13.07.2015 Views

notes to the financial statements - CWT Limited - Investor Relations

notes to the financial statements - CWT Limited - Investor Relations

notes to the financial statements - CWT Limited - Investor Relations

SHOW MORE
SHOW LESS

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

6 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORT*THE MATTERHORN, SWITZERLAND<strong>CWT</strong> LIMITED 2012 ANNUAL REPORTThe Matterhorn is Switzerland’s most renowned mountain. Standingat 14,692 feet along <strong>the</strong> Swiss and Italian borders, it has fascinatedclimbers and observers from <strong>the</strong> early days <strong>to</strong> <strong>the</strong> present.With steep and perilous faces, its ascent routes are not for <strong>the</strong>faint hearted but for brave, highly-skilled mountaineers.Like mountaineers who train <strong>to</strong> conquer The Matterhorn, <strong>CWT</strong>draws strength and wisdom from its years of vast experience anddomain knowledge <strong>to</strong> overcome challenging paths and reachnew heights.7


8 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORT<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT9CORPORATE SECTIONCORPORATE SECTIONBOARD OF DIRECTORSLoi Kai MengChairmanMr Loi joined <strong>the</strong> Board as Chairman inNovember 2004. He is an accountant byprofession and has been in <strong>the</strong> logisticssec<strong>to</strong>r for over 40 years. Mr Loi is also <strong>the</strong>Group Managing Direc<strong>to</strong>r of C & PHoldings Pte Ltd and a Direc<strong>to</strong>r of anumber of private companies.Liao Chung LikDirec<strong>to</strong>rMr Liao joined <strong>the</strong> Board in November2004. He is <strong>the</strong> Deputy Group ManagingDirec<strong>to</strong>r of C & P Holdings Pte Ltdand a Direc<strong>to</strong>r of a number of privatecompanies. He graduated from <strong>the</strong>National University of Singapore witha degree in Bachelor of BusinessAdministration.Jimmy Yim Wing KuenIndependent Direc<strong>to</strong>rMr Yim joined <strong>the</strong> Board as anIndependent Direc<strong>to</strong>r in May 2003. He is asenior direc<strong>to</strong>r of one of Singapore’s mostestablished law firms, Drew & Napier LLC.Mr Yim was admitted <strong>to</strong> <strong>the</strong> SingaporeBar in 1983 and was appointed SeniorCounsel in 1998. His legal practice coversmost areas of civil and commercial law,criminal law and international commercialarbitrations. His various appointmentsinclude Fellow of <strong>the</strong> Singapore Instituteof Arbitrations, regional arbitra<strong>to</strong>r with <strong>the</strong>Singapore International Arbitration Centreand member of <strong>the</strong> Competition AppealBoard appointed by <strong>the</strong> Ministry of Tradeand Industry.Dr Hu Jian PingIndependent Direc<strong>to</strong>rFrom left <strong>to</strong> right (seated):Loi Pok YenDirec<strong>to</strong>r & Group CEOLoi Kai MengChairmanJimmy Yim Wing KuenIndependent Direc<strong>to</strong>rFrom left <strong>to</strong> right (standing):Liao Chung LikDirec<strong>to</strong>rDr Tan Wee LiangLead independent Direc<strong>to</strong>rDr Hu Jian PingIndependent Direc<strong>to</strong>rLoi Pok YenDirec<strong>to</strong>r & Group CEOMr Loi joined <strong>the</strong> Board in November2004. He is also <strong>CWT</strong> Group CEO. Withhis extensive experience in strategicand logistics business management,Mr Loi leads <strong>the</strong> Executive Team instreng<strong>the</strong>ning <strong>the</strong> Group’s businesses andcompetitiveness for <strong>the</strong> long-term successof <strong>the</strong> <strong>CWT</strong> Group. Mr Loi graduated from<strong>the</strong> National University of Singapore witha Bachelor of Business Administration(Honors) degree.Dr Tan Wee LiangLead Independent Direc<strong>to</strong>r*Dr Tan joined <strong>the</strong> Board in June 2008. Heis Associate Professor of Entrepreneurshipand Law at <strong>the</strong> Singapore ManagementUniversity, where he is programcoordina<strong>to</strong>r for <strong>the</strong> MSc (Management)by research. He has previously taughtat National University of Singaporeand Nanyang Technological Universityof Singapore. Dr Tan served as <strong>the</strong>International President of <strong>the</strong> Institute ofChartered Secretaries and Administra<strong>to</strong>rs,U.K. in 2004. He currently also serveson <strong>the</strong> board of St. Luke’s Hospital andexecutive committee of <strong>the</strong> PresbyterianCommunity Services. He was educatedat <strong>the</strong> National University of Singapore,University of Cambridge and MIT.Dr Hu was appointed <strong>to</strong> <strong>the</strong> Boardin December 2004. He is holding aposition in Beijing as Deputy SecretaryGeneral with China Communication andTransportation Association (CCTA). DrHu has more than 20 years of experiencein <strong>the</strong> transportation industry. He was<strong>the</strong> Chairman from 2007 <strong>to</strong> 2011 andGeneral Manager from 2001 <strong>to</strong> 2006of Shenzhen Bus Group Company Ltd,a China based company that owns <strong>the</strong>largest bus network in <strong>the</strong> ShenzhenSpecial Economic Area. Prior <strong>to</strong> this,he was <strong>the</strong> Executive Deputy GeneralManager of Shenzhen Metro Co., Ltd and<strong>the</strong> Shenzhen Transportation Bureau from1992 <strong>to</strong> 2001. Dr Hu was also <strong>the</strong> CivilEngineer, Project Manager and DeputyDivision-Chief of <strong>the</strong> Department ofConstruction of Shenzhen Metro Co., Ltdand <strong>the</strong> Shenzhen Transportation Bureaufrom 1992 <strong>to</strong> 1996. Dr Hu did a researchstudy in <strong>the</strong> Transportation ResearchCentre, University of Kansas, USA.*Dr Tan Wee Liang has been appointed as LeadIndependent Direc<strong>to</strong>r with effect from March1, 2013.


10 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORT<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT 11CORPORATE SECTIONCORPORATE SECTIONEXECUTIVE TEAMLoi Pok YenGroup CEOMr Loi was appointed Group CEO inJanuary 2005. He is also a Direc<strong>to</strong>r of<strong>the</strong> Board. With his extensive experiencein strategic and logistics businessmanagement, Mr Loi leads <strong>the</strong> ExecutiveTeam in streng<strong>the</strong>ning <strong>the</strong> Group’sbusinesses and competitiveness for <strong>the</strong>long-term success of <strong>the</strong> <strong>CWT</strong> Group. MrLoi graduated from <strong>the</strong> National Universityof Singapore with a Bachelor of BusinessAdministration (Honors) degree.Lynda GohDeputy Group CEO & Group CFOMrs Goh has been with <strong>the</strong> Company formore than 20 years holding various seniorpositions. As Deputy Group CEO & GroupCFO, her key role is <strong>to</strong> assist <strong>the</strong> GroupCEO in <strong>the</strong> corporate development andstrategic expansion, corporate financeand general management of <strong>the</strong> <strong>CWT</strong>Group of companies. Mrs Goh is alsoresponsible for managing <strong>the</strong> Group’sengineering business, investments,treasury, <strong>financial</strong>, human resourceand corporate affairs. Mrs Goh is aCertified Public Accountant and Fellow ofChartered Certified Accountant (UK).Adam SlaterDeputy Group CEO and CEO,Commodity LogisticsMr Slater has more than 15 years ofexperience in <strong>the</strong> commodities logisticsindustry. In his capacity as Deputy GroupCEO and CEO, Commodity Logistics, heoversees <strong>the</strong> development and expansionof Supply Chain Management businessof <strong>the</strong> Group. He is also responsiblefor <strong>the</strong> day <strong>to</strong> day management of <strong>the</strong>commodity logistics related businessesacross Asia, Europe, Africa, North & SouthAmerica and Australia. Prior <strong>to</strong> joining <strong>the</strong>commodities logistics industry, he workedas a metal trader in China for 5 years. Hehas a Bachelor of Art in East Asian Studiesfrom McGill University and also studiedChinese language at Fudan University.Tan Choon WeiCEO, Freight LogisticsMr Tan has been with <strong>the</strong> Company since1988. Prior <strong>to</strong> his appointment as CEO,Freight Logistics in January 2005, MrTan held various senior positions in <strong>the</strong>Group. He led <strong>the</strong> Company’s regionaldevelopment in <strong>the</strong> past 20 years andwas appointed as Executive Chairmanof <strong>CWT</strong> Globelink Group since January2002, overseeing <strong>the</strong> freight consolidationbusiness of <strong>the</strong> <strong>CWT</strong> Group.Mark LoweCEO, Commodity Supply ChainManagementMr Lowe was appointed CEO, CommoditySupply Chain Management in July2011 and heads up MRI Trading Groupand Capsolon Pte Ltd, <strong>the</strong> holdingcompany for MRI Trading Group. As <strong>the</strong>commodities marketing and supply chainmanagement arm of <strong>the</strong> <strong>CWT</strong> Groupof businesses, <strong>the</strong> division is activelymarketing physical non-ferrous metals,bulk minerals and gas oil. Mr Lowe is anindustry veteran with over 26 years ofexperience in commodities trading. Prior<strong>to</strong> joining <strong>CWT</strong>, he held senior positionswith Louis Dreyfus Commodities andTrafigura.Jeremy AngCEO, Financial ServicesMr Ang was appointed CEO, FinancialServices in April 2011. He heads up StraitsFinancial Group, <strong>the</strong> <strong>financial</strong> servicesarm of <strong>the</strong> <strong>CWT</strong> Group engaged in <strong>the</strong>offering of futures and derivatives trade,forex, bullion and Over-<strong>the</strong>-Counter(OTC) brokerage services. Mr Ang is anindustry veteran, especially in <strong>the</strong> globalderivatives market, with over 27 years ofexperience in <strong>the</strong> futures industry. Prior <strong>to</strong>joining <strong>CWT</strong>, he held leadership positionswith <strong>the</strong> Singapore Exchange (SGX),Singapore Commodity Exchange (SICOM),DBS Vickers Securities (Singapore) and <strong>the</strong>REFCO Group.Martin VersteegCEO, <strong>CWT</strong> EuropeMr Versteeg has more than 38 yearsof experience in <strong>the</strong> soft commoditieslogistics industry. As CEO, <strong>CWT</strong> Europe,he is responsible for <strong>the</strong> developmentand expansion of <strong>the</strong> Group’s logisticsbusiness in Europe and Africa. MrVersteeg is a board member of Corporateand Private Banking of RabobankAmsterdam, <strong>the</strong> European CocoaAssociation in Brussels and <strong>the</strong> EuropeanWarehouse Keepers Federation inAmsterdam. He holds a Masters degreein law from VU University of Amsterdam.In 2009, Mr Versteeg was also awarded<strong>the</strong> prestigious Amsterdam Ports Medalby <strong>the</strong> Amsterdam Ports Association inrecognition of his significant contribution<strong>to</strong>wards streng<strong>the</strong>ning and reinforcing <strong>the</strong>prestige of Amsterdam ports.Eric HermanCEO, Contract Logistics & BusinessDevelopmentMr Herman has over 18 years ofexperience in <strong>the</strong> logistics industry. Prior<strong>to</strong> joining <strong>CWT</strong>, he was employed by APMoller Maersk in various senior positionsin <strong>the</strong> United States, Latin Americaand across Asia, where he optimizedsupply chain solutions for multinationalcompanies. As CEO of Contract Logistics& Business Development, Mr Herman’skey role is <strong>to</strong> develop/expand valueaddingglobal contract logistics business,including forming and implementingstrategies for creating synergies andexpanding capabilities.Foo Say ChuangManaging Direc<strong>to</strong>r, Warehousing &Business DevelopmentMr Foo has more than 29 years of logisticsexperience in local and multinationalcorporations. As Managing Direc<strong>to</strong>r ofWarehousing & Business Development,he is responsible for <strong>the</strong> developmentand expansion of <strong>the</strong> Group’s logisticsbusiness in Singapore and <strong>the</strong> regionalmarket, including Russia, India, Ukraine,Malaysia and Thailand. He has a Bachelorof Business in Transport from <strong>the</strong> RoyalMelbourne Institute of Technology,a Diploma in Shipping Management(Maritime Studies) and a Diploma in Sales& Marketing.Kay Kong SwanCEO, Container, Steel and TransportLogisticsMr Kay has more than 27 years ofengineering and logistics experienceof which <strong>the</strong> last 17 years were spentholding key positions in OCWS Logistics.He is responsible for <strong>the</strong> Group’sContainer, Steel and Transport Logisticsbusiness. Prior <strong>to</strong> working in <strong>the</strong> logisticsindustry, Mr Kay was also involved inmanagement consultancy and businessdevelopment. He has a Master’s degreein Business Analysis (with distinction) from<strong>the</strong> University of Lancaster, UK.Leaw Tiew SanCEO, Contract Logistics (SEA)Mr Leaw has more than 13 years ofexperience in <strong>the</strong> logistics business andover 16 years of experience in Sales &Marketing. He heads up Chemical Logistics,Cold Chain Logistics, Bonded Logistics,Industrial & Consumer Logistics and alsoConventional Transportation for contractlogistics business in Sou<strong>the</strong>ast Asia.BG (NS) Ishak IsmailCEO, Defence ServicesBG (NS) Ishak was appointed CEO,Defence Services in April 2012. Heheads up <strong>CWT</strong> Defence ServicesDivision which provides integratedlogistics, procurement and supply, andengineering solutions for <strong>the</strong> defence,homeland security and rescue industries.BG (NS) Ishak has close <strong>to</strong> 30 years ofmanagement and military experiencewith <strong>the</strong> Singapore Armed Forces(SAF). In 2008, he received <strong>the</strong> PublicAdministration Medal for his significantcontributions <strong>to</strong> <strong>the</strong> armed forces. Prior<strong>to</strong> joining <strong>CWT</strong>, he was a senior vicepresident with ST Electronics where hewas responsible in managed services<strong>to</strong> mainly MINDEF and <strong>the</strong> SAF. BG (NS)Ishak is currently a board direc<strong>to</strong>r of <strong>the</strong>Maritime & Port Authority of Singaporeand <strong>the</strong> Chairman of <strong>the</strong> Advisory Panelfor <strong>the</strong> SAF Advanced Schools, SAFTIMilitary Institute.Daniel TokDeputy CEO, Freight LogisticsAs <strong>the</strong> Freight Logistics Deputy CEO, MrTok oversees <strong>the</strong> freight logistics groupoperations and keeps <strong>the</strong> organizationenergized on a day-<strong>to</strong>-day, tactical basis.As part of <strong>the</strong> collaborative leadershipteam, his key role includes <strong>the</strong> formulationand implementation of key businessstrategies <strong>to</strong> realize group synergies. MrTok brings <strong>to</strong> <strong>the</strong> group close <strong>to</strong> 30 yearsof experience in <strong>the</strong> freight industry.Ong Yan Wah OliverManaging Direc<strong>to</strong>r, InfrastructureDevelopmentMr Ong has more than 16 years ofexperience in <strong>the</strong> construction andproperty management sec<strong>to</strong>r. AsManaging Direc<strong>to</strong>r of InfrastructureDevelopment, he is responsible for <strong>the</strong>development and expansion of <strong>the</strong>Group’s logistics infrastructure facilitiesin Singapore and <strong>the</strong> regional market,including China and Malaysia. Mr Onghas overseen and completed all <strong>the</strong> majordevelopments of <strong>the</strong> Group’s variouslogistics facilities over <strong>the</strong> last 7 years. Hegraduated from <strong>the</strong> National Universityof Singapore with a Bachelor of BusinessAdministration degree.


12 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORT<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT 13CORPORATE SECTIONCORPORATE SECTIONCORPORATE DATARegistered OfficeSolici<strong>to</strong>rsCORPORATE STRUCTUREBoard of Direc<strong>to</strong>rsLoi Kai Meng (Chairman)Liao Chung LikLoi Pok YenDr Tan Wee LiangJimmy Yim Wing KuenDr Hu Jian Ping38 Tanjong Penjuru<strong>CWT</strong> Logistics Hub 1Singapore 609039Tel: 6262 6888Fax: 6261 2373Email: e-mail@cwtlimited.comAudi<strong>to</strong>rs and Reporting AccountantsRajah & Tann LLP9 Battery Road#25-01 Straits Trading BuildingSingapore 049910Drew & Napier LLC10 Collyer Quay#10-01 Ocean Financial CentreSingapore 049315<strong>CWT</strong> <strong>Limited</strong> defines common values, goals and strategies for <strong>the</strong> entire Group.<strong>CWT</strong> LIMITEDAudit CommitteeJimmy Yim Wing Kuen (Chairman)Dr Tan Wee LiangLiao Chung LikNominating cum RemunerationCommittee*Dr Hu Jian Ping (Chairman)Loi Kai MengDr Tan Wee LiangExecutive CouncilLoi Kai Meng (Chairman)Liao Chung Lik (Vice Chairman)Loi Pok YenLye Siew Hong - Lynda GohAdam SlaterTan Choon WeiEric HermanFoo Say ChuangCompany SecretaryLye Siew Hong - Lynda GohKPMG LLP16 Raffles Quay #22-00Hong Leong BuildingSingapore 048581Partner in-charge of <strong>the</strong> audit:Lee Jee Cheng Philip(appointed in <strong>financial</strong> year 2010)Principle BankersDBS Bank Ltd12 Marina Boulevard,Marina Bay Financial Centre,Singapore 018982Standard Chartered Bank8 Marina Boulevard #27-01Marina Bay Financial Centre Tower 1Singapore 018981Oversea-Chinese Banking Corporation<strong>Limited</strong>65 Chulia StreetOCBC CentreSingapore 049513United Overseas Bank <strong>Limited</strong>80 Raffles PlaceUOB PlazaSingapore 048624Share RegistrarBoardroom Corporate & Advisory ServicesPte Ltd50 Raffles Place#32-01 Singapore Land TowerSingapore 048623Corporate and Subsidiary Websites**www.cwtlimited.comwww.cwtcommodities.comwww.cwt-globelink.comwww.ocws.com.sgwww.force21.com.sgwww.mritrading.chwww.indeco.com.sgwww.straits<strong>financial</strong>.com100% 100% 100% 100% 70% 97%* 100%* 60%* 98% 40%<strong>CWT</strong>GLOBELINKPTE LTD<strong>CWT</strong>COMMODITIESPTE LTD<strong>CWT</strong>LOGISTICSPTE LTDOCWSLOGISTICSPTE LTDFORCE 21EQUIPMENTPTE LTDMRITRADINGAGCAPSOLONPTE LTDINDECOENGINEERSPTE LTD100%* 100%MRITRADINGPTE LTDCACHEPROPERTYMANAGEMENTPTE LTDSTRAITSFINANCIALGROUPPTE LTDARA-<strong>CWT</strong>TRUSTMANAGEMENT(CACHE)LIMITEDNote:This is a simplified graphic of <strong>the</strong> <strong>CWT</strong> Group structure as of March 28,2013 and <strong>the</strong>refore may be subject <strong>to</strong> change. Percentage stated hasbeen rounded off <strong>to</strong> <strong>the</strong> nearest whole number.* Effective interestLogistics businessEngineering ServicesbusinessCommodity SCM businessFinancial Services businessNote:* Dr Hu Jian Ping has been appointed as Chairman of <strong>the</strong> NRC and Dr Tan Wee Liang appointed as Member of <strong>the</strong> NRC with effect from March 1, 2013.** Our websites contain contact details of our network of offices.


14 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTVICTORIA FALLS, AFRICA<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT 15Named after <strong>the</strong> British Queen, Vic<strong>to</strong>ria Falls is one of <strong>the</strong> 7 naturalwonders of <strong>the</strong> world and is <strong>the</strong> biggest curtain of water in <strong>the</strong>world. Its vast volume and dimensions resonate with abundance,power, and vigour.<strong>CWT</strong> typifies <strong>the</strong>se same characteristics as it leverages its expertiseand resources <strong>to</strong> provide world-class logistics services whereit operates. As a dynamic and responsive company, it cascades itsefficiency <strong>to</strong> its cus<strong>to</strong>mers by empowering <strong>the</strong>ir businesses andflows its vitality <strong>to</strong> its people, shareholders, and partners.


16 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORT<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT 17BUSINESS SECTIONBUSINESS SECTIONBACKGROUND<strong>CWT</strong> designs, engineers and managesintegrated logistics and supply chainsolutions for small establishments <strong>to</strong>multinational corporations across multiplemarkets and geographies. Through itssolutions, <strong>the</strong> Group delivers supplychain integrity and flexibility, logisticsefficiency and cost savings, and marketcompetitiveness <strong>to</strong> its worldwidecus<strong>to</strong>mers. In addition, <strong>CWT</strong> has abroad portfolio of diversified businessesincluding commodity supply chainmanagement, <strong>financial</strong> and engineeringservices. <strong>CWT</strong>’s fiscal year is based on<strong>the</strong> calendar year. <strong>CWT</strong> is a Singaporecorporation established in 1970.BUSINESS STRATEGY<strong>CWT</strong> is committed <strong>to</strong> bringing <strong>the</strong> bestcus<strong>to</strong>mer experience through its bespoke,effective and sustainable solutions andservices. The Group’s business strategyleverages its ability <strong>to</strong> provide integrationof strength based upon its logisticscapabilities, assets and global network.<strong>CWT</strong>’s integrated business modelenables revenue <strong>to</strong> accrue from multiplesources, namely asset-based income,service fees and trading profits. <strong>CWT</strong>’slong term strategy focuses on creatingwarehouse capacity integral <strong>to</strong> its logisticssolutions, expanding its geographicalnetwork and streng<strong>the</strong>ning its logisticscapabilities. The Group has also adopteda capital recycling strategy through<strong>the</strong> sale and leaseback of property <strong>to</strong>fund new business development andexpansion. <strong>CWT</strong> aims <strong>to</strong> make targetedcapital investments <strong>to</strong> broaden its serviceofferings, complement its organic growthand create a diversified business portfolio.In addition, <strong>CWT</strong> takes a conscious riskmanagement approach <strong>to</strong> safeguard <strong>the</strong>various interests of its stakeholders. TheGroup’s balanced risk profile and strongbalance sheet have created a sound<strong>financial</strong> foundation for future growth.BUSINESS SEGMENTSLogistics<strong>CWT</strong> focuses and operates its logisticsbusiness mainly in <strong>the</strong> followingindustries: Commodities; Defence; Food& Beverage; Freight Forwarding; Marine;and Petrochemicals & Chemicals.Commodities - <strong>CWT</strong> Commodities, anapproved and licensed London MetalExchange (LME) and London InternationalFinancial Futures and Options Exchange(LIFFE) warehouse opera<strong>to</strong>r, specializesin <strong>the</strong> s<strong>to</strong>rage and handling of hard andsoft commodities through <strong>the</strong> provision ofwarehouse management services whichinclude weighing, sampling, packing andblending, along with container stuffingand shipping. <strong>CWT</strong> Commodities alsoprovides distribution and consolidationservices for international clients from<strong>the</strong> trading, banking and manufacturingindustry. <strong>CWT</strong> Commodities currentlymanages cargo in close <strong>to</strong> 30 countriesaround <strong>the</strong> world.Defence - <strong>CWT</strong> Defence ServicesDivision integrates defence logistics,procurement and engineering services<strong>to</strong> provide a one-s<strong>to</strong>p solution for <strong>the</strong>defence, security and rescue industries.Leveraging <strong>the</strong> Group’s logistics expertiseand capabilities, <strong>CWT</strong> Defence ServicesDivision provides overseas exercisesand personal equipment shipment, retaillogistics management and integratedlogistics services for break bulk, projectand bulk cargo shipment. Through itsspecialized manufacturing capabilities,<strong>CWT</strong> Defence Services Division is able<strong>to</strong> procure and supply personal and fieldequipment and offer innovative solutionsin Chemical, Biological, Radiological,and Nuclear (CBRN), defence systemsand homeland security. In addition, <strong>CWT</strong>Defence Services Division maintainsmilitary facilities and equipment fleet byoffering its reliable engineering services.Food & Beverage - <strong>CWT</strong> Cold ChainServices Division offers superiorintegrated logistics solutions <strong>to</strong>its cus<strong>to</strong>mers requiring cold chainlogistics and distribution services with<strong>the</strong> largest and best featured multitemperaturecontrolled logistics facilityin Singapore as a value proposition.<strong>CWT</strong> Cold Hub offers freezer, chiller,air-conditioned and ambient s<strong>to</strong>rage <strong>to</strong>meet <strong>the</strong> high demand and expectationof its cus<strong>to</strong>mers in <strong>the</strong> Food & Beverageindustry, including food manufacturers,wholesalers and retailers. Equipped with<strong>the</strong> best practice cool tunnel in its loadingdock facility, <strong>CWT</strong> Cold Hub ensures that100% cold chain integrity is maintainedthroughout <strong>the</strong> loading and unloadingoperations. In addition, <strong>CWT</strong> Cold ChainServices Division specializes in wines<strong>to</strong>rage and distribution services.Freight Forwarding - <strong>CWT</strong> Globelinkprovides freight consolidation and cargotransshipment services <strong>to</strong> and frommost major ports around <strong>the</strong> world.<strong>CWT</strong> Globelink is among <strong>the</strong> world’s <strong>to</strong>pconsolida<strong>to</strong>rs of Less Than Container Load(LCL) cargo in sea freight services with anextensive network of offices and serviceagents that covers around 200 direct portsand 1,500 inland destinations worldwide.<strong>CWT</strong> Globelink’s comprehensive rangeof services includes Container FreightStation (CFS) operations, DangerousGoods (DG) cargo handling, sea-airservices, buyer’s consolidation andgeneral freight forwarding.Marine - <strong>CWT</strong> supports <strong>the</strong> marineindustry with its container and steellogistics solutions. The Group’s containerlogistics division OCWS Logistics offersbonded yard and warehousing facilitiesand provides container trucking, s<strong>to</strong>rage,maintenance and repair services as wellas ISO tank cleaning and repair. TheGroup’s steel logistics division under <strong>CWT</strong>Engineering offers an integrated steellogistics solution that encompasses <strong>the</strong>corrosion protection of ferrous and nonferrousmaterials, s<strong>to</strong>rage and distribution,and <strong>the</strong> transportation of metal materials.Petrochemicals & Chemicals - <strong>CWT</strong>Logistics provides in-plant logisticsand manages regional distributionhub operations for leading chemicaland petrochemical companies withits comprehensive warehousing,transportation and freight managementservices featuring an experiencedworkforce, online inven<strong>to</strong>ry managementand cus<strong>to</strong>mized supply chain solutionsincluding value-added services such aspackaging and drumming. <strong>CWT</strong> Logisticsis able <strong>to</strong> design, build and operate acomprehensive range of asset-basedsupply chain solutions for <strong>the</strong> chemicaland petrochemical industry <strong>to</strong> meet <strong>the</strong>increased flexibility required by cus<strong>to</strong>mersseeking <strong>to</strong> gain a competitive edge ingrowth markets.Commodity Supply Chain Management<strong>CWT</strong>’s commodity supply chainmanagement (SCM) division, organizedunder Capsolon Pte Ltd and its principalsubsidiaries MRI Trading (collectively MRI),is a leader in metals and minerals trading.MRI specializes in non-ferrous ores,concentrates, refined and precious metalsand <strong>the</strong>ir related by products for a globalsmelting and processing cus<strong>to</strong>mer base.MRI also provides end-<strong>to</strong>-end supplychain management for bulk coal as well asenergy products such as diesel, gasolineand naphtha, leveraging <strong>the</strong> integrationof <strong>the</strong> SCM division strength in <strong>the</strong> metaland mineral sec<strong>to</strong>rs and <strong>CWT</strong>’s existingexpertise in s<strong>to</strong>ck management acrossfive continents. In addition, MRI offersstrategic collaborative arrangements,COMPETITIVE STRENGTHS<strong>CWT</strong>’s success depends on its ability<strong>to</strong> execute and deliver operating and<strong>financial</strong> performance leveraging itsunderlying competitive strengths.Proven track record and innovativelogistics capabilities<strong>CWT</strong> has over 40 years of track record inproviding integrated logistics services<strong>to</strong> cus<strong>to</strong>mers and continues <strong>to</strong> deliverclass leading solutions <strong>to</strong> help cus<strong>to</strong>mersaddress complex business challenges.The Group re<strong>to</strong>ols cus<strong>to</strong>mers’ distributionnetworks and helps <strong>the</strong>m accelerate time<strong>to</strong>-market,realize cost efficiencies andensure supply chain integrity.Global network and logisticsinfrastructureThe Group’s global network connectscus<strong>to</strong>mers <strong>to</strong> around 200 direct ports and1,500 inland destinations. <strong>CWT</strong>’s logisticspre-export finance, structured commodityand project finance, and risk managementservices.Financial Services<strong>CWT</strong>’s brokering division Straits FinancialGroup (Straits) provides comprehensivebrokerage, risk management andtrade facilitation services for physicalcommodities and commodity derivatives.Straits currently operates in Singapore,China and in <strong>the</strong> US. Straits’ US subsidiaryis a Full Clearing Member of ChicagoMercantile Exchange (CME), ChicagoBoard of Trade (CBOT), CommodityExchange (COMEX), New York MercantileExchange (NYMEX) and CME ClearportOTC-clearing platform. Straits’ Singaporesubsidiary holds a commodity brokinglicense under <strong>the</strong> auspices of CommodityTrading Act in Singapore and is regulatedby International Enterprise Singaporeand offers a broad range of productsand services specializing in broking andclearing of OTC products and commoditycollateralization. Straits capitalizeson <strong>the</strong> Group’s strengths and globalnetwork <strong>to</strong> offer a comprehensive andintegrated spectrum of trade servicesfacilities in Asia and Europe serve asregional distribution hubs, which enablecus<strong>to</strong>mers <strong>to</strong> enjoy efficient operations for<strong>the</strong> s<strong>to</strong>rage, movement and distribution ofgoods.Bench strength in <strong>CWT</strong>’s managementteam<strong>CWT</strong> has a diversified managementstructure. Each of <strong>the</strong> Group’s businessunits is led by an experienced andknowledgeable management team.Capitalizing on a collaborativemanagement culture, <strong>CWT</strong> aims <strong>to</strong>maximize its intra-group synergies.A strong brand and long-standingrelationships with cus<strong>to</strong>mers<strong>CWT</strong>’s continued focus on deliveringreliable and class leading solutions hasdistinguished <strong>CWT</strong> as a valued brand in itsvarious markets. The <strong>CWT</strong> brand signifiesinnovation, quality and reliability of <strong>CWT</strong>’sproducts and services. This reputation,including brokerage, risk management,commodities collateralization,warehousing and logistics. In addition,<strong>CWT</strong> is engaged in <strong>the</strong> trust and assetmanagement of Cache Logistics Trust, alogistics property Real Estate InvestmentTrust (REIT) which <strong>CWT</strong> has a stake in.Engineering Services<strong>CWT</strong>’s engineering division IndecoEngineers (Indeco) offers reliableand sustainable solutions that bringabout optimum value and savings,competitive edge and increased flexibility<strong>to</strong> cus<strong>to</strong>mers. Building on its coreengineering strengths, Indeco providesa comprehensive range of maintenanceand management services for facilities,vehicles and equipment fleet. Indecoalso provides ‘Design & Build’ solutionsfor logistics properties, leveraging <strong>the</strong>Group’s logistics infrastructure buildingexperience and its expertise in <strong>the</strong> areasof engineering design and build or retrofit<strong>to</strong> cater <strong>to</strong> cus<strong>to</strong>mers’ unique operationalrequirements.coupled with <strong>the</strong> recruitment andretention of dedicated and experiencedstaff, has allowed <strong>CWT</strong> <strong>to</strong> develop andretain long-standing relationships withcus<strong>to</strong>mers over <strong>the</strong> past 40 years. <strong>CWT</strong>’sbrand value and reputation are importantintangible assets, enabling <strong>CWT</strong> <strong>to</strong> enterin<strong>to</strong> new markets and <strong>to</strong> attract and retaina diverse cus<strong>to</strong>mer base.Prudent and conservative <strong>financial</strong>profile<strong>CWT</strong> maintains a conservative <strong>financial</strong>profile which gives it a strong competitiveposition and makes it a preferredcounterparty. <strong>CWT</strong>’s balanced risk profileand prudent cost management practiceshave created a sound foundation for itsfuture growth and expansion.


18 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTMAYAN PYRAMID, MEXICO<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT 19The Mayan pyramids are among <strong>the</strong> most impressive achievementsof ancient architecture. Strongly surviving <strong>the</strong> ages, <strong>the</strong>irintricate carved s<strong>to</strong>ne stair steps lead up <strong>to</strong> a small temple usedfor sacred ceremonies and as landmarks and observa<strong>to</strong>ries during<strong>the</strong> early civilization.Exemplifying <strong>the</strong>se pyramids’ workmanship and longevity, <strong>CWT</strong>solidifies and expands its field by strategically capitalizing onvibrant markets in diverse regions and industries thus creating anextensive and continuing global presence.


20 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORT<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT 21BUSINESS SECTIONBUSINESS SECTIONOPERATIONS AND FINANCIAL REVIEWFinancial PerformanceFY2012 FY2011 % changeRevenue S$ million 5,397.0 2,579.7 +109EBITDA- Operating* S$ million 105.7 58.1 +82- Total S$ million 127.3 64.7 +97PBT- Operating* S$ million 96.8 58.5 +66- Total S$ million 118.5 65.1 +82PATNCI- Operating* S$ million 86.5 51.6 +68- Total S$ million 107.9 57.1 +89Operating Earnings Per Share cent 14.4 8.7 +66Note: <strong>CWT</strong> has delivered ano<strong>the</strong>r year of stronggrowth and record performance. Thisperformance was contributed mainlyby Commodity SCM Business on highervolume; Logistics Business arising fromhigher warehousing capacity, volumeand yield; and Engineering Services fromproject income.Revenue for <strong>the</strong> year ended December31, 2012 more than doubled on last yearat S$5,397 million. Operating PATNCIgrew by 68% <strong>to</strong> S$86.5 million. Including<strong>the</strong> gain of S$22.6 million from <strong>the</strong> saleand leaseback of a logistics property, <strong>to</strong>talPATNCI was S$107.9 million, an increaseof 89% over FY2011.82%7%4%4%3%Revenue by BusinessCommodity SCMFreight LogisticsContract & O<strong>the</strong>rLogisticsCommodity LogisticsEngineering ServicesCommodity SCM Business, on <strong>the</strong> backof higher volume and an expandedportfolio coupled with a full year effect,accounted for 82% of <strong>to</strong>tal revenue.Logistics Business contributed 15% of<strong>to</strong>tal revenue. During <strong>the</strong> year, LogisticsBusiness improved on its revenue andprofits due <strong>to</strong> increased warehousingcapacity with <strong>the</strong> completion of newlogistics hubs and increased utilization ofwarehouses, as well as higher volume andyield from contract logistics. The growthwas partly offset by lower contributionfrom soft commodity logistics mainly due<strong>to</strong> poor crop harvest, and startup cost ofbusinesses in <strong>the</strong> Europe, Middle East andAfrica (EMEA) region.57%13%9%7%7%5%2%Revenue by GeographyChinaSingaporeIndiaEuropeO<strong>the</strong>rsKoreaAfrica & Middle EastLogistics Business and Commodity SCMBusiness are managed on a worldwidebasis and <strong>the</strong> Group operates principallyin Singapore, China, India, o<strong>the</strong>r partsof Asia, Europe and Africa. EngineeringServices Business operations are primarilyin Singapore. On a geographical segmentbasis, revenue sourced from Chinaaccounted for more than 50% of <strong>the</strong>Group’s revenue with full year contributionfrom Commodity SCM Business.Note:Rest of Asia, Oceania and North AmericaLogistics BusinessCommodity Logistics<strong>CWT</strong> Commodities remains focused onsolidifying and growing its commoditylogistics business <strong>to</strong> facilitate interregionaltrade flows. For <strong>the</strong> year underreview, <strong>CWT</strong> Commodities managed,handled and s<strong>to</strong>red cargoes in morethan 300 warehouse locations spreadacross five continents. These included15 LME approved warehouses and 3LIFFE-listed warehouses. A key highlightfor <strong>the</strong> commodity logistics businessdivision was <strong>the</strong> construction of oils<strong>to</strong>rage tank facilities and a coal s<strong>to</strong>rageyard in Mongolia <strong>to</strong> facilitate supply chainmanagement activities.<strong>CWT</strong> Commodities also expanded itswarehouse capacity in Africa and Europein support of its product diversificationservices throughout its varioussubsidiaries. In Ghana, 10,000 <strong>to</strong>ns ofwarehouse capacity were added <strong>to</strong> s<strong>to</strong>recashew nuts, cocoa beans and generalgoods. In Mozambique, new warehousespace was obtained for <strong>to</strong>bacco s<strong>to</strong>ragein <strong>the</strong> port of Beira. In Turkey, <strong>CWT</strong>Commodities streng<strong>the</strong>ned its warehousecapabilities with a new warehouselocation in Mersin, <strong>the</strong> country’s largestport in <strong>the</strong> South. In addition, <strong>CWT</strong>Commodities s<strong>to</strong>res and manages cargoin about 240 warehouses across 14provinces in China.Freight LogisticsThe freight market remained very volatilethroughout 2012. On an industry-widebasis, shipping carriers introduced variousstages of General Rate Increases <strong>to</strong>counter <strong>the</strong> erosion of rate level due <strong>to</strong><strong>the</strong> introduction of various high capacityvessels. Greater supply of capacitiescoupled with mothballing of vessels bycarriers contributed much <strong>to</strong> <strong>the</strong> volatilebuying rates and <strong>the</strong> unstable coststructure.Notwithstanding <strong>the</strong> less-than-favorablemarket conditions, <strong>CWT</strong>’s freight logisticsdivision <strong>CWT</strong> Globelink continues <strong>to</strong> growits market presence. In 2012, it set upoffices in Bulgaria, <strong>the</strong> United Kingdomand Qatar as well as streng<strong>the</strong>ned itspresence in Turkey and Portugal byadding new branches in Mersin andLisbon. <strong>CWT</strong> Globelink also gainedmarket share in <strong>the</strong> Global Forwardersmarket when it was appointed by variousglobal cus<strong>to</strong>mers as <strong>the</strong>ir preferredGlobal Carrier. In addition, <strong>CWT</strong> Globelinkhas integrated its Information Technologycapabilities which enabled cus<strong>to</strong>mers<strong>to</strong> check freight status and track cargomovement more effectively and efficiently.Warehousing and Contract Logistics<strong>CWT</strong>’s contract logistics businessperformance improved on <strong>the</strong> back ofhigher warehousing capacity, volume andyield from existing and new cus<strong>to</strong>mers infiscal 2012.<strong>CWT</strong> is currently redeveloping an existing240,000-square foot warehouse at TohGuan Road East, Singapore in<strong>to</strong> a modernmulti-s<strong>to</strong>rey warehouse of about 600,000square feet Gross Floor Area (GFA).Redevelopment work commenced at<strong>the</strong> end of last year. In March 2012, <strong>CWT</strong>also started construction for <strong>CWT</strong> ColdHub 2 in Singapore. The hub will provideabout 725,000 square feet GFA of multitemperaturecontrolled warehousingspace. Both logistics facilities will be readyin 2014.Commodity Supply Chain ManagementBusiness<strong>CWT</strong>’s commodity supply chainmanagement business continued <strong>to</strong> makea major contribution <strong>to</strong> <strong>to</strong>tal revenue withincreasing contribution from diversifiedsupply sources. Stronger base metalvolumes compensated for <strong>the</strong> expectedlower volumes and margins from <strong>the</strong> newbusiness lines. However, <strong>the</strong>se diversifyingplatforms are expected <strong>to</strong> add value in <strong>the</strong>coming months. China continues <strong>to</strong> be <strong>the</strong>main market for MRI’s products and thisis set <strong>to</strong> continue but with slightly lowerconsumption, although expansionaryfiscal policies are expected <strong>to</strong> providedemand support. MRI will continue <strong>to</strong>seek diversification in business lines andgeographic trade flows.To supplement its supply chainmanagement operations, MRI has addedsignificant resources <strong>to</strong> its operationsin Singapore as well as for its domesticChina business. In addition and in order<strong>to</strong> access ano<strong>the</strong>r important componen<strong>to</strong>f <strong>the</strong> supply chain, MRI acquired LNMetals in Oc<strong>to</strong>ber 2012 <strong>to</strong> add refinedmetals <strong>to</strong> its trading portfolio. MRI hasalso expanded its product activities <strong>to</strong>cover naphtha, distillates and coal. TheAsian headquarters in Singapore willcomplement MRI’s current headquartersin Switzerland, allowing greatermanagement efficiency and risk oversight.The business group is in <strong>the</strong> processof integrating its risk managementsystems and standardizing reporting andoperational procedures worldwide.Financial Services BusinessStraits Financial LLC (“SF US”) has grown<strong>to</strong> become one of <strong>the</strong> <strong>to</strong>p 50 FuturesCommission Merchants (FCMs) globallywith close <strong>to</strong> US$100 million in cus<strong>to</strong>merfunds as of 31 December, 2012. SF US’services offering ranges across research,execution and clearing of exchangetraded and cleared futures & optionsproducts listed on all <strong>the</strong> leading globalexchanges. It serves over 5,000 cus<strong>to</strong>mersfrom a wide range of commodity marketparticipants and inves<strong>to</strong>rs. During <strong>the</strong>year, SF US streng<strong>the</strong>ned its services byoffering direct clearing on CME Clearportplatform which is <strong>the</strong> world’s leadingOTC-clearing platform. In addition, it hasestablished an office in New Jersey <strong>to</strong>better serve <strong>the</strong> cus<strong>to</strong>mers in <strong>the</strong> eastcoast of US who specialize in energy andforeign exchange markets.Straits (Singapore) Pte Ltd (“SFSingapore”) is an approved InterdealerBroker on <strong>the</strong> Singapore Exchangefor products that are OTC traded andexchange cleared, and specializes inindustrial and bulk commodities. SFSingapore also offers such similar clearingservices for o<strong>the</strong>r OTC clearing platformssuch as CME Clearport, IntercontinentalExchange (ICE) and London ClearingHouse (LCH). Its clientele include leadingsteel mills, traders, commodity consumersand producers. In terms of geographicfootprint, SF Singapore has been growingits franchise in China, Sou<strong>the</strong>ast Asia andIndia. In addition, SF Singapore, <strong>to</strong>ge<strong>the</strong>rwith its sister companies, offers TradeServices which create value for clientsby enabling <strong>the</strong>m with a rich bundleof services comprising of commoditycollateralization, efficient workingcapital management and superior riskmanagement solutions.


22 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORT<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT 23BUSINESS SECTIONBUSINESS SECTIONGLOBAL OPERATIONS<strong>CWT</strong> operates in 50 countries through its subsidiaries and local partners. <strong>CWT</strong> is able <strong>to</strong> seamlessly connect cus<strong>to</strong>mers<strong>to</strong> around 200 direct ports and 1,500 inland destinations through its global network. In addition, <strong>CWT</strong> has a well establishedlogistics infrastructure – it owns and/or manages over 10 million square feet of warehouse space globally.LegendAsia / PacificEuropeMiddle EastAfrica<strong>CWT</strong> FootprintsNorth and Central AmericaSouth America*warehouse locationsEngineering Services BusinessIndeco Engineers secured major contractsvalued at over S$50 million for <strong>the</strong> yearunder review. Some of <strong>the</strong> miles<strong>to</strong>nes arehighlighted as follow:Facilities Management andMaintenanceIndeco successfully renewed <strong>the</strong> ChangiAirport Terminal 1 maintenance contractfor ano<strong>the</strong>r three years and is responsiblefor <strong>the</strong> efficient and reliable operationsof <strong>the</strong> terminal facilities, including <strong>the</strong>performance of <strong>the</strong> critical High TensionNetwork Electrical Systems at Changiand Seletar Airports. The High TensionNetwork controls all <strong>the</strong> essentialSingapore*, Australia, China*, Hong Kong, India, Indonesia, Malaysia*, Mongolia,Pakistan, South Korea*, Sri Lanka, Thailand and VietnamBelgium*, Bulgaria, Croatia, Es<strong>to</strong>nia, Germany*, Ireland*, Ne<strong>the</strong>rlands*, Portugal,Romania, Serbia, Slovenia, Spain, Switzerland, Turkey*, Ukraine and <strong>the</strong> UnitedKingdom*Kuwait, Qatar and United Arab Emirates*Egypt, Ghana*, Ivory Coast, Malawi, Morocco, Mozambique*, South Africa, Togo andZimbabweCosta Rica, Guatemala, Mexico and <strong>the</strong> United States of America*Argentina, Brazil, Chile, Peru and Uruguayfacilities such as runway lightings andcommunication systems, without which,<strong>the</strong> airport will not be able <strong>to</strong> functionproperly. Indeco also renewed <strong>the</strong>Singapore Air Traffic Control Centremaintenance contract for ano<strong>the</strong>r 3years, which requires Indeco <strong>to</strong> meet<strong>the</strong> stringent systems availability of <strong>the</strong>key radar installation buildings and<strong>the</strong> Changi Airport Control Tower. Inaddition, Indeco successfully securedcontracts with <strong>the</strong> Ministry of ForeignAffairs, SATS Airfreight Terminal 6, SATSMaintenance Centre and <strong>the</strong> Housing andDevelopment Board (HDB).Vehicle MaintenanceIndeco inked a 5-year extension contractwith <strong>the</strong> Changi Airport Group <strong>to</strong> maintainall its Airport Fire Fighting Vehicles, whichare essential for <strong>the</strong> airport in times ofemergency and in situations which requirefast and efficient response. In addition,Indeco also secured maintenance contractswith <strong>the</strong> National Environment Agency,Singapore Power and <strong>the</strong> SAF for <strong>the</strong>upkeep of <strong>the</strong>ir vehicles and equipmentfleet.Product Engineering and InstallationIn 2012, Indeco successfully completed<strong>the</strong> project awarded by <strong>the</strong> Land TransportAuthority <strong>to</strong> provide ventilation <strong>to</strong> elevatedMRT stations by installing over 130 giganticHigh Volume Low Speed (HVLS) fans at 27stations.EmployeesAs of December 31, 2012, <strong>CWT</strong> had5,687 employees. <strong>CWT</strong> has devised andimplemented human resource policiesand practices which create a safe,positive and inclusive workplace for itsemployees. Appropriate performanceorientedschemes or incentive schemesare in place <strong>to</strong> encourage and rewardgood performance which creates aperformance-oriented culture within <strong>the</strong>Company.Regulation<strong>CWT</strong>’s operations are subject <strong>to</strong>international, country, state and/or localrules and regulations and <strong>the</strong> laws of <strong>the</strong>o<strong>the</strong>r jurisdictions and countries in whichit operates and govern various aspects of<strong>CWT</strong>’s business.For instance, <strong>CWT</strong>’s commodity logisticsdivision requires an LME license <strong>to</strong>provide licensed s<strong>to</strong>rage facilities forLME-warranted cargo. As a logisticsservice provider of soft commoditiesin Europe, it is essential for <strong>CWT</strong>’swarehouses <strong>to</strong> be LIFFE-approved for <strong>the</strong>s<strong>to</strong>rage of cocoa and robusta coffee. <strong>CWT</strong>is also EKO licensed for <strong>the</strong> s<strong>to</strong>rage andhandling of organic commodities whichenables <strong>CWT</strong> <strong>to</strong> provide services <strong>to</strong> <strong>the</strong>major food and agricultural companies in<strong>the</strong> European Union (EU).<strong>CWT</strong>’s contract logistics division alsorequires various licenses and permits<strong>to</strong> carry on its business. These includea flammable material s<strong>to</strong>rage licensefrom <strong>the</strong> Singapore Civil Defence Force,a hazardous substances permit from<strong>the</strong> National Environment Agency ofSingapore, a warehouse license fromSingapore Cus<strong>to</strong>ms and various o<strong>the</strong>rlicenses from <strong>the</strong> Agri-Food & VeterinaryAuthority of Singapore <strong>to</strong> provide logisticssolutions for chemical and petrochemical,consumer, food and beverage and coldchain cus<strong>to</strong>mers.In addition, <strong>CWT</strong>’s <strong>financial</strong> servicesdivision requires and has obtained variouslicenses in <strong>the</strong> respective countries inwhich it operates.Risk ManagementEffective risk management is afundamental aspect of <strong>CWT</strong>’s business.<strong>CWT</strong> operates internationally and isexposed <strong>to</strong> foreign currency risks arisingfrom various currency exposures. Wherepossible, <strong>CWT</strong> seeks <strong>to</strong> minimize itsforeign currency exposure in operationsby matching its exposure <strong>to</strong> foreigncurrency receivables <strong>to</strong> its exposure <strong>to</strong>foreign currency payables.<strong>CWT</strong> seeks <strong>to</strong> minimize its foreigncurrency exposures in foreignsubsidiaries, associates and jointlycontrolledentities by repatriating <strong>the</strong>irearnings, where practicable. <strong>CWT</strong>also requires <strong>the</strong> foreign subsidiaries,associates and jointly-controlled entities<strong>to</strong> maintain <strong>the</strong>ir borrowings in <strong>the</strong>relevant foreign currencies which match<strong>the</strong>ir respective functional currencies.In respect of <strong>the</strong> o<strong>the</strong>r monetary assetsand liabilities held in currencies o<strong>the</strong>rthan <strong>the</strong> functional currencies, <strong>CWT</strong>reviews <strong>the</strong> balances periodically <strong>to</strong>ensure that net exposure is kept at anacceptable level. Where practicable, suchnet exposure is covered by appropriatehedging instruments.The commodities industry in which <strong>CWT</strong>operates is characterized by volatile,cyclical and market-driven commodityprices, which are largely determined bychanges in <strong>the</strong> supply and demand ofindustrial commodities and raw materialsthat are caused by market fluctuationsoutside of <strong>CWT</strong>’s control. <strong>CWT</strong> manages<strong>the</strong>se risks by using derivative <strong>financial</strong>instruments <strong>to</strong> hedge its exposure <strong>to</strong>commodity prices. In <strong>the</strong> event thatcommodity price risk cannot or is notadequately hedged, <strong>CWT</strong> would confirmorders with suppliers upon receipt ofconfirmed orders from its cus<strong>to</strong>mers, suchthat prices for purchases of supplies areonly confirmed shortly after <strong>the</strong> sale priceshave been determined.<strong>CWT</strong>’s commodity supply chainmanagement business engages inlarge value trade transactions. Suchtransactions are financed by transactionalfinance facilities from reputable bankswith strong compliance and internalcontrol mechanisms. Although <strong>CWT</strong> hascomprehensive guidelines and standardoperating procedures for employees<strong>to</strong> deal with such transactions so as <strong>to</strong>manage <strong>the</strong> various identified risks,<strong>CWT</strong> cannot ensure that <strong>the</strong>re will bestrict compliance of such guidelinesor standard operating procedures.Any lapses in internal guidelines andstandard operating procedures maylead <strong>to</strong> significant <strong>financial</strong> losses <strong>to</strong><strong>CWT</strong>. To mitigate such lapses, <strong>CWT</strong>enforces a clear segregation of dutiesat <strong>the</strong> operation level and subjects allsuch transactions <strong>to</strong> internal approval bydesignated personnel and relies on <strong>the</strong>financing bank’s internal compliance andcontrol mechanisms.<strong>CWT</strong>’s brokerage services divisionis exposed <strong>to</strong> <strong>the</strong> risk of cus<strong>to</strong>mersdefaulting on <strong>the</strong>ir obligations as <strong>CWT</strong>has <strong>to</strong> make good <strong>the</strong> losses incurred onits cus<strong>to</strong>mers’ accounts if <strong>the</strong> cus<strong>to</strong>mers<strong>the</strong>mselves are unable <strong>to</strong> make good <strong>the</strong>losses incurred. To mitigate such risk, <strong>CWT</strong>adopts a comprehensive cus<strong>to</strong>mer creditassessment process for all new cus<strong>to</strong>mers<strong>to</strong> assess <strong>the</strong> background, <strong>financial</strong>standing and suitability of every newcus<strong>to</strong>mer. <strong>CWT</strong> has also implementedrobust internal risk managementprocesses such as setting cus<strong>to</strong>mertrading limits based on <strong>the</strong>ir <strong>financial</strong>net worth and/or margin deposits. In<strong>the</strong> event of a cus<strong>to</strong>mer defaulting on afinanced cargo, <strong>CWT</strong> typically hedges itsposition and sells <strong>the</strong> affected cargo <strong>to</strong><strong>the</strong> relevant exchange.<strong>CWT</strong>’s brokerage services divisionmanages large sums of cus<strong>to</strong>mer monieswhich are held in segregated cus<strong>to</strong>meraccounts. The management of cus<strong>to</strong>mermonies requires active and timely riskmanagement. <strong>CWT</strong> has comprehensivestandard operating procedures for<strong>the</strong> management of cus<strong>to</strong>mer monies.However, such standard operatingprocedures may be compromised due<strong>to</strong> lapses caused by negligence of itsemployees or managerial oversight. <strong>CWT</strong>mitigates such risk by designating a clearsegregation of duties <strong>to</strong> reduce potentiallapses in risk management controls.Fur<strong>the</strong>r, multiple approvals are requiredfor all processes <strong>to</strong> reduce human error.


24 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORT<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT 25BUSINESS SECTIONBUSINESS SECTIONInsurance<strong>CWT</strong> believes that its assets andproperties are covered with adequateinsurance provided by reputableinsurance companies and withcommercially reasonable deductibles andlimits on coverage, which are normal for<strong>the</strong> type and location of <strong>the</strong> assets andproperties <strong>to</strong> which <strong>the</strong>y relate. <strong>CWT</strong> alsoreviews <strong>the</strong> adequacy of its insurancecoverage annually.To carry on business effectively, <strong>CWT</strong> hasprocured industrial all-risk, machineryand equipment all-risk, public liability,insurance for s<strong>to</strong>ck deterioration, fidelityguarantee, transport opera<strong>to</strong>r anddirec<strong>to</strong>rs’ and officers’ liability policies.<strong>CWT</strong> has also procured general insurancefor workmen’s compensation, term life,group hospital and surgical, personalaccident, business travel and mo<strong>to</strong>r vehicles.Legal ProceedingsSUMMARY OF SERVICE OFFERINGSWAREHOUSING LOGISTICS<strong>CWT</strong> <strong>Limited</strong>- S<strong>to</strong>rage- Handling- MovementDEFENCE LOGISTICS<strong>CWT</strong> Defence Services Division- Forwarding and logistics services for defencetroops training overseas- Design and delivery of defence, security andrescue gear & equipment- Maintenance and management of militaryfacilities, vehicles and equipment fleet- Agent of specialized military equipment<strong>CWT</strong> is party <strong>to</strong> various legal proceedingsin <strong>the</strong> ordinary course of its business.LOGISTICSFREIGHT LOGISTICS<strong>CWT</strong> Globelink Group- LCL consolidation- CFS operations- DG cargo handling- Sea-Air services- Buyer’s consolidation- General freight forwardingCONTRACT LOGISTICS<strong>CWT</strong> Logistics Group- Regional distribution hub operations- Onsite logistics- Supply chain solutions- Petrochemical & Chemical logistics- Cold Chain logistics- Bonded/Dutiable Cargo logisticsHowever, <strong>CWT</strong> does not expect anyproceeding, if determined adverselyagainst <strong>CWT</strong>, <strong>to</strong> have a material adverseeffect on its consolidated <strong>financial</strong>position and <strong>the</strong> results of its operations.<strong>CWT</strong> vigorously defends all claims andmakes provision for potential liabilitieswhen probable and reasonably estimable,based on <strong>the</strong> state of proceedings,currently available information and legaladvice received from time <strong>to</strong> time.COMMODITY LOGISTICS<strong>CWT</strong> Commodities Group- LME warehousing- LIFFE/SICOM warehousing- S<strong>to</strong>ck moni<strong>to</strong>ring- Freight forwarding and shipping- Trade credit facilitation- Mining logisticsCONTAINER LOGISTICSOCWS Logistics Group- Container s<strong>to</strong>rage, maintenance and repair- ISO tank cleaning and repair- Reefer structural and machinery repair- FCL container s<strong>to</strong>rage and management- Container trucking and local distribution- Transposition/Cross docking hubmanagementGROUP FIVE-YEAR FINANCIAL SUMMARYFinancial Year Ended 31 December2012 2011 2010 2009 2008For <strong>the</strong> Year (S$ million)Revenue 5,397.0 2,579.7 747.2 623.9 602.7EBITDA 127.3 64.7 181.7 58.7 44.1Profit- PBT 118.5 65.1 189.4 42.4 77.6- Operating PBT* 96.8 58.5 38.9 31.3 31.7- PATNCI 107.9 57.1 179.0 33.9 73.9- Operating PATNCI* 86.5 51.6 28.5 22.8 25.0Per shareEarnings (Singapore cents)- PBT 19.7 10.9 32.2 7.4 13.5- PATNCI 18.0 9.6 30.4 5.9 12.9Operating Earnings (Singapore cents) 14.4 8.7 4.8 4.0 4.4Weighted average number of issued shares (million) 600.3 595.0 588.8 574.3 574.3Number of issued shares as at 31 December (million) 600.3 600.3 590.3 574.3 574.3At year-end (S$ million)Net tangible assets 477.9 362.1 385.4 254.6 224.9Shareholders’ funds 582.8 476.2 428.3 292.0 266.4Non-controlling interests 32.6 33.0 20.7 17.5 16.5Capital employed 860.6 787.8 558.2 367.7 436.0Net cash / (borrowings) 78.9 59.4 184.1 (88.3) (62.1)Gross gearing (x) 0.5 0.4 - 0.4 0.3Net gearing (x) - - - 0.2 0.2Return on shareholders’ funds (%)PBT 20.3 13.7 44.2 14.5 29.1PATNCI 18.5 12.0 41.8 11.6 27.7COMMODITY SUPPLYCHAIN MANAGEMENTBASE METALSMRI Trading AG- Commodity supply chain management forbase metal concentrates and refined metalsENGINEERING SERVICESENGINEERING SERVICESIndeco Engineers Pte Ltd- Facilities management and maintenance- Vehicles and equipment fleet managementand maintenance- Supply and installation of engineeringproducts- Design & Build for logistics propertiesFINANCIAL SERVICESBROKERING SERVICESStraits Financial Group- Trade facilitation services for physical commoditiesand commodity derivatives- Brokerage services for exchenge-listed, CFDsand spot Forex & Bullion productsShareholders’ valueDistribution (Singapore cents per share)- Interim dividend (net) - - 6.0 - -- Final dividend (net) 3.0 2.5 2.5 2.0 2.0- Total distribution 3.0 2.5 8.5 2.0 2.0Share price as at 31 December (S$) 1.225 0.990 1.000 0.845 0.305Note:ENERGY AND BULK PRODUCTSPROPERTY MANAGEMENTASSET AND TRUST MANAGEMENT<strong>to</strong> <strong>the</strong> sum of net borrowingsand <strong>to</strong>tal equity.MRI Trading Pte LtdCache Property Management Pte LtdARA-<strong>CWT</strong> Trust Management (Cache) <strong>Limited</strong>- Commodity supply chain management fordiesel, gasoline and naphtha- Sourcing, fulfillment and end-<strong>to</strong>-end supplychain management for bulk coal ores andalloys- Property management for Cache LogisticsTrust- Trust and asset management for CacheLogistics Trust


26 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTTHE SINAI DESERT, EGYPT<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT 27Wide, open, rolling. The Sinai desert is a depiction of endlesspossibilities. With an unhindered view from all directions, disruptionsare uncommon. It is flowing and forthright and a source oflimitless thoughts.Similarly, <strong>CWT</strong> with its clear visions continuously seizes new opportunities<strong>to</strong> enhance its seamless connectivity across globalregions. Fur<strong>the</strong>r facilitating its trade flows, it has continued <strong>to</strong>cultivate its resources and relationships <strong>the</strong>reby positioning itselffor more growth expanse in <strong>the</strong> future.


28 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTCORPORATE SOCIAL RESPONSIBILITYAs an industry leader, <strong>CWT</strong> is committed<strong>to</strong> developing and maintainingsustainable, responsible practices in itsglobal operations. Key areas of emphasisinclude stakeholder engagement,community involvement, <strong>the</strong> environment,health and safety, human resources andgovernance.Stakeholder Engagement<strong>CWT</strong> engages with employees, cus<strong>to</strong>mers,inves<strong>to</strong>rs, governments and o<strong>the</strong>rstakeholders during <strong>the</strong> year aboutsocial responsibility issues of interest <strong>to</strong><strong>the</strong>m and its business. Such engagementenables <strong>CWT</strong> <strong>to</strong> provide updates, obtaininsights, build strong relationships andidentify strengths and opportunities <strong>to</strong>improve its performance.<strong>CWT</strong> engages with employeesdaily through a variety of internalcommunication channels. It is committed<strong>to</strong> conducting its business with honestyand integrity, and requires employees<strong>to</strong> adhere <strong>to</strong> <strong>CWT</strong>’s Code of BusinessConduct and Ethics Policy. The Codesummarizes <strong>the</strong> company’s ethicalstandards and key policies in areas suchas compliance with laws and regulations,insider trading, conflicts of interest, fairdealing, and interaction with publicofficials, and provides relevant informationabout expected behavior.Maintaining <strong>the</strong> trust of cus<strong>to</strong>mersand partners is important <strong>to</strong> <strong>CWT</strong>’ssuccess. <strong>CWT</strong> interacts with <strong>the</strong>m dailyin <strong>the</strong> conduct of its business throughits Sales teams and Cus<strong>to</strong>mer SupportOrganization. <strong>CWT</strong> values cus<strong>to</strong>merfeedback, which <strong>CWT</strong> uses <strong>to</strong> help shapeits plans and strategies.<strong>CWT</strong> also meets regularly with inves<strong>to</strong>rsand analysts <strong>to</strong> provide company updatesand <strong>financial</strong> performance. Its inves<strong>to</strong>rrelations website is updated regularlyand contains company announcements,s<strong>to</strong>ck and <strong>financial</strong> information as wellas contact details <strong>to</strong> facilitate ease ofenquiries. In 2012, <strong>CWT</strong> received amerit award for exemplary corporategovernance by <strong>the</strong> Securities Associationof Singapore (SIAS).In addition, <strong>CWT</strong> engages withgovernments at all levels on issuesimportant <strong>to</strong> <strong>CWT</strong>, <strong>the</strong> logistics industryand communities where we operate.Community Involvement<strong>CWT</strong>’s community involvement andcorporate giving efforts are aligned withits business operations which included<strong>the</strong> annual provision of transportationlogistics for <strong>the</strong> Children’s CancerFoundation’s ‘Hair for Hope’ fundraisingcampaign in support of childrenpatients. <strong>CWT</strong> also supports noncharitableorganizations which count<strong>the</strong> less privileged, young children and<strong>the</strong> needy as beneficiaries. In addition,<strong>CWT</strong>’s employees participated in variousactivities <strong>to</strong> promote healthy living anddonated <strong>the</strong>ir time through volunteer andoutreach activities. <strong>CWT</strong> will continue <strong>to</strong>look for new opportunities <strong>to</strong> expand itscommunity involvement efforts.Environment, Health and Safety<strong>CWT</strong> is committed <strong>to</strong> reducing <strong>the</strong> impac<strong>to</strong>f operations and providing a safeand healthy workplace for employees.<strong>CWT</strong>’s Environment, Health and Safety(EHS) management systems approachenables sustainable and effectivemethods needed <strong>to</strong> enhance companywideEHS performance. <strong>CWT</strong>’s EHSpolicy sets out <strong>the</strong> guiding principlesfor <strong>the</strong> management system and lays<strong>the</strong> foundation for a robust health andsafety management systems <strong>to</strong> provide aframework for continuous improvementsin risk reduction and mitigation.Employees at <strong>CWT</strong> are responsible for<strong>the</strong>ir individual safety as well as that ofo<strong>the</strong>rs. <strong>CWT</strong> believes <strong>the</strong> key <strong>to</strong> buildingand maintaining a safety culture isthrough integration and involvement.<strong>CWT</strong>’s safety committees and work teamscontinue <strong>to</strong> lead and drive employeeresponsibility and participation <strong>to</strong>wardthis cause. In 2012, <strong>CWT</strong> invested inabout 2,500 man hours in safety trainingand activities, including additionalemergency exercises and joint drills with<strong>the</strong> Singapore Civil Defence Force (SCDF).In addition, <strong>CWT</strong> is recognized withResponsible Care, <strong>the</strong> chemical industry’sglobal initiative <strong>to</strong> continuously improveoperations in terms of EHS standards.Human Resources<strong>CWT</strong> is committed <strong>to</strong> having a diverseworkforce, and <strong>to</strong> providing an inclusiveand supportive environment where allemployees are valued and participatefully in <strong>the</strong> <strong>CWT</strong> employment experience.<strong>CWT</strong> believes employees’ talents will beutilized <strong>to</strong> <strong>the</strong> fullest and organizationalperformance will be streng<strong>the</strong>ned in adiverse and supportive environment.Attracting, retaining and motivating<strong>the</strong> best people will position <strong>CWT</strong> at<strong>the</strong> forefront of <strong>the</strong> industry. To sustaina diverse, high-performing teamenvironment, <strong>CWT</strong> invests in a wide rangeof benefits programs around <strong>the</strong> world<strong>to</strong> promote <strong>the</strong> health, well-being andproductivity of employees. It has alsoput in place a compensation strategyfocused on providing base pay that iscompetitive with local market conditions,supplemented by incentive payopportunities that reward performance.In addition, <strong>to</strong> support employee learningand development, <strong>CWT</strong> encouragesemployees <strong>to</strong> acquire new knowledgeand skills through various enrichment andtraining courses.Governance<strong>CWT</strong>’s corporate governance standardsare set at <strong>the</strong> highest level of <strong>the</strong> Group,starting with <strong>the</strong> Board of Direc<strong>to</strong>rs,and flow down through every level of<strong>the</strong> Group. Corporate governance at<strong>CWT</strong> spans many aspects of <strong>the</strong> Group’soperations, practices and proceduresand includes guidelines and mechanismsthat promote ethical corporate behaviordesigned <strong>to</strong> protect shareholders andvarious stakeholders while maximizinginves<strong>to</strong>r returns.<strong>CWT</strong>’s Board has long adhered <strong>to</strong>sound corporate governance practices.The Board has adopted and disclosedCorporate Governance Guidelines <strong>to</strong>clarify how it exercises its responsibilities<strong>to</strong> <strong>CWT</strong>’s stakeholders. Additionally, <strong>the</strong>seguidelines demonstrate that <strong>the</strong> Boardhas <strong>the</strong> necessary authority and practicesin place <strong>to</strong> review and evaluate <strong>CWT</strong>’sbusiness operations as appropriate and <strong>to</strong>make decisions that are independent of<strong>CWT</strong>’s management.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT29CORPORATE GOVERNANCE<strong>CWT</strong> believes in having high standards of corporate governance and is committed <strong>to</strong> making sure that effective self-regula<strong>to</strong>ry corporatepractices exist <strong>to</strong> protect <strong>the</strong> interests of its shareholders and maximize long-term shareholder value.In its aim <strong>to</strong> achieve <strong>the</strong> best practices in corporate governance, <strong>CWT</strong> subscribes <strong>to</strong> <strong>the</strong> Code of Corporate Governance (<strong>the</strong> Code)dated May 2, 2012 by <strong>the</strong> Monetary Authority of Singapore, which forms a sound platform for supporting good governance andtransparency practices.The Board is pleased <strong>to</strong> report that throughout <strong>the</strong> reporting period for <strong>the</strong> <strong>financial</strong> year ended December 31, 2012, <strong>CWT</strong> largelycomplied with <strong>the</strong> Code’s principles and guidelines. This statement outlines <strong>CWT</strong>’s corporate governance practices with specificreference <strong>to</strong> <strong>the</strong> principles and guidelines of <strong>the</strong> Code.BOARD MATTERSBoard’s Conduct of Affairs (Principle 1)The Board charts <strong>the</strong> long-term strategic direction and oversees <strong>the</strong> business affairs of <strong>the</strong> <strong>CWT</strong> Group. It assumes responsibility for <strong>the</strong>Group’s overall strategic plans and key business initiatives, significant investments and major funding, and <strong>financial</strong> performance reviewsand corporate governance practices. The Board also determines <strong>the</strong> compensation policies for Senior Management and moni<strong>to</strong>rsstandards of performance and issue policy, both directly and through board committees, ensuring <strong>the</strong> Group’s compliance with all lawsand regulations as may be relevant <strong>to</strong> <strong>the</strong> business.To support its role and assist in <strong>the</strong> execution of its responsibilities, <strong>the</strong> Board has established two board committees, namely, <strong>the</strong>Nominating cum Remuneration Committee (NRC) and <strong>the</strong> Audit Committee (AC). The terms of reference and composition of each boardcommittee are described in <strong>the</strong> respective section on Board Membership and Audit Committee.The Board meets regularly and holds at least four meetings a year, with ad-hoc meetings being convened when circumstances require.Meetings via teleconference are permitted by <strong>the</strong> Company’s Articles of Association (<strong>the</strong> Articles). The frequency of meeting andattendance of each Direc<strong>to</strong>r at every board and board committee meeting are hereby disclosed.Board of Direc<strong>to</strong>rsNo. of BoardMeetingsHeldNo. of BoardMeetingsAttendedNo. of NRCMeetingsHeldNo. of NRCMeetingsAttendedNo. of ACMeetingsHeldNo. of ACMeetingsAttendedLoi Kai Meng 6 6 2 2 N.A. N.A.Liao Chung Lik 6 6 N.A. N.A. 5 5Loi Pok Yen 6 6 N.A. N.A. N.A. N.A.Jimmy Yim Wing Kuen 6 6 2 2 5 5Dr Hu Jian Ping 6 5 2 2 N.A. N.A.Dr Tan Wee Liang 6 6 N.A. N.A. 5 5Note: N.A. de<strong>notes</strong> Not ApplicableAll Direc<strong>to</strong>rs of <strong>the</strong> Board objectively take decisions in <strong>the</strong> interests of <strong>the</strong> Group. Matters which specifically require <strong>the</strong> Board’s decisionare those involving a conflict of interest for a substantial shareholder or a direc<strong>to</strong>r (such transactions are subject <strong>to</strong> AC’s prior approval),material capital expenditure/investments, material acquisitions and disposal of investments/assets, corporate or <strong>financial</strong> restructuringand share issuances, dividends and o<strong>the</strong>r returns <strong>to</strong> shareholders as well as matters which require <strong>the</strong> Board’s approval as specifiedunder <strong>the</strong> Company’s interested person transaction policy. Specific approval from <strong>the</strong> Board is also required for any investment orexpenditure exceeding 5% of <strong>the</strong> Group Net Tangible Assets.In line with best practices in corporate governance and <strong>the</strong> Code, <strong>CWT</strong> has available budget for Direc<strong>to</strong>rs <strong>to</strong> receive fur<strong>the</strong>r relevanttraining of <strong>the</strong>ir choice in relation with <strong>the</strong>ir duties. Relevant courses include programmes conducted by <strong>the</strong> Singapore Institute ofDirec<strong>to</strong>rs.Direc<strong>to</strong>rs are aware of <strong>the</strong>ir duties and obligations and <strong>the</strong> requirements in respect of disclosure of interests in securities, disclosure of


30 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTCORPORATE GOVERNANCEconflicts of interest in transactions involving <strong>CWT</strong>, prohibitions on dealings in <strong>CWT</strong>’s securities and restrictions on disclosure of pricesensitiveinformation. Direc<strong>to</strong>rs are also informed of regula<strong>to</strong>ry changes affecting <strong>CWT</strong>.Board Composition and Guidance (Principle 2)As at December 31, 2012, <strong>the</strong> Board comprises <strong>the</strong> following members:Name of Direc<strong>to</strong>rPosition heldon <strong>the</strong> BoardDate of firstappointment<strong>to</strong> <strong>the</strong> BoardDate of lastre-electionas Direc<strong>to</strong>rNature ofAppointmentLoi Kai Meng Chairman 26 November 2004 25 April 2012 Non-executive/ NonindependentLiao Chung Lik Direc<strong>to</strong>r 26 November 2004 25 April 2012 Non-executive/ NonindependentLoi Pok Yen Direc<strong>to</strong>r 26 November 2004 25 April 2012 Executive/ NonindependentJimmy Yim Wing Kuen Direc<strong>to</strong>r 28 May 2003 23 April 2010 Non-executive/IndependentDr Hu Jian Ping Direc<strong>to</strong>r 10 December 2004 25 April 2011 Non-executive/IndependentDr Tan Wee Liang Direc<strong>to</strong>r 15 June 2008 25 April 2011 Non-executive/IndependentThe Board currently comprises 6 Direc<strong>to</strong>rs. The Board is of <strong>the</strong> view that <strong>the</strong> present board size of 6 Direc<strong>to</strong>rs is adequate <strong>to</strong> provide fora diversity of views, facilitate effective decision-making and that <strong>the</strong> Board has an appropriate balance of executive, independent andnon-independent Direc<strong>to</strong>rs, taking in<strong>to</strong> account <strong>the</strong> scope and nature of operations of <strong>the</strong> Group. Each Direc<strong>to</strong>r has been appointedon <strong>the</strong> strength of his calibre, experience and potential <strong>to</strong> contribute <strong>to</strong> <strong>the</strong> Group and its businesses. Direc<strong>to</strong>rs bring valuable insightsfrom different perspectives vital <strong>to</strong> <strong>the</strong> strategic interests of <strong>the</strong> Group. The Board is of <strong>the</strong> view that its Direc<strong>to</strong>rs as a group possess <strong>the</strong>necessary competencies <strong>to</strong> lead and govern <strong>the</strong> Group effectively. Their profiles are found on page 9.The NRC noted that all Independent Direc<strong>to</strong>rs had completed <strong>the</strong>ir self-assessment and confirmed <strong>the</strong>ir independence of <strong>the</strong> Group.There is a fairly strong independent element in <strong>the</strong> Board, with <strong>the</strong> NRC considering 3 out of 6 Direc<strong>to</strong>rs <strong>to</strong> be independent fromManagement and <strong>the</strong> Group. The independence of each Independent Direc<strong>to</strong>r is reviewed annually by <strong>the</strong> NRC. The NRC adopts <strong>the</strong>Code’s definition of what constitutes an Independent Direc<strong>to</strong>r (ID) in its review and it is satisfied that no individual or small group ofindividuals dominate <strong>the</strong> Board’s decision-making process.The Non-executive Direc<strong>to</strong>rs (NEDs) participate in board and board committee activities, provide necessary advice and guidance andcontribute <strong>to</strong> <strong>the</strong> overall strategic development of <strong>the</strong> Group. The NEDs may be called upon by <strong>the</strong> AC and NRC if necessary <strong>to</strong>formally meet without <strong>the</strong> presence of Management or Executive Direc<strong>to</strong>r <strong>to</strong> review any matters that must be raised privately. The NRC,comprising only NEDs, reviews Management’s performance and determines <strong>the</strong> rewards for such performance.Chairman and Group Chief Executive Officer (Principle 3)<strong>CWT</strong> has a separate Chairman and Group Chief Executive Officer (CEO). There is appropriate division of responsibilities between <strong>the</strong>Chairman and <strong>the</strong> Group CEO, which ensures a balance of power and authority within <strong>the</strong> Group. The Chairman leads <strong>the</strong> Board andis responsible for its workings and proceedings. The Group CEO is <strong>the</strong> most senior executive in <strong>CWT</strong> and bears executive responsibilityfor <strong>the</strong> Group’s business. The Group CEO, Loi Pok Yen, is <strong>the</strong> son of <strong>the</strong> Chairman, Loi Kai Meng.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT31CORPORATE GOVERNANCELead Independent Direc<strong>to</strong>rThe Board appointed Jimmy Yim Wing Kuen as Lead Independent Direc<strong>to</strong>r (LID) on August 18, 2008 <strong>to</strong> lead and coordinate <strong>the</strong> activitiesof <strong>the</strong> Independent Direc<strong>to</strong>rs (IDs) of <strong>the</strong> Company. The LID aids <strong>the</strong> IDs <strong>to</strong> constructively challenge business proposals and reviewbusiness strategies put up by Management and provide necessary advice and guidance <strong>to</strong> Management.Jimmy Yim has served more than nine years from <strong>the</strong> date of his first appointment. The NRC is satisfied with <strong>the</strong> assessment andconfirmation of <strong>the</strong> independence of Jimmy Yim from <strong>the</strong> Group and <strong>the</strong> Management and having considered <strong>the</strong> fact that Jimmy Yimbeing LID had contributed significantly <strong>to</strong> <strong>the</strong> Board, <strong>the</strong> AC and <strong>the</strong> NRC on various fronts, is in consensus with <strong>the</strong> Board’s views thatJimmy Yim, who has been active in <strong>the</strong> evaluation and deliberation of business initiatives and investments of <strong>CWT</strong>, will continue <strong>to</strong> makevaluable contributions <strong>to</strong> <strong>the</strong> Board as he has good understanding of <strong>the</strong> Group’s businesses and its business model. The Board, havingconsidered all fac<strong>to</strong>rs including <strong>the</strong> importance of continuity, supports <strong>the</strong> recommendation of <strong>the</strong> NRC for re-election of Jimmy Yim asindependent direc<strong>to</strong>r of <strong>CWT</strong> at <strong>the</strong> Annual General Meeting (AGM) in April 2013.Note: With effect from March 1, 2013, Dr Tan Wee Liang has been appointed as Lead Independent Direc<strong>to</strong>r. Jimmy Yim will continue <strong>to</strong> serve <strong>the</strong> <strong>CWT</strong>Board as Independent Direc<strong>to</strong>r.Board Membership (Principle 4)<strong>CWT</strong>’s Executive Council (EXCO), AC and NRC have been formed <strong>to</strong> assist <strong>the</strong> Board in <strong>the</strong> execution of its responsibilities. Thesecommittees have written mandate and operating procedures, which are reviewed periodically.Executive Council (EXCO)The EXCO comprised two NEDs, Loi Kai Meng and Liao Chung Lik, one Executive Direc<strong>to</strong>r, Loi Pok Yen, and members of SeniorManagement. The EXCO oversees <strong>the</strong> management of <strong>CWT</strong> and its group of companies. Its principal responsibilities include strategyformulation and review of <strong>the</strong> Group’s long-term objectives, organization and resource structure, <strong>financial</strong> performance, cost management,business sustainability and corporate effectiveness.Audit Committee (AC)The AC comprised two IDs, Jimmy Yim Wing Kuen (AC Chairman) and Dr Tan Wee Liang, and one NED, Liao Chung Lik. The role andresponsibilities of <strong>the</strong> AC are described in <strong>the</strong> section on Audit Committee (Principle 12).Nominating cum Remuneration Committee (NRC)For <strong>the</strong> year under review, <strong>the</strong> NRC is chaired by LID Jimmy Yim Wing Kuen, who has a wealth of experience in corporate managementand is not associated with a substantial shareholder. The o<strong>the</strong>r members of <strong>the</strong> NRC are ID Dr Hu Jian Ping and NED Loi Kai Meng.The NRC covers dual roles in Direc<strong>to</strong>rs’ nomination cum evaluation and remuneration. The NRC’s functions include considering andmaking recommendations <strong>to</strong> <strong>the</strong> Board concerning <strong>the</strong> appointment and re-election of Direc<strong>to</strong>rs, and determining <strong>the</strong> independenceof <strong>the</strong> Direc<strong>to</strong>rs; evaluating Board and individual Direc<strong>to</strong>r’s performance and effectiveness; and reviewing <strong>the</strong> board composition of <strong>the</strong>Group and salary and variable bonus for Senior Management.The NRC recommends all appointments and re-appointments of Direc<strong>to</strong>rs <strong>to</strong> <strong>the</strong> Board and Board Committees. It takes in<strong>to</strong> considerationwhe<strong>the</strong>r Direc<strong>to</strong>rs who serve on many boards are able <strong>to</strong> commit <strong>the</strong> necessary time <strong>to</strong> discharge <strong>the</strong>ir responsibilities. The Board hasdetermined that each Direc<strong>to</strong>r can hold up <strong>to</strong> a maximum number of 6 listed company board representations in a year. The NRC alsoconducts an annual review of Direc<strong>to</strong>r’s independence. Based on <strong>the</strong> Code’s criteria for independence, <strong>the</strong> NRC has ascertained thatall IDs are independent.Article 92 of <strong>the</strong> Articles requires one-third of <strong>the</strong> Board <strong>to</strong> retire by rotation at every AGM. In o<strong>the</strong>r words, no direc<strong>to</strong>rs stay in officefor more than 3 years without being re-elected by shareholders. New Direc<strong>to</strong>rs are at present appointed by way of a board resolution,after <strong>the</strong> NRC approves <strong>the</strong>ir appointments. Such new Direc<strong>to</strong>rs must submit <strong>the</strong>mselves for re-election at <strong>the</strong> next AGM of <strong>the</strong> Group.Pursuant <strong>to</strong> Section 153 of <strong>the</strong> Companies Act (Cap. 50), Loi Kai Meng being above <strong>the</strong> age of 70 will also be subject <strong>to</strong> appointmentat <strong>the</strong> next AGM by an ordinary resolution.


32 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTCORPORATE GOVERNANCEA record of <strong>the</strong> Direc<strong>to</strong>rs’ appointment and re-appointment dates is set out on page 30.Note: With effect from March 1, 2013, Dr Hu Jian Ping has been appointed as Chairman of <strong>the</strong> NRC and Dr Tan Wee Liang appointed as Member of <strong>the</strong>NRC.Board Performance (Principle 5)The Board and <strong>the</strong> NRC will evaluate <strong>to</strong>ge<strong>the</strong>r <strong>the</strong> Board’s performance as a whole. The assessment process adopts objectiveperformance criteria such as comparison of <strong>the</strong> Group’s performance with its industry peers. The Board’s performance targets include ameasure aligned with shareholders’ interests, such as Total Shareholder Returns (TSR) and a comparison of <strong>CWT</strong>’s TSR against industrypeers. The performance criteria also consider <strong>CWT</strong>’s share price performance over a three-year period vis-a-vis <strong>the</strong> Singapore StraitsTimes Index and a benchmark index of its industry peers.The NRC, in considering <strong>the</strong> re-appointment of any direc<strong>to</strong>r, will evaluate <strong>the</strong> performance of <strong>the</strong> Direc<strong>to</strong>r. The assessment of eachDirec<strong>to</strong>r’s performance is undertaken by <strong>the</strong> Board Chairman and <strong>the</strong> NRC Chairman. The criteria for assessment include, but are notlimited <strong>to</strong>, attendance record at meetings of <strong>the</strong> Board and Board Committees, intensity of participation at meetings and <strong>the</strong> quality ofcontributions. O<strong>the</strong>r performance criteria include Return on Total Assets and Return on Equity.Access <strong>to</strong> Information (Principle 6)Direc<strong>to</strong>rs are provided with relevant information containing facts, analysis and recommendations in advance prior <strong>to</strong> each Board andBoard Committee meeting <strong>to</strong> enable <strong>the</strong>m <strong>to</strong> be properly informed of matters <strong>to</strong> be discussed and/or approved. Staff Management whohave prepared <strong>the</strong> papers, or who can provide additional insight in<strong>to</strong> <strong>the</strong> matters <strong>to</strong> be discussed, are invited <strong>to</strong> present <strong>the</strong> paper orattend at <strong>the</strong> relevant time during Board and Board Committee meetings.The Board also receives regular reports pertaining <strong>to</strong> <strong>the</strong> operational and <strong>financial</strong> performance of <strong>the</strong> Group. In addition, all analystreports on <strong>the</strong> Group are forwarded <strong>to</strong> <strong>the</strong> Board as and when received <strong>to</strong> keep <strong>the</strong> Direc<strong>to</strong>rs abreast of analysts’ views on <strong>the</strong> Group’sperformance.Direc<strong>to</strong>rs have separate and independent access <strong>to</strong> <strong>the</strong> Senior Management and Company Secretary at all times. The CompanySecretary attends all Board meetings and advises <strong>the</strong> Board on all governance matters; ensures that legal and regula<strong>to</strong>ry requirementsas well as board policies and procedures are complied with; and facilitates and organizes direc<strong>to</strong>rs’ training. The Board is involved in <strong>the</strong>appointment and removal of <strong>the</strong> Company Secretary.Procedures are in place for Direc<strong>to</strong>rs and Board Committees, where necessary, <strong>to</strong> seek independent professional advice, paid for by<strong>the</strong> Group.REMUNERATION MATTERSProcedures for Developing Remuneration Policies (Principle 7)The NRC has recommended, in consultation with <strong>the</strong> Board Chairman, <strong>to</strong> <strong>the</strong> Board a framework of Direc<strong>to</strong>rs’ fees for <strong>CWT</strong>’s NEDsand has reviewed <strong>the</strong> compensation package for key executives, which is performance-based. The Committee reviewed regularly <strong>to</strong>seek enhancement <strong>to</strong> <strong>the</strong> compensation structure with <strong>the</strong> view <strong>to</strong> incentivise performance. Where necessary, <strong>the</strong> NRC shall seek expertadvice inside and/or outside <strong>the</strong> Group on remuneration of all Direc<strong>to</strong>rs. No NRC member or Direc<strong>to</strong>r is involved in deliberations inrespect of any remuneration, compensation or any form of benefits <strong>to</strong> be granted <strong>to</strong> him.Presently, o<strong>the</strong>r than fixed term contract with certain key management member(s) approved by <strong>the</strong> Board before appointment, <strong>the</strong>reis no provision in <strong>the</strong> current employment contracts with <strong>the</strong> Executive Direc<strong>to</strong>r or key management personnel for compensation orparachute payment upon termination of <strong>the</strong>ir contract. Any such contractual commitment would need <strong>the</strong> prior approval of <strong>the</strong> NRCbefore execution.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT33CORPORATE GOVERNANCELevel and Mix of Remuneration (Principle 8)The NRC has given due consideration <strong>to</strong> <strong>the</strong> Code’s principles and guidance <strong>notes</strong> on <strong>the</strong> level and mix of remuneration so as <strong>to</strong> ensurethat <strong>the</strong> level of remuneration is appropriate <strong>to</strong> attract, retain and motivate Direc<strong>to</strong>rs needed <strong>to</strong> run <strong>the</strong> Group successfully.It has also taken in<strong>to</strong> account fac<strong>to</strong>rs such as efforts and time spent, and <strong>the</strong> responsibilities of NEDs. The NRC has ensured that that<strong>the</strong> proportion of <strong>the</strong> remuneration especially that of key executives is linked <strong>to</strong> corporate and individual’s performance, and that <strong>the</strong>performance-related elements of remuneration should form a significant portion of <strong>the</strong> <strong>to</strong>tal remuneration package of <strong>the</strong> ExecutiveDirec<strong>to</strong>r, whose remuneration package was designed <strong>to</strong> align his interests with those of shareholders.Presently, <strong>the</strong>re is no long-term incentive scheme for employees in place.<strong>CWT</strong> shall review <strong>the</strong> pay and employment conditions within <strong>the</strong> industry and those from peer companies <strong>to</strong> ensure that <strong>the</strong> Direc<strong>to</strong>rsand Senior Management are adequately remunerated.Additionally, <strong>the</strong> NRC has come <strong>to</strong> a consensus that it is not feasible <strong>to</strong> enforce contractual provision on reclaim of incentive componentsof remuneration from <strong>the</strong> Executive Direc<strong>to</strong>r or key management personnel. Such provision is presently absent from <strong>the</strong> relevantemployment contracts.Disclosure on Remuneration (Principle 9)Every Direc<strong>to</strong>r on <strong>the</strong> Board during Financial Year 2012 (FY2012) received a basic fee. In addition, he would have received <strong>the</strong> Chairman’sallowance if he were <strong>the</strong> Board Chairman, as well as <strong>the</strong> relevant allowance (depending on whe<strong>the</strong>r he is <strong>the</strong> Chairman or Member of<strong>the</strong> relevant Board Committee) for each position he has held on a Board Committee, subject <strong>to</strong> an overall cap on <strong>the</strong> <strong>to</strong>tal fees andallowances <strong>to</strong> be received by him. If he occupied a position for part of FY2012, <strong>the</strong> fee or allowance payable will be prorated accordingly.Based on <strong>the</strong> existing approved direc<strong>to</strong>r fee structure, <strong>the</strong> Direc<strong>to</strong>rs’ fees for FY2012 have been computed and summarised as follow:DIRECTORLoi Kai MengJimmy Yim Wing KuenLiao Chung LikDr Tan Wee LiangDr Hu Jian PingTotal Fees for FY2012FY2012 FEESS$230,000S$185,000S$100,000S$80,000S$65,000S$660,000All NEDs received 100% fixed fees for <strong>the</strong>ir services in FY2012 in accordance with <strong>the</strong> approved fee structure. The fees payable <strong>to</strong> eachof <strong>the</strong> NEDs fall within <strong>the</strong> S$250,000 band.The NRC has recommended and <strong>the</strong> Board has endorsed <strong>the</strong> proposed Direc<strong>to</strong>rs’ fees which will be tabled for shareholders’ approvalat <strong>the</strong> AGM in April 2013.With regard <strong>to</strong> <strong>the</strong> remuneration of key management personnel, <strong>the</strong>re are both fixed and variable components, with <strong>the</strong> latter beingtied <strong>to</strong> organizational and business units’ performance. The overall average fixed and variable components paid <strong>to</strong> key managementpersonnel, including <strong>the</strong> Executive Direc<strong>to</strong>r, in FY2012 were 28% and 72% respectively.


34 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTCORPORATE GOVERNANCEHaving considered <strong>the</strong> highly competitive industry conditions and <strong>the</strong> sensitivity and confidentiality of staff remuneration matters,<strong>CWT</strong> believes that <strong>the</strong> disclosure of remuneration of its <strong>to</strong>p 5 executives on a named basis as recommended by <strong>the</strong> Code would bedisadvantageous <strong>to</strong> <strong>the</strong> Group’s interests and hamper its ability <strong>to</strong> retain and nurture <strong>the</strong> Group’s talent pool. <strong>CWT</strong> has instead disclosed<strong>the</strong> number of key executives by remuneration band as follows:Annual RemunerationNumber of ExecutivesMore than S$7,250,000 1S$1,500,001 <strong>to</strong> S$1,750,000 1S$1,250,001 <strong>to</strong> S$1,500,000 2S$1,000,001 <strong>to</strong> S$1,250,000 1S$500,001 <strong>to</strong> S$750,000 3The Group CEO’s remuneration package falls in <strong>the</strong> highest band above and 86% of his package is variable.ACCOUNTABILITY AND AUDITAccountability (Principle 10)The Board, through its announcements of quarterly and full-year results, aims <strong>to</strong> provide shareholders with a balanced and understandableassessment of <strong>the</strong> Group’s performance and prospects. Results for <strong>the</strong> first three quarters are released <strong>to</strong> shareholders within 45 daysof <strong>the</strong> end of <strong>the</strong> quarter. Annual results are released within 60 days of <strong>the</strong> <strong>financial</strong> year-end.Management provides <strong>the</strong> EXCO with a monthly <strong>financial</strong> and operational report within 20 days from <strong>the</strong> end of <strong>the</strong> relevant reportingperiod. Monthly meetings are conducted involving Senior Management and <strong>the</strong> business unit heads. In addition, Management alsoprovides Direc<strong>to</strong>rs with a quarterly <strong>financial</strong> management report, which includes <strong>the</strong> quarterly management accounts, o<strong>the</strong>r <strong>financial</strong><strong>statements</strong> and an analysis of those accounts and an update of business and development projects. The report is submitted within 45days of <strong>the</strong> quarter end.<strong>CWT</strong> has clear policies and guidelines for dealings in securities by Direc<strong>to</strong>rs and employees, as recommended by <strong>the</strong> SGX-ST’s BestPractices Guide. Direc<strong>to</strong>rs and employees are cautioned <strong>to</strong> observe <strong>the</strong> insider trading laws at all times.Risk Management and Internal Controls (Principle 11)The Group carries out periodic assessments of risks and controls <strong>to</strong> ensure <strong>the</strong> adequacy of <strong>financial</strong> and operational controls andcompliance with those policies, procedures and controls.The Audit Controller, who reports directly <strong>to</strong> <strong>the</strong> Audit Committee, conducts regular audit of internal control systems of <strong>the</strong> groupcompanies and recommends necessary improvements and enhancements.<strong>CWT</strong>’s audi<strong>to</strong>rs, KPMG, also carry out a review of <strong>the</strong> internal controls <strong>to</strong> <strong>the</strong> extent that this is relevant <strong>to</strong> <strong>the</strong> preparation of true andfair <strong>financial</strong> <strong>statements</strong>. The Audit Committee also reviews <strong>the</strong> audit plans and findings of <strong>the</strong> external audi<strong>to</strong>rs including performanceimprovement observations noted by <strong>the</strong> audi<strong>to</strong>rs in connection with <strong>the</strong>ir audit.In addition, <strong>the</strong> Audit Committee reviews <strong>the</strong> actions taken by Management <strong>to</strong> address findings by both <strong>the</strong> internal and external audi<strong>to</strong>rs.Based on <strong>the</strong> above, <strong>the</strong> Board of Direc<strong>to</strong>rs is satisfied that <strong>the</strong>re are adequate internal controls within <strong>the</strong> Group. The AC expects <strong>the</strong>risk assessment process <strong>to</strong> be a continuing process.Audit Committee (Principle 12)The AC comprises three NEDs, <strong>the</strong> majority of whom, including <strong>the</strong> AC Chairman, is independent. As stated under Board Membershipon page 31, <strong>the</strong> members of <strong>the</strong> AC are Jimmy Yim Wing Kuen (AC Chairman), Dr Tan Wee Liang and Liao Chung Lik. The members of<strong>the</strong> AC, collectively, have <strong>the</strong> expertise in <strong>financial</strong> management and are qualified <strong>to</strong> discharge <strong>the</strong> AC’s responsibilities.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT35CORPORATE GOVERNANCEThe AC has full access <strong>to</strong> and co-operation by <strong>the</strong> Group’s Management and audi<strong>to</strong>rs, and has full discretion <strong>to</strong> invite any Direc<strong>to</strong>r orexecutive officer <strong>to</strong> attend its meetings. The audi<strong>to</strong>rs have unrestricted access <strong>to</strong> <strong>the</strong> AC. The AC has reasonable resources <strong>to</strong> enable it<strong>to</strong> discharge its functions properly.The AC holds at least four meetings a year and performs <strong>the</strong> following functions:a) reviews <strong>the</strong> quarterly <strong>financial</strong> results before submission <strong>to</strong> <strong>the</strong> Board and announcement <strong>to</strong> <strong>the</strong> shareholders;b) reviews <strong>the</strong> <strong>the</strong> consolidated <strong>financial</strong> <strong>statements</strong> of <strong>the</strong> Group before submission <strong>to</strong> <strong>the</strong> Board and <strong>the</strong> audi<strong>to</strong>rs’ report on those<strong>financial</strong> <strong>statements</strong>;c) reviews <strong>the</strong> scope and results of <strong>the</strong> external and internal audits, and <strong>to</strong> evaluate, with <strong>the</strong> assistance of internal and externalaudi<strong>to</strong>rs, <strong>the</strong> adequacy of <strong>the</strong> systems of internal and accounting controls, risk management and compliance;d) reviews <strong>the</strong> audit plans of <strong>the</strong> Group’s audi<strong>to</strong>rs and <strong>the</strong>ir evaluation of <strong>the</strong> systems of internal accounting controls arising from<strong>the</strong>ir audit examination;e) reviews that <strong>the</strong> system of internal controls maintained by <strong>the</strong> Group is sufficient <strong>to</strong> provide reasonable assurances that assetsare safeguarded against loss from unauthorized use, transactions are properly authorized and proper accounting records aremaintained;f) reviews <strong>the</strong> independence of <strong>the</strong> audi<strong>to</strong>rs;g) reviews interested person transactions; andh) recommends <strong>the</strong> nomination of audi<strong>to</strong>rs, approves <strong>the</strong> compensation of <strong>the</strong> audi<strong>to</strong>rs, and reviews <strong>the</strong> scope and results of <strong>the</strong>audit and its cost-effectiveness.The AC may examine whatever aspects it deems appropriate of <strong>the</strong> Group’s <strong>financial</strong> affairs, its internal reviews and external audits andits exposure <strong>to</strong> risks of a regula<strong>to</strong>ry or legal nature. It keeps under review <strong>the</strong> effectiveness of <strong>CWT</strong>’s system of accounting and <strong>financial</strong>controls, for which <strong>the</strong> Direc<strong>to</strong>rs are responsible. It also keeps under review <strong>the</strong> Group’s program <strong>to</strong> moni<strong>to</strong>r compliance with its legal,regula<strong>to</strong>ry and contractual obligations.The AC has <strong>the</strong> explicit authority <strong>to</strong> conduct or authorize investigations in<strong>to</strong> any matters within its terms of reference. Minutes of <strong>the</strong> ACmeetings are regularly submitted <strong>to</strong> <strong>the</strong> Board for its information and review.The AC reviews with <strong>the</strong> Chief Financial Officer and audi<strong>to</strong>rs all audit matters including:a) Audi<strong>to</strong>rs’ report <strong>to</strong> management on significant audit findings and recommendations for improvements in control systems;b) <strong>CWT</strong>’s quarterly and audited annual <strong>financial</strong> <strong>statements</strong> and related foot<strong>notes</strong>, and <strong>the</strong> integrity of <strong>financial</strong> reporting of <strong>the</strong>Group and accounting principles, for recommendation <strong>to</strong> <strong>the</strong> Board for approval; andc) The audi<strong>to</strong>rs’ audit of <strong>the</strong> annual <strong>financial</strong> <strong>statements</strong> and reports.Where necessary, <strong>the</strong> AC meets with internal and external audi<strong>to</strong>rs – without <strong>the</strong> presence of Management – <strong>to</strong> review any matters thatmight be raised privately.The AC has received <strong>the</strong> requisite information from <strong>the</strong> external audi<strong>to</strong>rs evidencing <strong>the</strong> latter’s independence. It has also reviewed <strong>the</strong>volume and nature of non-audit services provided by <strong>the</strong> external audi<strong>to</strong>rs during <strong>the</strong> current <strong>financial</strong> year. Based on this information,<strong>the</strong> AC is satisfied that <strong>the</strong> <strong>financial</strong>, professional and business relationships between <strong>CWT</strong> and <strong>the</strong> external audi<strong>to</strong>rs will not prejudice<strong>the</strong> independence and objectivity of <strong>the</strong> external audi<strong>to</strong>rs.


36 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTCORPORATE GOVERNANCEThe AC reviewed <strong>the</strong> performance of <strong>the</strong> existing audi<strong>to</strong>rs and decided <strong>to</strong> nominate for re-appointment, KPMG, as <strong>the</strong> Group’s audi<strong>to</strong>rsfor <strong>the</strong> <strong>financial</strong> year 2013.<strong>CWT</strong> has an open culture where <strong>the</strong>re is no restriction for staff of <strong>the</strong> Group <strong>to</strong> access <strong>the</strong> AC, Board Chairman, Group CEO, members of<strong>the</strong> EXCO, <strong>the</strong> Audit Controller, <strong>the</strong> Chief Financial Officer and <strong>the</strong> Manager of Human Resources <strong>to</strong> raise concerns about improprieties.Contact details of <strong>the</strong>se persons are accessible <strong>to</strong> all staff.In <strong>the</strong> review of <strong>the</strong> <strong>financial</strong> <strong>statements</strong> for <strong>the</strong> year ended December 31, 2012, <strong>the</strong> AC discussed with Management and <strong>the</strong> externalaudi<strong>to</strong>rs <strong>the</strong> accounting principles that were applied and <strong>the</strong>ir judged opinions of items that might affect <strong>the</strong> <strong>financial</strong> <strong>statements</strong>. Basedon <strong>the</strong> review and discussions, <strong>the</strong> AC is of <strong>the</strong> view that <strong>the</strong> <strong>financial</strong> <strong>statements</strong> are fairly presented in conformity with <strong>the</strong> relevantSingapore Financial Reporting Standards in all material aspects.Internal Audit (Principle 13)<strong>CWT</strong> has put in place an internal audit function that is independent of <strong>the</strong> activities it audits. The Audit Controller is an independentqualified resource reporting directly <strong>to</strong> <strong>the</strong> AC on all audit matters, and <strong>to</strong> <strong>the</strong> Chief Financial Officer on administrative matters.The Audit Controller meets <strong>the</strong> standards set out by recognised professional bodies and operates within <strong>the</strong> framework stated in itsInternal Audit Charter, which is approved by <strong>the</strong> AC. Its mission is <strong>to</strong> provide independent review, objective assessment of <strong>CWT</strong>’s internalcontrol framework/systems <strong>to</strong> add value and improve <strong>CWT</strong>’s operations. It helps <strong>CWT</strong> achieve its objectives by bringing a systematic,disciplined approach <strong>to</strong> evaluate and improve <strong>the</strong> effectiveness of risk management, controls and governance processes.The Audit Controller plans its internal audit schedules annually in consultation with, but independent of, Management and its plan issubmitted <strong>to</strong> and approved by <strong>the</strong> AC. The audit plans are aligned <strong>to</strong> <strong>the</strong> business objectives of <strong>the</strong> Group and <strong>the</strong> scope of <strong>the</strong> audit isdriven primarily from a risk-based audit approach, with audit resources being focused on higher risk assignments.The Audit Controller’s reports are distributed <strong>to</strong> <strong>the</strong> AC, Management and <strong>the</strong> external audi<strong>to</strong>rs as and when issued. These reports arediscussed with Senior Management periodically, and with <strong>the</strong> AC quarterly.In addition, <strong>the</strong> Audit Controller also works with <strong>the</strong> external audi<strong>to</strong>rs <strong>to</strong> discuss <strong>the</strong> audit scope and findings as well as <strong>to</strong> coordinate<strong>the</strong>ir specific audit efforts <strong>to</strong> achieve maximum synergies. Supervisory reports issued by <strong>the</strong> external audi<strong>to</strong>rs and <strong>the</strong> Audit Controllerare actively followed up for implementation by Management based on <strong>the</strong> agreed timelines.SHAREHOLDER RIGHTS AND RESPONSIBILITIESShareholders’ Rights (Principle 14)<strong>CWT</strong> fully supports and encourages shareholder participation at <strong>the</strong> AGM. All shareholders of <strong>CWT</strong> receive <strong>the</strong> annual report and noticeof AGM in advance of <strong>the</strong> AGM. The notice is also advertised in newspapers and made available on <strong>CWT</strong>’s website.<strong>CWT</strong> ensures that shareholders have <strong>the</strong> opportunity <strong>to</strong> participate effectively in and vote at <strong>the</strong> AGM. Shareholders are informed of <strong>the</strong>rules that govern general meeting of shareholders.While <strong>CWT</strong> does not have a specific limit in <strong>the</strong> Articles on <strong>the</strong> number of proxy votes for nominee companies, <strong>the</strong>re is a limit for <strong>the</strong>number of proxies. This is because <strong>CWT</strong> does not want <strong>to</strong> create separate classes of rights in shareholders. Also, under current law, ona show of hands, only one vote is counted.Communication with Shareholders (Principle 15)<strong>CWT</strong> is committed <strong>to</strong> maintaining high standards of disclosure and corporate transparency. The Group strives <strong>to</strong> convey <strong>to</strong> shareholderspertinent information in a clear, forthcoming, detailed, timely manner and on a regular basis, and take in<strong>to</strong> consideration <strong>the</strong>ir views andinputs, and address shareholders’ concerns.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT37CORPORATE GOVERNANCE<strong>CWT</strong> also moni<strong>to</strong>rs <strong>the</strong> dissemination of material information <strong>to</strong> ensure that it is made publicly available on a timely and non-selectivebasis.All <strong>financial</strong> results are made available <strong>to</strong> <strong>the</strong> public and all shareholders by publishing it through <strong>the</strong> SGXNET, and on <strong>CWT</strong>’s websitewww.cwtlimited.com. All information on <strong>the</strong> Group’s new initiatives is first disseminated via SGXNET followed by a news release, whichis also available on <strong>the</strong> website.The inves<strong>to</strong>r relations section of <strong>CWT</strong>’s website contains extensive inves<strong>to</strong>r-related information on <strong>CWT</strong> which serves as a one-s<strong>to</strong>presource platform for shareholders and inves<strong>to</strong>rs <strong>to</strong> gain access <strong>to</strong> company, <strong>financial</strong> and s<strong>to</strong>ck data, assisting <strong>the</strong>m in <strong>the</strong>ir investmentdecisions.<strong>CWT</strong> does not practise selective disclosure. Results and annual reports are announced or issued within <strong>the</strong> manda<strong>to</strong>ry period and areavailable on <strong>CWT</strong>’s website.Conduct of Shareholder Meetings (Principle 16)At <strong>the</strong> AGM, shareholders are given <strong>the</strong> opportunity <strong>to</strong> air <strong>the</strong>ir views and ask Direc<strong>to</strong>rs or Management questions regarding <strong>CWT</strong>. TheArticles also allow a shareholder of <strong>CWT</strong> <strong>to</strong> appoint one proxy <strong>to</strong> attend and vote in place of <strong>the</strong> shareholder.The Articles presently do not provide for shareholders <strong>to</strong> vote at <strong>the</strong> AGM in absentia such as by mail, email or fax <strong>to</strong> ensure properau<strong>the</strong>ntication of <strong>the</strong> identity of shareholders and <strong>the</strong>ir voting intent. <strong>CWT</strong> will consider implementing <strong>the</strong> relevant amendment <strong>to</strong> <strong>the</strong>Articles if <strong>the</strong> Board is of <strong>the</strong> view that <strong>the</strong>re is a demand for <strong>the</strong> same, and after <strong>CWT</strong> has evaluated and put in place <strong>the</strong> necessarysecurity and o<strong>the</strong>r measures <strong>to</strong> facilitate absentia voting and protect against errors, fraud and o<strong>the</strong>r irregularities.Each item of special business included in <strong>the</strong> notice of AGM is accompanied, where appropriate, by an explanation for <strong>the</strong> proposedresolution. Separate resolutions are proposed for each separate issue at <strong>the</strong> meeting.Chairpersons of <strong>the</strong> AC and NRC as well as <strong>the</strong> external audi<strong>to</strong>rs will be present and available <strong>to</strong> address questions at <strong>the</strong> AGM.Additionally, all minutes of <strong>the</strong> AGM, and a summary of <strong>the</strong> questions and answers raised at <strong>the</strong> AGM are publicly available <strong>to</strong> shareholdersupon request.SUPPLEMENTARY INFORMATIONShare Dealing and Interested Person Transaction PolicyRelevant Management employees of <strong>the</strong> Group have been advised of <strong>the</strong> guideline on Share Dealings, <strong>the</strong> implications of insider tradingand <strong>the</strong> recommendations of <strong>the</strong> Best Practices Guide issued by <strong>the</strong> Singapore Exchange <strong>Limited</strong>.<strong>CWT</strong> has put in place an internal policy in respect of any interested person transactions of <strong>the</strong> Group (IPT Policy). All division heads arerequired <strong>to</strong> familiarize <strong>the</strong>mselves with <strong>the</strong> IPT Policy, and highlight any such transactions <strong>to</strong> <strong>the</strong> Group’s Corporate Services Division,where a register of <strong>CWT</strong>’s interested person transactions is maintained. The IPT Policy also sets out <strong>the</strong> levels and procedures <strong>to</strong> obtainapproval for applicable transaction.The transactions conducted for <strong>the</strong> year ended December 31, 2012 were as follow:PurchasesC & P Capital Pte LtdC & P Transport Pte LtdAggregate ValueS$’0001,0761,282


38 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTSTOCK SECTIONSTATISTICS OF SHAREHOLDINGS AS AT 15 MARCH 2013DISTRIBUTION OF SHAREHOLDINGSSIZE OF SHAREHOLDINGSNO. OFSHAREHOLDERS % NO. OF SHARES %1 - 999 192 5.24 23,435 0.001,000 - 10,000 2,338 63.77 13,333,926 2.2210,001 - 1,000,000 1,106 30.17 66,061,848 11.011,000,001 AND ABOVE 30 0.82 520,885,441 86.77TOTAL : 3,666 100.00 600,304,650 100.00SHAREHOLDINGS HELD IN THE HANDS OF THE PUBLICBased on information available <strong>to</strong> <strong>the</strong> Company as at 15 March 2013, approximately 37% of <strong>the</strong> issued ordinary shares of <strong>the</strong> Companyis held by <strong>the</strong> public and <strong>the</strong>refore, Rule 723 of <strong>the</strong> Listing Manual issued by SGX-ST is complied with.TWENTY LARGEST SHAREHOLDERSNO. NAME NO. OF SHARES %1. C & P HOLDINGS PTE LTD 191,680,000 31.932. HSBC (SINGAPORE) NOMINEES PTE LTD 64,546,000 10.753. DBS NOMINEES PTE LTD 41,594,607 6.934. CITIBANK NOMINEES SINGAPORE PTE LTD 38,022,328 6.335. LOI KAI MENG 36,440,000 6.076. LOI KAI MENG (PTE) LIMITED 28,500,000 4.757. EDB INVESTMENTS PTE LTD 16,000,000 2.678. LOI POK YEN 15,600,000 2.609. PENJURU CAPITAL PTE LTD 15,000,000 2.5010. MAYBANK NOMINEES (S) PTE LTD 10,682,000 1.7811. STANLEY K K LIAO 8,397,000 1.4012. BNP PARIBAS SECURITIES SERVICES 7,007,000 1.1713. DB NOMINEES (S) PTE LTD 6,951,145 1.1614. UNITED OVERSEAS BANK NOMINEES (PTE) LTD 6,042,500 1.0115. PRECISE DEVELOPMENT PTE LTD 5,200,000 0.8716. RAFFLES NOMINEES (PTE) LTD 5,069,158 0.8417. MAYBANK KIM ENG SECURITIES PTE LTD 2,776,060 0.4618. LIM SOO SENG (PTE) LIMITED 2,624,000 0.4419. OCBC NOMINEES SINGAPORE PTE LTD 2,566,500 0.4320. DBSN SERVICES PTE LTD 2,256,633 0.38TOTAL : 506,954,931 84.47


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT39STOCK SECTIONSHAREHOLDINGS OF SUBSTANTIAL SHAREHOLDERS AS AT 15 MARCH 2013NAMEDIRECTINTERESTDEEMEDINTEREST TOTAL %C & P HOLDINGS PTE LTD (1) 191,680,000 - 191,680,000 31.93LOI KAI MENG (PTE) LIMITED (1)(2) 31,000,000 191,680,000 222,680,000 37.09STANLEY LIAO PRIVATE LIMITED (1)(3) 19,581,000 191,680,000 211,261,000 35.19LIM SOO SENG (PTE) LIMITED (1)(4) 2,624,000 191,680,000 194,304,000 32.37LOI KAI MENG (5) 67,000,000 224,630,000 291,630,000 48.58LIAO CHUNG LIK (6) 16,301,000 19,581,000 35,882,000 5.98LOI POK YEN (7) 15,600,000 16,100,000 31,700,000 5.28(1)C & P Holdings Pte Ltd is majority-owned by Loi Kai Meng (Pte) <strong>Limited</strong>, Stanley Liao Private <strong>Limited</strong> and Lim Soo Seng (Pte)<strong>Limited</strong>, each of whom owns more than 20% of its issued share capital.(2)Loi Kai Meng (Pte) <strong>Limited</strong> is deemed <strong>to</strong> be interested in <strong>the</strong> shares held by C & P Holdings Pte Ltd.(3)Stanley Liao Private <strong>Limited</strong> is deemed <strong>to</strong> be interested in <strong>the</strong> shares held by C & P Holdings Pte Ltd.(4)Lim Soo Seng (Pte) <strong>Limited</strong> is deemed <strong>to</strong> be interested in <strong>the</strong> shares held by C & P Holdings Pte Ltd.(5)Mr Loi Kai Meng is <strong>the</strong> legal and beneficial owner of 36,440,000 shares and is also <strong>the</strong> beneficial owner of 30,560,000 sharesregistered in <strong>the</strong> name of DBS Nominees Pte Ltd. Mr Loi Kai Meng is deemed <strong>to</strong> be interested in <strong>the</strong> shares held by C & PHoldings Pte Ltd and Loi Kai Meng (Pte) <strong>Limited</strong>. He is also deemed <strong>to</strong> be interested in 1,950,000 shares which are held by hisspouse, Mdm Lim Lay Khia@Lim Lay Choo.(6)Mr Liao Chung Lik is <strong>the</strong> beneficial owner of 16,301,000 shares registered in <strong>the</strong> name of HSBC (Singapore) Nominees Pte Ltd. MrLiao Chung Lik is deemed <strong>to</strong> be interested in 19,581,000 shares which are directly held by Stanley Liao Private <strong>Limited</strong>.(7)Mr Loi Pok Yen is <strong>the</strong> legal and beneficial owner of 15,600,000 shares. Mr Loi Pok Yen is deemed <strong>to</strong> be interested in 15,000,000shares which are directly held by Penjuru Capital Pte Ltd. He is also deemed <strong>to</strong> be interested in 1,100,000 shares which are heldby his spouse, Mdm Tong Siow Oon Sylvia.


40 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTSTOCK SECTIONSHARE PRICE PERFORMANCE<strong>CWT</strong> <strong>Limited</strong> (<strong>CWT</strong>): 23.77%Total Shareholder ReturnsStraits Times Index (STI): 21.55%302520151050JanFebMarAprMayJunJulAugSepOctNovDec2012Source: Bloomberg<strong>CWT</strong> SHARE PRICE AND VOLUME 2012Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecClosing Price (S$) 1.035 1.220 1.285 1.225 1.150 1.185 1.250 1.235 1.280 1.250 1.230 1.225High (S$) 1.065 1.250 1.320 1.300 1.285 1.205 1.270 1.270 1.300 1.290 1.265 1.260Low (S$) 1.000 1.010 1.145 1.200 1.125 1.110 1.185 1.200 1.210 1.240 1.200 1.210Average (S$) 1.033 1.130 1.233 1.250 1.205 1.158 1.228 1.235 1.255 1.265 1.233 1.235Volume (‘000) 3,959 19,804 24,810 7,583 14,704 3,639 6,203 6,280 15,639 6,667 6,795 5,801ST Index 2,907 2,994 3,010 2,979 2,773 2,878 3,036 3,025 3,060 3,038 3,070 3,167


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT41FINANCIAL SECTIONCONTENTSDIRECTORS’ REPORT 42STATEMENT BY DIRECTORS 45INDEPENDENT AUDITORS’ REPORT 46STATEMENTS OF FINANCIAL POSITION 47CONSOLIDATED INCOME STATEMENT 49CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 50CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 51CONSOLIDATED STATEMENT OF CASH FLOWS 55NOTES TO THE FINANCIAL STATEMENTS 58


42 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTDIRECTORS’ REPORTYear ended 31 December 2012We are pleased <strong>to</strong> submit this annual report <strong>to</strong> <strong>the</strong> members of <strong>the</strong> Company <strong>to</strong>ge<strong>the</strong>r with <strong>the</strong> audited <strong>financial</strong> <strong>statements</strong> for <strong>the</strong><strong>financial</strong> year ended 31 December 2012.DIRECTORSThe direc<strong>to</strong>rs in office at <strong>the</strong> date of this report are as follows:Loi Kai Meng (Chairman)Liao Chung LikLoi Pok YenJimmy Yim Wing KuenDr Tan Wee LiangDr Hu Jian PingDIRECTORS’ INTERESTSAccording <strong>to</strong> <strong>the</strong> register kept by <strong>the</strong> Company for <strong>the</strong> purposes of Section 164 of <strong>the</strong> Companies Act, Chapter 50 (<strong>the</strong> Act), particularsof interests of direc<strong>to</strong>rs who held office at <strong>the</strong> end of <strong>the</strong> <strong>financial</strong> year (including those held by <strong>the</strong>ir spouses and infant children) in sharesin <strong>the</strong> Company and in related corporations are as follows:Name of direc<strong>to</strong>r and corporation inwhich interests are heldHoldings registered in <strong>the</strong> nameof direc<strong>to</strong>r or nomineeAt1/1/2012At31/12/2012At21/1/2013At1/1/2012Holdings in which direc<strong>to</strong>r isdeemed <strong>to</strong> have an interestAt31/12/2012At21/1/2013<strong>CWT</strong> <strong>Limited</strong>Ordinary sharesLoi Kai Meng 67,000,000 67,000,000 67,000,000 223,630,000 223,630,000 223,630,000Liao Chung Lik 16,301,000 16,301,000 16,301,000 19,581,000 19,581,000 19,581,000Loi Pok Yen 14,100,000 15,600,000 15,600,000 16,100,000 16,100,000 16,100,000Jimmy Yim Wing Kuen 1,089,000 1,089,000 1,089,000 – – –C & P Holdings Pte LtdOrdinary sharesLoi Kai Meng – – – 2,790,551 2,790,551 2,790,551Liao Chung Lik – – – 3,331,735 3,331,735 3,331,735Except as disclosed in this report, no direc<strong>to</strong>r who held office at <strong>the</strong> end of <strong>the</strong> <strong>financial</strong> year had interests in shares of <strong>the</strong> Company, orof related corporations, ei<strong>the</strong>r at <strong>the</strong> beginning or at <strong>the</strong> end of <strong>the</strong> <strong>financial</strong> year.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT43DIRECTORS’ REPORTYear ended 31 December 2012Nei<strong>the</strong>r at <strong>the</strong> end of, nor at any time during <strong>the</strong> <strong>financial</strong> year, was <strong>the</strong> Company a party <strong>to</strong> any arrangement whose objects are, or oneof whose objects is, <strong>to</strong> enable <strong>the</strong> direc<strong>to</strong>rs of <strong>the</strong> Company <strong>to</strong> acquire benefits by means of <strong>the</strong> acquisition of shares in or debenturesof <strong>the</strong> Company or any o<strong>the</strong>r body corporate.During <strong>the</strong> <strong>financial</strong> year, <strong>the</strong> Company paid professional fees amounting <strong>to</strong> $39,665 <strong>to</strong> a firm in which a direc<strong>to</strong>r of <strong>the</strong> Company, JimmyYim Wing Kuen, is a member. However, <strong>the</strong> direc<strong>to</strong>r has nei<strong>the</strong>r received nor become entitled <strong>to</strong> receive benefits arising out of <strong>the</strong>setransactions o<strong>the</strong>r than those which he is ordinarily entitled <strong>to</strong> as a member of <strong>the</strong> professional firm.Except for <strong>the</strong> above and salaries, bonuses and fees and those benefits disclosed in Note 36 <strong>to</strong> <strong>the</strong> <strong>financial</strong> <strong>statements</strong>, since <strong>the</strong> end of<strong>the</strong> last <strong>financial</strong> year, no direc<strong>to</strong>r has received or become entitled <strong>to</strong> receive, a benefit by reason of a contract made by <strong>the</strong> Company ora related corporation with <strong>the</strong> direc<strong>to</strong>r, or with a firm of which he is a member, or with a company in which he has a substantial <strong>financial</strong>interest.SHARE OPTIONSDuring <strong>the</strong> <strong>financial</strong> year, <strong>the</strong>re were:(i)(ii)no options granted by <strong>the</strong> Company or its subsidiaries <strong>to</strong> any person <strong>to</strong> take up unissued shares in <strong>the</strong> Company or its subsidiaries;andno shares issued by virtue of any exercise of option <strong>to</strong> take up unissued shares of <strong>the</strong> Company or its subsidiaries.As at <strong>the</strong> end of <strong>the</strong> <strong>financial</strong> year, <strong>the</strong>re were no unissued shares of <strong>the</strong> Company or its subsidiaries under option.AUDIT COMMITTEEThe members of <strong>the</strong> Audit Committee at <strong>the</strong> date of this report are:Jimmy Yim Wing Kuen (Chairman)Liao Chung LikDr Tan Wee LiangThe Audit Committee performs <strong>the</strong> functions specified by section 201B of <strong>the</strong> Companies Act, <strong>the</strong> SGX Listing Manual, <strong>the</strong> Code ofCorporate Governance and <strong>the</strong> Best Practices Guide of <strong>the</strong> Singapore Exchange.The Audit Committee has held 4 meetings since <strong>the</strong> last direc<strong>to</strong>rs’ report. In performing its functions, <strong>the</strong> Audit Committee met with<strong>the</strong> Company’s external and internal audi<strong>to</strong>rs <strong>to</strong> discuss <strong>the</strong> scope of <strong>the</strong>ir work, <strong>the</strong> results of <strong>the</strong>ir examination and evaluation of <strong>the</strong>Company’s internal accounting control system.


44 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTDIRECTORS’ REPORTYear ended 31 December 2012The Audit Committee also reviewed <strong>the</strong> following:• assistance provided by <strong>the</strong> Company’s officers <strong>to</strong> <strong>the</strong> internal and external audi<strong>to</strong>rs;• quarterly <strong>financial</strong> information and annual <strong>financial</strong> <strong>statements</strong> of <strong>the</strong> Group and of <strong>the</strong> Company prior <strong>to</strong> <strong>the</strong>ir submission <strong>to</strong> <strong>the</strong>direc<strong>to</strong>rs of <strong>the</strong> Company for adoption; and• interested person transactions (as defined in Chapter 9 of <strong>the</strong> SGX Listing Manual).The Audit Committee has full access <strong>to</strong> management and is given <strong>the</strong> resources required for it <strong>to</strong> discharge its functions. It has fullauthority and <strong>the</strong> discretion <strong>to</strong> invite any direc<strong>to</strong>r or executive officer <strong>to</strong> attend its meetings. The Audit Committee also recommends <strong>the</strong>appointment of <strong>the</strong> external audi<strong>to</strong>rs and reviews <strong>the</strong> level of audit and non-audit fees.The Audit Committee is satisfied with <strong>the</strong> independence and objectivity of <strong>the</strong> external audi<strong>to</strong>rs and has recommended <strong>to</strong> <strong>the</strong> Board ofDirec<strong>to</strong>rs that <strong>the</strong> audi<strong>to</strong>rs, KPMG LLP, be nominated for re-appointment as audi<strong>to</strong>rs at <strong>the</strong> forthcoming Annual General Meeting of <strong>the</strong>Company.In appointing our audi<strong>to</strong>rs for <strong>the</strong> Company, subsidiaries and significant associated companies, we have complied with Rules 712 and715 of <strong>the</strong> SGX Listing Manual.AUDITORSThe audi<strong>to</strong>rs, KPMG LLP, have indicated <strong>the</strong>ir willingness <strong>to</strong> accept re-appointment.On behalf of <strong>the</strong> Board of Direc<strong>to</strong>rsLoi Kai MengDirec<strong>to</strong>rJimmy Yim Wing KuenDirec<strong>to</strong>r28 March 2013


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT45STATEMENT BY DIRECTORSYear ended 31 December 2012In our opinion:(a)(b)<strong>the</strong> <strong>financial</strong> <strong>statements</strong> set out on pages 47 <strong>to</strong> 141 are drawn up so as <strong>to</strong> give a true and fair view of <strong>the</strong> state of affairs of <strong>the</strong>Group and of <strong>the</strong> Company as at 31 December 2012 and <strong>the</strong> results, changes in equity and cash flows of <strong>the</strong> Group for <strong>the</strong> yearended on that date in accordance with <strong>the</strong> provisions of <strong>the</strong> Singapore Companies Act, Chapter 50 and Singapore FinancialReporting Standards; andat <strong>the</strong> date of this statement, <strong>the</strong>re are reasonable grounds <strong>to</strong> believe that <strong>the</strong> Company will be able <strong>to</strong> pay its debts as and when<strong>the</strong>y fall due.The Board of Direc<strong>to</strong>rs has, on <strong>the</strong> date of this statement, authorised <strong>the</strong>se <strong>financial</strong> <strong>statements</strong> for issue.On behalf of <strong>the</strong> Board of Direc<strong>to</strong>rsLoi Kai MengDirec<strong>to</strong>rJimmy Yim Wing KuenDirec<strong>to</strong>r28 March 2013


46 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTINDEPENDENT AUDITORS’ REPORTMembers of <strong>the</strong> Company<strong>CWT</strong> <strong>Limited</strong> and its SubsidiariesReport on <strong>the</strong> <strong>financial</strong> <strong>statements</strong>We have audited <strong>the</strong> accompanying <strong>financial</strong> <strong>statements</strong> of <strong>CWT</strong> <strong>Limited</strong> (“<strong>the</strong> Company”) and its subsidiaries (“<strong>the</strong> Group”), whichcomprise <strong>the</strong> <strong>statements</strong> of <strong>financial</strong> position of <strong>the</strong> Group and <strong>the</strong> Company as at 31 December 2012, <strong>the</strong> income statement, statemen<strong>to</strong>f comprehensive income, statement of changes in equity and statement of cash flows of <strong>the</strong> Group for <strong>the</strong> year <strong>the</strong>n ended, and asummary of significant accounting policies and o<strong>the</strong>r explana<strong>to</strong>ry information, as set out on pages 47 <strong>to</strong> 141.Management’s responsibility for <strong>the</strong> <strong>financial</strong> <strong>statements</strong>Management is responsible for <strong>the</strong> preparation of <strong>financial</strong> <strong>statements</strong> that give a true and fair view in accordance with <strong>the</strong> provisions of<strong>the</strong> Singapore Companies Act, Chapter 50 (“<strong>the</strong> Act”) and Singapore Financial Reporting Standards, and for devising and maintaininga system of internal accounting controls sufficient <strong>to</strong> provide a reasonable assurance that assets are safeguarded against loss fromunauthorised use or disposition; and transactions are properly authorised and that <strong>the</strong>y are recorded as necessary <strong>to</strong> permit <strong>the</strong>preparation of true and fair profit and loss accounts and balance sheets and <strong>to</strong> maintain accountability of assets.Audi<strong>to</strong>rs’ responsibilityOur responsibility is <strong>to</strong> express an opinion on <strong>the</strong>se <strong>financial</strong> <strong>statements</strong> based on our audit. We conducted our audit in accordance withSingapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform <strong>the</strong> audit <strong>to</strong>obtain reasonable assurance about whe<strong>the</strong>r <strong>the</strong> <strong>financial</strong> <strong>statements</strong> are free from material misstatement.An audit involves performing procedures <strong>to</strong> obtain audit evidence about <strong>the</strong> amounts and disclosures in <strong>the</strong> <strong>financial</strong> <strong>statements</strong>.The procedures selected depend on <strong>the</strong> audi<strong>to</strong>r’s judgement, including <strong>the</strong> assessment of <strong>the</strong> risks of material misstatement of <strong>the</strong><strong>financial</strong> <strong>statements</strong>, whe<strong>the</strong>r due <strong>to</strong> fraud or error. In making those risk assessments, <strong>the</strong> audi<strong>to</strong>r considers internal control relevant<strong>to</strong> <strong>the</strong> entity’s preparation of <strong>financial</strong> <strong>statements</strong> that give a true and fair view in order <strong>to</strong> design audit procedures that are appropriatein <strong>the</strong> circumstances, but not for <strong>the</strong> purpose of expressing an opinion on <strong>the</strong> effectiveness of <strong>the</strong> entity’s internal control. An auditalso includes evaluating <strong>the</strong> appropriateness of accounting policies used and <strong>the</strong> reasonableness of accounting estimates made bymanagement, as well as evaluating <strong>the</strong> overall presentation of <strong>the</strong> <strong>financial</strong> <strong>statements</strong>.We believe that <strong>the</strong> audit evidence we have obtained is sufficient and appropriate <strong>to</strong> provide a basis for our audit opinion.OpinionIn our opinion, <strong>the</strong> consolidated <strong>financial</strong> <strong>statements</strong> of <strong>the</strong> Group and <strong>the</strong> statement of <strong>financial</strong> position of <strong>the</strong> Company are properlydrawn up in accordance with <strong>the</strong> provisions of <strong>the</strong> Act and Singapore Financial Reporting Standards <strong>to</strong> give a true and fair view of <strong>the</strong>state of affairs of <strong>the</strong> Group and of <strong>the</strong> Company as at 31 December 2012 and <strong>the</strong> results, changes in equity and cash flows of <strong>the</strong> Groupfor <strong>the</strong> year ended on that date.Report on o<strong>the</strong>r legal and regula<strong>to</strong>ry requirementsIn our opinion, <strong>the</strong> accounting and o<strong>the</strong>r records required by <strong>the</strong> Act <strong>to</strong> be kept by <strong>the</strong> Company and by those subsidiaries incorporatedin Singapore of which we are <strong>the</strong> audi<strong>to</strong>rs have been properly kept in accordance with <strong>the</strong> provisions of <strong>the</strong> Act.KPMG LLPPublic Accountants andCertified Public AccountantsSingapore28 March 2013


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT47STATEMENTS OF FINANCIAL POSITIONAs at 31 December 2012GroupCompanyNote 2012 2011 2012 2011$’000 $’000 $’000 $’000Non-current assetsProperty, plant and equipment 4 314,071 308,226 65,544 42,723Intangible assets 5 130,508 139,555 327 331Subsidiaries 6 – – 324,911 310,890Associates 7 25,026 23,616 200 200Jointly-controlled entities 8 25,926 25,200 5,154 5,356Financial assets 9 106,917 83,575 106,844 80,686Non-current receivables 10 12,765 8,470 1,222 1,630Deferred tax assets 12 4,091 5,364 – –O<strong>the</strong>r non-current assets 13 5,162 4,681 3 3624,466 598,687 504,205 441,819Current assetsInven<strong>to</strong>ries 14 338,095 170,334 1,850 1,781Trade and o<strong>the</strong>r receivables 16 920,785 536,349 146,770 122,155Financial assets 9 13,354 – – –Derivative <strong>financial</strong> instruments 27 22,564 83,563 – –Tax recoverable 932 591 229 86Cash and cash equivalents 21 294,707 211,982 11,313 6,4531,590,437 1,002,819 160,162 130,475Non-current assets held-for-sale 23 – 2,345 – –1,590,437 1,005,164 160,162 130,475Total assets 2,214,903 1,603,851 664,367 572,294Equity attributable <strong>to</strong> owners of <strong>the</strong> CompanyShare capital 24 174,338 174,338 174,338 174,338Reserves 25 408,424 301,832 155,687 129,109582,762 476,170 330,025 303,447Non-controlling interests 32,605 33,030 – –Total equity 615,367 509,200 330,025 303,447Non-current liabilitiesO<strong>the</strong>r payables 30 57,245 81,459 – –Financial liabilities 26 85,844 81,274 55,970 54,101Derivative <strong>financial</strong> instruments 27 2,644 2,418 – –Employee benefits 28 11,338 11,802 – –Deferred tax liabilities 12 29,756 30,799 – –Deferred gains 31 58,448 70,828 57,168 64,442245,275 278,580 113,138 118,543The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


48 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTSTATEMENTS OF FINANCIAL POSITIONAs at 31 December 2012GroupCompanyNote 2012 2011 2012 2011$’000 $’000 $’000 $’000Current liabilitiesTrade and o<strong>the</strong>r payables 30 704,557 442,951 175,582 118,345Financial liabilities 26 580,378 310,887 9,984 1,279Derivative <strong>financial</strong> instruments 27 18,042 17,071 – –Employee benefits 28 2,366 2,319 – –Current tax payable 8,357 8,210 – 416Deferred gains 31 37,644 32,832 35,328 29,954Provisions 32 2,917 1,801 310 3101,354,261 816,071 221,204 150,304Total liabilities 1,599,536 1,094,651 334,342 268,847Total equity and liabilities 2,214,903 1,603,851 664,367 572,294The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT49CONSOLIDATED INCOME STATEMENTYear ended 31 December 2012Note 2012 2011$’000 $’000Revenue 34 5,397,046 2,579,696Cost of sales (5,143,473) (2,421,804)Gross profit 253,573 157,892O<strong>the</strong>r income 29,133 12,096Administrative expenses (153,472) (105,251)O<strong>the</strong>r operating expenses (11,390) (9,583)Profit from operations 117,844 55,154Finance income 22,152 17,893Finance expenses (28,526) (16,187)Net finance (expenses)/income 37 (6,374) 1,706Share of profit of associates and jointly-controlled entities, net of tax 6,998 8,222Profit before income tax 35 118,468 65,082Income tax expense 38 (9,428) (5,609)Profit for <strong>the</strong> year 109,040 59,473Attributable <strong>to</strong>:Owners of <strong>the</strong> Company 107,920 57,145Non-controlling interests 1,120 2,328Profit for <strong>the</strong> year 109,040 59,473Earnings per share (cents)Basic 39 17.98 9.60Diluted 39 17.98 9.60The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


50 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEYear ended 31 December 2012Note 2012 2011$’000 $’000Profit for <strong>the</strong> year 109,040 59,473O<strong>the</strong>r comprehensive incomeForeign currency translation differences relating <strong>to</strong> foreign operations (10,790) 1,923Foreign currency translation differences reclassified <strong>to</strong> profit or loss ondisposal of subsidiaries (40) (1,195)Net change in fair value of available-for-sale <strong>financial</strong> assets 26,626 (4,230)Net change in fair value of available-for-sale <strong>financial</strong> assets reclassified <strong>to</strong>profit or loss upon disposal (58) (2,194)Effective portion of changes in fair value of cash flow hedges (314) (2,651)Share of o<strong>the</strong>r comprehensive (loss)/income of associates and jointly-controlled entities (2,425) 767Tax on o<strong>the</strong>r comprehensive income 38 – –O<strong>the</strong>r comprehensive income/(loss) for <strong>the</strong> year,net of income tax 12,999 (7,580)Total comprehensive income for <strong>the</strong> year 122,039 51,893Total comprehensive income attributable <strong>to</strong>:Owners of <strong>the</strong> Company 122,538 50,480Non-controlling interests (499) 1,413Total comprehensive income for <strong>the</strong> year 122,039 51,893The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT51CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2012SharecapitalFair valuereserveCurrencytranslationreserveHedgingreserveCapitalreserveStatu<strong>to</strong>ryreserveO<strong>the</strong>rreserveRetainedprofitsTotalattributable<strong>to</strong> equityholdersof <strong>the</strong>CompanyNoncontrollinginterestsTotalequity2011$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000At 1 January 2011 161,965 14,890 (21,852) (544) – 557 – 273,273 428,289 20,698 448,987Total comprehensive incomefor <strong>the</strong> yearProfit for <strong>the</strong> year – – – – – – – 57,145 57,145 2,328 59,473O<strong>the</strong>r comprehensive incomeExchange differences arising fromtranslation of foreign operations – – 1,990 – – – – – 1,990 (67) 1,923Exchange difference reclassified <strong>to</strong> profit orloss on disposal of a subsidiary – – (1,195) – – – – – (1,195) – (1,195)Fair value changes on available-for-sale<strong>financial</strong> assets – (4,177) – – – – – – (4,177) (53) (4,230)Fair value changes on available-for-sale<strong>financial</strong> assets reclassified <strong>to</strong> profit orloss arising on disposal – (2,194) – – – – – – (2,194) – (2,194)Effective portion of changes in fair value ofcash flow hedges – – – (1,856) – – – – (1,856) (795) (2,651)Share of o<strong>the</strong>r comprehensive (loss)/income of associates and jointlycontrolledentities – (10) 777 – – – – – 767 – 767Total o<strong>the</strong>r comprehensive income – (6,381) 1,572 (1,856) – – – – (6,665) (915) (7,580)Total comprehensive incomefor <strong>the</strong> year – (6,381) 1,572 (1,856) – – – 57,145 50,480 1,413 51,893The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


52 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTCONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2012NoteSharecapitalFair valuereserveCurrencytranslationreserveHedgingreserveCapitalreserveStatu<strong>to</strong>ryreserveO<strong>the</strong>rreserveRetainedprofitsTotalattributable<strong>to</strong> equityholdersof <strong>the</strong>CompanyNon -controllinginterestsTotalequity$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Transactions with owners, recogniseddirectly in equityContributions by and distributions<strong>to</strong> ownersIssue of new shares 24 12,373 – – – – – – – 12,373 – 12,373Dividend paid <strong>to</strong> equity holders – – – – – – – (14,758) (14,758) – (14,758)Dividend paid <strong>to</strong> non-controlling interests – – – – – – – – – (1,242) (1,242)Total contributions by and distributions<strong>to</strong> owners 12,373 – – – – – – (14,758) (2,385) (1,242) (3,627)Transfer of reservesTransfer <strong>to</strong> statu<strong>to</strong>ry reserve in compliancewith foreign entities’ statu<strong>to</strong>ryrequirements – – – – – 47 – (47) – – –Changes in ownership interestsin subsidiariesGroup restructuring – – – 544 (887) – – 835 492 7,635 8,127Changes in ownership interest insubsidiaries that do not result in lossof controlChanges in non-controlling interests – – – – (477) – – (229) (706) 4,526 3,820Total changes in ownership interestin subsidiaries – – – 544 (1,364) – – 606 (214) 12,161 11,947Total transactions with owners 12,373 – – 544 (1,364) 47 – (14,199) (2,599) 10,919 8,320At 31 December 2011 174,338 8,509 (20,280) (1,856) (1,364) 604 – 316,219 476,170 33,030 509,200The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT53CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2012SharecapitalFair valuereserveCurrencytranslationreserveHedgingreserveCapitalreserveStatu<strong>to</strong>ryreserveO<strong>the</strong>rreserveRetainedprofitsTotalattributable<strong>to</strong> equityholdersof <strong>the</strong>CompanyNoncontrollinginterestsTotalequity2012$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000At 1 January 2012 174,338 8,509 (20,280) (1,856) (1,364) 604 – 316,219 476,170 33,030 509,200Total comprehensive incomefor <strong>the</strong> yearProfit for <strong>the</strong> year – – – – – – – 107,920 107,920 1,120 109,040O<strong>the</strong>r comprehensive incomeExchange differences arising fromtranslation of foreign operations – – (9,263) – – – – – (9,263) (1,527) (10,790)Exchange difference reclassified <strong>to</strong> profi<strong>to</strong>r loss on disposal of a subsidiary – – (40) – – – – – (40) – (40)Fair value changes on available-for-sale<strong>financial</strong> assets – 26,618 – – – – – – 26,618 8 26,626Fair value changes on available-for-sale<strong>financial</strong> assets reclassified <strong>to</strong> profit orloss arising on disposal – (58) – – – – – – (58) – (58)Effective portion of changes in fair valueof cash flow hedges – – – (214) – – – – (214) (100) (314)Share of o<strong>the</strong>r comprehensive (loss)/income of associates and jointlycontrolledentities – 5 (2,590) (19) 172 7 – – (2,425) – (2,425)Total o<strong>the</strong>r comprehensive income – 26,565 (11,893) (233) 172 7 – – 14,618 (1,619) 12,999Total comprehensive incomefor <strong>the</strong> year – 26,565 (11,893) (233) 172 7 – 107,920 122,538 (499) 122,039The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


54 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTCONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2012SharecapitalFair valuereserveCurrencytranslationreserveHedgingreserveCapitalreserveStatu<strong>to</strong>ryreserveO<strong>the</strong>rreserveRetainedprofitsTotalattributable<strong>to</strong> equityholdersof <strong>the</strong>CompanyNoncontrollinginterestsTotalequity$’000 $’000 $’000 $‘000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Transactions with owners, recogniseddirectly in equityContributions by and distributions<strong>to</strong> ownersDividend paid <strong>to</strong> equity holders – – – – – – – (15,008) (15,008) – (15,008)Dividend paid <strong>to</strong> non-controlling interests – – – – – – – – – (2,852) (2,852)Redenomination of ordinary shares – – – – – – (661) – (661) (18) (679)Total contributions by and distributions<strong>to</strong> owners – – – – – – (661) (15,008) (15,669) (2,870) (18,539)Transfer of reservesTransfer <strong>to</strong> statu<strong>to</strong>ry reserve in compliancewith foreign entities’ statu<strong>to</strong>ryrequirements – – – – (7) 39 – (32) – – –Changes in ownership interest insubsidiariesChanges in non-controlling interests – 16 (16) – (109) – – (168) (277) 2,944 2,667Total changes in ownership interestin subsidiaries – 16 (16) – (109) – – (168) (277) 2,944 2,667Total transactions with owners – 16 (16) – (116) 39 (661) (15,208) (15,946) 74 (15,872)At 31 December 2012 174,338 35,090 (32,189) (2,089) (1,308) 650 (661) 408,931 582,762 32,605 615,367The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT55CONSOLIDATED STATEMENT OF CASH FLOWSYear ended 31 December 20122012 2011$’000 $’000Cash flows from operating activitiesProfit before income tax 118,468 65,082Adjustments for:Interest expense 27,113 13,484Interest income (14,656) (8,185)Dividend income from available-for-sale <strong>financial</strong> assets (7,394) (7,585)Depreciation of property, plant and equipment 24,727 21,854Net (gain)/loss on disposal or liquidation of:- Available-for-sale <strong>financial</strong> assets (102) (2,123)- Property, plant and equipment and intangible assets 179 (2,672)- Subsidiaries, jointly-controlled entity and associates (376) (4,718)- Non-current assets held-for-sale (22,980) –Share of profit of associates and jointly-controlled entities (6,998) (8,222)Amortisation of:- Intangible assets 8,570 5,308- Deferred gain (34,466) (32,871)Reversal of deferred gain (2,415) –Impairment losses on:- Intangible assets 83 127- Available-for-sale <strong>financial</strong> assets 81 –- Trade and o<strong>the</strong>r receivables 2,168 729- Property, plant and equipment 1,022 378Increase in retirement benefit obligations 297 –Increase in subordinated employee benefit liabilities 81 –Provision 175 (89)Operating profit before working capital changes 93,577 40,497Changes in working capital:Inven<strong>to</strong>ries (162,266) 179,363Trade and o<strong>the</strong>r receivables (335,456) (46,531)Trade and o<strong>the</strong>r payables 282,873 33,148Cus<strong>to</strong>mer segregated funds (57,797) (41,469)Cash (used in)/generated from operations (179,069) 165,008Income taxes paid (8,235) (5,685)Net cash (used in)/from operating activities (187,304) 159,323The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


56 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTCONSOLIDATED STATEMENT OF CASH FLOWSYear ended 31 December 2012Note 2012 2011$’000 $’000Cash flows from investing activitiesInterest received 14,749 8,249Dividends received from:- Associates and jointly-controlled entities 3,772 3,505- Available-for-sale <strong>financial</strong> assets 7,394 7,585Purchases of:- Property, plant and equipment (60,151) (68,424)- Intangible assets (1,551) (742)- Available-for-sale <strong>financial</strong> assets (166) (6,132)- Exchange membership (657) (4,429)- Transferable club membership (4) –Investment in exploration and evaluation assets (1,241) –Guarantee deposits with clearing corporation (2,441) –Net proceeds from disposal of:- Property, plant and equipment 952 9,642- Available-for-sale <strong>financial</strong> assets 405 10,158- Non-current assets held-for-sale 69,566 –- Subsidiaries, net of cash disposed of 41 (1,197) 12,971- Jointly-controlled entity 207 –Proceeds from liquidation of subsidiaries 92 –Proceeds from disposal of shares <strong>to</strong> a non-controlling interest 20 –Acquisitions of interest in:- Subsidiaries, net of cash acquired 40 (29,032) (418,491)- Associates (617) (1,155)- Jointly-controlled entities (612) (10,549)- Non-controlling interests – (428)Deferred consideration paid <strong>to</strong> non-controlling interests (11,370) –Loans <strong>to</strong>:- Associates (566) (420)- Non-controlling interests (1,486) –Quasi equity loan <strong>to</strong> jointly-controlled entities – (1,296)Repayment of loan from jointly-controlled entities 252 –Net cash used in investing activities (13,682) (459,956)The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT57CONSOLIDATED STATEMENT OF CASH FLOWSYear ended 31 December 2012Note 2012 2011$’000 $’000Cash flows from financing activitiesInterest paid (27,113) (13,484)Dividends paid:- Equity holders of <strong>the</strong> Company (15,008) (14,758)- Non-controlling interests (2,852) (1,242)Capital contributions from non-controlling interests 3,030 4,142Repayment of finance lease obligations (1,324) (860)Repayment of loan from non-controlling interest (740) (116)Proceeds from bank borrowings 130,579 143,847Repayment of bank borrowings (65,105) (74,676)Loan from non-controlling interest 1,133 3,677Changes in pledged fixed deposits (118) (288)Net cash from financing activities 22,482 46,242Net decrease in cash and cash equivalents (178,504) (254,391)Cash and cash equivalents at beginning of <strong>the</strong> year (55,127) 197,337Effect of exchange rate fluctuations on balances held in foreign currencies 3,045 1,927Cash and cash equivalents at end of <strong>the</strong> year 21 (230,586) (55,127)The accompanying <strong>notes</strong> form an integral part of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>.


58 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 2012These <strong>notes</strong> form an integral part of <strong>the</strong> <strong>financial</strong> <strong>statements</strong>.The <strong>financial</strong> <strong>statements</strong> were authorised for issue by <strong>the</strong> Board of Direc<strong>to</strong>rs on 28 March 2013.1 DOMICILE AND ACTIVITIES<strong>CWT</strong> <strong>Limited</strong> (<strong>the</strong> “Company”) is incorporated in <strong>the</strong> Republic of Singapore and has its registered office at 38 Tanjong Penjuru,<strong>CWT</strong> Logistics Hub 1, Singapore 609039.The principal activities of <strong>the</strong> Company are those relating <strong>to</strong> <strong>the</strong> provision of warehousing and logistics services, transportationservices and investment holding.The principal activities of <strong>the</strong> Group are those relating <strong>to</strong> <strong>the</strong> provision of warehousing and logistics services, transportation services,import and export services cargo consolidation and freight forwarding services, container depot operations, commodities supplychain management, collateral management services, engineering services, design-and-build of logistics facilities and <strong>financial</strong>services.The consolidated <strong>financial</strong> <strong>statements</strong> relate <strong>to</strong> <strong>the</strong> Company and its subsidiaries (collectively referred <strong>to</strong> as <strong>the</strong> “Group”) and <strong>the</strong>Group’s interests in associates and jointly-controlled entities.2 BASIS OF PREPARATION2.1 Statement of complianceThe <strong>financial</strong> <strong>statements</strong> are prepared in accordance with <strong>the</strong> Singapore Financial Reporting Standards (FRS).2.2 Basis of measurementThe <strong>financial</strong> <strong>statements</strong> have been prepared on <strong>the</strong> his<strong>to</strong>rical cost basis except as disclosed in <strong>the</strong> accounting policies set outbelow.2.3 Functional and presentation currencyThese <strong>financial</strong> <strong>statements</strong> are presented in Singapore dollars, which is <strong>the</strong> Company’s functional currency. All <strong>financial</strong> informationpresented in Singapore dollars have been rounded <strong>to</strong> <strong>the</strong> nearest thousand, unless o<strong>the</strong>rwise stated.2.4 Use of estimates and judgementsThe preparation of <strong>financial</strong> <strong>statements</strong> in conformity with FRS requires management <strong>to</strong> make judgements, estimates andassumptions that affect <strong>the</strong> application of accounting policies and <strong>the</strong> reported amounts of assets, liabilities, income andexpenses. Actual results may differ from <strong>the</strong>se estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions <strong>to</strong> accounting estimates are recognised in<strong>the</strong> period in which <strong>the</strong> estimates are revised and in any future periods affected.In <strong>the</strong> application of <strong>the</strong> Group’s accounting policies, which are described in note 3, management is of <strong>the</strong> opinion that <strong>the</strong>re isno instance of application of judgement which is expected <strong>to</strong> have a significant effect on <strong>the</strong> amounts recognised in <strong>the</strong> <strong>financial</strong><strong>statements</strong>, apart from those involving estimations described below.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT59NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20122 BASIS OF PREPARATION (CONTINUED)2.4 Use of estimates and judgements (continued)The key assumptions concerning <strong>the</strong> future, and o<strong>the</strong>r key sources at reporting date, that have a significant risk of causing amaterial adjustment <strong>to</strong> <strong>the</strong> carrying amounts of assets and liabilities in <strong>the</strong> next <strong>financial</strong> year are described in <strong>the</strong> following <strong>notes</strong>:• Note 4 – Impairment assessment, provision for res<strong>to</strong>ration costs, depreciation of property, plant and equipment anddetermination of deferred gain arising from sale and leaseback transaction• Note 5 – Measurement of recoverable amounts for goodwill impairment test• Note 6 – Impairment allowances on investments in subsidiaries• Note 12 – Measurement of deferred tax assets• Note 15 – Measurement of allowance for foreseeable losses• Note 16 – Impairment allowances on trade receivables• Note 29 – Measurement of retirement benefit obligation• Note 32 – Measurement of provisions• Note 38 – Assessment of income tax provision• Note 40 – Determination of purchase considerations (including deferred and contingent considerations), valuation ofassets, liabilities and contingent liabilities acquired in business combinations• Note 42 – Valuation of <strong>financial</strong> instruments2.5 Changes in accounting policiesOverviewIn <strong>the</strong> current <strong>financial</strong> year, <strong>the</strong> Group has adopted all <strong>the</strong> new and revised FRSs and Interpretations of FRSs (“INT FRSs”) thatare relevant <strong>to</strong> its operations and effective for annual periods beginning on 1 January 2012. The adoption of <strong>the</strong>se new andrevised FRSs and INT FRSs does not result in substantial changes <strong>to</strong> <strong>the</strong> Group’s accounting policies and has no material effec<strong>to</strong>n <strong>the</strong> amounts reported for <strong>the</strong> current or prior years.


60 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIESThe accounting policies set out below have been applied consistently <strong>to</strong> all periods presented in <strong>the</strong>se <strong>financial</strong> <strong>statements</strong> andhave been applied consistently by Group entities.3.1 Basis of consolidationBusiness combinationsBusiness combinations are accounted for using <strong>the</strong> acquisition method in accordance with FRS 103 Business Combinationas at <strong>the</strong> acquisition date, which is <strong>the</strong> date on which control is transferred <strong>to</strong> <strong>the</strong> Group. Control is <strong>the</strong> power <strong>to</strong> govern <strong>the</strong><strong>financial</strong> and operating policies of an entity so as <strong>to</strong> obtain benefits from its activities. In assessing control, <strong>the</strong> Group takes in<strong>to</strong>consideration potential voting rights that are currently exercisable.The consideration transferred does not include amounts related <strong>to</strong> <strong>the</strong> settlement of pre-existing relationships. Such amountsare generally recognised in profit or loss.Costs related <strong>to</strong> <strong>the</strong> acquisition, o<strong>the</strong>r than those associated with <strong>the</strong> issue of debt or equity securities, that <strong>the</strong> Group incurs inconnection with a business combination are expensed as incurred.Any contingent consideration payable is recognised at fair value at <strong>the</strong> acquisition date. If <strong>the</strong> contingent consideration isclassified as equity, it is not remeasured and settlement is accounted for within equity. O<strong>the</strong>rwise, subsequent changes <strong>to</strong> <strong>the</strong> fairvalue of <strong>the</strong> contingent consideration are recognised in profit or loss.For non-controlling interests that are present ownership interests and entitle <strong>the</strong>ir holders <strong>to</strong> a proportionate share of <strong>the</strong> acquiree’snet assets in <strong>the</strong> event of liquidation, <strong>the</strong> Group elects on a transaction-by-transaction basis whe<strong>the</strong>r <strong>to</strong> measure <strong>the</strong>m at fairvalue, or at <strong>the</strong> non-controlling interests’ proportionate share of <strong>the</strong> recognised amounts of <strong>the</strong> acquiree’s identifiable net assets,at <strong>the</strong> acquisition date. All o<strong>the</strong>r non-controlling interests are measured at acquisition-date fair value or, when applicable, on <strong>the</strong>basis specified in ano<strong>the</strong>r standard.When share-based payment awards (replacement awards) are exchanged for awards held by <strong>the</strong> acquiree’s employees(acquiree’s awards) and relate <strong>to</strong> past services, <strong>the</strong>n all or a portion of <strong>the</strong> amount of <strong>the</strong> acquirer’s replacement awards isincluded in measuring <strong>the</strong> consideration transferred in <strong>the</strong> business combination. This determination is based on <strong>the</strong> marketbasedvalue of <strong>the</strong> replacement awards compared with <strong>the</strong> market-based value of <strong>the</strong> acquiree’s awards and <strong>the</strong> extent <strong>to</strong> which<strong>the</strong> replacement awards relate <strong>to</strong> past and/or future service.SubsidiariesSubsidiaries are entities controlled by <strong>the</strong> Group. The <strong>financial</strong> <strong>statements</strong> of subsidiaries are included in <strong>the</strong> consolidated<strong>financial</strong> <strong>statements</strong> from <strong>the</strong> date that control commences until <strong>the</strong> date that control ceases.The accounting policies of subsidiaries have been changed when necessary <strong>to</strong> align <strong>the</strong>m with <strong>the</strong> policies adopted by <strong>the</strong>Group. Losses applicable <strong>to</strong> <strong>the</strong> non-controlling interests in a subsidiary are allocated <strong>to</strong> <strong>the</strong> non-controlling interests even ifdoing so causes <strong>the</strong> non-controlling interests <strong>to</strong> have a deficit balance.Loss of controlUpon <strong>the</strong> loss of control, <strong>the</strong> Group derecognises <strong>the</strong> assets and liabilities of <strong>the</strong> subsidiary, any non-controlling interests and<strong>the</strong> o<strong>the</strong>r components of equity related <strong>to</strong> <strong>the</strong> subsidiary. Any surplus or deficit arising on <strong>the</strong> loss of control is recognised inprofit or loss. If <strong>the</strong> Group retains any interest in <strong>the</strong> previous subsidiary, <strong>the</strong>n such interest is measured at fair value at <strong>the</strong> datethat control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale <strong>financial</strong> assetdepending on <strong>the</strong> level of influence retained.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT61NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.1 Basis of consolidation (continued)Investments in associates and jointly-controlled entities (equity-accounted investees)Associates are those entities in which <strong>the</strong> Group has significant influence, but not control, over <strong>the</strong> <strong>financial</strong> and operating policiesof <strong>the</strong>se entities. Significant influence is presumed <strong>to</strong> exist when <strong>the</strong> Group holds between 20% and 50% of <strong>the</strong> voting powerof ano<strong>the</strong>r entity. Jointly-controlled entities are those entities over whose activities <strong>the</strong> Group has joint control, established bycontractual agreement and requiring unanimous consent for strategic <strong>financial</strong> and operating decisions.Investments in associates and jointly-controlled entities are accounted for using <strong>the</strong> equity method (equity-accounted investees)and are recognised initially at cost.The consolidated <strong>financial</strong> <strong>statements</strong> include <strong>the</strong> Group’s share of <strong>the</strong> profit or loss and o<strong>the</strong>r comprehensive income of <strong>the</strong>equity-accounted investees, after adjustments <strong>to</strong> align <strong>the</strong> accounting policies of <strong>the</strong> equity-accounted investees with those of<strong>the</strong> Group, from <strong>the</strong> date that significant influence or joint control commences until <strong>the</strong> date that significant influence or jointcontrol ceases.When <strong>the</strong> Group’s share of losses exceeds its interest in an equity-accounted investee, <strong>the</strong> carrying amount of that interest,including any long-term investments, is reduced <strong>to</strong> zero, and <strong>the</strong> recognition of fur<strong>the</strong>r losses is discontinued except <strong>to</strong> <strong>the</strong> extentthat <strong>the</strong> Group has an obligation or has made payments on behalf of <strong>the</strong> investee.Acquisition of non-controlling interestsAcquisitions of non-controlling interests are accounted for as transactions with owners in <strong>the</strong>ir capacity as owners and <strong>the</strong>refore <strong>the</strong>carrying amount of assets and liabilities are not changed and <strong>the</strong>refore no goodwill is recognised as a result of such transactions.The adjustments <strong>to</strong> non-controlling interests are based on a proportionate amount of <strong>the</strong> net assets of <strong>the</strong> subsidiary. Anydifference between <strong>the</strong> adjustment <strong>to</strong> non-controlling interests and <strong>the</strong> fair value of consideration paid is recognised directly inequity and presented as part of equity attributable <strong>to</strong> owners of <strong>the</strong> Company.Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions areeliminated in preparing <strong>the</strong> consolidated <strong>financial</strong> <strong>statements</strong>. Unrealised gains arising from transactions with associates andjointly-controlled entities are eliminated <strong>to</strong> <strong>the</strong> extent of <strong>the</strong> Group’s interest in <strong>the</strong> entity. Significant unrealised losses areeliminated in <strong>the</strong> same way as unrealised gains, but only <strong>to</strong> <strong>the</strong> extent that <strong>the</strong>re is no evidence of impairment.Accounting for subsidiaries, associates and jointly-controlled entities by <strong>the</strong> CompanyInvestments in subsidiaries, associates and jointly-controlled entities are stated in <strong>the</strong> Company’s statement of <strong>financial</strong> positionat cost less accumulated impairment losses.3.2 Foreign currencyForeign currency transactionsTransactions in foreign currencies are translated <strong>to</strong> <strong>the</strong> respective functional currencies of Group entities at exchange rates at <strong>the</strong>dates of <strong>the</strong> transactions. The functional currencies of <strong>the</strong> Group entities are mainly <strong>the</strong> Singapore dollar, United States dollar,Euro and <strong>the</strong> Chinese Yuan. Monetary assets and liabilities denominated in foreign currencies at <strong>the</strong> end of <strong>the</strong> reporting periodare retranslated <strong>to</strong> <strong>the</strong> functional currency at <strong>the</strong> exchange rate at that date. The foreign currency gain or loss on monetary itemsis <strong>the</strong> difference between amortised cost in <strong>the</strong> functional currency at <strong>the</strong> beginning of <strong>the</strong> year, adjusted for effective interest andpayments during <strong>the</strong> year, and <strong>the</strong> amortised cost in foreign currency translated at <strong>the</strong> exchange rate at end of <strong>the</strong> year.


62 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.2 Foreign currency (continued)Foreign currency transactions (continued)Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated <strong>to</strong> <strong>the</strong>functional currency at <strong>the</strong> exchange rate at <strong>the</strong> date that <strong>the</strong> fair value was determined. Non-monetary items in a foreigncurrency that are measured in terms of his<strong>to</strong>rical costs are translated using <strong>the</strong> exchange rate at <strong>the</strong> date of <strong>the</strong> transaction.Foreign currency differences arising on retranslation are recognised in profit or loss except for <strong>the</strong> following differences which arerecognised in o<strong>the</strong>r comprehensive income arising on <strong>the</strong> translation of:• available-for-sale equity instruments (except on impairment in which case foreign currency differences that have beenrecognised in o<strong>the</strong>r comprehensive income are reclassified <strong>to</strong> profit or loss);• a <strong>financial</strong> liability designated as a hedge of <strong>the</strong> net investment in a foreign operation <strong>to</strong> <strong>the</strong> extent that <strong>the</strong> hedge iseffective; or• qualifying cash flow hedges <strong>to</strong> <strong>the</strong> extent <strong>the</strong> hedge is effective.Foreign operationsThe assets and liabilities of foreign operations are translated <strong>to</strong> Singapore dollars at exchange rates at <strong>the</strong> end of <strong>the</strong> reportingperiod. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, aretranslated <strong>to</strong> Singapore dollars at exchange rates at <strong>the</strong> dates of <strong>the</strong> transactions. Goodwill and fair value adjustments aretreated as assets and liabilities of <strong>the</strong> foreign operation and translated at <strong>the</strong> closing rate.Foreign currency differences are recognised in o<strong>the</strong>r comprehensive income, and presented in <strong>the</strong> foreign currency translationreserve (currency translation reserve) in equity. However, if <strong>the</strong> foreign operation is a non-wholly-owned subsidiary, <strong>the</strong>n <strong>the</strong>relevant proportionate share of <strong>the</strong> translation difference is allocated <strong>to</strong> <strong>the</strong> non-controlling interests. When a foreign operationis disposed of such that control, significant influence or joint control is lost, <strong>the</strong> cumulative amount in <strong>the</strong> currency translationreserve related <strong>to</strong> that foreign operation is reclassified <strong>to</strong> profit or loss as part of <strong>the</strong> gain or loss on disposal. When <strong>the</strong> Groupdisposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, <strong>the</strong> relevant proportionof <strong>the</strong> cumulative amount is reattributed <strong>to</strong> non-controlling interests. When <strong>the</strong> Group disposes of only part of its investment inan associate or jointly-controlled entity that includes a foreign operation while retaining significant influence or joint control, <strong>the</strong>relevant proportion of <strong>the</strong> cumulative amount is reclassified <strong>to</strong> profit or loss.Net investments in a foreign operationWhen <strong>the</strong> settlement of a monetary item receivable from or payable <strong>to</strong> a foreign operation is nei<strong>the</strong>r planned nor likely <strong>to</strong> occur in<strong>the</strong> foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered <strong>to</strong> form part of a netinvestment in a foreign operation are recognised in o<strong>the</strong>r comprehensive income, and are presented in <strong>the</strong> translation reserve inequity.3.3 Property, plant and equipmentRecognition and measurementItems of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.Cost includes expenditure that is directly attributable <strong>to</strong> <strong>the</strong> acquisition of <strong>the</strong> asset. The cost of self-constructed assets includes<strong>the</strong> cost of materials and direct labour, any o<strong>the</strong>r costs directly attributable <strong>to</strong> bringing <strong>the</strong> assets <strong>to</strong> a working condition for <strong>the</strong>irintended use, and <strong>the</strong> cost of dismantling and removing <strong>the</strong> items and res<strong>to</strong>ring <strong>the</strong> site on which <strong>the</strong>y are located. Purchasedsoftware that is integral <strong>to</strong> <strong>the</strong> functionality of <strong>the</strong> related equipment is capitalised as part of that equipment.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT63NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.3 Property, plant and equipment (continued)Recognition and measurement (continued)Where parts of an item of property, plant and equipment have different useful lives, <strong>the</strong>y are accounted for as separate items(major components) of property, plant and equipment.The gain or loss on disposal of an item of property, plant and equipment is determined by comparing <strong>the</strong> proceeds from disposalwith <strong>the</strong> carrying amount of property, plant and equipment, and is recognised net within o<strong>the</strong>r income/o<strong>the</strong>r expenses in profit orloss.Subsequent costsThe cost of replacing a component of an item of property, plant and equipment is recognised in <strong>the</strong> carrying amount of <strong>the</strong> itemif it is probable that <strong>the</strong> future economic benefits embodied within <strong>the</strong> component will flow <strong>to</strong> <strong>the</strong> Group and its cost can bemeasured reliably. The carrying amount of <strong>the</strong> replaced component is derecognised. The costs of <strong>the</strong> day-<strong>to</strong>-day servicing ofproperty, plant and equipment are recognised in profit or loss as incurred.DepreciationDepreciation is based on <strong>the</strong> cost of an asset less its residual value. Significant components of individual assets are assessedand if a component has a useful life that is different from <strong>the</strong> remainder of that asset, that component is depreciated separately.Depreciation is recognised in profit or loss on a straight-line basis over <strong>the</strong> estimated useful lives (or lease term, if shorter) of eachpart of an item of property, plant and equipment. Freehold land and assets-under-construction are not depreciated.Depreciation is recognised from <strong>the</strong> date that <strong>the</strong> property, plant and equipment are installed and are ready for use, or in respec<strong>to</strong>f internally constructed assets, from <strong>the</strong> date that <strong>the</strong> asset is completed and ready for use.The estimated useful lives are as follows:Leasehold land and buildingsLeasehold improvementsPlant, machinery and equipmentMo<strong>to</strong>r vehicles and trailersFurniture, fittings, computers and office equipment5 <strong>to</strong> 58 years15 years5 <strong>to</strong> 10 years5 <strong>to</strong> 10 years1 <strong>to</strong> 5 yearsDepreciation methods, useful lives and residual values are reviewed at <strong>the</strong> end of each reporting period and adjusted if appropriate.Assets-under-construction are stated at cost. Expenditure directly attributable <strong>to</strong> assets-under-construction is capitalised whenincurred. Depreciation will commence when <strong>the</strong> asset is ready for use.3.4 Mining propertiesCosts directly attributable <strong>to</strong> <strong>the</strong> construction and development of a mine are capitalised as mine development until such time asproduction commences.The construction and development costs <strong>to</strong>ge<strong>the</strong>r with <strong>the</strong> capitalised exploration costs, are amortised over <strong>the</strong> unit of productionfrom <strong>the</strong> period when production commences. Costs that are not directly attributable <strong>to</strong> construction and development arerecognised in profit or loss as incurred.


64 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.4 Mining properties (continued)Res<strong>to</strong>ration, rehabilitation and decommissioning costs arising from <strong>the</strong> installation of plant and o<strong>the</strong>r site preparation work,discounted <strong>to</strong> <strong>the</strong>ir net present value, are provided when <strong>the</strong> obligation <strong>to</strong> incur such costs arises and are capitalised in<strong>to</strong> <strong>the</strong> cos<strong>to</strong>f mining properties. Such costs are estimated on <strong>the</strong> basis of a formal closure plan and are subject <strong>to</strong> regular review.Capitalised res<strong>to</strong>ration, rehabilitation and decommissioning costs are charged <strong>to</strong> profit or loss through depreciation of <strong>the</strong> assetsand unwinding of <strong>the</strong> discount on <strong>the</strong> provision.The costs for res<strong>to</strong>ration of site damage, which arises during production, are provided at <strong>the</strong>ir net present values and chargedagainst profit or loss as extraction progresses.The discount rate used <strong>to</strong> measure <strong>the</strong> net present value of <strong>the</strong> obligations is <strong>the</strong> pre tax rate that reflects <strong>the</strong> current marketassessment of <strong>the</strong> time value of money and <strong>the</strong> risks specific <strong>to</strong> <strong>the</strong> obligation.3.5 Mineral exploration, evaluation, stripping and development costsPre-mining rightsCosts incurred prior <strong>to</strong> obtaining mining rights are expensed in <strong>the</strong> period in which <strong>the</strong>y are incurred.Exploration and evaluation costsOnce <strong>the</strong> legal right <strong>to</strong> explore has been acquired, exploration and evaluation cost for an area of interest, o<strong>the</strong>r than that acquiredfrom <strong>the</strong> purchase of ano<strong>the</strong>r company, is charged <strong>to</strong> profit or loss as incurred, except when <strong>the</strong> costs will be recouped fromfuture exploitation or sale of <strong>the</strong> area of interest and it is planned <strong>to</strong> continue with active and significant operations in relation<strong>to</strong> <strong>the</strong> area, or at <strong>the</strong> reporting period end, <strong>the</strong> activity has not reached a stage which permits a reasonable assessment of <strong>the</strong>existence of commercially recoverable reserves, in which case <strong>the</strong> cost is capitalised. Exploration and evaluation costs includeresearching and analyzing his<strong>to</strong>rical exploration data, explora<strong>to</strong>ry drilling, trenching, sampling, and <strong>the</strong> costs of pre-feasibilitystudies. Purchased exploration and evaluation assets are recognised at <strong>the</strong>ir fair value at acquisition if purchased as part of abusiness combination.General and administrative costs are allocated <strong>to</strong> an exploration and evaluation asset only <strong>to</strong> <strong>the</strong> extent that <strong>the</strong>se costs can berelated directly <strong>to</strong> operational activities in <strong>the</strong> relevant area of interest.All capitalised exploration and evaluation cost is moni<strong>to</strong>red for indications of impairment. Where a potential impairment isindicated, an assessment is performed for each area of interest or at <strong>the</strong> cash generating unit level.Once reserves are established and development is sanctioned, exploration and evaluation assets are transferred <strong>to</strong> “MiningProperties”. No amortisation is charged during <strong>the</strong> exploration and evaluation phase.Stripping costsStripping costs are costs incurred in <strong>the</strong> waste removal activity known as stripping activity.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT65NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.5 Mineral exploration, evaluation, stripping and development costs (continued)Pre-production stripping costsPre-production stripping costs are capitalised as part of “Mines Development” if it improves access <strong>to</strong> a mine and meet <strong>the</strong>following criteria:• it is probable that <strong>the</strong> future economic benefits will flow <strong>to</strong> <strong>the</strong> entity;• <strong>the</strong> entity can identify <strong>the</strong> component of <strong>the</strong> ore body <strong>to</strong> which access has been improved; and• <strong>the</strong> costs incurred can be measured reliably.Pre-production stripping costs are expensed as incurred if it does not meet <strong>the</strong> above criteria.Capitalisation of pre-production stripping costs ceases at <strong>the</strong> time that saleable material begins <strong>to</strong> be extracted from <strong>the</strong> mine.Production stripping costsProduction stripping commences at <strong>the</strong> time that saleable materials begin <strong>to</strong> be extracted from <strong>the</strong> mine and normally continuesthroughout <strong>the</strong> life of a mine.Production stripping costs are deferred and capitalised as asset when <strong>the</strong> current period actual stripping ratio exceeds <strong>the</strong>expected long-term average stripping ratio. Production stripping costs which have been previously deferred and capitalised asasset will be reversed and recognised as expenses if <strong>the</strong> current period actual stripping ratio is less than <strong>the</strong> long-term strippingratios.Current actual stripping ratio is <strong>the</strong> ratio of <strong>the</strong> volume of overburden or waste <strong>to</strong> be removed <strong>to</strong> get access <strong>to</strong> <strong>the</strong> mine. Longtermstripping ratio is <strong>the</strong> estimate of overall stripping ratio of certain mine made by <strong>the</strong> management based on actual strippingratios in previous periods and planned stripping ratios for future periods <strong>to</strong> <strong>the</strong> extent that can be reasonably forecasted. At eachreporting date, <strong>the</strong> long-term stripping ratio is re-assessed by <strong>the</strong> management with <strong>the</strong> information updated in current periodand amendment will be made if necessary. Changes in estimates of long-term stripping ratio are accounted for prospectivelyfrom <strong>the</strong> date of <strong>the</strong> change.(i)RecognitionStripping costs are recognised when <strong>the</strong> stripping activity takes place. Recognition of stripping costs shall cease when<strong>the</strong> waste removal activity necessary <strong>to</strong> access <strong>the</strong> mine/ore has completed.(ii)MeasurementStripping costs shall initially be recognised at cost being <strong>the</strong> accumulation of costs directly incurred <strong>to</strong> perform <strong>the</strong>stripping activity and an allocation of directly attributable costs.Incidental operations that take place at <strong>the</strong> same time as <strong>the</strong> stripping activity are charged <strong>to</strong> profit or loss as incurred andshould not be classified as part of stripping costs.After <strong>the</strong> initial recognition, stripping costs shall be carried at cost less accumulated amortisation and accumulatedimpairment.(iii)AmortisationProduction stripping costs are amortised on a systematic basis over <strong>the</strong> expected useful life of <strong>the</strong> identified componen<strong>to</strong>f <strong>the</strong> mine/ore. The unit of production method is applied unless ano<strong>the</strong>r method is more appropriate.


66 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.5 Mineral exploration, evaluation, stripping and development costs (continued)Development costsDevelopment costs incurred is accumulated for each area of interest in which economically recoverable resources have beenidentified and recognised as “Mines Development”. Such costs comprise costs directly attributable <strong>to</strong> <strong>the</strong> construction of a mineand <strong>the</strong> related infrastructure. Mines Development is reclassified as “Mining Properties” at <strong>the</strong> end of <strong>the</strong> commissioning phasewhen <strong>the</strong> mine is capable of operating in <strong>the</strong> manner intended by management.When fur<strong>the</strong>r development cost is incurred in respect of a mining property after <strong>the</strong> commencement of production, such costs iscapitalised as part of <strong>the</strong> mining property when it is probable that additional economic benefits associated with <strong>the</strong> expenditurewill flow <strong>to</strong> <strong>the</strong> Group. O<strong>the</strong>rwise, such costs are charged <strong>to</strong> profit and loss when incurred.No depreciation is recognised in respect of development properties until <strong>the</strong>y are reclassified as “Mining Properties”.Development properties are tested for impairment on each reporting period.3.6 LeasesWhen entities within <strong>the</strong> Group are lessors of a finance leaseAmounts due from lessees under finance leases are recorded as receivables at <strong>the</strong> amount of <strong>the</strong> Group’s net investment in <strong>the</strong>leases. Finance lease income is allocated <strong>to</strong> accounting periods so as <strong>to</strong> reflect a constant rate of return on <strong>the</strong> Group’s netinvestment outstanding in respect of <strong>the</strong> leases.When entities within <strong>the</strong> Group are lessees of a finance leaseLeased assets in which <strong>the</strong> Group assumes substantially all <strong>the</strong> risks and rewards of ownership are classified as finance leases.Upon initial recognition, property, plant and equipment acquired through finance leases are capitalised at <strong>the</strong> lower of its fairvalue and <strong>the</strong> present value of <strong>the</strong> minimum lease payments. Subsequent <strong>to</strong> initial recognition, <strong>the</strong> asset is accounted for inaccordance with <strong>the</strong> accounting policy applicable <strong>to</strong> that asset. Leased assets are depreciated over <strong>the</strong> shorter of <strong>the</strong> lease termand <strong>the</strong>ir useful lives. Lease payments are apportioned between finance expense and reduction of <strong>the</strong> lease liability. The financeexpense is allocated <strong>to</strong> each period during <strong>the</strong> lease term so as <strong>to</strong> produce a constant periodic rate of interest on <strong>the</strong> remainingbalance of <strong>the</strong> liability. Contingent lease payments are accounted for by revising <strong>the</strong> minimum lease payments over <strong>the</strong> remainingterm of <strong>the</strong> lease when <strong>the</strong> lease adjustment is confirmed.When <strong>the</strong> entities within <strong>the</strong> Group are lessors of an operating leaseAssets subject <strong>to</strong> operating leases are included in leasehold buildings and are stated at cost less accumulated depreciation andimpairment losses. Rental income (net of any incentives given <strong>to</strong> lessees) is recognised on a straight-line basis over <strong>the</strong> leaseterm.When <strong>the</strong> entities within <strong>the</strong> Group are lessees of an operating leaseWhere <strong>the</strong> Group has <strong>the</strong> use of assets under operating leases, payments made under <strong>the</strong> leases are recognised in profit or losson a straight-line basis over <strong>the</strong> term of <strong>the</strong> lease. Lease incentives received are recognised in profit or loss as an integral part of<strong>the</strong> <strong>to</strong>tal lease.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT67NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.6 Leases (continued)Sale and leaseback transactionsIn a sale and leaseback of an asset, <strong>the</strong> excess of <strong>the</strong> sale proceeds over <strong>the</strong> carrying amount of <strong>the</strong> asset is recognisedimmediately in income except where <strong>the</strong> transaction results in a finance lease or where <strong>the</strong> sale price is above <strong>the</strong> fair value ofasset leased back in an operating lease. Where <strong>the</strong> sale and leaseback results in a finance lease, <strong>the</strong> excess of <strong>the</strong> sale proceedsover <strong>the</strong> carrying amount of <strong>the</strong> asset is deferred and amortised over <strong>the</strong> term of <strong>the</strong> finance lease. Where <strong>the</strong> sale proceeds arein excess of <strong>the</strong> fair value of an asset sold and leased back in an operating lease, <strong>the</strong> excess of <strong>the</strong> sale proceeds over <strong>the</strong> fairvalue of <strong>the</strong> asset is deferred and amortised over <strong>the</strong> period for which <strong>the</strong> asset is expected <strong>to</strong> be used.If <strong>the</strong> sale results in a loss, <strong>the</strong> loss is recognised immediately except where <strong>the</strong> sale price is below fair value which is compensatedby future lease payments at below market price; in which case, <strong>the</strong> difference is deferred and amortised over <strong>the</strong> period <strong>the</strong> assetis expected <strong>to</strong> be used.3.7 Intangible assetsGoodwillGoodwill and negative goodwill arise on <strong>the</strong> acquisition of subsidiaries, associates and jointly-controlled entities.Goodwill represents <strong>the</strong> excess of:• <strong>the</strong> fair value of <strong>the</strong> consideration transferred; plus• <strong>the</strong> recognised amount of any non-controlling interests in <strong>the</strong> acquiree; plus• if <strong>the</strong> business combination is achieved in stages, <strong>the</strong> fair value of <strong>the</strong> existing equity interest in <strong>the</strong> acquiree,over <strong>the</strong> net recognised amount (generally fair value) of <strong>the</strong> identifiable assets acquired and liabilities assumed.When <strong>the</strong> excess is negative, a bargain purchase gain is recognised immediately in profit or loss.Subsequent measurementGoodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, <strong>the</strong> carryingamount of goodwill is included in <strong>the</strong> carrying amount of <strong>the</strong> investment, and an impairment loss on such an investment is notallocated <strong>to</strong> any asset, including goodwill, that forms part of <strong>the</strong> carrying amount of <strong>the</strong> equity-accounted investee.O<strong>the</strong>r intangible assetsO<strong>the</strong>r intangible assets are measured at fair value upon initial recognition. Subsequent <strong>to</strong> initial recognition, <strong>the</strong> intangible assetsare measured at cost less accumulated amortisation and accumulated impairment losses.• Computer softwareComputer software which is acquired by <strong>the</strong> Group, where it is not an integral part of <strong>the</strong> related hardware, is treated asan intangible asset. Computer software is stated at cost less accumulated amortisation and impairment losses.Computer software is amortised <strong>to</strong> profit or loss using <strong>the</strong> straight-line method over its estimated useful life of 3 <strong>to</strong> 5 years.


68 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.7 Intangible assets (continued)O<strong>the</strong>r intangible assets (continued)• Cus<strong>to</strong>mer contractsCus<strong>to</strong>mer contracts relate <strong>to</strong> <strong>the</strong> estimated value of contracts acquired in a business combination; and have finite livesand are measured at cost less accumulated amortisation and impairment losses.Cus<strong>to</strong>mer contracts are amortised <strong>to</strong> profit or loss using <strong>the</strong> straight-line method over <strong>the</strong> cus<strong>to</strong>mers’ contract periods of1 <strong>to</strong> 10 years.• London Metal Exchange (“LME”) licenceThe licence relates <strong>to</strong> <strong>the</strong> estimated licence value acquired in a business combination; and has finite life and is measuredat cost less accumulated amortisation and impairment losses.LME licence is amortised <strong>to</strong> profit or loss using <strong>the</strong> straight-line method over its estimated useful life of 30 years.• Port Concession Rights (“PCR”)PCR relates <strong>to</strong> <strong>the</strong> estimated value of PCR arising from a foreign warehouse located and operated within a port concessionarea that was acquired in a business combination; and has finite life and is measured at cost less accumulated amortisationand impairment losses.PCR is amortised <strong>to</strong> profit or loss using <strong>the</strong> straight-line method over its estimated useful life of 36 years.• Business <strong>Relations</strong>hips (“BRS”)BRS were acquired in a business combination by <strong>the</strong> Group and have finite useful lives. It is measured at cost lessaccumulated amortisation and impairment losses.BRS is amortised <strong>to</strong> profit or loss using <strong>the</strong> straight-line basis over its estimated useful life of 4 <strong>to</strong> 10 years.• Brand (“BD”)BD was acquired in a business combination by <strong>the</strong> Group and has finite useful life. It is measured at cost less accumulatedamortisation and impairment losses.BD is amortised <strong>to</strong> profit and loss on a straight-line basis over its estimated useful life of 5 years.The amortisation period and amortisation method of intangible assets are reviewed at each reporting date.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT69NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.8 Inven<strong>to</strong>riesInven<strong>to</strong>ries principally comprise commodities held for trading and inven<strong>to</strong>ries that form part of <strong>the</strong> Group’s normal purchase, saleor usage requirements for its processing activities.Inven<strong>to</strong>ries of metals and energy commodities acquired with <strong>the</strong> purpose of selling <strong>the</strong>m in <strong>the</strong> near term and generating a profitfrom fluctuations in price, where <strong>the</strong> Group acts as a broker-trader, are measured at fair value less cost <strong>to</strong> sell.All o<strong>the</strong>r inven<strong>to</strong>ries are valued at <strong>the</strong> lower of cost and net realisable value. Net realisable value is <strong>the</strong> estimated selling price in<strong>the</strong> ordinary course of business less <strong>the</strong> estimated costs of completion and <strong>the</strong> estimated costs necessary <strong>to</strong> make <strong>the</strong> sale.Cost is determined on a first-in, first-out (FIFO) basis and includes <strong>the</strong> full costs of materials, freight and insurance and all o<strong>the</strong>rcosts incurred in bringing <strong>the</strong> inven<strong>to</strong>ries <strong>to</strong> <strong>the</strong>ir present location and condition.Allowance is made where necessary for obsolete, slow moving and defective inven<strong>to</strong>ries.3.9 Contract work-in-progressContract work-in-progress comprises uncompleted service contracts.Contract work-in-progress at <strong>the</strong> reporting date is recorded in <strong>the</strong> statement of <strong>financial</strong> position at cost plus attributable profitless recognised losses, net of progress billings and allowances for foreseeable losses, and is presented in <strong>the</strong> statement of<strong>financial</strong> position as contract work-in-progress (as an asset) or as excess of progress billings over contract work-in-progress (asa liability), as applicable. Cost includes all expenditure related directly <strong>to</strong> specific contracts and an allocation of fixed and variableoverheads incurred in <strong>the</strong> Group’s contract activities based on normal operating capacity.Allowance is made where applicable for any foreseeable losses on uncompleted contracts as soon as <strong>the</strong> possibility of <strong>the</strong> lossis ascertained.Progress claims not yet paid by <strong>the</strong> cus<strong>to</strong>mer are included in <strong>the</strong> statement of <strong>financial</strong> position under progress billings receivable.3.10 Non-current assets held-for-saleNon-current assets that are expected <strong>to</strong> be recovered primarily through sale ra<strong>the</strong>r than through continuing use are classifiedas held-for-sale. Immediately before classification as held-for-sale, <strong>the</strong> assets are remeasured in accordance with <strong>the</strong> Group’saccounting policies. Thereafter, <strong>the</strong> assets are measured at <strong>the</strong> lower of <strong>the</strong>ir carrying amount and fair value less cost <strong>to</strong> sell.Impairment losses on initial classification as held-for-sale and subsequent gains or losses on remeasurement are recognised inprofit or loss. Gains are not recognised in excess of any cumulative impairment loss.3.11 Financial instrumentsDerivative <strong>financial</strong> instrumentsThe Group holds derivative <strong>financial</strong> instruments <strong>to</strong> hedge its foreign currency and interest rate risk exposures.Derivatives are initially recognised at fair value at <strong>the</strong> date <strong>the</strong> derivative contracts are entered in<strong>to</strong> and are subsequently remeasured<strong>to</strong> <strong>the</strong>ir fair values at <strong>the</strong> end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless<strong>the</strong> derivative is designated and is effective as a hedging instrument, in which event <strong>the</strong> timing of <strong>the</strong> recognition in profit or lossdepends on <strong>the</strong> nature of <strong>the</strong> hedge relationship.


70 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.11 Financial instruments (continued)Derivative <strong>financial</strong> instruments (continued)A derivative with a positive fair value is recognised as a <strong>financial</strong> asset; a derivative with a negative fair value is recognised as a<strong>financial</strong> liability. A derivative is presented as a non-current asset or non-current liability if <strong>the</strong> remaining maturity of <strong>the</strong> instrumentis more than 12 months and it is not expected <strong>to</strong> be realised or settled within 12 months. O<strong>the</strong>r derivatives are presented ascurrent assets or liabilities.Derivative <strong>financial</strong> instruments relate <strong>to</strong> <strong>the</strong> commodity trading activities and consist of instruments such as commodity futures,commodity options, commodity fixed price forward contracts and o<strong>the</strong>r forward contracts with determinable pricing. All purchasesand sales of derivative <strong>financial</strong> instruments are recognised on <strong>the</strong> trade date, which is <strong>the</strong> date that <strong>the</strong> Group commits <strong>to</strong> sellor purchase <strong>the</strong> asset. All realised and unrealised gains and losses arising from changes in <strong>the</strong> fair value of derivative <strong>financial</strong>instruments are included in profit or loss in <strong>the</strong> period in which <strong>the</strong>y arise.The fair value of publicly traded derivatives is based on quoted market prices at <strong>the</strong> balance sheet date. The fair value ofcommodity fixed price forward contracts is calculated as <strong>the</strong> present value of <strong>the</strong> estimated future cash flows. The fair value offoreign exchange forward contracts is determined using forward foreign exchange market rates at <strong>the</strong> balance sheet date.Hedge accountingAt <strong>the</strong> inception of a hedge relationship, <strong>the</strong> Group formally designates and documents <strong>the</strong> hedge relationship <strong>to</strong> which <strong>the</strong>Group wishes <strong>to</strong> apply hedge accounting, as well as its risk management objectives and strategy for undertaking <strong>the</strong> hedgetransactions. The documentation includes identification of <strong>the</strong> hedging instrument, <strong>the</strong> hedge item or transaction, <strong>the</strong> natureof risk being hedged and how <strong>the</strong> entity assess <strong>the</strong> hedging instrument’s effectiveness in offsetting <strong>the</strong> exposure <strong>to</strong> changes in<strong>the</strong> hedged item’s fair value or cash flows attributable <strong>to</strong> <strong>the</strong> hedged risk. Such hedges are expected <strong>to</strong> be highly effective inachieving offsetting changes in fair value of or cash flows and are assessed on an ongoing basis <strong>to</strong> determine that <strong>the</strong>y actuallyhave been highly effective throughout <strong>the</strong> <strong>financial</strong> reporting periods for which <strong>the</strong>y are designated.The Group makes an assessment, both at <strong>the</strong> inception of <strong>the</strong> hedge relationship as well as on an ongoing basis, of whe<strong>the</strong>r <strong>the</strong>hedging instruments are expected <strong>to</strong> be “highly effective” in offsetting <strong>the</strong> changes in <strong>the</strong> fair value or cash flows of <strong>the</strong> respectivehedged items attributable <strong>to</strong> <strong>the</strong> hedged risk, and whe<strong>the</strong>r <strong>the</strong> actual results of each hedge are within a range of 80%-125%. Fora cash flow hedge of a forecast transaction, <strong>the</strong> transaction should be highly probable <strong>to</strong> occur and should present an exposure<strong>to</strong> variations in cash flows that could ultimately affect reported profit or loss.Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred.Subsequent <strong>to</strong> initial recognition, derivatives are measured at fair value, and changes <strong>the</strong>rein are accounted for as describedbelow.Fair value hedgeChanges in <strong>the</strong> fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or lossimmediately, <strong>to</strong>ge<strong>the</strong>r with any changes in <strong>the</strong> fair value of <strong>the</strong> hedged item that is attributable <strong>to</strong> <strong>the</strong> hedged risk. The change in<strong>the</strong> fair value of <strong>the</strong> hedging instrument and <strong>the</strong> change in <strong>the</strong> hedged item attributable <strong>to</strong> <strong>the</strong> hedged risk are recognised in <strong>the</strong>line of <strong>the</strong> statement of comprehensive income/income statement relating <strong>to</strong> <strong>the</strong> hedged item.Hedge accounting is discontinued when <strong>the</strong> Group revokes <strong>the</strong> hedging relationship, <strong>the</strong> hedging instrument expires or is sold,terminated, or exercised, or no longer qualifies for hedge accounting. The adjustment <strong>to</strong> <strong>the</strong> carrying amount of <strong>the</strong> hedged itemarising from <strong>the</strong> hedged risk is amortised <strong>to</strong> profit or loss from that date.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT71NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.11 Financial instruments (continued)Cash flow hedgeWhen a derivative is designated as <strong>the</strong> hedging instrument in a hedge of <strong>the</strong> variability in cash flows attributable <strong>to</strong> a particular riskassociated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, <strong>the</strong> effectiveportion of changes in <strong>the</strong> fair value of <strong>the</strong> derivative is recognised in o<strong>the</strong>r comprehensive income and presented in <strong>the</strong> hedgingreserve in equity. Any ineffective portion of changes in <strong>the</strong> fair value of <strong>the</strong> derivative is recognised immediately in profit or loss.When <strong>the</strong> hedged item is a non-<strong>financial</strong> asset, <strong>the</strong> amount accumulated in equity is included in <strong>the</strong> carrying amount of <strong>the</strong> assetwhen <strong>the</strong> asset is recognised. In o<strong>the</strong>r cases, <strong>the</strong> amount accumulated in equity is reclassified <strong>to</strong> profit or loss in <strong>the</strong> same periodthat <strong>the</strong> hedged item affects profit or loss. If <strong>the</strong> hedging instrument no longer meets <strong>the</strong> criteria for hedge accounting, expiresor is sold, terminated or exercised, or <strong>the</strong> designation is revoked, <strong>the</strong>n hedge accounting is discontinued prospectively. If <strong>the</strong>forecast transaction is no longer expected <strong>to</strong> occur, <strong>the</strong>n <strong>the</strong> balance in equity is reclassified <strong>to</strong> profit or loss.(i)Non-derivative <strong>financial</strong> assetsNon-derivative <strong>financial</strong> instruments comprise investments in equity securities, non-current receivables, trade and o<strong>the</strong>rreceivables, cash and cash equivalents, <strong>financial</strong> liabilities, and trade and o<strong>the</strong>r payables.Non-derivative <strong>financial</strong> instruments are recognised initially at fair value plus, for instruments not at fair value throughprofit or loss, any directly attributable transaction costs. Subsequent <strong>to</strong> <strong>the</strong> initial recognition, non-derivative <strong>financial</strong>instruments are measured as described below.A <strong>financial</strong> instrument is recognised if <strong>the</strong> Group becomes a party <strong>to</strong> <strong>the</strong> contractual provisions of <strong>the</strong> instrument. Financialassets are derecognised if <strong>the</strong> Group’s contractual rights <strong>to</strong> <strong>the</strong> cash flows from <strong>the</strong> <strong>financial</strong> assets expire or if <strong>the</strong> Grouptransfers <strong>the</strong> <strong>financial</strong> asset <strong>to</strong> ano<strong>the</strong>r party without retaining control or transfers substantially all <strong>the</strong> risks and rewardsof <strong>the</strong> asset. Regular way purchases and sales of <strong>financial</strong> assets are accounted for at trade date, i.e. <strong>the</strong> date that<strong>the</strong> Group commits itself <strong>to</strong> purchase or sell <strong>the</strong> asset. Financial liabilities are derecognised if <strong>the</strong> Group’s obligationsspecified in <strong>the</strong> contract expire or are discharged or cancelled.Available-for-sale <strong>financial</strong> assetsThe Group’s investment in equity securities is classified as available-for-sale <strong>financial</strong> assets. Subsequent <strong>to</strong> initialrecognition, <strong>the</strong>y are measured at fair value plus any directly attributable transaction costs, and changes <strong>the</strong>rein, o<strong>the</strong>rthan impairment losses, are recognised in <strong>the</strong> o<strong>the</strong>r comprehensive income and presented in fair value reserve in equity.When an investment is derecognised, <strong>the</strong> cumulative gain or loss previously recognised in equity is transferred <strong>to</strong> profit orloss.Loan and receivablesLoans and receivables are <strong>financial</strong> assets with fixed or determinable payments that are not quoted in an active market.Loans and receivables are recognised initially at fair value plus any directly attributable transaction costs. Subsequent<strong>to</strong> initial recognition, loans and receivables are measured at amortised cost using <strong>the</strong> effective interest method, less anyimpairment losses.Cash and cash equivalentsCash and cash equivalents comprise cash balances and fixed deposits. For <strong>the</strong> purpose of <strong>the</strong> statement of cash flows,cash and cash equivalents are presented net of bank overdrafts which are repayable on demand and which form anintegral part of <strong>the</strong> Group’s cash management.


72 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.11 Financial instruments (continued)(ii)Non-derivative <strong>financial</strong> liabilitiesThe Group initially recognises debt securities issued and subordinated liabilities on <strong>the</strong> date that <strong>the</strong>y are originated.Financial liabilities for contingent consideration payable in a business combination are recognised at <strong>the</strong> acquisition date.All o<strong>the</strong>r <strong>financial</strong> liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on <strong>the</strong>trade date, which is <strong>the</strong> date that <strong>the</strong> Group becomes a party <strong>to</strong> <strong>the</strong> contractual provisions of <strong>the</strong> instrument.The Group derecognises a <strong>financial</strong> liability when its contractual obligations are discharged, cancelled or expire.Financial liabilities for contingent consideration payable in a business combination are initially measured at fair value.Subsequent changes in <strong>the</strong> fair value of <strong>the</strong> contingent consideration are recognised in profit or loss.Financial assets and liabilities are offset and <strong>the</strong> net amount presented in <strong>the</strong> statement of <strong>financial</strong> position when, andonly when, <strong>the</strong> Group has a legal right <strong>to</strong> offset <strong>the</strong> amounts and intends ei<strong>the</strong>r <strong>to</strong> settle on a net basis or <strong>to</strong> realise <strong>the</strong>asset and settle <strong>the</strong> liability simultaneously.The Group classifies non-derivative <strong>financial</strong> liabilities in<strong>to</strong> <strong>the</strong> o<strong>the</strong>r <strong>financial</strong> liabilities category. Such <strong>financial</strong> liabilitiesare recognised initially at fair value plus any directly attributable transaction costs. Subsequent <strong>to</strong> initial recognition, <strong>the</strong>se<strong>financial</strong> liabilities are measured at amortised cost using <strong>the</strong> effective interest method.O<strong>the</strong>r non-derivative <strong>financial</strong> liabilities comprise loans and borrowings, bank overdrafts, and trade and o<strong>the</strong>r payables.Bank overdrafts that are repayable on demand and form an integral part of <strong>the</strong> Group’s cash management are includedas a component of cash and cash equivalents for <strong>the</strong> purpose of <strong>the</strong> statement of cash flows.(iii)Share capitalOrdinary sharesOrdinary shares are classified as equity.Incremental costs directly attributable <strong>to</strong> <strong>the</strong> issue of ordinary shares are recognised as a deduction from equity, net ofany tax effects.3.12 Impairment – <strong>financial</strong> assetsNon-derivative <strong>financial</strong> assetsA <strong>financial</strong> asset not carried at fair value through profit or loss is assessed at each reporting date <strong>to</strong> determine whe<strong>the</strong>r <strong>the</strong>re isobjective evidence that it is impaired. A <strong>financial</strong> asset is impaired if objective evidence indicates that a loss event has occurredafter <strong>the</strong> initial recognition of <strong>the</strong> asset, and that <strong>the</strong> loss event had a negative effect on <strong>the</strong> estimated future cash flows of thatasset that can be estimated reliably.Objective evidence that <strong>financial</strong> assets (including equity securities) are impaired can include default or delinquency by a deb<strong>to</strong>r,restructuring of an amount due <strong>to</strong> <strong>the</strong> Group on terms that <strong>the</strong> Group would not consider o<strong>the</strong>rwise, indications that a deb<strong>to</strong>r orissuer will enter bankruptcy, adverse changes in <strong>the</strong> payment status of borrowers or issuers in <strong>the</strong> Group, economic conditionsthat correlate with defaults or <strong>the</strong> disappearance of an active market for a security. In addition, for an investment in an equitysecurity, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT73NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.12 Impairment – <strong>financial</strong> assets (continued)Non-derivative <strong>financial</strong> assets (continued)The Group considers evidence of impairment for receivables at both a specific asset and collective level. All individually significantreceivables are assessed for specific impairment. All individually significant receivables found not <strong>to</strong> be specifically impaired are<strong>the</strong>n collectively assessed for any impairment that has been incurred but not yet identified. Receivables that are not individuallysignificant are collectively assessed for impairment by grouping <strong>to</strong>ge<strong>the</strong>r receivables with similar risk characteristics.In assessing collective impairment, <strong>the</strong> Group uses his<strong>to</strong>rical trends of <strong>the</strong> probability of default, timing of recoveries and <strong>the</strong>amount of loss incurred, adjusted for management’s judgement as <strong>to</strong> whe<strong>the</strong>r current economic and credit conditions are suchthat <strong>the</strong> actual losses are likely <strong>to</strong> be greater or less than suggested by his<strong>to</strong>rical trends.An impairment loss in respect of a <strong>financial</strong> asset measured at amortised cost is calculated as <strong>the</strong> difference between its carryingamount and <strong>the</strong> present value of <strong>the</strong> estimated future cash flows discounted at <strong>the</strong> asset’s original effective interest rate. Lossesare recognised in profit or loss and reflected in an allowance account against receivables. Interest on <strong>the</strong> impaired assetcontinues <strong>to</strong> be recognised through <strong>the</strong> unwinding of <strong>the</strong> discount. When a subsequent event causes <strong>the</strong> amount of impairmentloss <strong>to</strong> decrease, <strong>the</strong> decrease in impairment loss is reversed through profit or loss.Available-for-sale <strong>financial</strong> assetsImpairment losses on available-for-sale investment securities are recognised by transferring <strong>the</strong> cumulative loss that has beenrecognised in o<strong>the</strong>r comprehensive income, and presented in <strong>the</strong> fair value reserve in equity, <strong>to</strong> profit or loss. The cumulativeloss that is removed from o<strong>the</strong>r comprehensive income and recognised in profit or loss is <strong>the</strong> difference between <strong>the</strong> acquisitioncost, net of any principal repayment and amortisation, and <strong>the</strong> current fair value, less any impairment loss previously recognisedin profit or loss. Changes in impairment attributable <strong>to</strong> time value are reflected as a component of interest income.If, in a subsequent period, <strong>the</strong> fair value of an impaired available-for-sale debt security increases and <strong>the</strong> increase can be relatedobjectively <strong>to</strong> an event occurring after <strong>the</strong> impairment loss was recognised in profit or loss, <strong>the</strong>n <strong>the</strong> impairment loss is reversed,with <strong>the</strong> amount of <strong>the</strong> reversal recognised in profit or loss. However, any subsequent recovery in <strong>the</strong> fair value of an impairedavailable-for-sale equity security is recognised in o<strong>the</strong>r comprehensive income.3.13 Impairment – non-<strong>financial</strong> assetsThe carrying amounts of <strong>the</strong> Group’s non-<strong>financial</strong> assets are reviewed at each reporting date <strong>to</strong> determine whe<strong>the</strong>r <strong>the</strong>re isany indication of impairment. If any such indication exists, <strong>the</strong> assets’ recoverable amounts are estimated. For goodwill, <strong>the</strong>recoverable amount is estimated each year at <strong>the</strong> same time.For <strong>the</strong> purpose of impairment testing, assets that cannot be tested individually are grouped <strong>to</strong>ge<strong>the</strong>r in<strong>to</strong> <strong>the</strong> smallest group ofassets that generates cash inflows from continuing use that are largely independent of <strong>the</strong> cash inflows of o<strong>the</strong>r assets or groupsof assets (<strong>the</strong> “cash-generating unit”). Subject <strong>to</strong> an operating segment ceiling test, for <strong>the</strong> purposes of goodwill impairmenttesting, cash-generating units <strong>to</strong> which goodwill has been allocated are aggregated so that <strong>the</strong> level at which impairment istested reflects <strong>the</strong> lowest level at which goodwill is moni<strong>to</strong>red for internal reporting purposes. Goodwill acquired in a businesscombination is allocated <strong>to</strong> groups of cash-generating units that are expected <strong>to</strong> benefit from <strong>the</strong> synergies of <strong>the</strong> combination.The Group’s corporate assets do not generate separate cash inflows. If <strong>the</strong>re is an indication that a corporate asset may beimpaired, <strong>the</strong>n <strong>the</strong> recoverable amount is determined for <strong>the</strong> cash-generating unit <strong>to</strong> which <strong>the</strong> corporate asset belongs.The recoverable amount of an asset or cash-generating unit is <strong>the</strong> greater of its value in use and its fair value less costs <strong>to</strong> sell.In assessing value in use, <strong>the</strong> estimated future cash flows are discounted <strong>to</strong> <strong>the</strong>ir present value using a pre-tax discount rate thatreflects current market assessments of <strong>the</strong> time value of money and <strong>the</strong> risks specific <strong>to</strong> <strong>the</strong> asset or cash-generating unit.


74 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.13 Impairment – non-<strong>financial</strong> assets (continued)An impairment loss is recognised if <strong>the</strong> carrying amount of an asset or its cash-generating unit exceeds its estimated recoverableamount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating unitsare allocated first <strong>to</strong> reduce <strong>the</strong> carrying amount of any goodwill allocated <strong>to</strong> <strong>the</strong> units and <strong>the</strong>n <strong>to</strong> reduce <strong>the</strong> carrying amount of<strong>the</strong> o<strong>the</strong>r assets in <strong>the</strong> unit (group of units) on a pro-rata basis.An impairment loss in respect of goodwill is not reversed. In respect of o<strong>the</strong>r assets, impairment losses recognised in priorperiods are assessed at each reporting date for any indications that <strong>the</strong> loss has decreased or no longer exists. An impairmentloss is reversed if <strong>the</strong>re has been a change in <strong>the</strong> estimates used <strong>to</strong> determine <strong>the</strong> recoverable amount. An impairment lossis reversed only <strong>to</strong> <strong>the</strong> extent that <strong>the</strong> asset’s carrying amount does not exceed <strong>the</strong> carrying amount that would have beendetermined, net of depreciation or amortisation, if no impairment loss had been recognised.3.14 ProvisionsA provision is recognised if, as a result of a past event, <strong>the</strong> Group has a present legal or constructive obligation that can beestimated reliably, and it is probable that an outflow of economic benefits will be required <strong>to</strong> settle <strong>the</strong> obligation. If <strong>the</strong> effect ismaterial, provisions are determined by discounting <strong>the</strong> expected future cash flows at a pre-tax rate that reflects current marketassessments of <strong>the</strong> time value of money and <strong>the</strong> risks specific <strong>to</strong> <strong>the</strong> liability.Onerous contractsA provision for onerous contracts is recognised when <strong>the</strong> expected benefits <strong>to</strong> be derived by <strong>the</strong> Group from a contract arelower than <strong>the</strong> unavoidable cost of meeting <strong>the</strong> obligations under <strong>the</strong> contract. The provision is measured at <strong>the</strong> present valueof <strong>the</strong> lower of <strong>the</strong> expected cost of terminating <strong>the</strong> contract and <strong>the</strong> expected net cost of continuing with <strong>the</strong> contract. Beforea provision is established, <strong>the</strong> Group recognises any impairment loss on <strong>the</strong> assets associated with that contract.3.15 Revenue recognitionProvision of logistics servicesProvided it is probable that <strong>the</strong> economic benefits will flow <strong>to</strong> <strong>the</strong> Group, and that <strong>the</strong> revenue and costs can be measured reliably,revenues from <strong>the</strong> provision of logistic services are recognised as follows:Freight forwardingExport revenue is recognised when <strong>the</strong> cargos are delivered <strong>to</strong> <strong>the</strong> carriers and import revenue is recognised upon <strong>the</strong> arrival ofcargos.Distribution services, repair and maintenance services and surface preparation servicesRevenues from distribution services, repair and maintenance services and surface preparation services are recognised as andwhen <strong>the</strong> services are rendered.Sale of goodsRevenue from <strong>the</strong> sale of goods is measured at <strong>the</strong> fair value of <strong>the</strong> consideration received or receivable, net of returns andallowances, trade discounts and volume rebates. Revenue is recognised when <strong>the</strong> significant risks and rewards of ownershiphave been transferred <strong>to</strong> <strong>the</strong> buyer, recovery of <strong>the</strong> consideration is probable, <strong>the</strong> associated costs and possible return of goodscan be estimated reliably, and <strong>the</strong>re is no continuing management involvement with <strong>the</strong> goods.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT75NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.15 Revenue recognition (continued)Sale of goods (continued)Revenue from <strong>the</strong> sale of certain commodities are initially recorded based on 100% of <strong>the</strong> provisional sales prices. Until finalsettlement occurs, adjustments <strong>to</strong> <strong>the</strong> provisional sales price are made <strong>to</strong> take in<strong>to</strong> account metal price changes, based upon<strong>the</strong> month-end spot price and metal quantities upon receipt of <strong>the</strong> final assay and weight certificates, if different from <strong>the</strong>initial certificates. The Company marks <strong>to</strong> market its provisional sales based on <strong>the</strong> forward price for <strong>the</strong> estimated month ofsettlement. In <strong>the</strong> balance sheet such mark <strong>to</strong> market adjustments are included within ‘accrued income’ or ‘accrued expenses’.Financial services incomeCommission and brokerage fee incomeWhen <strong>the</strong> Group acts in <strong>the</strong> capacity of an agent ra<strong>the</strong>r than as a principal in a transaction, <strong>the</strong> revenue recognised is <strong>the</strong> netamount of commission earned by <strong>the</strong> Group. Commission income is recognised as earned when trades are executed by clients.Transaction fee incomeTransaction fee represents <strong>the</strong> margin earned from executing sale and purchase contracts for cus<strong>to</strong>mers. Transaction fee isrecognised in income when <strong>the</strong> contracts are executed.Service income and interest incomeService income is recognised when <strong>the</strong> services are rendered. Interest income is accrued on a time basis, by reference <strong>to</strong> <strong>the</strong>principal amount outstanding and at <strong>the</strong> effective interest rate applicable.Warehouse rental incomeWarehouse rental income receivable under operating leases is recognised on a straight-line basis over <strong>the</strong> term of <strong>the</strong> lease.Lease incentives granted are recognised as an integral part of <strong>the</strong> <strong>to</strong>tal rental income <strong>to</strong> be received. Contingent rentals arerecognised as income in <strong>the</strong> accounting period in which <strong>the</strong>y are earned.Contract revenueWhen <strong>the</strong> outcome of <strong>the</strong> service contract can be estimated reliably, contract revenue and costs are recognised as income andexpense using <strong>the</strong> percentage of completion method, measured by reference <strong>to</strong> <strong>the</strong> contract activity. When it is probable that<strong>to</strong>tal contract costs will exceed <strong>to</strong>tal contract revenue, <strong>the</strong> expected loss is recognised as an expense immediately. When <strong>the</strong>outcome of a contract cannot be estimated reliably, contract costs are recognised as an expense in <strong>the</strong> period in which <strong>the</strong>y areincurred and revenue is recognised only <strong>to</strong> <strong>the</strong> extent of contract costs incurred that can probably be recovered.Construction contractsAs soon as <strong>the</strong> outcome of a construction contract can be estimated reliably, contract revenue and expenses are recognised in<strong>the</strong> income statement in proportion <strong>to</strong> <strong>the</strong> stage of completion of <strong>the</strong> contract. The percentage of completion is measured byreference <strong>to</strong> <strong>the</strong> percentage of costs incurred <strong>to</strong> date <strong>to</strong> <strong>the</strong> estimated <strong>to</strong>tal contract costs. Contract revenue includes <strong>the</strong> initialamount agreed in <strong>the</strong> contract plus any variations in contract work, claims and incentive payments <strong>to</strong> <strong>the</strong> extent that it is probablethat <strong>the</strong>y will result in revenue and can be measured reliably.


76 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.15 Revenue recognition (continued)Construction contracts (continued)The stage of completion is assessed by reference <strong>to</strong> surveys of work performed. When <strong>the</strong> outcome of a construction contractcannot be estimated reliably, contract revenue is recognised only <strong>to</strong> <strong>the</strong> extent of contract costs incurred that are likely <strong>to</strong> berecoverable. An expected loss on a contract is recognised immediately in <strong>the</strong> income statement.When contract costs incurred <strong>to</strong> date plus recognised profits less recognised losses exceed progress billings, <strong>the</strong> surplusrepresenting amounts due from cus<strong>to</strong>mers is shown as ‘construction contracts in progress’ and included under ‘trade ando<strong>the</strong>r receivables’. For contracts where progress billings exceed contract costs incurred <strong>to</strong> date plus recognised profits lessrecognised losses, <strong>the</strong> surplus representing amounts due <strong>to</strong> cus<strong>to</strong>mers is shown as ‘billings in advance of work completed’ andincluded under ‘deferred income’. Amounts received before <strong>the</strong> related work is performed are shown as ‘cus<strong>to</strong>mer advances’and included under ‘deferred income’.3.16 Employee benefitsDefined contribution plansObligations for contributions <strong>to</strong> defined contribution pension plans are recognised as an expense in profit or loss in <strong>the</strong> period inwhich <strong>the</strong> employees render <strong>the</strong>ir services.Short-term employee benefitsAll short-term employee benefits, including accumulated compensated absences, are recognised in profit or loss in <strong>the</strong> period inwhich <strong>the</strong> employees render <strong>the</strong>ir services.Pension obligationsThe Group operates defined benefit pension schemes. The schemes are generally funded through payments from employeesand from <strong>the</strong> relevant Group companies. The assets of <strong>the</strong> plan are held in separately administered funds. The Group’s definedbenefit plans define an amount of pension benefit that an employee will receive on retirement, dependent on one or more fac<strong>to</strong>rssuch as age, years of service and compensation. The Group has no legal or constructive obligations <strong>to</strong> pay fur<strong>the</strong>r contributionsif <strong>the</strong> fund does not hold sufficient assets <strong>to</strong> pay all employees <strong>the</strong> benefits relating <strong>to</strong> employee service in <strong>the</strong> current and priorperiods.The liability recognised in <strong>the</strong> balance sheet in respect of defined benefit pension plans is <strong>the</strong> present value of <strong>the</strong> defined benefi<strong>to</strong>bligation at <strong>the</strong> balance sheet date less <strong>the</strong> fair value of plan assets, <strong>to</strong>ge<strong>the</strong>r with adjustments for unrecognised actuarialgains or losses and past service costs. The defined benefit obligation is calculated annually by independent actuaries using <strong>the</strong>projected unit credit method. The present value of <strong>the</strong> defined benefit obligation is determined by discounting <strong>the</strong> estimatedfuture cash outflows using interest rates of high-quality corporate bonds that are denominated in <strong>the</strong> currency in which <strong>the</strong>benefits will be paid, and that have terms <strong>to</strong> maturity approximating <strong>to</strong> <strong>the</strong> terms of <strong>the</strong> related pension liability.Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of <strong>the</strong> greater of10% of <strong>the</strong> value of plan assets or 10% of <strong>the</strong> defined benefit obligation are charged or credited <strong>to</strong> income over <strong>the</strong> employees’expected average remaining working lives. Past-service costs are recognised immediately in income, unless <strong>the</strong> changes <strong>to</strong> <strong>the</strong>pension plan are conditional on <strong>the</strong> employees remaining in service for a specified period of time (<strong>the</strong> vesting period). In this case,<strong>the</strong> past-service costs are amortised on a straight-line basis over <strong>the</strong> vesting period.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT77NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.16 Employee benefits (continued)O<strong>the</strong>r employee benefitsThe Group operates o<strong>the</strong>r long-term employee benefit schemes. Every year <strong>the</strong> Group calculates <strong>the</strong> amount <strong>to</strong> be debited/credited <strong>to</strong> <strong>the</strong> bonus pool under <strong>the</strong> schemes. Such amounts are recognised in <strong>the</strong> statement of comprehensive income.Payments <strong>to</strong> beneficiaries are dependent on certain conditions such as minimum service period and long-term profitability.Payments within 12 months <strong>to</strong> beneficiaries after <strong>the</strong> service period are reclassified from non-current liabilities <strong>to</strong> current liabilities.3.17 Finance income and expensesFinance income comprises interest income on funds invested, dividend income, gain on disposal of available-for-sale <strong>financial</strong>assets, changes in <strong>the</strong> fair value of derivative <strong>financial</strong> instruments and net foreign currency gains that are recognised in profit orloss. Interest income is recognised as it accrues, using <strong>the</strong> effective interest method. Dividend income is recognised on <strong>the</strong> datethat <strong>the</strong> Group’s right <strong>to</strong> receive payment is established.Finance expenses comprise interest expense on borrowings, unwinding of <strong>the</strong> discount on provisions, loss on disposal ofavailable-for-sale <strong>financial</strong> assets, net foreign currency losses, impairment losses recognised on <strong>financial</strong> assets and losses onderivative instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss using <strong>the</strong> effectiveinterest method, except <strong>to</strong> <strong>the</strong> extent that <strong>the</strong>y are capitalised as being directly attributable <strong>to</strong> <strong>the</strong> acquisition, construction orproduction of an asset which necessarily takes a substantial period of time <strong>to</strong> be prepared for its intended use or sale.3.18 Government grantsGovernment grants received in relation <strong>to</strong> <strong>the</strong> purchase or construction of assets are deducted against <strong>the</strong> costs of <strong>the</strong> assetsacquired. These government grants are recognised in profit or loss on a straight-line basis over <strong>the</strong> useful lives of <strong>the</strong> assets byway of a reduced depreciation charge.3.19 Income tax expenseTax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except <strong>to</strong> <strong>the</strong> extentthat it relates <strong>to</strong> a business combination, or items recognised directly in equity or in o<strong>the</strong>r comprehensive income.Current tax is <strong>the</strong> expected tax payable or receivable on <strong>the</strong> taxable income or loss for <strong>the</strong> year, using tax rates enacted orsubstantively enacted at <strong>the</strong> reporting date, and any adjustment <strong>to</strong> tax payable in respect of previous years.Deferred tax is recognised in respect of temporary differences between <strong>the</strong> carrying amounts of assets and liabilities for <strong>financial</strong>reporting purposes and <strong>the</strong> amounts used for taxation purposes. Deferred tax is not recognised for:• temporary differences on <strong>the</strong> initial recognition of assets or liabilities in a transaction that is not a business combinationand that affects nei<strong>the</strong>r accounting nor taxable profit or loss;• temporary differences related <strong>to</strong> investments in subsidiaries, associates and jointly-controlled entities <strong>to</strong> <strong>the</strong> extent that<strong>the</strong> Group is able <strong>to</strong> control <strong>the</strong> timing of <strong>the</strong> reversal of <strong>the</strong> temporary difference and it is probable that <strong>the</strong>y will notreverse in <strong>the</strong> foreseeable future; and• taxable temporary differences arising on <strong>the</strong> initial recognition of goodwill.


78 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.19 Income tax expense (continued)The measurement of deferred taxes reflects <strong>the</strong> tax consequences that would follow <strong>the</strong> manner in which <strong>the</strong> Group expects,at <strong>the</strong> end of <strong>the</strong> reporting period, <strong>to</strong> recover or settle <strong>the</strong> carrying amount of its assets and liabilities. Deferred tax is measuredat <strong>the</strong> tax rates that are expected <strong>to</strong> be applied <strong>to</strong> temporary differences when <strong>the</strong>y reverse, based on <strong>the</strong> laws that have beenenacted or substantively enacted by <strong>the</strong> reporting date.Deferred tax assets and liabilities are offset if <strong>the</strong>re is a legally enforceable right <strong>to</strong> offset current tax liabilities and assets, and <strong>the</strong>yrelate <strong>to</strong> income taxes levied by <strong>the</strong> same tax authority on <strong>the</strong> same taxable entity, or on different tax entities, but <strong>the</strong>y intend <strong>to</strong>settle current tax liabilities and assets on a net basis or <strong>the</strong>ir tax assets and liabilities will be realised simultaneously.A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, <strong>to</strong> <strong>the</strong> extent that it isprobable that future taxable profits will be available against which <strong>the</strong>y can be utilised. Deferred tax assets are reviewed at eachreporting date and are reduced <strong>to</strong> <strong>the</strong> extent that it is no longer probable that <strong>the</strong> related tax benefit will be realised.In determining <strong>the</strong> amount of current and deferred tax, <strong>the</strong> Group takes in<strong>to</strong> account <strong>the</strong> impact of uncertain tax positions andwhe<strong>the</strong>r additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all opentax years based on its assessment of many fac<strong>to</strong>rs, including interpretations of tax law and prior experience. This assessmentrelies on estimates and assumptions and may involve a series of judgements about future events. New information may becomeavailable that causes <strong>the</strong> Group <strong>to</strong> change its judgement regarding <strong>the</strong> adequacy of existing tax liabilities; such changes <strong>to</strong> taxliabilities will impact tax expense in <strong>the</strong> period that such a determination is made.3.20 Earnings per shareThe Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculatedby dividing <strong>the</strong> profit or loss attributable <strong>to</strong> ordinary shareholders of <strong>the</strong> Company by <strong>the</strong> weighted average number of ordinaryshares outstanding during <strong>the</strong> year, adjusted for own shares held. Diluted earnings per share is determined by adjusting <strong>the</strong> profi<strong>to</strong>r loss attributable <strong>to</strong> ordinary shareholders and <strong>the</strong> weighted average number of ordinary shares outstanding, adjusted for ownshares held, for <strong>the</strong> effects of all dilutive potential ordinary shares, which comprise share options granted <strong>to</strong> employees.3.21 Segment reportingAn operating segment is a component of <strong>the</strong> Group that engages in business activities from which it may earn revenues and incurexpenses, including revenues and expenses that relate <strong>to</strong> transactions with any of <strong>the</strong> Group’s o<strong>the</strong>r components. All operatingsegments’ operating results are reviewed regularly by <strong>the</strong> Group CEO <strong>to</strong> make decisions about resources <strong>to</strong> be allocated <strong>to</strong> <strong>the</strong>segment and assess its performance, and for which discrete <strong>financial</strong> information is available.Segment results that are reported <strong>to</strong> <strong>the</strong> Group CEO include items directly attributable <strong>to</strong> a segment as well as those that canbe allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and liabilities, business developmentcosts and corporate expenses arising from group functions.Segment capital expenditure is <strong>the</strong> <strong>to</strong>tal costs incurred during <strong>the</strong> year <strong>to</strong> acquire property, plant and equipment, and intangibleassets o<strong>the</strong>r than goodwill.3.22 New standards and interpretations not adoptedA number of new standards, amendments <strong>to</strong> standards and interpretations are effective for annual periods beginning after 1January 2012, and have not been applied in preparing <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>. The Group does not plan <strong>to</strong> early adopt<strong>the</strong>se new standards, amendments <strong>to</strong> standards and interpretations and does not expect <strong>the</strong>se <strong>to</strong> have significant effect on <strong>the</strong><strong>financial</strong> <strong>statements</strong> of <strong>the</strong> Group and Company in future <strong>financial</strong> periods except as o<strong>the</strong>rwise indicated below:


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT79NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20123 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)3.22 New standards and interpretations not adopted (continued)Applicable for <strong>the</strong> Group’s 2013 <strong>financial</strong> <strong>statements</strong>• FRS 19 Employee Benefits (revised 2011), which revises certain principles of <strong>the</strong> current FRS 19, including <strong>the</strong> eliminationof <strong>the</strong> option <strong>to</strong> defer recognition of re-measurement gains and losses for defined benefit plans and requiring <strong>the</strong>se remeasurements<strong>to</strong> be presented in o<strong>the</strong>r comprehensive income. The standard also requires a re-assessment of <strong>the</strong>basis used for determining <strong>the</strong> income or expense related <strong>to</strong> defined benefit plans. In addition, <strong>the</strong>re are changes <strong>to</strong> <strong>the</strong>definition of employee benefits as short-term or o<strong>the</strong>r long-term employee benefits.The Group is expected <strong>to</strong> reduce o<strong>the</strong>r comprehensive income and increase accruals of pensions costs and pensionsexpenses, with <strong>the</strong> elimination of <strong>the</strong> option <strong>to</strong> defer recognition of re-measurement gains and losses for defined benefitplans and requiring <strong>the</strong>se re-measurements <strong>to</strong> be presented in o<strong>the</strong>r comprehensive income.These amendments will be applied retrospectively and prior periods in <strong>the</strong> Group’s 2013 <strong>financial</strong> <strong>statements</strong> will berestated. The effect of <strong>the</strong> adoption of <strong>the</strong> standard is a reduction in o<strong>the</strong>r comprehensive income by $3,400,000 and anincrease in accruals of pensions costs and pensions expenses by $71,000 in 2012.• FRS 112 Disclosure of Interests in O<strong>the</strong>r Entities, which sets out <strong>the</strong> disclosures required <strong>to</strong> be made in respect of allforms of an entity’s interests in o<strong>the</strong>r entities, including subsidiaries, joint arrangements, associates and unconsolidatedstructured entities. The adoption of this standard would result in more extensive disclosures being made in <strong>the</strong> Group’s<strong>financial</strong> <strong>statements</strong> in respect of its interests in o<strong>the</strong>r entities; as FRS 112 is primarily a disclosure standard, <strong>the</strong>re will beno <strong>financial</strong> impact on <strong>the</strong> results and <strong>financial</strong> position of <strong>the</strong> Group and <strong>the</strong> Company upon adoption of this standard by<strong>the</strong> Group. The Group is currently collating <strong>the</strong> information of <strong>the</strong> additional disclosures required.


80 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20124 PROPERTY, PLANT AND EQUIPMENTGroupNoteLeaseholdland,buildingsandimprovementsFreeholdlandExplorationandevaluationassetsPlant,machineryandequipmentMo<strong>to</strong>rvehiclesand trailersFurniture,fittings,computersand officeequipmentAssetsunderconstructionTotal$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000CostAt 1 January 2011 164,227 6,471 – 46,369 24,073 15,055 41,278 297,473Additions 7,204 – – 9,111 6,971 3,455 44,010 70,751Disposal of subsidiaries (8,896) – – (131) – – – (9,027)Acquisition through businesscombinations 40(ii) 60,000 – – – 104 63 877 61,044Transfers 82,076 – – 179 – – (82,255) –Reclassification <strong>to</strong> assets held-for-sale 23 (3,682) – – (150) – – – (3,832)Disposals (7,353) – – (75) (3,611) (283) – (11,322)Effect of movement in exchange rates (2,035) 68 – (29) (69) (160) (9) (2,234)At 31 December 2011 291,541 6,539 – 55,274 27,468 18,130 3,901 402,853Additions 3,419 – 1,241 5,433 2,752 3,638 46,915 63,398Disposal of subsidiaries (302) – – (41) (121) (522) – (986)Acquisition through businesscombinations 40(i) 2,903 – 3,964 – – 94 – 6,961Transfers 3,964 – – – – 587 (4,551) –Transfers <strong>to</strong> intangible assets 5 – – – – – – (138) (138)Reclassification <strong>to</strong> assets held-for-sale 23 (32,796) – – – – (308) – (33,104)Disposals (385) – – (6,200) (2,475) (3,792) (41) (12,893)Effect of movement in exchange rates (4,363) (332) (251) (486) (371) (420) (39) (6,262)At 31 December 2012 263,981 6,207 4,954 53,980 27,253 17,407 46,047 419,829


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT81NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20124 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)GroupNoteLeaseholdland,buildings andimprovementsFreeholdlandExplorationandevaluationassetsPlant,machineryandequipmentMo<strong>to</strong>rvehiclesand trailersFurniture,fittings,computersand officeequipmentAssetsunderconstructionTotal$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Accumulated depreciation andimpairment lossesAt 1 January 2011 35,684 2,043 – 20,660 12,096 9,544 – 80,027Depreciation charge for <strong>the</strong> year 11,467 – – 5,206 3,000 2,181 – 21,854Impairment loss – 378 – – – – – 378Disposals (1,539) – – (13) (2,694) (226) – (4,472)Disposal of subsidiaries (1,258) – – (30) – – – (1,288)Reclassification <strong>to</strong> assets held-for-sale 23 (1,389) – – (98) – – – (1,487)Effect of movement in exchange rates (263) 75 – (1) (81) (115) – (385)At 31 December 2011 42,702 2,496 – 25,724 12,321 11,384 – 94,627Depreciation charge for <strong>the</strong> year 12,132 – – 6,130 3,084 3,386 – 24,732Impairment loss 818 204 – – – – – 1,022Disposals (157) – – (5,596) (2,300) (3,724) – (11,777)Disposal of subsidiaries (240) – – (29) (70) (345) – (684)Reclassification <strong>to</strong> assets held-for-sale 23 (753) – – – – (29) – (782)Effect of movement in exchange rates (711) (34) – (263) (92) (280) – (1,380)At 31 December 2012 53,791 2,666 – 25,966 12,943 10,392 – 105,758Carrying amountAt 1 January 2011 128,543 4,428 – 25,709 11,977 5,511 41,278 217,446At 31 December 2011 248,839 4,043 – 29,550 15,147 6,746 3,901 308,226At 31 December 2012 210,190 3,541 4,954 28,014 14,310 7,015 46,047 314,071


82 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20124 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)NoteLeaseholdbuildingsandimprovementsPlant,machineryandequipmentMo<strong>to</strong>rvehiclesand trailersFurniture,fittings,computersand officeequipmentAssetsunderconstructionTotalCompany $’000 $’000 $’000 $’000 $’000 $’000CostAt 1 January 2011 47,867 9,885 10,704 7,442 660 76,558Additions 1,552 1,786 467 364 655 4,824Disposals – (2) (1,028) – – (1,030)Transfers 319 – – – (319) –At 31 December 2011 49,738 11,669 10,143 7,806 996 80,352Additions 457 80 124 597 27,537 28,795Disposals – (2) (275) – (41) (318)Reclassifications 1,860 – – (1,860) – –Transfers <strong>to</strong> intangible assets 5 – – – – (138) (138)At 31 December 2012 52,055 11,747 9,992 6,543 28,354 108,691Accumulated depreciationAt 1 January 2011 18,307 4,299 5,959 4,705 – 33,270Depreciation chargefor <strong>the</strong> year 2,241 1,026 1,097 609 – 4,973Disposals – (2) (612) – – (614)At 31 December 2011 20,548 5,323 6,444 5,314 – 37,629Depreciation charge for <strong>the</strong>year 2,349 1,219 1,025 1,201 – 5,794Disposals – (1) (275) – – (276)Reclassifications 747 – – (747) – –At 31 December 2012 23,644 6,541 7,194 5,768 – 43,147Carrying amountAt 1 January 2011 29,560 5,586 4,745 2,737 660 43,288At 31 December 2011 29,190 6,346 3,699 2,492 996 42,723At 31 December 2012 28,411 5,206 2,798 775 28,354 65,544


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT83NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20124 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)(i)Exploration and evaluation assets consists of <strong>the</strong> estimated fair value attributable <strong>to</strong> exploration licences acquired as par<strong>to</strong>f acquisition through business combination (see note 40).(ii) During <strong>the</strong> year, <strong>the</strong> Group acquired property, plant and equipment with an aggregate cost of $63,398,000 (2011:$70,751,000), of which $2,002,000 (2011: $2,327,000) was acquired under finance lease arrangements. At <strong>the</strong> reportingdate, <strong>the</strong> carrying amount of property, plant and equipment of <strong>the</strong> Group held under finance lease and hire purchasearrangements amounted <strong>to</strong> $3,595,000 (2011: $3,932,000).(iii)(iv)Property, plant and equipment with a carrying amount of $123,403,000 (2011: $80,335,000) have been pledged assecurity for bank loans and bank overdrafts granted <strong>to</strong> <strong>the</strong> Group.The following are <strong>the</strong> significant accounting estimates and judgements used in applying accounting policies:(a)Depreciation of property, plant and equipmentProperty, plant and equipment are depreciated on <strong>the</strong> straight-line basis over <strong>the</strong>ir estimated useful lives, aftertaking in<strong>to</strong> account <strong>the</strong> estimated residual values. The Group reviews <strong>the</strong> estimated useful lives and residualvalues of <strong>the</strong> assets regularly in order <strong>to</strong> determine <strong>the</strong> amount of depreciation expense <strong>to</strong> be recorded in each<strong>financial</strong> year. Changes in <strong>the</strong> expected level of use of <strong>the</strong> assets and <strong>the</strong> Group’s his<strong>to</strong>rical experience with similarassets, after taking in<strong>to</strong> account anticipated technological changes, could impact <strong>the</strong> economic useful lives and<strong>the</strong> residual values of <strong>the</strong> assets; <strong>the</strong>refore future depreciation charges could be revised. Any changes in <strong>the</strong>economic useful lives could impact <strong>the</strong> depreciation charge and consequently, affect <strong>the</strong> Group’s results.During <strong>the</strong> year, <strong>the</strong>re were no changes in useful lives or residual values of <strong>the</strong> Group’s property, plant andequipment.(b)Provision for res<strong>to</strong>rationIn some lease agreements, <strong>the</strong> Group and Company are required <strong>to</strong> carry out site res<strong>to</strong>ration work upon expiryof <strong>the</strong> leases. At 31 December 2012, <strong>the</strong> Group and Company have provisions for site res<strong>to</strong>ration amounted <strong>to</strong>$534,000 (2011: $534,000) and $284,000 (2011: $284,000), respectively. The expected site res<strong>to</strong>ration costsare based on estimated costs of dismantling and removing assets and res<strong>to</strong>ring <strong>the</strong> premises <strong>to</strong> <strong>the</strong>ir originalconditions.(c)Impairment assessmentThe Group has substantial investments in property, plant and equipment for its logistics and warehousingbusinesses. Each of <strong>the</strong>se warehouse properties (including land) and <strong>the</strong> related plant and equipment formsa separate cash-generating unit (“CGU”). Management evaluates <strong>the</strong> performance of <strong>the</strong> CGUs annually andperforms an impairment assessment for CGUs with impairment trigger. The recoverable amount of a CGU isdetermined based on <strong>the</strong> higher of fair value less costs <strong>to</strong> sell and value-in-use.During <strong>the</strong> <strong>financial</strong> year, one of <strong>the</strong> subsidiaries, Pryzma Ltd, carried out a review of <strong>the</strong> recoverable amount of itsfreehold land which has become idle since <strong>the</strong> termination of <strong>the</strong> warehouse property project in 2008. The Groupobtained an updated open market valuation of <strong>the</strong> freehold land conducted by an independent professionalvaluer on a willing-buyer-willing-seller basis close <strong>to</strong> <strong>the</strong> reporting date. The market value has decreased andaccordingly, an impairment loss of $204,000 (2011: $378,000) was recognised in <strong>the</strong> <strong>financial</strong> year.During <strong>the</strong> <strong>financial</strong> year, one of <strong>the</strong> subsidiaries, <strong>CWT</strong> Logistics (S) Pte Ltd, decided <strong>to</strong> rebuild its logisticsproperty. The Group has obtained an open market valuation of <strong>the</strong> property conducted by an independentprofessional valuer <strong>to</strong> determine <strong>the</strong> property’s residual land value. The property was impaired by $818,000 in <strong>the</strong><strong>financial</strong> year.


84 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20124 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)(iv)The following are <strong>the</strong> significant accounting estimates and judgements used in applying accounting policies: (continued)(d)Sale and leasebackIn 2012, <strong>the</strong> Group completed a sale and leaseback transaction for a leasehold building with a third party. Thelease commitments under <strong>the</strong> leaseback agreement are substantially less than <strong>the</strong> fair value of <strong>the</strong> building and<strong>the</strong> Group does not share in <strong>the</strong> residual value of <strong>the</strong> building. Accordingly, <strong>the</strong> leaseback transaction has beendetermined <strong>to</strong> be an operating lease as substantially all <strong>the</strong> risks and rewards of <strong>the</strong> building are with <strong>the</strong> landlord.(e)Expenses capitalisedDuring <strong>the</strong> <strong>financial</strong> year, <strong>the</strong> Group capitalised <strong>the</strong> following expenses in assets-under-construction andexploration and evaluation assets:GroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Operating lease expense 1,135 514 – –Depreciation 5 – – –1,140 514 – –


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT85NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20125 INTANGIBLE ASSETSGroupNoteGoodwillon Computer Cus<strong>to</strong>mer LME concession Businessconsolidation software contracts licence rights relationship Brand Total$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000PortCostAt 1 January 2011 28,674 2,217 7,935 10,198 11,143 – – 60,167Additions – 709 – – 33 – – 742Acquisition through businesscombinations 40(ii) 37,970 – – – – 32,435 21,603 92,008Disposal – (120) – – – – – (120)Effect of movement in exchangerates 3,194 (9) – – (236) (269) (179) 2,501At 31 December 2011 69,838 2,797 7,935 10,198 10,940 32,166 21,424 155,298Additions 1,441 83 – – 27 – – 1,551Acquisition through businesscombinations 40(i) 2,808 4 – – – 980 – 3,792Disposal – (119) – – – – – (119)Transfer from property, plant andequipment 4 – 138 – – – – – 138Effect of movement in exchangerates (2,807) (40) – – (398) (1,812) (1,205) (6,262)At 31 December 2012 71,280 2,863 7,935 10,198 10,569 31,334 20,219 154,398


86 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20125 INTANGIBLE ASSETS (CONTINUED)GoodwillonconsolidationComputersoftwareCus<strong>to</strong>mercontractsLMElicencePortconcessionrightsBusinessrelationship Brand Total$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Accumulated amortisation and impairmentlossAt 1 January 2011 740 1,785 5,578 1,445 672 – – 10,220Amortisation charge for <strong>the</strong> year – 350 673 340 318 1,555 2,072 5,308Impairment loss 127 – – – – – – 127Effect of movement in exchange rates 1 (9) – – (28) 53 71 88At 31 December 2011 868 2,126 6,251 1,785 962 1,608 2,143 15,743Amortisation charge for <strong>the</strong> year – 330 384 340 312 3,089 4,115 8,570Impairment loss 82 1 – – – – – 83Disposal – (104) – – – – – (104)Effect of movement in exchange rates (4) (28) – – (33) (145) (192) (402)At 31 December 2012 946 2,325 6,635 2,125 1,241 4,552 6,066 23,890Carrying amountAt 1 January 2011 27,934 432 2,357 8,753 10,471 – – 49,947At 31 December 2011 68,970 671 1,684 8,413 9,978 30,558 19,281 139,555At 31 December 2012 70,334 538 1,300 8,073 9,328 26,782 14,153 130,508


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT87NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20125 INTANGIBLE ASSETS (CONTINUED)CompanyNoteComputersoftware$’000CostAt 1 January 2011 1,542Additions 239At 31 December 2011 1,781Additions 51Transfer from property, plant and equipment 4 138At 31 December 2012 1,970Accumulated amortisationAt 1 January 2011 1,269Amortisation charge for <strong>the</strong> year 181At 31 December 2011 1,450Amortisation charge for <strong>the</strong> year 193At 31 December 2012 1,643Carrying amountAt 1 January 2011 273At 31 December 2011 331At 31 December 2012 327The amortisation charge is recognised in <strong>the</strong> following line items in profit or loss:GroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Administration expenses 303 329 176 173Cost of sales 27 20 17 8O<strong>the</strong>r operating expenses 8,240 4,959 – –8,570 5,308 193 181


88 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20125 INTANGIBLE ASSETS (CONTINUED)Impairment test for cash-generating units containing goodwillFor <strong>the</strong> purpose of impairment testing, goodwill is allocated <strong>to</strong> <strong>the</strong> following cash-generating units, which represent <strong>the</strong> lowestlevel within <strong>the</strong> Group at which <strong>the</strong> goodwill is moni<strong>to</strong>red for internal management purposes:Group2012 2011$’000 $’000LME warehousing 3,269 3,276General warehousing 12,937 11,844Collateral management (“CMA”) 5,891 6,117Freight forwarding 3,310 3,240Defence logistics 5,482 5,482Supply chain management (“SCM”) 38,889 38,978O<strong>the</strong>rs 634 3370,412 68,970The recoverable amount of <strong>the</strong> cash-generating units is based on value-in-use calculations which were determined by discountingfuture cash flows generated from continuing use of <strong>the</strong> units. The key assumptions used for projecting future cash flows are asfollows:LMEGeneralFreightDefencewarehousingwarehousingCMAforwardinglogisticsSCMRevenue annual growth rate (-14%) - 3% 3% - 11% 3% - 24% 4% - 5% 10% - 82% 3% - 23%Discount rate 8% 8% 8% 10% 8% 6.4%The budgeted gross margins used in <strong>the</strong> forecasts are based on past performance trends and expectations of marketdevelopments. The average growth rates used are consistent with past performance trends and forecasts included in industryreports. The discount rates used are pre-tax and reflect <strong>the</strong> weighted average cost of capital adjusted for <strong>the</strong> risks specific <strong>to</strong> <strong>the</strong>respective cash-generating units.Cash flows are projected based on <strong>financial</strong> budgets approved by management covering 2013 and are extrapolated using <strong>the</strong>growth rates and gross margins as described above for <strong>the</strong> next four years. The terminal value is estimated by using <strong>the</strong> fifth yearcash flow through perpetuity at zero growth rate and discounting it.The Group believes that any reasonably possible changes in <strong>the</strong> above key assumptions are not likely <strong>to</strong> cause any of <strong>the</strong>recoverable amounts <strong>to</strong> be materially lower than <strong>the</strong> related carrying amounts.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT89NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20126 SUBSIDIARIESCompanyNote 2012 2011$’000 $’000Unquoted equity shares, at cost 149,391 132,487Quasi-equity loans (a) 191,466 192,175340,857 324,662Less: Accumulated impairment lossesAt 1 January (13,772) (13,772)Net impairment losses recognised (2,174) –At 31 December (15,946) (13,772)Carrying amount 324,911 310,890(a)(b)Quasi-equity loans <strong>to</strong> subsidiaries are interest-free and form part of <strong>the</strong> Company’s net investments in subsidiaries. Theloans are unsecured and settlement is nei<strong>the</strong>r planned nor likely <strong>to</strong> occur in <strong>the</strong> foreseeable future.Impairment losses recognised/(reversed) in <strong>the</strong> Company’s profit or loss during <strong>the</strong> <strong>financial</strong> year are as follows:CompanyNote 2012 2011$’000 $’000Caddee Pte Ltd (“CADDEE”) (i) 141 –<strong>CWT</strong> Yangshan Ltd (“YS”) (i) 311 –Pryzma Ltd (“PRYZMA”) (ii) 901 –<strong>CWT</strong> Logistics (Tianjin) Co., Ltd (“TJH”) (iii) 322 –49 Pandan Pte Ltd (“49P”) (iv) (460) –<strong>CWT</strong> Fresh Pte Ltd (“FRESH”) (v) 959 –2,174 –(i)(ii)(iii)(iv)(v)During <strong>the</strong> year, <strong>the</strong> Company reviewed <strong>the</strong> estimated recoverable amount of CADDEE and YS and recognised animpairment loss of S$141,000 and S$311,000 respectively. The estimated recoverable amount was measuredusing “fair value less costs <strong>to</strong> sell” approach. Management considered <strong>the</strong> fair values of <strong>the</strong> underlying assets ofCADDEE and YS <strong>to</strong> approximate <strong>the</strong>ir carrying amounts due <strong>to</strong> <strong>the</strong> relative short-term nature of <strong>the</strong>se assets; and<strong>the</strong> fair value of <strong>the</strong> liabilities were based on <strong>the</strong> estimated cash outflows <strong>to</strong> settle <strong>the</strong> obligations.The Group terminated a warehouse property project in 2008. The Group obtained an updated open marketvalue of PRYZMA’s freehold land appraised by an independent professional valuer on a willing-buyer-willing-sellerbasis close <strong>to</strong> <strong>the</strong> reporting date annually. The market value has decreased compared <strong>to</strong> <strong>the</strong> valuation carriedout last year which resulted <strong>to</strong> a fur<strong>the</strong>r reduction of PRYZMA’s recoverable amount. Accordingly, an additionalimpairment loss of S$901,000 was recognised.During <strong>the</strong> year, <strong>the</strong> Group disposed its entire equity interest in TJH for a consideration of RMB2,300,000. TheCompany recognised an impairment loss of S$322,000 arising from full impairment of quasi loan <strong>to</strong> TJH.During <strong>the</strong> year, <strong>the</strong> Group entered in<strong>to</strong> a sales and leaseback arrangement for a leasehold property of 49P andrecognised a one-off gain of $22,576,000. As a result of <strong>the</strong> improved recoverable amount, <strong>the</strong> impairment lossof $460,000 previously recognised was reversed.During <strong>the</strong> year, management decided <strong>to</strong> cease FRESH’s business in view of difficult operating conditions. Thecessation of <strong>the</strong> business resulted in an impairment loss of $959,000 recognised by <strong>the</strong> Company.


90 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20126 SUBSIDIARIES (CONTINUED)(c)Details of <strong>the</strong> significant subsidiaries are as follows:Name of subsidiariesCountry ofincorporation/businessEffectiveinterest heldby <strong>the</strong> Group2012 2011% %1<strong>CWT</strong> Logistics Pte Ltd Singapore 100.0 100.01<strong>CWT</strong> Globelink Pte Ltd Singapore 100.0 100.01<strong>CWT</strong> Commodities Pte Ltd Singapore 100.0 100.01OCWS Logistics Pte Ltd Singapore 100.0 100.01Indeco Engineers (Pte) Ltd Singapore 100.0 100.01<strong>CWT</strong> Commodities (Metals) Pte Ltd Singapore 100.0 100.01<strong>CWT</strong> Commodities (China) Pte Ltd Singapore 100.0 100.01Cache Property Management Pte Ltd Singapore 60.0 60.01Force 21 Equipment Pte Ltd Singapore 70.0 70.02Globelink-Trans (Tianjin) International ForwardingCo., LtdPeople’sRepublic of China100.0 100.03Straits Financial LLC United States of America 92.3 91.32MRI Trading AG Switzerland 96.6 96.62<strong>CWT</strong> Europe B.V. The Ne<strong>the</strong>rlands 70.0 70.01Capsolon Pte Ltd Singapore 96.6 96.61Straits Financial Group Pte Ltd Singapore 97.8 97.81MRI Trading Pte Ltd Singapore 96.6 96.61Audited by KPMG LLP, Singapore2Audited by o<strong>the</strong>r member firms of KPMG International3Audited by McGladrey LLPKPMG LLP Singapore is <strong>the</strong> audi<strong>to</strong>r of all significant Singapore-incorporated subsidiaries. O<strong>the</strong>r member firms of KPMGInternational are audi<strong>to</strong>rs of significant foreign-incorporated subsidiaries.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT91NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20127 ASSOCIATESGroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Investments in associates 24,700 23,270 200 200Quasi-equity loans 326 346 – –25,026 23,616 200 200Investments in associates include goodwill on acquisition of $2,376,000 (2011: $1,404,000).The quasi-equity loans <strong>to</strong> an associate are interest-free and form part of <strong>the</strong> Group’s net investment in associates. The loans areunsecured and settlement is nei<strong>the</strong>r planned nor likely <strong>to</strong> occur in <strong>the</strong> foreseeable future.Details of <strong>the</strong> significant associates are as follows:Name of associatesCountry ofincorporation/businessEffectiveinterest heldby <strong>the</strong> Group2012 2011% %1Globelink West Star Shipping LLC UnitedArab Emirates49.0 49.02Westford Trade Services Ltd Hong Kong 50.0 50.01Audited by o<strong>the</strong>r member firms of KPMG International2Audited by Mazars, Hong KongO<strong>the</strong>r member firms of KPMG International are audi<strong>to</strong>rs of significant foreign-incorporated associates.The summarised <strong>financial</strong> information relating <strong>to</strong> associates is not adjusted for <strong>the</strong> percentage of ownership held by <strong>the</strong> Group.The <strong>financial</strong> information of associates is as follows:Group2012 2011$’000 $’000Income statementRevenue 412,294 225,328Expenses (403,556) (214,055)Profit before tax 8,738 11,273Income tax (88) (203)Profit after taxation 8,650 11,070Statement of <strong>financial</strong> positionTotal assets 154,069 148,677Total liabilities 107,392 102,644


92 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20127 ASSOCIATES (CONTINUED)The Group’s share of <strong>the</strong> associates’ commitments and contingent liabilities is as follows:(a)Non-cancellable operating lease commitments2012 2011$’000 $’000Payable:Within 1 year 79 32After 1 year but within 5 years 65 31After 5 years – 8144 71Receivable:Within 1 year 122 16After 1 year but within 5 years 306 –After 5 years 261 –689 16(b)Contingent liabilitiesShare of associates’ contingent liabilities 956 1,0798 JOINTLY-CONTROLLED ENTITIESGroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Investments in jointly-controlled entities 23,909 22,663 4,115 4,115Quasi-equity loans 2,017 2,537 1,039 1,24125,926 25,200 5,154 5,356Investments in jointly-controlled entities include goodwill on acquisition of $9,539,000 (2011: $9,426,000).The quasi-equity loans <strong>to</strong> jointly-controlled entities are interest-free and form part of <strong>the</strong> Group’s net investment in <strong>the</strong> jointlycontrolledentities. The loans are unsecured and settlement is nei<strong>the</strong>r planned nor likely <strong>to</strong> occur in <strong>the</strong> foreseeable future.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT93NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20128 JOINTLY-CONTROLLED ENTITIES (CONTINUED)Details of <strong>the</strong> jointly-controlled entities are as follows:Name of jointly-controlled entitiesCountry of incorporation/businessEffectiveinterest heldby <strong>the</strong> Group2012 2011% %1Fujian Atl-<strong>CWT</strong> Logistic Co., Ltd People’sRepublic of China49.0 49.02JIC Inspection Services Pte Ltd Singapore 22.0 22.03<strong>CWT</strong>-SML Logistics LLC UnitedArab Emirates40.0 40.04ARA-<strong>CWT</strong> Trust Management (CACHE) <strong>Limited</strong> Singapore 40.0 40.01Globelink Unimar Logistics Inc Turkey 50.0 50.01Audited by o<strong>the</strong>r member firms of KPMG International2Audited by Deloitte & Touche, Singapore3Audited by Deloitte & Touche, United Arab Emirates4Audited by KPMG LLP, SingaporeThe jointly-controlled entities are not significant as defined under <strong>the</strong> Singapore Exchange <strong>Limited</strong> Listing Manual.The Group’s share of <strong>the</strong> jointly-controlled entities’ results, assets and liabilities is as follows:Group2012 2011$’000 $’000Assets and liabilitiesNon-current assets 12,245 10,353Current assets 13,126 11,588Current liabilities (8,053) (6,158)Non-current liabilities (3,291) (2,921)Net assets 14,027 12,862Cumulative share of unrecognised losses* 344 37614,371 13,238ResultsRevenue 44,652 24,198Expenses (41,457) (20,849)Profit before tax 3,195 3,349Income tax expense (514) (373)Profit after taxation 2,681 2,976* As at 31 December 2012 and 31 December 2011, <strong>the</strong> Group’s cumulative share of unrecognised losses for certain jointlycontrolledentities had exceeded <strong>the</strong> Group’s cost of investment in <strong>the</strong>se jointly-controlled entities.


94 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 20128 JOINTLY-CONTROLLED ENTITIES (CONTINUED)The Group’s share of <strong>the</strong> jointly-controlled entities’ commitments is as follows:(a)2012 2011$’000 $’000Non-cancellable operating lease commitmentsPayable:Within 1 year 492 478After 1 year but within 5 years 1,270 1,337After 5 years 11,305 11,00713,067 12,822Receivable:Within 1 year 186 152After 1 year but within 5 years 3 12189 164(b)Contingent liabilitiesShare of jointly-controlled entities’ contingent liabilities 200 2129 FINANCIAL ASSETSNon-currentAvailable-for-sale <strong>financial</strong> assets:GroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000- Quoted equity securities, measured at fair value 106,872 83,530 106,844 80,686- Unquoted equity securities, measured at cost 45 45 – –106,917 83,575 106,844 80,686CurrentAvailable-for-sale <strong>financial</strong> assets:- Quoted equity securities, measured at fair value 2,871 – – –Financial assets designated at fair value through profit or loss:- Commodities warrant 9,826 – – –- Warrant option 657 – – –13,354 – – –


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT95NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201210 NON-CURRENT RECEIVABLESGroupCompanyNote 2012 2011 2012 2011$’000 $’000 $’000 $’000Non-current portion of:Loans <strong>to</strong> non-controlling interests 4,132 3,121 1,222 1,630Loan <strong>to</strong> a jointly-controlled entity 18 356 369 – –Loans <strong>to</strong> associates 19 4,643 4,311 – –Finance lease receivables 11 512 649 – –Guarantee deposits with clearing corporation 3,122 – – –O<strong>the</strong>rs – 20 – –Non-current receivables classified as loans andreceivables 12,765 8,470 1,222 1,630The loans <strong>to</strong> non-controlling interests are unsecured and are repayable at <strong>the</strong> end of <strong>the</strong> term. The loans are based on fixedinterest rate of 1.73% <strong>to</strong> 12% (2011: 1.73%) per annum.Guarantee deposits with clearing corporation (2011: $681,000 included in trade and o<strong>the</strong>r receivable) refers <strong>to</strong> collateral placedby a subsidiary with Chicago Mercantile Exchange (“CME”) by virtue of <strong>the</strong> subsidiary being a clearing member of <strong>the</strong> CME.11 FINANCE LEASE RECEIVABLESGroupNote 2012 2011$’000 $’000Amounts receivable under finance leases:Gross receivables 773 921Unearned interest income (56) (82)Net receivables classified as loans and receivables 717 839Current 16 205 190Non-current 10 512 649717 839GrossUnearnedreceivables income receivables$’000 $’000 $’0002012Within 1 year 226 (21) 205After 1 year but within 5 years 547 (35) 512773 (56) 7172011Within 1 year 216 (26) 190After 1 year but within 5 years 601 (54) 547After 5 years 104 (2) 102921 (82) 839These lease receivables relate <strong>to</strong> <strong>the</strong> finance leases of <strong>the</strong> Group’s machinery, equipment and mo<strong>to</strong>r vehicles. The average termof finance leases entered in<strong>to</strong> is 10 years (2011: 10 years).NetThe interest rate inherent in <strong>the</strong> leases is fixed at <strong>the</strong> agreement date throughout <strong>the</strong> lease term. The average effective interestrate is 3.6% (2011: 3.6%) per annum.The carrying amount of <strong>the</strong> Group’s finance lease receivables approximates <strong>the</strong>ir fair value, based on discounting <strong>the</strong> estimatedcash flows at <strong>the</strong> market rate prevailing at <strong>the</strong> reporting date.


96 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201212 DEFERRED TAXMovements in temporary differences during <strong>the</strong> year:At1 January2011TranslationdifferencesAcquisitionthroughbusinesscombination(note 40(ii))Recognisedin profi<strong>to</strong>r loss(note 38)At31 December2011TranslationdifferencesAcquisitionthroughbusinesscombinations(note 40(i))Recognisedin profi<strong>to</strong>r loss(note 38)Disposal ofinterests insubsidiary(note 41(i))At31 December2012Group$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Deferred tax liabilities/(assets)Fair value adjustmen<strong>to</strong>n leasehold building 1,408 (6) 6,482 (264) 7,620 (255) 268 123 – 7,756Property, plant and equipment 3,767 46 – (659) 3,154 17 – 380 – 3,551Intangible assets 5,040 (169) 9,187 (782) 13,276 (579) – (1,381) – 11,316Inven<strong>to</strong>ries – (63) 534 72 543 82 – 3,181 – 3,806Trade and o<strong>the</strong>r receivables (79) (109) 4,407 3,644 7,863 (205) – (4,315) – 3,343Trade and o<strong>the</strong>r payables (415) 75 (1,085) 1,027 (398) 16 – (50) – (432)Provisions (165) 11 (136) (130) (420) 8 – (127) – (539)Unutilised tax losses (2,547) (29) (2) (3,682) (6,260) 58 – 2,898 96 (3,208)O<strong>the</strong>rs – 2 1 54 57 – – 15 – 727,009 (242) 19,388 (720) 25,435 (858) 268 724 96 25,665CompanyDeferred tax liabilities/(assets)Property, plant and equipment 2,294 – – (302) 1,992 – – (1,397) – 595Trade and o<strong>the</strong>r payables (69) – – – (69) – – 69 – –Unutilised tax losses (1,923) – – – (1,923) – – 1,328 – (595)302 – – (302) – – – – – –


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT97NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201212 DEFERRED TAX (CONTINUED)Deferred tax liabilities and assets are offset when <strong>the</strong>re is a legally enforceable right <strong>to</strong> set off current tax assets against current taxliabilities and when <strong>the</strong> deferred taxes relate <strong>to</strong> <strong>the</strong> same taxation authority. The amounts determined after appropriate offsettingare included in <strong>the</strong> <strong>statements</strong> of <strong>financial</strong> position as follows:GroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Deferred tax liabilities 29,756 30,799 – –Deferred tax assets (4,091) (5,364) – –Deferred tax assets have not been recognised in respect of <strong>the</strong> following items:Group2012 2011$’000 $’000Deductible temporary differences 4,496 556Unutilised tax losses 84,594 63,83889,090 64,394Included in tax losses are $752,000 of losses of a subsidiary that are available for offset against future taxable profits of <strong>the</strong>subsidiary for <strong>the</strong> next 2 <strong>financial</strong> years. The annual amount of tax losses deductible from taxable income is limited <strong>to</strong> 50% of <strong>the</strong>taxable income of <strong>the</strong> said subsidiary in a given year.The tax losses are subject <strong>to</strong> agreement by <strong>the</strong> tax authorities and compliance with tax regulations in <strong>the</strong> respective countries inwhich <strong>the</strong> subsidiaries operate. The deductible temporary differences and tax losses, o<strong>the</strong>r than disclosed above, do not expireunder current tax legislation.Deferred tax assets have not been recognised in respect of <strong>the</strong>se items because it is not probable that future taxable profits willbe available against which certain subsidiaries of <strong>the</strong> Group can utilise <strong>the</strong> benefits.13 OTHER NON-CURRENT ASSETSGroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000O<strong>the</strong>r investments 5,162 4,681 3 3O<strong>the</strong>r investments include clearing memberships with <strong>the</strong> Chicago Mercantile Exchange (“CME”), <strong>the</strong> Chicago Board of Trade(“CBOT”) and <strong>the</strong> New York Mercantile Exchange (“NYMEX”) and <strong>the</strong> Commodity Exchange, Inc (“COMEX”) amounting <strong>to</strong>$4,838,000 (2011: $4,200,000). The clearing membership is a prerequisite for <strong>the</strong> Group <strong>to</strong> trade in CME, CBOT, NYMEX andCOMEX.


98 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201214 INVENTORIESGroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Raw materials 1,012 1,284 – –Work-in-progress 38 61 – –Consumables, equipment and spare parts 2,451 1,512 31 21Commodity inven<strong>to</strong>ries at fair value 26,870 – – –Commodity inven<strong>to</strong>ries at lower of cost and netrealisable value 301,712 160,194 – –O<strong>the</strong>r goods for sale 6,012 7,283 1,819 1,760338,095 170,334 1,850 1,781Raw materials, consumables, changes in work-in-progress and commodities recognised in cost of sales amounted <strong>to</strong>$4,286,972,000 (2011: $1,839,566,000).Commodity inven<strong>to</strong>ries with carrying amounts of $318,000,000 (2011: $153,000,000) have been pledged as securities forcertain of <strong>the</strong> Group’s bank credit facilities.15 CONTRACT WORK-IN-PROGRESSGroupNote 2012 2011$’000 $’000Costs incurred and attributable profits 113,314 21,222Progress billings (111,658) (17,399)1,656 3,823Represented by:Progress billing receivables 16 1,849 3,823Advance billings and billings in excess of costs incurred and recognised profits (193) –1,656 3,823The Group assesses allowance for foreseeable losses by taking in<strong>to</strong> account <strong>the</strong> contracted revenue, estimated costs <strong>to</strong>completion, project duration and overruns. It is possible that management estimate is not indicative of future losses that may beincurred. Any increase or decrease would affect profit or loss in <strong>the</strong> future years.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT99NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201216 TRADE AND OTHER RECEIVABLESGroupCompanyNote 2012 2011 2012 2011$’000 $’000 $’000 $’000Trade receivables 471,108 417,503 14,706 11,458Less: Allowance for impairment of receivables (3,072) (2,778) (408) (290)468,036 414,725 14,298 11,168Subsidiaries:- trade and non-trade 20 – − 16,214 18,790- loans 17 – − 105,484 89,138Related parties:- trade 1,543 2,286 4 11- non-trade 111 1,357 – –- loans 979 3,359 – –- interest receivables 67 48 – –Associates:- trade 3,697 2,398 1,020 494- non-trade 2,211 4 – –- dividends receivable 94 94 – –Jointly-controlled entities:- trade 240 248 48 53- non-trade 123 64 103 64- loan 18 73 225 – −Non-controlling interests:- non-trade 300 318 – –- loans 815 407 815 407Staff loans 115 251 2 2Finance lease receivables 11 205 190 – –Interest receivables 26 16 – –O<strong>the</strong>r receivables 324,237 59,689 3,618 663Receivable from exchange – 778 – –Receivable from brokers 73,589 11,152 – –Progress billings receivable 15 1,849 3,823 – –Accrued receivable – 1,315 – –Loans and receivables 878,310 502,747 141,606 120,790Deposits 10,962 7,110 3,713 108Deposits with clearing organisation 15,394 5,196 – –Prepayments 16,119 21,296 1,451 1,257920,785 536,349 146,770 122,155The non-trade amounts due from subsidiaries, related parties, associates, jointly-controlled entities and non-controlling interestare unsecured, interest-free and repayable on demand.The related party loans are unsecured and are repayable on demand. The loans are based on floating interest rates ranging from1.21% <strong>to</strong> 1.35% (2011: 1.10% <strong>to</strong> 1.20%) per annum. Interest is repriced on a quarterly basis.


100 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201216 TRADE AND OTHER RECEIVABLES (CONTINUED)The loans <strong>to</strong> non-controlling interests are unsecured, interest-free and repayable on demand.The Group’s o<strong>the</strong>r receivables include accrued income of $258,647,000 (2011: $31,069,000) which represents primarily priceadjustments <strong>to</strong> <strong>the</strong> provisional sales/purchase price of certain commodities. During <strong>the</strong> contractually agreed quotational period,<strong>the</strong> sales/purchase prices are not fixed and fluctuate based on <strong>the</strong> changes in <strong>the</strong> market prices of <strong>the</strong> underlying metals. TheGroup marks <strong>to</strong> market its provisional sales and purchases based on <strong>the</strong> forward price for <strong>the</strong> estimated month of settlement. In<strong>the</strong> statement of <strong>financial</strong> position, positive mark <strong>to</strong> market adjustments are included within ‘accrued income’ whereas negativeadjustments are included within ‘accrued expenses’. Upon completion of <strong>the</strong> quotation period, <strong>the</strong> prices are fixed based upon<strong>the</strong> spot price and metal contents and quantities upon receipt of <strong>the</strong> final assay and weight certificates.The Group’s trade receivables and prepayments in <strong>the</strong> amount of $275,753,000 (2011: $155,098,000) and $3,034,000 (2011:$8,178,000) respectively are pledged as securities for bank credit facilities.The maximum exposure <strong>to</strong> credit risk for receivables classified as loans and receivables at <strong>the</strong> reporting date by businesssegment is:GroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Operating segmentLogistics services 149,184 134,811 141,606 120,790Commodity supply chain management (“SCM”) 611,873 323,194 – –Engineering services 28,385 30,664 – –O<strong>the</strong>rs 88,868 14,078 – –878,310 502,747 141,606 120,790Sales by <strong>the</strong> SCM segment are generally secured by letters of credit. The Group generally does not require collateral for salesfrom o<strong>the</strong>r segments. As at 31 December 2012, trade receivables of <strong>the</strong> Group secured by letters of credit amounted <strong>to</strong>$314,591,000 (2011: $245,045,000).The ageing of receivables classified as loans and receivables at <strong>the</strong> reporting date is:GroupImpairmentImpairmentGross losses Gross losses2012 2012 2011 2011$’000 $’000 $’000 $’000Not past due 814,230 (68) 451,482 (6)Past due 1 – 30 days 31,340 (3) 26,352 (67)Past due 31 – 90 days 16,333 (19) 17,715 (152)Past due 91 – 180 days 4,570 (154) 4,708 (230)Past due 181 - 365 days 7,381 (635) 3,372 (749)Past due more than 1 year 8,813 (3,478) 2,021 (1,699)882,667 (4,357) 505,650 (2,903)


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT101NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201216 TRADE AND OTHER RECEIVABLES (CONTINUED)Impairment losses include allowance for impairment of non-trade amounts due from related parties, loan <strong>to</strong> a jointly-controlledentity and o<strong>the</strong>r receivables of $1,285,000 (2011: $125,000).CompanyImpairmentImpairmentGross losses Gross losses2012 2012 2011 2011$’000 $’000 $’000 $’000Not past due 83,033 – 72,770 –Past due 1 – 30 days 10,766 – 12,144 –Past due 31 – 90 days 16,368 – 9,996 –Past due 91 – 180 days 16,178 – 13,832 –Past due 181 days – 365 days 12,039 – 9,531 –Past due more than 1 year 6,487 (3,265) 4,582 (2,065)144,871 (3,265) 122,855 (2,065)The changes in allowance for impairment losses in respect of receivables classified as loans and receivables during <strong>the</strong> year wereas follows:GroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000At 1 January 2,903 2,256 2,065 2,144Allowance recognised/(reversed) 2,168 729 1,200 (79)Allowance utilised (671) (11) – –Translation differences (43) (71) – –At 31 December 4,357 2,903 3,265 2,065The Group assessed collectibility based on his<strong>to</strong>rical default rates <strong>to</strong> determine <strong>the</strong> impairment loss <strong>to</strong> be recognised. Managementreviews <strong>the</strong> ageing of receivables classified as loans and receivables, and except for <strong>the</strong> impaired receivables, no impairment lossis necessary in respect of <strong>the</strong> remaining receivables due <strong>to</strong> <strong>the</strong> good track records and reputation of cus<strong>to</strong>mers.The Group’s primary exposure <strong>to</strong> credit risk arises through its trade and o<strong>the</strong>r receivables. Concentration of credit risk relating <strong>to</strong><strong>the</strong>se trade and o<strong>the</strong>r receivables is limited due <strong>to</strong> <strong>the</strong> Group’s many varied cus<strong>to</strong>mers, which are internationally dispersed. TheGroup’s his<strong>to</strong>rical experience in <strong>the</strong> collection of accounts receivable falls within <strong>the</strong> recorded allowances. Due <strong>to</strong> <strong>the</strong>se fac<strong>to</strong>rs,management believes that no additional credit risk beyond <strong>the</strong> amounts provided for collection losses is required.


102 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201217 LOANS TO SUBSIDIARIESCompanyNote 2012 2011$’000 $’000CurrentLoans <strong>to</strong> subsidiaries* 16 105,484 89,138* Loans <strong>to</strong> subsidiaries are classified as loans and receivablesThe current loans <strong>to</strong> subsidiaries are unsecured and bear interest at a rate ranging from 1.31% <strong>to</strong> 12% (2011: 1.35% <strong>to</strong> 2.5%)per annum. The interest rate reprices on monthly or quarterly basis.18 LOAN TO JOINTLY-CONTROLLED ENTITYGroupNote 2012 2011$’000 $’000Non-currentLoan <strong>to</strong> a jointly-controlled entity, classified as loans and receivables 10 356 369CurrentLoan <strong>to</strong> a jointly-controlled entity, classified as loans and receivables 264 350Allowance for impairment losses (191) (125)16 73 225The non-current loan <strong>to</strong> a jointly-controlled entity is unsecured and bears interest at a fixed rate of 5% (2011: 5%) per annum. Asat <strong>the</strong> reporting date, <strong>the</strong> Group has given an undertaking <strong>to</strong> <strong>the</strong> jointly-controlled entity not <strong>to</strong> recall <strong>the</strong> loan within <strong>the</strong> next 12months.The current loans <strong>to</strong> jointly-controlled entities are unsecured and bear interest at an effective rate of 5% (2011: 3.7%) per annum.19 LOANS TO ASSOCIATESGroupNote 2012 2011$’000 $’000Non-currentLoans <strong>to</strong> associates, classified as loans and receivables 10 4,643 4,311The non-current loans <strong>to</strong> associates are unsecured and bear interest at 0.76% - 8% (2011: 0.76% - 6%) per annum. The Grouphas given an undertaking <strong>to</strong> <strong>the</strong> associates not <strong>to</strong> recall <strong>the</strong> loan within <strong>the</strong> next 12 months.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT103NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201220 AMOUNTS DUE FROM SUBSIDIARIESCompanyNote 2012 2011$’000 $’000Amounts due from subsidiaries- trade 15,767 19,094- non-trade 3,303 1,47119,070 20,565Allowance for impairment losses (2,856) (1,775)16 16,214 18,790All <strong>the</strong> balances with subsidiaries are classified as loans and receivables. The trade balances are transacted at arm’s length. Thenon-trade balances are unsecured, interest-free and repayable on demand.The Company assessed collectibility of <strong>the</strong> balances, having considered <strong>the</strong> <strong>financial</strong> conditions of <strong>the</strong> subsidiaries and <strong>the</strong>irability <strong>to</strong> make <strong>the</strong> required repayments. Management believes that no fur<strong>the</strong>r impairment loss beyond <strong>the</strong> recorded allowancesis necessary. If <strong>the</strong> <strong>financial</strong> conditions of <strong>the</strong> subsidiaries were <strong>to</strong> deteriorate subsequently, fur<strong>the</strong>r impairment loss may <strong>the</strong>n berecognised in future periods.21 CASH AND CASH EQUIVALENTSGroupCompanyNote 2012 2011 2012 2011$’000 $’000 $’000 $’000Fixed deposits 59,278 74,210 – –Cus<strong>to</strong>mer segregated funds 99,266 41,469 – –Cash and bank balances 136,163 96,303 11,313 6,453Cash and cash equivalents in <strong>the</strong> statement of<strong>financial</strong> position 294,707 211,982 11,313 6,453Less:Bank overdrafts 26 (425,319) (225,050)Cus<strong>to</strong>mer segregated funds (99,266) (41,469)Fixed deposits pledged (708) (590)Cash and cash equivalents in <strong>the</strong> statement ofcash flows (230,586) (55,127)Cus<strong>to</strong>mer segregated funds represent cus<strong>to</strong>mers’ funds held by regulated subsidiaries that are required <strong>to</strong> be held in segregatedaccounts by <strong>the</strong> laws and regulations of <strong>the</strong> United States of America and Singapore.Included in bank overdrafts as at 31 December 2012 is an amount of $98,000 (2011: $452,000) which is unsecured. Bankoverdrafts of $5,095,000 were secured by a subsidiary’s property, floating charges on existing fixed and floating assets and anirrevocable power of at<strong>to</strong>rney of <strong>the</strong> same amount. The remainder of $420,125,000 (2011: $224,598,000) is secured on certainfixed deposits, a lien on trade receivables, inven<strong>to</strong>ries and fixed and floating charges over certain property, plant and equipment.


104 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201221 CASH AND CASH EQUIVALENTS (CONTINUED)The weighted average effective interest rates per annum at <strong>the</strong> reporting date are as follows:Group2012 2011% %Fixed deposits 0.91 1.28Bank overdrafts 2.21 2.31Interest rates reprice at intervals of one week, one, three or six months.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT105NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201222 FINANCIAL ASSETS AND LIABILITIES CLASSIFICATIONAccounting classification and fair valuesFair values versus carrying amountsThe fair values of <strong>financial</strong> assets and liabilities, <strong>to</strong>ge<strong>the</strong>r with <strong>the</strong> carrying amounts shown in <strong>the</strong> statement of <strong>financial</strong> position,are as follows:Fair value– hedginginstrumentsLoans andreceivablesAvailablefor-saleFair valuethroughprofi<strong>to</strong>r lossO<strong>the</strong>r<strong>financial</strong>liabilitieswithin <strong>the</strong>scope ofFRS 39TotalcarryingamountFairvalueNote$’000 $’000 $’000 $’000 $’000 $’000 $’000Group2012Cash and cashequivalents 21 – 294,707 – – – 294,707 294,707Trade and o<strong>the</strong>rreceivables 16 – 878,310 – – – 878,310 878,310Non-currentreceivables 10 – 12,765 – – – 12,765 13,236Financial assets 9 – – 109,788 10,483 – 120,271 120,271Commodities forwardcontracts used forhedging 27 344 – – – – 344 344Commodities futuresused for hedging 27 22,220 – – – – 22,220 22,22022,564 1,185,782 109,788 10,483 – 1,328,617 1,329,088Interest rate swapsused for hedging 27 (2,644) – – – – (2,644) (2,644)Commodities futuresused for hedging 27 (18,042) – – – – (18,042) (18,042)Secured bank loans 26 – – – – (215,149) (215,149) (217,314)Unsecured bank loans 26 – – – – (22,541) (22,541) (22,541)Hire purchase andfinance leaseliabilities 26 – – – – (3,213) (3,213) (3,213)Trade and o<strong>the</strong>rpayables 30 – – – – (748,927) (748,927) (748,927)Bank overdrafts 21 – – – – (425,319) (425,319) (425,319)(20,686) – – – (1,415,149) (1,435,835) (1,438,000)


106 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201222 FINANCIAL ASSETS AND LIABILITIES CLASSIFICATION (CONTINUED)Accounting classification and fair values (continued)Fair values versus carrying amounts (continued)Fair value– hedging Loans and Available-forsaleO<strong>the</strong>r<strong>financial</strong>liabilitieswithin <strong>the</strong>scope ofTotalcarryingNote instruments receivablesFRS 39 amount Fair value$’000 $’000 $’000 $’000 $’000 $’000Group2011Cash and cash equivalents 21 − 211,982 − − 211,982 211,982Trade and o<strong>the</strong>r receivables 16 − 502,747 − − 502,747 502,747Non-current receivables 10 − 8,470 − − 8,470 8,007Financial assets 9 − − 83,575 − 83,575 83,575Commodities futures usedfor hedging 27 83,563 − − − 83,563 83,56383,563 723,199 83,575 − 890,337 889,874Interest rate swaps used forhedging 27 (2,418) − − − (2,418) (2,418)Commodities futures usedfor hedging 27 (17,071) − − − (17,071) (17,071)Secured bank loans 26 − − − (143,773) (143,773) (144,309)Unsecured bank loans 26 − − − (20,662) (20,662) (20,662)Hire purchase and financelease liabilities 26 − − − (2,676) (2,676) (2,676)Trade and o<strong>the</strong>r payables 30 − − − (512,194) (512,194) (512,194)Bank overdrafts 21 − − − (225,050) (225,050) (225,050)(19,489) − − (904,355) (923,844) (924,380)Company2012Cash and cash equivalents 21 − 11,313 − − 11,313 11,313Trade and o<strong>the</strong>r receivables 16 − 141,606 − − 141,606 141,606Non-current receivables 10 − 1,222 − − 1,222 1,222Available-for-sale securities 9 − − 106,844 − 106,844 106,844− 154,141 106,844 − 260,985 260,985Secured bank loans 26 − − − (55,800) (55,800) (55,800)Unsecured bank loans 26 − − − (9,950) (9,950) (9,950)Hire purchase 26 − − − (204) (204) (204)Trade and o<strong>the</strong>r payables 30 − − − (172,874) (172,874) (172,874)− − − (238,828) (238,828) (238,828)2011Cash and cash equivalents 21 − 6,453 − − 6,453 6,453Trade and o<strong>the</strong>r receivables 16 − 120,790 − − 120,790 120,790Non-current receivables 10 − 1,630 − − 1,630 1,630Available-for-sale securities 9 − − 80,686 − 80,686 80,686− 128,873 80,686 − 209,559 209,559Secured bank loans 26 − − − (53,900) (53,900) (53,900)Unsecured bank loans 26 − − − (1,245) (1,245) (1,245)Hire purchase 26 − − − (235) (235) (235)Trade and o<strong>the</strong>r payables 30 − − − (116,782) (116,782) (116,782)− − − (172,162) (172,162) (172,162)


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT107NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201223 NON-CURRENT ASSETS HELD-FOR-SALEGroup2012 2011$’000 $’000Property, plant and equipment – 2,345In February 2012, <strong>the</strong> Group disposed of a leasehold property that was reclassified from property, plant and equipment <strong>to</strong> noncurrentassets held for sale in <strong>the</strong> previous year.During <strong>the</strong> year, <strong>the</strong> Group reclassified a leasehold property from property, plant and equipment <strong>to</strong> non-current assets heldfor sale when <strong>the</strong> Group entered in<strong>to</strong> a conditional sale and purchase agreement in relation <strong>to</strong> a proposed sale and leasebacktransaction in May 2012. The sale and leaseback transaction was completed in July 2012.24 SHARE CAPITAL2012 2012 2011 2011No. ofNo. ofCompanysharesshares(’000) $’000 (’000) $’000Issued and fully paid, with no par value:At 1 January 600,305 174,338 590,305 161,965Shares issued – – 10,000 12,373At 31 December 600,305 174,338 600,305 174,338Issue of ordinary sharesDuring <strong>the</strong> last <strong>financial</strong> year, 10,000,000 ordinary shares were issued for $12,373,000, being partial settlement of <strong>the</strong> purchaseconsideration for <strong>the</strong> acquisition of MRI Trading AG.The holders of ordinary shares are entitled <strong>to</strong> receive dividends as declared from time <strong>to</strong> time and are entitled <strong>to</strong> one vote pershare at meetings of <strong>the</strong> Company. All shares rank equally with regard <strong>to</strong> <strong>the</strong> Company’s residual assets.Capital managementThe Board defines “Capital” <strong>to</strong> include share capital, reserves and non-controlling interests. The Board’s policy is <strong>to</strong> maintaina sound capital base <strong>to</strong> sustain <strong>the</strong> future development and expansion of <strong>the</strong> Group’s business, so as <strong>to</strong> maintain inves<strong>to</strong>r andcredi<strong>to</strong>r confidence in <strong>the</strong> Group. The Board of Direc<strong>to</strong>rs moni<strong>to</strong>rs <strong>the</strong> level of dividend payment by taking in<strong>to</strong> account <strong>the</strong>Group’s business expansion requirements.The Board of Direc<strong>to</strong>rs also seeks <strong>to</strong> maintain an optimal mix of equity and debt with a view <strong>to</strong> optimise <strong>financial</strong> return <strong>to</strong>shareholders. The Group targets <strong>to</strong> achieve a return on shareholders’ equity (“ROE”) of between 13.0% and 18.0%. In 2012,<strong>the</strong> Group achieved a ROE of 19% (2011: 12%).The Group moni<strong>to</strong>rs capital on <strong>the</strong> basis of <strong>the</strong> debt <strong>to</strong> equity ratio. This ratio is calculated as <strong>to</strong>tal borrowings divided by equity.Total borrowings refer <strong>to</strong> “<strong>financial</strong> liabilities” as shown in <strong>the</strong> consolidated statement of <strong>financial</strong> position; and equity refers <strong>to</strong>share capital, reserves and non-controlling interests as shown in <strong>the</strong> consolidated statement of <strong>financial</strong> position.


108 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201224 SHARE CAPITAL (CONTINUED)The Group’s strategy, which is unchanged from 2011, is <strong>to</strong> maintain <strong>the</strong> debt <strong>to</strong> equity ratio under 1.0. The debt <strong>to</strong> equity ratioat 31 December 2012 and 2011 were as follows:Group2012 2011$’000 $’000Total borrowings 666,222 392,161Less: Self-liquidating short term trade financing (550,350) (281,593)Adjusted <strong>to</strong>tal borrowings 115,872 110,568Total equity 615,367 509,200Debt <strong>to</strong> equity ratio 0.19 0.22Debt <strong>to</strong> equity ratio is <strong>the</strong> ratio of <strong>to</strong>tal borrowings excluding self-liquidating short term trade financing <strong>to</strong> <strong>the</strong> <strong>to</strong>tal equity. Selfliquidatingshort term trade financing is excluded from <strong>the</strong> calculation of debt <strong>to</strong> equity ratio due <strong>to</strong> its short term highly liquidnature that is fully secured by liquid assets such as inven<strong>to</strong>ries and receivables.There were no changes in <strong>the</strong> Group’s approach <strong>to</strong> capital management during <strong>the</strong> year.Straits Financial LLC (“SFLLC”) and Straits (Singapore) Pte Ltd (“SSPL”), subsidiaries incorporated in <strong>the</strong> United States of Americaand Singapore respectively, are subject <strong>to</strong> minimum capital requirements pursuant <strong>to</strong> laws and regulations of <strong>the</strong> United Statesof America and Singapore. Management has established controls and policies <strong>to</strong> ensure that <strong>the</strong> subsidiaries comply with <strong>the</strong>minimum capital requirements.The Group and its subsidiaries, o<strong>the</strong>r than set out above, are not subject <strong>to</strong> externally imposed capital requirements.25 RESERVESGroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Statu<strong>to</strong>ry reserve 650 604 – –Capital reserve (1,308) (1,364) – –Fair value reserve 35,090 8,509 35,694 9,232Currency translation reserve (32,189) (20,280) – –Hedging reserve (2,089) (1,856) – –O<strong>the</strong>r reserve (661) – – –Retained profits 408,931 316,219 119,993 119,877408,424 301,832 155,687 129,109The statu<strong>to</strong>ry reserve relates <strong>to</strong> profits set aside in accordance with local legislation by certain foreign entities and is nondistributable.The capital reserve comprises <strong>the</strong> difference between purchase considerations and net assets acquired in group restructuringand acquisition of non-controlling interests that does not result in a change in control.The fair value reserve comprises <strong>the</strong> cumulative net changes in <strong>the</strong> fair values of available-for-sale <strong>financial</strong> assets.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT109NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201225 RESERVES (CONTINUED)The currency translation reserve of <strong>the</strong> Group comprises foreign exchange differences arising from <strong>the</strong> translation of <strong>the</strong> <strong>financial</strong><strong>statements</strong> of foreign operations whose functional currencies are different from <strong>the</strong> functional currency of <strong>the</strong> Company.The hedging reserve comprises <strong>the</strong> effective portion of <strong>the</strong> cumulative net change in <strong>the</strong> fair value of cash flow hedging instruments.26 FINANCIAL LIABILITIESGroupCompanyNote 2012 2011 2012 2011$’000 $’000 $’000 $’000Current liabilitiesBank overdrafts 21 425,319 225,050 – –Bank loans (secured) 131,522 64,451 – –Bank loans (unsecured) 22,541 20,662 9,950 1,245Hire purchase and finance lease liabilities (a) 996 724 34 34Total 580,378 310,887 9,984 1,279Non-current liabilitiesBank loans (secured) 83,627 79,322 55,800 53,900Hire purchase and finance lease liabilities (a) 2,217 1,952 170 201Total 85,844 81,274 55,970 54,101The bank loans of <strong>the</strong> Group are secured over property, plant and equipment with carrying amounts of $120,856,000 (2011:$78,696,000) (see note 4), receivables and prepayments with carrying amounts of $278,787,000 (2011: $163,276,000) (see note16), floating charge on existing fixed and floating assets, cus<strong>to</strong>mers’ cheques and a second ranking fixed and floating chargeover all present and future assets of a subsidiary. The secured bank loans of <strong>the</strong> Group amounting <strong>to</strong> $509,000 (2011: nil) arecollateralised by physical cargo held at Singapore s<strong>to</strong>ck exchange approved warehouse.(a)Hire purchase and finance lease liabilitiesObligations under hire purchase and finance leases are repayable as follows:GroupPrincipal Interest Payments$’000 $’000 $’0002012Repayable within 1 year 996 201 1,197Repayable after 1 year but within 5 years 2,183 208 2,391Repayable after 5 years 34 7 413,213 416 3,6292011Repayable within 1 year 724 109 833Repayable after 1 year but within 5 years 1,887 161 2,048Repayable after 5 years 65 14 792,676 284 2,960


110 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201226 FINANCIAL LIABILITIES (CONTINUED)CompanyPrincipal Interest Payments$’000 $’000 $’0002012Repayable within 1 year 34 7 41Repayable after 1 year but within 5 years 136 29 165Repayable after 5 years 34 7 41204 43 2472011Repayable within 1 year 34 7 41Repayable after 1 year but within 5 years 136 28 164Repayable after 5 years 65 14 79235 49 284Terms and debt repayment scheduleThe terms and conditions of outstanding loans and borrowings are as follows:GroupNominal 2012 2011interestrateYear ofmaturityFacevalueCarryingamountFacevalueCarryingamount% $’000 $’000 $’000 $’000S$ floating rate loans 1.12% - 1.48% 2013 62,800 62,800 53,900 53,900GBP fixed rate loan 3.6% - 6.47% 2015 – 2031 2,452 2,452 2,880 2,880Euro floating rate loans 2.98% - 3.12% 2012 – – 4,623 4,623Euro floating rate loan 1-Month EURIBOR + 2017 627 627 798 7982.55% per yearEuro fixed rate loans 3.38% - 3.97% 2025 - 2027 19,782 19,782 22,014 22,014Euro floating rate loan 3-month EURIBOR + 2027 534 534 591 5911.35% per yearEuro floating rate loan 3-month EURIBOR + 2030 900 900 1,115 1,1151.85% per yearEuro floating rate loan 3-month EURIBOR + 2022 6,148 6,148 – –2.31% per yearUSD floating rate loan 1.185% - 5% 2013 133,621 133,621 77,759 77,759USD fixed rate loan 6.0% 2013 1,915 1,915 – –TRY fixed rate loans 9.48% - 18% 2013 - 2015 204 204 755 755RMB floating rate loans 5.0% 2013 5,878 5,878 – –RSD floating rate LIBOR + 4.92% 2013 2,829 2,829 – –per yearBank overdrafts 1.65% - 11% 2013 425,319 425,319 225,050 225,050Hire purchase and1.5% - 18.4% 2013-2018 3,213 3,213 2,676 2,676finance lease liabilities666,222 666,222 392,161 392,161


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT111NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201226 FINANCIAL LIABILITIES (CONTINUED)CompanyNominal 2012 2011interestrateYear ofmaturityFacevalueCarryingamountFacevalueCarryingamount% $’000 $’000 $’000 $’000S$ floating rate loans 1.12% - 1.48% 2013 62,800 62,800 53,900 53,900US$ floating rate loans 1.34% 2013 2,950 2,950 1,245 1,245Hire purchase 3% 2018 204 204 235 23565,954 65,954 55,380 55,380The following are <strong>the</strong> expected contractual undiscounted cash inflows/(outflows) of <strong>financial</strong> liabilities excluding derivatives(shown separately in note 27), including interest payments and excluding <strong>the</strong> impact of netting agreements:GroupCash flowsCarryingamountContractualcash flowsWithin1 yearWithin1 <strong>to</strong> 5 yearsMore than5 years$’000 $’000 $’000 $’000 $’0002012Floating rate loans 213,338 (218,866) (152,748) (60,997) (5,121)Fixed rate loans 24,353 (30,811) (4,728) (18,299) (7,784)Hire purchase andfinance lease liabilities 3,213 (3,629) (1,198) (2,390) (41)Bank overdrafts 425,319 (425,319) (425,319) – –Trade and o<strong>the</strong>r payables* 748,927 (748,927) (739,494) (9,433) –1,415,150 (1,427,552) (1,323,487) (91,119) (12,946)2011Floating rate loans 138,786 (142,471) (83,186) (57,184) (2,101)Fixed rate loans 25,649 (32,103) (3,270) (9,886) (18,947)Hire purchase and finance lease liabilities 2,676 (2,960) (833) (2,048) (79)Bank overdrafts 225,050 (225,050) (225,050) – –Trade and o<strong>the</strong>r payables* 512,194 (512,194) (430,735) (81,459) –904,355 (914,778) (743,074) (150,577) (21,127)* Excluding advance billings and billings in excess of costs incurred and recognised profits, as well as deposits received


112 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201226 FINANCIAL LIABILITIES (CONTINUED)Cash flowsCarryingamountContractualcash flowsWithin1 yearWithin1 <strong>to</strong> 5 yearsMore than5 yearsCompany $’000 $’000 $’000 $’000 $’0002012Floating rate loans 65,750 (67,330) (10,079) (57,251) −Hire purchase 204 (247) (41) (165) (41)Trade and o<strong>the</strong>r payables* 172,874 (172,874) (172,874) − −238,828 (240,451) (182,994) (57,416) (41)2011Floating rate loans 55,145 (57,263) (1,261) (56,002) −Hire purchase 235 (284) (41) (164) (79)Trade and o<strong>the</strong>r payables* 116,782 (116,782) (116,782) − −172,162 (174,329) (118,084) (56,166) (79)* Excluding deposits received27 DERIVATIVE FINANCIAL INSTRUMENTSGroupAssets Liabilities Assets Liabilities2012 2012 2011 2011$’000 $’000 $’000 $’000Held for hedgingInterest rate swaps – 2,644 – 2,418Commodities futures 22,220 18,042 83,563 17,071Commodities forward contracts 344 – – –22,564 20,686 83,563 19,489Analysed as:- current 22,564 18,042 83,563 17,071- non-current – 2,644 – 2,41822,564 20,686 83,563 19,489Net loss (realised and unrealised) from fair value adjustments of derivative <strong>financial</strong> instruments relating <strong>to</strong> commodities futuresamounting <strong>to</strong> $6,547,000 (2011: net gain of $111,840,000) is included in ‘Cost of sales’.The interest rate derivatives are used <strong>to</strong> hedge <strong>the</strong> interest rate risk related <strong>to</strong> <strong>the</strong> floating interest rate loans. The table belowanalyses <strong>the</strong> derivative <strong>financial</strong> instruments of <strong>the</strong> Group for which contractual maturities are essential for an understanding of<strong>the</strong> timing of <strong>the</strong> cash flows in<strong>to</strong> relevant maturity groupings based on <strong>the</strong> remaining period from <strong>the</strong> balance sheet date <strong>to</strong> <strong>the</strong>contractual maturity date. The amounts disclosed in <strong>the</strong> table are <strong>the</strong> contractual undiscounted cash flows.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT113NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201227 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)MaturityWithin1 yearWithin1 <strong>to</strong> 5 yearsMore than5 yearsGroup $’000 $’000 $’0002012Interest swaps 2,644 – –Commodities futures 18,042 – –20,686 – –2011Interest swaps 2,418 − −Commodities futures 17,071 − −19,489 − −28 EMPLOYEE BENEFITSGroup2012 2011Note $’000 $’000Non-currentSubordinated employee benefit liabilities 9,735 10,418Retirement benefit obligations 29 1,603 1,38411,338 11,802CurrentSubordinated employee benefit liabilities 2,366 2,31913,704 14,121Subordinated employee benefit liabilitiesThis programme represents a termination benefit which is paid in 3 instalments upon cessation of employment with a certainsubsidiary of <strong>the</strong> Group. Such benefit is granted <strong>to</strong> employees at <strong>the</strong> management’s discretion. Entitlement <strong>to</strong> benefits isreceived after reaching 2 years of service with <strong>the</strong> subsidiary.An amount of $2,619,000 (2011: $1,624,000) is included in administrative expenses <strong>to</strong> recognise <strong>the</strong> Group’s employee benefitliability under this program.


114 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201229 RETIREMENT BENEFIT OBLIGATIONThe present value of <strong>the</strong> funded obligations and <strong>the</strong> fair value of <strong>the</strong> plan assets were determined as at 31 December by aqualified actuary.Group2012 2011$’000 $’000Present value of funded obligations 14,569 10,733Fair value of plan assets (9,473) (7,631)Deficit in <strong>the</strong> plan 5,096 3,102Unrecognised actuarial losses (3,493) (1,718)Liability in <strong>the</strong> statement of <strong>financial</strong> position 1,603 1,384Movements in <strong>the</strong> defined benefit obligation are as follows:Group2012 2011$’000 $’000Defined benefit obligations at 1 January 10,733 –Acquisition through business combinations – 13,172Service cost 1,722 703Interest cost 301 163Change in assumptions 913 454Actuarial gains/losses 727 (958)Benefits paid 343 (1,472)Exchange differences (169) (1,329)Defined benefit obligations at 31 December 14,570 10,733The movements in <strong>the</strong> fair value of plan assets during <strong>the</strong> year are as follows:Group2012 2011$’000 $’000Fair value of plan assets at 1 January (7,630) –Acquisition through business combinations – (9,451)Expected return on plan assets (338) (176)Company contribution (1,498) (521)Actuarial losses 212 97Benefits paid (343) 1,472Exchange differences 124 948Fair value of plan assets at 31 December (9,473) (7,631)


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT115NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201229 RETIREMENT BENEFIT OBLIGATION (CONTINUED)The amounts recognised in <strong>the</strong> income statement are determined as follows:Group2012 2011$’000 $’000Current service cost 1,722 703Interest cost 300 163Expected return on plan assets (338) (176)Amortisation of unrecognised losses 58 32Exchange differences – (110)1,742 612The expense is recognised in <strong>the</strong> following line item in <strong>the</strong> income statement:Group2012 2011$’000 $’000Administrative expenses 1,742 612The actual return on plan assets was $124,000 (2011: $194,000). Plan assets comprise a qualifying insurance policy with a thirdparty insurance company under a contract subject <strong>to</strong> specific Swiss pension regulations (‘BVG’, ‘BVV’).Expected contributions <strong>to</strong> post-employment benefits for <strong>the</strong> 12 months ending 31 December 2013 are $1,732,000 (2012:$929,000).Funded status as of year end:Group2012 2011$’000 $’000Present value of defined benefit obligation 14,569 10,733Fair value of plan assets (9,473) (7,631)Deficit in <strong>the</strong> plan 5,096 3,102Experience adjustments on plan liabilities 727 958Experience adjustments on plan assets (212) (97)The principal actuarial assumptions are as follows:Group2012 2011Mortality tables, actuarial statistics (disability, mortality, etc) BVG 2010 BVG 2010Discount rate 2.15% 2.50%Average future salary increase 2.00% 1.50%Future pension increases 1.00% 1.00%Interest credited on savings accounts 2.15% 2.50%Expected return on plan assets 4.00% 4.00%Turnover 10.00% 10.00%


116 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201230 TRADE AND OTHER PAYABLESGroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Current liabilitiesTrade payables and accrued operating expenses 483,971 359,857 37,190 22,376Advance billings and billings in excess of costs incurredand recognised profits 5,441 6,757 – –Deposits received 7,434 5,459 2,708 1,563Subsidiaries:- trade – – 2,577 3,026- non-trade – – 18 62- loans – – 130,653 87,654Related parties:- trade 1,298 461 102 173- non-trade 555 440 – –- loans 48 51 – –Non-controlling interests:- non-trade 1,449 – – –- loans 4,484 1,683 – –Deferred purchase consideration- deferred payments 19,280 9,018 2,333 3,482- put and call options 7,363 8,421 – –Associates and jointly-controlled entities:- trade 483 269 1 9- non-trade 1,280 – – –Payables <strong>to</strong> clearing organisation 191 44 – –Amounts segregated for cus<strong>to</strong>mers 170,583 49,137 – –Commission and brokerage fee payable 697 1,354 – –704,557 442,951 175,582 118,345Non-current liabilitiesNon-controlling interests:- loan 2,238 4,905 – –Deferred purchase consideration- deferred payment 19,492 33,159 – –- put and call option 26,082 33,400 – –- contingent consideration 9,433 9,995 – –57,245 81,459 – –The non-trade amounts due <strong>to</strong> <strong>the</strong> subsidiaries, related parties, associates and jointly-controlled entities are unsecured, interestfreeand repayable on demand.The loans due <strong>to</strong> subsidiaries, related parties and non-controlling interests are unsecured, bear interest rates ranging from 0.2%<strong>to</strong> 6.0% (2011: 0.2% <strong>to</strong> 6.0%) per annum and are repayable on demand.Deferred purchase considerations arise from acquisition of subsidiaries, associates and a jointly-controlled entity.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT117NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201231 DEFERRED GAINSGroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Deferred gains:- current 37,644 32,832 35,328 29,954- non-current 58,448 70,828 57,168 64,44296,092 103,660 92,496 94,396Deferred gains relate <strong>to</strong> <strong>the</strong> excess of sales proceeds over <strong>the</strong> fair values of <strong>the</strong> leasehold buildings disposed of under sale andleaseback arrangements. Deferred gains are released <strong>to</strong> profit or loss on a straight-line basis over <strong>the</strong> leaseback period rangingfrom 3 <strong>to</strong> 8 years.32 PROVISIONSGroupClaims forWarrantiesdamageof goods andservicesSiteres<strong>to</strong>rationcostTotal$’000 $’000 $’000 $’000At 1 January 2012, as previously stated 296 726 534 1,556Reclassification from trade and o<strong>the</strong>r payables 245 − − 245At 1 January 2012, as restated 541 726 534 1,801Provision made 944 231 − 1,175Payments made − (13) − (13)Reversal of provision − (43) − (43)Translation differences − (3) − (3)At 31 December 2012 1,485 898 534 2,917CompanyAt 1 January and 31 December 2012 – 26 284 310The provisions made by <strong>the</strong> Group and <strong>the</strong> Company are in respect of:(i)warranty claims for completed projects. The provision is made based on estimates from his<strong>to</strong>rical warranty data and aweighting of all possible outcomes against <strong>the</strong>ir associated probabilities.(ii)claims by cus<strong>to</strong>mers for damage of goods and liquidated damages for services rendered in <strong>the</strong> course of businessincluding third party claims for accidents; and(iii)obligations <strong>to</strong> carry out site res<strong>to</strong>ration work on <strong>the</strong> leasehold buildings used for warehouse operations, estimated by thirdparty consultants.


118 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201233 SEGMENT REPORTINGOperating segmentsThe Group has three reportable segments, as described below, which are <strong>the</strong> Group’s strategic divisions. The strategic divisionsoffer different products and services, and are managed separately because <strong>the</strong>y require different technology and marketingstrategies. For each of <strong>the</strong> strategic divisions, <strong>the</strong> Group CEO (<strong>the</strong> chief operating decision maker) reviews internal managementreports on at least a quarterly basis. The following summary describes <strong>the</strong> operations in each of <strong>the</strong> Group’s reportable segments:• Logistics services. Include warehousing, transportation, freight forwarding and cargo consolidation, supply chainmanagement services such as procurement, inven<strong>to</strong>ry management, packing and o<strong>the</strong>r value added services anddelivery <strong>to</strong> end cus<strong>to</strong>mers, collateral management services, surface preparation of metal materials for corrosion controland container management services. The Group, being a one-s<strong>to</strong>p logistics provider, views all logistics services as <strong>to</strong>tallogistics solutions provided <strong>to</strong> cus<strong>to</strong>mers. These logistics services are aggregated in<strong>to</strong> a single operating segment since<strong>the</strong> aggregated operating results of this segment are regularly reviewed by <strong>the</strong> Group CEO <strong>to</strong> make decisions aboutresources <strong>to</strong> be allocated <strong>to</strong> it and <strong>to</strong> assess its performance.• Commodity supply chain management (SCM). Include physical trading and supply chain management of base metalnon-ferrous concentrates with predominant focus on copper, lead, zinc and o<strong>the</strong>r minor metals and energy products likenaphtha, distillates and coal.• Engineering services. Include management and maintenance of facilities, vehicles and equipment, supply and installationof engineering products, property management, and design-and-build for logistics properties.O<strong>the</strong>r services comprise <strong>financial</strong> services businesses and investments not falling within <strong>the</strong> operating segments mentionedabove.Performance is measured based on segment profit before income tax and is reviewed regularly by <strong>the</strong> Group CEO. Segmentprofit is used <strong>to</strong> measure performance as management believes that such information is <strong>the</strong> most relevant in evaluating <strong>the</strong>results of certain segments relative <strong>to</strong> o<strong>the</strong>r entities that operate within <strong>the</strong>se business environments. Inter-segment pricing isdetermined on an arm’s length basis.Segment profit before tax represents operating revenue less expenses. Corporate expenses represent <strong>the</strong> cost of Group functionnot allocated <strong>to</strong> <strong>the</strong> reportable segments.Segment assets represent assets directly managed by each segment, and primarily include receivables, property, plant andequipment.Segment liabilities represent liabilities directly managed by each segment, and primarily include payables and <strong>financial</strong> liabilities.Assets and liabilities of o<strong>the</strong>r services include cus<strong>to</strong>mers segregated funds of $170,583,000 and cus<strong>to</strong>mers segregated fundspayable of $170,583,000 respectively.Where <strong>the</strong>re are material changes in <strong>the</strong> organisational structure and management reporting methodologies, segment informationfor prior periods is restated <strong>to</strong> allow comparability.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT119NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201233 SEGMENT REPORTING (CONTINUED)Information about reportable segmentsLogistics services SCMEngineeringservices O<strong>the</strong>rs Total2012 2011 2012 2011 2012 2011 2012 2011 2012 2011$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000External revenue 808,000 701,216 4,410,395 1,784,764 156,600 90,827 22,051 2,889 5,397,046 2,579,696Inter-segment revenue 29 64 249 – 284 268 – – 562 332Total reportable segment revenue 808,029 701,280 4,410,644 1,784,764 156,884 91,095 22,051 2,889 5,397,608 2,580,028Interest income 1,552 1,450 13,659 6,764 56 50 88 3 15,355 8,267Interest expense (3,763) (2,920) (24,049) (10,646) – – – – (27,812) (13,566)Depreciation and amortisation (24,441) (22,512) (7,567) (3,683) (590) (871) (699) (96) (33,297) (27,162)Reportable segment profit before tax 82,030 58,743 31,583 6,858 18,931 6,843 (5,574) (5,462) 126,970 66,982Share of profits of associates andjointly-controlled entities 5,458 5,127 – – 1,540 1,767 – 1,328 6,998 8,222O<strong>the</strong>r material non-cash items:(Loss)/gain on disposal of property,plant and equipment (164) 2,717 – – – 75 – – (164) 2,792Gain on disposal of non-currentasset held-for-sale 22,980 – – – – – – – 22,980 –Impairment loss on property, plantand equipment (1,022) (378) – – – – – – (1,022) (378)Gain on disposal of subsidiaries 196 4,718 – – – – 131 – 327 4,718Gain on disposal of available-for-sale<strong>financial</strong> assets 102 2,123 – – – – – – 102 2,123Impairment loss on intangible assets (4) (127) (79) – – – – – (83) (127)Reportable segment assets 693,592 695,293 1,194,226 770,723 40,271 34,842 230,515 45,784 2,158,604 1,546,642Investment in associates and jointlycontrolledentities 48,492 47,544 – – 2,460 1,222 – 50 50,952 48,816Non-current assets held-for-sale – 2,345 – – – – – – – 2,345Capital expenditure 59,877 69,239 2,504 137 258 143 759 1,232 63,398 70,751Reportable segment liabilities 338,873 223,124 1,000,770 743,220 26,016 27,609 195,764 61,689 1,561,423 1,055,642


120 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201233 SEGMENT REPORTING (CONTINUED)Reconciliations of reportable segment revenues, profit or loss, assets and liabilities and o<strong>the</strong>r material items2012 2011$’000 $’000RevenuesTotal revenue for reportable segments 5,375,557 2,577,139O<strong>the</strong>r revenue 22,051 2,889Elimination of inter-segment revenue (562) (332)Consolidated revenue 5,397,046 2,579,696Profit or lossTotal profit or loss for reportable segments 132,544 72,431O<strong>the</strong>r profit or loss (5,574) (5,449)126,970 66,982Unallocated amounts:Business development costs and corporate expenses (15,500) (10,122)Share of profits of associates and jointly-controlled entities 6,998 8,222Consolidated profit or loss 118,468 65,082AssetsTotal assets for reportable segments 1,928,089 1,500,858O<strong>the</strong>r assets 230,515 45,784Investment in associates and jointly-controlled entities 50,952 48,816Non-current assets held-for-sale – 2,345O<strong>the</strong>r unallocated assets 5,347 6,048Consolidated <strong>to</strong>tal assets 2,214,903 1,603,851LiabilitiesTotal liabilities for reportable segments 1,365,659 993,953O<strong>the</strong>r liabilities 195,764 61,689O<strong>the</strong>r unallocated liabilities 38,113 39,009Consolidated <strong>to</strong>tal liabilities 1,599,536 1,094,651


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT121NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201233 SEGMENT REPORTING (CONTINUED)O<strong>the</strong>r material items2012ReportableConsolidatedsegment Adjustments <strong>to</strong>tals$’000 $’000 $’000Interest income 15,355 (699) 14,656Interest expense (27,812) 699 (27,113)Capital expenditure 63,398 – 63,398Depreciation and amortisation (33,297) – (33,297)Impairment loss on property, plant and equipment (1,022) – (1,022)Impairment loss on intangible assets (83) – (83)Loss on disposal of property, plant and equipment (164) – (164)Gain on disposal of non-current asset held-for-sale 22,980 – 22,980Gain on disposal of subsidiaries 327 – 327Gain on disposal of available-for-sale <strong>financial</strong> assets 102 – 1022011Interest income 8,267 (82) 8,185Interest expense (13,566) 82 (13,484)Capital expenditure 70,751 − 70,751Depreciation and amortisation (27,162) − (27,162)Impairment loss on property, plant and equipment (378) − (378)Gain on disposal of property, plant and equipment 2,792 − 2,792Gain on disposal of subsidiaries 4,718 − 4,718Impairment loss on intangible assets (127) − (127)Gain on disposal of available-for-sale <strong>financial</strong> assets 2,123 − 2,123Geographical informationThe logistics services and commodity supply chain management are managed on a worldwide basis and <strong>the</strong> Group operatesprincipally in Singapore, China, India, Europe and o<strong>the</strong>r parts of Asia and Africa. Engineering services are primarily in Singapore.


122 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201233 SEGMENT REPORTING (CONTINUED)O<strong>the</strong>r material items (continued)In presenting information on <strong>the</strong> basis of geographical segments, segment revenue is based on <strong>the</strong> geographical locations fromwhich <strong>the</strong> Group derives its revenue. Segment non-current assets (o<strong>the</strong>r than <strong>financial</strong> instruments and deferred tax assets) arebased on <strong>the</strong> geographical location of <strong>the</strong> assets.Revenue 2012 2011$’000 $’000China 3,080,421 1,440,164Singapore 724,711 370,872India 460,005 170,886Korea 261,234 97,866Thailand 177,395 -Belgium 126,988 57,131Sweden 117,094 76,285Brazil 42,192 31,327O<strong>the</strong>r countries 407,006 335,165Total 5,397,046 2,579,696Non-current assets 2012 2011$’000 $’000Singapore 223,389 216,906Switzerland 80,982 89,495The Ne<strong>the</strong>rlands 64,113 71,904Belgium 29,083 30,613China 25,273 39,350Mongolia 14,977 93O<strong>the</strong>r countries 65,998 52,917Total 503,815 501,278Major cus<strong>to</strong>merRevenue from two cus<strong>to</strong>mers of <strong>the</strong> Group’s commodity supply chain segment accounts for approximately $1,273,333,000(2011: $632,195,000) of <strong>the</strong> Group’s <strong>to</strong>tal revenues.34 REVENUEGroup2012 2011$’000 $’000Rendering of services 867,675 778,245Sale of goods 22,246 18,978Sale of commodities 4,412,866 1,765,074Construction income 94,259 17,3995,397,046 2,579,696


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT123NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201235 PROFIT BEFORE INCOME TAXThe following items have been included in arriving at profit before income tax:Group2012 2011$’000 $’000Staff costs 196,878 160,057Contributions <strong>to</strong> defined contribution plan included in staff costs 14,935 11,670Operating lease expense 100,640 88,984Audit fees paid <strong>to</strong>:- Audi<strong>to</strong>rs of <strong>the</strong> Company 606 541- O<strong>the</strong>r audi<strong>to</strong>rs 1,248 1,383Non-audit fees paid <strong>to</strong>:- Audi<strong>to</strong>rs of <strong>the</strong> Company 102 74- O<strong>the</strong>r audi<strong>to</strong>rs 739 808Professional fees paid <strong>to</strong> a firm in which a direc<strong>to</strong>r is a member 40 125Depreciation of property, plant and equipment 24,727 21,854Amortisation of:- Intangible assets 8,570 5,308- Deferred gain (34,466) (32,871)Amounts written-off for:- Bad debts 478 126Allowance/(reversal) of impairment losses on:- Property, plant and equipment 1,022 378- Intangible assets 83 127- Trade and o<strong>the</strong>r receivables 2,168 729- Available-for-sale <strong>financial</strong> assets 81 –(Gain)/loss on disposal or liquidation of:- Available-for-sale <strong>financial</strong> assets (102) (2,123)- Property, plant and equipment 164 (2,792)- Intangible assets 15 120- Subsidiaries (327) (4,718)- Jointly-controlled entity (49) –Non-current assets held-for-sale* (22,980) –* This relates mainly <strong>to</strong> <strong>the</strong> gain on disposal of leasehold building under sale and leaseback arrangement.


124 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201236 DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATIONThe compensation paid/payable <strong>to</strong> key management personnel, included in staff costs, are as follows:Group2012 2011$’000 $’000Direc<strong>to</strong>rs’ fees 660 675Senior management team remuneration* 28,560 24,245Post-employment benefits 480 368O<strong>the</strong>r long-term employee benefits 2 2Termination benefits – 165Share-based payments 712 1,75630,414 27,211* Represents short-term employee benefits37 FINANCE INCOME AND EXPENSESGroup2012 2011$’000 $’000Gain on disposal of available-for-sale <strong>financial</strong> assets 102 2,123Dividend income from available-for-sale <strong>financial</strong> assets 7,394 7,585Interest income:- Cash and cash equivalents 850 1,177- Finance lease 26 28- Jointly-controlled entities, associates and related parties 223 110- Loan <strong>to</strong> non-controlling interest 34 −- Interest charge <strong>to</strong> suppliers 2,349 1,302- Interest charge <strong>to</strong> cus<strong>to</strong>mers 10,942 5,339- O<strong>the</strong>rs 232 229Finance income 22,152 17,893Exchange loss (net) (1,332) (2,703)Impairment loss on available-for-sale <strong>financial</strong> assets (81) −Interest expense:- Bank borrowings and o<strong>the</strong>r banking facilities (23,340) (11,980)- Unwind of interest on deferred consideration (2,754) (225)- Finance leases (164) (144)- Related parties (339) (441)- O<strong>the</strong>rs (516) (694)Finance expenses (28,526) (16,187)Net finance (expenses)/income recognised in profit or loss (6,374) 1,706


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT125NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201238 INCOME TAX EXPENSEGroup2012 2011$’000 $’000Current tax expenseCurrent year 8,985 7,890Over provision in prior years (714) (1,749)Withholding tax 433 1888,704 6,329Deferred tax expenseOrigination and reversal of temporary differences (155) 735Under/(over) provision in prior years 879 (1,455)724 (720)Total income tax expense 9,428 5,609Income tax recognised in o<strong>the</strong>r comprehensive incomeGroupBefore TaxTax(expense)/benefit Net of Tax$’000 $’000 $’0002012Exchange differences arising from translation of foreign operations (10,790) – (10,790)Exchange differences realised on disposal of subsidiaries (40) – (40)Fair value changes on available-for-sale <strong>financial</strong> assets 26,626 – 26,626Fair value changes on available-for-sale <strong>financial</strong> assets transferred <strong>to</strong>profit or loss upon disposal (58) – (58)Fair value changes on cash flow hedges (314) – (314)Share of o<strong>the</strong>r comprehensive income of associates andjointly-controlled entities (2,425) – (2,425)12,999 – 12,9992011Exchange differences arising from translation of foreign operations 1,923 – 1,923Exchange differences realised on disposal of subsidiaries (1,195) – (1,195)Fair value changes on available-for-sale <strong>financial</strong> assets (4,230) – (4,230)Fair value changes on available-for-sale <strong>financial</strong> assets transferred <strong>to</strong>profit or loss upon disposal (2,194) – (2,194)Fair value changes on cash flow hedges (2,651) – (2,651)Share of o<strong>the</strong>r comprehensive income of associates andjointly-controlled entities 767 – 767(7,580) – (7,580)


126 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201238 INCOME TAX EXPENSE (CONTINUED)Reconciliation of effective tax rateGroup2012 2011$’000 $’000Profit before income tax 118,468 65,082Tax calculated using Singapore tax rate of 17% 20,139 11,064Effect of different tax rates in o<strong>the</strong>r countries (4,272) (1,839)Income not subject <strong>to</strong> tax (14,021) (8,565)Tax incentives (132) (436)Effect of utilisation of tax losses and wear and tear allowancesnot previously recognised as deferred tax assets (73) (63)Expenses not deductible for tax purposes 4,138 5,582Effect of deferred tax assets not recognised 3,681 2,882Reversal of deferred tax on fair value adjustment on leasehold building (630) –Under/(over) provision in prior years 165 (3,204)Withholding tax 433 1889,428 5,609A loss-transfer system of group relief (group relief system) for companies was introduced in Singapore with effect from year ofassessment 2003. Under <strong>the</strong> group relief system, a company belonging <strong>to</strong> a group may transfer its current year’s unabsorbedcapital allowances and current year’s unabsorbed tax losses <strong>to</strong> ano<strong>the</strong>r company belonging <strong>to</strong> <strong>the</strong> same group, <strong>to</strong> be deductedagainst <strong>the</strong> assessable income of <strong>the</strong> latter company. The utilisation of tax losses under <strong>the</strong> group relief system is subject <strong>to</strong>compliance with <strong>the</strong> relevant rules and procedures and agreement of <strong>the</strong> Inland Revenue Authority of Singapore.Certain tax returns of <strong>the</strong> Group entities (including <strong>the</strong> Company) for prior years have not yet been finalised with <strong>the</strong> respectivetax authorities. In arriving at <strong>the</strong> current tax expense of <strong>the</strong> Group, management establishes <strong>the</strong> best estimate of <strong>the</strong> expenditurerequired <strong>to</strong> settle its current tax liabilities based on its actual experience of similar transactions in <strong>the</strong> past, and in some cases,advice from its legal advisors on certain transactions.In respect of <strong>the</strong> gains recognised on sale and leaseback of certain leasehold buildings, <strong>the</strong> Group continues <strong>to</strong> treat <strong>the</strong>disposals of <strong>the</strong> leasehold buildings as capital transactions and accordingly, <strong>the</strong> gains on disposal of leasehold buildings including<strong>the</strong> accretion of <strong>the</strong> deferred gain over <strong>the</strong> leaseback period are <strong>the</strong>refore not subject <strong>to</strong> tax.Subsequent <strong>to</strong> <strong>the</strong> tax affairs being finalised by <strong>the</strong> tax authorities, <strong>the</strong>re may be significant adjustments affecting <strong>the</strong> Group’sresults in future periods as <strong>the</strong>re is no absolute certainty that <strong>the</strong> relevant tax authorities would accept <strong>the</strong> tax treatments ofcertain income and expenses submitted by <strong>the</strong> Group.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT127NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201239 EARNINGS PER SHAREGroup2012 2011$’000 $’000The basic and diluted earnings per share are based on:Profit for <strong>the</strong> year attributable <strong>to</strong> shareholders 107,920 57,145Issued ordinary shares at beginning of <strong>the</strong> year 600,305 590,305Weighted average number of ordinary shares during <strong>the</strong> year 600,305 595,044The Company does not have any dilutive potential ordinary shares in existence for <strong>the</strong> current and previous <strong>financial</strong> year.40 ACQUISITION OF SUBSIDIARIES(i) (a) Acquisition of subsidiaries in FY2012The following summarises <strong>the</strong> major classes of consideration transferred, and <strong>the</strong> recognised amounts of assetsacquired and liabilities assumed at <strong>the</strong> acquisition date for all acquisitions during <strong>the</strong> year:Group2012$’000Purchase considerationCash paid 20,127Deferred payment 2,247Total considerations for <strong>the</strong> acquisitions 22,374Effect on cash flows of <strong>the</strong> GroupCash paid (as above) 20,127Add: Bank overdrafts, net of cash acquired 8,905Cash outflow on acquisitions 29,032The following fair values have been determined on a provisional basis:At fairNote valueIdentifiable assets acquired and liabilities assumed 2012$’000Property, plant and equipment 4 6,961Intangible assets 5 984Financial assets (non-current) 24Derivative <strong>financial</strong> instruments 212Inven<strong>to</strong>ries 18,828Trade and o<strong>the</strong>r receivables 27,874Cash and cash equivalents 5,244Total assets 60,127Trade and o<strong>the</strong>r payables 10,527Financial liabilities 14,716Bank overdraft 14,149Long term contingency & loss provision 386Deferred tax liabilities 12 268Total liabilities 40,046


128 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201240 ACQUISITION OF SUBSIDIARIES (CONTINUED)(i) (a) Acquisition of subsidiaries in FY2012 (continued)NoteAt fairIdentifiable assets acquired and liabilities assumed 2012$’000valueTotal identifiable net assets 20,081Less: Non-controlling interest, based on <strong>the</strong>ir proportionate interest in <strong>the</strong> recognised amountsof assets and liabilities of <strong>the</strong> acquiree (515)Add: Goodwill arising from consolidation 5 2,808Total considerations for <strong>the</strong> acquisitions 22,374Acquisition-related costsThe Group incurred acquisition-related costs of $1,017,000 (US$817,000) related <strong>to</strong> external legal fees and due diligence costs.The legal fees and due diligence costs have been included in o<strong>the</strong>r operating expenses in <strong>the</strong> Group’s income statement.(b)Major acquisitionAcquisition of LN Metals International <strong>Limited</strong> (“LNM”)During <strong>the</strong> year, <strong>the</strong> Group obtained control of LN Metals International <strong>Limited</strong>, a commodity trading (metals) companyby acquiring 100% of <strong>the</strong> shares and voting interests in LNM for a <strong>to</strong>tal consideration of $14,737,000 (US$12,003,000)which consists of a cash consideration of S$12,490,000 (US$10,173,000) and a deferred consideration of S$2,247,000(US$1,830,000) payable in four tranches over four <strong>financial</strong> years.In <strong>the</strong> 3 months <strong>to</strong> 31 December 2012, LNM contributed revenue of $44,534,000 and loss of $901,000 <strong>to</strong> <strong>the</strong> Group’sresults. If <strong>the</strong> acquisition had occurred on 1 January 2012, management estimates that consolidated revenue wouldhave been $5,599,526,000 and <strong>the</strong> consolidated profit for <strong>the</strong> year would have been $108,301,000. In determining <strong>the</strong>seamounts, management has assumed that <strong>the</strong> fair value adjustments, determined provisionally, that arose on <strong>the</strong> date ofacquisition would have been <strong>the</strong> same if <strong>the</strong> acquisition had occurred on 1 January 2012.(ii) (a) Acquisition of subsidiaries in FY2011The following summarises <strong>the</strong> major classes of consideration transferred, and <strong>the</strong> recognised amounts of assetsacquired and liabilities assumed at <strong>the</strong> acquisition date for all acquisitions during <strong>the</strong> previous <strong>financial</strong> year:Group2011$’000Purchase considerationCash paid 81,078Equity instrument issued (10,000,000 ordinary shares) 12,373Deferred payment 36,083Fair value of put and call options 50,630Contingent considerations 10,079Total considerations for <strong>the</strong> acquisitions 190,243


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT129NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201240 ACQUISITION OF SUBSIDIARIES (CONTINUED)(ii) (a) Acquisition of subsidiaries in FY2011 (continued)Group2011$’000Effect on cash flows of <strong>the</strong> GroupCash paid (as above) 81,078Add: Bank overdraft, net of cash acquired 329,073Cash outflow at <strong>the</strong> acquisition date 410,151Cash paid on exercise of first tranche of <strong>the</strong> put and call options 8,340Cash outflow on acquisitions 418,491The following fair values have been determined on a provisional basis:NoteAt fairvalueIdentifiable assets acquired and liabilities assumed 2011$’000Property, plant and equipment 4 61,044Intangible assets 5 54,038Derivative <strong>financial</strong> instruments 19,792Inven<strong>to</strong>ries 347,129Trade and o<strong>the</strong>r receivables 420,202Deferred tax assets 12 136Cash and cash equivalents 44,075Total assets 946,416Trade and o<strong>the</strong>r payables 267,262Derivative <strong>financial</strong> instruments 19,864Subordinated employee benefit liability 13,480Retirement benefit obligations 1,363Financial liabilities 84,279Bank overdraft 373,148Long term contingency & loss provision 22Current tax payable 1,881Deferred tax liabilities 12 19,524Reserves 6,466Total liabilities 787,289Total identifiable net assets 159,127Less: Non-controlling interests, based on <strong>the</strong>ir proportionate interest in <strong>the</strong> recognisedamounts of assets and liabilities of <strong>the</strong> acquiree (7,741)Add: Goodwill arising from consolidation 5 37,970Add: Capital reserves arising from restructuring 887Total considerations for <strong>the</strong> acquisitions 190,243* There were no changes <strong>to</strong> <strong>the</strong> provisional fair values in <strong>the</strong> current year.


130 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201240 ACQUISITION OF SUBSIDIARIES (CONTINUED)(ii) (a) Acquisition of subsidiaries in FY2011 (continued)Acquisition-related costsThe Group incurred acquisition-related costs of $3,423,000 (US$2,730,000) related <strong>to</strong> external legal fees anddue diligence costs. The legal fees and due diligence costs had been included in o<strong>the</strong>r operating expenses in <strong>the</strong>Group’s income statement.Equity instrument issuedThe fair value of <strong>the</strong> ordinary shares issued was based on <strong>the</strong> listed share price of <strong>the</strong> Company at 30 June 2011of $1.2373 per share.Deferred paymentsDeferred payments consist of deferred and o<strong>the</strong>r amounts payable <strong>to</strong> <strong>the</strong> selling shareholders in three tranchesfrom 2012 <strong>to</strong> 2014.Contingent considerationsThe Group agreed <strong>to</strong> pay an additional consideration contingent on an agreed profit target <strong>to</strong> be achieved byMRI from 1 July 2011 <strong>to</strong> 30 June 2014. The contingent consideration will be payable in 2015. The Grouphas recognised $10,079,000 (US$7,706,000) as contingent consideration, which represents its fair value at <strong>the</strong>acquisition date, based on a discount rate of 3.725%.41 DISPOSAL OF SUBSIDIARIES(i)Disposal of subsidiaries in FY2012During <strong>the</strong> year, <strong>the</strong> Group disposed of its equity interest in Energy Taiwan <strong>Limited</strong>, <strong>CWT</strong> Logistics (Tianjin) Co., Ltd andPT Straits Bullion.The following summarises <strong>the</strong> assets and liabilities disposed off during <strong>the</strong> year arising from disposal of subsidiaries:GroupNote 2012$’000Property, plant and equipment 4 302Inven<strong>to</strong>ries 4,226Trade and o<strong>the</strong>r receivables 3,836Deferred tax assets 12 96Cash and cash equivalents 2,456Total assets 10,916Trade and o<strong>the</strong>r payables (9,002)Total liabilities (9,002)Net assets derecognised 1,914Less: Non-controlling interests (890)Net assets disposed of 1,024


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT131NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201241 DISPOSAL OF SUBSIDIARIES (CONTINUED)(i)Disposal of subsidiaries in FY2012 (continued)The aggregate cash outflows arising from <strong>the</strong> disposal of subsidiaries were as follows:Group2012$’000Net assets disposed (as above) 1,024Gain on disposal 235Considerations received on disposal of subsidiaries 1,259Less: Cash and cash equivalent disposed off (2,456)Net cash outflow on disposal (1,197)(ii)Disposal of subsidiaries in FY2011During <strong>the</strong> previous <strong>financial</strong> year, <strong>the</strong> Group disposed of its equity interest in <strong>CWT</strong> Cayman (Jinshan) Ltd.The following summarises <strong>the</strong> assets and liabilities disposed off during <strong>the</strong> previous <strong>financial</strong> year arising from disposal ofsubsidiaries:GroupNote 2011$’000Property, plant and equipment 4 7,739Total assets 7,739Trade and o<strong>the</strong>r payables (1,198)O<strong>the</strong>r liabilities (1)Total liabilities (1,199)Net assets derecognised 6,540Less: Non-controlling interests –Net assets disposed of 6,540The aggregate cash inflows arising from <strong>the</strong> disposal of subsidiaries were as follows:Group2011$’000Net assets disposed (as above) 7,735Reclassification of currency translation reserve (1,195)6,540Gain on disposal 6,431Net cash inflow on disposal 12,971


132 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201241 DISPOSAL OF SUBSIDIARIES (CONTINUED)(ii)Disposal of subsidiaries in FY2011 (continued)In connection with <strong>the</strong> disposal, <strong>the</strong> Group entered in<strong>to</strong> a 3 year lease for a warehouse owned by <strong>the</strong> disposed group.The gain on disposal of <strong>CWT</strong> Cayman (Jinshan) Ltd included an amount of $1,713,000 representing <strong>the</strong> gain in excessof <strong>the</strong> fair value of <strong>the</strong> warehouse owned by <strong>the</strong> disposed group. Accordingly, <strong>the</strong> Group recognised <strong>the</strong> amount of$1,713,000 as a deferred gain <strong>to</strong> be amortised over <strong>the</strong> period of <strong>the</strong> lease of <strong>the</strong> warehouse.42 FINANCIAL RISK MANAGEMENTOverviewThe Group has a system of controls in place <strong>to</strong> create an acceptable balance between <strong>the</strong> cost of risks occurring and <strong>the</strong> cost ofmanaging <strong>the</strong> risks. The management continually moni<strong>to</strong>rs <strong>the</strong> Group’s risk management process <strong>to</strong> ensure that an appropriatebalance between risk and control is achieved.The Audit Committee oversees how management moni<strong>to</strong>rs compliance with <strong>the</strong> Group’s risk management policies andprocedures and reviews <strong>the</strong> adequacy of <strong>the</strong> risk management framework in relation <strong>to</strong> <strong>the</strong> risks faced by <strong>the</strong> Group. The AuditCommittee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and adhoc reviews of riskmanagement controls and procedures, <strong>the</strong> results of which are reported <strong>to</strong> <strong>the</strong> Audit Committee.Credit riskCredit risk is <strong>the</strong> potential <strong>financial</strong> loss resulting from <strong>the</strong> failure of a cus<strong>to</strong>mer or a counter party <strong>to</strong> settle its <strong>financial</strong> andcontractual obligations <strong>to</strong> <strong>the</strong> Group, as and when <strong>the</strong>y fall due.The Group has a credit policy in place whereby new cus<strong>to</strong>mers are subject <strong>to</strong> credit evaluations based on available <strong>financial</strong>information and past experiences. The Group has established credit limits for cus<strong>to</strong>mers and moni<strong>to</strong>rs <strong>the</strong>ir balances on anongoing basis. Cash and fixed deposits are placed with banks and <strong>financial</strong> institutions, which are regulated.The maximum exposure <strong>to</strong> credit risk is represented by <strong>the</strong> carrying amount of each <strong>financial</strong> asset in <strong>the</strong> <strong>statements</strong> of <strong>financial</strong>position. Except as disclosed in note 33, <strong>the</strong>re were no significant concentrations of credit risks.Sales by <strong>the</strong> SCM segment are generally secured by letters of credit. The Group generally does not require collateral for salesfrom o<strong>the</strong>r segments.Liquidity riskPrudent liquidity risk management implies maintaining sufficient cash and cash equivalents and availability of funding as required.The Group moni<strong>to</strong>rs and maintains a level of cash and bank balances and credit facilities deemed adequate by management <strong>to</strong>finance <strong>the</strong> Group’s operations and <strong>to</strong> mitigate <strong>the</strong> effects of fluctuations in cash flows.The Group aims at maintaining flexibility in funding by keeping adequate liquidity available. Where necessary and at <strong>the</strong> appropriatetime, <strong>the</strong> Group would unlock cash from properties held <strong>to</strong> meet expansion needs.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT133NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201242 FINANCIAL RISK MANAGEMENT (CONTINUED)Liquidity risk (continued)The Group maintains adequate secured and unsecured loan facilities. As at 31 December 2012, <strong>the</strong> Group has unutilised loanfacilities amounting <strong>to</strong> $1,140,470,000 (2011: $905,179,000) that are available <strong>to</strong> fund its working capital requirements and <strong>to</strong>service financing obligations.Market riskMarket risk is <strong>the</strong> risk that changes in market prices, such as interest rates, foreign exchange rates and o<strong>the</strong>r price risks will affect<strong>the</strong> Group’s profit. The objective of market risk management is <strong>to</strong> manage and control market risk exposures within acceptableparameters, while optimising <strong>the</strong> return on risk.Price riskPrice risk is <strong>the</strong> risk that fair value or future cash flows of a <strong>financial</strong> instrument will fluctuate because of changes in market prices(o<strong>the</strong>r than those arising from interest rate risk or currency risk), whe<strong>the</strong>r those changes are caused by fac<strong>to</strong>rs specific <strong>to</strong> <strong>the</strong>individual <strong>financial</strong> instrument or its issuer, or fac<strong>to</strong>rs affecting all similar <strong>financial</strong> instruments traded in <strong>the</strong> market.Sensitivity analysisEquity price riskThe Group’s equity securities are designated as available-for-sale investment. A 10% increase or decrease in <strong>the</strong> underlyingequity prices at <strong>the</strong> reporting date with all o<strong>the</strong>r variables held constant would increase or decrease equity by $10,974,000 (2011:$8,353,000 respectively).Equity10% 10%increase decreaseGroup $’000 $’0002012Quoted equity securities 10,974 (10,974)2011Quoted equity securities 8,353 (8,353)Commodity price riskThe Group uses derivative <strong>financial</strong> instruments such as commodity futures and commodity option contracts <strong>to</strong> hedge certainexposures. The two markets used are <strong>the</strong> London Metal Exchange (“LME”) for Base Metals, such as copper, lead and zinc, and<strong>the</strong> London Bullion Market Association (“LBMA”) for gold and silver.


134 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201242 FINANCIAL RISK MANAGEMENT (CONTINUED)Commodity price risk (continued)The following table represents <strong>the</strong> quantities by commodity, <strong>to</strong> which <strong>the</strong> Group is exposed <strong>to</strong> commodity price risk. BaseMetals, such as Copper, Lead and Zinc are shown as, metric <strong>to</strong>ns (mt), precious metals such as Gold and Silver are shown asounces (oz).GroupNickel/Copper Lead Zinc Gold Silver Aluminium Naphtha Coalmt mt mt oz oz mt mt mt2012Gross exposure 17,583 25,461 20,602 17,631 1,339,864 1,021 16,503 162,107Hedges (17,525) (25,078) (20,129) (17,555) (1,338,573) (1,022) (16,364) (160,000)Net exposure 58 383 473 76 1,291 (1) 139 2,1072011Gross exposure 35,113 10,981 32,850 35,409 1,817,687 – – –Hedges (35,050) (10,900) (32,875) (35,438) (1,816,262) – – –Net exposure 63 81 (25) (29) 1,425 – – –Exposure <strong>to</strong> commodity prices is covered by derivatives and <strong>the</strong>refore, changes <strong>to</strong> market prices are not expected <strong>to</strong> significantlyimpact <strong>the</strong> Group’s <strong>financial</strong> performance. Changes in weight and content of <strong>the</strong> metals within <strong>the</strong> concentrates can impact <strong>the</strong>Group’s <strong>financial</strong> performance.Interest rate riskCertain of <strong>the</strong> Group’s term and o<strong>the</strong>r loans bear interests at floating rates. The Group’s earnings are affected by changesin interest rates due <strong>to</strong> <strong>the</strong> impact such changes have on short-term cash deposits and debt obligations. The Group’s deb<strong>to</strong>bligations are mainly denominated in Singapore and United States dollars. Generally, <strong>the</strong> Group adopts a conservative approachin interest risk management. The Group’s policy is <strong>to</strong> maintain its borrowings in <strong>the</strong> appropriate currencies such as <strong>to</strong> balancerisks and cost effectiveness.The Group enters in<strong>to</strong> interest rate swap contracts <strong>to</strong> hedge its interest rate risk.Sensitivity analysisIn managing its interest rate risk, <strong>the</strong> Group aims <strong>to</strong> reduce <strong>the</strong> impact of short-term fluctuations on <strong>the</strong> Group’s earnings. Over<strong>the</strong> longer term, however, any prolonged adverse change in interest rates can have a significant impact on profit or loss.For <strong>the</strong> variable rate bank loans, a change of 100 bp in interest rate at <strong>the</strong> reporting date would increase/(decrease) profit beforetax by <strong>the</strong> amounts shown below. The analysis assumes that all o<strong>the</strong>r variables, in particular, foreign currency rates, remainconstant.Profit before tax100 bp 100 bpincrease decreaseGroup $’000 $’0002012Variable rate bank loans (2,133) 2,1332011Variable rate bank loans (1,371) 1,371


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT135NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201242 FINANCIAL RISK MANAGEMENT (CONTINUED)Foreign exchange riskThe Group operates internationally and is exposed <strong>to</strong> foreign currency risks arising from various currency exposures. Wherepossible, <strong>the</strong> Group seeks <strong>to</strong> minimise its foreign currency exposure in operations by matching its exposure <strong>to</strong> foreign currencyreceivables <strong>to</strong> its exposure <strong>to</strong> foreign currency payables. The Group may also explore using derivatives <strong>to</strong> hedge its foreignexchange risk.The Group seeks <strong>to</strong> minimise its foreign currency exposures in foreign subsidiaries, associates and jointly-controlled entities byrepatriating <strong>the</strong>ir earnings, where practicable. The Group also requires <strong>the</strong> foreign subsidiaries, associates and jointly-controlledentities <strong>to</strong> maintain <strong>the</strong>ir borrowings in <strong>the</strong> relevant foreign currencies which match <strong>the</strong>ir respective functional currencies.In respect of <strong>the</strong> o<strong>the</strong>r monetary assets and liabilities held in currencies o<strong>the</strong>r than <strong>the</strong> functional currencies, <strong>the</strong> Group reviews<strong>the</strong> balances periodically <strong>to</strong> ensure <strong>the</strong> net exposure is kept at an acceptable level.The Group’s and Company’s significant exposures <strong>to</strong> foreign currencies are as follows:US dollar Singapore dollar Euro Chinese Yuan Swiss Franc$’000 $’000 $’000 $’000 $’000Group2012Long-term loan receivables 978 – – – –Short-term loan receivables 16,752 – – – –Trade and o<strong>the</strong>r receivables 43,377 8,443 18,647 948 489Cash and cash equivalents 9,508 1,602 541 122 530Trade and o<strong>the</strong>r payables (50,256) (52,466) (3,880) (2,428) (13,709)Financial liabilities (3,317) – (81) – –17,042 (42,421) 15,227 (1,358) (12,690)2011Long-term loan receivables 1,296 – 118 – –Trade and o<strong>the</strong>r receivables 22,224 5,074 5,542 5,790 551Cash and cash equivalents 9,788 2,373 1,331 165 –Trade and o<strong>the</strong>r payables (11,853) (2,792) (1,756) (6,816) –Financial liabilities (3,477) (461) – – –17,978 4,194 5,235 (861) 551


136 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201242 FINANCIAL RISK MANAGEMENT (CONTINUED)Foreign exchange risk (continued)CompanyUS dollar Euro Chinese Yuan$’000 $’000 $’0002012Trade and o<strong>the</strong>r receivables 16,168 – 17Cash and cash equivalents 654 18 10Trade and o<strong>the</strong>r payables (7,235) – –Financial liabilities (2,950) – –6,637 18 272011Trade and o<strong>the</strong>r receivables 1,034 – 42Cash and cash equivalents 222 57 10Trade and o<strong>the</strong>r payables (7,026) – –Financial liabilities (1,245) – –(7,015) 57 52Sensitivity analysisA 10% streng<strong>the</strong>ning of <strong>the</strong> Group’s major functional currencies against <strong>the</strong> following currencies at <strong>the</strong> reporting date wouldincrease/(decrease) equity and profit before tax by <strong>the</strong> amounts shown below. This analysis assumes that all o<strong>the</strong>r variables, inparticular interest rates, remain constant.GroupProfitCompanyProfitEquity before tax Equity before tax$’000 $’000 $’000 $’0002012US dollar – 1,704 – (664)Singapore dollar – (4,242) – –Euro – 1,523 – (2)Chinese Yuan – (136) – (3)Swiss Franc – (1,269) – –– (2,420) – (669)2011US dollar – (1,798) – 702Singapore dollar – (419) – –Euro – (523) – (6)Chinese Yuan – 86 – (5)Swiss Franc – (55) – –– (2,709) – 691A 10% weakening of <strong>the</strong> Group’s major functional currencies against <strong>the</strong> above currencies would have had <strong>the</strong> equal but oppositeeffect on <strong>the</strong> above currencies <strong>to</strong> <strong>the</strong> amounts shown above, on <strong>the</strong> basis that all o<strong>the</strong>r variables remain constant.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT137NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201242 FINANCIAL RISK MANAGEMENT (CONTINUED)Fair valuesThe aggregate net fair value of <strong>financial</strong> assets and <strong>financial</strong> liabilities which are not carried at fair value in <strong>the</strong> <strong>statements</strong> of<strong>financial</strong> position as at 31 December, are represented in <strong>the</strong> following table:Carryingamount value amount value2012 2012 2011 2011Group $’000 $’000 $’000 $’000Financial assetsNon-current receivables 12,765 13,236 8,470 8,007FairCarryingFairFinancial liabilitiesFixed interest rate bank loans 24,353 26,409 25,649 26,207Hire purchase and finance lease liabilities 1 3,213 3,213 2,676 2,67627,566 29,622 28,325 28,8831The fair value of hire purchase and finance lease liabilities is estimated as <strong>the</strong> present value of future cash flows, discountedat market interest rates for homogeneous lease agreements. The estimated fair value reflects change in interest rate.The carrying amount of finance lease liabilities closely approximates <strong>the</strong> fair value since <strong>the</strong> market interest rate as at <strong>the</strong>reporting date closely approximates <strong>the</strong> effective interest rate implicit in <strong>the</strong> finance lease.The following methods and assumptions are used <strong>to</strong> estimate fair values of <strong>the</strong> following significant classes of <strong>financial</strong> instrumentsnot included above:Cash and cash equivalents, trade and o<strong>the</strong>r receivables, trade and o<strong>the</strong>r payablesThe carrying amounts approximate <strong>the</strong> fair values due <strong>to</strong> <strong>the</strong> relatively short-term nature of <strong>the</strong>se <strong>financial</strong> instruments.Investment in equity securitiesThe fair value of available-for-sale <strong>financial</strong> assets is determined by reference <strong>to</strong> <strong>the</strong>ir quoted bid price at <strong>the</strong> reporting date.Floating interest rate bank loans and loans <strong>to</strong> subsidiariesThe carrying amounts of <strong>the</strong>se floating interest-bearing loans, which are repriced within six months interval, reflect <strong>the</strong>corresponding fair values.Interest rates used in determining fair valuesThe interest rates used <strong>to</strong> discount estimated cash flows, where applicable, are based on <strong>the</strong> loan rates plus adequate creditspread or actual average cost of debt, whichever is higher:Group2012 2011% %Finance lease receivables 3.6 3.6Bank loans 1.1 – 15.0 1.2 – 18.0Hire purchase and finance lease liabilities 1.5 – 18.0 1.5 – 10.0


138 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201242 FINANCIAL RISK MANAGEMENT (CONTINUED)Fair value hierarchyThe table below analyse <strong>financial</strong> instruments carried at fair value, by valuation method. The different levels have been definedas follows:Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2 : inputs o<strong>the</strong>r than quoted prices included within Level 1 that are observable for <strong>the</strong> asset or liability, ei<strong>the</strong>r directly(i.e., as prices) or indirectly (i.e., derived from prices).Level 3 : inputs for <strong>the</strong> asset or liability that are not based on observable market data (unobservable inputs).Level 1 Level 2 Level 3 Total$’000 $’000 $’000 $’000Group2012Available-for-sale <strong>financial</strong> assets 109,743 – – 109,743Financial assets designated at fair value through profit or loss – 10,483 – 10,483Derivative <strong>financial</strong> assets 22,220 344 – 22,564131,963 10,827 – 142,790Derivative <strong>financial</strong> liabilities (18,042) (2,644) – (20,686)113,921 8,183 – 122,1042011Available-for-sale <strong>financial</strong> assets 83,530 – – 83,530Derivative <strong>financial</strong> assets 78,558 5,005 – 83,563162,088 5,005 – 167,093Derivative <strong>financial</strong> liabilities (16,840) (2,649) – (19,489)145,248 2,356 – 147,604Company2012Available-for-sale <strong>financial</strong> assets 106,844 – – 106,8442011Available-for-sale <strong>financial</strong> assets 80,686 – – 80,68643 COMMITMENTSGroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Capital commitments:- contracted for but not provided 142,479 102,070 71,898 99,553- authorised but not contracted 18,583 29,967 – 392161,062 132,037 71,898 99,945The Group and Company lease land, warehouse facilities, offices and mo<strong>to</strong>r vehicles under operating leases. The leases typicallyrun for an initial period of 1 <strong>to</strong> 45 years, with an option <strong>to</strong> renew <strong>the</strong> lease after <strong>the</strong> expiry dates. Lease payments for land arerevised on an annual basis <strong>to</strong> reflect <strong>the</strong> market rental whilst o<strong>the</strong>r lease payments are revised on renewal of lease contracts <strong>to</strong>reflect market rental. None of <strong>the</strong> leases include contingent rental.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT139NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201243 COMMITMENTS (CONTINUED)At <strong>the</strong> reporting date, <strong>the</strong> Group and <strong>the</strong> Company had commitments for future minimum lease payments under non-cancellableoperating leases as follows:GroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Within 1 year 93,427 79,873 74,092 62,131After 1 year but within 5 years 160,054 169,434 122,830 135,171After 5 years 136,063 89,934 59,251 60,428389,544 339,241 256,173 257,730The Group and <strong>the</strong> Company contracted out part of <strong>the</strong>ir leasehold buildings <strong>to</strong> clients under logistic contracts. The contractstypically run for an initial period of 1 <strong>to</strong> 8 years. Rates are revised at renewal of contract <strong>to</strong> reflect market rate. None of <strong>the</strong>contracts include contingent payments. The non-cancellable contract payment receivables are as follows:GroupCompany2012 2011 2012 2011$’000 $’000 $’000 $’000Within 1 year 39,024 57,235 34,056 53,816After 1 year but within 5 years 52,262 14,434 50,527 13,369After 5 years 1,516 649 1,516 64992,802 72,318 86,099 67,83444 RELATED PARTIESFor <strong>the</strong> purposes of <strong>the</strong>se <strong>financial</strong> <strong>statements</strong>, parties are considered <strong>to</strong> be related <strong>to</strong> <strong>the</strong> Group where <strong>the</strong>re are directrelationships involving control, joint control or significant influence and excludes those entities for which <strong>the</strong> relationship with <strong>the</strong>Group is such that a person has significant influence over one entity, and a close family member of that person has significantinfluence over <strong>the</strong> o<strong>the</strong>r entity.During <strong>the</strong> <strong>financial</strong> year, o<strong>the</strong>r than those disclosed elsewhere in <strong>the</strong> <strong>financial</strong> <strong>statements</strong>, <strong>the</strong> Group had <strong>the</strong> following significantrelated party transactions on terms agreed between <strong>the</strong> parties:GroupKeymanagementJointlycontrolledO<strong>the</strong>rrelatedDirec<strong>to</strong>rs personnel Associates entities parties$’000 $’000 $’000 $’000 $’000Income statement transactions2012Sales of goods and/or services 695 6,146 20,498 3,972 2,415Purchase of goods and/or services 1,391 2,297 6,370 3,019 –Rental paid 1,128 – – – –Interest income from loan – – 29 27 –Interest expenses from loan 172 – – – –Legal fees paid 40 – – – –Dividends received – – 90 1,247 –


140 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201244 RELATED PARTIES (CONTINUED)GroupKeymanagementJointlycontrolledO<strong>the</strong>rrelatedDirec<strong>to</strong>rs personnel Associates entities parties$’000 $’000 $’000 $’000 $’000Income statement transactions2011Sales of goods and/or services 595 7,096 14,374 912 2,853Purchase of goods and/or services 1,396 3,946 4,461 524 –Rental paid 1,142 – – – –Interest income from loan – – 31 16 –Legal fees paid 125 – – – –Dividends received – – 80 1,968 –Transactions with related parties arise from <strong>the</strong> ordinary course of business and are not treated any differently from transactionswith cus<strong>to</strong>mers or suppliers of <strong>the</strong> Group.45 SUBSEQUENT EVENTSThe significant subsequent events that arose after 31 December 2012 are as follows:(a) The direc<strong>to</strong>rs proposed a final one-tier dividend of 3.0 (2011: 2.5) cents per ordinary share amounting <strong>to</strong> $18,009,140(2011: $15,007,616). The dividend has not been provided for in <strong>the</strong> <strong>financial</strong> <strong>statements</strong> as at 31 December 2012 andis subject <strong>to</strong> shareholders’ approval at <strong>the</strong> forthcoming Annual General Meeting of <strong>the</strong> Company; and(b)On 25 February 2013, <strong>the</strong> Company obtained approval in-principle from <strong>the</strong> Singapore Exchange Securities Trading<strong>Limited</strong> (<strong>the</strong> “SGX-ST”) <strong>to</strong> establish a S$500,000,000 multicurrency medium term debt issuance programme (<strong>the</strong> “DebtIssuance Programme”). Under <strong>the</strong> Debt Issuance Programme, <strong>CWT</strong> may from time <strong>to</strong> time issue <strong>notes</strong> (<strong>the</strong> “Notes”) andPerpetual Securities (<strong>to</strong>ge<strong>the</strong>r with <strong>the</strong> Notes, collectively referred <strong>to</strong> as <strong>the</strong> “Securities”). The Securities may be issuedin series or tranches in Singapore dollars or any o<strong>the</strong>r currency agreed between <strong>the</strong> Company and <strong>the</strong> relevant dealers.Each series or tranche of <strong>the</strong> Notes may be issued in various amounts and tenors and may bear interest or distribution at a fixed,floating, variable or hybrid rate or may not bear interest. Each series or tranche of Perpetual Securities may be issued in variousamounts and do not have fixed maturities, and may bear interest at a fixed or floating rate. The securities may be issued in bearerform or registered form and may be listed on <strong>the</strong> SGX-ST or any o<strong>the</strong>r s<strong>to</strong>ck exchange.The Notes and coupons of all series will constitute direct, unconditional, unsubordinated and unsecured obligations of <strong>the</strong>Company and shall at all times rank pari passu, without any preference or priority among <strong>the</strong>mselves, and pari passu with all o<strong>the</strong>rpresent and future unsecured obligations (o<strong>the</strong>r than unsubordinated obligations and priorities created by law) of <strong>the</strong> Company.The Perpetual Securities that specify <strong>the</strong>ir status as senior in <strong>the</strong> applicable pricing supplement and coupons relating <strong>to</strong> <strong>the</strong>m willconstitute direct, unconditional, unsubordinated and unsecured obligations of <strong>the</strong> Company and shall at all times rank pari passu,without any preference or priority among <strong>the</strong>mselves, and pari passu with all o<strong>the</strong>r present and future unsecured obligations(o<strong>the</strong>r than unsubordinated obligations and priorities created by law) of <strong>the</strong> Company.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT141NOTES TO THE FINANCIAL STATEMENTSYear ended 31 December 201245 SUBSEQUENT EVENTS (CONTINUED)The Perpetual Securities that specify <strong>the</strong>ir status as subordinated in <strong>the</strong> applicable pricing supplement and coupons relating<strong>to</strong> <strong>the</strong>m will constitute direct, unconditional, unsubordinated and unsecured obligations of <strong>the</strong> Company and shall at all timesrank pari passu, without any preference or priority among <strong>the</strong>mselves, and pari passu with any instrument or security (includingwithout limitation any preference shares) issued, entered in<strong>to</strong> or guaranteed by <strong>the</strong> Company (i) which ranks or is expressed <strong>to</strong>rank, by its terms or by operation of law, pari passu with <strong>the</strong> Perpetual Securities and (ii) <strong>the</strong> terms of which provide that <strong>the</strong>making of payments <strong>the</strong>reon or distributions in respect <strong>the</strong>reof are fully at <strong>the</strong> discretion of <strong>the</strong> Company and/or in <strong>the</strong> case of aninstrument or security guaranteed by <strong>the</strong> Company.The securities <strong>to</strong> be issued pursuant <strong>to</strong> <strong>the</strong> Debt Issuance Programme will be offered by <strong>the</strong> Company pursuant <strong>to</strong> exemptionsunder Sections 274 and 275 of <strong>the</strong> Securities and Futures Act (Chapter 289 of Singapore).The net proceeds arising from <strong>the</strong> issue of <strong>the</strong> securities under <strong>the</strong> Debt Issuance programme will be used for <strong>the</strong> generalcorporate funding purposes of <strong>the</strong> Company.Approval-in-principle has been obtained from <strong>the</strong> SGX-ST for permission <strong>to</strong> deal in and quotation for any securities <strong>to</strong> be issuedunder <strong>the</strong> Debt Issuance Programme and which are agreed at <strong>the</strong> time of issue <strong>the</strong>reof <strong>to</strong> be so listed on <strong>the</strong> SGX-ST.46 COMPARATIVE INFORMATIONDuring <strong>the</strong> current year, <strong>the</strong> Group reclassified:(i)(ii)trade and o<strong>the</strong>r payables <strong>to</strong> provisions <strong>to</strong> reflect more appropriately <strong>the</strong> nature of <strong>the</strong> liabilities. Comparative amounts werereclassified for consistency, which resulted in $245,000 being reclassified from trade and o<strong>the</strong>r payables <strong>to</strong> provisions.The reclassification is between different classes of liabilities and did not have any material effect on <strong>the</strong> consolidatedstatement of <strong>financial</strong> position.progress billing receivables amounting <strong>to</strong> $1,315,000 were reclassified from contract work-in-progress (note 15) <strong>to</strong> tradeand o<strong>the</strong>r receivables (note 12). The reclassification is between different classes of assets and did not have any materialeffect on <strong>the</strong> consolidated statement of <strong>financial</strong> position.


142 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTICE OF ANNUAL GENERAL MEETINGNOTICE IS HEREBY GIVEN that <strong>the</strong> 43 rd Annual General Meeting of <strong>the</strong> shareholders of <strong>CWT</strong> <strong>Limited</strong> (<strong>the</strong> “Company”) will be heldat 38 Tanjong Penjuru, <strong>CWT</strong> Logistics Hub 1, Singapore 609039 on 25 April 2013 at 5.00pm for <strong>the</strong> purpose of considering and, ifthought fit, passing, with or without amendments, <strong>the</strong> following resolutions relating <strong>to</strong> both ordinary and special businesses which willbe proposed as ordinary resolutions.ORDINARY BUSINESS1. To receive and adopt <strong>the</strong> Audited Accounts for <strong>the</strong> <strong>financial</strong> year ended 31 December 2012, and <strong>the</strong> Direc<strong>to</strong>rs’ Report and <strong>the</strong>Audi<strong>to</strong>rs’ Report <strong>the</strong>reon. (Resolution 1)2. To approve a final one-tier cash dividend of 3.0 cents per share (or a <strong>to</strong>tal net dividend of S$18,009,139.50 for <strong>the</strong> <strong>financial</strong> yearended 31 December 2012. (Resolution 2)3. To approve Direc<strong>to</strong>rs’ fees of S$660,000 for <strong>the</strong> <strong>financial</strong> year ended 31 December 2012 (2011: S$625,000).(Resolution 3)4. To re-elect <strong>the</strong> following Direc<strong>to</strong>rs pursuant <strong>to</strong> Article 92 of <strong>the</strong> Company’s Articles of Association and who, being eligible, will offer<strong>the</strong>mselves for re-election:Jimmy Yim Wing Kuen (Resolution 4)Dr Tan Wee Liang (Resolution 5)To re-appoint Loi Kai Meng as Direc<strong>to</strong>r of <strong>the</strong> Company, pursuant <strong>to</strong> Section 153(6) of <strong>the</strong> Singapore Companies Act (Cap. 50),<strong>to</strong> hold such office from <strong>the</strong> date of this Annual General Meeting until <strong>the</strong> next Annual General Meeting of <strong>the</strong> Company.(Resolution 6)Loi Kai Meng, if re-appointed, will continue <strong>to</strong> serve as non-executive Chairman and a member of <strong>the</strong> Nominating cumRemuneration Committee.5. To re-appoint KPMG LLP as Audi<strong>to</strong>rs of <strong>the</strong> Company and <strong>to</strong> authorize <strong>the</strong> Direc<strong>to</strong>rs <strong>to</strong> fix <strong>the</strong>ir remuneration.(Resolution 7)SPECIAL BUSINESSTo consider and, if thought fit, <strong>to</strong> pass <strong>the</strong> following Resolutions with or without amendments as Ordinary Resolutions:6. That pursuant <strong>to</strong> Section 161 of <strong>the</strong> Singapore Companies Act (Cap. 50) (“Companies Act”) and <strong>the</strong> listing rules of <strong>the</strong> SingaporeExchange Securities Trading <strong>Limited</strong> (“SGX-ST”), authority be and is hereby given <strong>to</strong> <strong>the</strong> direc<strong>to</strong>rs of <strong>the</strong> Company (“Direc<strong>to</strong>rs”)<strong>to</strong>:(A) (i) issue shares in <strong>the</strong> capital of <strong>the</strong> Company (“Shares”) (whe<strong>the</strong>r by way of rights, bonus or o<strong>the</strong>rwise);(ii)(iii)make or grant offers, agreements or options or awards (collectively, “Instruments”) that might or would require Shares<strong>to</strong> be issued, including but not limited <strong>to</strong> <strong>the</strong> creation and issue of warrants, debentures or o<strong>the</strong>r instruments convertiblein<strong>to</strong> Shares; andissue additional Instruments arising from adjustments made <strong>to</strong> <strong>the</strong> number of Instruments previously issued in <strong>the</strong> even<strong>to</strong>f rights, bonus or capitalization issues,at any time and upon such terms and conditions, and for such purposes, and <strong>to</strong> such persons as <strong>the</strong> Direc<strong>to</strong>rs may in <strong>the</strong>irabsolute discretion deem fit; and


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT143NOTICE OF ANNUAL GENERAL MEETING(B)(notwithstanding <strong>the</strong> authority conferred by this Resolution may have ceased <strong>to</strong> be in force) issue Shares in pursuance of anyInstrument made or granted by <strong>the</strong> Direc<strong>to</strong>rs while this Resolution was in force, provided that:(1) <strong>the</strong> aggregate number of Shares <strong>to</strong> be issued pursuant <strong>to</strong> this Resolution (including Shares <strong>to</strong> be issued in pursuanceof Instruments made or granted pursuant <strong>to</strong> this Resolution but excluding Shares which may be issued pursuant <strong>to</strong> anyadjustments effected under any relevant Instrument) does not exceed 50 percent of <strong>the</strong> <strong>to</strong>tal number of issued Sharesexcluding any treasury shares (as calculated in accordance with sub-paragraph (2) below) of which <strong>the</strong> aggregate numberof Shares <strong>to</strong> be issued o<strong>the</strong>r than on a pro-rata basis <strong>to</strong> shareholders of <strong>the</strong> Company (including Shares <strong>to</strong> be issuedin pursuance of Instruments made or granted pursuant <strong>to</strong> this Resolution but excluding Shares which may be issuedpursuant <strong>to</strong> any adjustments effected under any relevant Instrument) does not exceed 20 percent of <strong>the</strong> <strong>to</strong>tal number ofissued Shares excluding treasury shares (as calculated in accordance with sub-paragraph (2) below); and(2) (subject <strong>to</strong> such manner of calculation as may be prescribed by <strong>the</strong> SGX-ST) for <strong>the</strong> purpose of determining <strong>the</strong> aggregatenumber of Shares that may be issued under sub-paragraph (1) above:(i)<strong>the</strong> <strong>to</strong>tal number of issued Shares, excluding treasury shares, shall be calculated based on <strong>the</strong> <strong>to</strong>tal number ofissued Shares, excluding treasury shares, at <strong>the</strong> time this Resolution is passed, after adjusting for:(a)(b)(c)new Shares arising from <strong>the</strong> conversion or exercise of convertible securities;new Shares arising from <strong>the</strong> exercise of share options or vesting of share awards which are outstandingor subsisting at <strong>the</strong> time this Resolution is passed; andany subsequent bonus issue, consolidation or subdivision of Shares;(ii)in relation <strong>to</strong> an Instrument, <strong>the</strong> number of Shares shall be taken <strong>to</strong> be that number as would have been issuedhad <strong>the</strong> rights <strong>the</strong>rein been fully exercised or effected on <strong>the</strong> date of <strong>the</strong> making or granting of <strong>the</strong> Instrument;(3) in exercising <strong>the</strong> authority conferred by this Resolution, <strong>the</strong> Company shall comply with <strong>the</strong> provisions of <strong>the</strong> listing manualof <strong>the</strong> SGX-ST for <strong>the</strong> time being in force (unless such compliance has been waived by <strong>the</strong> SGX-ST) and <strong>the</strong> Articles ofAssociation for <strong>the</strong> time being of <strong>the</strong> Company; and(4) (unless revoked or varied by <strong>the</strong> Company in general meeting) <strong>the</strong> authority conferred by this Resolution shall continue inforce until <strong>the</strong> conclusion of <strong>the</strong> next annual general meeting of <strong>the</strong> Company or <strong>the</strong> date by which <strong>the</strong> next annual generalmeeting of <strong>the</strong> Company is required by law <strong>to</strong> be held, whichever is <strong>the</strong> earlier (1) .(Resolution 8)7. That:(A)for <strong>the</strong> purposes of Sections 76C and 76E of <strong>the</strong> Companies Act (Cap. 50) (“Companies Act”), <strong>the</strong> exercise by <strong>the</strong> direc<strong>to</strong>rs of<strong>the</strong> Company (“Direc<strong>to</strong>rs”) of all <strong>the</strong> powers of <strong>the</strong> Company <strong>to</strong> purchase or o<strong>the</strong>rwise acquire issued ordinary shares (“ShareBuy-Backs”) in <strong>the</strong> capital of <strong>the</strong> Company (“Shares”) not exceeding in aggregate <strong>the</strong> Prescribed Limit (as hereinafter defined), atsuch price(s) as may be determined by <strong>the</strong> Direc<strong>to</strong>rs from time <strong>to</strong> time, up <strong>to</strong> <strong>the</strong> Maximum Price (as hereinafter defined), whe<strong>the</strong>rby way of:(i)(ii)on-market Share Buy-Backs (each an “On-market Share Buy-Back”) transacted on <strong>the</strong> Singapore Exchange SecuritiesTrading <strong>Limited</strong> (“SGX-ST”); and/oroff-market Share Buy-Backs (each an “Off-market Share Buy-Back”) effected o<strong>the</strong>rwise than on <strong>the</strong> SGX-ST inaccordance with any equal access schemes as may be determined or formulated by <strong>the</strong> Direc<strong>to</strong>rs as <strong>the</strong>y consider fit,which schemes shall satisfy all <strong>the</strong> conditions prescribed by <strong>the</strong> Companies Act,and o<strong>the</strong>rwise in accordance with <strong>the</strong> applicable provisions of <strong>the</strong> Companies Act and <strong>the</strong> Listing Manual of <strong>the</strong> SGX-ST, be andis hereby authorized and approved generally and unconditionally (<strong>the</strong> “Share Buy-Back Mandate”);


144 <strong>CWT</strong> LIMITED 2012 ANNUAL REPORTNOTICE OF ANNUAL GENERAL MEETING(B)unless varied or revoked by <strong>the</strong> Company in general meeting, <strong>the</strong> authority conferred on <strong>the</strong> Direc<strong>to</strong>rs pursuant <strong>to</strong> <strong>the</strong> ShareBuy-Back Mandate may be exercised by <strong>the</strong> Direc<strong>to</strong>rs at any time, and from time <strong>to</strong> time during <strong>the</strong> period commencing from <strong>the</strong>date of <strong>the</strong> passing of this Resolution, and expiring on <strong>the</strong> earliest of:(i)<strong>the</strong> date on which <strong>the</strong> next annual general meeting of <strong>the</strong> Company (“AGM”) is held or required by law <strong>to</strong> be held;(ii)<strong>the</strong> date on which <strong>the</strong> Share Buy-Backs are carried out <strong>to</strong> <strong>the</strong> full extent mandated; and(iii)<strong>the</strong> date on which <strong>the</strong> authority conferred by <strong>the</strong> Share Buy-Back Mandate is revoked or varied by <strong>the</strong> Company ingeneral meeting;(C)in this Resolution:“Prescribed Limit” means 10% of <strong>the</strong> <strong>to</strong>tal number of Shares as at <strong>the</strong> date of passing of this Resolution unless <strong>the</strong> Companyhas effected a reduction of <strong>the</strong> share capital of <strong>the</strong> Company in accordance with <strong>the</strong> applicable provisions of <strong>the</strong> Companies Act,at any time during <strong>the</strong> Relevant Period, in which event <strong>the</strong> issued ordinary share capital of <strong>the</strong> Company shall be taken <strong>to</strong> be <strong>the</strong>amount of <strong>the</strong> issued ordinary share capital of <strong>the</strong> Company as altered (excluding any treasury shares that may be held by <strong>the</strong>Company from time <strong>to</strong> time);“Relevant Period” means <strong>the</strong> period commencing from <strong>the</strong> date on which <strong>the</strong> last AGM was held and expiring on <strong>the</strong> date <strong>the</strong>next AGM is held or is required by law <strong>to</strong> be held, whichever is <strong>the</strong> earlier, after <strong>the</strong> date of this Resolution;“Maximum Price” in relation <strong>to</strong> a Share <strong>to</strong> be purchased or acquired means <strong>the</strong> purchase price (excluding brokerage,commissions, stamp duties, applicable goods and services tax and o<strong>the</strong>r related expenses) <strong>to</strong> be paid for a Share, which shallnot exceed:(i)in <strong>the</strong> case of an On-market Share Buy-Back, 5% above <strong>the</strong> average of <strong>the</strong> closing market prices of <strong>the</strong> Shares over <strong>the</strong>last 5 market days on <strong>the</strong> SGX-ST on which transactions in <strong>the</strong> Shares were recorded, immediately preceding <strong>the</strong> day of<strong>the</strong> On-market Share Buy-Back by <strong>the</strong> Company, and deemed <strong>to</strong> be adjusted for any corporate action that occurs aftersuch 5-day period; and(ii)in <strong>the</strong> case of an Off-market Share Buy-Back pursuant <strong>to</strong> an equal access scheme, 20% above <strong>the</strong> average of <strong>the</strong>closing market prices of <strong>the</strong> Shares over <strong>the</strong> last 5 market days on <strong>the</strong> SGX-ST on which transactions in <strong>the</strong> Shares wererecorded, immediately preceding <strong>the</strong> day on which <strong>the</strong> Company announces its intention <strong>to</strong> make an offer under an OffmarketShare Buy-Back, stating <strong>the</strong> purchase price for each Share and <strong>the</strong> relevant terms of <strong>the</strong> equal access schemefor effecting <strong>the</strong> Off-market Share Buy-Back, and deemed <strong>to</strong> be adjusted for any corporate action that occurs after such5-day period; and(D) <strong>the</strong> Direc<strong>to</strong>rs and/or any of <strong>the</strong>m be and are hereby authorized <strong>to</strong> complete and do all such acts and things (including executingsuch documents as may be required) as <strong>the</strong>y and/or he may consider necessary or expedient <strong>to</strong> give effect <strong>to</strong> <strong>the</strong> transactionscontemplated by this Resolution (2) .(Resolution 9)8. To transact any o<strong>the</strong>r business which may be properly transacted at an Annual General Meeting.


<strong>CWT</strong> LIMITED 2012 ANNUAL REPORT145NOTICE OF ANNUAL GENERAL MEETINGExplana<strong>to</strong>ry Notes:(1) Ordinary Resolution No. 8, if passed, will empower <strong>the</strong> Direc<strong>to</strong>rs from <strong>the</strong> date of <strong>the</strong> Annual General Meeting until <strong>the</strong> date of<strong>the</strong> next Annual General Meeting <strong>to</strong> issue fur<strong>the</strong>r Shares and Instruments in <strong>the</strong> Company, including a bonus or rights issue. Themaximum number of Shares which <strong>the</strong> Direc<strong>to</strong>rs may issue under this Resolution shall not exceed <strong>the</strong> quantum set out in <strong>the</strong>Resolution.(2) Ordinary Resolution No. 9 is <strong>to</strong> renew <strong>the</strong> Share Buy-Back Mandate which was originally approved by shareholders on 25 April2012. Please refer <strong>to</strong> Appendix 1 <strong>to</strong> this Notice of Annual General Meeting for details.By Order of <strong>the</strong> BoardMadam Lye Siew Hong (Mrs Lynda Goh)Company Secretary10 April 2013Notes:1. A member of <strong>the</strong> Company entitled <strong>to</strong> attend and vote at <strong>the</strong> Annual General Meeting may appoint a proxy <strong>to</strong> attend and vote in his/her stead. A proxy neednot be a member of <strong>the</strong> Company.2. If a proxy is <strong>to</strong> be appointed, <strong>the</strong> instrument appointing a proxy and <strong>the</strong> power of at<strong>to</strong>rney or o<strong>the</strong>r authority, if any, under which it is signed or a notariallycertified copy of such power of at<strong>to</strong>rney, must be duly deposited at <strong>the</strong> registered office of <strong>the</strong> Company at 38 Tanjong Penjuru, <strong>CWT</strong> Logistics Hub 1,Singapore 609039, not less than 48 hours before <strong>the</strong> time appointed for <strong>the</strong> holding of <strong>the</strong> Annual General Meeting.3. The instrument appointing a proxy must be signed by <strong>the</strong> appoin<strong>to</strong>r or his at<strong>to</strong>rney duly authorized in writing. Where <strong>the</strong> instruction appointing a proxy isexecuted by a corporation, it must be executed ei<strong>the</strong>r under its seal or under <strong>the</strong> hand of any officer or at<strong>to</strong>rney duly authorized.


THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK


<strong>CWT</strong> LIMITED(Company Registration No.: 197000498M)(Incorporated in <strong>the</strong> Republic of Singapore)PROXY FORMFOR ANNUAL GENERAL MEETING(PLEASE SEE NOTES OVERLEAF BEFORE COMPLETING THIS FORM)IMPORTANT:1. For inves<strong>to</strong>rs who have used <strong>the</strong>ir CPF monies <strong>to</strong> buy ordinary sharesin <strong>the</strong> capital of <strong>CWT</strong> <strong>Limited</strong>, this Annual Report is forwarded <strong>to</strong><strong>the</strong>m at <strong>the</strong> request of <strong>the</strong>ir CPF Approved Nominees and is sentsolely FOR INFORMATION ONLY.2. This Proxy Form is not valid for use by CPF inves<strong>to</strong>rs and shall beineffective for all intents and purposes if used or purported <strong>to</strong> be usedby <strong>the</strong>m.3. CPF inves<strong>to</strong>rs who wish <strong>to</strong> attend <strong>the</strong> Meeting as an observer mustsubmit <strong>the</strong>ir requests through <strong>the</strong>ir CPF Approved Nominees within<strong>the</strong> time frame specified. If <strong>the</strong>y also wish <strong>to</strong> vote, <strong>the</strong>y must submit<strong>the</strong>ir voting instructions <strong>to</strong> <strong>the</strong> CPF Approved Nominees within <strong>the</strong>time frame specified <strong>to</strong> enable <strong>the</strong>m <strong>to</strong> vote on <strong>the</strong>ir behalf.*I/Weofbeing a *member/members of <strong>CWT</strong> <strong>Limited</strong> (<strong>the</strong> “Company”), hereby appoint:NameNRIC/Passport No.Proportion of ShareholdingsNo. of Shares %and/or (delete as appropriate)NameNRIC/Passport No.Proportion of ShareholdingsNo. of Shares %or failing *him/her, <strong>the</strong> Chairman of <strong>the</strong> Annual General Meeting (<strong>the</strong> “Meeting”) as *my/our *proxy/proxies <strong>to</strong> vote for *me/us on *my/our behalfat <strong>the</strong> Meeting of <strong>the</strong> Company <strong>to</strong> be held at 38 Tanjong Penjuru, <strong>CWT</strong> Logistics Hub 1, Singapore 609039 on 25 April 2013 at 5.00pm and atany adjournment <strong>the</strong>reof.*I/We direct *my/our *proxy/proxies <strong>to</strong> vote for or against <strong>the</strong> Resolutions proposed at <strong>the</strong> Meeting as indicated hereunder. If no specific directionas <strong>to</strong> voting is given or in <strong>the</strong> event of any o<strong>the</strong>r matter arising at <strong>the</strong> Meeting and at any adjournment <strong>the</strong>reof, <strong>the</strong> *proxy/proxies will vote orabstain from voting at *his/her discretion. The authority herein includes <strong>the</strong> right <strong>to</strong> demand or <strong>to</strong> join in demanding a poll and <strong>to</strong> vote on a poll.* Please delete whichever is not applicable accordinglyNo. ORDINARY RESOLUTIONS For Against1. Approval and adoption of Audited Accounts for <strong>the</strong> <strong>financial</strong> year ended 31 December 2012 and <strong>the</strong>Direc<strong>to</strong>rs’ Report and <strong>the</strong> Audi<strong>to</strong>rs’ Report <strong>the</strong>reon2. Approval of <strong>the</strong> final dividend for <strong>the</strong> <strong>financial</strong> year ended 31 December 20123. Approval of <strong>the</strong> Direc<strong>to</strong>rs’ fees for <strong>the</strong> <strong>financial</strong> year ended 31 December 20124. Re-election of Jimmy Yim Wing Kuen as Direc<strong>to</strong>r5. Re-election of Dr Tan Wee Liang as Direc<strong>to</strong>r6. Re-appointment of Loi Kai Meng as Direc<strong>to</strong>r7. Re-appointment of Audi<strong>to</strong>rs and authorizing <strong>the</strong> Direc<strong>to</strong>rs <strong>to</strong> fix <strong>the</strong>ir remuneration8. Authorize Direc<strong>to</strong>rs <strong>to</strong> allot and issue new shares9. Renewal of <strong>the</strong> Share Buy-Back MandatePlease indicate your vote with a tick ( ) within <strong>the</strong> boxes above ei<strong>the</strong>r “For” or “Against” <strong>the</strong> respective resolutions.Signed this ________ day of __________________ 2013.Signature(s) of Shareholder(s) or Common SealTotal Number of Shares in:(a) CDP Register(b) Register of MembersNo. of Shares


IMPORTANT:Please read <strong>the</strong> <strong>notes</strong> below:Notes:1. Please insert <strong>the</strong> <strong>to</strong>tal numbers of shares held by you on <strong>the</strong> Proxy Form. If you have shares entered against your name in <strong>the</strong> Deposi<strong>to</strong>ry Register (asdefined in Section 130A of <strong>the</strong> Companies Act), you should insert that number of shares. If you have shares registered in your name in <strong>the</strong> Register ofMembers, you should insert that number of shares. If you have shares entered against your name in <strong>the</strong> Deposi<strong>to</strong>ry Register and shares registered in yourname in <strong>the</strong> Register of Members, you should insert <strong>the</strong> aggregate number of shares entered against your name in <strong>the</strong> Deposi<strong>to</strong>ry Register and registeredin your name in <strong>the</strong> Register of Members. If no number is inserted, <strong>the</strong> instrument appointing a proxy or proxies shall be deemed <strong>to</strong> relate <strong>to</strong> all <strong>the</strong> sharesheld by you.2. A member of <strong>the</strong> Company entitled <strong>to</strong> attend and vote at a meeting of <strong>the</strong> Company is entitled <strong>to</strong> appoint one or two proxies <strong>to</strong> attend and vote in his/herstead. A proxy need not be a member of <strong>the</strong> Company.3. Where a member appoints two proxies, <strong>the</strong> appointments shall be in <strong>the</strong> alternative unless he/she specifies <strong>the</strong> proportion of his/her shareholding(expressed as a percentage of <strong>the</strong> whole) <strong>to</strong> be represented by each proxy.4. The instrument appointing a proxy must be deposited at <strong>the</strong> registered office of <strong>the</strong> Company at 38 Tanjong Penjuru, <strong>CWT</strong> Logistics Hub 1, Singapore609039, not less than 48 hours before <strong>the</strong> time appointed for <strong>the</strong> Annual General Meeting.5. The instrument appointing a proxy must be under <strong>the</strong> hand of <strong>the</strong> appoin<strong>to</strong>r or his at<strong>to</strong>rney duly authorised in writing. Where <strong>the</strong> instrument appointing aproxy is executed by a corporation, it must be ei<strong>the</strong>r under its common seal or under <strong>the</strong> hand of an at<strong>to</strong>rney appointed in writing by <strong>the</strong> member.6. Where <strong>the</strong> instrument of proxy is executed by an at<strong>to</strong>rney, <strong>the</strong> relevant power of at<strong>to</strong>rney or an office copy or notarially certified copy of <strong>the</strong> power ofat<strong>to</strong>rney must be received by <strong>the</strong> Company at least 48 hours before <strong>the</strong> time notified for <strong>the</strong> Annual General Meeting.7. A corporation which is a member may authorise by resolution of its direc<strong>to</strong>rs or o<strong>the</strong>r governing body such person as it thinks fit <strong>to</strong> act as its representativeat <strong>the</strong> Annual General Meeting, in accordance with Section 179 of <strong>the</strong> Companies Act.GENERALThe Company shall be entitled <strong>to</strong> reject <strong>the</strong> instrument appointing a proxy if it is incomplete, improperly completed or illegible or where <strong>the</strong> true intentions of <strong>the</strong>appoin<strong>to</strong>r are not ascertainable from <strong>the</strong> instructions of <strong>the</strong> appoin<strong>to</strong>r specified in <strong>the</strong> instrument appointing a proxy. In addition, in <strong>the</strong> case of shares entered in <strong>the</strong>Deposi<strong>to</strong>ry Register, <strong>the</strong> Company may reject any instrument appointing a proxy lodged if <strong>the</strong> member, being <strong>the</strong> appoin<strong>to</strong>r, is not shown <strong>to</strong> have shares enteredagainst his name in <strong>the</strong> Deposi<strong>to</strong>ry Register as at 48 hours before <strong>the</strong> time appointed for holding <strong>the</strong> Annual General Meeting, as certified by The Central Deposi<strong>to</strong>ry(Pte) <strong>Limited</strong> <strong>to</strong> <strong>the</strong> Company.

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!