount sufficient to enable the Group to service its indebtedness, including the Notes, or to fund the Group s other liquidity needs. If the Group is unable to generate sufficient cash flow to satisfy its debt obligations, the Group may have to undertake alternative financing plans, such as refinancing or restructuring its debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. There can be no assurance that any refinancing would be possible, that any assets could be sold or, if sold, of the timing of the sales and the amount of proceeds that may be realised from those sales, or that additional financing could be obtained on acceptable terms, if at all. The Group s inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance its indebtedness on commercially reasonable terms, would materially and adversely affect the Group s financial condition and results of operations and the Group s ability to satisfy its obligations under the Notes. The Notes are structurally subordinated to secured liabilities of the Issuer and all liabilities of the subsidiaries of the Issuer The obligations of the Issuer under the Notes will constitute unsecured obligations of the Issuer. As at 31 December 2013, approximately 69 per cent. of the indebtedness of the Issuer and its subsidiaries was secured by their assets (including vessels). This includes loans and other facilities granted by banks and financial institutions (including some or all of the Arrangers) to the Group. Therefore in the event of the winding-up of the Issuer, the right of the holders of Notes to receive payments in respect of the Notes will rank junior to the claims of all its secured creditors. After satisfaction of the claims of its secured creditors, there is no guarantee that the remaining assets will be sufficient to satisfy all of the obligations of the Issuer under the Notes. Moreover, the subsidiaries of the Issuer are not providing any guarantees and the shares of such subsidiaries will not be pledged to secure the obligations of the Issuer under the Notes. Therefore, the Issuer s obligations under the Notes will be structurally subordinated to all existing and future obligations of the existing and future subsidiaries and all claims of creditors of existing or future subsidiaries. The Group is subject to regulatory risk Safety, environmental and similar regulations impose significant requirements and compliance costs on the Group s businesses. Multilateral, bilateral and local regulations determine the access of the Group and its competitors and potential competitors to the international market. Changes in those regulations or the implementation of those regulations could have a material adverse impact on the Group s businesses by, amongst other things, increasing its costs, restricting its market access, benefiting its competitors over the Group and restricting the Group s abilities to profitably manage its businesses. 93

96 The Group is dependent on its key management team and the business, financial condition, performance, results of operations and/or prospects of the Group may be adversely affected by an inability to retain such key personnel The Group believes that its continued success is dependent on the abilities and continued services of the executive directors of the Issuer and key management personnel. The Group has an experienced management team and the continued success of the Group s business is therefore dependent, to a large extent, on its ability to retain and motivate the services of the executive directors of the Issuer and key management personnel. There can be no assurance that the Group will be able to retain the executive directors of the Issuer and key management personnel and the loss of their services, without suitable and timely replacements, may adversely affect the Group s business, financial condition, performance, results of operations and/or prospects. Exchange rate fluctuations could have a negative effect on the financial condition and results of operations of the Group The Group is exposed to exchange rate risk in several ways. The currencies of its revenues may not match the currencies of its operating costs. As a consequence, there is a risk that changes in exchange rates could have a significant negative effect on the reported profits of the Group. There is a risk that fluctuations in exchange rates could have a negative effect on the competitiveness of the Group relative to its competitors in different countries. In particular, due to the greater international scope of the Group s operations compared to some of its competitors, the Group may be more exposed than other companies. In addition, as the operations and assets of the Group are located in various countries all over the world, exchange rate fluctuations could have a significant negative effect on their financial statements. The Issuer cannot guarantee that exchange rate fluctuations will not have a material negative effect on the business, financial condition, performance, results of operations and/or prospects of the Group. Labour problems may disrupt the Group s operations The Group generally enjoys healthy relationships with its workforce and the labour unions of which its employees are members. However, in the event of any concerted union action such as work stoppages, the Group s operations may be disrupted. There is no absolute assurance that the Group s relations with the labour unions will remain strong and strikes may occur. Third party contractors providing various services to the Group may also experience labour problems, which may have an impact on the provision of their services to the Group. In such events, the Group s business, financial condition, performance, results of operations and/or prospects may be adversely affected. The Group s operations may be disrupted by the spread of infectious and/or communicable diseases Given the Group s global operations, any outbreak of infectious and/or communicable diseases such as the influenza virus and its variants including swine influenza (H1N1), avian influenza (H5N1) and avian influenza (H7N9) may cause temporary disruptions to the Group s operations; for example, the crew of a vessel or key operations personnel could be quarantined due to exposure to such diseases. Such disruptions may adversely affect the Group s business, financial condition, performance, results of operations and/or prospects; in particular, if such an outbreak becomes uncontrolled there may be a material adverse economic effect in the countries where the Group operates and conducts business. 94

97 The Group s business may be adversely affected by protectionist policies adopted by countries globally There is a risk that countries could respond to the global economic downturn and financial crisis by resorting to protectionist measures in order to preserve domestic industries. Such measures include the raising of import tariffs, provision of subsidies to domestic industries and the creation of other trade barriers. A global trend towards protectionism would be harmful for the global economy in general, as protectionist measures would cause world trade to shrink further. This may threaten global economic recovery. If the risk of protectionism rises, there is a likelihood of the Group s businesses and prospects being adversely affected as the level of world trade declines. This is particularly so due to the fact that a large portion of the Group s business is conducted worldwide and the profitability of the Group s business would accordingly be affected by the volume of global trade. A failure in the Group s information technology systems or a shutdown in communications networks may adversely affect the Group s operations The Group is dependent on its information technology systems as well as third party telecommunications systems to provide integrated services to its customers. The provision of the Group s services depends on the stability of its information technology systems as well as the external network infrastructure of its telecommunications provider(s). Although the Group s centralised data systems and back-up systems are located separately in different places, there is no assurance that both systems will not be simultaneously damaged or destroyed in the event of a major disaster. Both the information technology systems and the external network may be vulnerable to damage or interruptions in operation due to fire, power loss, telecommunications systems failures, physical break-ins, a significant breakdown in internal controls, fraudulent activities by employees, failure of security measures or back-up systems, or other events beyond the Group s control. Any such failure in the information technology systems or the external network may adversely affect the Group s business, financial condition, performance, results of operations and/or prospects. Increasing competition from other modes of transportation may adversely affect the Group s business Other modes of transportation, including highways, railways and air transportation compete directly with sea transportation. Cargo owners may choose to use other modes of transportation for their cargo. If cargo owners opt for alternate shipping modes, it may affect the demand for containers which the Group manufactures and the shipping services which the Group provides. This in turn may adversely affect the Group s business, financial condition, performance, results of operations and/or prospects. The Group may be unable to enforce contracts with existing customers No assurance can be given that the Group s customers will honour the terms of signed contracts and that the Group will be able to successfully enforce such contracts with existing customers. To the extent that the Group may incur a loss as a result of a customer defaulting on its contract with the Group, this may have an adverse effect on the Group s business, financial condition, performance, results of operations and/or prospects. 95

98 The Group is exposed to risks of major litigation Due to the nature of the Group s businesses and operations, the Group is exposed to risks of major litigation. The cost of pursuing and defending any legal proceeding in which the Group is involved in may be substantial, and may divert the Group s management from the effective operation of its businesses. In addition, if the Group is unsuccessful in settling any legal proceedings on commercially reasonable terms, the Group may be liable for amounts that may have a material adverse effect on the Group s business and/or financial condition. The Group is subject to risks inherent in joint venture structures or associates The Group has, and expects in the future to have, interests in joint venture entities or associates in connection with its container shipping and container manufacturing businesses. However, there is no assurance that the Group s current joint venture partners or associates will continue to be a suitable fit or that the Group will be able to attract suitable joint venture partners or associates in the future. Disagreements may occur between the Group and its joint venture partners or associates regarding the business and operations of the joint ventures or associates which may not be resolved amicably. In addition, the Group s joint venture partners or associates may (a) have economic or business interests or goals that are not aligned with those of the Group, (b) take actions contrary to the Group s instructions, requests, policies or objectives, (c) be unable or unwilling to fulfil their obligations, (d) have financial difficulties; or (e) have disputes with the Group as to the scope of their responsibilities and obligations. If one or more of the Group s joint venture partners or associates are unable or unwilling to fulfil their respective contractual obligations (for example, they may default in making payments during future capital calls or capital raising exercises) or experience a decline in creditworthiness, the performance of the Group s joint ventures or associates may be materially and adversely affected. Although joint venture agreements generally contain terms that govern the treatment of such events to the detriment of the defaulting party and the Group would generally seek to enforce its rights as enumerated within these agreements, the Group s business, financial condition, performance, results of operations and/or prospects may still be adversely affected. The Group s operations may be affected by natural calamities and adverse weather conditions The Group s operations are exposed to a variety of natural calamities and adverse weather conditions, including violent storms, abnormal waves, typhoons, tidal waves, tsunamis, major earthquakes, landslides and fire. Natural calamities at sea or near ports could disrupt the operation of the Group s vessels (through the suspension or closure of port facilities) or result in the Group s vessels grounding, sinking, colliding with other vessels or property, or the loss of life. In the event of a delay in the voyage of any of the Group s vessels as a result of adverse weather conditions, the Group may have to incur additional costs and expenses if it is required to implement an unscheduled recovery plan. In addition, if the Group s vessels are damaged as a result of adverse weather conditions, the Group will also have to incur additional costs in repairing such vessels. The operation of the Group s land-based operations comprising, among other things, freight forwarding, warehousing, distribution, value added services and ancillary transportation services may be adversely affected by natural disasters. In particular, natural disasters such as earthquakes, landslides and fire in the countries in which it operates may result in disruptions of land-based services, for example, ports and terminals, roads and railways, and delays in its land-based deliveries, damage to its land-based facilities or loss of life. Any of such events will result in a reduction in turnover of the Group and/or an increase in costs which may materially and adversely affect the Group s business, financial condition, performance, results of operations and/or prospects. 96

99 PURPOSE OF THE PROGRAMME AND USE OF PROCEEDS The net proceeds arising from the issue of the Notes under the Programme (after deducting issue expenses) will be used for refinancing existing borrowings, financing investments of the Issuer and for general working capital purposes or such other purposes as may be specified in the relevant Pricing Supplement. 97

100 CLEARING AND SETTLEMENT Clearance and Settlement under the Depository System In respect of Notes which are accepted for clearance by CDP in Singapore, clearance will be effected through an electronic book-entry clearance and settlement system for the trading of debt securities ( Depository System ) maintained by CDP. Notes that are to be listed on the SGX-ST may be cleared through CDP. CDP, a wholly-owned subsidiary of the SGX-ST, is incorporated under the laws of Singapore and acts as a depository and clearing organisation. CDP holds securities for its accountholders and facilitates the clearance and settlement of securities transactions between accountholders through electronic book-entry changes in the securities accounts maintained by such accountholders with CDP. In respect of Notes which are accepted for clearance by CDP, the entire issue of the Notes is to be held by CDP in the form of a Global Note for persons holding the Notes in securities accounts with CDP ( Depositors ). Delivery and transfer of Notes between Depositors is by electronic book-entries in the records of CDP only, as reflected in the securities accounts of Depositors. Although CDP encourages settlement on the third business day following the trade date of debt securities, market participants may mutually agree on a different settlement period if necessary. Settlement of over-the-counter trades in the Notes through the Depository System may only be effected through certain corporate depositors ( Depository Agents ) approved by CDP under the Companies Act to maintain securities sub-accounts and to hold the Notes in such securities sub-accounts for themselves and their clients. Accordingly, Notes for which trade settlement is to be effected through the Depository System must be held in securities sub-accounts with Depository Agents. Depositors holding the Notes in direct securities accounts with CDP, and who wish to trade Notes through the Depository System, must transfer the Notes to be traded from such direct securities accounts to a securities sub-account with a Depository Agent for trade settlement. CDP is not involved in money settlement between Depository Agents (or any other persons) as CDP is not a counterparty in the settlement of trades of debt securities. However, CDP will make payment of interest and repayment of principal on behalf of issuers of debt securities. Although CDP has established procedures to facilitate transfer of interests in the Notes in global form among Depositors, it is under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. None of the Issuer, the Principal Paying Agent or any other agent will have the responsibility for the performance by CDP of its obligations under the rules and procedures governing its operations. Clearance and Settlement under Euroclear and/or Clearstream, Luxembourg Euroclear and Clearstream, Luxembourg each holds securities for participating organisations and facilitates the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in the accounts of such participants, thereby eliminating the need for physical movements of certificates and any risks from lack of simultaneous transfer. Euroclear and Clearstream, Luxembourg provide to their respective participants, among other things, services for safekeeping, administration, clearance and settlement of internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg each also deals with domestic securities markets in several countries through established depository and custodial relationships. The respective systems of Euroclear and Clearstream, Luxembourg have established an electronic bridge between their two systems which enables their respective participants to settle trades with one another. 98

101 Euroclear and Clearstream, Luxembourg participants are financial institutions throughout the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organisations. Indirect access to Euroclear or Clearstream, Luxembourg is also available to other financial institutions, such as banks, brokers, dealers and trust companies which clear through or maintain a custodial relationship with a Euroclear or Clearstream, Luxembourg participant, either directly or indirectly. A participant s overall contractual relations with either Euroclear or Clearstream, Luxembourg are governed by the respective rules and operating procedures of Euroclear or Clearstream, Luxembourg and any applicable laws. Both Euroclear and Clearstream, Luxembourg act under those rules and operating procedures only on behalf of their respective participants, and have no record of, or relationship with, persons holding any interests through their respective participants. Distributions of principal with respect to book-entry interests in the Notes held through Euroclear or Clearstream, Luxembourg will be credited, to the extent received by the relevant Principal Paying Agent or, as the case may be, the Non-CDP Paying Agent, to the cash accounts of the relevant Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system s rules and procedures. 99

102 SINGAPORE TAXATION The statements below are general in nature and are based on certain aspects of current tax laws in Singapore and administrative guidelines and circulars issued by MAS in force as at the date of this Information Memorandum and are subject to any changes in such laws, administrative guidelines or circulars, or the interpretation of those laws, guidelines or circulars, occurring after such date, which changes could be made on a retroactive basis. These laws, guidelines and circulars are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below. Neither these statements nor any other statements in this Information Memorandum are intended or are to be regarded as advice on the tax position of any holder of the Notes or of any person acquiring, selling or otherwise dealing with the Notes or on any tax implications arising from the acquisition, sale or other dealings in respect of the Notes. The statements made herein do not purport to be a comprehensive or exhaustive description of all the tax considerations that may be relevant to a decision to subscribe for, purchase, own or dispose of the Notes and do not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities or financial institutions in Singapore which have been granted the relevant Financial Sector Incentive(s)) may be subject to special rules or tax rates. Holders or prospective holders of the Notes are advised to consult their own professional tax advisers as to the Singapore or other tax consequences of the acquisition, ownership of or disposal of the Notes, including, in particular, the effect of any foreign, state or local tax laws to which they are subject. It is emphasised that none of the Issuer, the Arrangers and any other persons involved in the Programme accepts responsibility for any tax effects or liabilities resulting from the subscription for, purchase, holding or disposal of the Notes. 1. Interest and Other Payments Subject to the following paragraphs, under Section 12(6) of the ITA, the following payments are deemed to be derived from Singapore: (a) (b) any interest, commission, fee or any other payment in connection with any loan or indebtedness or with any arrangement, management, guarantee or service relating to any loan or indebtedness which is (i) borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore (except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore or any immovable property situated outside Singapore) or (ii) deductible against any income accruing in or derived from Singapore; or any income derived from loans where the funds provided by such loans are brought into or used in Singapore. Such payments, where made to a person not known to the paying party to be a resident in Singapore for tax purposes, are generally subject to withholding tax in Singapore. The rate at which tax is to be withheld for such payments (other than those subject to the 15.0% final withholding tax described below) to non-resident persons (other than non-resident individuals) is currently 17.0%. The applicable rate for non-resident individuals is currently 20.0%. However, if the payment is derived by a person not resident in Singapore otherwise than from any trade, business, profession or vocation carried on or exercised by such person in Singapore and is not effectively connected with any permanent establishment in Singapore of that person, the payment is subject to a final withholding tax of 15.0%. The rate of 15.0% may be reduced by applicable tax treaties. 100

103 However, certain Singapore-sourced investment income derived by individuals from financial instruments is exempt from tax, including: (a) interest from debt securities derived on or after 1 January 2004; (b) (c) discount income (not including discount income arising from secondary trading) from debt securities derived on or after 17 February 2006; and prepayment fee, redemption premium and break cost from debt securities derived on or after 15 February 2007, except where such income is derived through a partnership in Singapore or is derived from the carrying on of a trade, business or profession. In addition, as the Programme as a whole is arranged by Credit Suisse (Singapore) Limited, DBS Bank Ltd. and Standard Chartered Bank, Singapore Branch, each of which is a Financial Sector Incentive (Bond Market) Company, Financial Sector Incentive (Capital Market) Company or Financial Sector Incentive (Standard Tier) Company (as defined in the ITA), any tranche of the Notes (the Relevant Notes ) issued as debt securities under the Programme during the period from the date of this Information Memorandum to 31 December 2018 would be, pursuant to the ITA and the MAS Circular FSD Cir 02/2013 entitled Extension and Refinement of Tax Concessions for Promoting the Debt Market issued by MAS on 28 June 2013 (the MAS Circular ), qualifying debt securities ( QDS ) for the purposes of the ITA, to which the following treatment shall apply: (i) (ii) subject to certain prescribed conditions having been fulfilled (including the furnishing of a return on debt securities for the Relevant Notes in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with the Relevant Notes as the relevant authorities may require to MAS and such other relevant authorities as may be prescribed, and the inclusion by the Issuer in all offering documents relating to the Relevant Notes of a statement to the effect that where interest, discount income, prepayment fee, redemption premium or break cost from the Relevant Notes is derived by a person who is not resident in Singapore and who carries on any operation in Singapore through a permanent establishment in Singapore, the tax exemption for qualifying debt securities shall not apply if the non-resident person acquires the Relevant Notes using the funds and profits of such person s operations through the Singapore permanent establishment), interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium and break cost (collectively, the Qualifying Income ) from the Relevant Notes derived by a holder who is not resident in Singapore and who (aa) does not have any permanent establishment in Singapore or (bb) carries on any operation in Singapore through a permanent establishment in Singapore but the funds used by that person to acquire the Relevant Notes are not obtained from such person s operation through a permanent establishment in Singapore, are exempt from Singapore tax; subject to certain conditions having been fulfilled (including the furnishing of a return on debt securities for the Relevant Notes in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with the Relevant Notes as the relevant authorities may require to MAS and such other relevant authorities as may be prescribed), Qualifying Income from the Relevant Notes derived by any company or body of persons (as defined in the ITA) in Singapore is subject to income tax at a concessionary rate of 10.0% (except for holders of the relevant Financial Sector Incentive(s) who may be taxed at different rates); and 101

104 (iii) subject to: (aa) the Issuer including in all offering documents relating to the Relevant Notes a statement to the effect that any person whose interest, discount income, prepayment fee, redemption premium or break cost derived from the Relevant Notes is not exempt from tax shall include such income in a return of income made under the ITA; and (bb) the furnishing of a return on debt securities for the Relevant Notes in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with the Relevant Notes as the relevant authorities may require to MAS and such other relevant authorities as may be prescribed, payments of Qualifying Income derived from the Relevant Notes are not subject to withholding of tax by the Issuer. Notwithstanding the foregoing: (A) (B) if during the primary launch of any tranche of Relevant Notes, the Relevant Notes of such tranche are issued to fewer than four persons and 50.0% or more of the issue of such Relevant Notes is beneficially held or funded, directly or indirectly, by related parties of the Issuer, such Relevant Notes would not qualify as QDS; and even though a particular tranche of Relevant Notes are QDS, if, at any time during the tenure of such tranche of Relevant Notes, 50.0% or more of the issue of such Relevant Notes is held beneficially or funded, directly or indirectly, by any related party(ies) of the Issuer, Qualifying Income derived from such Relevant Notes held by: (I) (II) any related party of the Issuer; or any other person where the funds used by such person to acquire such Relevant Notes are obtained, directly or indirectly, from any related party of the Issuer, shall not be eligible for the tax exemption or concessionary rate of tax as described above. The term related party, in relation to a person, means any other person who, directly or indirectly, controls that person, or is controlled, directly or indirectly, by that person, or where he and that other person, directly or indirectly, are under the control of a common person. The terms prepayment fee, redemption premium and break cost are defined in the ITA as follows: prepayment fee, in relation to debt securities and qualifying debt securities, means any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by the terms of the issuance of the securities; redemption premium, in relation to debt securities and qualifying debt securities, means any premium payable by the issuer of the securities on the redemption of the securities upon their maturity; and break cost, in relation to debt securities and qualifying debt securities, means any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by any loss or liability incurred by the holder of the securities in connection with such redemption. 102

105 References to prepayment fee, redemption premium and break cost in this Singapore tax disclosure have the same meaning as defined in the ITA. Where interest, discount income, prepayment fee, redemption premium or break cost (i.e. the Qualifying Income) is derived from the Relevant Notes by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available for QDS under the ITA (as mentioned above) shall not apply if such person acquires such Relevant Notes using the funds and profits of such person s operations through a permanent establishment in Singapore. Any person whose interest, discount income, prepayment fee, redemption premium or break cost (i.e. the Qualifying Income) derived from the Relevant Notes is not exempt from tax (including for the reasons described above) shall include such income in a return of income made under the ITA. Under the Qualifying Debt Securities Plus Scheme ( QDS Plus Scheme ), subject to certain conditions having been fulfilled (including the furnishing of a return on debt securities in respect of the QDS in the prescribed format within such period as the relevant authorities may specify and such other particulars in connection with the QDS as the relevant authorities may require to MAS and such other relevant authorities as may be prescribed), income tax exemption is granted on Qualifying Income from QDS (excluding Singapore Government Securities) which: (a) are issued during the period from 16 February 2008 to 31 December 2018; (b) (c) (d) have an original maturity of not less than 10 years; cannot be redeemed, called, exchanged or converted within 10 years from the date of their issue; and cannot be re-opened with a resulting tenure of less than 10 years to the original maturity date. However, even if a particular tranche of the Relevant Notes are QDS which qualify under the QDS Plus Scheme, if, at any time during the tenure of such tranche of Relevant Notes, 50.0 per cent. or more of the issue of such Relevant Notes is held beneficially or funded, directly or indirectly, by any related party(ies) of the Issuer, Qualifying Income from such Relevant Notes derived by: (i) (ii) any related party of the Issuer; or any other person where the funds used by such person to acquire such Relevant Notes are obtained, directly or indirectly, from any related party of the Issuer, shall not be eligible for the tax exemption under the QDS Plus Scheme as described above. The MAS Circular states that, with effect from 28 June 2013, the QDS Plus Scheme will be refined to allow QDS with certain standard early termination clauses (as prescribed in the MAS Circular) to qualify for the QDS Plus Scheme at the point of issuance of such debt securities. MAS has also clarified that if such debt securities are subsequently redeemed prematurely pursuant to such standard early termination clauses before the 10th year from the date of issuance of such debt securities, the tax exemption granted under the QDS Plus Scheme to Qualifying Income accrued prior to such redemption will not be clawed back. Under such circumstances, the QDS Plus status of such debt securities will be revoked prospectively for such outstanding debt securities (if any), and holders thereof may still enjoy the tax benefits under the QDS scheme if the QDS conditions continue to be met. 103

106 MAS has stated that, notwithstanding the above, QDS with embedded options with economic value (such as call, put, conversion or exchange options which can be triggered at specified prices or dates and are built into the pricing of such debt securities at the onset) which can be exercised within ten years from the date of issuance of such debt securities will continue to be excluded from the QDS Plus Scheme from such date of issuance. 2. Capital Gains Any gains considered to be in the nature of capital made from the sale of the Notes will not be taxable in Singapore. However, any gains derived by any person from the sale of the Notes which are gains from any trade, business, profession or vocation carried on by that person, if accruing in or derived from Singapore, may be taxable as such gains are considered revenue in nature. Holders of the Notes who apply or are required to apply the Financial Reporting Standard 39 - Financial Instruments: Recognition and Measurement ( FRS 39 ), may for Singapore income tax purposes be required to recognise gains or losses (not being gains or losses in the nature of capital) on the Notes, irrespective of disposal, in accordance with FRS 39. Please see the section below on Adoption of FRS 39 Treatment for Singapore Income Tax Purposes. 3. Adoption of FRS 39 Treatment for Singapore Income Tax Purposes The Inland Revenue Authority of Singapore has issued a circular entitled Income Tax Implications Arising from the Adoption of FRS 39 - Financial Instruments: Recognition & Measurement (the FRS 39 Circular ). The ITA has since been amended to give effect to the FRS 39 Circular. The FRS 39 Circular generally applies, subject to certain opt-out provisions, to taxpayers who are required to comply with FRS 39 for financial reporting purposes. Holders of the Notes who may be subject to the tax treatment under the FRS 39 Circular should consult their own accounting and tax advisers regarding the Singapore income tax consequences of their acquisition, holding or disposal of the Notes. 4. Estate Duty Singapore estate duty has been abolished with respect to all deaths occurring on or after 15 February

107 SUBSCRIPTION, PURCHASE AND DISTRIBUTION The Programme Agreement provides for Notes to be offered from time to time through one or more Dealers. The price at which a Series or Tranche will be issued will be determined prior to its issue between the Issuer and the relevant Dealer(s). The obligations of the Dealers under the Programme Agreement will be subject to certain conditions set out in the Programme Agreement. Each Dealer (acting as principal) will subscribe or procure subscribers for Notes from the Issuer pursuant to the Programme Agreement. United States The Notes have not been and will not be registered under the Securities Act, and the Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act ( Regulation S ). The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder. Each Dealer has agreed that, and each further Dealer appointed under the Programme will be required to agree that, except as permitted by the Programme Agreement, it will not offer, sell or deliver the Notes, (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution of an identifiable tranche of which such Notes are a part, as determined and certified to the Principal Paying Agent by such Dealer (or, in the case of an identifiable tranche of Notes sold to or through more than one Dealer, by each of such Dealers with respect to Notes of an identifiable tranche purchased by or through it, in which case the Principal Paying Agent shall notify such Dealer when all such Dealers have so certified), within the United States or to, or for the account or benefit of, U.S. persons, and it will have sent to each Dealer to which it sells Notes during the distribution compliance period a confirmation or other notice setting out the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. In addition, until 40 days after the commencement of the offering of any identifiable tranche of Notes, an offer or sale of Notes within the United States by any dealer that is not participating in the offering of such Notes may violate the registration requirements of the Securities Act. Hong Kong Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that: (i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes other than (a) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a prospectus as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and 105

108 (ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance. Singapore Each Dealer has acknowledged that this Information Memorandum has not been registered as a prospectus with the MAS. Accordingly, each Dealer has represented, warranted and agreed that it has not offered or sold any Notes or caused the Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell any Notes or cause the Notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this Information Memorandum or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the SFA, (ii) to a relevant person pursuant to Section 275(1), or to any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. General Each Dealer understands that no action has been taken in any jurisdiction that would permit a public offering of any of the Notes, or possession or distribution of this Information Memorandum or any other document or any Pricing Supplement, in any country or jurisdiction (other than Singapore) where action for that purpose is required. Each Dealer has agreed that it will comply with all applicable securities laws, regulations and directives in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers Notes or any interest therein or rights in respect thereof or has in its possession or distributes, any other document or any Pricing Supplement. Any person who may be in doubt as to the restrictions set out in the SFA or the laws, regulations and directives in each jurisdiction in which it subscribes for, purchases, offers, sells or delivers the Notes or any interest therein or rights in respect thereof and the consequences arising from a contravention thereof should consult his own professional advisers and should make his own inquiries as to the laws, regulations and directives in force or applicable in any particular jurisdiction at any relevant time. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the Dealers or any affiliate of the Dealers is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by that Dealer or its affiliate on behalf of the Issuer in such jurisdiction. 106

109 APPENDIX I GENERAL AND OTHER INFORMATION INFORMATION ON DIRECTORS 1. Save as disclosed below, the Directors are not related by blood or marriage to one another nor are they related to any substantial shareholder of the Issuer: (a) (b) the Directors of the Issuer Mr Teo Chew Peter Chang, Mr Teo Siong Seng, Mr Teo Cho Keng, Mr Teo Tiou Seng (Tony), Mr Teo Teng Seng and Mr Teo Choo Wee are the sons of the Director of the Issuer, Mr Teo Woon Chang Yun Chung; and the Director of the Issuer Ms Teo Lay Seng (Lisa) is the daughter of the Director of the Issuer, Mr Teo Woon Chang Yun Chung. 2. No Director of the Issuer is or was involved in any of the following events: (a) (b) (c) a petition under any bankruptcy laws filed in any jurisdiction against such person or any partnership in which he was a partner or any corporation of which he was a director or an executive officer; a conviction of any offence, other than a traffic offence, or judgment, including findings in relation to fraud, misrepresentation or dishonesty, given against him in any civil proceedings in Singapore or elsewhere, or being a named subject to any pending proceedings which may lead to such a conviction or judgment, or so far as such person is aware, any criminal investigation pending against him; or the subject of any order, judgment or ruling of any court of competent jurisdiction, tribunal or government body, permanently or temporarily enjoining him from acting as an investment adviser, dealer in securities, director or employee of a financial institution and engaging in any type of business practice or activity. 3. As at the date of this Information Memorandum, no option to subscribe for shares in, or debentures of, the Issuer has been granted to, or was exercised by, any Director of the Issuer. 4. No Director of the Issuer is interested, directly or indirectly, in the promotion of any assets acquired or disposed of by, or leased to, the Issuer or any of its subsidiaries, within the two years preceding the date of this Information Memorandum, or in any proposal for such acquisition, disposal or lease as aforesaid. 107

110 5. All shares of the Issuer are held by PIL Holdings Pte. Ltd. ( PILH ). The Directors of the Issuer hold shares in PILH and their interests in PILH as at the Latest Practicable Date are as follows: Directors Direct Interest Number of Shares % Teo Woon Chang Yun Chung (1) 79,275, Teo Chew Peter Chang 3,600, Teo Siong Seng 3,600, Teo Cho Keng 1,650, Teo Tiou Seng 2,400, Teo Teng Seng 2,250, Teo Choo Wee 1,650, Teo Lay Seng 1,275, Kuan Kim Kin Tay Kian Phuan William Tan Chor Kee Lim Jock Fong SHARE CAPITAL 6. As at the date of this Information Memorandum, there is only one class of ordinary shares in the Issuer. The rights and privileges attached to the Shares are stated in the Articles of Association of the Issuer. 7. No debentures or shares of the Issuer have been issued, as fully or partly paid up, for cash or for a consideration other than cash, within the two years preceding the date of this Information Memorandum. 8. The issued share capital of the Issuer as at the Latest Practicable Date is as follows: Share Designation Issued Share Capital Number of Shares Amount Ordinary Shares 554,400,000 S$554,400,000 BORROWINGS 9. As at 31 December 2013, the Group had no other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trading bills) or acceptance credits, mortgages, charges, hire purchase commitments, guarantees or other material contingent liabilities, save as disclosed in Appendix V. (1) Y. C. Chang & Sons Private Limited ( YCCS ) and South Pacific International Holdings Limited ( SPIH ) hold 43.66% and 31.66% in PILH respectively. YC Chang, together with members of his family, control YCCS and SPIH. 108

111 WORKING CAPITAL 10. The Directors are of the opinion that, after taking into account the present banking facilities and the net proceeds of the issue of the Notes, the Issuer will have adequate working capital for its present requirements. CHANGES IN ACCOUNTING POLICIES 11. There has been no significant change in the accounting policies of the Issuer since its audited consolidated annual financial statements for the financial year ended 31 December LITIGATION 12. No action, suit or proceeding against or affecting the Issuer or any of its subsidiaries (other than those of a frivolous or vexatious nature which are being contested in good faith) which, if adversely determined, would individually or in the aggregate have a material adverse effect on the financial condition, assets, results of operations or business of the Issuer or the Group, taken as a whole, or be material in the context of the issue and offering of the Notes has been started and is continuing, save where disclosed in this Information Memorandum and dealt with by appropriate proceedings, and no written notice, claim or demand has been received by any of them which evidences an intention to commence any such action, suit or proceeding. GENERAL 13. Save as disclosed in this Information Memorandum, the financial condition and operations of the Issuer are not likely to be affected by any of the following: (a) (b) (c) (d) (e) known trends, demands, commitments, events or uncertainties that will result in or are reasonably likely to result in the liquidity of the Issuer increasing or decreasing in any material way; material commitments for capital expenditures; unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from operations; known trends or uncertainties that have had or that the Issuer reasonably expects to have a material favourable or unfavourable impact on revenues or operating income; and any material information which may be relevant to the financial or trading prospects of the Issuer including special trading factors or risks, which are not mentioned elsewhere in this Information Memorandum or in any public announcement by the Issuer and which are unlikely to be known or anticipated by the general public and which could materially and adversely affect the profits of the Issuer or the Group. 109

112 MATERIAL ADVERSE CHANGE 14. Save as disclosed in this Information Memorandum, there has been no material adverse change in the financial condition, assets, results of operations or business of the Issuer or the Group, taken as a whole, since 31 December CONSENT 15. Ernst & Young LLP has given and has not withdrawn its written consent to the issue of this Information Memorandum with the references herein to its name and, where applicable, reports in the form and context in which they appear in this Information Memorandum. DOCUMENTS AVAILABLE FOR INSPECTION 16. Copies of the following documents may be inspected at the registered office of the Issuer at 140 Cecil Street, #03-00, PIL Building, Singapore during normal business hours for a period of six months from the date of this Information Memorandum: (a) (b) the Memorandum and Articles of Association of the Issuer; the Trust Deed; and (c) the audited consolidated annual financial statements of the Issuer and its subsidiaries for the financial year ended 31 December 2010, 31 December 2011, 31 December 2012 and 31 December FUNCTIONS, RIGHTS AND OBLIGATIONS OF THE TRUSTEE 17. The functions, rights and obligations of the Trustee are set out in the Trust Deed. 110

113 APPENDIX II AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS OF PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010 The information in this Appendix II has been reproduced from the audited consolidated annual financial statements of Pacific International Lines (Private) Limited and its subsidiaries for the financial year ended 31 December 2010 and has not been specifically prepared for inclusion in this Information Memorandum. 111

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224 APPENDIX III AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS OF PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED AND ITS SUBSIDIARIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 The information in this Appendix III has been reproduced from the audited consolidated annual financial statements of Pacific International Lines (Private) Limited and its subsidiaries for the financial year ended 31 December 2011 and has not been specifically prepared for inclusion in this Information Memorandum. 222

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