Genting Hong Kong - INTERIM REPORT TO SHAREHOLDERS · 2012. 3. 20. · Hong Kong SAR Tel: (852) 23782000 Fax: (852) 23143809 E-mail: [email protected] Mr. Gerard Lim Ewe

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INTERIM REPORT TO SHAREHOLDERSfor the three months and nine months ended 30 September 2001

CONTENTS

Page

Corporate Information 1

Consolidated Profit and Loss Accounts 2

Consolidated Balance Sheet 3

Consolidated Cash Flow Statements 4

Consolidated Statements of Recognised Gains and Losses 4

Notes to the Accounts 5

Interim Dividend 12

Financial Review 12

Directors’ Interests in Equity Securities 14

Substantial Shareholders 15

Practice Note 19 to the Listing Rules 16

Purchase, Sale or Redemption of Shares 16

Corporate Governance 16

STAR CRUISES LIMITED(Continued into Bermuda with limited liability)

Interim Report for the three months and nine months ended30 September 2001

1 In te r im Repor t

Corporate Information

Board of Directors

Dato’ Lim Kok Thay

Chairman, President and Chief Executive Officer

Mr. Alan Howard Smith, J.P.

Deputy Chairman and Independent Non-executiveDirector

Mr. Chong Chee TutExecutive Director and Chief Operating Officer

Mr. William Ng Ko SengExecutive Director and Executive Vice President

Mr. David Colin Sinclair VeitchExecutive Director, President and Chief ExecutiveOfficer of Norwegian Cruise Line Limited

Mr. Tan Boon Seng

Independent Non-executive Director

Mr. Lim Lay Leng

Independent Non-executive Director

SecretaryMs. Louisa Tam Suet Lin

Assistant SecretaryMr. Tan Wooi Meng

A.S. & K. Services Ltd.

Registered OfficeCedar House,

41 Cedar Avenue,

Hamilton HM12, Bermuda

Corporate OfficeSuite 1501, Ocean Centre,

5 Canton Road,Tsimshatsui, Kowloon,

Hong Kong SAR

Bermuda Principal RegistrarButterfield Corporate Services Limited

Rosebank Centre,

11 Bermudiana Road,

Pembroke,

BermudaTel: (441) 2951111

Fax: (441) 2956759

Hong Kong Branch RegistrarCentral Registration Hong Kong Limited

Rooms 1901-1905,19th Floor, Hopewell Centre,

183 Queen’s Road East,

Hong Kong SAR

Tel: (852) 28628628

Fax: (852) 28650990/25296087

Transfer AgentM & C Services Private Limited

138 Robinson Road #17-00,The Corporate Office,

Singapore 068906

Tel: (65) 2280507

Fax: (65) 2251452

AuditorsMessrs PricewaterhouseCoopers,

Certified Public Accountants22nd Floor, Prince’s Building,Central, Hong Kong SAR

Internet Homepagewww.starcruises.com

Investor RelationsEnquiries may be directed to:

Ms. Louisa Tam Suet Lin

Company SecretaryHong Kong SAR

Tel: (852) 23782000

Fax: (852) 23143809

E-mail: [email protected]

Mr. Gerard Lim Ewe Keng

Senior Vice President, Chief Executive OfficeKuala Lumpur, Malaysia

Tel: (603) 20306013

Fax: (603) 21613621

E-mail: [email protected]

2Star Cru ises L im i ted

The Board of Directors (the “Directors”) of Star Cruises Limited (the “Company”) presents the unauditedconsolidated accounts of the Company and its subsidiaries (collectively referred to as the “Group”) for the threemonths and nine months ended 30 September 2001, as follows:

Consolidated Profit and Loss Accounts

Three months ended Nine months endedNote 30 September 30 September

2001 2000 2001 2000US$’000 US$’000 US$’000 US$’000

unaudited unaudited unaudited unaudited

Turnover 2 379,834 428,893 1,042,447 981,438

Operating expenses (excludingdepreciation and amortisation) (221,289) (241,209) (636,448) (560,867)

Selling, general andadministrative expenses(excluding depreciation) (59,314) (58,843) (177,309) (146,227)

Depreciation and amortisation 3 (38,411) (39,676) (112,287) (100,282)

(319,014) (339,728) (926,044) (807,376)

Operating profit 2 60,820 89,165 116,403 174,062

Interest income 1,020 986 6,313 2,134Financial costs (25,247) (52,705) (92,205) (134,434)Other non-operating income/

(loss), net 1,046 (732) 8,222 834Share of losses of associated

company — — — (748)

(23,181) (52,451) (77,670) (132,214)

Profit before taxation 37,639 36,714 38,733 41,848

Taxation 4 (341) (15,650) (807) (20,080)

Profit after taxation 37,298 21,064 37,926 21,768

Minority interests — (3,424) — (5,672)

Net profit for the period 37,298 17,640 37,926 16,096

Basic earnings per share(US cents) 5 0.90 0.56 0.92 0.52

Fully diluted earnings per share(US cents) 5 0.90 0.56 0.91 0.51

Operating dataPassenger Cruise Days 1,894,158 1,958,884 5,353,701 4,840,524Capacity Days 1,864,419 1,958,957 5,485,527 4,945,156Occupancy as a percentage of

capacity days 102% 100% 98% 98%


Consolidated Balance Sheet

Note As at

30 September 31 December

2001 2000

US$’000 US$’000

unaudited audited

Intangible assets 630,027 639,036

Fixed assets 2,979,974 2,888,148

Restricted cash 150 150

Other assets 14,556 20,362

CURRENT ASSETS

Consumable inventories 30,739 28,329

Trade receivables 6 15,948 19,920

Prepaid expenses and others 54,945 37,946

Restricted cash 2,123 2,858

Amounts due from related companies 9 204 —

Cash and cash equivalents 176,650 292,508

280,609 381,561

CURRENT LIABILITIES

Trade creditors 7 72,952 76,092

Accruals and other liabilities 127,483 161,337

Current portion of long-term bank loans 8 599,573 263,573

Amounts due to related companies 9 — 603

Advance ticket sales 171,271 126,478

971,279 628,083

Net current liabilities (690,670) (246,522)

Total assets less current liabilities 2,934,037 3,301,174

Financed by:

Share capital 414,673 414,108

Reserves 1,207,148 1,180,829

Shareholders’ funds 10 1,621,821 1,594,937

Long-term bank loans 8 1,302,080 1,696,044

Other long-term liabilities 9,962 10,025

Deferred taxation 174 168

2,934,037 3,301,174


Consolidated Cash Flow Statements

Three months ended Nine months ended30 September 30 September

2001 2000 2001 2000US$’000 US$’000 US$’000 US$’000

unaudited unaudited unaudited unauditedNET CASH INFLOW FROM OPERATING

ACTIVITIES 50,628 92,928 244,930 251,533

RETURNS ON INVESTMENTS ANDSERVICING OF FINANCEInterest paid (22,241) (33,912) (113,775) (93,497)Interest received 1,020 1,030 6,285 2,134

Net cash outflow from returns on investmentsand servicing of finance (21,221) (32,882) (107,490) (91,363)

TAXATION (261) (352) (974) (1,194)

INVESTING ACTIVITIESPurchase of fixed assets (131,238) (70,022) (283,725) (229,323)Proceeds from sale of fixed assets 154 37 90,657 139Acquisition of additional interests in

NCL Holding ASA — — — (513,844)Others — (6,445) (246) (6,445)

Net cash outflow from investing activities (131,084) (76,430) (193,314) (749,473)

Net cash outflow before financing activities (101,938) (16,736) (56,848) (590,497)

FINANCING ACTIVITIESProceeds from short and long-term bank loans 269,999 50,436 325,209 631,263Principal repayments of short and long-term

bank loans (176,386) (36,425) (383,173) (83,556)Proceeds from issuance of ordinary shares 724 48 1,557 293Proceeds from interest bearing loans from

related companies — — — 113,582Restricted cash 709 (5,420) 735 119Others, net (742) (14,024) (2,035) (20,828)

Net cash inflow/(outflow) from financingactivities 94,304 (5,385) (57,707) 640,873

Effect of exchange rate changes on cash andcash equivalents 836 (581) (1,303) (1,201)

Net (decrease)/increase in cash and cashequivalents (6,798) (22,702) (115,858) 49,175

Cash and cash equivalents at the beginningof the period 183,448 124,600 292,508 52,723

Cash and cash equivalents at the endof the period 176,650 101,898 176,650 101,898

Consolidated Statements of Recognised Gains and Losses


2001 2000 2001 2000US$’000 US$’000 US$’000 US$’000

unaudited unaudited unaudited unauditedLosses on financial instruments (15,037) — (14,426) —Exchange differences arising on

translation of subsidiaries 1,024 60 (263) (867)

Net (losses)/gains not recognised in theprofit and loss accounts (14,013) 60 (14,689) (867)

Profit for the period 37,298 17,640 37,926 16,096

Total recognised gains 23,285 17,700 23,237 15,229


Notes to the Accounts

1. PRINCIPAL ACCOUNTING POLICIES

The unaudited accounts of the Group have been prepared in compliance with Statement of Standard AccountingPractice (“SSAP”) 25 “Interim Financial Reporting”, and Appendix 16 of the Listing Rules of The Stock Exchange ofHong Kong Limited. The accounting policies and methods of computation used in the preparation of these accountsare consistent with those used in the annual accounts for the year ended 31 December 2000.

Intangible assets

The Group is currently amortising goodwill and other intangible assets over useful lives of 40 years which is in excessof the rebuttable presumption in SSAP 29 “Intangible Assets” and SSAP 30 “Business Combinations” that the usefullives of such assets should not exceed 20 years. SSAP 29 and SSAP 30 are effective for accounting periods commencing1 January 2001.

(a) The Group amortises goodwill arising from the purchase of NCL Holding ASA (“NCL”) totalling US$372.6 millionon a straight-line basis over 40 years which is consistent with the useful life of goodwill adopted by other leadingcruise companies. The Group believes that 40 years is a reasonable estimate of the useful lives of this goodwillas the NCL business has been in operation since the 1960s and operates in a market that is expected to grow andin which there are barriers to entry given the major capital investment required.

(b) Intangible assets representing trade names and trademarks of Norwegian Cruise Line and Orient Lines of US$291.6million were recorded on the acquisition of NCL and are being amortised on a straight-line basis over 40 years.The Group considers that 40 years is a reasonable estimate of the useful lives of these assets as the trade namesand trademarks have already been in existence for many years (since 1960s). In addition, the Group incurs andintends to continuously incur significant advertising expenditure which supports the selection of a long useful lifefor these assets.

Drydocking expenses

Drydocking costs represent major inspection and overhaul costs and are depreciated to reflect the consumption ofbenefits, which are to be replaced or restored by the subsequent drydocking generally every two to three years. In prioryears, these drydocking costs, which were to be amortised within one year, were classified as current assets and theremainder of such costs was included in other assets. Effective this year, the Group has included these drydockingcosts as a separate component of the ship costs in accordance with revised SSAP 17 “Property, Plant and Equipment”,where necessary, comparative figures have been reclassified to conform to the current period’s presentation.

2. TURNOVER AND OPERATING PROFIT

The Group is principally engaged in the operation of passenger cruise ships.

Turnover consists of revenues earned from cruise and cruise related activities and charter hire. Cruise and cruiserelated revenue comprises sales of passenger tickets, including, in some cases, air transportation to and from thecruise ship, and revenues from onboard services and other related services, including gaming, food and beverage.Charter hire revenue includes the lease operation of one passenger cruise ship and a catamaran to third party customers.

The amounts of each significant category of revenue recognised by the Group were as follows:

TURNOVERThree months ended Nine months ended

30 September 30 September2001 2000 2001 2000

US$’000 US$’000 US$’000 US$’000unaudited unaudited unaudited unaudited

Cruise and cruise related activities 375,648 424,760 1,031,395 970,385

Charter hire 4,186 4,133 11,052 11,053

379,834 428,893 1,042,447 981,438


Notes to the Accounts (Continued)

2. TURNOVER AND OPERATING PROFIT (Continued)

OPERATING PROFITThree months ended Nine months ended



Cruise and cruise related activities 58,559 86,417 110,202 167,730

Charter hire 2,261 2,748 6,201 6,332

60,820 89,165 116,403 174,062

The Group’s turnover in its principal markets of North America and Asia Pacific is analysed as follows:

TURNOVERThree months ended Nine months ended



Asia Pacific 119,790 157,332 372,678 409,446North America (note) 223,369 242,706 582,880 512,587Others 36,675 28,855 86,889 59,405

379,834 428,893 1,042,447 981,438

OPERATING PROFITThree months ended Nine months ended



Asia Pacific 25,728 40,291 79,391 86,977North America (note) 30,506 43,856 32,191 78,449Others 4,586 5,018 4,821 8,636

60,820 89,165 116,403 174,062

Note: Substantially all this turnover and operating profit arises in the United States of America.

3. DEPRECIATION AND AMORTISATION

Depreciation and amortisation of the Group consists of the following:


2001 2000 2001 2000US$’000 US$’000 US$’000 US$’000


Depreciation of fixed assets 33,732 34,477 97,700 89,108Amortisation of software development costs 788 975 2,916 1,414Amortisation of goodwill 2,360 2,401 7,081 5,507Amortisation of trade names and trademarks 1,531 1,823 4,590 4,253

Total depreciation and amortisation 38,411 39,676 112,287 100,282

– relating to operating function 36,096 37,601 105,621 94,762– relating to selling, general and

administrative function 2,315 2,075 6,666 5,520



4. TAXATION


2001 2000 2001 2000US$’000 US$’000 US$’000 US$’000


Overseas taxation- Current taxation 341 312 807 891- Deferred taxation — 15,338 — 19,189

341 15,650 807 20,080

5. EARNINGS PER SHARE

Earnings per share has been calculated as follows:


2001 2000 2001 2000US$’000 US$’000 US$’000 US$’000


BASICNet profit 37,298 17,640 37,926 16,096

Average outstanding ordinary sharesin thousands 4,144,802 3,124,287 4,144,060 3,123,975

Basic earnings per share in US cents 0.90 0.56 0.92 0.52

FULLY DILUTEDNet profit 37,298 17,640 37,926 16,096

Average outstanding ordinary sharesin thousands 4,144,802 3,124,287 4,144,060 3,123,975

Effect of dilutive ordinary sharesin thousands 15,118 48,026 21,990 53,577

Average outstanding ordinary sharesafter assuming dilution in thousands 4,159,920 3,172,313 4,166,050 3,177,552

Fully diluted earnings per share in US cents 0.90 0.56 0.91 0.51

6. TRADE RECEIVABLES

As at30 September 2001 31 December 2000

US$’000 US$’000unaudited audited

Trade receivables 18,857 22,300Less: Provisions (2,909) (2,380)

15,948 19,920



6. TRADE RECEIVABLES (Continued)

At 30 September 2001 and 31 December 2000, the ageing analysis of the trade receivables were as follows:



Current to 30 days 5,997 13,62531 days to 60 days 2,188 2,22361 days to 120 days 3,257 1,642121 days to 180 days 1,241 929181 days to 360 days 3,486 2,093Over 360 days 2,688 1,788

18,857 22,300

Credit terms generally range from payment in advance to 30 days credit terms.

7. TRADE CREDITORS

The ageing of trade creditors as at 30 September 2001 and 31 December 2000 were as follows:



Current to 60 days 67,211 68,99461 days to 120 days 3,826 3,138121 days to 180 days 1,383 3,381Over 180 days 532 579

72,952 76,092

Credit terms granted to the Group generally vary from no credit to 45 days credit.

8. LONG-TERM BANK LOANS

Long-term bank loans consist of the following:



US$521.6 million syndicated term loan 434,453 469,227US$600 million term loan (i) 450,000 600,000US$210 million M/S Norwegian Sky Loan 182,000 196,000US$623 million Fleet Loan 565,200 597,6001999 KfW M/S Norwegian Sun Pre-delivery (ii) – 96,790US$225 million M/S Norwegian Sun Post-

delivery Loan (ii) 225,000 –US$45 million term loan 45,000 –

Total liabilities 1,901,653 1,959,617Less: Current portion (599,573) (263,573)

Long-term portion 1,302,080 1,696,044



8. LONG-TERM BANK LOANS (Continued)

(i) Pursuant to the terms of an amendment agreement signed in April 2001, the Group repaid US$150 million of theUS$600 million 5-year term loan. This repayment was made from the proceeds of the disposal of m.v. StarAquarius of US$75 million in the first quarter this year with the balance from the proceeds of the convertible notesissued to Resorts World Limited (“RWL”) and the share placement, both of which occurred in 2000.

The Group re-classified this term loan as a current liability as the Group was in breach of one of the financialcovenants relating to this term loan as at 30 September 2001. In November 2001, the Group accepted a SyndicatedTerm Loan Facility offer from The Hong Kong and Shanghai Banking Corporation Limited (“HSBC”) to provide upto US$450 million in loans to refinance this term loan. The commitment of HSBC in respect of the facility offer issubject to HSBC being of the opinion that there has been no material adverse change in the status or financialcondition of the Group or in international financial markets that may affect the successful syndication of the loan.The facility bears interest at rates, which vary according to the London Interbank Offer Rate, and is repayable in12 equal installments payable at six-monthly intervals commencing 18 months from the facility agreement date. Ifa notice of acceleration for repayment of all or part of the 5-year term loan is received, such acceleration wouldtrigger cross-default provisions under other indebtedness of the Group.

(ii) In October 1999, in connection with the construction of the M/S Norwegian Sun, NCL entered into a loan agreementwith a syndicate of banks (the “1999 KfW Loan”) to borrow up to US$150 million. The 1999 KfW Loan is repayableupon delivery of the vessel by the shipyard but no later than 31 December 2001. In May 2000, the Group obtaineda permanent financing commitment (“M/S Norwegian Sun Post-Delivery Loan Agreement”) from a syndicate ofbanks to provide up to US$225 million in loans to repay the 1999 KfW Loan (upon delivery of the vessel) and tofinance portion of the final payment to the shipyard. In the six months ended 30 June 2001, the Group had fullydrawn down amounts under the 1999 KfW Loan to pay the shipyard. In August 2001, the Group borrowedUS$225 million under the M/S Norwegian Sun Post-Delivery Loan Agreement and an additional US$45 millionterm loan. The proceeds from these borrowings were used to repay the 1999 KfW Loan and the final shipyardcontract payment (including costs related to extras).

9. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES

Golden Hope Limited (“GHL”), a company incorporated in the Isle of Man acting as trustee for the Golden Hope UnitTrust, a private unit trust whose beneficiaries include various trusts established for the benefit of Tan Sri Lim Goh Tong,and certain members of his family controls the Group.

Dato’ Lim Kok Thay, the Chairman, President and Chief Executive Officer of the Group, is a son of Tan Sri Lim GohTong.

Kien Huat Development Sdn Bhd (“Kien Huat”) is a company in which a brother of Dato’ Lim Kok Thay has a substantialinterest.

Genting Berhad (“GB”), a company in which Dato’ Lim Kok Thay has a deemed interest and which is listed on theKuala Lumpur Stock Exchange, controls Resorts World Berhad (“RWB”), a company also listed on the Kuala LumpurStock Exchange which in turn controls RWL which is a substantial shareholder of the Company.

A description of certain material transactions between the Group and these companies is set out below:

(a) Kien Huat, together with its related companies, is involved in constructing a terminal building and renovating aship berth for the Group in Laem Chabang, Bangkok, Thailand. In addition, Kien Huat is also involved in carryingout improvements to the Group’s berthing facilities and other infrastructure facilities. Amounts charged to theGroup in respect of these services were US$0.1 million and US$0.3 million in the three months ended 30 September2001 and 2000 and US$0.3 million and US$0.8 million in the nine months ended 30 September 2001 and 2000.

(b) GB and its related companies provide certain services to the Group, including treasury services, secretarialservices, certain information technology support services and other support services. The Group also purchasedair tickets from a subsidiary of RWB. Amounts charged to the Group in respect of these services were US$0.4million and US$0.6 million in the three months ended 30 September 2001 and 2000 and US$1.3 million andUS$1.9 million in the nine months ended 30 September 2001 and 2000.

The Group provides certain services to assist a subsidiary of GB in promoting the Genting Highlands Resort andother resort related properties as well as in conducting business liaison activities internationally. The amountcharged to the subsidiary of GB was US$0.1 million and US$0.2 million in the three months and nine monthsended 30 September 2001.

Amounts outstanding at the end of each fiscal period in respect of the above transactions are included in the balancesheets within amounts due from / (to) related companies.



10. SHAREHOLDERS’ FUNDS

Nine months ended 30 September 2001

ForeignAdditional currency Unamortised Cash flow

Share Share paid-in translation share option hedge RetainedCapital Premium capital adjustments expense reserve earnings Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

unaudited

At 1 January 2001 414,108 1,053,853 93,952 (25,577) (8,911) — 67,512 1,594,937Exchange translation

differences — — — (263) — — — (263)Net profit for the period — — — — — — 37,926 37,926Loss on financial

instruments — — — — — (14,821) — (14,821)Issue of ordinary

shares pursuant toStar CruisesEmployees ShareOption Scheme 565 992 — — — — — 1,557

Charged to profit andloss account — — — — 2,090 395 — 2,485

At 30 September 2001 414,673 1,054,845 93,952 (25,840) (6,821) (14,426) 105,438 1,621,821

Nine months ended 30 September 2000

ForeignAdditional currency Unamortised Cash flow

Share Share paid-in translation share option hedge RetainedCapital Premium capital adjustments expense reserve earnings Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

unaudited

At 1 January 2000 62,467 675,823 89,376 (23,825) (4,892) — 111,512 910,461Exchange translation

differences — — — (867) — — — (867)Net profit for the period — — — — — — 16,096 16,096Bonus issue on the

basis of 4 newordinary shares forevery one existingordinary shares 249,943 (249,943) — — — — — —

Issue of ordinaryshares pursuant to Star Cruises Employees Share Option Scheme 32 261 — — — — — 293

Issuance of shareoption — — 1,535 — (1,535) — — —

Charged to profit andloss account — — — — 1,060 — — 1,060

At 30 September 2000 312,442 426,141 90,911 (24,692) (5,367) — 127,608 927,043



11. FINANCIAL INSTRUMENTS

(i) Interest rate swaps

The Group entered into several additional amortising interest rate swaps to effectively convert the interest rate onUS$50 million of the US$521.6 million term loan obtained to finance the construction of m.v. SuperStar Leo andm.v. SuperStar Virgo from a floating rate obligation to a fixed rate obligation in the three months ended 30 September2001. As at 30 September 2001, the Group has effectively converted the interest rate of aggregate US$318.5million of this term loan to a fixed rate obligation, and the estimated fair market value of these interest rate swapswas approximately US$14.4 million, which was unfavourable to the Group. The changes in the fair value of theseinterest rate swaps are included as a separate component of reserves.

(ii) Foreign exchange forward contracts

In the three months ended 30 September 2001, the Group entered into several additional forward contractstotalling US$34.2 million to hedge currency exchange risk relating to its anticipated Singapore dollars’ stream ofrevenue. As at 30 September 2001, the Group has forward contracts with a total notional amount of US$201.2million. The notional amount will be reduced six-monthly in varying amounts over periods ranging from 5 to 11years commencing August 2000. As at 30 September 2001, the estimated fair market value of these forwardcontracts was approximately US$10.0 million which was favourable to the Group. The changes in the fair value ofthese forward contracts are taken as other income in the profit and loss account.

12. CAPITAL COMMITMENTS AND CONTINGENCIES

(i) Capital expenditure

The Group had the following commitments as at 30 September 2001 and 31 December 2000:



Contracted but not provided for– Cruise ships under construction 678,949 840,807– Cruise terminal under construction 5,059 9,547– Others 15,929 —

699,937 850,354

Authorised but not contracted for — —

(ii) Material Litigation and Contingencies

There were no material changes to the information disclosed in the Group’s annual report for the year ended 31December 2000.

13. SIGNIFICANT SUBSEQUENT EVENTS

(i) In June 1999, a syndicated term loan for an amount up to US$604.8 million was obtained by two subsidiaries ofthe Group to part finance the construction of m.v. Norwegian Star (formerly known as m.v. SuperStar Libra) andm.v. Norwegian Dawn (formerly known as m.v. SuperStar Scorpio) respectively. In October 2001, the syndicatedterm loan agreement was amended to provide for borrowings of up to US$626.9 million.

In November 2001, the Group drewdown US$313.5 million to pay the shipyard upon delivery of m. v. NorwegianStar to the Group.

(ii) In November 2001, the Group accepted a Syndicated Term Loan Facility offer from The Hong Kong and ShanghaiBanking Corporation Limited to provide up to US$450 million in loans to refinance the 5-year term loan.


Interim Dividend

The Directors do not recommend the declaration of any interim dividend in respect of the nine months ended 30 September2001 (2000: Nil).

Financial Review

For the third quarter ended 30 September 2001, the Group recorded a net profit of US$37.3 million on revenue of US$379.8million, as compared to a net profit of US$17.6 million on revenue of US$428.9 million for the same quarter in 2000. Netprofit for the nine months ended 30 September 2001 was US$37.9 million on revenue of US$1,042.4 million, compared toa net profit of US$16.1 million on revenue of US$981.4 million for the same period in 2000.

Results for nine months ended 30 September 2001 as compared with proforma results for nine months ended 30September 2000

The results for the nine months ended 30 September 2001 are not directly comparable to the nine months ended 30September 2000 as the Group consolidated the results of NCL Holding ASA (“NCL”) which was acquired over the periodDecember 1999 to February 2000, with effect from 1 March 2000. On a proforma basis, including NCL’s results for Januaryand February 2000, the Group recorded a net profit of US$37.9 million compared to a proforma net profit of US$22.0 millionin the same period in 2000.

Proforma results for the nine months ended 30 September 2000 is as follows:

Nine months ended 30 September2001 2000

US$’000 US$’000unaudited unaudited

Reported operating profit 116,403 174,062

Proforma adjustments

To consolidate 100% of NCL’s results from 1 January 2000 as ifthe acquisition of 100% of NCL had occurred on 1 January 2000 — 15,243

Proforma operating profit 116,403 189,305

Reported net profit 37,926 16,096

Proforma adjustments

To consolidate 100% of NCL’s results from 1 January 2000 as ifthe acquisition of 100% of NCL had occurred on 1 January 2000 — 5,875

Proforma net profit 37,926 21,971

Operating data Actual Proforma

Passenger Cruise Days 5,353,701 5,500,640Capacity Days 5,485,527 5,662,544Occupancy as a percentage of capacity days 98% 97%

Note: The above unaudited proforma results for the nine months ended 30 September 2000 have been prepared for illustrative purposesonly and exclude any proforma adjustments for increased interest expense on borrowings to fund the acquisition.

In the third quarter this year, on a quarter on quarter comparison, the Group experienced a decrease in revenue of 11.4%from US$428.9 million to US$379.8 million. This is a direct result of a 4.8% decrease in capacity days and an overall 6.9%decrease in yield. Total costs and expenses, excluding non-operating expenses decreased 6.1% from US$339.7 million toUS$319.0 million. Operating profit decreased 31.8% from US$89.2 million to US$60.8 million. Excluding the one time startup costs for the new ships of approximately US$10 million, operating profit for this quarter would have been 20.7% lowerthan the results for the third quarter last year. Non-operating expenses decreased 55.8% from US$52.5 million to US$23.2million as a result of lower interest expenses and gains on foreign exchange contracts for the period.


Financial Review (Continued)

Quarter on quarter, revenue for the Group’s Asia Pacific operations (excluding NCL’s Asia Pacific operations) decreased17.3% as a result of an 8.5% decrease in capacity days and 9.5% decrease in yield. The decline in capacity days comparedto the same period last year was due to the sale of m.v. Star Aquarius, m.v. MegaStar Capricorn and m.v. MegaStarSagittarius and drydock of m.v. SuperStar Leo and m.v. SuperStar Aries. The reduction in capacity days was partially offsetby the introduction of m.v. Norwegian Star 1 in November 2000. Ship operating cost per capacity day for the Group’s AsiaPacific operations reduced 2.5% in third quarter this year, resulting in a net nine months increase of 2.6%. Selling, generaland administrative cost per capacity day reduced by 4.4% in third quarter this year, bringing the nine months movement toan overall increase of 2.2% over 2000.

Capacity days in third quarter for NCL decreased by 2.5% over the same period in 2000. The decrease in capacity days wasmainly due to the transfer of m.v. Norwegian Star 1 into the Star Cruises Asia Pacific operations, partially offset by theintroduction of M/S Norwegian Sun into the NCL’s fleet from 1 September 2001. Net revenue yields for Norwegian CruiseLine Limited (excluding Norwegian Capricorn Line’s operations in Australia), the combination of Norwegian Cruise Line andOrient Lines brands, declined 6.5% in third quarter, resulting in an overall 6.9% decline in the nine months of 2001. Shipoperating costs per capacity day decreased by 4.4% in the third quarter and an overall decrease of 0.5% in the nine monthsof this year compared to last year. Selling, general and administrative costs per capacity day increased by 2.0% in thirdquarter, which results in an overall nine months increase of 5.6% over 2000. Higher selling, general and administrativeexpenses were mainly due to the US$10 million shoreside overhead and promotional costs that were incurred for the startup of the new ships.

Foreign exchange and interest rate swaps

As at 30 September 2001, the Group has effectively converted the interest rate of aggregate US$318.5 million of its termloan to a fixed rate obligation, and the estimated fair market value of these interest rate swaps was approximately US$14.4million, which was unfavourable to the Group. The changes in the fair value of these interest rate swaps are included as aseparate component of reserves.

In the three months ended 30 September 2001, the Group entered into several additional forward contracts totalling US$34.2million to hedge currency exchange risk relating to its anticipated Singapore dollars’ stream of revenue. As at 30 September2001, the Group has forward contracts with a total notional amount of US$201.2 million and the estimated fair market valueof these forward contracts was US$10.0 million, which was favourable to the Group. The changes in fair value of theseforward contracts are included in the profit and loss account.

Liquidity and capital resources

In the nine months ended 30 September 2001, operating activities generated cash inflow of US$244.9 million.

The Group made principal repayments of US$381.2 million in relation to its long-term bank loans in the nine months ended30 September 2001, of which US$150 million was made from the proceeds of the disposal of m.v. Star Aquarius in 2001 ofUS$75 million with the balance from the proceeds of the convertible notes issued to RWL and the share placement. InAugust 2001, the Group borrowed US$225 million under the M/S Norwegian Sun Post-Delivery Loan Agreement andtogether with the US$45 million term loan obtained during this quarter, it repaid the 1999 KfW Loan and the final shipyardcontract payment (including costs related to extras). The 1999 KfW Loan had been fully drawndown during the six monthsended 30 June 2001.

In the nine months ended 30 September 2001, the Group incurred approximately US$283.7 million of capital expenditureon fixed assets. Capital expenditure for the nine months ended 30 September 2001 were primarily associated with thepayments to shipyards upon delivery of M/S Norwegian Sun to the Group as well as for ships under construction and therefurbishment of the Group’s existing fleet. Approximately US$90.7 million was received from disposal of fixed assets,mainly from the disposal of m.v. Star Aquarius and m.v. MegaStar Sagittarius during the nine months ended 30 September2001.

Prospects

The unexpectedly pronounced general slowdown in the global economy coupled with the impact of the terrorist attacks inthe United States in September 2001, have adversely affected travelling patterns, passenger traffic and the leisure industryin general in which the Group operates. In this present continuing difficult environment, the Group has been continuallyreviewing its operations and taking the necessary measures to meet the dynamics of demand and capacity in the cruiseoperations. Such measures enable the Group to consolidate its operations and to provide a strong foundation for theGroup’s future growth when the economic outlook becomes more positive. The measures that have been taken include:

• delaying the planned and previously announced swap of the m.v. SuperStar Aries and the s/s Norway.

• focusing on the primary core markets such as Singapore, Hong Kong and North America and promoting “homelandcruising” in part to address people’s fear of long-haul flights currently.


Financial Review (Continued)

Prospects (Continued)

• reorganising the Group’s Japan operations to focus only on fly cruise by withdrawing the m.v. SuperStar Taurus fromFukuoka, Japan.

• merging the Norwegian Cruise Line and Orient Lines’ shoreside operations.

• adding a second ship to the Hawaii market in 2002 in view of the strong bookings for the m.v. Norwegian Star. TheNorwegian Wind, originally scheduled to operate in Asia until 4 January 2003, instead will operate 10- and 11-nightcruises from Honolulu starting 27 September 2002, through April 2003.

As well, the Group has introduced additional measures to further streamline the cost structure. Such measures are, amongothers, salary restructuring for employees and centralising back office functions. These cost control initiatives are beingimplemented and the Group expects to deliver an approximate cost reduction of around 5% in 2002. The Group has alsoeliminated, deferred or reduced a number of capital projects after reviewing its capital expenditure programme.

Other than as disclosed above and elsewhere in the interim report, the Directors are not aware of any other materialchanges to the information in relation to the Group’s performance and the material factors underlying its result and financialposition published in the annual report for the year ended 31 December 2000 and in the interim reports for the three monthsended 31 March 2001 and six months ended 30 June 2001.

Directors’ Interests in Equity Securities

At 30 September 2001, the interests of the Directors in the securities of the Company and its associated corporations (withinthe meaning of the Securities (Disclosure of Interests) Ordinance (“SDI Ordinance”)), as recorded in the register maintainedby the Company under Section 29 of the SDI Ordinance or as notified to the Company and The Stock Exchange of HongKong Limited pursuant to the Model Code for Securities Transactions by Directors of Listed Companies were as follows:

Ordinary shares of US$0.10 each in the Company

Number of ordinary sharesPersonal Family Corporate Otherinterests interests interests interests Total

(Note) (Note) (Note) (Note)

Dato’ Lim Kok Thay 5,615,000 23,247,990(1) 23,247,990(1) 3,647,723,812(2) 3,676,586,802(1)

Mr. Chong Chee Tut 252,000 — — — 252,000Mr. William Ng Ko Seng 87,500 — — — 87,500Mr. David Colin Sinclair Veitch 275,000 — — — 275,000

Notes:

1. Deemed interest under family interest and corporate interest refers to the same block of 23,247,990 ordinary shares held by GoldsfineInvestments Limited (“Goldsfine”). Each of Dato’ Lim Kok Thay and his wife, Datin Wong Hon Yee holds 50 per cent. of the issuedshare capital of Goldsfine. This same block of 23,247,990 ordinary shares held by Goldsfine has not been duplicated in arriving at thetotal interest of Dato’ Lim.

2. Deemed interests through Resorts World Limited, Golden Hope Limited and Joondalup Limited.


Directors’ Interests in Equity Securities (Continued)

Interest arising from options granted under The Star Cruises Employees Share Option Scheme, details of the principalterms of the scheme were given in the Company’s latest published annual report for the year ended 31 December 2000.

Number of shares Number ofNumber of options acquired and exercise options Exercise

outstanding at of options during outstanding price perName of Director 1/7/2001 the interim period at 30/9/2001 Date granted share Exercisable Period

Dato’ Lim Kok Thay 5,000,000 (2,500,000) 2,500,000 25/5/1998 US$0.2712 21/8/1999 - 20/8/20053,625,000 — 3,625,000 24/3/1999 US$0.2712 24/3/2002 - 23/3/20091,375,000 — 1,375,000 24/3/1999 US$0.455 24/3/2002 - 23/3/20091,000,000 — 1,000,000 23/10/2000 US$0.2712 23/10/2003 - 22/8/20103,625,000 — 3,625,000 16/11/2000 US$0.2712 24/3/2002 - 23/3/20091,375,000 — 1,375,000 16/11/2000 US$0.455 24/3/2002 - 23/3/2009

250,000 — 250,000 16/11/2000 US$0.2712 23/10/2003 - 22/8/2010

13,750,000

Mr. Chong Chee Tut 148,000 — 148,000 25/5/1998 US$0.2712 20/12/2000 - 19/12/2005100,000 — 100,000 25/5/1998 US$0.455 23/6/2000 - 22/6/2007425,000 — 425,000 24/3/1999 US$0.2712 24/3/2002 - 23/3/200975,000 — 75,000 24/3/1999 US$0.455 24/3/2002 - 23/3/2009

480,000 — 480,000 23/10/2000 US$0.2712 23/10/2003 - 22/8/201020,000 — 20,000 23/10/2000 US$0.455 23/10/2003 - 22/8/2010

1,248,000

Mr. William Ng Ko Seng 187,500 — 187,500 25/5/1998 US$0.2712 21/8/2000 - 20/8/200525,000 — 25,000 24/3/1999 US$0.2712 24/3/2002 - 23/3/2009

100,000 — 100,000 24/3/1999 US$0.455 24/3/2002 - 23/3/2009380,000 — 380,000 23/10/2000 US$0.2712 23/10/2003 - 22/8/201020,000 — 20,000 23/10/2000 US$0.455 23/10/2003 - 22/8/2010

712,500

Mr. David Colin Sinclair Veitch 1,000,000 — 1,000,000 7/1/2000 US$0.455 7/1/2003 - 6/1/2010

Certain Directors held qualifying shares in certain subsidiaries of the Company in trust for the Company and other subsidiaries.

Substantial Shareholders

At 30 September 2001, the register of substantial shareholders maintained by the Company under section 16(1) of the SDIOrdinance shows that the Company had been notified of the following substantial shareholders’ interests, being 10% or more ofthe Company’s issued share capital. These interests are in addition to those disclosed above in respect of the Directors and chiefexecutive.

Number of Percentage ofName of shareholder (Notes) ordinary shares shareholding

Parkview Management Sdn Bhd (1 and 8) 1,486,886,993 35.9Kien Huat Realty Sdn Bhd (2 and 8) 1,486,886,993 35.9Genting Berhad (3 and 8) 1,486,886,993 35.9Resorts World Bhd (4 and 8) 1,486,886,993 35.9Sierra Springs Sdn Bhd (5 and 8) 1,486,886,993 35.9Resorts World Limited (5 and 8) 1,486,886,993 35.9GZ Trust Corporation (6 and 9) 2,160,836,819 52.1Golden Hope Limited (7 and 9) 2,160,836,819 52.1Datin Wong Hon Yee (10) 3,676,586,802 88.7


Substantial Shareholders (Continued)

Notes:

1. Parkview Management Sdn Bhd is a trustee of a discretionary trust (“Discretionary Trust”), the beneficiaries of which include certainmembers of Tan Sri Lim Goh Tong’s family (“Lim Family”).

2. Kien Huat Realty Sdn Bhd (“KHR”) is a private company of which the Discretionary Trust, through Info-Text Sdn Bhd and Dataline SdnBhd controls more than one third of the voting power.

3. Genting Berhad is a company listed on the Kuala Lumpur Stock Exchange (“KLSE”) in Malaysia of which KHR controls more than onethird of the voting power.

4. Resorts World Bhd is a company listed on KLSE and is a subsidiary of Genting Berhad.

5. Sierra Springs Sdn Bhd and Resorts World Limited are companies which are wholly-owned subsidiaries of Resorts World Bhd.

6. GZ Trust Corporation is the trustee of various discretionary trusts established for the benefit of certain members of the Lim Family.These discretionary trusts are unit-holders of Golden Hope Unit Trust (“GHUT”), a private unit trust.

7. Golden Hope Limited is the trustee of GHUT.

8. The interests of persons named in Notes 1 to 5 in 1,486,886,993 ordinary shares relates to the same block of shares.

9. The interests of persons named in Notes 6 and 7 in 2,160,836,819 ordinary shares relates to the same block of shares.

10. Datin Wong Hon Yee as the wife of Dato’ Lim Kok Thay, has a family interest in the same block of 3,676,586,802 ordinary shares inwhich Dato’ Lim has a deemed interest. Datin Wong also has a corporate interest in 23,247,990 ordinary shares held by Goldsfine byholding 50 per cent. of the issued share capital of Goldsfine.

Practice Note 19 to the Listing Rules

The Company is a party to three loan agreements for an aggregate amount of approximately US$1.8 billion with termsranging from five to sixteen years. These agreements require the Lim Family to retain a direct or indirect ownership interestof 51 per cent or more in the Company during the term of the loans. A further short-term revolving credit of US$50 millionwhich remains available to the Company requires the Company be directly or indirectly majority-owned by Golden HopeLimited.

The Group was in breach of a financial covenant under a syndicated term loan as at 30 September 2001. Please refer tonote 8(i) to the Accounts for details of the breach and the refinancing facility offer.

Purchase, Sale or Redemption of Shares

Neither the Company nor any of its subsidiaries has purchased, redeemed or sold any of the Company’s shares during thenine months ended 30 September 2001, save for the issue of 5,649,500 new ordinary shares of US$0.10 each at anaggregate price of US$1,556,957 pursuant to the exercise of options granted under The Star Cruises Employees ShareOption Scheme.

Corporate Governance

In compliance with the Code of Best Practice stipulated in Appendix 14 of the Rules Governing the Listing of Securities onThe Stock Exchange of Hong Kong Limited (the “Code of Best Practice”), the Company has established an Audit Committeewith written terms of reference. The Audit Committee comprises the three Independent Non-executive Directors of theCompany, namely Mr. Alan Howard Smith, J.P., Mr. Tan Boon Seng and Mr. Lim Lay Leng. This unaudited Interim Reporthas been reviewed by the Audit Committee.

None of the Directors is aware of information that would reasonably indicate that the Company was not in compliance withthe Code of Best Practice at any time during the nine months ended 30 September 2001 except that Independent Non-executive Directors were not appointed for a specific term but are subject to retirement by rotation and re-election at theannual general meeting of the Company in accordance with the Bye-laws of the Company.

By order of the Board

DATO’ LIM KOK THAYChairman, President and Chief Executive Officer

Hong Kong, 14 November 2001

Documents

Genting Hong Kong - INTERIM REPORT TO SHAREHOLDERS · 2012. 3. 20. · Hong Kong SAR Tel: (852) 23782000 Fax: (852) 23143809 E-mail: [email protected] Mr. Gerard Lim Ewe