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inflation rate) for the remaining term of the lease, while that for the Lease for Land and Buildings is
US$16,000 for FY2007; US$20,000 for FY2008; US$25,000 for FY2009 and US$25,000 (adjusted for
prevailing annual inflation rate) for the remaining term of the lease. These rents are based on the independent
valuation report issued in July 2007 by the Superintending Company of Indonesia (Persero).
The rents under the above leases for the Period Under Review are set out below.
Period from
1 January
2008 Up to
FY2005 FY2006 FY2007
Five Months
Ended
31 May 2008
the Latest
Practicable
Date
(US$’000) (US$’000) (US$’000) (US$’000) (US$’000)
Rent under the Lease of Machinery
and Equipment ............... — — 288 105 (1)
Rent under the Lease for Land and
Buildings. ................... — — 192 60 (2)
105 (1)
Notes:
(1) This figure reflects the rent for the period from 1 January 2008 up to 26 March 2008 only, when PT Batamec
ceased to be an Interested Person.
(2) This figure reflects the rent for the period from 1 January 2008 up to 26 March 2008 only, when PT Batamec
ceased to be an Interested Person.
Our Directors believe that the above leases were entered into on an arm’s length basis as the rental
payable is in line with market rates as based on the independent valuation report. We intend to continue with
these lease arrangements in the future.
Transactions with Yawson
Sale of Nine Vessels — Purchase of 10 Vessels — Corporate Guarantee in Favour of Yawson — Lease of
Vessels
Yawson, a dormant company which was previously in the principal business of freight forwarding and
chartering, is 94.55% owned by Yaw Chee Siew.
In order to avoid a potential conflict of interest with our operations and in view of the Offering, Yawson
ceased its operations in December 2007 and has since been dormant.
From September 2006 to July 2007, our Company contracted with third parties to purchase four barges
and five tugs from them for a total consideration of S$30.4 million. Our Company had a back-to-back
arrangement with Yawson to sell these vessels to Yawson at the same consideration as Yawson had the
financial resources to secure the bank facilities to finance our original purchase of these vessels. Yawson
financed the purchase of these vessels with cash and a loan from Bangkok Bank. As discussed below, our
Company provided a corporate guarantee for the loan and these vessels were leased back to us for our
chartering business, which commenced in April 2007.
Separately, in 2006, Brizill International contracted to purchase from PT Batamec a barge for S$3.3 million
(see “— Transactions with Brizill International”) and had a back-to-back arrangement with Yawson to sell
this barge to Yawson at the same consideration. Yawson financed the purchase of the barge with cash and a
loan from Hong Leong Finance. As discussed below, our Company provided a corporate guarantee for the loan
and the barge was leased back to us.
With the improvement of our financial condition, we repurchased these ten vessels from Yawson between
October and December 2007 for our chartering fleet.
The total amounts under these sales and purchases for the Period under Review are as follows:
FY2005 FY2006 FY2007
Five Months Ended
31 May 2008
60 (2)
Period from
1 January 2008
Up to the Latest
Practicable Date
(S$’000) (S$’000) (S$’000) (S$’000) (S$’000)
Sale of nine vessels to Yawson. . — 6,430 23,938 — —
Purchase of 10 vessels from
Yawson ................. — — 33,618 — —
155