degree from the University of South Africa and a Bachelor of Commerce ... Sanjay Anand has headed Chemoil’s logistics operations

www.chemoil.com

AN

NU

AL

RE

PO

RT

20

13

CH

EM

OIL

EN

ER

GY

LIM

ITE

D

Designed and produced by

(65) 6578 6522

CHEMOIL ENERGY LIMITED ANNUAL REPORT 2013

ANNUAL REPORT 2013 CHEMOIL ENERGY LIMITED

PAGE 1

CONTENTS02 chairman’s message 03 board of directors 05 executive officers 06 year in review08 risk management 09 corporate information 10 corporate structure 11 corporate governance23 financial contents 24 statement of directors 25 independent auditors’ report26 statements of financial position 28 consolidated statement of comprehensive income30 consolidated statement of changes in equity 31 consolidated statement of cash flows33 notes to financial statements 122 statistics of shareholdings

CHAIRMAN’S MESSAGE

Dear Shareholders,

Overview and Achievements in FY2013

On behalf of the Board of Directors of Chemoil Energy Limited, I am pleased to report that the Group performed well for the year ended 31 December 2013, recording a profit after tax of US$102 million, and a revenue of US$13 billion.

Our 2013 results were again strong in North America, reflecting the sustained profitability in our marine fuels sector as well as significant positive earnings in our global renewables business unit. Additionally, several of our organic growth start-ups have begun to yield profits, notably Chemoil Energy, which sells diesel to the fracking industry in the United States.

Globally our team produced a profit before tax of US$41 million. In addition, earnings were positively impacted by credits associated with the renewables business in the United States, resulting in an overall tax credit of US$61 million for the year. These positive results occurred despite poor results in our European marine fuel group which we have now restructured. This compares to 2012 when our year end results were US$150 million. However, this included an exceptional gain from the sale of Helios Terminal for US$285 million.

Thus, 2013 represents a significant increase in earnings and underscores the achievements of Chemoil’s management and employees in ensuring our continued profitability.

Strategic Developments

Last year, Chemoil continued to expand and diversify. In July, we acquired the marine fuels business of Colonial Marine in the South Eastern United States. This acquisition has already been integrated successfully into our East Coast United States bunker business and more recently we have added two Florida ports.

Financially, we continue to benefit from a strong balance sheet and this year secured three major financing syndications totaling US$1.7 billion. The US$300 million 364-Day Committed Revolving Credit Facility will be used to finance the general corporate and working capital requirements of the Group. Two borrowing base facilities will finance ongoing receivables and inventory financing requirements, a US$500 million 364-Day Uncommitted Secured Receivables Borrowing Base Facility for our Asian and European operations, and a US$900 million 364-Day Uncommitted Secured Inventory and Receivables Borrowing Base Facility for our operations in the Americas. As we continue to refine and improve our financial standing, these facilities will form an integral part in supporting our business growth.

Acknowledgements

In conclusion, our results again underscore Chemoil’s ability to generate return in a challenging marine environment. I wish to thank both management and staff for the energy and support they have continued to demonstrate, enabling the Group to achieve another year of positive results.

I also wish to thank my colleagues on the Board for their guidance and leadership of the company and most importantly, I would like to express my sincere appreciation to all our shareholders, customers, suppliers and business partners for their support of Chemoil through the years and look forward to our continued business together in the future.

Mark Jonathan CattonChairman

PAGE 3

BOARD OF DIRECTORS


MARK JONATHAN CATTONChairman/Non-Executive Director

Mark Catton is currently the Managing Director of Glencore Singapore Pte Ltd. He has been with Glencore since 1990, taking on an initial role as a Business Analyst before moving on in 1993 to operations as a Crude and Products Operations Manager with Glencore UK Ltd. Beginning in 1995, Mr. Catton was a Trader in London, and in 1997 he was appointed to the position of Senior Naphtha and Gasoline Trading Manager in Glencore Singapore Pte Ltd. He moved into the role of Global Manager – Naphtha in 2002, and from 2004 onward led Glencore Singapore as Managing Director. Mr. Catton holds an Electrical and Electronic Engineering, B Eng (Hons) from Nottingham University, UK. He was appointed to the Board on 31 March 2010 and as Chairman of the Board on 29 April 2011. He is also a member of the Nominating and Remuneration Committee. He was last re-elected as a Director on 26 April 2012.

THOMAS K. REILLYChief Executive Officer/Director

Thomas Reilly is the former CEO of OceanConnect Holdings, Inc., the only company to combine state of the art online technology as well as 24/7 traditional expertise in order to provide global energy and risk management products and services. Mr. Reilly brings to the business his deep industry experience, with the goal of strengthening the company’s bunker trading, risk products and brokering services. Prior to his role as CEO of OceanConnect Holdings, Inc., Mr. Reilly was Vice President for Fuel and Marine Marketing LLC, a Texaco and Chevron joint venture, and was responsible for bunkering and fuel trading in the Pacific Rim and the Middle East regions. Mr. Reilly began his career as an attorney in New York City and holds a BA from St. Lawrence University, USA; a Juris Doctorate from Fordham University School of Law, USA; and a Masters of Environmental Law from Pace University, USA. He joined the Board on 3 January 2011 and was last re-elected as a Director on 18 April 2013.

ALEXANDER FRANK BEARDNon-Executive Director

Alexander Beard is Glencore’s Global Head of Oil, and has more than 20 years of experience in the industry. After five years with British Petroleum’s Crude Oil Department, he joined Glencore UK Ltd. in 1995. For the next 13 years, Mr. Beard specialized in his position as a FSU Trading Manager. With his extensive experience, he was appointed in 2007 to his current role as Global Head of Oil, leading Glencore’s activities in Oil and Product Trading and Investments. Mr. Beard holds an MA(Hons) in Biochemistry awarded by Christ Church, Oxford. He was appointed to the Board on 31 March 2010 and was last re-elected as a Director on 26 April 2012. He is due for re-election as a Director on 15 April 2014.

WARREN MICHAEL BLOUNTNon-Executive Director

Warren Blount is currently an Asset Manager in the Oil Department of Glencore Energy UK Ltd. He has been with Glencore since 2005. Prior to joining Glencore, he was Finance Director with Emerson Process Management, Baar, Switzerland; and prior to that, he held various assurance and corporate finance roles with KPMG. Mr. Blount holds a Bachelor of Commerce (Honours) – Accounting degree from the University of South Africa and a Bachelor of Commerce – Accounting and Marketing degree from the University of the Witwatersrand. He is a qualified chartered accountant and also holds a CIMA with the Chartered Institute of Management Accountants. Mr. Blount was appointed to the Board on 8 November 2013. He is due for re-election as a Director on 15 April 2014.

BOARD OF DIRECTORS

PETER MICHAEL MEADELead Independent Director

Peter Meade is the Lead Independent Director and has been Chemoil’s Independent Director since March 2008. He is also the Chairman of the Nominating and Remuneration Committee and a member of the Audit Committee. Mr. Meade is the Chairman and Independent Director of OceanConnect Holdings Inc., a worldwide brokerage for marine fuel, gas oil, clean products, biofuel and risk management services. Prior to this, he was Vice President and Chief Financial Officer of Fuel and Marine Marketing LLC (FAMM) from 1998 to 2002. Mr. Meade held various management, financial and treasury roles in Texaco after embarking on his career in 1980, the last of which was Assistant General Manager of the Marine Lubricant Group. Mr. Meade has also worked at General Foods Corporation and the former Chase Manhattan Bank. He holds a BA in Liberal Arts from Saint Leo University and an MBA in Finance from Long Island University. He was appointed to the Board on 26 February 2008 and was last re-elected as a Director on 18 April 2013.

STEVEN SIMPSONIndependent Director

Steven Simpson is an Independent Director, Chairman of the Audit Committee and a member of the Nominating and Remuneration Committee. He is the Managing Director, and Principal of Triton Advisory Group Pte Ltd., a boutique mergers and acquisitions, fixed income trading and corporate advisory group located in Singapore. Mr. Simpson has a Bachelor of Commerce degree from University of New South Wales, Australia, and is a Certified Public Accountant, Australia Institute of Accountants. In his role at Triton, he has acted as an advisor on private and government sector activities, including privatizations, mergers and acquisitions and capital market activities. Prior to this, he was a Managing Partner of Price Waterhouse Consulting in Indonesia and Australia, and was Group Controller Australasia for Honeywell. At present, he holds various other board appointments, which include a Non-executive Director and Audit Committee member of Goldsource Mines Inc. (a Canada-listed entity). He was appointed to the Board on 19 November 2010 and was last re-elected as a Director on 29 April 2011. He is due for re-election as a Director on 15 April 2014.

PAGE 5

EXECUTIVE OFFICERS


FREDERICK IVOR BENDLE Chief Financial Officer

Fred Bendle has spent 28 years in the oil industry. He started his industry career in 1982 with six years as CFO of Exploration Consultants Limited, then the UK’s largest oil industry consultancy, before moving in 1988 to a similar position in Tuskar Resources plc, a London listed oil exploration group. He subsequently worked for several years in Africa and the Middle East as the CFO for Kuwait Foreign Petroleum Company before joining the oil division of the Glencore Group in 1994. He has since had senior positions for Glencore in Fujairah, Russia, Africa, Colombia and the USA. Mr. Bendle has a Bachelor of Law and after a short period practicing law in London, he obtained his qualification as a Chartered Accountant in 1982. Mr. Bendle was appointed CFO of Chemoil Energy Limited in August 2012. He has worked in various capacities for Chemoil since July 2010, notably as Director of Internal Audit and as CEO of Indian-listed subsidiary Calsoft and Chairman of Inatnech.

SANJAY ANAND Senior Vice President, Global Operations

Sanjay Anand has headed Chemoil’s logistics operations since 2007 and was appointed Managing Director of Asia and Middle East operations in 2008. He joined Chemoil in 2007 when the Group acquired Link Marine, a company he established in 2003. Prior to joining Chemoil, Mr. Anand was Operations and Technical Director for Univan Ship Management for 11 years and Engineering Surveyor at Lloyd’s Register of Shipping for six years. Mr. Anand holds an MBA from Newcastle Business School; a Master’s Degree in Law of International Trade with commendation from Northumbria University; and graduated in Marine Engineering from the Directorate of Marine Engineering Training.

YEAR IN REVIEW

The year 2013 was a good year for the Chemoil Group both operationally and financially. Our marine fuel business units have continued to show resilience amid weakness in our key customer base, the shipping sector. Our acquisition of the business of Colonial on the East Coast of the United States has not just been profitable on a stand-alone basis but has provided synergies with both our West Coast operations and our New York business which have raised margins and profitability throughout. Our renewables and chemicals business has shown a strong year in terms of volumes of biofuels sold as well as overall profitability, and has also greatly enhanced the Group’s fiscal efficiency in the USA. Though full year Group revenue decreased by 5% compared to the previous year due to a combination of lower volumes and lower selling prices, margins improved 22% from the previous year, with gross contribution per metric ton reaching $8.32. Our profit after tax from continuing operations is a commendable $102 million.

Volumes and GCMT

Volume of fuel sold decreased by 2% to 19.9 million metric tons. The decrease was mainly brought about by a 5% decrease in retail volumes, which achieved only 10.9 million metric tons against retail sales of 11.5 million metric tons in 2012. Retail volume decline was felt most in the Americas, where profits were largely driven this year by cargo trading. In addition, our OceanConnect Marine business unit faced increased competition when compared to 2012 and as a result their sales volumes were 20% lower. In Asia, marine fuel retail sales volumes were lower, whilst our volumes in Europe declined, due mainly to the reduction of our operations there in the second half of 2013. As we announced in our third quarter results our profits were severely impacted by poor performance in Europe and we have taken immediate action by making changes to the business model there. However we remain committed to a strong presence in Europe from which to provide the best possible service to our clients.

In July 2013, we acquired the marine fuel business of Colonial in the Southeastern part of the United States. Colonial is a significant fuel supplier in and around the ports of Charleston, Savannah and Jacksonville with a reputation for quality and service that we feel is a good fit for Chemoil. The acquisition is a strategic one intended to extend the competitive edge of the Chemoil brand down the US East Coast and to be well positioned for the growth potential that may come with the widening of the Panama Canal.

Our biofuels business showed significant growth in 2013 where volume transacted increased to 1.3 million metric tons from 225 thousand metric tons the previous year. These sales consist largely of ethanol. Our aviation business likewise increased their volumes from 138 thousand metric tons to 295 thousand metric tons. In 2013, the aviation business expanded its operations internationally, with increased sales in the UK, Middle East, and Singapore.

Profitability

Gross contribution increased 20% to $166 million. This resulted from GCMT of $8.32 per metric ton, which was 24% higher than the previous year. The improvement in GCMT highlights our success in focusing on improving margins rather than chasing volume in a difficult low margin market.

Of the key components of gross contribution, there were significant increases in rentals of storage facilities as well as service and commission expenses. The increase in storage expenses was due mainly to the leasing of tanks at Helios Terminal, after our divestment of the terminal in December 2012. Higher storage expenses also reflect the inclusion of the storage tanks for the Colonial business, as well as additional storage tanks leased for biodiesel. Service and commission expenses increased mainly because of higher volumes transacted in our biofuels business and our aviation business. Other expenses decreased 34% to $40.8 million. This

PAGE 7

YEAR IN REVIEW


is mainly due to a reversal of a duty payable that was expensed in 2012 and prior years, but for which we have now successfully claimed repayment from the US government.

Profit before tax from continuing operations reached $41.3 million. Our associates and joint ventures performed well, contributing $19.8 million to profits. Profit after tax attributable to equity holders reached $101 million, which includes a tax credit of $60.6 million arising mainly from the tax treatment of biodiesel excise tax credits in the USA. Following a clarification issued by the US internal revenue service in the fourth quarter 2013 we were able to exclude biodiesel excise tax credits for the whole year from our US taxable income. This gives rise to very significant and beneficial tax losses in the U.S which we anticipate will reduce our tax payments in future years.

Financial Position

Our net working capital position, at $378 million remained stable at around the same figure as the previous year. Trade payables are reflecting a decrease of about 24% to $787 million. However, this is only a snapshot of the trade payables position as at year end 2013 whereas the level of payables averaged around $1.1 billion during the first three quarters. The reduction was due mainly to lower purchases during the latter part of the year.

Current borrowings have increased 70% to $976 million as at year end 2013. Our borrowings have increased gradually throughout 2013, reaching $724 million as at end June, and $1.0 billion as at end September. This reflects the increased working capital needs as we grow, but particularly our biofuels business unit and the acquisition of Colonial. To ensure that we maintained adequate working capital at all times we negotiated three new finance facilities this year, namely, a $300 million revolving credit facility in May, a $500 million receivables borrowing base facility in June both for

our Asian and European operations, and a $900 million inventory and receivables borrowing base facility in December for our operations in the Americas. The new facility in the Americas replaces the receivables securitization facility we have had for several years. Although borrowings increased, our finance expenses for the year decreased by 8% to $20.3 million due to lower interest rates on our new facilities.

Our equity position is at its strongest historically. With profit after tax attributable to equity holders of $101 million, our total equity increased to $585 million from $484 million the previous year. This translates to a net tangible asset value of 43.1 US cents per share. The increased equity base allowed us to maintain reasonable leverage ratios of 169% despite the increase in total borrowings.

RISK MANAGEMENT

Risk Management Goals

The primary goal of Chemoil’s risk management program is the assurance of reliable, long-term business profitability through effective control of the various risks of our business lines. Our risk management framework addresses the key functions of risk identification, measurement, control, monitoring and reporting through the enforcement of a series of internal controls.

Our underlying philosophy is one that does not shy away from risk. Rather, we embrace risk, understanding that in the long run, we will build greater shareholder value by effectively managing risk rather than fleeing from it. We are continually improving the systems and talent infrastructure to better evaluate our various global risks and their associated returns. Crucially, though, we realize successful risk management is not just about systems and models, statistics and reports. It is about developing a culture where risk management is understood as a function central to the long-term value of the enterprise and one for which everyone is accountable.

Risk Management Cornerstones

Our risk management structure continues to follow a top-down approach wherein our Board of Directors provides the broad framework that governs the management level Executive Risk Management Committee (ERMC). The core risk management department reports to the ERMC.

Our risk management philosophy remains centered on the independence of the risk management function. The responsibilities of our risk management personnel are strictly non-commercial, and they are encouraged to challenge the assumptions and activities of all of our commercial desks. Each member of the risk management team is required to be vigilant, and we are developing a culture where the commercial desks not only understand the importance of this stance, but encourage it as it protects both them and the larger enterprise.

Recent Developments

In 2013, we made significant changes to our corporate risk management policy. Our revised policy has improved the controls with which we monitor and evaluate the risks of each business line. Through the second half of 2013, we implemented changes to improve our monitoring of daily trading activity and trading limits, our management of basis risks, and our analysis of new business activities. 2014 will see a continuation of this improvement process as various new controls are implemented.

PAGE 9

CORPORATE INFORMATION


BOARD OF DIRECTORSChairmanMARK JONATHAN CATTON

Chief Executive OfficerTHOMAS KEVIN REILLY

Non-ExecutivePETER MICHAEL MEADE (Lead Independent)STEVEN BARRY SIMPSON (Independent)ALEXANDER FRANK BEARDUSMANTO NJO (resigned wef 8 Nov 2013)WARREN MICHAEL BLOUNT(appointed wef 8 Nov 2013)

AUDIT COMMITTEESTEVEN BARRY SIMPSON (Chairman)USMANTO NJO (resigned wef 8 Nov 2013)PETER MICHAEL MEADEWARREN MICHAEL BLOUNT(appointed wef 8 Nov 2013)

NOMINATING & REMUNERATION COMMITTEEPETER MICHAEL MEADE (Chairman)STEVEN BARRY SIMPSONMARK JONATHAN CATTON

EXECUTIVE OFFICERS & MANAGEMENTChief Executive OfficerTHOMAS KEVIN REILLY

Chief Financial OfficerFREDERICK IVOR BENDLE

Senior Vice President, Global OperationsSANJAY ANAND

COMPANY SECRETARYKARALON LIMITED

REPRESENTATIVES OF THE COMPANY SECRETARYJAMES E. BAKERKIM YI HWA

REGISTERED OFFICE31/F, 148 ELECTRIC ROADNORTH POINTHONG KONGTEL: 852-2598 5234FAX: 852-2598 7500

HONG KONG SHARE REGISTRARBOARDROOM CORPORATE SERVICES (HK) LIMITED31/F, 148 ELECTRIC ROADNORTH POINTHONG KONGTEL: 852-2598 5234FAX: 852-2598 7500

SINGAPORE SHARE TRANSFER AGENTBOARDROOM CORPORATE & ADVISORY SERVICES PTE LTD50 RAFFLES PLACE #32-01SINGAPORE LAND TOWERSINGAPORE 048623TEL: 65-6536 5355FAX: 65-6536 1360

CORPORATE WEBSITEwww.chemoil.com

HONG KONG AUDITORSDELOITTE TOUCHE TOHMATSU35/F ONE PACIFIC PLACE88 QUEENSWAYHONG KONGTEL: 852-2852 1600FAX: 852-2541 1911

INTERNATIONAL AUDITORSDELOITTE & TOUCHE LLPUNIQUE ENTITY NO. T08LL0721A6 SHENTON WAYOUE DOWNTOWN 2 #32-00SINGAPORE 068809TEL: 65-6224 8288FAX: 65-6538 6166

Audit Partner-In-ChargeNG PECK HOON (MS)

Date of AppointmentAPRIL 29, 2011

BankersABN AMRO Bank NVBank of America Leasing and Capital LLCBanque Cantonale de Geneve BNP Paribas, Singapore Branch BNP Paribas (Suisse) SA Canara Bank Credit Suisse GE Artesia Bank ING Bank NV ING Belgium (Brussels) JPMorgan Chase Bank NA Mizuho Corporate Bank, Ltd Oversea-Chinese Banking Corporation LimitedRabobank International Raiffeisen Bank International AG Security Bank Corporation Societe GeneraleThe Bank of Tokyo-Mitsubishi UFJ, Ltd UBS AG

Offices

United States of AmericaChemoil Corporation Four Embarcadero Center 34th Floor, San Francisco, CA 94111-4187 United States of America Tel: 1-415-268 2700 Fax: 1-415-268 2701

United States of AmericaChemoil Corporation44 South Broadway5th Floor, Suite 603White Plains, NY 10601United States of AmericaTel: 1-914-285 9785 Fax: 1-914-285 9786

RotterdamChemoil Europe BV Blaak 313011 GA RotterdamThe NetherlandsTel: 31-10-292 9933 Fax: 31-10-482 9190

SingaporeChemoil International Pte Ltd 1 Temasek Avenue, #36-01 Millenia Tower Singapore 039192 Tel: 65-6880 8200 Fax: 65-6880 5988

PanamaChemoil Latin America Inc PH Plaza Canaima, 19th Floor Samuel Lewis Street, Obarrio PO Box 082300992 Panama, Rep de Panama Tel: 507-265 5070 Fax: 507-265 5088

Middle EastChemoil Middle East DMCC Office No. 26-E, AG Tower (Silver Tower) Level 26, Jumeirah Lake Towers PO Box 35711 Dubai, UAE Tel: 971-0-44 4 73495 Fax: 971-0 -44 4 73496

United KingdomChemoil Energy UK LtdThe Old Trading House15 Northburgh StreetLondon EC1V 0JRTel: 44-207 553 6700 Fax: 44-207 900 3331

CORPORATE STRUCTURE(1)

Chemoil Energy LimitedHong Kong

100%Chemoil Corporation,California, USA

100%Chemoil International Pte LtdSingapore

100%Chemoil Europe B.V.The Netherlands

85%Baltic Fuel Inc.British Virgin Islands

49%Chemoil-AdaniPte. Ltd.Singapore

(1) Key subsidiaries, joint ventures and associated companies as at 25 February 2014.(2) 10% ownership interest in Kemoil Limited is held by Overseas Nominees Limited on behalf of Chemoil Energy Limited.(3) The Group, through its subsidiary, Chemoil Advanced Management Services Private Limited also holds a 3.63% ownership

interest in this company, resulting in total ownership by the Group of 71.79%. This company holds ownership interest in other entities.

100%Chemoil Logistics Inc.British Virgin Islands

100%Chemoil TerminalsCorporation,California, USA

25%Galaxy Energy Group Ltd.British Virgin Islands

100%Kemoil LimitedHong Kong(2)

40%GPS Chemoil LLC, (FZC)UAE

100% Chemoil Energy, Inc.Delaware, USA

80%Huguenot Fuels, Inc.Delaware, USA

35%Apex Fuels LLCDelaware, USA

100%Chemoil Latin America, Inc. Panama

100%Chemoil Energy UK LimitedUnited Kingdom

100%Chemoil EnergyPhilippines, Inc.Philippines

100%OceanConnectMarine Pte LtdSingapore

70%Chemoil Aviation AsiaPte LtdSingapore

100%Chemoil Middle EastDMCCUAE

100%Inatech HoldingsPte LtdSingapore

65%EOT Co LtdBritish Virgin Islands

49%Burando Holding B.V.The Netherlands

50%ChemlubeInternational LLC The Netherlands

50%Sopetra SASwitzerland

100%Chemoil Chartering Ltd.British Virgin Islands

100%Chemoil NavigationLimitedMarshall Islands

68.07%California SoftwareCompany LimitedIndia(3)


PAGE 11

CORPORATE GOVERNANCE

Chemoil Energy Limited (the “Company”) is committed to maintaining high standards of corporate governance through practices underpinned by integrity, transparency and accountability benchmarked against the Code of Corporate Governance as revised by the Monetary Authority of Singapore on 2 May 2012 (the “2012 Code”).

This statement sets out the Company’s corporate governance practices and activities with reference to the 2012 Code.

Board’s Conduct of its AffairsPrinciple 1: The Company should be headed by an effective Board to lead and control the company

The Company is led by an entrepreneurial Board that establishes the corporate policies and strategic direction to build sustainable value for all shareholders. The Board sets the direction and goals, as well as supervises and monitors the performance of the executive management.

The Board regularly reviews the performance of the Group’s businesses and assumes responsibility for corporate governance. The Board also ensures that a framework of prudent and effective controls is established that enables risks to be assessed and managed, including safeguarding of shareholders’ interests and the company’s assets; and adequacy and integrity of internal controls, risk management, financial reporting and compliance processes.

The Company has adopted a set of Delegation of Authority guidelines which sets out the levels of authorisation required for specified transactions, including those that require Board approval.

Matters that are reserved for the Board’s decision and approval include approval of major investments, acquisitions, divestments and funding proposal, annual budgets and business plans.

Two main sub-Board Committees support the Board in the execution of their responsibilities, namely:

• Audit Committee (“AC”)• Nominating and Remuneration Committee (“NRC”)

The membership and attendance of the directors at the Board and Board Committee meetings held in FY2013 are set out in the table below:

Name of Director Board MeetingAudit Committee

MeetingNominating and Remuneration

Committee Meeting

Mark Catton 3/3 – 2/2Thomas Reilly 3/3 – –Alexander Beard 3/3 – –Peter Meade 3/3 5/5 2/2Steven Simpson 3/3 5/5 2/2Usmanto Njo1 0/2 3/4 –Warren Blount2 1/1 0/1 –

Notes:1 Mr. Usmanto Njo resigned as a member of the Board and AC with effect from 8 November 2013.2 Mr. Warren Blount was appointed as a member of the Board and AC with effect from 8 November 2013.


Attendance at Board meetings by telephone and video conferencing via audio-visual communication are allowed under the Company’s Articles of Association (the “Articles”).

All newly appointed directors undergo an orientation programme that includes a presentation on the Company’s businesses and strategic plans and objectives. Where required, the directors are provided with updated information and/or training in areas such as directors’ duties and responsibilities, corporate governance, changes in financial reporting standards, insider trading, changes in the Companies Act and industry-related matters to ensure that directors are able to continually discharge their duties diligently.

The Board as a whole is updated on relevant changes to the regulatory and financial reporting standards, to enable them to properly discharge their duties as Board members.

Board Composition and GuidancePrinciple 2: The Company values a strong and independent element on the Board

As at 31 December 2013, the Board comprised six Directors, one of whom is the Chief Executive Officer (“CEO”), with the remaining five directors being Non-Executive Directors. Two of the five Non-Executive Directors are also Independent Directors. As two out of its six directors are independent directors, the Company has one-third of its Board staffed by independent directors. The independent directors help to uphold good corporate governance and exercise their independent judgement in the best interest of the Company and this enables management to benefit from their external and objective perspective of issues that are brought before the Board.

The NRC reviews the size and composition of the Board annually. The composition of the Board takes into consideration the nature and scope of the Group’s operations to ensure diversity of the Board and that the Board has relevant skill sets for effective decision making. The NRC is of the view that the current size and composition of the Board is appropriate for the scope and nature of the Group’s operations and facilitates effective discussion and the decision-making process. The Directors of the Board have varied qualifications and expertise in accounting, finance, business management, strategic planning, engineering, biochemistry and most also have experience in the marine fuel industry.

The 2012 Code recommends that independent directors should comprise at least half of the Board where the Chairman is not an independent director. This should be complied with by the Company for its financial year commencing 1 January 2017. In the interim, the Board continues to review the composition of the Board to ensure that its size and composition is conducive for effective discussion and decision making.

The Board confirms that the following factors sufficiently ensure that power is not concentrated in the hands of one individual and that there is accountability and independent decision making by the Board:

• Active participation by Independent Directors and Non-Executive Directors during Board meetings, who participate in setting strategy and goals for the Company and challenge the assumptions and proposals of the management on all issues affecting the affairs and businesses of the Group.

• The appointment of a Lead Independent Director to address shareholder concerns which could not have been resolved through the normal channels of the Chairman and CEO, or for which such contact is inappropriate. The Lead Independent Director also acts as the principal liaison between the Independent Directors and the Chairman on sensitive issues.

Brief profiles of the current Board of Directors are provided under the section “Board of Directors” in this annual report.


PAGE 13


Chairman and Chief Executive OfficerPrinciple 3: Chairman and Chief Executive Officer to be separate persons to ensure appropriate balance of power, increased accountability and greater capacity of the Board for independent decision making

The roles of the Chairman and the CEO are separated.

With the separation of roles, the Chairman will bear responsibility for providing leadership to the Board, and the CEO will have executive responsibility for the Company’s business. The Chairman ensures that Board meetings are held when necessary and sets the agenda in consultation with the other Directors. He reviews all Board papers, prior to their being presented to the Board, and ensures that Board members are provided with complete, accurate and timely information on a regular basis to enable them to be fully cognisant of the affairs of the Group. He also promotes a culture of openness and debate at the Board and encourages constructive relations within the Board and between the Board and Management.

Board MembershipPrinciple 4: The process for the appointment and re-appointment of new directors to the Board should be formal and transparent

The NRC is wholly comprised of non-executive directors, the majority of whom, including the Chairman, are independent.

The members of the NRC are:

• Mr. Peter Meade Chairman• Mr. Mark Catton Member• Mr Steven Simpson Member

The NRC ensures that directors appointed to the Board possess the relevant background, experience and expertise to make fair and sound decisions.

New directors of the Company are appointed after a review and recommendation by the NRC to the Board. New directors are required to submit themselves for re-election at the next AGM of the Company in accordance with the Company’s Memorandum and Articles of Association. The Articles also provide that at least one-third of the directors retire from office and are subject to re-election at every AGM. All directors are required to retire from office at least once every three years. The shareholders approve the re-election of directors at the AGM.

The NRC reviews all nominations for appointments and re-appointments to the Board and submits its recommendations for approval by the Board taking into account the appropriate mix of core competencies for the Board to fulfil its roles and responsibilities.

The NRC has assessed the independence of the non-executive directors, namely, Mr. Peter Meade and Mr. Steven Simpson and is satisfied that there are no relationships identified under the 2012 Code which would deem them not to be independent. Each of the independent directors has declared that they are independent.

The NRC considered the multiple board representations of the Directors and is satisfied that notwithstanding the multiple directorships and other principal commitments of the Directors, each Director has been able to commit time and effort to the affairs of the Company. A Director who is unable to attend meetings in person may give his views, if any, in writing to the Chairman of the Board and/or Board Committees.


The Board is of the view, that as different companies have different complexities and directors have different capabilities, it is best to have each Director evaluate his own ability to commit time to the Company. For this reason, the Board has not prescribed the maximum number of directorships a Director may hold.

Board PerformancePrinciple 5: Formal assessment of the effectiveness of the Board as a whole and its Board Committees and the contribution by each Director to the effectiveness of the Board

The NRC is responsible for evaluating the performance of the Board and it takes into consideration a number of criteria in its evaluation, namely the size and composition of the Board, the Board’s access to information, the number of formal and informal meetings held, the length and depth of discussions and deliberations held, the discharge of the Board’s functions and the communications and guidance given by the Board to the management.

For FY2013, the NRC considered that there are fewer Board members, and all have easy access to information, and all could easily and expediently communicate with each Board member. Based on these considerations, the NRC conducted an informal assessment using the above criteria. The NRC was of the view that the contributions made by each director and performance of the Board as a whole was satisfactory. The Board does not see a need to have separate evaluation of its Board Committees in FY2013.

Access to InformationPrinciple 6: Board members should have complete, adequate and timely information

The Board has separate and independent access to senior management and the representatives of the Company Secretary at all times. The management provides information requested by the Board promptly and keeps the Board informed of all material events and transactions as these occur. The management consults Board members as necessary and where appropriate. The Board is provided with Board papers prior to Board meetings to enable them to be informed, and accorded sufficient time to seek clarification and arrange consultations if required.

The representatives of the Company Secretary attend and document all Board meetings. The representatives of the Company Secretary assists the Chairman in implementing appropriate Board procedures to facilitate the effective functioning of the Board, and compliance with the Company’s Articles and the relevant rules and regulations applicable to the Company.

The appointment and removal of the Company Secretary are subject to the approval of the Board.

The Board in fulfilling its responsibilities can, as a group or individually, when deemed fit, direct the Company to appoint external professionals to render independent advice.


PAGE 15


Remuneration Matters

Procedures for Developing Remuneration PoliciesPrinciple 7: The policy on executive remuneration and for fixing remuneration packages of individual directors should be formal and transparent

Level And Mix of RemunerationPrinciple 8: The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) the directors to provide good stewardship for the company, and (b) key management personnel to successfully manage the company.

Disclosure On RemunerationPrinciple 9: Clear disclosure on remuneration policies, level and mix of remuneration, and procedure for setting remuneration

Framework of Remuneration and Remuneration Packages

The NRC makes recommendations on the remuneration of directors and ensures a transparent and sound policy that maximizes shareholders’ value and talent retention. The NRC may from time to time, and where necessary or required, engage external consultants.

During FY2013, the NRC has reviewed and recommended a framework of remuneration, and specific remuneration packages, which include performance-related components for the CEO, approved by the Board.

Policy in Respect of Directors’ Remuneration

Directors’ fees are subject to the approval of shareholders at the Company’s AGM. The framework for determining director’s fees in FY2013 is set out below:

All amounts in US$ Base fee

Lead Independent

DirectorCommittee

Chair

Non-chair Committee

Member

Mark Catton1 – – 250,000 –Alexander Beard – – – –Usmanto Njo2 – – – –Warren Blount3 – – – –Thomas Reilly4 – – – –Peter Meade 50,000 10,000 10,000 10,000Steven Simpson 50,000 – 20,000 5,000

Only Independent Non-Executive Directors are paid attendance fees for all scheduled and ad-hoc physical and telephonic meetings.

1 Chairman’s Directors’ Fees paid to Singfuel Investment Pte Ltd.2 Mr. Usmanto Njo resigned as a member of the Board and AC with effect from 8 November 2013.3 Mr. Warren Blount was appointed as a member of the Board and AC with effect from 8 November 2013.4 Remuneration under separate agreement as CEO.


Level and Mix of Remuneration for Key Management Personnel and Directors for the Year Ended 31 December 2013

The level and mix for each key management personnel or director’s remuneration in bands of S$250,000 are set out below:

CEO and Key Management Personnel

Directors’ Fees

Base/Fixed

Salary

Variable or Performance-

related Income/

BonusBenefits

in Kind

Value of Share

Options Granted Total

Name % % % % % %

Between S$4,250,001 and S$4,500,000Thomas Reilly – 22.17 76.71 1.12 – 100(CEO)Between S$750,001 and S$1,000,000Sanjay Anand – 64.48 32.23 – 3.29 100Between S$750,001 and S$1,000,000Frederick Ivor Bendle – 56.69 42.71 – 0.60 100(CFO)

Chemoil Group has many valued management personnel worldwide. In FY2013, Mr. Frederick Bendle and Mr. Sanjay Anand are the Executive Officers of the Group and considered the key management personnel, apart from the CEO whose remuneration is already disclosed above. The Company believes that the above disclosure of the remuneration of the CEO in bands of $250,000 provides sufficient overview.

The NRC has recommended to the Board and the Board accepts the recommendation to disclose the remuneration of the two key management personnel in bands of S$250,000. The Company’s compensation framework comprises fixed pay and variable bonus which links the performance of individual employees with the Company’s performance. Due to the sensitive nature of this subject, the Board is of the opinion that such disclosure would be adequate for purposes of compliance with the 2012 Code.

Additionally, although the 2012 Code recommends full disclosure in aggregate of the total remuneration paid to the key management personnel (who are not directors or the CEO), the Board is of the opinion that it is not in the best interest of the Company to disclose the exact details of their remuneration due to the competitiveness of the industry for key talent.


PAGE 17


None of the employees in the Company or any of its principal subsidiaries whose remuneration exceed S$50,000 during the year is an immediate family member of a director or the CEO.

Non-Executive Directors

Directors’ Fees

Base/Fixed

Salary

Variable or Performance-

relatedIncome/

BonusBenefits

in Kind

Value of Share

Options Granted Total

Name % % % % % %

Below S$250,000Alexander Beard – – – – – –Mark Catton1 100.0 – – – – 100Usmanto Njo2 – – – – – –Warren Blount3 – – – – – –Peter Meade 87.7 – – – 12.3 100Steven Simpson 87.4 – – – 12.6 100

1 Chairman’s Directors’ Fees paid to Singfuel Investment Pte Ltd.2 Mr. Usmanto Njo resigned as a member of the Board and AC with effect from 8 November 2013.3 Mr. Warren Blount was appointed as a member of the Board and AC with effect from 8 November 2013.

The Directors holding office as at 31 December 2013 had no interests in the shares or share options of the Company and/or its subsidiaries as recorded in the register of Directors’ Shareholdings, except as follows:

Direct interest as at Deemed interest as at1.1.2013 31.12.2013 21.1.2014 1.1.2013 31.12.2013 21.1.2014

Interest in the Company’s ordinary shares of HK$0.0000125 each.

Mark Catton – – – – – –Alexander Beard – – – – – –Usmanto Njo – – – – – –Thomas Reilly – – – – – –Peter Meade – – – – – –Steven Simpson – – – – – –

(Options to subscribe for ordinary shares)

Peter Meade 880,000 1,056,000 1,056,000 – – –Steven Simpson 352,000 528,000 528,000 – – –


Details of the 2006 Share Option Scheme

The NRC administers the 2006 Share Option Scheme (the “Scheme”). Please refer to Note 21 of the Notes to the Financial Statements for details of the Scheme.

The aggregate number of share options that may be granted shall not exceed 5% of the issued share capital of the Company. There are no employees who received 5% or more of the total number of options available under the Scheme.

Information on Directors participating in the Scheme is as follows:

Options granted during the financial

year under review (including terms)

Aggregate options granted since

commencement of Scheme to the end

of the financial year under review

Aggregate options exercised since

commencement of Scheme to the end

of the financial year under review

Aggregate options outstanding as

at the end of the financial year under review

Peter Meade 176,000 1,056,000 – 1,056,000Steven Simpson 176,000 528,000 – 528,000

As at 31 December 2013, no options have been granted to controlling shareholders (as defined in the Listing Manual of the SGX-ST) of the Company or their associates (as defined in the Listing Manual of the SGX-ST).

As at 31 December 2013, no options have been granted at a discount.

The CEO and key management personnel’s remuneration packages are based on service contracts and their remuneration is determined by having regard to the performance of the Group as well as individual performance and market trends. New service agreements or renewals, if any, will be subject to the NRC’s review to ensure that the terms are fair and for a reasonable period.

Accountability and Audit

AccountabilityPrinciple 10: The Board should present a balanced and understandable assessment of the Company’s performance, position and prospects

The Board is provided with management accounts together with explanations and information on the management accounts that present a balanced and comprehensible assessment of the Group’s performance, position and prospects on a quarterly basis.

Financial results of the Company and the Group are disseminated through announcements via SGXNET, by news releases, through media and analyst briefings as well as postings on the Company’s website.


PAGE 19


Risk Management and Internal ControlsPrinciple 11: The Board is responsible for the governance of risk and should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the company’s assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.

The Board is responsible for ascertaining that Management maintains a sound system of risk management and internal controls to safeguard the shareholders’ interests and the Company’s assets.

During the year, the AC, on behalf of the Board, has reviewed the adequacy and effectiveness of the Company’s risk management and material internal control plans which in summary include the following:

• Internal audits carried out by three different groups, namely:o a Glencore Internal Audit Team subject to certain safeguards approved by the AC;o internal Chemoil resources; ando Protiviti, an independent third party that reviews the interested party transactions (“IPTs”) and

related procedures.• Review by the statutory auditors with a focus on issues over which the AC has concerns or in areas of

particular risk. The AC also ensures that the annual management letter relating to internal controls matters produced by the statutory auditors is followed up and points are closed.

• Enterprise Risk Management (“ERM”) – The Company has an effective Risk Management Governance Structure which comprises a Risk Management Team that reports to the Executive Risk Management Committee (“ERMC”), and the ERMC in turn reports to the Board as well as the AC. Further improvements to the Risk Management Team and ERMC were made during the year to ensure that it continues to fulfil its primary objective in performing enterprise risk assessments.

• Documentation of controls – Continued reviews and improvements are made to the existing business and transaction processes as part of the internal control plans.

With these in place, the Board is able to assess the adequacy and effectiveness of the Company’s system of controls including financial, operational, compliance and information technology controls, and risk management systems. The Board, with the concurrence of the AC, is also of the view and it has received the assurance from the CEO and CFO that (a) the Company’s risk management and internal controls is adequate and effective in addressing the material risks in its current business environment, including material financial, operational, compliance and information technology risks, (b) the financial records of the Company have been properly maintained and the financial statements for the year ended 31 December 2013 do give a true and fair view of the Company’s operations and finances. The structure established by the Company provides reasonable but not absolute assurance that the Company will not be adversely affected by any event that can be reasonably foreseen as it strives to achieve its business objectives. However, the Board also notes that no system of internal controls and risk management can provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors, poor judgement in decision-making, human error, losses, fraud or other irregularities.


Audit CommitteePrinciple 12: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties.

The AC comprises 3 members, the majority of whom, including the Chairman, are independent. The members of the AC are:

• Mr. Steven Simpson Chairman• Mr. Peter Meade Member• Mr. Usmanto Njo1 Member• Mr. Warren Blount2 Member

1 Mr. Usmanto Njo resigned as a member of the Board and AC with effect from 8 November 2013.2 Mr. Warren Blount was appointed as a member of the Board and AC with effect from 8 November 2013.

All the members of the AC have recent and relevant accounting and related financial management expertise.

The AC was established and operates in accordance with written terms of reference which sets out its duties and responsibilities clearly.

The AC has the power to conduct or authorize investigations into any matters within its scope of responsibility. The AC is authorized to obtain independent professional advice whenever deemed necessary for the discharge of its responsibilities. Such expenses will be borne by the Company.

The AC has the co-operation of and complete access to the Company’s management. It has full discretion to invite any director or executive officer to attend the meetings, and has been given reasonable resources to enable the discharge of its functions.

The AC meets with the internal auditors and external auditors at least once a year without the presence of management to discuss significant issues arising from their audit, other audit findings and recommendations. It also considers management letters from the external auditors and management’s response to them.

During the year, the AC reviewed the quarterly financial statements, any announcements relating to the Company’s financial performance, the results of the audits performed by the internal and external auditors, the effectiveness of the Company’s internal audit function and reviewed the register of IPTs.

The AC undertook a review of all non-audit services provided by the external auditors during FY2013 and is of the view that these would not affect the independence of the external auditors. Fees paid/payable to Deloitte Touche Tohmatsu Limited member firms in FY2013 for audit services was US$845,000. The non-audit fees paid/payable to Deloitte Touche Tohmatsu Limited member firms in FY2013 was US$418,000.

The Company has complied with Rules 712 and 716 of the SGX-ST Listing Manual. The AC and the Board is satisfied that the appointment of such auditors would not compromise the standard and effectiveness of the audit of the Company.

The AC has reviewed the “Concern Reporting Policies and Procedures” which provides for the mechanisms by which employees and other persons may, in confidence, raise concerns about possible improprieties in financial reporting or other matters, and was satisfied that arrangements are in place for the independent investigation of such matters and for appropriate follow-up action. The details of the policy are found on the Company’s website.


PAGE 21


Internal AuditPrinciple 13: The Company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits.

The AC reviews and approves audit plans for both internal and external audit. In FY2013, internal audits were carried out by three different groups as reported under Principle 11: Risk Management and Internal Controls.

Protiviti continued to be engaged to review the IPTs and related procedures and a summary of the IPTs is found in this Corporate Governance Report. The Company has a Chemoil Global Policy Manual that encapsulates many of the Company’s longstanding policies. The Company also has in place internal guidelines on insider trading by directors and employees of the Company and Group companies. With these implementations, the AC is assured that there is alignment, adequate coverage and consistent standards of internal audit, and that the AC is of the view that there is adequacy of internal controls, including financial, operational, compliance and information technology controls, risk management systems and internal audit functions.

Shareholder Rights And Responsibilities

Shareholder RightsPrinciple 14: The Company should treat all shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders’ rights, and continually review and update such governance arrangements

Communication with ShareholdersPrinciple15: The Company should actively engage shareholders and put in place an investor relations policy to promote regular, effective and fair communication with shareholders

Conduct of Shareholder MeetingsPrinciple 16: The Company should encourage greater shareholder participation at general meetings of shareholders, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

In line with the SGX-ST’s Listing Rules, the Board’s policy is to ensure that all shareholders should be equally informed of all major developments impacting the Group.

Information is disseminated to shareholders on a timely basis through:

• SGXNET announcements and news release• Annual reports prepared and issued to all shareholders• Company’s website at www.chemoil.com where shareholders can access information on the Group

At general meetings, each distinct issue is proposed as a separate resolution. Voting at general meetings will be by show of hands unless a poll is demanded by the Chairman or by not less than five shareholders or proxies or shareholders or proxies representing an aggregate of not less than one-tenth of the total voting rights of all shareholders having the right to attend and vote at the meeting. Voting by a show of hands enables the Company to deal with the business of the meeting expeditiously.

At the Company’s AGMs, shareholders are given the opportunity and have expressed their views, comments and raised enquiries to Directors and management. The Chairmen of the AC and the NRC are required to be and have been present at AGMs to answer any questions relating to the work of their committees.


The Board has considered the payment of dividends to shareholders and has elected to utilize profits and proceeds from asset sales to propel the growth of Chemoil.

Other Governance Practices

Securities TransactionsInsider trading policy

The Company has in place a policy prohibiting share dealings by Directors and employees of the Group in the two weeks before the release of quarterly results and one month before the release of the full-year results, with the restriction ending two market days after the announcement of the relevant results. Directors and employees are expected to observe the insider trading laws at all times even when dealing in securities within permitted trading periods. An officer should also not deal in the Company’s securities on short-term considerations.

Interested Person Transactions

The Company has established procedures to ensure that all IPTs are reported in a timely and thorough manner to the AC and that these transactions are conducted at arm’s length and are not prejudicial to the interests of other shareholders.

During FY2013, the following IPTs were entered into by the Group.

Name of interested person

Aggregate value of all interested person

transactions entered into under the SPS agreement during the financial year

under review ($ in 000’s) Others

Jan-Dec 2013 – (US$’000) Jan-Dec 2013 – (US$’000)

GLENCORE LTD 1,227,509 1,017GLENCORE SINGAPORE PTE LTD 2,052,109 393GLENCORE ENERGY UK LTD. 61,176 –GLENCORE GRAIN BV 310,511 2GLENCORE COMMODITIES LTD – SINGAPORE 56,097 –GLENCORE COMMODITIES LTD 41,298 –ST SHIPPING & TRANSPORT INC 350 1,751ST SHIPPING & TRANSPORT PTE LTD (SINGAPORE) 198,189 186ST SHIPPING & TRANSPORT PTE LTD (US). 2,494 –Total 3,949,733 3,349

Material Contracts

Apart from the IPTs disclosed above, there were no other material contracts entered into by the Company and its subsidiaries involving the interests of its CEO, Directors or controlling shareholders, which are either still subsisting at the end of the financial year or entered into since the end of the previous financial year.


PAGE 23

FINANCIAL CONTENTS24 statement of directors 25 independent auditors’ report 26 statements of financial position28 consolidated statement of comprehensive income 30 consolidated statement of changes in equity31 consolidated statement of cash flows 33 notes to financial statements

STATEMENT OF DIRECTORS

In the opinion of the directors, the consolidated financial statements of the Group and the statement of financial position of the Company as set out on pages 26 to 121 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at December 31, 2013 and of the results, changes in equity and cash flows of the Group for the financial year then ended and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.

On behalf of the directors

Mark Jonathon CattonChairman

Thomas Kevin ReillyChief Executive Officer

March 10, 2014


PAGE 25

INDEPENDENT AUDITORS’ REPORTto the members of chemoil energy limited

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Chemoil Energy Limited (the “Company”) and its subsidiaries (the “Group”) which comprise the statements of financial position of the Group and the Company as at December 31, 2013, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 26 to 121.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

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

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

Opinion

In our opinion, the accompanying statement of financial position of the Company and the consolidated financial statements give a true and fair view of the financial position of the Company and of the Group as at December 31, 2013 and of the financial performance and cash flows of the Group for the year then ended in accordance with International Financial Reporting Standards.

Deloitte & Touche LLPPublic Accountants andChartered Accountants

Ng Peck HoonPartnerSingapore

March 10, 2014

STATEMENTS OF FINANCIAL POSITIONDecember 31, 2013(In US$’000, unless otherwise stated)

Group CompanyNote 2013 2012 2013 2012

ASSETSCurrent assetsCash and cash equivalents 4 289,470 329,241 7,556 212,046Derivative financial instruments 5 45,217 18,143 – –Financial assets at fair value through profit or loss 6 1,198 1,085 1,198 1,085Trade and other receivables 7 1,357,869 1,206,619 315,727 133,429Income tax recoverable 16,047 7,472 – –Inventories 8 401,672 396,363 – –Other current assets 9 50,036 32,319 112 2

2,161,509 1,991,242 324,593 346,562Non-current assets classified as held for sale 10 26,533 – 12,072 –Total current assets 2,188,042 1,991,242 336,665 346,562Non-current assetsOther non-current assets 11 4,846 2,957 – –Investments in associates 12 28,786 32,680 – 8,500Investments in joint ventures 13 58,270 59,470 24,621 29,621Investments in subsidiaries 14 – – 193,207 193,354Intangible assets 15 27,255 31,282 – –Property, plant and equipment 16 44,190 61,119 – –Deferred income tax assets 17 66,265 5,470 – –Total non-current assets 229,612 192,978 217,828 231,475Total assets 2,417,654 2,184,220 554,493 578,037


PAGE 27

Group CompanyNote 2013 2012 2013 2012

LIABILITIES AND EQUITYCurrent liabilitiesTrade and other payables 18 787,274 1,036,720 386,403 407,096Derivative financial instruments 5 42,294 15,966 – –Borrowings 19 976,307 574,526 28,964 4,144Provisions for other liabilities and charges 20 3,296 2,871 – –Current income tax liabilities 1,073 1,660 – –Total current liabilities 1,810,244 1,631,743 415,367 411,240Non-current liabilitiesBorrowings 19 10,974 51,040 – 28,786Deferred income tax liabilities 17 2,188 2,103 – –Provisions for other liabilities and charges 20 9,444 15,000 – –Total non-current liabilities 22,606 68,143 – 28,786Total liabilities 1,832,850 1,699,886 415,367 440,026Capital, reserves and non-controlling interestsShare capital 21 2 2 2 2Share premium 21 85,816 85,816 85,816 85,816Treasury shares 21 (1,612) (1,666) – –Merger reserve 22 3,529 3,529 – –Other reserves 23 (3,535) (2,477) 508 213Retained earnings 24 500,707 399,715 52,800 51,980Equity attributable to owners of the Company 584,907 484,919 139,126 138,011Non-controlling interests (103) (585) – –Total equity 584,804 484,334 139,126 138,011Total liabilities and equity 2,417,654 2,184,220 554,493 578,037

See accompanying notes to financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEYear ended December 31, 2013(In US$’000, unless otherwise stated)

Note 2013 2012

Revenue 25 12,958,908 13,641,789

Other gains – net 25 4,186 6,39612,963,094 13,648,185

Expenses:– Inventories recognised as an expense 12,587,883 13,334,557– Barging and pipelines costs 67,841 68,146– Chartering and other shipping related expenses 13,248 14,072– Rentals for office premises, storage tanks and motor vehicles 64,928 44,487– Demurrage costs 10,542 7,388– Employee benefits 26 69,421 53,889– Marketing and communication expenses 9,186 8,587– Service and commission expenses 34,096 18,915– Other expenses 40,830 61,865– Depreciation, impairment and amortisation 23,307 43,972– Finance expense 27 20,314 21,968Total expenses 12,941,596 13,677,846

Share of results of associates and joint ventures – net 19,783 190Profit (Loss) before income tax 41,281 (29,471)

Income tax credit 28 60,613 5,471Profit (Loss) after tax – Continuing operations 101,894 (24,000)Profit from discontinued operations 29 – 174,046Profit after tax 101,894 150,046

Attributable to: Owners of the Company 100,992 153,159 Non-controlling interests 902 (3,113)

101,894 150,046


PAGE 29

Note 2013 2012

Profit for the year 101,894 150,046

Other comprehensive income:Items that may be reclassified subsequently to profit or loss:

Cash flow hedges 23 – 4,289 Currency translation differences 23 (1,769) (19,168) Other comprehensive loss for the year, net of income tax (1,769) (14,879)Total comprehensive income for the year 100,125 135,167Attributable to:Owners of the Company 99,643 138,204Non-controlling interests 482 (3,037)

100,125 135,167

Continuing operationsEarnings (Loss) per share for profit attributable to the owners of the Company (expressed in cents per share) 31 – Basic 7.9 (1.6) – Diluted 7.8 (1.6)

Discontinued operationsEarnings per share for profit attributable to the owners of the Company (expressed in cents per share) 31 – Basic – 13.5 – Diluted – 13.5


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended December 31, 2013(In US$’000, unless otherwise stated)

NoteShare

capitalShare

premiumMergerreserve

Treasury shares

held by trust (i)

Otherreserves

Retainedearnings Total

Non-controlling

interestsTotal

equity

Balance at January 1, 2013 2 85,816 3,529 (1,666) (2,477) 399,715 484,919 (585) 484,334Total comprehensive income for the year

Profit for the year – – – – – 100,992 100,992 902 101,894 Other comprehensive income for the year, net of income tax – – – – (1,349) – (1,349) (420) (1,769)Total – – – – (1,349) 100,992 99,643 482 100,125Transactions with owners, recognised directly in equity

Employee share option scheme:– Value of services rendered 23 – – – – 295 – 295 – 295– Treasury shares re-issued – – – 54 (4) – 50 – 50Total – – – 54 291 – 345 – 345

Balance at December 31, 2013 2 85,816 3,529 (1,612) (3,535) 500,707 584,907 (103) 584,804

Balance at January 1, 2012 2 85,816 3,529 (3,675) 12,825 246,556 345,053 2,452 347,505Total comprehensive income for the yearProfit for the year – – – – – 153,159 153,159 (3,113) 150,046Other comprehensive income for the year, net of income tax – – – – (14,955) – (14,955) 76 (14,879)Total – – – – (14,955) 153,159 138,204 (3,037) 135,167Transactions with owners, recognised directly in equityEmployee share option scheme:– Value of services rendered 23 – – – – 310 – 310 – 310– Treasury shares re-issued – – – 2,009 (657) – 1,352 – 1,352Total – – – 2,009 (347) – 1,662 – 1,662

Balance at December 31, 2012 2 85,816 3,529 (1,666) (2,477) 399,715 484,919 (585) 484,334

(i) Amicorp Trustee (Singapore) Limited is the trustee of a trust established to purchase and hold the Company’s shares from the open market for delivery to employees under the share option plan. Such shares are designated as treasury shares.



PAGE 31

CONSOLIDATED STATEMENT OF CASH FLOWSYear ended December 31, 2013(In US$’000, unless otherwise stated)

Note 2013 2012

Operating activitiesProfit for the year 101,894 150,046Adjustments for: Income tax credit (60,613) (3,278) Share option expense 26 295 310 Depreciation, impairment and amortisation 23,307 49,885 Bad debt expense 2,294 14,184 Gain on early settlement of purchase consideration – (5,000) Net gain on disposal of subsidiary – (164,702) Net loss on disposal of a joint venture 25 – 151 Fair value gains on financial assets at fair value through profit or loss 25 (113) (146) Unrealised translation gains (761) (92) Share of results of associates and joint ventures (19,783) (190) Interest income 25 (2,509) (2,427) Finance expense 27 20,314 22,977Operating cash flows before movements in working capital 64,325 61,718

Changes in working capital, net of effects of disposal Derivative financial instruments (746) (3,415) Other assets (17,749) (9,957) Trade and other receivables (151,485) (142,254) Inventories 49,548 (96,087) Trade and other payables (250,581) 200,421 Provision for other liabilities and charges (5,131) (6,129)Cash (used in) generated from operations (311,819) 4,297

Income tax paid (9,258) (8,257)Net cash used in operating activities (321,077) (3,960)

CONSOLIDATED STATEMENT OF CASH FLOWSYear ended December 31, 2013(In US$’000, unless otherwise stated)

Note 2013 2012

Investing activities Purchase of property, plant and equipment (7,034) (11,266) Proceeds on disposal of property, plant and equipment 5,677 600 Purchases of intangible assets (1,926) (155) Proceeds from disposal of a subsidiary, net of cash disposed of 29 – 279,450 Proceeds from disposal of intangible assets – 518 Investments in and loans to joint ventures 13 (6,200) (28,410) Acquisition of subsidiaries 39 (61,110) (10,000) Return of capital from joint venture 13 5,000 – Interest received 2,509 2,427 Dividends received from associates 2,773 976 Dividends received from joint ventures 165 –Net cash (used in) from investing activities (60,146) 234,140

Financing activities Proceeds from borrowings 1,193,627 548,501 Repayment of borrowings (617,586) (596,059) Proceeds from re-issue of treasury shares 51 1,352 Interest paid (20,314) (22,977) Bank balances and deposits pledged with banks for bank loans 4,541 2,204Net cash from (used in) financing activities 560,319 (66,979)

Net increase in cash and cash equivalents 179,096 163,201Cash and cash equivalents at beginning of the year 86,666 (76,535)Cash and cash equivalents at end of the year 4 265,762 86,666



PAGE 33

NOTES TO FINANCIAL STATEMENTSDecember 31, 2013(In US$’000, unless otherwise stated)

1 GENERAL INFORMATION

Chemoil Energy Limited (the “Company”) and its subsidiaries (together the “Group”) are mainly global traders in marine fuel, aviation fuel and land based diesel products. The Group operates in major ports such as Long Beach, Houston, New Orleans, New York, Panama, Rotterdam, Fujairah and Singapore. The principal activity of the Company is to carry on the business of an investment holding company.

The principal activities of the subsidiaries are disclosed in Note 38.

The Company is a limited liability company incorporated and domiciled in Hong Kong. The address of its registered office is 31/F, 148 Electric Road, North Point, Hong Kong.

The Company is listed on the main board of the Singapore Exchange Securities Trading Limited (“SGX-ST”).

These financial statements were authorised for issue by the Board of Directors of the Company on March 10, 2014.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). They have been prepared under the historical cost convention, except as disclosed in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

2.1 Basis of preparation (Continued)

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

The acquisition of the entire equity interest in Chemoil Corporation by the Company on August 31, 2006 was accounted for using the “pooling-of-interest” method as the Company and Chemoil Corporation were under the common control of the same controlling shareholders before and after the acquisition (Note 2.17).

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

2.1.1 Adoption of new and revised standards

On January 1, 2013, the Group has adopted all the new and revised IFRSs that are effective from that date and are relevant to its operations and effective for annual periods beginning on or after January 1, 2013. The adoption of these new/revised IFRSs does not result in changes to the Group’s and Company’s accounting policies and has no material effect on the amounts reported for the current or prior years except as disclosed below:

Amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities

The Group has applied the amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities for the first time in the current year. The amendments to IFRS 7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement.

The amendments to IFRS 7 have been applied retrospectively. Other than additional disclosures in Note 7 to the consolidated financial statements, the directors of the Company do not anticipate that the application of these amendments to IFRS 7 will have a significant impact on the financial statements.


PAGE 35



2.1.1 Adoption of new and revised standards (Continued)

New and revised Standards on consolidation, joint arrangements, associates and disclosures

In May 2011, a package of five standards on consolidation, joint arrangements, associates and disclosures was issued comprising IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, IAS 27 (as revised in 2011) Separate Financial Statements and IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures. Subsequent to the issue of these standards, amendments to IFRS 10, IFRS 11 and IFRS 12 were issued to clarify certain transitional guidance on the first-time application of the standards.

In the current year, the Group has applied for the first time IFRS 10, IFRS 11, IFRS 12 and IAS 28 (as revised in 2011) together with the amendments to IFRS 10, IFRS 11 and IFRS 12 regarding the transitional guidance.

The adoption of these new and revised standards does not result in changes to the Group’s and Company’s accounting policies and has no material effect on the amounts reported for the current or prior years.

IFRS 13 Fair Value Measurements

The Group has applied IFRS 13 for the first time in the current year. IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).

IFRS 13 defines fair value of an asset as the price that would be received to sell an asset or paid to transfer a liability, in the case of determining the fair value of a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, IFRS 13 includes extensive disclosure requirements.

Other than the additional disclosures, the application of IFRS 13 has not had any material impact on the amounts recognised in the financial statements.




2.1.1 Adoption of new and revised standards (Continued)

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income

The Group has applied the amendments to IAS 1 Presentation of Items of Other Comprehensive Income for the first time in the current year. The amendments introduce new terminology, whose use is not mandatory, for the statement of comprehensive income and income statement. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis – the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

2.2 Consolidation

(a) Subsidiaries

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.


PAGE 37


2.2 Consolidation (Continued)

(a) Subsidiaries (Continued)

Basis of consolidation (Continued)

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:

• thesizeoftheCompany’sholdingofvotingrightsrelativetothesizeanddispersionofholdingsof the other vote holders;

• potentialvotingrightsheldbytheCompany,othervoteholdersorotherparties;

• rightsarisingfromothercontractualarrangements;and

• anyadditional factsandcircumstances that indicate that theCompanyhas,ordoesnothave,the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

The acquisition of subsidiaries under the common control of the Company’s shareholders have been consolidated using the “pooling of interests” method as explained in Note 2.1.

The acquisition of subsidiaries not under the common control of the Company’s shareholders is accounted using the acquisition method of accounting. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration which the acquirer transferred in exchange for the acquiree includes any asset or liability resulting from a contingent consideration arrangement. The acquirer shall recognise the acquisition-date fair value of contingent consideration as part of the consideration transferred in exchange for the acquiree. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.






If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the acquirer shall retrospectively adjust the provisional amounts recognised at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognised as of that date. During the measurement period, the acquirer shall also recognise additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable. However, the measurement period shall not exceed one year from the acquisition date.

The measurement period is the period after the acquisition date during which the acquirer may adjust the provisional amounts recognised for a business combination. The measurement period provides the acquirer with a reasonable time to obtain the information necessary to identify and measure the following as of the acquisition date in accordance with the requirements of this IFRS:

a. the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree;

b. the consideration transferred for the acquiree (or the other amount used in measuring goodwill);

c. in a business combination achieved in stages, the equity interest in the acquiree previously held by the acquirer; and

d. the resulting goodwill or gain on a bargain purchase.

Some changes in the fair value of contingent consideration that the acquirer recognises after the acquisition date may be the result of additional information that the acquirer obtained after that date about facts and circumstances that existed at the acquisition date. Such changes are measurement period adjustments. However, changes resulting from events after the acquisition date, such as meeting an earnings target, reaching a specified share price or reaching a milestone on a research and development project, are not measurement period adjustments. The acquirer shall account for changes in the fair value of contingent consideration that are not measurement period adjustments as follows:


PAGE 39





a. Contingent consideration classified as equity shall not be remeasured and its subsequent settlement shall be accounted for within equity.

b. Contingent consideration classified as an asset or a liability that:

i. is a financial instrument and is within the scope of IAS 39 shall be measured at fair value, with any resulting gain or loss recognised either in profit or loss or in other comprehensive income in accordance with that IFRS.

ii. is not within the scope of IAS 39 shall be accounted for in accordance with IAS 37 or other IFRSs as appropriate.

On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes directly attributable costs of investment.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill (see Note 2.6(a)). If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(b) Transactions and non-controlling interests

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.




(b) Transactions and non-controlling interests (Continued)

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

(c) Associates and joint ventures

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discounted Operations. Under the equity method, an investment in an associate or a joint venture is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.


PAGE 41



(c) Associates and joint ventures (Continued)

An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment or a portion thereof is classified as held for sale. When the Group retains an interest in the former associate or joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IAS 39. The difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.

The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.




(c) Associates and joint ventures (Continued)

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

(d) Interests in joint operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

When a group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its interest in a joint operation:

• Its assets, including its share of any assets held jointly.

• Its liabilities, including its share of any liabilities incurred jointly.

• Its revenue from the sale of its share of the output arising from the joint operation.

• Its share of the revenue from the sale of the output by the joint operation.

• Its expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.

When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognised in the Group’s consolidated financial statements only to the extent of other parties’ interests in the joint operation.

When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of assets), the Group does not recognise its share of the gains and losses until it resells those assets to a third party.


PAGE 43


2.3 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided for the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief executive officer who makes strategic decisions.

2.4 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in United States Dollar (“US$”), which is the Company’s functional currency and presentation currency of the consolidated financial statements.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of fair value gain or loss.

(c) Group companies

The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the end of the reporting period;

(ii) income and expenses for each consolidated statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(iii) all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings, are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the profit or loss as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.



2.5 Property, plant and equipment

Freehold land is initially recognised at cost and subsequently stated at cost less accumulated impairment losses (Note 2.7). Other property, plant and equipment are initially recognised at cost and subsequently stated at historical cost less accumulated depreciation and accumulated impairment losses (Note 2.7). Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance costs are charged to the profit or loss during the financial period in which they are incurred.

Freehold land and construction work in progress are not depreciated. Depreciation on other items of property, plant and equipment are calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Buildings and improvements – 5 to 30 yearsOffice and computer equipment, furniture and fittings – 3 to 5 yearsEquipment and terminals – 15 yearsVessels – 5 to 30 yearsMotor vehicles – 5 to 10 years

Fully depreciated property, plant and equipment are retained in the financial statements until they are no longer in use.

The assets’ residual values, useful lives, and depreciation method are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2.7).

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within ‘Other gains (losses) – net’ in the profit or loss.


PAGE 45


2.6 Intangible assets

(a) Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in ‘Intangible assets’. Goodwill on acquisitions of associates and joint ventures is included in ‘Investments in associates’ and ‘Investments in joint ventures’ and is tested for impairment as part of the overall balance. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

(b) Computer software

Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

(i) it is technically feasible to complete the software product so that it will be available for use;

(ii) management intends to complete the software product and use or sell it;

(iii) there is an ability to use or sell the software product;

(iv) it can be demonstrated how the software product will generate probable future economic benefits;

(v) adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

(vi) the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised over their estimated useful lives on a straight-line basis, which do not exceed three years.



2.6 Intangible assets (Continued)

(c) Contractual customer relationships

Contractual customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The contractual customer relationships have a finite useful life and are at cost less accumulated amortisation less impairment losses. Amortisation is calculated using the straight-line method over three to five years, which is the expected life of the customer relationships.

(d) Licenses

Separately acquired licenses are shown at historical cost. Licenses acquired in a business combination are recognised at fair value at the acquisition date. Licenses have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of licenses over their estimated useful lives of 10 years.

2.7 Impairment of non-financial assets

Non-financial assets that have an indefinite useful life, for example goodwill, or intangible assets not ready to use, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

In a subsequent period, if the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the non-financial assets at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

2.8 Financial assets

(a) Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss, and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.


PAGE 47


2.8 Financial assets (Continued)

(a) Classification (Continued)

Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified as held for trading if it has been acquired principally for the purpose of selling in the short term. Derivatives are categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise ‘Trade and other receivables’ (Note 2.12) and ‘Cash and cash equivalents’ (Note 2.10) in the statement of financial position.

(b) Recognition and derecognition

Regular purchases and sales of financial assets are recognised on trade date – the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. On disposal of a financial asset, the difference between the carrying amount and the sale proceeds is recognised in the profit or loss. Any amount in the fair value reserve relating to that asset is transferred to the profit or loss.

Trade receivables that are factored out to banks and other financial institutions with recourse to the Group are not derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash received from the financial institutions is recorded as borrowings.



2.8 Financial assets (Continued)

(c) Initial measurement

Financial assets are initially recognised at fair value plus transaction costs except for financial assets at fair value through profit or loss, which are recognised at fair value. Transaction costs for financial assets at fair value through profit or loss are recognised immediately as expenses.

(d) Subsequent measurement

Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Gains and losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented in the profit or loss within ‘Other gains (losses) – net’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the profit or loss as part of other income when the Group’s right to receive payments is established.

(e) Impairment of financial assets carried at amortised cost

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets, other than derivative financial instruments and those at fair values through profit or loss, is impaired and recognises an allowance for impairment when such evidence exists.

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy, and default or significant delay in payments are objective evidence that these financial assets are impaired.

The carrying amount of these assets is reduced through the use of an impairment allowance account which is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. When the asset becomes uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are recognised against the same line item in the profit or loss.

The allowance for impairment loss account is reduced through the profit or loss in a subsequent period when the amount of impairment loss decreases and the related decrease can be objectively measured. The carrying amount of the asset previously impaired is increased to the extent that the new carrying amount does not exceed the amortised cost, had no impairment been recognised in prior periods.


PAGE 49


2.9 Financial guarantees

The Company has issued corporate guarantees to banks for borrowings of its subsidiaries. These guarantees are financial guarantees as they require the Company to reimburse the banks if the subsidiaries fail to make principal or interest payments when due in accordance with the terms of their borrowings.

Financial guarantees are initially recognised at their fair values plus transaction costs in the Company’s statement of financial position.

Financial guarantees are subsequently amortised to the profit or loss over the period of the subsidiaries’ borrowings, unless it is probable that the Company will reimburse the bank for an amount higher than the unamortised amount. In this case, the financial guarantees shall be carried at the expected amount payable to the bank in the Company’s statement of financial position.

Intragroup guarantee transactions are eliminated on consolidation.

2.10 Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less, net of bank overdrafts and bank balances and deposits pledged with banks for bank loans. Bank overdrafts are presented as current borrowings on the statements of financial position.

2.11 Derivative financial instruments and hedging activities

A derivative financial instrument is initially recognised at fair value on the date the contract is entered into and is subsequently remeasured at its fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

The Group also uses derivative instruments for risk management purposes. Although these derivatives are linked to the inventory or underlying transactions, they do not meet the criteria for hedge accounting as defined by the International Accounting Standard (“IAS”) 39 Financial Instruments: Recognition and Measurement and thus do not qualify for hedge accounting. Changes in the fair value of these derivative instruments are recognised immediately in the profit or loss within ‘Other gains (losses) -net’.

2.12 Trade receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, using the effective interest method, less allowance for impairment.



2.13 Inventories

Inventories, comprising of commodities held for resale, are stated at fair value less costs to sell, with changes in fair value less costs to sell recognised in the profit or loss.

2.14 Non-current assets classified as held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.

When the Group is committed to a sale plan involving disposal of an investment, or a portion of an investment, in an associate or joint venture, the investment or the portion of the investment that will be disposed of is classified as held for sale when the criteria described above are met, and the Group discontinues the use of the equity method in relation to the portion that is classified as held for sale from the time when the investment (or a portion of the investment) is classified as held for sale. Any retained portion of an investment in an associate or a joint venture that has not been classified as held for sale continues to be accounted for using the equity method. The Group discontinues the use of the equity method at the time of disposal when the disposal results in the Group losing significant influence over the associate or joint control over the joint venture.

After the disposal takes place, the Group accounts for any retained interest in the associate or joint venture in accordance with IAS 39 unless the retained interest continues to be an associate or a joint venture, in which case the Group uses the equity method (see the accounting policy regarding investments in associates or joint ventures above).

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs of disposal.


PAGE 51


2.15 Classification as debt or equity

Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities are classified as either financial liabilities “at fair value through profit or loss” or other financial liabilities.

2.16 Share capital and treasury shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

When any group company purchases the Company’s ordinary shares (“treasury shares”), the consideration paid including any directly attributable incremental cost is presented as a component within equity attributable to the Company’s owners, until they are cancelled, sold or re-issued.

When treasury shares are subsequently cancelled, the cost of treasury shares are deducted against the share capital account if the shares are purchased out of capital of the Company, or against the retained profits of the Company if the shares are purchased out of earnings of the Company.

When treasury shares are subsequently sold or re-issued pursuant to the employee share option scheme, the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sale or re-issue, net of any directly attributable incremental transaction costs and related income tax, is included in equity attributable to the Company’s owners.

2.17 Merger reserve

In applying the pooling of interests method (Note 2.1), the consolidated statement of comprehensive income and consolidated statement of cash flows include the results of operations and cash flows of the companies comprising the Group as at August 31, 2006 as if the structure of the Group had been in existence prior to that date. The assets and liabilities are brought into the statements of financial position at their existing carrying amounts. Any difference between the amount recorded as share capital issued and the amount for the share capital acquired are adjusted against equity. Expenditure incurred in relation to a uniting of interests is recognised as an expense in the period incurred.



2.18 Trade and other payables

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.19 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the end of the reporting period.

Borrowing costs incurred to finance the construction of property, plant and equipment are capitalised during the period of time that is required to complete and prepare the asset for its intended use. The amount of borrowing cost capitalised in an asset is the actual borrowing costs incurred during the period less any investment income on the temporary investment of those borrowings.

Other borrowing costs are recognised on a time-proportion basis in profit or loss using the effective interest method.

2.20 Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when the Group’s obligations are discharged, cancelled or they expire.


PAGE 53


2.21 Current and deferred income taxes

Income tax expense for the period comprises current and deferred tax. Tax is recognised in the profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority or either the taxable entity or different taxable entities where there is an intention to settle the balances in a net basis.



2.22 Employee benefits

(a) Defined contribution plans

The Group has defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(b) Share-based compensation

The Group operates a share-based compensation plan in which the terms of the arrangement provide the Group to settle by issuing equity instruments. If the Group has a present obligation to settle in cash, the fair value of the employee services received in exchange for the grant of the options is recognised as an expense with the recognition of a corresponding liability over the vesting period. Until the liability is settled, it is re-measured at the end of each reporting period with changes in fair value recognised in profit or loss. If the Group does not have a present obligation to settle in cash, the fair value of the employee services received in exchange for the grant of the options is recognised as an expense in the profit or loss with a corresponding increase in the share option reserve over the vesting period. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted on the date of the grant. Non-market vesting conditions are included in the assumptions about the number of options that are expected to vest. The total amount to be expensed is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the profit or loss, with a corresponding adjustment to the share option reserve over the remaining vesting period.

When the options are exercised, the proceeds received (net of transaction costs) and the related balance previously recognised in the share option reserve are credited to share capital account, when new ordinary shares are issued, or to the “treasury shares” account, when treasury shares are re-issued to the employees.

(c) Bonus plans

The Group recognises a liability and an expense for bonuses. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.


PAGE 55


2.23 Provisions

Provisions for reinstatement, restructuring, legal claims and onerous lease contracts are recognised when: the Group has a present legal or constructive present obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provision for onerous lease contracts represents the present value of the future lease payments that the group is presently obligated to make under non-cancellable onerous operating lease contracts, less revenue expected to be earned on the lease including estimated future sub-lease revenue. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

Changes in the estimated timing or amount of the expenditure or discount rate are recognised in the profit or loss when the changes arise.

2.24 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown, net of sales tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.



2.24 Revenue recognition (Continued)

Revenue is recognised as follows:

(a) Sales of fuel products are recognised upon passing of title to the customer which generally coincides with delivery and acceptance of the goods sold.

(b) Chartering income on time charters is recognised when the services are rendered, on a time proportion basis according to the agreements in place.

(c) Demurrage income is recognised if a claim is considered probable.

(d) Revenue from the sale of software products is recognised when the sale is completed with the passing of the title. Revenue from software development is recognised based on software developed and billed to clients as per the terms of the specific contracts.

(e) Revenue from the provision of services is recognised when the services are rendered.

(f) Other rental income, including terminal income, from operating leases is recognised on a straight-line basis over the lease term.

(g) Interest income is recognised on a time proportion basis, using the effective interest method.

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

2.25 Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred income in the statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Other government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.


PAGE 57


2.26 Leases

(a) When the Group is the lessee:

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are charged to the profit or loss on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment made to the lessor as penalty is recognised as an expense when termination takes place.

Finance leases

Leases where the Group assumes substantially all risks and rewards incidental to ownership of the leased assets are classified as finance leases.

The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised on the statements of financial position as property, plant and equipment and borrowings respectively, at the inception of the leases based on the lower of the fair value of the leased assets and the present value of the minimum lease payments.

Each lease payment is apportioned between the finance expense and the reduction of the outstanding lease liability. The finance expense is recognised in profit or loss on a basis that reflects a constant periodic rate of interest on the finance lease liability.

(b) When the Group is the lessor:

Operating leases

Leases of property, plant and equipment where the Group retains substantially all risks and rewards incidental to ownership are classified as operating leases.

Rental income from operating leases (net of any incentives given to lessees) is recognised in profit or loss on a straightline basis over the lease term.

Initial direct costs incurred by the Group in negotiating and arranging operating leases are added to the carrying amount of the leased assets and recognised as an expense in profit or loss over the lease term on the same basis as the lease income.

2.27 Dividend distribution

Interim dividends are recorded in the financial year in which they are declared payable. Final dividends are recognised as a liability in the Group’s consolidated financial statements in the period in which the dividends are approved by the Company’s shareholders.



2.28 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

2.29 New and revised IFRSs in issue but not yet effective

The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective at the date of authorisation of the consolidated financial statements:

IFRS 9 Financial Instruments2

Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosures2

Amendments to IFRS 10, 12 and IAS 27 Investment Entities1

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities1

Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets1

Amendments to IFRSs Annual Improvements to IFRSs 2010-2012 Cycle3

Amendments to IFRSs Annual Improvements to IFRSs 2011-2013 Cycle3

1 Effective for annual periods beginning on or after January 1, 2014, with earlier application permitted.2 Effective for annual periods beginning on or after January 1, 2018.3 Effective for annual periods beginning on or after July 1, 2014, with limited exceptions.


PAGE 59


2.29 New and revised IFRSs in issue but not yet effective (Continued)

IFRS 9 Financial Instruments

IFRS 9, issued in November 2009, introduced new requirements for the classification and measurement of financial assets.

IFRS 9 was amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition.

Key requirements of IFRS 9:

• All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

• With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.

Management is currently still evaluating the effects of the application of IFRS 9.



2.29 New and revised IFRSs in issue but not yet effective (Continued)

Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities

The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements.

To qualify as an investment entity, a reporting entity is required to:

• Obtain funds from one or more investors for the purpose of providing them with professional investment management services.

• Commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both.

• Measure and evaluate performance of substantially all of its investments on a fair value basis.

Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities.

The directors of the Company anticipate that the investment entities amendments will not have any effect on the financial statements.

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities

The amendments to IAS 32 clarify existing application issues relating to the offset of financial assets and financial liabilities requirements. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realisation and settlement’.

The directors of the Company do not anticipate that the application of these amendments to IAS 32 will have a significant impact on the financial statements..

Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets

The amendments to IAS 36 remove the requirement to disclose the recoverable amount of a cash generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements regarding the fair value hierarchy, key assumptions and valuation techniques used when the recoverable amount of an asset or CGU was determined based on its fair value less costs of disposal.

The directors of the Company do not anticipate that the application of these amendments to IAS 36 will have a significant impact on the financial statements.


PAGE 61

3 CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.6. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates (Note 15).

During the year, the Group has impaired an amount of US$10,000 towards goodwill of a subsidiary due to significant decline in business volume and US$2,355 towards goodwill of two other subsidiaries on account of lower projected profits in future.

(b) Income taxes

The Group is subject to income taxes in a number of jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

With respect to the subsidiary in United States of America, based on the Chief Counsel’s Advice (CCA) 201342010 issued by United States of America Internal Revenue Service (IRS), management intends to take the position on its FY2011 through FY2013 corporate income tax returns that certain Internal Revenue Code (IRC) §6426 credits and related net payments under §6427(e) resulting from excise tax credits received or receivable by the Group, amounting to US$209.0 million do not constitute items of gross income for US federal income tax purposes. Additional non-precedential guidance supplementing the initial memorandum, CCA 201406001, should not alter this position. As such, management anticipates the position of excluding this credit from gross income to be a significant tax saving for the Group and is in the process of filing amended tax return with the IRS for FY2011 and FY2012 and submission of tax return for FY2013 which are expected to be audited by the IRS prior to receipt of refund of tax paid for those years.


3 CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

(b) Income taxes (Continued)

The exclusion of such excise tax credits and related net payments from its taxable income has resulted in a taxable loss for the subsidiary in United States of America. The Group has recognised significant deferred tax assets amounting to US$62.0 million arising from such tax losses. In assessing the realisability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized within 20 years carryforward period. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon historical utilisation of tax losses, and projections for future taxable income over the periods for which the deferred tax assets are deductible, management believes, as of December 31, 2013, it is more likely than not that the Company will realise the benefits of the deferred tax assets.

Subsequent to the announcement of the intention of the holding company, Sing Fuel Investment Pte Ltd, to de-list the Company, management is assessing whether, such potential acquisition of additional interest by the majority shareholder will cause a change of ownership for Federal income tax purposes under IRC §383 of a subsidiary in United States of America under which certain annual limits could be imposed for the utilisation of net operating losses by the subsidiary. If the United States subsidiary experiences an ownership change, the impact of such change requires estimation of the equity value of the subsidiary at the time of the ownership change and an estimate of the 2014 taxable income or loss to determine if the entire tax losses recognised by the subsidiary will be utilised within the 20 years carryforward period. Management is of the view that based on the estimate of the fair value of the subsidiary and taxable income, the losses will be fully utilised.

(c) Impairment, residual values and useful lives of property, plant and equipment

In the prior year, the Group has recognised impairment losses of US$17.3 million in respect of its vessels to reflect the recoverable amount based on the estimated fair value less cost to sell.

In addition, in prior year, based on an independent valuation of the land and buildings carried out in January 2013 which indicated a fair value of approximately US$13.8 million the Group has recognised an impairment loss of US$3.0 million in 2012. The independent valuation carried out in January 2013 was determined based on a consideration of both the discounted cash flows method and income capitalisation method which require the Group to estimate the future cash flows expected to arise from the rental of the land and buildings in their remaining useful lives and suitable discount rates in order to calculate the present values.

Management has secured a potential deal to sell the land and building for US$13.7 million on February 4, 2014. The carrying amount of the land and buildings after depreciation charges during the year was US$9.1 million. Management has therefore recorded a reversal of previous impairment amount of US$3.0 million in profit or loss. Thereafter, the investment has been reclassified as non-current assets classified as held for sale (Note 10) at the end of the reporting period. The carrying values of property, plant and equipment are disclosed in Note 16.


PAGE 63


(d) Purchase Price Allocation for acquisition of businesses

Prior years’ acquisitions

On January 1, 2011, the Group entered into an Asset Purchase Agreement to acquire certain assets related to a marine fuel business for a consideration in the range of US$20 million to US$30 million based on future earnings targets of the business acquired.

Estimation of total consideration payable and allocation of intangible assets requires management’s judgment. Based on the earnings before interests and income taxes projections of the business for the remaining 8 quarters up to December 31, 2013, management determined the consideration to be US$30 million.

During the year ended 2012, the Group had agreed to early settle the total consideration at US$25 million on the basis of a revised agreement signed in March 2012. Management is of the view that as the settlement occurred after the one year measurement period as allowed under IFRS 3 – Business Combinations, the gain on early settlement of US$5 million have been taken to profit or loss (Note 25).

Current year’s acquisition

During the year, the Group had acquired three businesses for a total consideration of US$65.6 million. Allocation of intangible assets requires management’s judgement and management has allocated a consideration of US$10.8 million as part of goodwill as there are no separately identified assets.

(e) Allowance for doubtful debts

The Group makes allowances for bad and doubtful debts based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of bad doubtful debts requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of trade and other receivables and doubtful debts expense in the period in which such estimate has been changed. The carrying amounts of trade and other receivables are disclosed in Note 7 to the financial statements.



(f) Impairment of investments in subsidiary, associates and joint ventures

Determining whether investments in subsidiaries are impaired requires an estimation of the value in use of these investments if there exist any indication of impairment. The value in use calculation requires the Company to estimate the future cash flows expected to arise from the investments (cash-generating units) and a suitable discount rate in order to calculate present value. The carrying amount of investment in subsidiaries was US$193.2 million (2012: US$193.4 million) as at the end of the reporting period.

Based on similar analysis, the Group has provided an amount of US$6.2 million as impairment charged on its investment in joint ventures (Note 13), US$0.7 million on its investments in associates (Note 12) and the company has provided an impairment loss of US$0.2 million for the subsidiaries (Note 14).

(g) Provision for onerous lease contracts

Under the terms of the sale agreement, for the disposal of its shares in Chemoil Storage Ltd, a subsidiary of the Group has entered into a non-cancellable lease contract in the prior year till 2018 to pay monthly tank rentals at US$5.75 per cubic metre with an annual inflation adjustment. As disclosed in Note 20, management is of the view that based on its estimates, it is probable that the cost of lease expense will exceed its lease revenue based on prevailing supply/demand for storage space in Singapore. Management has exercised judgment and provided for such shortfall. The carrying amount of such onerous lease was US$10.6 million (2012: US$15 million) at the end of reporting period.

(h) Fair value estimation

The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market prices used for financial assets held by the Group are the current bid prices; the quoted market prices used for financial liabilities held by the Group are the current ask prices.

The fair value of financial instruments that are not traded in an active market is determined by using most recent transactions or other valuation techniques. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the end of the reporting period.

The carrying amounts of current financial assets and liabilities carried at amortised cost approximate their fair value. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

Non-financial assets measured at fair value comprise inventories and non-current assets classified as held for sale. In estimating the fair value of a non-financial asset or a liability, the Group uses market-observable data to the extent it is available.

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in Note 35.


PAGE 65

4 CASH AND CASH EQUIVALENTS

Group Company2013 2012 2013 2012

Cash at bank and on hand 182,568 53,273 400 1,177Short term deposits with financial institutions 106,902 275,968 7,156 210,869

289,470 329,241 7,556 212,046

Cash and cash equivalents are denominated in the following currencies:

Group Company2013 2012 2013 2012

United States dollar 282,535 288,627 5,660 200,890Euro 1,801 6,300 – –Singapore dollar 2,861 30,265 1,896 11,156Others 2,273 4,049 – –

289,470 329,241 7,556 212,046

Short term deposits with financial institutions have the following weighted average effective interest rates at the end of the reporting period:

Group Company2013 2012 2013 2012

% % % %

United States dollar 0.06 0.16 0.26 0.10Others 0.29 0.12 0.20 0.25

Short term deposits with financial institutions mature within 2 months (2012: 2 months) from the end of the reporting period.

For the purpose of presenting the consolidated statement of cash flows, the consolidated cash and cash equivalents comprise the following:

Group2013 2012

Cash and bank balances 289,470 329,241Less: Bank balances and deposits pledged with banks for bank loans – (4,541)Less: Bank overdrafts (Note 19) (23,708) (238,034)Cash and cash equivalents 265,762 86,666


5 DERIVATIVE FINANCIAL INSTRUMENTS

Group Company2013 2012 2013 2012

Non-hedging derivative instruments: Derivative commodity contracts (Note 2.11) 2,931 (7,295) – – Forward fixed priced physical contracts 192 9,472 – – Forward foreign exchange contracts (Note 2.11) (200) – – –Total 2,923 2,177 – –

2013 2012Notional principal amount

Fair ValuesNotional principal amount

Fair ValuesAssets Liabilities Assets Liabilities

Analysed as:GroupCommodity swaps1 1,119,598 16,304 (10,516) 1,553,262 1,172 (5,147)Commodity futures1 352,977 2,113 (4,970) 244,563 53 (3,373)Forward fixed priced physical contracts2 947,279 26,800 (26,608) 1,934,535 16,918 (7,446)Currency forwards3 7,286 – (200) – – –

45,217 (42,294) 18,143 (15,966)

Comprises:Current portion 45,217 (42,294) 18,143 (15,966)

1 Derivative commodity contracts mature within 6 months (2012: 6 months) from the end of the reporting period.2 Forward fixed priced physical contracts mature within 6 months (2012: 6 months) from the end of the reporting period.3 Forward foreign exchange contracts mature within 6 months from the end of the reporting period.

Derivative financial instruments are denominated in United States Dollars.


PAGE 67

6 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Group Company2013 2012 2013 2012

Held for tradingListed securities:– Equity securities – Singapore 1,198 1,085 1,198 1,085

Changes in fair values of other financial assets at fair value through profit or loss are recorded within ‘Other gains (losses) – net’ in profit or loss (Note 25). The fair values of all equity securities are based on their current bid prices in an active market.

Financial assets at fair value through profit or loss are denominated in Singapore Dollar.

7 TRADE AND OTHER RECEIVABLES

Group Company2013 2012 2013 2012

Trade receivables:–– Subsidiaries – – 2,951 3,124– Associates 63,871 7,901 – –– Joint ventures 2,219 2,348 – –– Fellow subsidiaries (Note 36) 59,297 38,218 – –– Third parties 1,205,664 1,122,789 – –

1,331,051 1,171,256 2,951 3,124Less: Allowance for impairment of trade receivables – third parties (4,797) (9,573) – –Trade receivables net 1,326,254 1,161,683 2,951 3,124

Other receivables:– Subsidiaries – – 307,333 111,801– Associates 1,250 – –– Joint ventures – 9 12 12– Third parties 30,365 48,427 5,431 18,492

31,615 48,436 312,776 130,305

Less: Allowance for impairment of other receivables – third parties – (3,500) – –

31,615 44,936 312,776 130,3051,357,869 1,206,619 315,727 133,429


7. TRADE AND OTHER RECEIVABLES (Continued)

Concentrations of credit risk with respect to trade receivables are limited due to the Group’s large number of customers who are internationally dispersed. The normal credit period is 30 days (2012: 30 days).

Trade receivables of the Group amounting to US$514,470 (2012: US$133,380) at end of the reporting period have been pledged as security for bank borrowings (Note 19).

Trade receivables of the Group amounting to US$ Nil (2012: US$100,000) was sold to a financial institution pursuant to a Receivables Purchase Agreement. The gross amount of trade receivables secured under the agreement was US$ Nil (2012: US$137,440). As the sale of these receivables does not qualify for derecognition under the provisions of IAS 39 Financial Instruments: Recognition and Measurement, these were included as the Group’s trade receivables and the proceeds received from the financial institution were recognised as borrowings (Note 19).

Current non-trade receivables from subsidiaries, associates and joint ventures are unsecured, interest-free and are repayable on demand.

Fellow subsidiaries comprise subsidiaries of the Company’s immediate and ultimate holding companies (Note 36).

Trade and other receivables are predominantly denominated in United States Dollar.

Allowance for doubtful debts on trade receivables of the Group of US$2,294 (2012: US$14,184) was recognised and included in “Other expenses” based on management estimates as described in Note 3(e).

Included in trade and other receivables is an amount of US$26,323 (2012: US$29,176) representing margin deposits placed with the brokers, which are not offset against the derivative financial instruments in the statements of financial position. The margin accounts are maintained with recognised financial institutions for commodity swap and future contracts. The margin accounts move in relation to their trades that will expire in the future, variation margins required and prices of commodity traded.

8 INVENTORIES

Group2013 2012

Fuels at fair value less costs to sell 401,672 396,363

Inventories amounting to US$333,509 (2012: US$296,067) at end of the reporting period have been pledged as security for bank borrowings (Note 19).

The valuation techniques and inputs used to develop the fair values of the inventories have been disclosed in Note 35.2 to the consolidated financial statements.


PAGE 69

9 OTHER CURRENT ASSETS

Group Company2013 2012 2013 2012

Advances to suppliers 38,327 20,890 – –Deposits 332 287 – –Prepayments 11,377 11,142 112 2

50,036 32,319 112 2

10 NON-CURRENTASSETSCLASSIFIEDASHELDFORSALE

On December 31, 2013, management resolved to dispose the following:

(a) Investment in Galaxy Energy Group Ltd, an associate of the Group for a consideration of US$14,400.

(b) Land and building in an India subsidiary with a carrying amount of US$12,133.

Negotiations with interested parties have subsequently taken place. The assets attributed to the above, which are expected to be sold within twelve months, have been classified as non-current assets held for sale and presented separately in the statements of financial position.

(a) The investment in an associate is stated at the fair value less cost to sell as the proceed from disposal is expected to be lower than the net carrying value (Note 12).

(b) For the land and building, the proceeds of disposal are expected to equal or exceed the net carrying value and accordingly, the land and building classified as held for sale is stated at the previous carrying amount.


11 OTHERNON-CURRENTASSETS

Group2013 2012

Prepayments 1,578 1,212Loan to a joint venture entity 2,000 –Deposits 1,268 1,745

4,846 2,957

Pursuant to shareholder agreement for the acquisition of 35% interest in a joint venture during the year, the Group has entered into a loan agreement with the other joint venturer. Under the terms and conditions of this agreement, the loan shall bear interest (i) from April 1, 2013 (“Effective Date”) until June 30, 2014 (“First Maturity Date”) at a rate equal to London Interbank Offer Rate (LIBOR) plus 250 basis points per annum and (ii) from the First Maturity Date until the Second Maturity Date at a rate equal to LIBOR plus 500 basis points. Interest is paid on a monthly basis.

In addition, the Group was also granted the option to purchase from the shareholder an additional 16% interest of the joint venture at any time from the Effective Date until the First Maturity Date. The Group may purchase the additional interest in consideration for the payment of US$2.0 million to the shareholder. Management is of the view that the option is out of the money and any fair value attributable is insignificant.

12 INVESTMENTS IN ASSOCIATES

Group Company2013 2012 2013 2012

Equity investments at cost – 8,500

Beginning of financial year 32,680 37,256Currency translation differences 2,374 (578)Share of results 12,850 3,042Impairment allowance (695) (6,064)Transfer to non-current assets held for sale (14,400) –Dividends received or receivable (4,023) (976)End of financial year 28,786 32,680Investments in associates include goodwill of 8,282 8,282


PAGE 71

12 INVESTMENTS IN ASSOCIATES (Continued)

Movement in impairment allowance

2013 2012

Beginning of financial year 6,064 –(Write back)/charge during the year (5,369) 6,064Reclassification to non-current assets classified as held for sale (695) –End of financial year – 6,064

The Group has reversed US$5.4 million on account of improved performance of an associate in the current year (2012: impairment of US$6.1 million) and adjusted the carrying value of the associate based on the amount estimated to be recoverable upon its sale in the next financial year.

In prior year, at the Company level, an impairment allowance of US$4.7 million was recognised for the share of the above associate and certain other loss-making barges owned by other associates.

The summarised financial information of associates is as follows:

Group2013 2012

Assets 137,094 859,196Liabilities 101,631 785,508Revenue 87,849 4,902,412Net profit 10,738 13,367

Details of significant associates of the Group are as follows:

Name of company Principal activities

Country of business/

incorporation

Proportion of ownership interest and voting power2013 2012

% %

Galaxy Energy Group Ltd1 Oil Trading British Virgin Islands

– 25

Burando Holding B.V.2 Logistical maritime service provider

Netherlands 49 49

1 On January 9, 2014, an agreement was finalised to dispose the entire share of ownership in Galaxy Energy Group Ltd for US$14.4 million. Accordingly, the investment was reclassified from investments in associates to non-current assets classified as held for sale.

2 Audited by PricewaterhouseCoopers, Rotterdam, Netherlands.


13 INVESTMENTS IN JOINT VENTURES

Group Company2013 2012 2013 2012

Equity investments at cost 24,621 29,621

Beginning of financial year 59,470 33,976Currency translation differences (968) (476)Additions during the financial year 4,200 28,987Share of results 6,933 (2,852)Capital reduction in a joint venture (5,000) –Impairment during the year (6,200) –Disposals during the year – (165)Dividends received (165) –End of financial year 58,270 59,470

Investments in joint ventures include goodwill, net of impairment 9,825 11,825

The following amounts represent the Group’s share of the assets and liabilities, and the results of the joint ventures:

Group2013 2012

Assets:– Current assets 123,851 91,992– Non-current assets 61,071 60,592

184,922 152,584Liabilities:– Current liabilities 104,661 73,161– Non-current liabilities 31,816 31,778

136,477 104,939Net assets 48,445 47,645

Revenue 479,341 424,674Expenses (472,486) (426,740)Profit (Loss) before tax 6,855 (2,066)Income tax (43) (214)Profit (Loss) after tax 6,812 (2,280)Share of joint venturers’ capital commitments – 3,000

Share of joint ventures’ contingent liabilities – –


PAGE 73

13 INVESTMENTS IN JOINT VENTURES (Continued)

The Group has made an impairment allowance of US$6.2 million (2012: US$ Nil) to adjust the carrying value of the joint ventures to the recoverable amount based on value in use which is determined based on the net present values of the estimated future cash flows.

Details of significant joint ventures of the Group are as follows:

Name of company Principal activities

Country of business/

incorporation

Proportion of ownership interest and voting power2013 2012

% %

GPS Chemoil LLC (FZC)1 Terminalmanagement services

United Arab Emirates

40* 40*

Chemoil Adani Pte Ltd2 Oil trading Singapore 49 49

Chemlube International LLC3 Oil trading United States of America

50 50

Sopetra S.A.4 Oil trading Switzerland 50 50

Apex Fuels LLC5 Oil trading United States of America

35# –

* GPS Chemoil LLC (FZC) is deemed to be a joint venture as the parties have joint control of the arrangement and rights to the net assets of the arrangement.

# Apex Fuels LLC is deemed to be a joint venture as the unanimous, affirmative vote of the members at a meeting of Members is required for all relevant activities such as financing, investing, debt and dividend.

1 Audited by Deloitte & Touche, Fujairah.2 Audited by Rama & Co.3 Audited by Fein & Fein, P.C.4 Audited by BfB Societe Fiduciaire5 Audited by Nigro & Nigro PC


14 INVESTMENTS IN SUBSIDIARIES

Company2013 2012

Equity investments at cost 211,941 211,941Impairment losses (18,734) (18,587)

193,207 193,354

Details of significant subsidiaries are included in Note 38.

The impairment loss was provided based on the projected future performance of these subsidiaries in conjunction with the annual impairment review for goodwill.

15 INTANGIBLE ASSETS

Group2013 2012

Composition: Goodwill arising on acquisition (Note 15(a)) 24,953 30,753 Software costs (Note 15(b)) 1,896 79 Contractual customer relationships (Note 15(c)) – – Licenses (Note 15(d)) 406 450

27,255 31,282

(a) Goodwill arising on acquisition

Group2013 2012

CostBeginning of financial year 42,701 41,925Currency translation differences – (24)Acquisition of subsidiaries (Note 39) 6,555 800End of financial year 49,256 42,701Accumulated impairment lossBeginning of financial year 11,948 7,464Impairment loss recognised during the year 12,355 4,484End of financial year 24,303 11,948

Net carrying value 24,953 30,753


PAGE 75

15 INTANGIBLE ASSETS (Continued)

(a) Goodwill arising on acquisition (Continued)

Impairment test for goodwill

Goodwill is allocated to the Group’s cash-generating units (CGU) identified according to the countries of operation:

Group2013 2012

United States of America (USA) 5,000 –Singapore 19,953 29,952United Arab Emirates (UAE) – 801

24,953 30,753

The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate in which the CGU operates.

During the financial year, the management has estimated an impairment loss of goodwill of US$12,355 (2012: US$4,484) as a result of the annual impairment review.

Key assumptions used for value-in-use calculations are as follows:

Singaporeand UAE USA

2013Growth rate1 0% 2%Discount rate2 11% 11%

2012Growth rate1 2% 0%Discount rate2 11% 0%

1 Weighted average growth rate used to extrapolate cash flows beyond the budget period.2 Pre-tax discount rate applied to cash flow projections.

The weighted average growth rate used is consistent with the forecasts included in industry reports. The discount rate used is pre-tax and reflect specific risks relating to the relevant segments.



(b) Software costs

Group2013 2012

CostBeginning of financial year 11,333 11,046Currency translation differences (145) 788Additions 1,926 17Disposals – (518)End of financial year 13,114 11,333

Accumulated amortisationBeginning of financial year 11,254 9,602Currency translation differences (206) 61Charge for the year 170 1,591End of financial year 11,218 11,254

Net carrying value 1,896 79

(c) Contractual customer relationships

Group2013 2012

CostBeginning of financial year 2,425 2,400Currency translation differences – 25End of financial year 2,425 2,425

Accumulated amortisationBeginning of financial year 2,425 1,599Currency translation differences – 16Charge for the year – 310Impairment allowance during the year – 500End of financial year 2,425 2,425

Net carrying value – –


PAGE 77


(d) Licenses

Group2013 2012

CostBeginning of financial year 584 453Additions – 138Currency translation differences – (7)End of financial year 584 584

Accumulated amortisationBeginning of financial year 134 42Charge for the year 44 92End of financial year 178 134

Net carrying value 406 450

The average remaining amortisation period for software costs, contractual customer relationship and licenses is 3, nil, 8 (2012: 1, nil, 9) respectively.


16 PROPERTY, PLANT AND EQUIPMENT

Freeholdland andbuildings

Office andcomputer

equipment,furniture

and fittings

Equipmentand

terminals VesselsMotor

vehicles

Constructionwork in

progress Total

Group

Cost: At January 1, 2013 32,611 9,766 35,971 48,865 8,569 24 135,806 Currency translation differences (3,467) (1,592) (44) – (2) – (5,105) Additions 612 598 721 434 4,387 282 7,034 Disposals – (27) – (22,853) (243) – (23,123) Asset reclassified as held for sale (Note 10) (16,528) – – – – – (16,528) At December 31, 2013 13,228 8,745 36,648 26,446 12,711 306 98,084

Accumulated depreciation and impairment: At January 1, 2013 10,977 7,553 23,425 31,340 1,392 – 74,687 Currency translation differences (745) (1,702) (183) – 2 – (2,628) Charge for the year 1,256 1,462 1,284 463 2,211 – 6,676 Reversal of impairment (b) (3,000) – – – – – (3,000) Disposals – – – (17,328) (118) – (17,446) Asset reclassified as held for sale (Note 10) (4,395) – – – – – (4,395) At December 31, 2013 4,093 7,313 24,526 14,475 3,487 – 53,894Net carrying value: At December 31, 2013 9,135 1,432 12,122 11,971 9,224 306 44,190

At December 31, 2012 21,634 2,213 12,546 17,525 7,177 24 61,119


PAGE 79

16 PROPERTY, PLANT AND EQUIPMENT (Continued)

Freeholdland andbuildings

Office andcomputer

equipment,furniture

and fittings

Equipmentand

terminals VesselsMotor

vehicles

Constructionwork in

progress Total

Group

Cost: At January 1, 2012 30,538 9,568 200,504 48,489 1,562 155 290,816 Currency translation differences 2,099 18 15 – 7 – 2,139 Additions 330 429 2,352 422 7,215 518 11,266 Disposals (356) (146) (5) (46) (52) (94) (699) Disposal of a subsidiary (Note 29) – (103) (167,436) – (177) – (167,716) Transfers – – 541 – 14 (555) – At December 31, 2012 32,611 9,766 35,971 48,865 8,569 24 135,806

Accumulated depreciation and impairment: At January 1, 2012 5,836 6,874 44,065 11,487 251 – 68,513 Currency translation differences (1,260) (430) 5 – 16 – (1,669) Charge for the year 3,423 1,236 7,918 2,520 1,249 – 16,346 Impairment loss 3,000 – – 17,333 – – 20,333 Disposal of a subsidiary (Note 29) – (102) (28,563) – (72) – (28,737) Disposals (22) (25) – – (52) – (99) At December 31, 2012 10,977 7,553 23,425 31,340 1,392 – 74,687Net carrying value: At December 31, 2012 21,634 2,213 12,546 17,525 7,177 24 61,119

(a) Borrowings of the Group of US$44,620 (2012: US$61,550) are secured on property, plant and equipment of the Group with carrying amounts of US$15,581 and non-current assets held for sale of US$12,133 (2012: Nil)

Borrowings of the Company of US$28,964 (2012: US$32,930) are secured on property, plant and equipment of the Company with carrying amounts of US$7,578 (2012: US$7,588).

(b) In prior year, based on an independent valuation of the land and buildings carried out in January 2013 which indicated a fair value of approximately US$13.8 million, the Group has recognised an impairment loss of US$3.0 million. The carrying amount as at December 31, 2013 after providing for current year’s depreciation was US$9.1 million. Management has secured a potential deal to sell the land and building for US$13.7 million on February 4, 2014. Accordingly, management has recorded a reversal of previous impairment amount of US$3.0 million in profit or loss.


17 DEFERRED INCOME TAX

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.

The movement in the deferred income tax account is as follows:

Group2013 2012

Beginning of financial year (3,367) 1,772Currency translation differences (12) (284)(Credited) Charged to profit or loss for the year (Note 28) (60,698) 1,813Disposal of subsidiary (Note 29) – (6,668)End of financial year (64,077) (3,367)

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Deferred tax liabilities

Acceleratedtax

depreciationFair value

gains Others Total

At January 1, 2013 3,935 1,903 1,782 7,620Currency translation differences (8) – – (8)Credited to profit or loss (236) (143) (1,667) (2,046)At December 31, 2013 3,691 1,760 115 5,566

At January 1, 2012 11,592 3,848 2,132 17,572Currency translation differences (228) – – (228)Charged (Credited) to profit or loss 2,258 (1,945) (350) (37)Disposal of subsidiary (Note 29) (9,687) – – (9,687)At December 31, 2012 3,935 1,903 1,782 7,620


PAGE 81

17 DEFERRED INCOME TAX (Continued)

Deferred tax assets

Tax losses ProvisionsInvestment

allowance Others Total

At January 1, 2013 (4,411) (5,762) – (814) (10,987)Currency translation differences (4) – – – (4)Charged (Credited) to profit or loss (59,066) 1,934 – (1,520) (58,652)At December 31, 2013 (63,481) (3,828) – (2,334) (69,643)

At January 1, 2012 (5,913) (3,858) (5,254) (775) (15,800)Currency translation differences (56) – – – (56)Charged (Credited) to profit or loss 1,512 (1,904) 2,281 (39) 1,850Disposal of subsidiary (Note 29) 46 – 2,973 – 3,019At December 31, 2012 (4,411) (5,762) – (814) (10,987)

Deferred income tax assets are recognised for tax losses carry-forward to the extent that the realisation of the related tax benefit through the future taxable profits is probable. The Group has unrecognised tax losses of US$94,933 (2012: US$54,618) at the end of the reporting period which can be carried forward and used to offset against future taxable income subject to meeting certain statutory requirements by those companies with unrecognised tax losses in their respective countries of incorporation. The tax losses will expire mainly from 2019 to 2028.

Deferred income tax liabilities of US$54,361 (2012: US$23,864) have not been recognised for the withholding and other taxes that will be payable on the earnings of overseas subsidiaries and share of joint ventures when remitted to the holding company. These unremitted earnings are permanently reinvested and amount to US$187,144 (2012: US$84,691) at end of the reporting period.

18 TRADE AND OTHER PAYABLES

Group Company2013 2012 2013 2012

Trade payables to:– Third parties 488,738 899,665 784 5,681– Subsidiaries – – 385,306 401,302– Joint ventures 1,567 3,585 – –– Associates 151 1,758 – –– Fellow subsidiaries (Note 36) 211,779 79,537 63 –

702,235 984,545 386,153 406,983Accrued interest payable on borrowings 466 1,783 78 91Accruals for trade purchases and operating expenses 84,573 50,392 172 22Total 787,274 1,036,720 386,403 407,096

Trade and other payables are predominantly denominated in United States Dollars.


19 BORROWINGS

Group Company2013 2012 2013 2012

CurrentAdvances from financial institutions under Receivables Purchase Agreement (Note 7) – 100,000 – –Bank overdrafts (Note 4) 23,708 238,034 – –Bank loans 952,599 236,492 28,964 4,144

976,307 574,526 28,964 4,144Non-currentBank loans 10,974 51,040 – 28,786

10,974 51,040 – 28,786Total 987,281 625,566 28,964 32,930

(a) Security of borrowings

Total borrowings include secured liabilities of US$687,914 (2012: US$625,528) and US$28,964 (2012: US$32,930) for the Group and Company respectively.

In prior year, advances from financial institutions under the Receivables Purchase Agreement were secured against the trade receivables (Note 7).

In prior and current years, bank loans and bank overdrafts are secured over certain bank balances and deposits (Note 4), trade receivables (Note 7), inventories (Note 8) and property, plant and equipment (Note 16) and lease rentals. In addition, during the year, the ultimate holding company has provided the corporate guarantee in respect of certain bank loans.

(b) Maturity of borrowings

The current borrowings (excluding finance lease liabilities) of the Group and Company have an average maturity of 2 months (2012: 2 months) from the end of the reporting period. The non-current borrowings (excluding finance lease liabilities) have the following maturities from the end of the reporting period:

Group Company2013 2012 2013 2012

Non-currentTwo to five years 10,974 48,303 – 28,786Later than five years – 2,737 – –

10,974 51,040 – 28,786


PAGE 83

19 BORROWINGS (Continued)

(c) Currency risks

The carrying amounts of total current and non-current borrowings are denominated in the following currencies:

Group Company2013 2012 2013 2012

United States Dollar 974,117 607,140 28,964 32,930Indian Rupee 7,362 10,833 – –Philippine Peso 5,802 7,593 – –

987,281 625,566 28,964 32,930

(d) Interest rate risks

The weighted average effective interest rates of current and non-current borrowings at the end of the reporting period are as follows:

Group Company2013 2012 2013 2012

Advances from financial institutions under Receivables Purchase Agreement – 2.07% – –Bank overdrafts 0.89% 1.60% – –Bank loans 1.55% 2.74% 1.16% 3.31%

Borrowings are mainly at variable rates with repricing within 3 months (2012: 3 months) of the end of the reporting period.

(e) Carrying amounts and fair value

The carrying amounts of borrowings approximate their fair value.


20 PROVISIONS FOR OTHER LIABILITIES AND CHARGES

Group2013 2012

CurrentLegal claims (Note 20(a)) 2,096 2,871Provision for onerous lease contracts (Note 20(b)) 1,200 –

3,296 2,871Non-currentProvision for onerous lease contracts (Note 20(b)) 9,444 15,000Total 12,740 17,871

(a) Legal claims

The provisions are in respect of certain legal claims brought against the Group by customers and vendors. In the opinion of the directors, after taking appropriate legal advice, the outcome of these legal claims will not give rise to any significant loss beyond the amounts provided at end of the reporting period. The directors consider that disclosure of further details of these claims would seriously prejudice the Group’s negotiating position and accordingly further information on the nature of the obligation has not been provided.

Movement in provision for legal claims is as follows:

Group2013 2012

Beginning of financial year 2,871 2,871Utilised (775) –End of financial year 2,096 2,871


PAGE 85

20 PROVISIONS FOR OTHER LIABILITIES AND CHARGES (Continued)

(b) Provision for onerous lease contracts

Under the terms of the sale agreement, for the disposal of its shares in Chemoil Storage Ltd, a subsidiary of the Group has a non-cancellable lease contract till 2018. Management is of the view that based on its estimates, it is probable that the cost of lease expense will exceed its lease revenue based on prevailing supply/demand for storage space in Singapore. Management has exercised judgment and provided for the shortfall amounting to US$15 million in the financial statements for 2012. Management has performed a re-assessment during 2013 of the provision taking into consideration new sublease contracts entered into in 2013 with new customers with a 2% indexation factor and discount rate of 5% (2012: 5%) from 2014 to 2018, resulting in a provision of US$10.6 million. (2012: US$15.0 million).

Movement in provision for onerous lease contracts is as follows:

Group2013 2012

Beginning of financial year 15,000 –Charge to profit or loss – 15,000Utilised (1,554) –Credit to profit or loss (2,802) –End of financial year 10,644 15,000

Current 1,200 –Non-current 9,444 15,000

10,644 15,000

The provision made/written-back has been recognised within “Rentals for office premises, storage tanks and motor vehicles” in the consolidated statement of comprehensive income.


21 SHARE CAPITAL, SHARE PREMIUM AND TREASURY SHARES

Number of ordinary shares (thousands) Amount

Issuedshare

capital

Treasuryshares

held by Trust

Sharecapital

Treasuryshares

held by Trust

Sharepremium Total

Group

2013Beginning of financial year 1,292,612 (5,530) 2 (1,666) 85,816 84,152

Treasury shares re-issued– Cash consideration, net of expense – 180 – 50 – 50– Loss on re-issue of treasury shares

(Note 23) – – – 4 – 4– 180 – 54 – 54

End of financial year 1,292,612 (5,350) 2 (1,612) 85,816 84,206

2012Beginning of financial year 1,292,612 (12,200) 2 (3,675) 85,816 82,143

Treasury shares re-issued– Cash consideration, net of expense – 6,670 – 1,352 – 1,352– Loss on re-issue of treasury shares

(Note 23) – – – 657 – 657– 6,670 – 2,009 – 2,009

End of financial year 1,292,612 (5,530) 2 (1,666) 85,816 84,152

Company

2013 and 2012Beginning and end of financial year 1,292,612 – 2 – 85,816 85,818

As at December 31, 2013, the authorised share capital of the Company is HK$1,000 (2012: HK$1,000) comprising 80,000,000,000 shares (2012: 80,000,000,000 shares) with a par value of HK$0.0000125 per share (2012: HK$0.0000125 per share), carry one vote per share and carry a right to dividends.

All issued ordinary shares are fully paid.

(a) Treasury shares held by Trust

On January 21, 2009, the Company established a trust (“Trust”) to purchase and hold the Company’s shares acquired from the open market for the delivery to employees under the Company’s share option scheme. The Trust is consolidated in the consolidated financial statements under SIC Interpretation 12, Consolidation – Special Purpose Entities.

The Trust did not acquire any of the Company’s shares in the open market during 2013 and 2012.


PAGE 87

21 SHARE CAPITAL, SHARE PREMIUM AND TREASURY SHARES (Continued)

b) Share options

Share options are granted to selected directors and employees. The exercise price of the options is determined at the average of the closing prices of the Company’s shares on the Singapore Exchange for five market days immediately preceding the date of grant. The options will vest over a period of two years for directors and five years for employees from the grant date. The options have a contractual option term of ten years. The Group has no legal or constructive obligation to repurchase or settle the options in cash.

Movement in the number of unissued ordinary shares under option and their exercise prices is as follows:

Group and Company

No. of ordinary shares under option

Date of grant

Beginning of financial

year

Granted during

financial year

Forfeitedduring

financial year

Cancelledduring

financial year

Exercisedduring

financial year

End offinancial

year

201314.12.2006 18,947,073 – – – – 18,947,07327.08.2007 516,000 – – – – 516,00025.09.2007 3,536,969 – – – 3,536,96912.12.2008 528,000 – – – (25,000) 503,00012.12.2008 414,589 – – – – 414,58904.03.2009 3 – – – – 311.08.2009 3,425,000 – – – – 3,425,00011.08.2009 3,274,898 – – – – 3,274,89820.08.2010 2,806,221 – (150,000) – (125,000) 2,531,22120.08.2010 1,707,524 – – – 1,707,52421.10.2011 3,900,000 – (440,000) – (30,000) 3,430,00021.10.2011 528,000 – – – – 528,00021.08.2012 4,200,000 – (450,000) – – 3,750,00021.08.2012 352,000 – – – 352,00021.08.2013 – 4,200,000 – – – 4,200,00021.08.2013 – 352,000 – – – 352,000

44,136,277 4,552,000 (1,040,000) – (180,000) 47,468,277



b) Share options (Continued)

No. of ordinary shares under option

Date of grant

Beginning of financial

year

Granted during

financial year

Forfeitedduring

financial year

Cancelledduring

financial year

Exercisedduring

financial year

End offinancial

year

201214.12.2006 18,947,073 – – – – 18,947,07327.08.2007 516,000 – – – – 516,00025.09.2007 3,556,969 – – (20,000) – 3,536,96912.12.2008 5,028,000 – – – (4,500,000) 528,00012.12.2008 1,250,000 – – (630,000) (205,411) 414,58904.03.2009 3 – – – – 311.08.2009 3,425,000 – – – – 3,425,00011.08.2009 3,274,898 – – – – 3,274,89820.08.2010 3,726,564 – (785,343) (30,000) (105,000) 2,806,22120.08.2010 2,887,047 – – – (1,179,523) 1,707,52421.10.2011 4,450,000 – (550,000) – – 3,900,00021.10.2011 528,000 – – – – 528,00021.08.2012 – 4,200,000 – – – 4,200,00021.08.2012 – 352,000 – – – 352,000

47,589,554 4,552,000 (1,335,343) (680,000) (5,989,934) 44,136,277

Out of the outstanding options for 47,468,277 (2012: 44,136,277) shares, options for 36,669,788 (2012: 34,516,544) shares are exercisable at the end of the reporting period.

Options exercised resulted in shares being issued as under:

2013 2012Number

of sharesExercise

Price – US$Number

of sharesExercise

Price – US$

125,000 0.32 1,284,523 0.3225,000 0.17 4,705,411 0.1730,000 0.20 –

180,000 5,989,934

The weighted average share price at the time of exercise was US$0.39 (2012: US$0.37) per share. The total cash consideration (net of expenses) in respect of reissued shares was US$50 (2012: US$1,328).


PAGE 89



Pursuant to Singfuel Investment Pte Ltd’s (“Singfuel”) acquisition of the Company on March 19, 2010, Singfuel made a proposal to the holders of the options (“option holders”) to buy out all of the outstanding and unexercised options (the “option proposal”) held by the option holders. In consideration thereof, the option holders will waive all rights to exercise such options into new shares and surrender their options for cancellation. Consequently, certain option holders accepted the option proposal and surrendered 4,990,424 options for cancellation.

As a result of the option proposal made by Singfuel on March 19, 2010, 25,126,405 unvested options became immediately exercisable and the option term was reduced to 6 months.

The option term was subsequently reinstated to 10 years in accordance with the Company’s share option plan.

The fair value of options granted during the period determined using the Binomial valuation model was US$295 (2012: US$318). The significant inputs into the model are presented below. The volatility measured at the standard deviation of expected share price returns is based on statistical analysis of daily share prices over the last three years.

Date of grant

Standarddeviation of

expected share price

returnsDividend

yield

Annualrisk-freeinterest

rateExercise

priceExercise

period

14.12.2006 30.0% 1.5% 4.8% US$0.450 14.12.2007 – 13.12.2017

27.08.2007 30.0% 1.5% 3.1% US$0.586 27.08.2008 – 26.08.2018

25.09.2007 30.0% 1.5% 4.0% US$0.483 25.09.2008 – 24.09.2018

12.12.2008 66.0% 1.5% 0.56% US$0.174 12.12.2009 – 11.12.2019

12.12.2008 66.0% 1.5% 0.56% US$0.174 12.12.2009 – 11.12.2019

04.03.2009 65.0% 1.5% 0.80% US$0.233 04.03.2010 – 03.03.2020

11.08.2009 65.0% 1.5% 0.89% US$0.487 19.03.2010 – 10.08.2020

11.08.2009 65.0% 1.5% 0.89% US$0.487 19.03.2010 – 10.08.2020




Date of grant

Standarddeviation of

expected share price

returnsDividend

yield

Annualrisk-freeinterest

rateExercise

priceExercise

period

20.08.2010 58.0% 1.10% 0.28% US$0.322 20.08.2011 – 19.08.2021

20.08.2010 58.0% 1.10% 0.28% US$0.322 20.08.2011 – 19.08.2021

21.10.2011 55.0% 1.10% 0.07% US$0.20 21.10.2012 – 20.10.2022

21.10.2011 55.0% 1.10% 0.07% US$0.20 21.10.2012 – 20.10.2022

21.08.2012 55.0% 1.10% 0.10% US$0.326 21.08.2013 – 20.08.2023

21.08.2012 55.0% 1.10% 0.10% US$0.326 21.08.2013 – 20.08.2023

21.08.2013 53.0% 1.10% 0.14% US$0.309 21.08.2014 – 20.08.2024

21.08.2013 53.0% 1.10% 0.14% US$0.309 21.08.2014 – 20.08.2024

22 MERGER RESERVE

The excess of the nominal value of the shares of Chemoil Corporation acquired by the Company in 2006 over the nominal value of the shares issued by the Company in exchange for Chemoil Corporation’s shares has been taken to shareholders’ equity as “Merger Reserve”.


PAGE 91

23 OTHER RESERVES

Group Company2013 2012 2013 2012

(a) Composition:Share option reserve 4,728 4,433 508 213Currency translation reserve (7,602) (6,253) – –Hedging reserve – – – –Capital reserve (661) (657) – –

(3,535) (2,477) 508 213

Group Company2013 2012 2013 2012

(b) Movements:(i) Share option reserve

Beginning of financial year 4,433 4,123 213 (97)Contribution to the TrustEmployee share option scheme:– Value of employee services (Notes 21(b) and 26) 295 310 295 310End of financial year 4,728 4,433 508 213

(ii) Currency translation reserveBeginning of financial year (6,253) 12,991 – –Net currency translation differences of financial statements of foreign subsidiaries, joint ventures (1,769) 3,931 – – and associatesRelease on disposal of subsidiaries (Note 29) – (23,099) – –Less: Non-controlling interests 420 (76) – –End of financial year (7,602) (6,253) – –

(iii) Hedging reserveBeginning of financial year – (4,289) – –Cash flow hedges– Fair value losses – (1,476) – –– Transfer to finance expense (Note 27) – 5,765 – –End of financial year – – – –

(iv) Capital reserveBeginning of financial year (657) – – –Loss on re-issue of treasury shares (Note 21) (4) (657) – –End of financial year (661) (657) – –

Other reserves are non-distributable.


24 RETAINED EARNINGS

Retained earnings of the Group are distributable except for accumulated retained profits of associates and joint ventures amounting to US$45,847 (2012: US$26,064). Retained earnings of the Company are distributable. Movement in retained earnings of the Company is as follows:

Company2013 2012

Beginning of financial year 51,980 67,009Profit (loss) for the year 820 (15,029)End of financial year 52,800 51,980

25 REVENUEANDOTHERGAINS(LOSSES)

Continuing operations

Group2013 2012

Revenue:Sales of fuel 12,872,949 13,574,528Chartering income 13,438 13,480Terminal rental 37,447 18,366Service fees and commission income 6,713 6,814Sale of software 14,222 9,477Demurrage and other claim income 14,139 19,124

12,958,908 13,641,789

Group2013 2012

Other gains (losses) – net:Currency exchange gains – net 1,219 122Net loss on sale of a joint venture – (151)Gain on early settlement of purchase consideration – 5,000Fair value gains on financial assets at fair value through profit or loss 113 146Derivative financial instruments losses – net (1,074) (1,593)Interest income:– bank deposits 2,509 2,418Others 1,419 454

4,186 6,396


PAGE 93

25 REVENUEANDOTHERGAINS(LOSSES) (Continued)

Discontinued operations

Group2013 2012

Revenue:Terminal rental – 30,160

– 30,160

Other gains (losses) – net:Currency exchange gains – net – 638Interest income:– bank deposits – 9

– 647

26 EMPLOYEE BENEFIT EXPENSE


Group2013 2012

Wages and salaries 67,427 52,552Employer’s contribution to defined contribution plans 1,699 1,027Share options granted to directors and employees (Notes 21(b) and 23) 295 310

69,421 53,889


Group2013 2012

Wages and salaries 3,038Employer’s contribution to defined contribution plans – 323

– 3,361


27 FINANCE EXPENSE


Group2013 2012

Interest expense:– bank loans 20,314 16,195– finance lease liabilities – 8Cash flow hedges – transfer from equity (Note 23) – 5,765

20,314 21,968


Group2013 2012

Interest expense:– bank loans – 1,006– finance lease liabilities – 3

– 1,009

28 INCOMETAX(CREDIT)EXPENSE

Group2013 2012

Tax expense attributable to profit (loss) is made up of:

Current income tax 85 (5,055)Deferred income tax (Note 17) (54,888) 1,813

(54,803) (3,242)Underprovision in prior years– current income tax – (36)– deferred income tax (Note 17) (5,810) –

(60,613) (3,278)

Analysed as follows:– continuing operations (60,613) (5,471)– discontinuing operations – 2,193

(60,613) (3,278)


PAGE 95

28 INCOMETAX(CREDIT)EXPENSE (Continued)

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

Group2013 2012

Profit before tax and share of results of associates and joint ventures 21,498 146,578

Tax calculated at domestic tax rates applicable to profits in the respective countries 26,394 (2,805)Effects of:– Income not subject to tax (78,402) (79)– Expenses not deductible 155 873– Income tax at concessionary rate (975) (2,280)– Utilisation of previously unrecognised tax losses (1,870) –– Tax losses for which no deferred income tax asset was recognised – 1,024Adjustments recognised in current year in relation to prior year:– Current income tax – (36)– Deferred income tax (Note 17) (5,810) –Others (105) 25Tax credit (60,613) (3,278)

The Group is subject to tax rates ranging from 17% to 40% in various countries. Certain subsidiaries enjoy a concessionary tax rate in respect of prescribed activities.

29 DISPOSAL OF SUBSIDIARY AND DISCONTINUED OPERATION

(A) Disposal of a subsidiary

In December 2012, the Group disposed of 100% of all the issued ordinary shares in a subsidiary group, namely Chemoil Storage Limited and its subsidiary, Helios Terminal Corporation Pte. Ltd.


29 DISPOSAL OF SUBSIDIARY AND DISCONTINUED OPERATION (Continued)

(A) Disposal of a subsidiary (Continued)

Details of the disposal are as follows:

Book values of net assets over which control was lost:

Group2012

Identifiable assets and liabilitiesCash and cash equivalents (1,757)Inventories (4)Trade and other receivables (597)Property, plant and equipment (138,979)Other current assets (16)Total assets (141,353)

Trade and other payables 763Provisions for reinstatement costs 7,006Deferred income tax liabilities 6,668Borrowings 63Total liabilities 14,500

Net assets derecognised (126,853)

Consideration received:Cash 285,000Deferred consideration – consideration adjustment to reflect changes in working capital 2,249Total consideration 287,249

Group2012

Gain on disposal:Consideration 287,249Net assets derecognised (126,853)Legal and incidental expenses (3,793)Provision of onerous lease contracts (15,000)Cumulative exchange differences in respect of the net assets of subsidiary reclassified from equity on loss of control of subsidiary (Note 23(b)(ii)) 23,099Gain on disposal 164,702

Net cash inflow arising on disposal:– Cash consideration received 285,000– Cash and cash equivalents disposed of (1,757)– Legal fees and incidental expenses (3,793)

279,450


PAGE 97

29 DISPOSAL OF SUBSIDIARY AND DISCONTINUED OPERATION (Continued)

(B) Discontinued Operation

The profit for the year ended December 31, 2012 arising from discontinued operations of the Singapore Storage Terminal was analysed as follows:


Group2012

Profit for the year 9,344Gain on disposal 164,702

174,046

The results of the discontinued operation for the period January 1, 2012 to December 31, 2012 is analysed as follows:

Group2012

RevenueTerminal rental 30,160

30,160

Other gains – net: 64730,807

ExpensesBarging and Pipeline costs 524Rentals on operating leases 30Employee benefits 3,361Marketing and communication expenses 84Service and commission expenses 5,889Other expenses 2,460Depreciation and amortisation 5,913Finance expense 1,009Profit before tax 11,537Income tax expense (2,193)Profit for the year (attributable to the owners of the company) 9,344

As the disposal of the subsidiary was completed with effect from December 31, 2012, the full year results of US$9,344 was consolidated as part of the Group’s profit for the year ended December 31, 2012.


30 SEGMENT INFORMATION

Management has determined the operating segments based on the organisation of the Group. The results of these operating segments are reviewed by the Chief Executive Officer (“CEO”) to make strategic decisions.

The Group is organised into three main operating segments:

• Fuel sales Sales of marine, aviation fuel and related products to customers such as traders, physical suppliers, resellers and end users

• Shipping Income derived from chartering and ship management services• Terminalling Revenue derived by lease of terminals to physical suppliers of marine fuel

Others comprise sale of software and other miscellaneous services.

The CEO assesses the performance of these operating segments based on gross contribution. Gross contribution is computed as revenue including derivative financial instruments (gains) losses – net, less inventories recognised as an expense, barging and pipeline costs, chartering and other shipping related expenses, rentals on operating leases, demurrage costs and service and commission expenses. Gross contribution is not measured for the “Others” segment as the sale of software and other miscellaneous services are considered as non-core activities.

The segment information provided to the CEO for the reportable segments for the year ended December 31, 2013 is as follows:

Fuel Sales Shipping Terminalling Others Total

Group

Segment revenue 12,920,770 44,170 18,277 15,114 12,998,331Inter-segment revenue (643) (31,554) (6,790) (436) (39,423)Revenue from external customers 12,920,127 12,616 11,487 14,678 12,958,908

Gross contribution 141,190 5,318 18,198 872 165,578Interest income 2,200 4 30 275 2,509Finance expense 16,246 49 745 3,274 20,314Depreciation, impairment and amortisation 22,744 465 1,142 (1,044) 23,307Share of results of associates and joint ventures – net 11,106 5,005 3,672 – 19,783Income tax (credit) expense (63,042) 78 2,563 (212) (60,613)


PAGE 99

30 SEGMENT INFORMATION (Continued)


Total assets 2,290,717 22,746 20,068 84,123 2,417,654Total assets includes:Investments in associates – 28,786 – – 28,786Investments in joint ventures 32,326 – 25,944 – 58,270Additions to:– property, plant and equipment 5,556 434 708 336 7,034– intangible assets 8,481 – – – 8,481

The segment information provided to the CEO for the reportable segments for the year ended December 31, 2012 is as follows:



Group

Segment revenue 13,611,352 35,212 17,013 11,200 13,674,777Inter-segment revenue (3,462) (22,915) (6,078) (533) (32,988)Revenue from external customers 13,607,890 12,297 10,935 10,667 13,641,789

Gross contribution 106,501 4,393 15,358 2,643 128,895Interest income 1,788 11 1 618 2,418Finance expense 15,158 963 889 4,958 21,968Depreciation, impairment and amortisation 10,013 19,856 4,967 9,136 43,972Share of results of associates and joint ventures – net (4,050) 3,183 1,057 – 190Income tax (credit) expense (5,321) 51 1,630 (1,831) (5,471)



Discontinued operations – Terminalling

Group

Revenue from external customers 30,160

Gross contribution 23,717Interest income 9Finance expense 1,009Depreciation 5,913Income tax expense 2,193


Total assets 1,828,799 26,833 20,214 308,374 2,184,220Total assets includes:Investments in associates 8,500 24,180 – – 32,680Investments in joint ventures 32,198 – 27,272 – 59,470Additions to:– property, plant and equipment 10,095 421 656 94 11,266– intangible assets 955 – – – 955

A reconciliation of gross contribution from continuing operations to profit (loss) before tax from continuing operations is provided as follows:

2013 2012

Gross contribution 165,578 128,895Sales of software 14,222 9,476Other gains, excluding derivative financial instruments gains – net 5,260 22,889Rental, service and commission expense – Others (504) (640)Marketing and communication expenses (9,186) (8,587)Employee benefits (69,421) (53,889)Other expenses (40,830) (61,865)Depreciation, impairment and amortisation (23,307) (43,972)Finance expense (20,314) (21,968)Share of results of associates and joint ventures – net 19,783 190Profit(Loss) before income tax 41,281 (29,471)


PAGE 101


A reconciliation of gross contribution from discontinued operations to profit before tax for the year ended December 31, 2012 arising from discontinued operations is provided as follows:

2012

Gross contribution 23,717Other gains, excluding derivative financial instruments gains – net 647Marketing and communication expenses (84)Employee benefits (3,361)Other expenses (2,460)Depreciation, impairment and amortisation (5,913)Finance expense (1,009)Gain on disposal 164,702Profit before income tax 176,239

Revenue by product and services

Revenue from external customers is derived primarily from the sale of marine fuel, the provision of chartering and ship management services and terminal rental. The breakdown of revenue from external customers by product and services are disclosed in Note 25.

Geographical information

Revenue from external customers attributable to countries in which revenue is derived are as follows:

Group2013 2012

RevenueUnited States of America 5,114,379 4,074,612Netherlands 2,118,500 2,918,000Singapore 3,774,612 4,443,875Panama 751,470 902,820United Arab Emirates 549,957 870,432Others 649,990 432,050Total 12,958,908 13,641,789



Non-current assets other than financial instruments and deferred tax assets are located in the following countries:

Group2013 2012

Non-current assetsUnited States of America 38,020 22,190Panama 158 228Netherlands 43,214 52,546United Arab Emirates 26,056 27,469Singapore 46,067 51,096Others 9,832 33,979Total 163,347 187,508

31 EARNINGS(LOSS)PERSHARE

(a) Basic earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing the net profit (loss) attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year (excluding ordinary shares purchased by the Trust and held as treasury shares (Note 21)).


Group2013 2012

Profit (Loss) attributable to owners of the Company 100,992 (20,887)Weighted average number of ordinary shares in issue (in thousands) 1,287,250 1,285,978Basic earnings (loss) per share (cents per share) 7.9 (1.6)


PAGE 103

31 EARNINGS(LOSS)PERSHARE (Continued)

(a) Basic earnings (loss) per share (Continued)


Group2013 2012

Profit attributable to owners of the Company – 174,046Weighted average number of ordinary shares in issue (in thousands) – 1,285,978Basic earnings per share (cents per share) – 13.5

(b) Diluted earnings (loss) per share

Diluted earnings (loss) per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The dilutive potential ordinary shares of the Company are share options.

For share options, the weighted average number of shares on issue has been adjusted as if all dilutive share options were exercised. The number of shares that could have been issued upon the exercise of all dilutive share options less the number of shares that could have been issued at fair value (determined as the Company’s average share price for the financial year) for the same total proceeds is added to the denominator as the number of shares issued for no consideration. No adjustment is made to the net profit (loss).

Diluted earnings (loss) per share attributable to the owners of the Company is calculated as follows:


Group2013 2012

Profit (Loss) attributable to owners of the Company 100,992 (20,887)

Weighted average number of ordinary shares in issue (in thousands) 1,287,250 1,285,978Adjustments for share options (in thousands) 7,722 7,629Weighted average number of ordinary shares for diluted earnings per share (in thousands) 1,294,972 1,293,607Diluted earnings (loss) per share (cents per share) 7.8 (1.6)


31 EARNINGS(LOSS)PERSHARE (Continued)

(b) Diluted earnings (loss) per share (Continued)


Group2013 2012

Profit attributable to owners of the Company – 174,046

Weighted average number of ordinary shares in issue (in thousands) – 1,285,978Adjustments for share options (in thousands) – 7,629Weighted average number of ordinary shares for diluted earnings per share (in thousands) – 1,293,607Diluted earnings per share (cents per share) – 13.5

32 LITIGATION AND CLAIMS

The Group is involved in certain lawsuits and claims that arise in the ordinary course of conducting its business. Other than the provisions made in the consolidated financial statements, the directors believe that the Group is not liable under such claims, and that it is not possible to estimate the amount of additional losses, if any, that might result from adverse judgement against the Group.

33 GUARANTEES

The Group and Company have issued corporate guarantees to banks and third parties for borrowings and trade and other payables of certain subsidiaries and associates. These bank loans and trade and other payables amounted to US$41,678 (2012: US$31,552) and US$712,435 (2012: US$607,110) for the Group and Company respectively at the end of the reporting period.

It is not anticipated that any material liabilities will arise from these guarantees.

34 OPERATING LEASES AND COMMITMENTS

(a) Operating lease expenses

Rentals on operating leases recognised in profit or loss comprise the following:

Group2013 2012

Barges (included in “Barging and pipeline costs”) 63,847 53,778Vessels (included in “Inventories recognised as an expense” and “Chartering and other shipping related expenses”) 1,109 4,718Offices, storage tanks and motor vehicles (included in “Rentals for office premises, storage tanks and motor vehicles”) 64,928 44,517Other equipment (included in “Other expenses”) 2 1

129,886 103,014


PAGE 105

34 OPERATING LEASES AND COMMITMENTS (Continued)

(b) Operating lease commitments – where the Group is a lessee

The Group leases various offices, storage tanks, motor vehicles and vessels/barges under non-cancellable operating lease agreements. The leases have varying terms and renewal rights.

The future aggregate minimum lease payments under non-cancellable operating leases contracted for at the end of the reporting period but not recognised as liabilities, are as follows:

Group2013 2012

Not later than one year 73,899 40,770Later than one year but not later than five years 100,902 40,892Later than five years 414 2,221

175,215 83,883

(c) Operating lease commitments – where the Group is a lessor

The Group leases out storage tanks and vessels/barges under non-cancellable operating lease agreements. The leases have varying terms and renewal rights.

The future minimum lease payments receivable under non-cancellable operating leases contracted for at the end of the reporting period but not recognised as receivables, are as follows:

Group2013 2012

Not later than one year 21,161 10,573Later than one year but not later than five years 9,167 11,486Later than five years – 1,786

30,328 23,845

The details of the Group’s assets leased out under operating leases (where the Group is the lessor) as at the end of the reporting period are as follows:

Group2013 2012

Property, plant and equipmentNet carrying value 15,434 24,244Accumulated depreciation 12,817 10,803Depreciation charge for the year 964 1,044


35 FINANCIAL RISK MANAGEMENT

35.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments, such as commodity swaps and futures, interest rate swaps and currency forwards to hedge certain financial risk exposures.

The Group has a risk management division responsible for identifying, measuring and analysing financial risks of the Group. The risk management division provides periodic reports on the Group’s risk exposures to enable management to monitor compliance of the Group’s operations with the established risk management policies and procedures.

The risk management division reports directly to the Executive Risk Management Committee (ERMC), which in turn reports to the board of directors. The ERMC is responsible for setting the Group’s risk management parameters such as customer credit limits, risk exposure limits and the risk management policies and procedures.

(a) Market risk

(i) Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign currency risk arises mainly from future commercial transactions, recognised assets and liabilities and net investment in foreign operations.

The Group’s trade purchases and sales are predominantly denominated in United States Dollar, which is the functional currency of most entities in the Group and therefore there is no significant exposure to foreign currency risk. In locations where the Group has an exposure to foreign currencies, the Group may enter into forward exchange contracts, when considered necessary.

The Group has certain investments in foreign operations whose net assets are exposed to foreign currency translation risks. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.

The Group’s currency exposure based on the information provided to key management is set out in Notes 4, 5, 6, 7, 18, and 19.

Due to its minimal exposure to foreign currency risk, the Group’s result is not sensitive to significant variation in foreign currency.


PAGE 107

35 FINANCIAL RISK MANAGEMENT (Continued)

35.1 Financial risk factors (Continued)

(a) Market risk (Continued)

(ii) Commodity price risk

The Group trades in marine and aviation fuel products. As a result, the Group’s physical inventory is exposed to commodity price risks arising from the volatility in commodity prices. The Group enters into derivative contracts in the form of commodity swaps and futures to hedge its exposure to such commodity price risks. If the commodity prices increase (decrease) by 5% (2012: 5%) with all other variables including tax rate being held constant, the profit after tax will be higher/lower by US$392 (2012: higher/lower by US$274) as a result of the changes in the fair values of the inventories and commodity swaps and futures as at end of the reporting period.

The above sensitivity analysis is hypothetical and should not be predictive of the Group’s future performance as the physical inventory volume and derivative positions change daily and are not static.

(iii) Other price risk

The Group is not exposed to significant equity securities price risk because the investments held by the Group which are classified on the statements of financial position as ‘Financial assets at fair value through profit or loss’ is only US$1,198 (2012: US$1,085).

(iv) Cash flow and fair value interest rate risk

As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s interest rate risk mainly arises from its long term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group’s policy is to maintain its borrowings substantially in floating rate instruments. The Group’s exposure to cash flow interest rate risks arises mainly from these variable-rate borrowings. The Group may enter into floating-to-fixed interest rate swaps to manage these cash flow interest rate risks. Such interest rate swaps have the economic effect of converting borrowings from floating rates to fixed rates.

The Group’s and Company’s borrowings at variable rates on which effective hedges have not been entered into, are denominated mainly in United States Dollar. If the United States Dollar interest rate increases/decreases by 0.50% (2012: 0.50%) with all other variables including tax rate being held constant, the profit after tax (2012: loss after tax from continuing operations) will be higher/lower by US$3,423 (2012: higher/lower by US$3,655), as a result of higher/lower interest expense on these borrowings.




(b) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk arises from cash and cash equivalents, derivative financial instruments, as well as credit exposure to customers, including outstanding receivables and committed transactions. For bank and financial institutions, only counterparties that meet the appropriate credit criteria and are of high credit standing are accepted. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history, obtaining sufficient security where appropriate to mitigate credit risk and entering into credit insurance policy to limit credit risk. For other financial assets, the Group adopts the policy of dealing only with high credit quality counterparties.

The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Credit exposure to an individual counterparty is restricted by credit limits that are monitored by Global Head of Credit and approved by the Chief Financial Officer and for credit limits above an established threshold, the Chief Executive Officer, based on ongoing credit evaluation. The counterparty’s payment profile and credit exposure are regularly monitored at the entity level by the respective management and at the Group level by Global Head of Credit and the Chief Financial Officer.

As the Group and Company do not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the statements of financial position, except that in addition, the Group and Company have provided corporate guarantees to banks and third parties for loans and trade and other payables of its subsidiaries and associates and its maximum credit exposure in respect of these guarantees are US$41,678 (2012: US$31,552) and US$712,435 (2012: US$607,110) for the Group and Company respectively at the end of the reporting period (Note 33).

The Group’s and Company’s major classes of financial assets are cash and cash equivalents, derivative financial instruments and trade and other receivables.

The credit risk for trade and other receivables based on the information provided to key management is as follows:

Group2013 2012

By operating segmentFuel sales 1,344,344 1,180,836Shipping 4,227 2,489Terminalling 327 598Others 8,971 22,696

1,357,869 1,206,619


PAGE 109



(b) Credit risk (Continued)

(i) Financial assets that are neither past due nor impaired

Cash at bank and bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade and other receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group. Derivative financial instruments are neither past due nor impaired as they are mainly with high credit quality counterparties.

(ii) Financial assets that are past due and/or impaired

There is no other class of financial assets that is past due and/or impaired except for trade and other receivables.

The age analysis of trade and other receivables past due but not impaired is as follows:

Group2013 2012

Past due 1 to 30 days 105,342 146,203Past due 30 to 60 days 19,934 25,846Past due more than 60 days 21,070 11,500

146,346 183,549

The carrying amount of trade and other receivables individually determined to be impaired and the movement in the related allowance for impairment is as follows:

Group2013 2012

Past due more than 60 days 4,797 13,073Less: Allowance for impairment (4,797) (13,073)

– –

Beginning of financial year 13,073 6,011Allowance made 2,294 14,184Allowance utilised (10,570) (7,122)End of financial year 4,797 13,073

The individually impaired receivables mainly relate to customers, which are in difficult economic situations. It was assessed that a portion of these receivables is expected to be recovered.




(c) Liquidity risk

The Group manages the liquidity risk by maintaining sufficient cash to enable them to meet their normal operating commitments, having an adequate amount of committed credit facilities and the ability to close market positions at a short notice.

The table below analyses the Group’s and Company’s non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period from the end of the reporting period to the contractual maturity date. Derivative financial liabilities are included in the analysis as their contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual undiscounted cash flows.

Less than 1 year

2 to 5 years

Over 5 years

Group

At December 31, 2013Net-settled:Derivative financial instruments – Commodity swaps and futures (15,486) – –Gross settled:Derivative financial instruments – Forward fixed priced physical contracts (26,608) – – – Currency forwards (200) – –Trade and other payables (787,274) – –Borrowings (976,307) (10,974) –Financial guarantee contracts (41,678) – –

(1,847,553) (10,974) –

At December 31, 2012Net-settled:Derivative financial instruments – Commodity swaps and futures (8,520) – –Gross settled:Derivative financial instruments – Forward fixed priced physical contracts (7,446) – –Trade and other payables (1,036,720) – –Borrowings (574,526) (48,303) (2,737)Financial guarantee contracts (31,552) – –

(1,658,764) (48,303) (2,737)


PAGE 111



(c) Liquidity risk (Continued)

Less than 1 year

2 to 5 years

Over 5 years

Company

At December 31, 2013Trade and other payables (386,403) – –Borrowings (28,964)Financial guarantee contracts (712,435) – –

(1,127,802) – –

At December 31, 2012Trade and other payables (407,096) – –Borrowings (4,144) (28,786) –Financial guarantee contracts (607,110) – –

(1,018,350) (28,786) –

At Company level, management is of the view that the net current liabilities are mainly due to intercompany funding and does not consider this as an undue exposure.

(d) Capital risk

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, issue new shares, obtain new borrowings or sell assets to reduce borrowings. The Group’s overall strategy remains unchanged from 2012.

Consistent with others in the industry, the Group monitors capital based on the gearing ratio. The gearing ratio is calculated as net debt divided by total equity. Net debt is calculated as borrowings less cash and cash equivalents.




Group Company2013 2012 2013 2012

Net debt 697,811 296,325 21,408 (179,116)Total equity 584,804 484,334 139,126 138,011Gearing ratio 1.19 0.61 0.15 (1.30)

The Group and the Company are in compliance with all externally imposed capital requirements for the financial years ended December 31, 2013 and 2012.

35.2 Fair value measurements

This note provides information about how the Group determines fair values of various financial assets and financial liabilities.

Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis

Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used).


PAGE 113


35.2 Fair value measurements (Continued)

Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued)

Fair valueHierarchy

Valuationtechnique(s)and key input(s)

Significantunobservable

input(s)

Relationship ofunobservable

inputs tofair valueFair values as at

31/12/2013 31/12/2012Assets Liabilities Assets Liabilities 31/12/2012

Derivative financial instruments (Note 5)

Commodity swaps 16,304 (10,516) 1,172 (5,147) Level-2 Based on quoted bid prices in an active market on a relevant index adjusted for premiums/discounts

Not applicable Not applicable

Commodity futures 2,113 (4,970) 53 (3,373) Level-1 Quoted bid prices in an active market


Forward fixed priced physical contracts

26,800 (26,608) 16,918 (7,446) Level-2 Based on quoted bid prices in an active market on a relevant index for a similar or a comparable product adjusted for premiums/discounts


Currency forwards – (200) – – Level-2 Discounted cash flow. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates


Total 45,217 (42,294) 18,143 (15,966)

Financial assets at fair value through profit or loss (Note 6)

Equity investments 1,198 – 1,085 – Level-1 Quoted bid prices in an active market


Inventories (Note 8)

401,672 – 396,363 – Level-2 Based on quoted bid prices in an active market on a relevant index for a similar or a comparable product adjusted for premiums/discounts





Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required)

The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values.

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

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

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

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

The following table presents the Group’s assets and liabilities measured at fair value at December 31, 2013.

Level 1 Level 2 Level 3 Total

Group

AssetsNon-hedging derivatives 2,113 43,104 – 45,217Financial assets at fair value through profit or loss 1,198 – – 1,198Total assets 3,311 43,104 – 46,415

LiabilitiesNon-hedging derivatives (4,970) (37,324) – (42,294)Total liabilities (4,970) (37,324) – (42,294)

Company

AssetsFinancial assets at fair value through profit or loss 1,198 – – 1,198

1,198 – – 1,198


PAGE 115



Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required) (Continued)

The following table presents the Group’s assets and liabilities measured at fair value at December 31, 2012.

Level 1 Level 2 Level 3 Total

Group

AssetsNon-hedging derivatives 53 18,090 – 18,143Financial assets at fair value through profit or loss 1,085 – – 1,085Total assets 1,138 18,090 – 19,228

LiabilitiesNon-hedging derivatives (3,373) (12,593) – (15,966)Total liabilities (3,373) (12,593) – (15,966)

Company

AssetsFinancial assets at fair value through profit or loss 1,085 – – 1,085

There is no transfer between Level 1 and Level 2 of the fair value hierarchy during the financial year.

The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

Specific valuation techniques used to value financial instruments include:

• Quotedmarketpricesordealerquotesforsimilarinstruments.

• The fairvalueof interest rateswaps iscalculatedas thepresentvalueof theestimated futurecashflows based on observable yield curves.

• Other techniques, such as discounted cash flow analysis, are used to determine fair value for theremaining financial instruments.



35.3 Financial instruments by category

(a) The carrying amount of the different categories of financial instruments is as disclosed in the statements of financial position and in Note 5 to the financial statements, except for the following:

Financialassets at Financial

fair value liabilitiesLoans and through at amortised

receivables profit or loss cost

Group

December 31, 2013Cash and cash equivalents 289,470 – –Derivative financial instruments (net) – 2,923 –Financial assets at fair value through profit or loss – 1,198 –Trade and other receivables 1,357,869 – –Other non-current assets 2,000 – –Trade and other payables – – (787,274)Borrowings – – (987,281)Total 1,649,339 4,121 (1,774,555)

December 31, 2012Cash and cash equivalents 329,241 – –Derivative financial instruments (net) – 2,177 –Financial assets at fair value through profit or loss – 1,085 –Trade and other receivables 1,206,619 – –Trade and other payables – – (1,036,720)Borrowings – – (625,566)Total 1,535,860 3,262 (1,662,286)


PAGE 117


35.3 Financial instruments by category (Continued)

Financialassets at Financial

fair value liabilitiesLoans and through at amortised

receivables profit or loss cost

Company

December 31, 2013Cash and cash equivalents 7,556 – –Financial assets at fair value through profit or loss – 1,198 –Trade and other receivables 315,727 – –Trade and other payables – (386,403)Borrowings – – (28,964)Total 323,283 1,198 (415,367)

December 31, 2012Cash and cash equivalents 212,046 – –Financial assets at fair value through profit or loss – 1,085 –Trade and other receivables 133,429 – –Trade and other payables – – (407,096)Borrowings – – (32,930)Total 345,475 1,085 (440,026)

36 IMMEDIATE AND ULTIMATE HOLDING COMPANIES

On February 26, 2010, Singfuel Investment Pte. Ltd. (‘Singfuel’), incorporated in Singapore, acquired more than 50% of the issued share capital of the Company from a controlling shareholder. Pursuant to the acquisition, Singfuel became the Company’s immediate holding company. The ultimate holding company is GlencoreXstrata plc.

Fellow subsidiaries comprise subsidiaries of the Company’s immediate and ultimate holding companies.


37 RELATED PARTY TRANSACTIONS

In addition to the information disclosed elsewhere in the financial statements, the following transactions took place between the Group and related parties during the financial year at terms agreed between the parties:

(a) Sales and purchases of goods and services

Group2013 2012

Sales of goods and servicesSales of goods/services to joint ventures 274,329 95,230Sales of goods/services to associates 71 –Sales of goods/services to fellow subsidiaries 1,286,284 1,374,057

Purchases of goods and servicesPurchase of goods/services from associates 17,917 914Purchases of goods/services from joint ventures 105,072 305,968Purchase of goods/services from fellow subsidiaries 2,222,904 1,232,128

Net (losses) gains on derivative financial instrumentsNet (losses) gains on derivative financial instruments with joint ventures (829) 1,763Net losses on derivative financial instruments with fellow subsidiaries (750) (5,768)

Payments made on behalf by and reimbursed to other related parties

Professional feesProfessional fees charged by joint ventures 79 138

Outstanding balances to/from related parties at end of the reporting period are set out inNotes 5, 7, 18 and 19.

(b) Key management compensation

Group2013 2012

Salaries and other short-term employee benefits 7,449 6,422Post-employment benefits 16 45Share option expense 60 39

7,525 6,506


PAGE 119

38 SIGNIFICANT SUBSIDIARIES

The details of significant subsidiaries are as follows:

Proportion ofownership interestand voting powerName of subsidiaries and country of incorporation Principal activities2013 2012

% %

Chemoil Corporation, United States of America 1 Oil trading 100 100

Chemoil Europe B.V., Netherlands 2 Oil trading 100 100

Chemoil International Pte Ltd, Singapore 3 Oil trading 100 100

Chemoil North America Corporation, United States of America 1

Special purpose vehicle 100 100

Chemoil Terminals Corporation, United States of America 1

Terminal management 100 100

Chemoil Latin America Inc, Republic of Panama 1 Oil trading 100 100

Chemoil Middle East DMCC, United Arab Emirates 4 Oil trading 100 100

California Software Company Ltd and its subsidiaries, India and United States of America 5

Software development 71.74 67.7

Oceanconnect Marine Pte Ltd, Singapore 3 Brokerage and trading 100 100services includingmarine fuel auctions,fuel derivatives andbrokering services

1 Not required to be audited under the laws of the country of incorporation, but audited by Deloitte & Touche LLP, Singapore, for purposes of the audit of the consolidated financial statements.

2 Audited by Deloitte & Touche, Rotterdam, Netherlands.

3 Audited by Deloitte & Touche LLP, Singapore.

4 Audited by Deloitte & Touche, Dubai.

5 Consolidated financial statements audited by Tomy & Francis Chartered Accountants, India and audited by Deloitte & Touche, Singapore, for purposes of the audit of the consolidated financial statements.

In accordance with Rule 716 of The Singapore Exchange Securities Trading Limited – Listing Rules, the Audit Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment of different auditors for its subsidiaries and significant associated companies and joint ventures would not compromise the standard and effectiveness of the audit of the Group.


39 ACQUISITION OF SUBSIDIARIES

On July 9, 2013, the Group acquired the marine fuel sales business of Colonial Oil Industries, Inc, a Georgia corporation for cash consideration of US$59.8 million.

In addition, on February 1, 2013, the Group acquired 70% equity interest in Chemoil Aviation Asia Pte Ltd (formerly known as Bass Aero Pte Ltd), incorporated in Singapore, from two individual shareholders for cash consideration of US$1.6 million. This transaction has been accounted for by acquisition method of accounting.

Consideration transferred (fair values at acquisition date)

2013

Acquisition of subsidiaries

Cash consideration 61,412

Fair value of assets acquired and liabilities assumed at date of acquisition

2013

Current assets

Inventories 54,857Trade and other receivables 810Other current assets 23Bank balances and cash 302Total current assets 55,992

Current liabilities

Current tax liabilities 103Trade payables 1,032Total current liabilities 1,135Net assets acquired and liabilities assumed 54,857


PAGE 121

39 ACQUISITION OF SUBSIDIARIES (Continued)

Non-controlling interest

The non-controlling interest (30%) in Chemoil Aviation Asia Pte Ltd recognised at the acquisition date was measured by reference to the share of acquired net assets. The fair value of the non-controlling interest as at the date of acquisition is insignificant.

Goodwill arising on acquisition

2013

Consideration transferred 61,412Less: fair value of identifiable net assets acquired (54,857)Goodwill arising on acquisition 6,555

Goodwill arose in the acquisition of Colonial Industries, Inc and Chemoil Aviation Asia Pte Ltd because the cost of the combination included a control premium.

None of the goodwill arising on this acquisition is expected to be deductible for tax purposes.

Net cash outflow on acquisition of subsidiaries

2013

Consideration paid in cash 61,412Less: cash and cash equivalent balances acquired (302)Total 61,110

Impact of acquisition on the results of Group

Included in the profit for the year is US$658 and US$12 attributable to the additional businesses generated by Colonial Industries, Inc and Chemoil Aviation Asia Pte Ltd respectively. Revenue for the period from Colonial Industries, Inc and Chemoil Aviation Asia Pte Ltd amounted to US$314,007 and US$3,647 respectively.

Had these business combinations been effected at January 1, 2013, the revenue of the Group would have been higher by US$632,092 and the profit for the year would have been higher by US$1,255.

40 SUBSEQUENT EVENTS

On February 25, 2014, Singfuel, an indirect wholly-owned subsidiary of Glencore Xstrata plc (“Glencore”), and Chemoil Energy Limited (“Chemoil”) jointly announced that Singfuel is seeking a voluntary delisting of Chemoil from the Official List of the SGX-ST.

STATISTICS OF SHAREHOLDINGS As at 3 March 2014

Total number of issued shares : 1,292,612,000 sharesIssued and Fully Paid-up Capital : HK$16,157.65Class of Shares : Ordinary Shares with equal voting rights

DISTRIBUTION OF SHAREHOLDINGS

SIZE OF SHAREHOLDINGS NO. OF SHAREHOLDERS % NO. OF SHARES %

1 – 999 4 0.14 1,236 0.001,000 – 10,000 1,583 55.62 9,522,000 0.7410,001 – 1,000,000 1,242 43.64 69,172,956 5.351,000,001 AND ABOVE 17 0.60 1,213,915,808 93.91TOTAL: 2,846 100.00 1,292,612,000 100.00

SUBSTANTIAL SHAREHOLDERS AS AT 3 MARCH 2014

Direct Interest Deemed InterestNo. of Shares % No. of Shares %

Singfuel Investment Pte. Ltd. 1,150,933,594 89.04 – –Glencore Xstrata plc – – 1,150,933,594 89.04Glencore International AG – – 1,150,933,594 89.04Glencore Asian Holdings Pte. Ltd. – – 1,150,933,594 89.04

Notes:Glencore Asian Holdings Pte. Ltd., Glencore International AG and Glencore Xstrata plc, by virtue of being the immediate holding company, the intermediate holding company and the ultimate holding company of Singfuel Investment Pte. Ltd. respectively, are deemed interested in the shares owned by Singfuel Investment Pte. Ltd.


PAGE 123

TWENTY LARGEST SHAREHOLDERS

NO. NAME NO. OF SHARES %

1. SINGFUEL INVESTMENT PTE. LTD. 1,150,933,594 89.042. HSBC (SINGAPORE) NOMINEES PTE LTD 13,182,000 1.023. LEE YUEN SHIH 9,421,000 0.734. CITIBANK NOMINEES SINGAPORE PTE LTD 8,093,444 0.635. HONG LEONG FINANCE NOMINEES PTE LTD 6,765,000 0.526. UOB KAY HIAN PRIVATE LIMITED 5,066,000 0.397. DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 3,022,000 0.238. ABN AMRO NOMINEES SINGAPORE PTE LTD 2,700,000 0.219. OCBC SECURITIES PRIVATE LIMITED 2,500,000 0.1910. OVERSEA-CHINESE BANK NOMINEES PRIVATE LIMITED 2,000,000 0.1511. RAFFLES NOMINEES (PTE) LIMITED 1,960,000 0.1512. CIMB SECURITIES (SINGAPORE) PTE. LTD. 1,869,000 0.1413. FONG SOON YONG 1,525,000 0.1214. PHILLIP SECURITIES PTE LTD 1,364,353 0.1115. DMG & PARTNERS SECURITIES PTE LTD 1,237,000 0.1016. MAYBANK KIM ENG SECURITIES PTE. LTD. 1,211,963 0.0917. DBS NOMINEES (PRIVATE) LIMITED 1,065,454 0.0818. TAN AH CHYE 950,000 0.0719. CHOY SAI CHAK 900,000 0.0720. UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 806,000 0.06

TOTAL: 1,216,571,808 94.10

Percentage of Shareholding in Public’s Hands

Approximately 10.96% of the Company’s shares are held in the hands of the public. Accordingly, the Company has complied with Rule 723 of the Listing Manual of the Singapore Exchange Securities Trading Limited.

This page has been intentionally left blank

www.chemoil.com

AN

NU

AL

RE

PO

RT

20

13

CH

EM

OIL

EN

ER

GY

LIM

ITE

D

Designed and produced by

(65) 6578 6522

CHEMOIL ENERGY LIMITED ANNUAL REPORT 2013

Documents

degree from the University of South Africa and a Bachelor of Commerce ... Sanjay Anand has headed Chemoil’s logistics operations