financial pages 105-125/FA2 - Sembcorp Marine€¦ · Contents General Information 106 Report of the Directors 107 Statement by Directors 125 Report of the Auditors 126 Profit and

Contents

General Information 106

Report of the Directors 107

Statement by Directors 125

Report of the Auditors 126

Profit and Loss Accounts 127

Balance Sheets 128

Statements of Changes in Equity 130

Cash Flow Statement of the Group 132

Notes to the Financial Statements 135

Supplementary Information 178

Major Properties 180

Notice of Annual General Meeting 181

Proxy Form 183

SEMBCORP MARINE LTD AND SUBSIDIARY COMPANIES

SembCorp Marine 2003106

DirectorsWong Kok Siew ChairmanTan Kwi Kin PresidentTan Pheng HockKiyotaka MatsuzawaNaoteru TsudaLow Sin LengTan Tew Han (Appointed on 17 April 2003)Ajaib Haridass (Appointed on 31 October 2003)Heng Chiang Gnee (Alternate to Tan Kwi Kin)Chee Keng Soon (Resigned on 17 April 2003)Giam Chin Toon (Resigned on 31 October 2003)Er Kwong Wah (Resigned on 17 April 2003)

SecretaryLim Seh Li

RegistrarKon Choon Kooi Pte Ltd47 Hill Street #06-02Chinese Chamber of Commerce & Industry BuildingSingapore 179365

Registered Office29 Tanjong Kling RoadSingapore 628054

AuditorsErnst & Young

Audit PartnerDaniel Soh (with effect from 2003)

G eneral Information

107SembCorp Marine 2003


R eport of the Directors

The Directors present their report to the members together with the audited financial statements of the Company and ofthe Group for the year ended 31 December 2003.

Directors of the CompanyThe names of the Directors of the Company in office at the date of this report are:

Wong Kok Siew ChairmanTan Kwi Kin PresidentTan Pheng HockKiyotaka MatsuzawaNaoteru TsudaLow Sin LengTan Tew Han (Appointed on 17 April 2003)Ajaib Haridass (Appointed on 31 October 2003)Heng Chiang Gnee (Alternate to Tan Kwi Kin)

Arrangements to enable Directors to acquire shares and debenturesOther than the SembCorp Marine Share Option Plan, neither at the end of the financial year, nor at any time during thefinancial year was the Company a party to any arrangement whose object is to enable the Directors of the Company to acquirebenefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

Directors’ interests in shares, share options and debenturesThe following Directors who held office at the end of the financial year had, according to the register required to be keptunder Section 164 of the Companies Act, an interest in shares or debentures of the ultimate holding company, TemasekHoldings (Private) Limited or any other related corporations as stated below:

Name of Directorand Corporation Other shareholdings inin which interest Description of Exercise Shareholdings registered in which the Director isheld interests period the name of Director deemed to have an interest

At beginning At end of At beginning At end ofof the year the year of the year the year

Wong Kok SiewSembCorp Marine Ordinary shares of - 75,000 212,500 - -Ltd $0.10 each

Options to subscribefor ordinary shares of$0.10 each- at $0.70 per share 8/9/2001 to 225,000 150,000 - -

7/9/2005

- at $0.66 per share 28/9/2002 to 250,000 187,500 - -27/9/2006

- at $0.90 per share 8/11/2003 to 250,000 250,000 - -7/11/2007

- at $0.99 per share 9/8/2004 to - 250,000 - -8/8/2008




Directors’ interests in shares, share options and debentures (cont’d)



Wong Kok SiewSembCorp Ordinary shares of - 636,446 836,446 - -Industries Ltd $0.25 each


19/5/2009

- at $1.99 per share 27/6/2001 to 500,000 500,000 - -26/6/2010

- at $1.55 per share 20/4/2002 to 500,000 500,000 - -19/4/2011

- at $1.59 per share 8/5/2003 to 400,000 400,000 - -7/5/2012

- at $0.98 per share 18/10/2003 to 400,000 400,000 - -17/10/2012

- at $1.14 per share 3/6/2004 to - 400,000 - -2/6/2013

- at $1.29 per share 19/11/2004 to - 400,000 - -18/11/2013

Conditional award of - up to 560,000 - - -280,000 performanceshares to be deliveredafter 2002 (Note 1a)

Conditional award of - up to 600,000 up to 600,000 - -300,000 performanceshares to be deliveredafter 2003 (Note 1b)

Conditional award of - up to 800,000 up to 800,000 - -400,000 performanceshares to be deliveredafter 2004 (Note 1c)

Conditional award of - - up to 800,000 - -400,000 performanceshares to be deliveredafter 2005 (Note 1d)

Conditional award of - 800,000 600,000 - -1,000,000 restrictedshares (Note 2)






Wong Kok SiewSembCorp Options to subscribeLogistics Ltd for ordinary shares

of $0.25 each- at $2.50375 per 29/6/2001 to 80,000 80,000 - - share 28/6/2005

- at $1.8375 per 16/5/2002 to 120,000 120,000 - share 15/5/2006

- at $2.01 per 28/2/2003 to 200,000 200,000 - - share 27/2/2007

- at $1.50 per 6/2/2004 to - 200,000 - - share 5/2/2008

Singapore Food Ordinary shares of - 80,000 180,000 - -Industries Limited $0.05 each

Options to subscribefor ordinary sharesof $0.05- at $0.78 per share 30/10/2001 to 100,000 100,000 - -

29/10/2009

- at $0.55 per share 24/8/2001 to 200,000 100,000 - -23/8/2005

- at $0.69 per share 28/7/2002 to 120,000 120,000 - -27/7/2006

- at $0.78 per share 9/8/2003 to 120,000 120,000 - -8/8/2007

Singapore Ordinary shares of - 5,137 25,137 - -Technologies $0.10 eachEngineering Ltd

ST Assembly Test Ordinary shares of - 2,000 2,000 - -Services Ltd $0.25 each

Raffles Holdings Ordinary shares of - 10,000 10,000 - -Limited $0.50 each

Singapore Tele- Ordinary shares of - 1,880 1,880 1,540 1,540communications $0.15 eachLtd







Tan Kwi KinSembCorp Marine Ordinary shares of - 950,000 950,000 - -Ltd $0.10 each

Options to subscribefor ordinary sharesof $0.10 each

- at $0.79 per share 27/4/2000 to 200,000 - - -26/4/2003

- at $0.70 per share 8/9/2001 to 750,000 750,000 - -7/9/2010

- at $0.66 per share 28/9/2002 to 800,000 800,000 - -27/9/2011

- at $0.90 per share 8/11/2003 to 800,000 800,000 - -7/11/2012

- at $0.99 per share 9/8/2004 to - 800,000 - -8/8/2013




SembCorp Options to subscribeIndustries Ltd for ordinary shares of

$0.25 each- at $1.99 per share 27/6/2001 to 25,000 25,000 - -

26/6/2010

- at $1.55 per share 20/4/2002 to 25,000 25,000 - -19/4/2011

- at $1.59 per share 8/5/2003 to 12,500 12,500 - -7/5/2012

- at $0.98 per share 18/10/2003 to 12,500 12,500 - -17/10/2012

- at $1.14 per share 3/6/2004 to - 12,500 - -2/6/2013

- at $1.29 per share 19/11/2004 to - 12,500 - -18/11/2013






Tan Kwi KinSingapore Food Ordinary shares of - 18,000 18,000 - -Industries Limited $0.05 each



Singapore Tele- Ordinary shares of - 200 200 200 200communications $0.15 eachLtd

Tan Pheng HockSembCorp Marine Options to subscribeLtd for ordinary shares of


27/9/2006

- at $0.90 per share 8/11/2003 to 40,000 40,000 - -7/11/2007

- at $0.99 per share 9/8/2004 to - 50,000 - -8/8/2008



7/8/2008

- at $1.418 per share 10/2/2001 to 400,000 400,000 - -9/2/2009

- at $2.00 per share 11/8/2001 to 5,000 5,000 - -10/8/2009

- at $2.26 per share 10/2/2002 to 400,000 400,000 - -9/2/2010

- at $2.72 per share 20/2/2002 to 225,000 225,000 - -19/2/2011







Tan Pheng HockSingapore Options to subscribeTechnologies for ordinary shares ofEngineering Ltd $0.10 each

- at $2.68 per share 11/8/2002 to 227,500 227,500 - -10/8/2011

- at $2.29 per share 8/2/2003 to 175,000 175,000 - -7/2/2012

- at $1.92 per share 13/8/2003 to 175,000 175,000 - -12/8/2012

- at $1.79 per share 7/2/2004 to - 200,000 - -6/2/2013

- at $1.86 per share 12/8/2004 to - 200,000 - -11/8/2013

Conditional award of - up to 220,000 - - -110,000 performanceshares to be deliveredafter 2002 (Note 1a)






Vertex Technology Ordinary shares of - - - 5 units 5 unitsFund (II) Ltd US$1.00 each







Tan Pheng HockChartered Ordinary shares of - 7,000 7,000 - -Semiconductor $0.26 eachManufacturing Ltd

Kiyotaka MatsuzawaSembCorp Marine Options to subscribeLtd for ordinary shares of


7/11/2007- at $0.99 per share 9/8/2004 to - 130,000 - -

8/8/2008

Naoteru TsudaSembCorp Marine Options to subscribeLtd for ordinary shares of


7/11/2007- at $0.99 per share 9/8/2004 to - 50,000 - -

8/8/2008

Low Sin LengSembCorp Marine Ordinary shares of - - 12,500 - -Ltd $0.10 each

Options to subscribefor ordinary shares of$0.10 each

- at $0.66 per share 28/9/2002 to 50,000 37,500 - -27/9/2011

- at $0.90 per share 8/11/2003 to 50,000 50,000 - -7/11/2012

- at $0.99 per share 9/8/2004 to - 50,000 - -

8/8/2008

SembCorp Ordinary shares of - 100,000 100,000 - -Industries Ltd $0.25 each


19/4/2011







Low Sin LengSembCorp Options to subscribeIndustries Ltd for ordinary shares of


7/5/2012

- at $0.98 per share 18/10/2003 to 250,000 250,000 - -17/10/2012

- at $1.14 per share 3/6/2004 to - 200,000 - -2/6/2013

- at $1.29 per share 19/11/2004 to - 150,000 - -18/11/2013




SembCorp Options to subscribeLogistics Ltd for ordinary shares of


15/5/2011

- at $2.01 per share 28/2/2003 to 20,000 20,000 - -27/2/2012

- at $1.50 per share 6/2/2004 to - 20,000 - -5/2/2013


CapitaLand Ordinary shares of - 2,000 2,000 - -Limited $1.00 each






Low Sin LengSingapore Options to subscribeComputer Systems for ordinary shares ofLimited $0.25 each

- at $1.55 per share 8/3/2003 to 5,000 5,000 - -7/3/2007

- at $0.86 per share 22/2/2004 to - 5,000 - -21/2/2008

Singapore Airlines Ordinary shares of - 3,000 3,000 4,000 4,000Ltd $0.50 each


Tan Tew Han #

SembCorp Options to subscribeMarine Ltd for ordinary shares of

$0.10 each- at $0.99 per share 9/8/2004 to - 75,000 - -

8/8/2008

Singapore Food Ordinary shares of - 80,000 - - -Industries Limited $0.05 each

Singapore Ordinary shares of - - - 4,000 4,000Technologies $0.10 eachEngineering Ltd

Chartered Ordinary shares of - 13,000 13,000 7,000 7,000Semiconductor $0.26 eachManufacturing Ltd

ST Assembly Ordinary shares of - - - 1,000 1,000Test Services Ltd $0.25 each

CapitaLand Ordinary shares of - - - 4,000 4,000Limited $1.00 each

Singapore Airlines Ordinary shares of - 17,000 17,000 3,000 3,000Ltd $0.50 each

Singapore Tele- Ordinary shares of - 2,580 2,580 6,200 6,200Communications $0.15 eachLtd







Tan Tew Han #

Singapore Airport Ordinary shares of - - - 1,000 1,000Terminal Services $0.10 eachLtd

SMRT Corporation Ordinary shares of - 100,000 100,000 34,000 34,000Ltd $0.10 each

Ajaib Haridass #

SembCorp Ordinary shares of - 50,000 50,000 - -Industries Ltd $0.25 each

Chartered Ordinary shares of - - - 10,000 10,000Semiconductor $0.26 eachManufacturing Ltd

Heng Chiang GneeSembCorp Marine Ordinary shares of - 500,000 725,000 - -Ltd $0.10 each

Options to subscribefor ordinary shares of$0.10 each- at $0.79 per share 27/4/2000 to 150,000 - - -

26/4/2003

- at $0.70 per share 8/9/2001 to 450,000 300,000 - -7/9/2010

- at $0.66 per share 28/9/2002 to 500,000 375,000 - -27/9/2011

- at $0.90 per share 8/11/2003 to 500,000 500,000 - - 7/11/2012

- at $0.99 per share 9/8/2004 to - 500,000 - -8/8/2013









Heng Chiang GneeSembCorp Ordinary shares of - - - 12,715 12,715Industries Ltd $0.25 each

Options to subscribefor ordinary shares of$0.25 each

- at $1.99 per share 27/6/2001 to 12,000 12,000 - -26/6/2010

- at $1.55 per share 20/4/2002 to 12,000 12,000 - -19/4/2011

- at $1.59 per share 8/5/2003 to 7,000 7,000 - -7/5/2012

- at $0.98 per share 18/10/2003 to 7,000 7,000 - -17/10/2012

- at $1.14 per share 3/6/2004 to - 10,000 - -2/6/2013

- at $1.29 per share 19/11/2004 to - 10,000 - -18/11/2013

SembCorp Ordinary shares of - - - - 2,000Logistics Ltd $0.25 each


Chartered Ordinary shares of - 5,000 5,000 - -Semiconductor $0.26 eachManufacturing Ltd



Singapore Ordinary shares of - 3,000 3,000 - -Computer Systems $0.25 eachLimited

Singapore Tele- Ordinary shares of - 200 200 - -communications $0.15 eachLtd

# At date of appointment of Director



Note 1: The actual number delivered will depend on the achievement of set targets over a 3 year period as indicated below. Achievement of target below80%, level will mean no performance shares will be delivered, while achievement up to 200% will mean up to twice the number of conditionalperformance shares awarded could be delivered.

(a) Period from 2000 to 2002∆

(b) Period from 2001 to 2003(c) Period from 2002 to 2004(d) Period from 2003 to 2005

∆ For this period, Tan Pheng Hock was awarded 9,000 new shares on 12 March 2003. Upon the partial achievement of one of 3 targets set. Thebalance of the conditional awards covering the period from 2000 to 2002 has thus lapsed.

Note 2: 1,000,000 SembCorp Industries shares are comprised in conditional award of restricted stocks granted to Wong Kok Siew pursuant to the SembCorpIndustries Restricted Stock Plan subject to completion of the vesting period referred to below and Wong Kok Siew continuing to be in the employmentof the SembCorp Industries Group at the time of the vesting. Of the 1,000,000 SembCorp Industries Shares:

(i) 200,000 SembCorp Industries shares have been vested on 20 August 2002;(ii) 200,000 SembCorp Industries shares have been vested on 20 August 2003;(iii) 200,000 SembCorp Industries shares will vest on 20 August 2004;(v) 200,000 SembCorp Industries shares will vest on 20 August 2005; and(vi) 200,000 SembCorp Industries shares will vest on 20 August 2006;

If Wong Kok Siew ceases to be in the employment of the SembCorp Industries Group before the completion of each vesting date, his awards of allunvested SembCorp Industries Shares will lapse with immediate effect and become null and void but he will be entitled to retain all SembCorpIndustries Shares which have vested on or before the date of his cessation of employment.

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

There were no changes in the Directors’ interests in the Company between the end of the financial year and 21 January2004.

Directors’ contractual benefitsExcept as disclosed in Note 4 to the financial statements on the payment of professional fees to a firm in which Mr AjaibHaridass, a Director of the Company, is a member, since the end of the previous financial year, no Director of the Companyhas received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporationwith the Director, or with a firm of which the Director is a member, or with a company in which the Director has a substantialfinancial interest.

Share PlansThe Company’s Share Option Plan, Performance Share Plan and Restricted Stock Plan (collectively, the “Share Plans”) wereapproved and adopted by the shareholders at an Extraordinary General Meeting of the Company held on 31 May 2000.

The Executive Resource and Compensation Committee (the “Committee”) of the Company has been designated as theCommittee responsible for the administration of the Share Plans. The Committee comprises the following members, all ofwhom are directors:Wong Kok Siew (Chairman)Tan Tew Han (Appointed on 17 April 2003)Ajaib Haridass (Appointed on 31 October 2003)

The Share Option Plan is the incentive scheme for directors and employees of the Company and its subsidiaries (the“Group”) whereas the Performance Share Plan and Restricted Stock Plan are aimed primarily at key executives of theGroup.





The Share Option Plan provides the Company with means whereby non-executive directors and employees of the Group,and certain categories of persons who can make significant contributions through their close working relationship with theGroup, such as non-executive directors and employees of the Company’s Parent Group and non-executive directors andemployees of the Company’s associates, are given an opportunity to participate in the equity of the Company.

Under the rules of the Share Option Plan, participants who ceased to be employed by the Group, Parent Group or AssociatedCompany by reason of ill health, injury or disability, redundancy, retirement at or after the legal retirement age, retirementbefore the legal retirement age, death, etc, or any other event approved by the Committee, may be allowed by the Committeeto retain their unexercised Options. The Committee may determine the number of Shares comprised in that Option whichmay be exercised and the period during which such Option shall be exercisable, being a period not later than the expiry ofthe Exercise Period in respect of that Option. Such Option may be exercised at any time notwithstanding that the date ofexercise of such Option falls on a date prior to the first day of the Exercise Period in respect of such Option.

The Company designates SembCorp Industries Limited as the Parent Group.

The Performance Share Plan and Restricted Stock Plan award fully-paid shares to participants to achieve pre-determinedtargets that create and enhance economic values for shareholders of the Company, or to accomplish time-based serviceconditions. Awards will be released to participants as fully-paid shares, or their equivalent cash value or combinationsthereof, free-of-charge provided that the conditions of the awards are achieved and subject to approval by the Committee.

Awards granted under the Performance Share Plan are released at the end of the performance period only when the pre-determined targets have been achieved. There are no vesting periods beyond the performance achievement periods.Awards granted under the Restricted Stock Plan vest only after satisfactory completion of time-based service conditions, orwhere the award is performance related, after a further period of service beyond the performance target completion date.No minimum vesting period is prescribed under the Restricted Plan and the length of the vesting period in respect of eachaward will be determined on a case-by-case basis. Performance-based restricted awards differ from awards granted underthe Performance Plan in that an extended vesting period is imposed beyond the performance target completion date.

Share Incentive PlansThe Share Plans are intended to attract, retain and incentivise participants to higher standards of performance and encouragegreater dedication and loyalty by enabling the Company to give recognition to past contributions and services; as well asmotivating participants to contribute to the long-term prosperity of the Group.

Other information regarding the Share Option Plan is as follows:(i) The exercise price of the options can be set at a discount to the market price not exceeding 20% of the market price

in respect of options granted at the time of grant.(ii) The options can be exercised 12 months after the grant for market price options and 24 months for discounted

options. Further vesting period for the exercise of the options may be set.(iii) The options granted expire after 5 years for non-executive directors, associates employees and 10 years for the

employees of Group and parent Group.





Share Plans (cont’d)

SembCorp Marine Share Option PlanAt the end of the financial year, details of the options granted under the Option Plan on unissued shares of $0.10 each of theCompany are as follows:

SembCorp Marine LtdOrdinary shares of $0.10 each

1998 1999 2000 2001 2002 2003Options Options Options Options Options Options

Date options granted 27 Apr 1998 10 Mar 1999 8 Sep 2000 27 Sep 2001 7 Nov 2002 8 Aug 2003Option exercise period:From 27 Apr 2000 10 Mar 2001 8 Sep 2001 28 Sep 2002 8 Nov 2003 9 Aug 2004To 26 Apr 2003 9 Mar 2004 7 Sep 2010 27 Sep 2011 7 Nov 2012 8 Aug 2013Number of holders at31 December 2003 - 17 718 872 1,064 1,092Exercise price per option $0.79 $0.65 $0.70 $0.66 $0.90 $0.99

‘000 ‘000 ‘000 ‘000 ‘000 ‘000Number of options outstanding:At 1 January 2003 1,380 494 11,000 12,370 15,601 -Options exercised (1,250) (90) (2,372) (1,962) (53) (2)Options granted - - - - - 15,619Options granted but not accepted - - - - - (138)Options cancelled (130) - (105) (190) (349) (29)

At 31 December 2003 - 404 8,523 10,218 15,199 15,450

The details of the Plan (which was started in 1991 as the Jurong Shipyard Limited Executives’ Share Option Scheme) wereset out in the financial statements of that year.

The fair values of options of the Company granted at the date of the grant are estimated using the Black-Scholes Option-pricing model are as follows:

Option period Number of shares Fair value of option(both dates inclusive) options granted Exercise price at date of grant

9 Aug 2004 to 8 Aug 2008 735,000 $0.99 $0.209 Aug 2004 to 8 Aug 2013 14,884,000 $0.99 $0.20




The details of options of the Company granted during the year and granted/exercised since commencement of the Schemeto 31 December 2003 were as follows:

Optionsgranted Aggregate Aggregate options Aggregate Aggregate

during the options cancelled/lapsed/ options optionsOption participants year granted not accepted exercised outstanding

Directors of the CompanyWong Kok Siew 250,000 1,050,000 - (212,500) 837,500Tan Kwi Kin 800,000 4,200,000 - (1,050,000) 3,150,000Tan Pheng Hock 50,000 110,000 - - 110,000Kiyotaka Matsuzawa 130,000 230,000 - - 230,000Naoteru Tsuda 50,000 70,000 - - 70,000Low Sin Leng 50,000 150,000 - (12,500) 137,500Tan Tew Han 75,000 75,000 - - 75,000Heng Chiang Gnee 500,000 2,600,000 - (925,000) 1,675,000(alternate to Tan Kwi Kin)

Former directors of 130,000 1,050,000 - (312,500) 737,500the Company

Other ExecutivesGroup 13,305,000 69,279,300 (5,294,750) (22,109,250) 41,875,300

Parent Group 149,000 730,000 (103,250) (94,000) 532,750

Non-executive director 130,000 540,000 - (177,250) 362,750 of Parent Group

15,619,000 80,084,300 (5,398,000) (24,893,000) 49,793,300

Since the commencement of the Share Option Plan, no options have been granted to the controlling shareholders of theCompany or their associates. No participants under the Share Option Plan has been granted 5% or more of the totaloptions available. No options have been offered at a discount.

The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any right toparticipate in any share issue of any other company.

Save as disclosed, there were no other unissued shares of the Company or its subsidiary companies under options as at theend of the financial year.

Proforma financial effect under United States Financial Accounting Standard No. SFAS 123

Strictly for information purposes only, the proforma consolidated profit after taxation and minority interests and the earningsper share would have been as follows had the Company accounted for the fair value of the options granted under UnitedStates Financial Accounting Standard No. 123.




Share Plans (cont’d)

2003$’000

Profit after taxation and minority interests:- As reported 78,540- Proforma 76,031

2003Cents

Earnings per share (in cents) :- As reported 5.55- Proforma 5.37

Diluted earnings per share (in cents) :- As reported 5.52- Proforma 5.34

These proforma amounts may not be representative of future disclosures as the estimated fair value of share options areonly determined in respect of options granted since the financial year ended 31 December 1999 and which is amortisedover the vesting period.

SembCorp Marine Performance Share PlanUnder the Performance Share Plan, the awards granted conditional on performance targets are set based on medium-termcorporate objectives at the start of each rolling three-year performance qualifying period. The final number of shares givenwill depend on the level of achievement of those targets over the three-year performance period. A specific number ofperformance shares shall be released by the Committee to the recipient at the end of the performance period provided theminimum level of targets achieved is not less than 80% of the targets set.

Recipients who do not meet at least 80% of the targets set at the end of the performance period will not be granted theperformance shares. If the achievement of the targets exceeds 100%, more performance shares than the original awardcould be delivered up to a maximum of 200% of the original award.

The details of performance shares of the Company awarded since commencement of the Performance Plan were as follows:

ConditionalShares Aggregate Aggregate Aggregate

Awarded Conditional Conditional ConditionalPerformance Shares During the Shares Shares SharesParticipants Year Awarded Lapsed Outstanding

Director of the CompanyTan Kwi Kin 380,000 1,140,000 - 1,140,000Heng Chiang Gnee 200,000 600,000 - 600,000

580,000 1,740,000 - 1,740,000




The total number of performance shares in awards granted conditionally and representing 100% of targets achieved, butnot released as at end 2003, was 1,740,000. Based on the multiplying factor, the actual release of the awards could rangefrom zero to a maximum of 3,480,000 performance shares.

In accordance with the accounting policy of the Group, during the current financial year, the Group has provided $831,000(2002: $495,000) in respect of performance shares based on the market values of the shares at reporting date.

SembCorp Marine Restricted Stock PlanUnder the Restricted Plan, awards granted vest only after the satisfactory completion of time-based service conditions orwhere the award is performance-related, after a further period of service beyond the performance target completion date(performance-based restricted awards). No minimum vesting period is prescribed under the Restricted Plan and the lengthof the vesting period in respect of each award will be determined on a case-by-case basis. Performance-based restrictedawards differ from awards granted under the Performance Plan in that an extended vesting period is imposed beyond theperformance target completion date.

The maximum number of performance shares and restricted stock which could be delivered, when aggregated with thenumber of new shares issued and issuable in respect of all options granted, is within the 15% limit of the share capital of theCompany on the day preceding the relevant date of the grant.

No awards have been granted under the Restricted Plan during the year.

No participants, other than those disclosed under the directors’ interests in share options, received 5% or more of the totalnumber of options available.

Audit CommitteeThe Audit Committee comprises 3 independent non-executive directors, one of whom is also the Chairman of the Committee.The members of the Audit Committee at the date of this report are:

Tan Tew Han (Chairman) (appointed on 17 April 2003)Kiyotaka MatsuzawaAjaib Haridass (appointed on 31 October 2003)

The Audit Committee has held 4 meetings since the last directors’ report. In performing its functions, the Audit Committeemet with the Company’s external and internal auditors to discuss the scope of their work, the results of their examinationand evaluation of the Company’s internal accounting control system.

The Audit Committee performs the functions specified in Section 201B of the Companies Act, the Listing Manual of theSingapore Exchange, and the Code of Corporate Governance.

The Audit Committee also reviewed the following:• assistance provided by the Company’s officers to the internal and external auditors;• financial statements of the Group and the Company prior to their submission to the directors of the Company for

adoption; and• interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange).



The Audit Committee has full access to management and is given the resources required for it to discharge its functions. Ithas full authority and the discretion to invite any director or executive officer to attend its meetings. The Audit Committeealso recommends the appointment of the external auditors and reviews the level of audit and non-audit fees.

The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended tothe Board of Directors that the auditors, Ernst & Young, be nominated for re-appointment as auditors at the forthcomingAnnual General Meeting of the Company.

AuditorsErnst & Young have expressed their willingness to accept re-appointment as auditors.

On behalf of the Board,

WONG KOK SIEWChairman

TAN KWI KINPresident

Singapore11 February 2004


Audit Committee (cont’d)



S tatement by Directors Pursuant to Section 201(15)

We, Wong Kok Siew and Tan Kwi Kin, being two of the Directors of SembCorp Marine Ltd, do hereby state that, in theopinion of the Directors:

(i) the accompanying balance sheets, profit and loss accounts, statements of changes in equity of the Company andthe Group and consolidated cash flow statement together with notes thereto are drawn up so as to give a true andfair view of the state of affairs of the Company and of the Group as at 31 December 2003, and of the results of thebusiness, changes in equity of the Company and of the Group and cash flows of the Group for the year ended onthat date; and

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

On behalf of the Board,

WONG KOK SIEWChairman

TAN KWI KINPresident




R eport of the Auditors to the Members of SembCorp Marine Ltd

We have audited the accompanying financial statements of SembCorp Marine Ltd (the “Company”) and its subsidiarycompanies (the “Group”) set out on pages 127 to 177 for the year ended 31 December 2003. These financial statements arethe responsibility of the Company’s Directors. Our responsibility is to express an opinion on these financial statementsbased on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by the Directors, as well asevaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the consolidated financial statements of the Group and the profit and loss account, balance sheet and statements ofchanges in equity of the Company are properly drawn up in accordance with the provisions of the Companies Act(the Act) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of theCompany and of the Group as at 31 December 2003, the results and changes in equity of the Company and of theGroup and cash flows of the Group for the financial year ended on that date; and

(b) the accounting and other records (excluding registers) required by the Act to be kept by the Company and by thesubsidiary companies incorporated in Singapore, of which we are the auditors, have been properly kept in accordancewith the provisions of the Act.

We have considered the financial statements and, where they are required by the laws of the country of incorporation,auditors’ reports of all subsidiary companies of which we have not acted as auditors, being financial statements included inthe consolidated financial statements. The names of those subsidiary companies audited by our associated firms are statedin Note 37 to the financial statements.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the financialstatements of the Company are in form and content appropriate and proper for the purposes of the preparation of theconsolidated financial statements, and we have received satisfactory information and explanation as required by us forthose purposes.

The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification,and in respect of subsidiary companies incorporated in Singapore did not include any comment made under Section 207(3)of the Act.

ERNST & YOUNGCertified Public Accountants




P rofit and Loss Accounts for the year ended 31 December 2003

Note Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Turnover 3 1,067,986 1,011,512 20,060 20,464Cost of sales (966,068) (883,956) (14,856) (14,005)

Gross profit 101,918 127,556 5,204 6,459

Other operating income 19,312 9,933 9,105 1,743General and administrative expenses (46,922) (47,606) (6,126) (5,706)

Operating profit 4 74,308 89,883 8,183 2,496Dividend and net interest income 5 11,600 13,693 86,402 105,890Exceptional items 6 1,275 6,653 2,569 19,714Share of results of associated companies and joint ventures 7 8,003 6,062 - -

Profit before taxation 95,186 116,291 97,154 128,100Taxation 8 (16,961) (23,084) (17,485) (20,117)

Profit after taxation 78,225 93,207 79,669 107,983Minority interests 315 (1,109) - -

Profit attributable to members of the Company 78,540 92,098 79,669 107,983

Earnings per share (cents) 9Basic 5.55 6.54Diluted 5.52 6.50

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



B alance Sheets as at 31 December 2003


$’000 $’000 $’000 $’000

Non-current assetsFixed assets 10 452,720 447,886 178,693 183,662Subsidiary companies 11 - - 350,499 333,126Associated companies and joint venture 12 58,700 101,778 27,026 43,292Other long term investments 13 71,776 92,759 67,965 74,490Long term trade debtors 14 168,639 201,791 66,786 77,349Goodwill on consolidation 15 3,615 2,122 - -

Total non-current assets 755,450 846,336 690,969 711,919

Current assetsStocks and work-in-progress 16 255,972 247,806 - -Trade debtors 14 210,455 201,032 81,440 70,729Other debtors 17 100,452 30,942 90,479 128,926Fixed deposits 18 152,753 93,952 1,336 6,053Bank and cash balances 50,033 68,487 4,746 8,591

Total current assets 769,665 642,219 178,001 214,299

Current liabilitiesTrade creditors 19 373,425 385,912 5,335 5,292Other creditors and provisions 20 21,343 21,620 1,195 71,174Progress billings in excess of work-in-progress 21 19,572 20,980 - -Borrowings 22 101,029 27,709 30,000 23,000Provision for taxation 15,804 35,902 - 5,772

Total current liabilities 531,173 492,123 36,530 105,238

Net current assets 238,492 150,096 141,471 109,061



B alance Sheets as at 31 December 2003


$’000 $’000 $’000 $’000

Total assets less current liabilities 993,942 996,432 832,440 820,980

Non-current liabilitiesDeferred taxation 23 47,678 42,775 31,781 32,201Hire purchase creditors 24 1,165 57 - -Provision for retirement gratuities 25 3,226 3,296 - -

Total non-current liabilities 52,069 46,128 31,781 32,201

941,873 950,304 800,659 788,779

Capital and reservesShare capital 26 142,005 141,432 142,005 141,432Reserves 27 785,122 798,576 658,654 647,347

927,127 940,008 800,659 788,779Minority interests 14,746 10,296 - -

941,873 950,304 800,659 788,779




S tatements of Changes in Equity for the year ended 31 December 2003

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Issued capital - ordinary shares (1)

Balance at 1 January1,414,322,480 (2002: 1,406,140,980) shares of $0.10 each 141,432 140,614 141,432 140,614Issue of 5,729,400 (2002: 8,181,500) shares of $0.10 each upon exercise of share options 573 818 573 818

Balance at 31 December1,420,051,880 (2002: 1,414,322,480) shares of $0.10 each 142,005 141,432 142,005 141,432

Revenue reserveBalance at 1 January 541,527 517,299 411,916 375,403Profit for the year 78,540 92,098 79,669 107,983Dividends on ordinary shares Note 28(b) (71,841) (71,470) (71,841) (71,470)Transfer from other capital reserve upon:- disposal of an associated company - 3,600 - -- redemption of redeemable convertible loan stock 155 - - -

Balance at 31 December 548,381 541,527 419,744 411,916

Foreign currency translation reserveBalance at 1 January 4,595 5,580 - -Realisation upon disposal of:- associated company - 195 - -- joint venture (5,310) - - -Translation differences for the year (1,851) (1,180) - -

Balance at 31 December (2,566) 4,595 - -



S tatements of Changes in Equity for the year ended 31 December 2003

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Share premium accountBalance at 1 January 234,471 229,329 234,471 229,329Premium on shares issued on exercise of share options 3,479 5,142 3,479 5,142


Asset revaluation reserveBalance at 1 January and 31 December 960 960 960 960

Other capital reservesBalance at 1 January 17,023 27,463 - -Share of an associated company’s capital reserves - 16 - -Deferred tax on redeemable convertible loan stocks of a subsidiary company - (70) - -Transfer to the profit and loss account upon disposal of:- associated company - (6,786) - -- other long term investment (16,471) - - -Transfer to revenue reserve upon:- disposal of an associated company - (3,600) - -- redemption of redeemable convertible loan stock (155) - - -

Balance at 31 December 397 17,023 - -

Total shareholders’ equity 927,127 940,008 800,659 788,779

Net change in equity from non-owner sources excluding net profits (1,851) (1,234) - -

(1) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinaryshares carry one vote per share without restriction.




C ash Flow Statement of the Group for the year ended 31 December 2003

2003 2002$’000 $’000

Cash flow from operating activitiesOperating profit 74,308 89,883Adjustments for: Gain on disposal of fixed assets (4,735) (159) Amortisation of goodwill on consolidation of subsidiary companies 1,260 935 Amortisation of redeemable convertible loan stock discount 91 98 Redeemable convertible loan stock discount write-off - 10 Depreciation of fixed assets 33,945 32,429 Fixed assets write-off 7 89

Operating income before reinvestment in working capital 104,876 123,285Decrease/(increase) in stocks and work-in-progress 24,686 (32,125)Decrease in debtors 4,936 205,003Decrease in creditors (51,420) (91,805)

Cash generated from operations 83,078 204,358Investment and interest income received 13,865 15,487Income taxes paid (34,695) (24,836)Interest paid (2,654) (843)

Net cash provided by operating activities 59,594 194,166

Cash flow from investing activitiesAcquisition of subsidiary companies (4,607) (18,635)Investment in associated companies and joint venture (250) (27,526)Purchase of fixed assets (32,627) (14,435)Purchase of other long term investments (1,641) (3,020)Capital refund from associated companies 510 3,075Dividends from associated companies 3,440 3,214Proceeds from disposal of fixed assets 471 4,010Proceeds from disposal of associated and joint venture companies 7,349 28,069Proceeds from sale of other long term investments 11,290 3,084

Net cash used in investing activities (16,065) (22,164)

Cash flow from financing activitiesDividends paid- by the Company (71,841) (71,470)- to minority shareholders (241) -Proceeds on issue of new shares by the Company 4,052 5,960Additional/(repayment of) short term bank loan 65,577 (246)Repayment to hire purchase creditors (729) (279)Fixed deposit pledged with a bank for banking facilities (1,120) (53,259)

Net cash used in financing activities (4,302) (119,294)




2003 2002$’000 $’000

Net increase in cash and cash equivalents 39,227 52,708Cash and cash equivalents at beginning of year 109,180 56,472

Cash and cash equivalents at end of year (Note 31) 148,407 109,180

The acquisitions of the following subsidiary companies have been shown as a single item:

Name of subsidiary companies Effective interestacquired Effective dates

PPL Shipyard Pte Ltd and its subsidiary companies 35% 1 July 2003Jurong SML Pte Ltd 50% 1 January 2002

15% 1 March 2002The effect on the individual assets and liabilities is set out below:

Acquisition of subsidiarycompanies

2003 2002$’000 $’000

Fixed assets 8,881 43,997Other long term unquoted investment 3,700 -Stocks and work-in-progress 34,260 5,642Debtors 26,227 30,228Bank and cash balances 11,267 52Bank overdrafts, unsecured (1,174) (6,787)Bank loans (7,652) (2,800)Creditors (40,398) (50,410)Current taxation (642) (690)Deferred taxation (335) -

Net assets acquired 34,134 19,232Minority interests (5,120) (52)Amount taken up as associated company (17,067) (6,731)Goodwill on acquisition 2,753 1,851

Purchase consideration 14,700 14,300Amount reflected as non-trade payable - (2,400)

Cash paid 14,700 11,900




The acquisition subsidiary companies, net of cash is represented by:

2003 2002$’000 $’000

Cash paid (14,700) (11,900)Less: Bank and cash balances acquired 11,267 52Add: Bank overdrafts, unsecured acquired (1,174) (6,787)

Net cash outflow (4,607) (18,635)

The effect of the acquisitions of subsidiary companies on the financial position of the Group at 31 December and its resultsfor the year is shown below:

2003 2002$’000 $’000

Contribution to the Group for the period:Turnover 80,192 32,687

(Loss)/profit before taxation (7,381) 35Goodwill amortisation (276) (586)

Loss before taxation (7,657) (551)Taxation 888 (48)

Loss after taxation (6,769) (599)Minority interests 974 52

(5,795) (547)

Total assets at 31 December 78,519 51,905Total liabilities at 31 December 50,931 32,686




Notes to the Financial Statements - 31 December 2003

1. GeneralThe financial statements of SembCorp Marine Ltd for the year ended 31 December 2003 were authorised for issuein accordance with a resolution of the Directors on 11 February 2004.

The Company is a limited liability company incorporated in the Republic of Singapore. Its immediate holdingcompany is SembCorp Industries Ltd and the ultimate holding company is Temasek Holdings (Private) Limited.Both holding companies are incorporated in the Republic of Singapore. Related companies and related parties inthese financial statements refers to subsidiary and associated companies of SembCorp Industries Ltd and TemasekHoldings (Private) Limited respectively.

The registered office and principal place of business of the Company is located at 29 Tanjong Kling Road, Singapore628054.

The principal activities of the Company are provision of management services and investment holding. The principalactivities of subsidiary companies and associated companies are stated in Note 37. There have been no significantchanges in the nature of these activities of the Company and its subsidiary companies during the year.

2. Significant accounting policies(a) Basis of preparation of financial statements

The financial statements are presented in Singapore dollars. The financial statements have been prepared inaccordance with Singapore Financial Reporting Standards (“FRS”) as required by the Companies Act. Inprevious years, the financial statements were prepared in accordance with Singapore Statements of AccountingStandard (SAS). The transition from SAS to FRS did not result in any significant change in accounting policies.

The financial statements have been prepared under the historical cost basis modified by the revaluation ofcertain fixed assets. The accounting policies have been consistently applied with those used in the previousyear.

(b) Principles of consolidationThe accounting year of the Company and all its subsidiary companies ends on 31 December and theconsolidated financial statements incorporate the financial statements of the Company and all its subsidiarycompanies after the elimination of all material intercompany transactions. The equity and net profit attributableto majority shareholders’ interests are shown separately in the consolidated balance sheet and consolidatedprofit and loss account, respectively. The results of subsidiary companies acquired or disposed of during theyear are included in or excluded from the Group results from the respective dates of acquisition or disposal,as applicable.

Goodwill arising on acquisition which represents the excess of the cost of acquisition over the fair value of theGroup’s share of the identifiable net assets acquired is amortised on the basis outlined in paragraph (e)below.

The consolidated financial statements are prepared using uniform accounting policies for like transactionsand other events in similar circumstances.

Assets, liabilities and results of the overseas subsidiary companies are translated into Singapore dollars onthe basis outlined in paragraph (s) below.



(c) Subsidiary companiesShares in subsidiary companies are stated at cost and provision is made for impairment in value. Dividendincome is accrued on the basis of dividends declared.

(d) Associated companies and joint venturesAn associated company is defined as a company, not being a subsidiary company, in which the Group has along term interest of not less than 20% nor more than 50% of the equity and in whose financial and operatingpolicy decisions the Group exercises significant influence.

A joint venture, not being a subsidiary or associated company, is one in which the Group has a long terminterest and contractual arrangement whereby parties in the joint venture undertake an economic activitywhose operational and financial affairs are subject to the joint control of the Group and the contractualparties.

The Group’s share of the results of associated companies and joint ventures that are jointly controlled entitiesare included in the consolidated profit and loss account under the equity method. The Group’s share of post-acquisition reserves of associated companies and joint ventures that are jointly controlled entities are includedin the investments in associated companies and joint ventures, respectively, in the consolidated balancesheet. Where the audited financial statements are not available, the share of results is arrived at from unauditedmanagement financial statements made up mainly to the end of the accounting year to 31 December. Goodwillarising on acquisition which represents the excess of the cost of acquisition over the fair value of the Group’sshare of the identifiable net assets acquired is amortised on the basis outlined in paragraph (e) below.

When the Group’s share of losses exceeds the carrying amount of the investment, the investment is reportedat nil value and recognition of losses is discountinued except to the extent of the Group’s commitments.

For joint ventures that involves jointly controlled operations or assets, the proportionate share in these jointventures’ individual income, expenses, assets and liabilities are included in financial statements of the Groupwith items of a similar nature on a line by line basis.

Shares in associated companies and joint ventures are stated in the Company’s balance sheet at cost andprovision is made for impairment in value.

Dividend income is accrued on the basis of dividends declared.

(e) Goodwill on ConsolidationGoodwillGoodwill arising on acquisition represents the excess of cost of acquisition over the fair value of the Group’sshare of the identifiable net assets acquired. Goodwill is stated at cost less accumulated amortisation andimpairment losses. Goodwill is amortised from the date of initial recognition over its estimated useful life ofnot more than 20 years.

During the year, the Group extended the useful life of goodwill in the investment in an associated companyfrom 3 years to 4.25 years. This extension was made to coincide the goodwill amortisation with the expectedcompletion of a major conversion project by that associated company.


2. Significant accounting policies (cont’d)



This change in accounting estimate was accounted prospectively. The effect of the change is to decrease thecurrent year goodwill amortisation charge and increase profit for the year by $2,220,000.

Negative GoodwillNegative goodwill arising on acquisition represents the fair value of the Group’s share of the identifiable netassets acquired over the cost of acquisition.

To the extent that negative goodwill relates to an expectation of future losses and expenses, that are identifiedin the plan of acquisition and can be measured reliably, but which have not yet been recognised, it is recognisedin the profit and loss account when the future losses and expenses are recognised. Any remaining negativegoodwill, but not exceeding the fair values of the non-monetary assets acquired, is recognised in the profitand loss account over the weighted average useful life of those assets that are depreciable or amortisable.Negative goodwill in excess of the fair values of the non-monetary assets acquired is recognised immediatelyin the profit and loss account.

(f) Revenue recognitionRevenue from ship and rig repair, building and conversion are recognised on the percentage of completionmethod in proportion to the stage of completion, provided the work is at least 20% completed and theoutcome of the contract can be reliably estimated. The percentage of completion is measured by referenceto the percentage of costs incurred to-date to the estimated total costs for each contract, with dueconsideration made to include only those costs that reflect works performed.

Income on goods sold and other services rendered is recognised on completion of delivery. Charter hireincome is taken to the profit and loss account on an accrual basis over the charter hire period.

(g) Fixed assetsFixed assets are stated at cost or valuation less accumulated depreciation. The cost of an asset comprises itspurchase price and any directly attributable costs of bringing the asset to working condition for its intendeduse. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenanceand repairs are charged to the profit and loss account. When assets are sold or retired, their cost andaccumulated depreciation are removed from the financial statements and any gain or loss resulting fromtheir disposal is included in the profit and loss account.

Where fixed assets are revalued, any surplus on revaluation is credited to the asset revaluation reserve. Adecrease in net carrying amount arising on revaluation of fixed assets is charged to the profit and loss accountto the extent that it exceeds any surplus held in reserve relating to previous revaluation of the same class ofassets.




(h) DepreciationDepreciation is calculated on the straight-line method to write off the cost or valuation of fixed assets overtheir estimated useful lives. No depreciation is provided on freehold land. The estimated useful lives of fixedassets are as follows:

Freehold and leasehold buildings 45 years or remaining period of leaseQuays and dry docks 60 years or remaining period of leasePlant, machinery and tools 3 to 10 yearsMotor vessels, launches, cranes and floating docks 3 to 20 yearsMotor vehicles 3 to 5 yearsFurniture and office equipment 3 to 5 yearsUtilities and fittings 30 yearsComputer equipment 1 to 5 years

Fully depreciated assets are retained in the financial statements until they are no longer in use and no furthercharge for depreciation is made in respect of these assets.

(i) InvestmentsInvestments held on a long-term basis are stated at average cost. Provision is made for impairment in value.

Dividend income is recognised in the profit and loss account upon actual receipt. Interest income is accruedon the day-to-day basis.

(j) Stocks and work-in-progressStocks consist mainly of steel and other materials used for ship and rig repair, building and conversion andare stated at the lower of cost and net realisable value. Cost is principally determined on the weightedaverage method. Provision is made for all deteriorated, obsolete and slow-moving items.

Work-in-progress comprises mainly uncompleted ship and rig repair, building and conversion jobs. It is statedat the lower of cost and net realisable value. Cost includes materials, direct labour, sub-contractors’ costs andappropriate allocation of fixed and variable production overheads. Provision is made for anticipated losses,if any, on work-in-progress when the possibility of loss is ascertained.

(k) Trade and other debtorsTrade and other debtors, including related companies and related parties, on normal trade terms, arerecognised and carried at original invoiced amount less an allowance for any uncollectible amounts. Anestimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts arewritten off as incurred.

(l) Trade and other creditorsLiabilities for trade and other creditors, including related companies and related parties, on normal tradeterms, are carried at cost which is the fair value of the consideration to be paid in the future of goods andservices received, whether or not billed to the Group.





(m) Finance leases and hire purchase assetsFinance leases are those leasing agreements including hire purchases that give rights approximating toownership. Assets financed under such leases are treated as if they had been purchased outright at thepresent value of the minimum lease payments during the periods of leases and the corresponding leasingcommitments are shown as obligations to the lessor. Depreciation of the relevant assets is provided for as inparagraph (h) above. Lease payments are treated as consisting of capital and interest elements and theinterest is amortised on the reducing balance basis over each lease term and charged to the profit and lossaccount.

(n) Employee benefitsDefined contribution planThe Group’s companies in Singapore make contributions to the state pension scheme, the Central ProvidentFund, as required by Singapore law. Contributions to this fund are recognised as compensation expense inthe same period as the employment that gives rise to the contribution.

Employee leave entitlementEmployee entitlements to annual leave are recognised when they accrue to employees. An accrual is madefor the estimated liability for leave as a result of services rendered by employees up to the balance sheetdate.

Employee Stock OptionThe Group has an employee share incentive plan for the granting of non-transferable share options. Nocompensation cost or obligations are recognised. When the options are exercised, equity is increased by theamount of the proceeds received.

Retirement gratuityRetirement benefits payable to certain categories of employees upon their retirement are provided for in thefinancial statements based on their entitlement under the staff benefit plan or, in respect of unionisedemployees who joined on or before 31 December 1988, based on an agreement with the Union.

The Group’s net obligation in respect of retirement benefit is the amount of future benefits that employeeshad earned in return for their service in the current and prior periods. The obligation is calculated using theprojected salary increase and is discounted to its present value and the fair value of any related assets isdeducted.

Performance share planAn initial estimate is made for the cost of compensation under the Group’s performance share plan based onthe number of shares expected to be awarded at the end of the performance period, valued at market priceat the date of the grant of the award. The cost is charged to the profit and loss account on a basis that fairlyreflects the manner in which the benefits will accrue to the employee under the plan over the service periodto which the performance criteria relate.

At each reporting date, the compensation cost is remeasured based on the latest estimate of the number ofshares that will be awarded considering the performance criteria and the market price of the shares at thereporting date. Any increase or decrease in compensation cost over the previous estimate is recorded in theprofit and loss account for that reporting period.




The final measure of compensation cost is based on the number of shares ultimately awarded and the marketprice at the date the performance criteria are met.

Restricted stock planAn initial estimate is made for the cost of compensation under the Group’s restricted stock plan based on thenumbers of shares expected to be awarded upon satisfactory completion of time-based service condition,valued at market price at the date of the grant of the award. The cost is charged to the profit and loss accounton a basis that fairly reflects the manner in which the benefits will accrue to the employee under the plan overthe service period to which the performance criteria relate.

At each reporting date, the compensation cost for remaining shares to be released under the restricted stockplan in remeasured based on the market price of shares at the reporting date. Any increase or decrease incompensation cost over the previous estimate is recorded in the profit and loss account for that reportingperiod.

(o) BorrowingsInterest bearing loansInterest bearing loans are recognised at cost.

Redeemable convertible loan stockThe components of the loan stock are split using the incremental method, where the value of the equitycomponent is the difference between the total proceeds at the date of issue and the present value of asimilar liability instrument without conversion right.

The equity component of the loan is included in the redeemable convertible loan stock reserve. The financialcomponent is initially recognised at fair value and subsequently at amortised cost. Amortised cost is calculatedby taking into account the discounts on settlement. The discount is amortised over the life of the redeemableconvertible loan stock and charged directly to the profit and loss account.

(p) ProvisionsA provision is recognised when there is a present obligation (legal or constructive) as a result of a past eventand it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed ateach balance sheet date and adjusted to reflect the current best estimate.

(q) ImpairmentThe carrying amounts of the Group’s assets, other than stocks and work-in-progress, are reviewed at eachbalance sheet date to determine whether there is any indication of impairment. If any such indication exists,the asset’s recoverable amount is estimated.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceedsits recoverable amount. All impairment losses are recognised in the profit and loss account.





Calculation of recoverable amountThe recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value inuse, the estimated future cash flows are discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and the risks specific to the asset. For an assetthat does not generate cash inflows largely independent of those from other assets, the recoverable amountis determined for the cash-generating unit to which the asset belongs.

Reversal of impairment lossAn impairment loss is reversed if there has been a change in the estimates used to determine the recoverableamount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceedthe carrying amount that would have been determined, net of depreciation or amortisation, if no impairmentloss had been recognised. A reversal of an impairment loss in respect of land and buildings carried at revaluedamount is recognised in the same way as a revaluation increase. All other reversals of impairment are recognisedin the profit and loss account.

An impairment loss in respect of goodwill is not reversed unless the loss was caused by a specific externalevent of an exception nature that is not expected to recur, and the increase in recoverable amount relatesclearly to the reversal of the effect of that specific event.

(r) Deferred taxationDeferred taxation is provided, using the liability method, on all temporary differences at the balance sheetdate between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income inthe years on which those temporary differences are expected to be recovered or settled based on the taxrates enacted or substantively enacted at the balance sheet date.

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments insubsidiary companies, associated companies and joint ventures, except where the timing of reversal of thetemporary difference can be controlled and it is probable that the temporary differences will not reverse inthe foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused taxassets and unused tax losses, to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can beutilised.

Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that arecredited or charged, in the same or different period, directly to equity.

(s) Foreign currenciesForeign currency transactions are recorded in Singapore dollars at rates of exchange approximating thoseruling at transaction dates. Foreign currency monetary assets and liabilities are translated at rates ruling atthe balance sheet date. All exchange differences are dealt with in the profit and loss account.






For inclusion in the consolidated financial statements, all assets and liabilities of the foreign subsidiarycompanies, associated companies and joint ventures are translated into Singapore dollars at the exchangerates ruling at the balance sheet date and the results of foreign subsidiary companies, associated companiesand joint ventures are translated into Singapore dollars at the average exchange rates. Exchange differencesdue to such currency translations are included in the foreign currency translation reserve.

(t) Cash and cash equivalentsCash and cash equivalents consist of cash at bank and in hand and fixed deposits less bank overdrafts butexclude secured fixed deposits and bank overdrafts which are used for financing activities.

(u) Derivative financial instrumentsDerivative financial instruments are used to manage exposure to foreign exchange risks arising fromoperational, financing and investment activities. Derivative financial instruments are not used for tradingpurposes.

Gains and losses from forward exchange contracts used to hedge anticipated future currency transactionsare deferred until the forecasted transaction occurs. Where the hedged item is a recognised asset or liability,it is translated at the contracted forward rates.

3. TurnoverTurnover represents sales from the various activities described in Note 1 and Note 37, including the revenuerecognised on contracts relating to the ship and rig repair, building and conversion which are at least 20%completed.

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000Services rendered: Ship & rig repair, building and conversion 1,016,839 961,991 - 411 Ship chartering 19,618 22,599 - - Rental income - - 15,499 14,783 Management fee - - 4,561 5,270 Others 6,483 13,098 - -Sale of goods 25,046 13,824 - -

1,067,986 1,011,512 20,060 20,464




4. Operating profitOperating profit is stated after charging/(crediting):

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Directors’ remuneration - Directors of the Company 1,390 1,400 1,390 1,400 Other directors of subsidiary companies 2,129 1,230 - -Directors’ fee - Directors of the Company 332 317 332 317 Other directors of subsidiary companies 17 13 - -Professional fees paid to a firm in which a Director is a member 10 - 10 -Foreign currency exchange loss/(gain) 3,342 2,156 (1,077) (1,624)Gain on disposal of fixed assets 4,735 159 4,625 -Rental expenses 19,353 18,190 7,200 6,947Auditors’ remuneration - Auditors of the Company Statutory audit 464 398 73 76 Other services 31 296 27 279 Other auditors of subsidiary companies Statutory audit 52 50 - -

As at 31 December 2003, the Group and Company had 5,469 and 14 (2002: 5,155 and 12) employees, respectively. Staffcosts, which include Directors’ remuneration for the year, amounted to $166,470,000 (2002: $158,211,000) and $3,565,000(2002: $3,927,000) for the Group and Company, respectively. Central Provident Fund contributions which amounted to$8,843,000 (2002: $8,153,000) and $79,000 (2002: $79,000) for the Group and Company, respectively, were included as part ofstaff costs for the year.

5. Dividend & net interest incomeGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Gross dividend:

Unquoted subsidiary companies - - 78,495 97,327Unquoted associated companies - - 533 968Quoted equity shares 7 32 7 18Unquoted equity shares 90 - 90 -

97 32 79,125 98,313



5. Dividend & net interest income (cont’d)


Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Interest income: Associated company - 5 - 5 Related parties 2,740 2,986 2,405 2,620 Unquoted bonds 4,346 4,350 4,346 4,350 Trade debtors 4,738 4,829 940 1,296 Fixed deposits 1,972 1,003 44 48 Loan to related companies 104 158 - - Others 266 1,152 138 123

14,166 14,483 7,873 8,442

Interest expense: Redeemable convertible loan stock (1,760) (92) - - Subsidiary companies - - (189) (553) Related company (19) - - - Bank borrowings (884) (730) (407) (312)

(2,663) (822) (596) (865)

11,600 13,693 86,402 105,890

6. Exceptional itemsGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Gain on disposal of: Associated companies, Note (a) - 18,295 - 25,086 Joint venture company 1,951 - - - Long term equity investments, Note (a) 337 557 1,744 123 Sale of redeemable convertible loan stocks of a subsidiary company - - - 500Dilution of interest in a subsidiary company to minority interest - (163) - 600Quoted warrants written off - (225) - (225)

2,288 18,464 1,744 26,084




Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Impairment loss – fixed assets, Note (b) (2,113) (4,000) - -

Writeback/(provision) for impairment in value of:Associated company - (1,309) - (1,194)Other long term equity investments 1,391 (4,391) 1,391 (1,391)Other long term non-equity investments (291) (2,111) (201) (2,016)Loan to an associated company - - (365) (1,769)

1,100 (7,811) 825 (6,370)

1,275 6,653 2,569 19,714

(a) Gain on disposal is stated after consideration of realisation of other capital reserves and foreign currencytranslation reserve as follows:

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Other capital reserveAssociated company - 6,786 - -Other long term equity investments 16,471 - - -

16,471 6,786 - -

Foreign currency translation reserveAssociated company - (195) - -Joint venture 5,310 - - -

5,310 (195) - -

(b) Due to the continued difficult operating environment in Karimun, the impairment loss for fixed assets in the“Ship and rig repair, building and conversion” business segment of $2 million (2002: $4 million) representsthe write-down of certain fixed assets to recoverable amount. This recoverable amount was determinedbased on the value-in-use at the cash generating unit level. In determining the value-in-use at the cashgenerating unit level, the cashflows were discounted at rate of 6% per annum on a pre-tax basis.




7. Share of results of associated companies and joint venturesGroup

2003 2002$’000 $’000

Share of net profit for the year 11,111 11,390Amortisation of goodwill on acquisition of an associated company (3,108) (5,328)

8,003 6,062Share of taxation 154 (2,288)

8,157 3,774

8. TaxationGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

In respect of profit for the year: Current taxation 15,569 28,152 19,637 24,671 Deferred taxation 4,814 (2,664) (200) (982)

20,383 25,488 19,437 23,689

(Over)/under-provision in respect of prior years: Current taxation (3,022) 220 (1,732) 199 Deferred taxation (246) (4,912) (220) (3,771)

(3,268) (4,692) (1,952) (3,572)

Share of taxation of associated companies and joint venture (154) 2,288 - -

16,961 23,084 17,485 20,117

The Group and the Company have exempt profits amounting to approximately $127,800,000 (2002: $123,500,000)and $26,200,000 (2002: 26,100,000), respectively. Of this amount, $106,700,000 (2002: $113,500,000) for the Grouphas been agreed with the Comptroller of Income Tax.

As at 31 December 2003, certain subsidiary companies have unutilised tax losses of $40,441,000 (2002: $32,846,000),capital allowances of $20,398,000 (2002: $19,196,000) and investment allowance of $Nil (2002: $467,000) availablefor set-off against future taxable income subject to the provisions of the Income Tax Act and agreement by theComptroller of Income Tax.




The unutilised tax losses and capital allowance in a subsidiary company amounting $40,818,000 (2002: $40,049,000)expire between 2004 to 2009 (2002: 2003 to 2008).

The amounts of tax losses and capital allowances previously carried forward at the beginning of the year and whichhave been utilised in the year to arrive at the computation of tax liabilities for the year are not significant.

A reconciliation between the tax expense and the product of accounting profit multiplied by the applicable taxrate for the years ended 31 December was as follows:

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Tax at 22% (2002: 22%) 19,180 24,250 21,374 28,182Exempt income, capital gains and tax incentives (3,884) (3,562) (2,252) (4,795)Effect of different tax rate in foreign jurisdiction 241 1,470 - -Effect on tax losses utilised (445) (69) - -Non deducible expenses 1,268 1,975 315 302Effect on changes in tax rates - (4,912) - (3,771)(Over)/under provision in respect of prior years (3,268) 220 (1,952) 199Deferred tax assets not recognised 3,905 1,268 - -Others 118 156 - -

Effective tax 17,115 20,796 17,485 20,117

Share of taxation of associated companies and joint venture (154) 2,288 - -

16,961 23,084 17,485 20,117

9. Earnings per share

(a) Basic earnings per share (“EPS”) is calculated by dividing the profit attributable to shareholders after deductingminority interests of $78,540,000 (2002: $92,098,000) by the weighted average number of ordinary shares inissue during the year of 1,415,768,518 (2002: 1,408,050,448).




9. Earnings per share (cont’d)

(b) Diluted EPS is calculated after adjusting for those shares not yet exercised under the SembCorp Marine ShareOption Plan as follows:

Group2003 2002

Weighted average number of ordinary shares in issue during the year 1,415,768,518 1,408,050,448Effects of dilutive share options 7,034,000 8,224,000

Weighted average number of ordinary shares outstanding used in the calculation of diluted EPS 1,422,802,518 1,416,274,448

(c) The basic and diluted EPS are as follows:Group

2003 2002Cents Cents

Basic EPS 5.55 6.54Diluted EPS 5.52 6.50

10. Fixed assetsDocks,quays,

launches, PlantLand & buildings cranes and machinery

Short term Construction marine andFreehold leasehold in-progress vessels tools Others Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000GroupCost or valuationBalance at 1 January 2003At cost 5,194 118,983 7,305 451,491 134,404 24,939 742,316At valuation - - - 25,152 - - 25,152

5,194 118,983 7,305 476,643 134,404 24,939 767,468Currency re-alignment (81) - - - (6) (6) (93)Additions 18 766 292 3,860 25,783 1,908 32,627Acquisition of a subsidiary companies - 7,760 17 - 22,604 8,253 38,634Reclassifications - 4,552 (6,356) - 1,478 326 -Disposals (744) - - - (193) (282) (1,219)Write-off - - - - (148) (478) (626)

At 31 December 2003 4,387 132,061 1,258 480,503 183,922 34,660 836,791

Balance at 31 December 2003At cost 4,387 132,061 1,258 455,351 183,922 34,660 811,639At valuation - - - 25,152 - - 25,152

4,387 132,061 1,258 480,503 183,922 34,660 836,791




Docks,quays,


Short term Construction marine andFreehold leasehold in-progress vessels tools Others Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000GroupAccumulated depreciation/

impairment lossAt 1 January 2003 635 46,488 286 154,860 94,675 22,638 319,582Currency re-alignment (6) - - - (6) (1) (13)Charge for the year 85 3,163 - 15,698 12,147 2,852 33,945Acquisition of a subsidiary companies - 6,578 - - 16,753 6,422 29,753Reclassifications - 85 (286) 142 57 2 -Disposals (247) - - - (193) (250) (690)Write-off - - - - (139) (480) (619)Impairment loss - 744 - 1,128 229 12 2,113

At 31 December 2003 467 57,058 - 171,828 123,523 31,195 384,071

Charge for 2002 85 2,973 - 17,377 9,420 2,574 32,429

Net book valueAt 31 December 2003 3,920 75,003 1,258 308,675 60,399 3,465 452,720

At 31 December 2002 4,559 72,495 7,019 321,783 39,729 2,301 447,886

Docks,quays,


Short term marine andFreehold leasehold vessels tools Others Total

$’000 $’000 $’000 $’000 $’000 $’000CompanyCost or valuationBalance at 1 January 2003At cost 2,293 43,984 177,883 4,023 584 228,767At valuation - - 25,152 - - 25,152

2,293 43,984 203,035 4,023 584 253,919Additions 4 - - - 93 97Disposals (744) - - - - (744)

At 31 December 2003 1,553 43,984 203,035 4,023 677 253,272

Balance at 31 December 2003At cost 1,553 43,984 177,883 4,023 677 228,120At valuation - - 25,152 - - 25,152

1,553 43,984 203,035 4,023 677 253,272



10. Fixed assets (cont’d)


Docks,quays,


Short term marine andFreehold leasehold vessels tools Others Total

$’000 $’000 $’000 $’000 $’000 $’000CompanyAccumulated depreciationAt 1 January 2003 335 16,769 50,413 2,226 514 70,257Charge for the year 44 965 3,382 133 45 4,569Disposals (247) - - - - (247)

At 31 December 2003 132 17,734 53,795 2,359 559 74,579

Charge for 2002 44 964 3,383 133 19 4,543

Net book valueAt 31 December 2003 1,421 26,250 149,240 1,664 118 178,693

At 31 December 2002 1,958 27,215 152,622 1,797 70 183,662

(a) Docks and quays are stated at Directors’ valuation of 1973 of $25,152,000 with subsequent additions stated at cost.If the following re-valued assets of the Group and Company have been included in the financial statements at costless accumulated depreciation, the net written down value would have been:

Group and Company2003 2002

$’000 $’000

Docks and quays 6,741 6,989

The re-valued net book value of docks and quays is $11,392,000 (2002: $11,811,000).

(b) Net book value of fixed assets acquired under hire purchase agreements as at balance sheet date amounted to$2,954,000 (2002: $499,000) in respect of the Group only.

(c) Others comprise motor vehicles, furniture and office equipment, utilities and fittings and computer equipment.




11. Subsidiary companiesCompany

2003 2002$’000 $’000

Unquoted shares, at cost 267,325 237,049Provision for impairment in value (5,385) (5,385)

261,940 231,664Loans to subsidiary companies 88,559 101,462

350,499 333,126

Provision for impairment in value of a subsidiary companyBalance at 1 January and 31 December 5,385 5,385

The loans to subsidiary companies are unsecured, interest free and is not expected to be repaid within thenext twelve months.

The Company’s subsidiary companies are set out in Note 37.

12. Associated companies and joint ventureGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Associated companiesUnquoted shares, at cost 19,491 35,919 18,531 34,432Provision for impairment in value, Note (a) - - - -Share of net post-acquisition profits 22,254 16,302 - -Goodwill on acquisition, Note (b) 6,214 9,322 - -

47,959 61,543 18,531 34,432Loans and advances to associated companies, Note (c) 10,630 10,630 8,495 8,860

58,589 72,173 27,026 43,292

Joint venturesUnquoted shares, at cost 250 24,337 - -Share of net post-acquisition reserves (139) 5,268 - -

111 29,605 - -

58,700 101,778 27,026 43,292



12. Associated companies and joint venture (cont’d)


(a) Provision for impairment in value of an associated companyGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Balance at 1 January - - - 615Charge for the year - 1,309 - 1,194Write-off - (1,309) - (1,809)

Balance at 31 December - - - -

(b) Goodwill on acquisition

CostBalance at 1 January and 31 December 15,982 15,982 - -

Accumulated depreciationBalance at 1 January 6,660 1,332 - -Charge for the year 3,108 5,328 - -

Balance at 31 December 9,768 6,660 - -

Net book value 6,214 9,322 - -

(c) Loans and advances to associated companiesLoans and advances to associated companies are stated after deducting provision for impairment in valueof $2,134,000 (2002: $1,769,000).

Balance at 1 January - - 1,769 -Charge for the year - - 365 1,769

Balance at 31 December - - 2,134 1,769

The loans and advances to associated companies are unsecured, interest free and is not expected to berepaid within the next twelve months.

The Group’s associated companies are set out in Note 37.




The Group’s share of results and balance sheet of the joint ventures are as follows:

Group2003 2002

$’000 $’000Results of the joint ventures: Revenue 5,897 8,766 Expenses (5,824) (8,523)

Profit before taxation 73 243

Balance sheet of the joint ventures: Non-current assets 1,325 23,050 Current assets 382 9,705 Current liabilities (1,596) (3,150)

Net assets 111 29,605

13. Other long term investmentsGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Quoted equity security, Note (a) - 26,886 - 9,007Quoted equity securities, Note (b) 4,483 1,800 4,483 1,800

4,483 28,686 4,483 10,807

Unquoted bonds, at cost, Note (c) 60,000 60,000 60,000 60,000Unquoted equity securities, at cost, Note (d) 6,855 3,344 3,109 3,109Unquoted non-equity securities, Note (e) 247 247 247 247Club memberships, Note (f) 191 482 126 327

67,293 64,073 63,482 63,683

71,776 92,759 67,965 74,490

Market value of club memberships 191 482 126 327

Market value of quoted securities 8,409 12,192 8,409 12,192




13. Other long term investments (cont’d)

(a) The investment in Jurong Engineering Ltd (“JEL”) is stated after deducting the provision for impairment invalue as follows:

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Balance at 1 January 3,000 - - -Amount written off (2,703) - - -(Write-back)/charge for the year (297) 3,000 - -

Balance at 31 December - 3,000 - -

JEL was disposed during the year.

(b) Quoted equity securities are stated at cost and after deducting provision for impairment in value analysedas follows:

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Balance at 1 January 1,391 - 1,391 1,391(Write-back)/charge for the year (1,391) 1,391 (1,391) -

Balance at 31 December - 1,391 - 1,391

(c) The unquoted bonds expire in 2009. The bonds’ effective interest rate is 7.25% per annum up toFebruary 2004, and from March 2004 to 2009, 7.50% per annum.

The indicative fair value of unquoted bonds at 31 December 2003 was $60,000,000 (2002: $63,000,000).

(d) Included in unquoted equity securities is investment in unquoted Class B redeemable preference sharesof Sabine Industries Inc., a former joint venture held by a subsidiary company. These shares have novoting rights and are redeemable on demand. The holders are entitled to receive quarterly cumulativedividends at the rate of 12% (2002: 12%) per annum. On redemption, the preference shares will beconverted into a promissory note that will bear interest at 6% (2002: 6%) per annum.

(e) The indicative fair value of the unquoted non-equity securities at 31 December 2003 was $338,000(2002: $247,000). Unquoted non-equity securities are stated at cost and after deducting provision for impairmentin value of $1,753,000 (2002: $1,753,000) analysed as follows:

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Balance at 1 January 1,753 - 1,753 -Charge for the year - 1,753 - 1,753





(f) Club memberships are stated at cost and after deducting provision for impairment in value of $649,000(2002: $358,000) for the Group and $464,000 (2002: $263,000) for the Company analysed as follows:

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000

Balance at 1 January 358 - 263 -Charge for the year 291 358 201 263

Balance at 31 December 649 358 464 263

14. Trade debtorsGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Trade debtors under “Current assets”, Note (a) 221,891 217,453 82,091 77,142Less: Provision for doubtful debts (11,436) (16,421) (651) (6,413)

210,455 201,032 81,440 70,729Long term trade debtors, Note (b) 168,639 201,791 66,786 77,349

379,094 402,823 148,226 148,078

(a) Current assetsAssociated companies 7,138 7,614 - -Related companies 6,724 7,317 - -Related parties 979 2,005 - -Subsidiary companies - - 70,820 52,063Joint venture company 724 755 - -External parties 200,967 192,239 7,177 21,155Lease receivables, Note (c) 5,359 7,523 4,094 3,924

221,891 217,453 82,091 77,142

Provision for external party doubtful debts

Balance at 1 January 16,421 13,909 6,413 7,050(Write-back)/charge for the year (1,811) 3,066 (2,681) 44Bad debts written off (3,177) (683) (3,081) (681)Acquisition of subsidiary company 3 129 - -

11,436 16,421 651 6,413

Bad debts written off directly to profit and loss account 72 1,069 - -



14. Trade debtors (cont’d)


Group Company2003 2002 2003 2002$’000 $’000 $’000 $’000

(b) Long term trade debtorsExternal parties 111,812 137,924 16,455 22,923Lease receivables, Note (c) 56,827 63,867 50,331 54,426

168,639 201,791 66,786 77,349

With the exception of $4,597,000 (2002: $6,660,000) for the Group and Company, all the debts due from externalparties are interest-bearing with interest rates for the Group and the Company ranging from 2.4% to 6%(2002: 2.4% to 6%) per annum and 6% (2002: 6%) respectively.

Group Company2003 2002 2003 2002$’000 $’000 $’000 $’000

(c) Lease receivablesRelated companies 5,169 4,946 4,094 3,924External parties 190 2,577 - -

Total under “Current assets”, Note (a) 5,359 7,523 4,094 3,924

Related companies 56,827 62,001 50,331 54,426External parties - 1,866 - -

Total under “Long term trade debtors”, Note (b) 56,827 63,867 50,331 54,426

Under the terms of the lease agreements, no contingent rents are recognised. Interest rates for the Group andthe Company ranged from 4% to 18% (2002: 4% to 18%) per annum and 4% (2002: 4%) per annum respectively.These lease receivables relate to the leases of marine vessels which the lessees have the option to purchasethe marine vessels during the term of the leases. Additional information on lease receivables are set out inparagraph (d).

(d) Additional information on lease receivables:Presentvalue of

Minimum Estimated Total gross Unearned minimumlease residual investment interest lease

Group payment value in lease income payment2003 $’000 $’000 $’000 $’000 $’000Receivable within 1 year 7,887 - 7,887 (2,528) 5,359Receivable after 1 year but within 5 years 29,389 3,000 32,389 (7,663) 24,726Receivable after 5 years 31,642 4,500 36,142 (4,041) 32,101

68,918 7,500 76,418 (14,232) 62,186




Presentvalue of

Minimum Estimated Total gross Unearned minimumlease residual investment interest lease

payment value in lease income payment2002 $’000 $’000 $’000 $’000 $’000Receivable within 1 year 10,815 - 10,815 (3,292) 7,523Receivable after 1 year but within 5 years 32,801 3,000 35,801 (8,887) 26,914Receivable after 5 years 37,970 4,500 42,470 (5,517) 36,953

81,586 7,500 89,086 (17,696) 71,390

Company2003Receivable within 1 year 6,328 - 6,328 (2,234) 4,094Receivable after 1 year but within 5 years 25,313 - 25,313 (7,083) 18,230Receivable after 5 years 31,642 4,500 36,142 (4,041) 32,101

63,283 4,500 67,783 (13,358) 54,425

2002Receivable within 1 year 6,328 - 6,328 (2,404) 3,924Receivable after 1 year but within 5 years 25,313 - 25,313 (7,840) 17,473Receivable after 5 years 37,970 4,500 42,470 (5,517) 36,953

69,611 4,500 74,111 (15,761) 58,350

15. Goodwill on consolidationGroup

2003 2002$’000 $’000

CostAt 1 January 3,245 1,105Additions 2,753 2,140

At 31 December 5,998 3,245

Accumulated amortisationAt 1 January 1,123 188Charge for the year 1,260 935

At 31 December 2,383 1,123

Net book valueAt 31 December 3,615 2,122

Amortisation of goodwill on consolidation are included in the line “General and administrative expenses” on theprofit and loss account.




16. Stocks and work-in-progressGroup

2003 2002$’000 $’000

Materials, Note (a) 15,918 19,351Finished goods, Note (a) 1,882 2,896Work-in-progress, Note (b) 238,172 225,559

255,972 247,806

(a) Stocks at cost are stated after deducting provision for stock obsolescence of:

Materials 745 728Finished goods 150 18

895 746

Analysis of provision for obsolete stocks:Balance at 1 January 746 1,130Charge/(write-back) to profit and loss account 192 (79)Stocks written off (43) (305)

Balance at 31 December 895 746

(b) Work-in-progressCosts and attributable profits less provision for foreseeable losses 931,034 493,932Less: Progress billings (692,862) (268,373)

238,172 225,559

(c) Analysis of provision for foreseeable losses:Balance at 1 January 300 100Charge to profit and loss account 282 200Amount written off (300) -

Balance at 31 December 282 300

17. Other debtorsGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Deposits and recoverables, Note (a) 51,635 14,046 3,300 3,547Non-trade receivables, Note (b) 42,671 11,136 87,160 125,232Prepayments 2,630 1,824 - 108Staff loans, Note (c) 3,516 3,936 19 39

100,452 30,942 90,479 128,926




(a) Deposits and recoverablesGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Cash collateral 3,710 - - -GST refundable 6,087 4,037 - 345Interest receivable 799 382 357 362Recoverable amount 36,797 6,424 585 1,644Tax recoverable 1,529 120 1,410 -Sundry deposits 2,713 3,083 948 1,196

51,635 14,046 3,300 3,547

The cash collateral pertains to deposits placed with certain insurance companies to obtain performance bonds forconstruction contracts and bears interest of 0.86% per annum.

Recoverable amount for the Group includes $31,704,000 (2002: $Nil) in respect of financing provided to a vesselrepaired. It carries an interest rate at 4% per annum and this receivable together with the trade receivable of$20,933,000 (2002: $27,498,000) is secured by the first legal mortgage over the vessel repaired.

Recoverable amount for the Group also includes $1,093,000 (2002: $1,885,000) which bears interest ranging from1.02% to 4% (2002: 1.025% to 4%) per annum.

(b) Non-trade receivablesGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Associated companies 939 1,242 938 1,243Joint venture 1,164 - - -Related company 17,773 6,894 - 72Subsidiary companies - - 81,426 120,917External parties- sale of fixed asset 4,796 - 4,796 -- sale of a joint venture 17,999 - - -- sale of a subsidiary company - 3,000 - 3,000

42,671 11,136 87,160 125,232

All amounts are repayable on demand.

All amounts due from associated and subsidiary companies and joint venture are unsecured and interest-free andcomprise mainly advances and payments on behalf. The related company balance is an unsecured loan whichbears interest ranging from 0.335% to 1.03% (2002: 0.4% to 2.0%) per annum. Advances to and payments on behalfof subsidiary companies are unsecured and also interest-free.




17. Other debtors (cont’d)

The amount due from external party on the sale of a joint venture is repayable in three instalments and will be fullyrepaid by 31 December 2004.

The external party balances are interest-free except for $3,000,000 in 2002 for the Group and Company whichbears interest at 4% per annum.

(c) Staff loans bear interest at 3.00% (2002: 2.25% to 3.00%) per annum.

18. Fixed depositsIncluded in the fixed deposits balance are fixed deposits of $54,379,000 (2002: $53,259,000) pledged with a bankfor banking facilities of a subsidiary company.

19. Trade creditorsGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Associated companies 10,920 6,561 - -Immediate holding company 995 1,306 900 1,233Related companies 6,228 6,450 145 145Subsidiary companies - - 33 106External parties 355,282 371,595 4,257 3,808

373,425 385,912 5,335 5,292

20. Other creditors and provisionsGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Accrual for unconsumed leave 4,566 4,402 150 147Deposits received 512 532 31 -GST payables 1,070 539 92 -Hire purchase creditors (Note 24) 1,230 192 - -Non-trade payables, Note (a) 10,021 10,959 922 71,027Provisions for warranty, Note (b) 3,944 4,996 - -

21,343 21,620 1,195 71,174

(a) Non-trade payablesAssociated companies 779 2,729 33 33Subsidiary companies - - 1 67,853Related company 1,501 - - -Related parties - 2,406 - 2,400External parties 7,741 5,824 888 741

10,021 10,959 922 71,027




With the exception of unsecured interest bearing amounts owing to:(i) a related company of $1,501,000 in 2003 with interest rate ranging from 0.4375% to 0.65% per annum;(ii) a subsidiary company of $35,674,000 in 2002 with interest ranging from 0.63% to 1.3% per annum;

the other non-trade amounts payable to the associated and subsidiary companies and related parties are unsecuredand interest free. All amounts are payable on demand.

Group2003 2002$’000 $’000

(b) Provision for warrantyBalance at 1 January 4,996 3,075(Writeback)/charge to profit and loss account (333) 1,921Amounts utilised (719) -

Balance at 31 December 3,944 4,996

21. Progress billings in excess of work-in-progressGroup

2003 2002$’000 $’000

Costs and attributable profits less losses 20,695 4,232Less: Progress billings (40,267) (25,212)

Progress billings in excess of work-in-progress (19,572) (20,980)

22. BorrowingsGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Bank loans- unsecured, Note (a) 101,029 23,000 30,000 23,000Redeemable convertible loan stocks – unsecured, Note (b) - 4,709 - -

101,029 27,709 30,000 23,000

(a) The unsecured bank loan of the Company for $30,000,000 is repayable on 21 January 2004 and bears interestof 0.98% per annum. In 2002, amounts comprises of two loans of $15,000,000 and $8,000,000 which arerepayable on 6 January 2003 and 27 January 2003. The 2002 loans bear interest of 1.39% and 1.26% per annumrespectively.

The unsecured bank loans of a subsidiary company totalling $50,000,000 comprise four loans of $15,000,000,$5,000,000, $5,000,000 and $25,000,000 repayable on 9 January 2004, 15 January 2004, 29 January 2004 and29 January 2004 respectively and bear interest ranging from 0.91% to 0.98% per annum.




22. Borrowings (cont’d)

The unsecured bank loans of a subsidiary company totalling $8,000,000 comprise three loans of $5,000,000,$1,000,000 and $2,000,000 repayable on 9 January 2004, 9 January 2004 and 16 January 2004 respectively andbear interest ranging from 1.58% to 1.62% per annum.

The unsecured bank loan of a subsidiary company totalling USD7,625,000 is repayable on 30 January 2004 andbears interest of 1.519% per annum.

(b) The redeemable convertible loan stocks were redeemed on 31 October 2003. The cumulative interest chargedat 4% to 6% per annum amounting to $1,760,000 were paid on the same date.

Group2003 2002

$’000 $’000

At cost - 4,800Less: Loan discount - (91)

Amortised cost/fair value - 4,709

Analysis of loan discount:Balance at 1 January (91) (199)Write-off during the year - 10Amortisation during the year 91 98

Balance at 31 December - (91)

23. Deferred taxationGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Balance at 1 January 42,775 50,251 32,201 36,953Charge to equity relating to redeemable convertible loan stock - 100 - -Charge/(write-back) for the year 4,568 (7,576) (420) (4,752)Acquisition of subsidiary company 335 - - -


Deferred taxation recognised arises as a result of:Group Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Deferred tax liabilitiesDifferences in depreciation 47,584 45,995 31,781 32,491Other deferred tax liabilities 2,741 2,005 - 27

50,325 48,000 31,781 32,518




Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000Deferred tax assetsDoubtful debts (1,142) (1,195) - -Unutilised tax losses, capital allowance and investment allowance likely to be utilised (702) (1,298) - -Employee benefits (710) (725) - -Other deferred tax assets (93) (2,007) - (317)

(2,647) (5,225) - (317)

47,678 42,775 31,781 32,201

Deferred taxation not recognised as a result of:Group

2003 2002$’000 $’000

Deferred tax (assets)/liabilitiesDifferences in depreciation 263 (486)Doubtful debts (1,087) (841)Unutilised tax losses, capital allowance and investment allowance likely to be utilised (17,002) (14,949)Other deferred tax liabilities/(assets) 7 (226)

(17,819) (16,502)

Deferred tax assets have not been recognised because it is not probable that future taxable profit will be availableagainst which the subsidiary companies can utilise the benefit therefrom.

24. Hire purchase creditorsPresentvalue of

Minimum Unearned minimumlease interest lease

Group payment income payment2003 $’000 $’000 $’000Payable after 1 year but within 5 years 1,216 (51) 1,165Payable within 1 year, under “Other creditors and provisions” (Note 20) 1,338 (108) 1,230

2,554 (159) 2,395




24. Hire purchase creditors (cont’d)

Presentvalue of

Minimum Unearned minimumlease interest lease

payment income payment2002 $’000 $’000 $’000Payable after 1 year but within 5 years 71 (14) 57Payable within 1 year, under “Other creditors and provisions” (Note 20) 218 (26) 192

289 (40) 249

The hire purchase agreements do not contain any escalation clauses and do not provide for contingent rents. Theimplicit interest rates range from 4.42% to 6.81% (2002: 6.58% to 6.81%) per annum. The net book value of assetsacquired under hire purchase agreements is disclosed in Note 10. Lease terms do not contain restrictions concerningdividend, additional debt or further leasing.

25. Provision for retirement gratuitiesGroup

2003 2002$’000 $’000

Balance at 1 January 3,296 1,699Charge for the year - 1,647Utilised during the year (70) (50)

Balance at 31 December 3,226 3,296

26. Share capitalGroup and Company2003 2002

$’000 $’000Authorised:5,000,000,000 ordinary shares of $0.10 each 500,000 500,000

Issued and fully paid up ordinary shares:Balance at 1 January 1,414,322,480 (2002: 1,406,140,980) shares of $0.10 each 141,432 140,614Issued during the year Exercise of share options of 5,729,400 (2002: 8,181,500) shares of $0.10 each 573 818

Balance at 31 December 1,420,051,880 (2002: 1,414,322,480) shares of $0.10 each 142,005 141,432




During the year, other than the issue of new shares upon the exercise of share options under the SembCorpMarine Share Option Plan (the “Plan”) there was no other issue of new shares.

Share options were granted in 2003 (the “2003 Options”) pursuant to the Plan in respect of 15,619,000 unissuedordinary shares of $0.10 each to 1,095 full time executives of the Group, 9 Directors of the Company and 20executives and one non-executive director of the immediate holding company, SembCorp Industries Ltd, who arenot substantial shareholders of the Company. In respect of options granted to executives and non executivedirector of the immediate holding company, a total of 279,000 options were granted during the financial year,making it a total of 1,270,000 options granted to those executives and non executive director from thecommencement of the Plan to the end of the financial year. The 2003 Options are exercisable from 9 August 2004to 8 August 2013 (9 August 2004 to 8 August 2008 for non-executive Directors of the Company) and the exerciseprice is $0.99 per share for cash.

The details of the Plan (which was started in 1991 as the Jurong Shipyard Limited Executives’ Share Option Scheme)were set out in the financial statements of that year.

The options granted, exercised and cancelled under the Plan during the year and the options outstanding at theend of the year are as follows:

1998 1999 2000 2001 2002 2003Options Options Options Options Options Options

Date options granted 27 Apr 1998 10 Mar 1999 8 Sep 2000 27 Sep 2001 7 Nov 2002 8 Aug 2003Option exercise period: From 27 Apr 2000 10 Mar 2001 8 Sep 2001 28 Sep 2002 8 Nov 2003 9 Aug 2004 To 26 Apr 2003 9 Mar 2004 7 Sep 2010 27 Sep 2011 7 Nov 2012 8 Aug 2013

Number of holders at31 December 2003 - 17 718 872 1,064 1,092

Exercise price per option $0.79 $0.65 $0.70 $0.66 $0.90 $0.99

‘000 ‘000 ‘000 ‘000 ‘000 ‘000

Number of options outstanding:At 1 January 2003 1,380 494 11,000 12,370 15,601 -Options exercised (1,250) (90) (2,372) (1,962) (53) (2)Options granted - - - - - 15,619Options granted but not accepted - - - - - (138)Options cancelled (130) - (105) (190) (349) (29)

At 31 December 2003 - 404 8,523 10,218 15,199 15,450




27. ReservesGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Revenue reserve 548,381 541,527 419,744 411,916Share premium account 237,950 234,471 237,950 234,471Foreign currency translation reserve (2,566) 4,595 - -Asset revaluation reserve 960 960 960 960Other capital reserves 397 17,023 - -

785,122 798,576 658,654 647,347

Made up of:Distributable 548,381 541,527 419,744 411,916Non-distributable 236,741 257,049 238,910 235,431

785,122 798,576 658,654 647,347

28. Dividends(a) The proposed net dividend of $38,767,000 for 2003 (2002: $55,159,000) comprises:

Group and Company2003 2002

$’000 $’000A final dividend of 1.0 cent per share less tax of 22%(2002: 1.0 cent per share less tax of 22%) 11,076 11,032A special dividend of 2.5 cents per share less tax of 22%(2002: 4.0 cents per share less tax of 22%) 27,691 44,127

38,767 55,159

(b) Interim dividend of 0.75 cents per share less tax of 22%(2002: 0.75 cents per share less tax of 22%) 8,292 8,253

Interim special dividend of 0.75 cents per share less tax of 22%(2002: 0.75 cents per share less tax of 22%) 8,292 8,254

2002 Final dividend of 1.0 cent per share less tax of 22%(2002: 2001 Final dividend of 1.0 cent per share less tax of 22%) 11,051 10,993

2002 Special dividend of 4.0 cents per share less tax of 22%(2002: 2001 Special dividend of 4.0 cents per share less tax of 22%) 44,206 43,970

71,841 71,470




29. Contingent liabilitiesGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Bankers’ guarantees:- secured by fixed deposits (Note 31) 54,379 53,259 - -- unsecured 115,879 115,221 - -Unsecured guarantees given to others in respect of:- an associated company - 34,856 - 34,856- subsidiary companies - - 991,160 525,776

30. CommitmentsAt year end, future commitments of the Group are as follows:

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000(a) Approved capital commitment:

Amounts approved by Directors but not committed 154,924 6,200 153,810 6,200Amounts approved and committed - 240 - -

154,924 6,440 153,810 6,200

(b) Foreign currency exchange contracts:Bought contracts 1,808 8,336 - -Sold contracts 102,908 1,387 - -

As at 31 December 2003, the Group had entered into foreign currency forward exchange buy contractsamounting to $1,808,000 (2002: $8,336,000) and foreign currency forward exchange sell contracts amountingto $102,908,000 (2002: $1,387,000). The fair value adjustments of the buy contracts and sell contracts (which isthe difference between the notional principal amounts and market value of the contracts) resulted a net gainof $1,310,000 (2002: $89,000) which was not adjusted in the financial statements.

(c) Minimum lease rental payable to JTC Corporation and a related company in respect of land and buildings:Group Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Within 1 year 17,607 12,205 6,637 9,773After 1 year but within 5 years 91,229 63,350 54,057 53,076After 5 years 25,115 52,089 12,618 34,325

133,951 127,644 73,312 97,174

The leases do not contain escalation clauses and do not provide for contingent rents. Lease terms do notcontain restrictions on the Group activities concerning dividends, additional debt or further leasing.

Certain leases include renewal options for additional lease period of 10 to 15 years and at rental rates basedon prevailing market rates.




31. Cash and cash equivalentsCash and cash equivalents included in the consolidated statement of cash flows comprise:

Group2003 2002

$’000 $’000

Fixed deposits, bank and cash balances 202,786 162,439Less: Fixed deposits pledged with a bank for bankingfacilities of a subsidiary company (54,379) (53,259)

148,407 109,180

Fixed deposits placed with financial institutions has maturity periods ranging from 1 day to 51 months(2002: 3 days to 6 months) from the financial year-end. Interest rate of fixed deposits range from 0.25% to 3.9%(2002: 0.5% to 3.7%) per annum, which are also the effective interest rates.

32. Significant related party transactionsSignificant transactions during the year between the Group and its related parties on terms as agreed between therespective parties and which are not otherwise disclosed in these financial statements consist of:

Group Company2003 2002 2003 2002

$’000 $’000 $’000 $’000Subsidiary companiesPurchases from subsidiary companies - - - 257

Immediate holding companyManagement fee payable 900 1,163 900 1,163

Related companiesSales 6,655 8,350 - -Purchases 8,027 9,065 - -Rental payable 8,350 8,700 - -

Associated companiesSales 62,984 94,589 - -Purchases 25,324 22,797 - -

33. Information by segment on Group operationsBusiness segmentsThe Group has 3 main business segments that are organised and managed separately according to their respectivebusiness activities. The 3 business segments are ship and rig repair, building and conversion, ship chartering andothers. The activities of these business segments are described in Note 1 and Note 37.




Segment accounting policies are the same as the policies described in Note 2 with inter-segment sales and transferscarried out on an arms’ length basis. Segment assets consist primarily of fixed assets, current assets and excludeinterest-bearing assets, inter-segment balances and tax assets. Segment liabilities comprise mainly of operatingliabilities and exclude interest-bearing liabilities, inter-segment balances and tax liabilities.

(a) By business segmentShip & rig

repair,building and Shipconversion chartering Others Eliminations Total

2003 $’000 $’000 $’000 $’000 $’000RevenueSales to external parties 1,016,839 19,618 31,529 - 1,067,986Inter-segment sales 174,377 23 41,388 (215,788) -

Consolidated sales 1,191,216 19,641 72,917 (215,788) 1,067,986

ResultsSegment results 68,143 2,567 3,598 - 74,308Exceptional items 1,478 - (203) - 1,275Investment and interest income 13,438 815 10 - 14,263Interest expenses (826) - (1,837) - (2,663)Share of results of associated companies & joint ventures 6,174 2,344 (515) - 8,003

Profit before taxation 88,407 5,726 1,053 - 95,186Taxation (17,518) (172) 729 - (16,961)

Profit after taxation 70,889 5,554 1,782 - 78,225

Other informationCapital additions 32,494 1 132 - 32,627Depreciation 29,617 2,783 1,545 - 33,945Amortisation 3,996 - 463 - 4,459

Segment assets 916,191 54,211 36,452 - 1,006,854Interest bearing assets 439,831 14,167 4,034 - 458,032Investment in associated companies & joint venture 53,830 580 4,290 - 58,700Tax recoverable 1,411 - 118 - 1,529

Consolidated total assets 1,411,263 68,958 44,894 - 1,525,115

Segment liabilities 401,675 3,136 10,024 - 414,835Interest bearing liabilities 104,925 - - - 104,925Deferred taxation 46,349 136 1,193 - 47,678Provision for taxation 15,036 57 711 - 15,804

Consolidated total liabilities 567,985 3,329 11,928 - 583,242




33. Information by segment on Group operations (cont’d)

Ship & rigrepair,

building and Shipconversion chartering Others Eliminations Total

2002 $’000 $’000 $’000 $’000 $’000RevenueSales to external parties 961,991 22,599 26,922 - 1,011,512Inter-segment sales 165,672 508 65,042 (231,222) -

Consolidated sales 1,127,663 23,107 91,964 (231,222) 1,011,512

Segment results 81,302 4,193 4,388 - 89,883Exceptional items 6,748 - (95) - 6,653Investment and interest income 13,553 931 31 - 14,515Interest expenses (712) - (110) - (822)Share of results of associated companies & joint venture 7,664 (324) (1,278) - 6,062

Profit before taxation 108,555 4,800 2,936 - 116,291Taxation (21,454) (801) (829) - (23,084)

Profit after taxation 87,101 3,999 2,107 - 93,207

Other informationCapital additions 14,284 - 151 - 14,435Depreciation 28,087 2,781 1,561 - 32,429Amortisation 6,082 - 279 - 6,361

Segment assets 884,270 61,458 54,824 - 1,000,552Interest bearing assets 366,728 13,903 5,474 - 386,105Investment in associated companies & joint venture 97,198 72 4,508 - 101,778Tax recoverable - - 120 - 120

Consolidated total assets 1,348,196 75,433 64,926 - 1,488,555

Segment liabilities 420,580 1,542 9,494 - 431,616Interest bearing liabilities 23,249 - 4,709 - 27,958Deferred taxation 41,646 170 959 - 42,775Provision for taxation 34,335 754 813 - 35,902

Consolidated total liabilities 519,810 2,466 15,975 - 538,251




(b) By geographical areaThe Group operates in 10 (2002: 8) countries and principally in the Republic of Singapore. Pricing of inter-segment sales and transfers are carried out on an arm’s length basis.

34. Directors’ remunerationThe remuneration of Directors of the Company fell within the following ranges:

2003 2002$500,000 and above 2 2$250,000 to $499,999 - -Below $250,000 10 8

12 10

The Directors’ remuneration of the Company included an amount of $307,000 (2002: $135,000) relating to taxablebenefit arising from the exercise of share options during the year. This amount has not been charged to the profitand loss account.

35. Financial risk management objectives and policiesThe main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, liquidityrisk and credit risk. The Board of Directors reviews and agrees policies for managing each of these risks and theyare summarised below:

Credit riskThe Group has no significant concentration of credit risk with any single counter party and monitors its exposure tocredit risks arising from sales to customers on an on-going basis where credit evaluations are done on customersthat require credit. The Group only deals with pre-approved counterparties with good credit rating and imposes acap on the amount to be transacted with any counterparty so as to reduce its concentration of risk.

The carrying amounts of investments, trade and other debtors and cash and cash equivalents represent the Group’smaximum exposure to credit risk.

Foreign currency riskThe Group incurs foreign currency risk on purchases that are denominated in a currency other than Singaporedollars, primarily the US dollar. To minimise exposure on foreign currency risks, the Group usually settles suchtransactions within 30 days terms.

Foreign currency riskThe Group also utilises forward exchange contracts with maturities of less than twelve months to hedge foreigncurrency denominated financial assets, liabilities and firm commitments. Under this programme, increases ordecreases in the Group’s foreign currency denominated financial assets, liabilities and firm commitments are partiallyoffset by gains and losses on the hedging instruments. The Group does not use foreign currency forward contractsfor trading purpose.



35. Financial risk management objectives and policies (cont’d)


Interest rate riskThe Group’s policy is to maintain an efficient optimal interest cost structure using a mix of fixed and variable ratedebts where working capital is financed by variable rate loans while long term investments are financed by fixedrate loans. Surplus funds, if any, are placed with reputable banks and/or investment in bonds.

The Group obtains additional financing through bank borrowings and leasing arrangements. The Group’s policy isto obtain the most favourable interest rates available without increasing its foreign currency exposure.

Liquidity riskShort-term funding is obtained from overdraft facilities and bank loans.

36. Fair value of financial instrumentsThe following methods and assumptions are used to estimate the fair value of each class of financial instrumentsfor which it is practicable to estimate that value:

Cash and cash equivalents, debtors, creditors and short-term borrowingsThe carrying amounts of cash and cash equivalents, debtors and creditors (including related party balances whichare expected to be repaid in accordance with normal credit terms), and short-term borrowings approximate theirfair values due to the short term nature of these balances.

Related party balancesNo disclosure of fair value is made for related party balances (including associated, related and subsidiary companiesand any other related parties) which are in the nature of loans as it is not practicable to determine their fair valueswith sufficient reliability since these balances have no fixed terms of repayment although these are not expectedto be settled within twelve months from the balance sheet date.

Unquoted equity investments and long term trade debtorsOther than the disclosures made in Note 13 and Note 14, it is not practicable to determine the fair values of theremaining unquoted equity investments held as long term investments and the long term trade debtors carried atcost. In the opinion of the Directors, the expected cash flows from these unquoted equity investments and long-term trade debtors are believed to be in excess of their carrying amounts.

Hire purchase creditorsThe fair value of the hire purchase creditors is determined by discounting the relevant cash flow using currentinterest rate for similar instruments at balance sheet date.

There are no significant differences between the fair values and the carrying amounts of the hire purchase creditors.

Unrecognised financial instrumentsThe valuation of financial instruments not recognised in the balance sheet reflects amounts which the Groupexpects to pay or receive to terminate the contracts or replace the contracts at their current market rates at thebalance sheet dates.

Other than the disclosure made in Note 30, there are no other unrecognised financial instruments.




37. Group companiesDetails of the Group’s subsidiary and associated companies are as follows:

Name of Company Percentage of(Country of Principal activities equity held by

incorporation) (Place of business) Cost the Group2003 2002 2003 2002$’000 $’000 % %

Subsidiary companiesBulk Trade Pte Ltd Bulk trading 1,764 1,764 100 100(Singapore) (Singapore)

Dolphin Shipping Company Ship owning and charter 500 500 100 100Private Limited (Singapore) (Singapore)

JPL Corporation Pte Ltd Investment holding 5,100 5,100 70 70(Singapore) (Singapore)

Jurong Integrated Services Steel fabrication work 5,000 5,000 100 100Pte Ltd (Singapore) (Singapore)

Jurong Machinery and Marine and general electronic 2,000 2,000 100 100Automation Pte Ltd (Singapore) and electrical works (Singapore)

Jurong Marine Contractors Provision of contract services 25 25 100 100Private Limited (Singapore) (Singapore)

Jurong Shipbuilders Investment holding 30,000 30,000 100 100Private Limited (Singapore) (Singapore)

Jurong Shipyard Pte Ltd Ship and rig repair, building, 50,000 50,000 100 100(Singapore) conversion and related services

(Singapore)

Jurong SML Pte Ltd (Singapore) Shipbuilding, ship repair and 28,305 28,305 100 100related services (Singapore)

Karimun Shiprepair and Investment holding (Singapore) 22,565 22,565 100 100Engineering Pte Ltd (Singapore)

PPL Shipyard Pte Ltd Rig building, repair and related 30,276 (a) 85 (a)(Singapore) services (Singapore)



37. Group companies (cont’d)


Name of Company Percentage of(Country of Principal activities equity held by

incorporation) (Place of business) Cost the Group2003 2002 2003 2002$’000 $’000 % %

Sembawang Shipyard Pte Ltd Ship repair and related services 54,230 54,230 100 100(Singapore) (Singapore)

Sembawang Shipyard (S) Investment holding (Singapore) 25,560 25,560 100 100Pte Ltd (Singapore)

SML Shipyard Pte Ltd Ship repair and related services 12,000 12,000 100 100(Singapore) (Singapore)

267,325 237,049

Associated companiesCosco (Dalian) Shipyard Co Ltd** Ship repair and related services 15,161 15,286 20 20(previously known as Dalian (People’s Republic of China)Cosco Marine EngineeringCo. Ltd)(People’s Republic of China)

Joint Shipyard Investment Investment holding 2,120 2,120 50 50Pte Ltd ** (Singapore) (Singapore)

Joint Shipyard Management Managing dormitories - - 25 25Services Pte Ltd (Singapore) (Singapore)

Joint Shipyard Technologies Liquidated (Singapore) (b) 200 (b) 28.6Pte Ltd (Singapore)

Jurong Clavon Pte Ltd Engineering work (Singapore) 200 200 50 50(Singapore)

Jurong Marine Services Provision of tugging and sea 1,050 1,050 50 50Pte Ltd ** (Singapore) transportation services (Singapore)

PPL Shipyard Pte Ltd Rig building, repair and (a) 15,576 (a) 50(Singapore) related services (Singapore)

18,531 34,432




Percentage ofName of Companies Principal Activities equity held by

(Country of Incorporation) (Place of Business) the Group2003 2002

% %Subsidiary and associated companies of Sembawang Shipyard Pte Ltd

SES Marine Services (Pte) Ltd (Singapore) Marine services (Singapore) 100 100

SES Engineering (M) Sdn Bhd * (Malaysia) Fabrication of metal structures (Malaysia) 100 100

Sembawang Shipyard Services (Pte) Ltd Marine services (Singapore) 100 100(Singapore)

OmixAsia.com Pte Ltd (Singapore) E-commence & bulk procurement 30 30(Singapore)

Subsidiary companies of Karimun Shiprepair and Engineering Pte Ltd

P.T. Karimun Sembawang Shipyard * Ship repair and related services (Indonesia) 100 100(Indonesia)

Sinna Services Pte Ltd (Singapore) Ship repair and related services (Singapore) 100 65

Subsidiary companies of PPL Shipyard Pte LtdBaker Marine Pte Ltd (Singapore) Rig enhancement and upgrading services, 85 50

engineering consultancy and projectmanagement, and supply of rig equipmentand parts (Singapore)

Baker Marine Services (HK) Limited * Provision of rig designs (Hong Kong) 85 50(Hong Kong)

Baker Marine Technology Inc. Engineering design, research and 85 50(United States of America) *** development, marketing and client services

support centre (United States of America)

Subsidiary and associated companies of Jurong Shipbuilders Private Limited

Jurong Shipping Company Private Limited Inactive (Singapore) 100 100(Singapore)

Jurong Shipping Company Beta Pte Ltd Inactive (Singapore) 100 100(Singapore)

Jurong Shipping Company Gamma Pte Ltd Inactive (Singapore) 100 100(Singapore)



37. Group companies (cont’d)


Percentage ofName of Companies Principal Activities equity held by

(Country of Incorporation) (Place of Business) the Group2003 2002

% %Subsidiary and associated companies of Jurong Shipbuilders Private Limited (con’t)

Tridex Investment Inc. *** Investment holding (British Virgin Islands) 100 100(British Virgin Islands)

Oslo Gas I LP *** (Republic of Liberia) Ship owning and charter (Norway) 33.3 33.3

Oslo Gas II LP *** (Republic of Liberia) Ship owning and charter (Norway) 33.3 33.3

Subsidiary and associated companies of Jurong Shipyard Pte Ltd

Jurong Brazil-Singapore Pte Ltd (Singapore) Investment holding (Singapore) 100 100

Jurong Shipyard Inc. *** (Bahamas) Investment holding (Bahamas) 35 35

Maua Jurong S.A. ** (Brazil) Shipbuilding, ship repair, and conversion (Brazil) 35 35

Subsidiary companies of JPL Corporation Pte Ltd

JPL Services Pte Ltd (Singapore) Equipment rental services and trading 70 70in copper slag (Singapore)

JPL Industries Pte Ltd (Singapore) Processing and distribution of copper slag 53.8 53.8(Singapore)

JPL Concrete Products Pte Ltd (Singapore) Production of concrete products (Singapore) 53.8 53.8

Joint venture company of Sembawang Shipyard (S) Pte Ltd

Bohai Sembawang Shipyard (Tianjin) Repairs and conversion of all types of marine - 50Co. Ltd ** vessels, production of quayside and container(People’s Republic of China) cranes and installation and repair of

mechanical and electronic equipment(People’s Republic of China)

Joint venture company of Dolphin Shipping Company Private Limited

Pacific Workboats Pte Ltd ** (Singapore) Ship leasing and marine surveying services 50 -(Singapore)




(a) PPL Shipyard Pte Ltd and its subsidiary companies is held by the Group as follows:2003 2002

% %

The Company 85.0 50.0

(b) Joint Shipyard Technologies Pte Ltd was liquidated during the year and was held by the Group as follows:2003 2002

% %

The Company - 14.3Held through a wholly-owned subsidiary company - 14.3

- 28.6

The above transactions does not have a material impact on the results and financial position of the Group.

* Audited by other member firms of Ernst & Young** Audited by other firms*** These companies are not required to be audited under the laws of their country of incorporation

38. Subsequent events(a) A wholly owned subsidiary company, Sembawang Shipyard (S) Pte Ltd (“SSSPL”) has established a subsidiary

company, Kristiansand Drilling Pte Ltd (“Kristiansand”), with Deep Drilling 1 Pte Ltd (“DD1”) on 16 January 2004.SSSPL holds 81.82% of the equity stake in Kristiansand while DD1 holds 18.18%. SSSPL and DD1 shall pay US$90million and US$20 million respectively for their equity capital in Kristiansand.

Kristiansand has entered into an EPC Construction Contract with PPL Shipyard Pte Ltd to construct one unit ofBaker Marine Pacific Class 375 Deep Drillling Offshore Jack-up rig for a total price of US$110m. During theconstruction period, the jack-up will be owned by Kristiansand.

(b) The Company acquired an additional 5% equity interest in Jurong Clavon Pte Ltd (“Jurong Clavon”) comprisingan additional 50,000 ordinary shares of par value S$1 each for a total consideration of S$394,000. With the completionof this acquisition, Jurong Clavon will become a 55% owned subsidiary company of the Company.

39. Comparative figuresThe following comparative figures relating to the previous year have been reclassified to conform with thepresentation in the current year and to better reflect the nature of the balance sheet items.

Group CompanyAs previously As previously

As restated stated As restated stated$’000 $’000 $’000 $’000

Other long-term investments 92,759 92,277 74,490 74,163Other debtors 30,942 31,424 128,926 129,253


S upplementary Information 31 December 2003 (Under SGX-ST Listing Manual Requirements)


A. Directors’ RemunerationThe remuneration of directors of the Company falls within the following ranges:-

2003$500,000 and above 2$250,000 to $499,999 -Below 250,000 10

12

Summary compensation table for the year ended 31 December 2003:

Names of Director *Salary #Bonus Directors’ Total ^Number of shareFees option granted

$’000 $’000 $’000 $’000 $‘000

Wong Kok Siew - 43 83 126 250

Tan Kwi Kin 714 239 - 953 800

Tan Pheng Hock - - 21 21 50

Kiyotaka Matsuzawa - - 48 48 130

Naoteru Tsuda - - 21 21 50

Low Sin Leng - 4 22 26 50

Tan Tew Han - - 52 52 75

Ajaib Haridass - - 9 9 -

Chee Keng Soon - 85 23 108 -

Giam Chin Toon - - 47 47 130

Er Kwong Wah - - 6 6 -

Heng Chiang Gnee 369 243 - 612 500

Total 1,083 614 332 2,029 2,035

In addition, the following directors were conditionally awarded an aggregate of 1,740,000 performance shares:Tan Kwi Kin 1,140,000Heng Chiang Gnee 600,000

The actual number delivered will depend on the achievement of set targets over a 3-year period from 2001 to 2003, 2002to 2004 and 2003 to 2005. Achievement of targets below 80% level will mean no performance shares will be delivered,while achievement of targets exceeding 100% will mean up to a maximum of 200% of the conditional performanceshares could be delivered.

* The salary amount shown is inclusive of allowances, CPF, all fees other than directors’ fee, and other emolument.# The bonus amount shown is inclusive of CPF and the taxable benefit arising from the exercise of share options during the year amounting to $307,000.

The latter amount has not been charged to the profit and loss account.^ Relates to share options granted during the year by the Company.



S upplementary Information 31 December 2003 (Under SGX-ST Listing Manual Requirements)

B. Interested Person TransactionsAggregate value of all transactions

conducted under a shareholders’mandate pursuant to Rule 920

of the SGX Listing Manual2003 2002$’000 $’000

Transaction for the Sales of Goods and ServicesKeppel Corporation Ltd and its associates 769 -Neptune Orient Lines Ltd and its associates 5,755 7,704SembCorp Industries Limited and its associates 3,241 6,693

Transaction for the Purchase of Goods and ServicesKeppel Corporation Ltd and its associates 2,104 2,824Neptune Orient Lines Ltd and its associates 5,612 6,368SembCorp Industries Limited and its associates 22,946 23,933

Management and Support ServicesSembCorp Industries Limited 900 1,136Total Interested Person Transactions 41,327 48,658

Treasury Transactions - Placement of Funds with/(from) as at 31 DecemberSembCorp Industries Limited and its associates 17,773 10,827SembCorp Industries Limited and its associates (1,501) -

Aggregate value of all transactionsexcluding transactions conducted

under a shareholders’ mandatepursuant to Rule 920 ofthe SGX Listing Manual2003 2002$’000 $’000

Investment TransactionsNeptune Orient Lines Ltd and its associates - 11,000Singapore Technologies Engineering Ltd and its associates - 3,300

- 14,300


M ajor Properties As at March 12, 2004


Held by Location Description & Tenure UsageApproximate Land Area

SembCorp Jalan Samulun Land area: 198,098m2 10 years leasehold Ship repairs includingMarine Building, workshop, 10 years renewal drydock, berthage

drydocks and quays option (expiry in 2020) & workshops

Tanjong Kling Land area: 491,054.57m2 10 years leasehold Ship repairs, shipBuilding, workshop, 10 years renewal conversion, offshore,drydocks and quays option (expiry in 2020) shipbuilding and rig

building includingdrydock, berthage &workshops

Mendong Spring 9 units of 3-room apartment Freehold Residential propertieswith built-in area of 99m2

per unit

Hilton Tower Apartment with Freehold Residential propertiesat Grange Road built-in area of 131m2

P.T. Karimun Karimun Island 150,000m2 30 years leasehold Ship repairing andSembawang Indonesia Building, workshop with option for 20 fabricationShipyard and wharves years plus another

option for 30 years

SES Engineering No. 15 56,348 sq ft Freehold Metal fabricationSdn Bhd Jalan Lambak Workshop and 3-storey workshop

Kawasan office buildingPerindustrianTaman Johor81200 Johor Bahru


N otice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the 41st Annual General Meeting of the Company will be held on Wednesday, April 28, 2004 at 11.00 a.m.at 29 Tanjong Kling Road, Singapore 628054 to transact the following business:-

Ordinary Business1 To receive and adopt the Directors’ Report and Audited Accounts for the year ended December 31, 2003.2 To approve the payment of a final dividend of 1.0 cent per share less income tax and a special dividend of 2.5 cents

per share less income tax for the year ended December 31, 2003.3 To re-elect the following Directors, each of whom will retire by rotation pursuant to Article 91 of the Company’s

Articles Association and who, being eligible, will offer themselves for re-election:(a) Wong Kok Siew(b) Tan Pheng Hock

4 To re-elect the following Directors, each of whom will retire pursuant to Article 97 of the Company’s Articles ofAssociation and who, being eligible, will offer themselves for re-election:

(a) Tan Tew Han (independent Chairman of the Audit Committee)

(b) Ajaib Haridass (independent member of the Audit Committee)

5 To approve the sum of S$332,332 as Directors’ Fees for the year ended December 31, 2003. (2002: S$316,500)6 To re-appoint Messrs Ernst & Young as Auditors of the Company and authorise the Directors to fix their remuneration.

Special BusinessTo consider and, if thought fit, to pass the following resolutions which will be proposed as Ordinary Resolutions:-7 That authority be and is hereby given to the Directors of the Company to:

(a) (i) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or otherwise; and/or (ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require

shares to be issued, including but not limited to the creation and issue of (as well as adjustments to)warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directorsmay in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue sharesin pursuance of any Instrument made or granted by the Directors while this Resolution was in force,

provided that:(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued

in pursuance of Instruments made or granted pursuant to this Resolution) does not exceed 50% of theissued share capital of the Company (as calculated in accordance with sub-paragraph (2) below), ofwhich the aggregate number of shares to be issued other than on a pro rata basis to shareholders ofthe Company (including shares to be issued in pursuance of Instruments made or granted pursuant tothis Resolution) does not exceed 20% of the issued share capital of the Company (as calculated inaccordance with sub-paragraph (2) below);

(2) (subject to such manner of calculation as may be prescribed by the Singapore Exchange SecuritiesTrading Limited (“SGX-ST”)) for the purpose of determining the aggregate number of shares that maybe issued under sub-paragraph (1) above, the percentage of issued share capital shall be based on theissued share capital of the Company as at the time this Resolution is passed, after adjusting for:

(i) new shares arising from the conversion or exercise of any convertible securities or share optionsor vesting of share awards which are outstanding or subsisting at the time this Resolution ispassed; and

(ii) any subsequent consolidation or subdivision of shares;(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions

of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has beenwaived by the SGX-ST) and the Articles of Association for the time being of the Company; and

(4) (unless revoked or varied by the Company in General Meeting) the authority conferred by this Resolutionshall continue in force until the conclusion of the next Annual General Meeting of the Company or thedate by which the next Annual General Meeting of the Company is required by law to be held, whicheveris the earlier.

8 That:(1) approval be and is hereby given, for the purposes of Chapter 9 of the listing manual (“Chapter 9”) of

the SGX-ST, for the Company, its subsidiaries and associated companies that are entities at risk (as thatterm is used in Chapter 9), or any of them, to enter into any of the transactions falling within the typesof interested person transactions described in the Appendix to the Letter to Shareholders datedApril 13, 2004 (the “Letter”) with any party who is of the class of interested persons described in theAppendix to the Letter, provided that such transactions are made on normal commercial terms and inaccordance with the review procedures for such interested person transactions;

SEMBCORP MARINE LTD (INCORPORATED IN THE REPUBLIC OF SINGAPORE)

Resolution 1Resolution 2

Resolution 3Resolution 4

Resolution 5Resolution 6Resolution 7Resolution 8

Resolution 9

Resolution 10


N otice of Annual General MeetingSEMBCORP MARINE LTD (INCORPORATED IN THE REPUBLIC OF SINGAPORE)

Resolution 11

(2) the approval given in paragraph (1) above (the “Shareholders Mandate”) shall, unless revoked orvaried by the Company in general meeting, continue in force until the conclusion of the next AnnualGeneral Meeting of the Company; and

(3) the Directors of the Company be and are hereby authorised to complete and do all such acts andthings (including executing all such documents as may be required) as they may consider expedient ornecessary or in the interests of the Company to give effect to the Shareholders Mandate and/or thisResolution.

9 That approval be and is hereby given to the Directors to:(a) offer and grant options in accordance with the provisions of the SembCorp Marine Share Option Plan

(the “Share Option Plan”) and/or to grant awards in accordance with the provisions of the SembCorpMarine Performance Share Plan (the “Performance Share Plan”) and/or the SembCorp Marine RestrictedStock Plan (the “Restricted Stock Plan”) (the Share Option Plan, the Performance Share Plan and theRestricted Stock Plan, together the “Share Plans”); and

(b) allot and issue from time to time such number of shares of $0.10 each in the capital of the Company asmay be required to be issued pursuant to the exercise of options under the Share Option Plan and/orsuch number of fully paid shares as may be required to be issued pursuant to the vesting of awardsunder the Performance Share Plan and/or the Restricted Stock Plan,

provided that the aggregate number of shares to be issued pursuant to the Share Plans shall not exceed 15% of theissued share capital of the Company from time to time.

10 To transact any other business.

By Order of the Board

Kwong Sook MayCompany Secretary

April 13, 2004

Explanatory Notes:Resolution 5 - if re-elected, Tan Tew Han will remain as the Chairman of the Audit Committee. Tan Tew Han is an independent Director.

Resolution 6 - if re-elected, Ajaib Haridass will remain as a member of the Audit Committee. Ajaib Haridass is an independent Director.

Statement pursuant to Article 54 of the Articles of Association of the Company:Resolution 9 - is to empower the Directors to issue shares in the capital of the Company and to make or grant instruments (such as warrants or debentures) convertible intoshares, and to issue shares in pursuance of such instruments, up to an amount not exceeding in total 50% of the issued share capital of the Company, with a sub-limit of 20%for issues other than on a pro rata basis to shareholders. For the purpose of determining the aggregate number of shares that may be issued, the percentage of issuedshare capital shall be based on the issued share capital of the Company at the time that Resolution 9 is passed, after adjusting for (a) new shares arising from the conversionor exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the time that Resolution 9 is passed, and (b) anysubsequent consolidation or subdivision of shares.

Resolution 10 - is to renew the mandate to enable the Company, its subsidiaries and associated companies which are considered to be “entities at risk” within the meaningof Rule 904(2) of the listing manual of the Singapore Exchange Securities Trading Limited, in their ordinary course of businesses, to enter into categories of transactionswith specified classes of the Company’s interested persons, provided that such transactions are entered into on an arm’s length basis and on normal commercial terms.Please see the Letter to Shareholders dated April 13, 2004 for details.

Resolution 11 - is to empower the Directors to offer and grant options and/or grant awards and to issue shares in the capital of the Company pursuant to the SembCorpMarine Share Option Plan, the SembCorp Marine Performance Share Plan and the SembCorp Marine Restricted Stock Plan (collectively, the “Share Plans”) provided thatthe aggregate number of shares issued pursuant to the Share Plans shall not exceed 15% of the issued share capital of the Company for the time being.

Note:A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two (2) proxies to attend and vote on his behalfand where a member appoints more than one (1) proxy, he shall specify the proportion of his shareholdings to be represented by each proxy. A proxy need not be amember of the Company. The instrument appointing a proxy or proxies must be lodged at 30 Hill Street #05-04 Singapore 179360 not later than 48 hours before the timeof the meeting.

Notice of Books Closure and Dividend Payment DateNOTICE IS HEREBY GIVEN that the Register of Members and Share Transfer Books of the Company will be closed from May 6, 2004 to May 7, 2004, both dates inclusive,for the preparation of dividend warrants.

Duly completed transfers in respect of ordinary shares in the capital of the Company together with all relevant documents of title received by the Company’s ShareRegistrar, Kon Choon Kooi Pte Ltd, 47 Hill Street #06-02, Chinese Chamber of Commerce & Industry Building Singapore 179365, up to 5 p.m. on May 5, 2004 (the “BookClosure Date”) will be registered to determine members’ entitlements to the proposed dividend. Subject as aforesaid, members whose securities accounts with TheCentral Depository (Pte) Limited are credited with ordinary shares in the capital of the Company as at 5.00 p.m. on the Book Closure Date will be entitled to the dividend.

The proposed dividend, if approved at the 41st Annual General Meeting, will be paid on May 18, 2004.

PROXY FORM

(INCORPORATED IN THE REPUBLIC OF SINGAPORE)

IMPORTANT1. For investors who have used their CPF monies to buy SembCorp Marine Ltd’s shares,

this document is forwarded to them at the request of their CPF Approved Nomineessolely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for allintents and purposes if used or purported to be used by them.

(Name)

(Address)

I/We of

being a member/members of SEMBCORP MARINE LTD hereby appoint:-

Name Address NRIC/Passport Number Proportion ofShareholdings (%)

and/or (delete as appropriate)

as my/our proxy/proxies to attend and vote for me/us on my/our behalf and, if necessary, to demand a poll, at the 41st AnnualGeneral Meeting of the Company to be held at 29 Tanjong Kling Road, Singapore 628054 on Wednesday, April 28, 2004 at11.00 a.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Resolutions as set out in the Notice ofAnnual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on anyother matter arising at the Annual General Meeting.)

No. Resolutions For Against

Ordinary Business1 Adoption of Directors’ Report and Accounts

2 Declaration of Final Dividend and Special Dividend

3 Re-election of Wong Kok Siew

4 Re-election of Tan Pheng Hock

5 Re-election of Tan Tew Han

6 Re-election of Ajaib Haridass

7 Approval of Directors’ Fees

8 Re-appointment of Auditors

Special Business9 Approval for the renewal of Share Issue Mandate

10 Approval for the renewal of the Shareholders Mandate

11 Authority for Directors to grant options and/or grant awards and issue sharesin accordance with SembCorp Marine’s Share Plans

Dated this day of 2004. Total Number of Shares Held

Signature(s) of Member(s) or Common Seal

Notes:1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act,

Chapter 50 of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. Ifyou have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number ofshares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy orproxies shall be deemed to relate to all the shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote instead of him. Such proxy need notbe a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to berepresented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at 30 Hill Street #05-04, Singapore 179360, not less than 48 hours before the time appointed for holding the AnnualGeneral Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy orproxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised.

6. A corporation which is a member may authorise by a resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual GeneralMeeting in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore.

General:The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointorare not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of shares entered in the Depository Register,the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have shares entered against his name in the DepositoryRegister as at 48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

The Company SecretarySembCorp Marine Ltdc/o 30 Hill Street #05-04

Singapore 179360

AffixPostageStamp

Documents

financial pages 105-125/FA2 - Sembcorp Marine€¦ · Contents General Information 106 Report of the Directors 107 Statement by Directors 125 Report of the Auditors 126 Profit and