Annual PDF 94hth9

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Contents
In Dedication FINANCIAL HIGHLIGHTS Current Year Financial Highlights Five-Year Group Financial Statistics Financial Calendar Analysis Of Shareholdings Share Performance CORPORATE PROFILE MISC... At A Glance MISC Fleet Strength Countries & Ports Of Call 2003/2004 MISC Group Structure Corporate Information PEOPLE Board Of Directors Profile Of Directors Management Committee Profile Of Management Committee CORPORATE TRANSPARENCY Our Corporate Governance Statement Statement On Internal Control Board Audit Committee Terms Of Reference Of Board Audit Committee THE YEAR IN REVIEW Chairmans Statement Operations Review Financial Year 2003/2004 Health, Safety, Security, And Environment (HSSE) Report Corporate Highlights Of The Year Corporate Social Responsibility Staff Development & Welfare: Sustaining An Integrated Workforce Employees Activities For The Year FINANCIAL Financial Statements List Of Vessels Properties Owned By MISC Bhd And Its Subsidiaries CORPORATE DIRECTORY MISC Group Of Companies ANNUAL GENERAL MEETING Notice Of Annual General Meeting Statement Accompanying Notice Of Annual General Meeting Proxy Form
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12 13 14 18 20
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32 38 43 44
48 58 86 88 94 98 100
104 178 183
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190 192
MALAYSIA INTERNATIONAL SHIPPING CORPORATION BERHAD (8178-H)
The Late
Dato Hj. Mohd Ali bin Hj.Yasin

(Managing DIrector/Chief Executive Officer of Malaysia International Shipping Corporation)
A man whose and to work ethicsleadership qualitiesa sensededicationand have instilled in us all of purpose direction. As we mourn his loss, we will forever remember his unwavering courage of conviction, moral sense of integrity and strong discipline to guide us as we move forward to even greater heights.
Current Year Financial Highlights

PROFTABILITY RM Million 2500 2,289.6 2,326.4 EARNINGS & DIVIDENDS Sen Per Share 150
2000
120
123.1
1,685.0 1,728.4
1500 1,389.4 1,417.3
90 90.6 1,415.6 1,343.9 1,310.7 1,310.3 74.7
72.3
70.5
1000
60
500
30 26.0 20.0
30.0
30.0
30.0
04 20 03 20 02 20 01 20 + 00 20
+Based on annualised 15 months figures
Profitability G The significant increase in profit before taxation of 77.5% was attributable to the contribution from American Eagle Tankers Inc. Limited ("AET") and the upsurge in freight rates and shipping volume in the shipping businesses. G Petroleum showed the biggest improvement in profit before taxation followed by Liner, Bulk, LNG and Chemical business units.
04 20 03 20 02 20 01 20 + 00 20
Profit Before Taxation Net Pofit For The Year
Earnings Per Share Dividends Per Share +Based on annualised 15 months figures
Earnings Per Share G Earnings per share increased by 52.6 sen or 74.6% to 123.1 sen per share. G Dividend per share as reflected in the financial statements remained at 30 sen per share for the current year, comprising 15 sen final dividend for FY2002/2003 and interim dividend of 15 sen for FY2003/2004. G Management is proposing a final dividend of 15 sen and a 10 sen special dividend at the forthcoming AGM bringing total dividend for FY2003/2004 to 40 sen per share.
BALANCE SHEET RM Million 25000 17,877.5 22,355.5
DEBT/EQUITY RATIO Ratio 1.0 0.98 0.8 0.73 0.70
20000 1,029.7 12,130.1 9,618.3 14,726.3
0.82
11,112.0 14,348.2
0.66
11,025.8 14,564.3
11,117.1
15000 14,378.1
0.6
0.52
0.46
10000
0.4
11,351.8
0.44 0.33
8,861.2
0.33
7,796.5
1,916.8
1,853.6
1,659.8
6,601.1
1,621.5
5000
0.2
04 20 03 20 02 20 01 20 + 00 20
02 20
Total Assets Ship, Properties & Equipment Cash, Deposits and Bank Balances Shareholders Funds
Balance sheet G Total assets increased by 51.8% of which RM6.0 billion was contributed by the acquisition of AET and increased stake in MSE Holdings Sdn. Bhd. group ("MSE"). Total vessels owned as at 30 June 2004 have also increased to 138 from 126 in the prior year. G Shareholders' funds increased by 18.0% resulting from additional earnings retained for the financial year. G Cash, deposits and bank balances increased by 80% or RM824.6 million. The increase were mainly due to the net cash generated from operations of RM2,446 million and net cash from financing activities of RM2,750 million. Financing activities registered a net inflow which resulted from the drawdown of the bridging loan facility
+ 00 20
01 20
04 20
and the additional Japan Bank for International Cooperation ("JBIC") loan drawdown on top of repayments of the Group's current loan obligations. However, these total inflows were reduced by the significant cash outflow for investing activities amounting to RM4,368 million for capital expenditure as described below and the acquisition of AET during the year. Capital expenditure continued its northward march as the Group maintains its investment pace registering a 36.8% increase in expenditure relative to last year. The payments comprise mainly of progress payments for LNG, Petroleum and the Floating, Production, Storage & Offloading (FPSO) project as well as MISC's LNG Tenaga vessels refurbishment project. G
03 20
Total Debt/Equity Net Debt/Equity
Debt/Equity ratio Debt/Equity ratio increased to 0.82 from 0.44 due to the bridging loan used to fund the AET acquisition as well as the consolidation of AET's existing loans. Furthermore, the Group increased its drawdown of the JBIC loan to finance the new LNG vessels construction. Nevertheless, the ratio remains significantly lower than the industry norm of 2.0 times.
Five-Year Group Financial Statistics

Annualised 31.3.2004 RM Million Revenue Profit before taxation Net profit for the year Taxation Dividends Earnings per share (sen) Return on assets (%) Return on shareholders' funds (%) Profit before taxation as % of revenue Net profit for the year as % of revenue Paid-up capital Shareholders' funds Total assets Total liabilities Total borrowings Capital expenditure Net tangible assets per share (sen) Debt/equity ratio Interest cover ratio 7,606.3 2,326.4 2,289.6 7.1 558.0 123.1 14.2 20.2 30.6 30.1 1,859.9 11,351.8 22,355.5 10,752.5 9,356.3 2,545.9 557.9 0.82 17.6 31.3.2003 RM Million 5,433.0 1,310.3 1,310.7 (3.5) 558.0 70.5 10.5 13.6 24.1 24.1 1,859.9 9,618.3 14,726.3 5,032.9 4,244.7 1,912.0 496.6 0.44 14.3 31.3.2002 RM Million 5,508.4 1,415.6 1,343.9 16.2 558.0 72.3 11.9 15.2 25.7 24.4 1,859.9 8,861.2 14,348.2 5,386.6 4,612.2 967.2 453.4 0.52 10.0 31.3.2001 RM Million 5,846.7 1,728.4 1,685.0 27.4 483.6 90.6 15.5 21.6 29.6 28.8 1,859.9 7,796.5 14,564.3 6,710.1 5,479.5 773.3 394.0 0.70 7.0 31.3.2000 RM Million 5,250.4 1,417.3 1,389.4 11.9 372.0 74.7 13.6 21.0 27.0 26.5 1,859.9 6,601.1 14,378.1 7,734.9 6,471.5 667.2 327.8 0.98 6.2
REVENUE RM Million 8,000

7,606.3
NET PROFIT FOR THE YEAR RM Million 2,500

2,289.6
DIVIDENDS RM Million 600

558.0 558.0 558.0
6,400
5,846.7
2,000
480
483.6
5,508.4
1,685.0
5,433.0
4,800
1,500
1,389.4
360
1,343.9 1,310.7
5,250.4 667.2
372.0
3,200
1,000
240
1,600
500
120
04 20 3 0 20 02 20 1 0 20 +
20
04 20 3 0 20 02 20 1 0 20 +
20
CAPITAL EXPENDITURE RM Million 3,000
20
2,400 1,800 1,200 600 0
04 20 3 0 20 02 20 1 0 20 +
10,000 8,000
2,545.9
00
00
INTEREST COVER RATIO No. of times
00
773.3
TOTAL BORROWINGS RM Million
NET TANGIBLE ASSETS PER SHARE Sen 600

9,356.3 557.9
480
453.4
496.6
394.0
6,000
360
5,479.5 327.8
6,471.5
1,912.0 967.2
4,612.2
4,000
240
4,244.7
2,000
120
04 20 3 0 20 02 20 1 0 20 +
04 20 3 0 20 02 20 1 0 20 +
20
20
04 20 3 0 20 02 20 1 0 20 +
20
00
00
00
RETURN ON ASSETS Percent
RETURN ON SHAREHOLDERS FUNDS Percent
20
20
28.0
17.6
16
14.3
16
15.5 13.6 14.2
22.4
21.6 21.0 20.2
12
10.0
12
16.8
11.9
15.2
10.5
13.6
8
7.0 6.2
11.2
5.6
04 20 3 0 20 02 20 1 0 20 + 00
20
+ Based on annualised 15 months figures
04 20 3 0 20 02 20 1 0 20 + 00
04 20 3 0 20 02 20 1 0 20 + 00
20
20
Financial Calendar
2003
Activity Name Financial Year Announcement Of Results & Dividends Quarter 1 Results Quarter 2 Results Quarter 3 Results Quarter 4 Results Interim Dividend (Announced/Paid) Final Dividend (Announced/Payable) Annual Report (Issued) Annual General Meeting
Apr
1
May
June
July
Aug
Sept
Oct
Nov
Dec
26 12
12
30
Announcement of Results & Dividends
Annual General Meeting
Annual Report (Issued)
2004
Jan Feb Mar
31
Financial Year
Apr
May
June
July
Aug
Announcement of Results & Dividends
1 April 2003 31 March 2004
Results Quarter 1 Announced 26 August 2003
25 24
Quarter 2 Announced Quarter 3 Announced Quarter 4 25 February 2004 12 November 2003
24 21
30
Announced
24 May 2004
Dividends
12
Interim Announced Paid 12 November 2003 30 December 2003
Final
Annual Report Annual General Meeting
Issued
21 July 2004 12 August 2004
Announced Payable
24 May 2004 30 August 2004
10
MISC SUBSTANTIAL SHAREHOLDERS as at 30 June 2004
Analysis Of Shareholdings
As At 30 June 2004
RHB Nominees (Tempatan) Sdn Bhd - 62.44% (Petroliam Nasional Berhad) Employees Provident Fund Board - 5.86% Total : 68.29 %
Size of Shareholdings Less than 100 100 1,000 1,001 10,000 10,001 100,000 100,001 to less than 5% of issued shares 5% and above of issued shares
No. of Shareholders 283 1,839 2,779 838 491 2 6,232
% of Shareholders 4.54 29.51 44.59 13.45 7.88 0.03 100.00
No. Shares 6,738 1,367,915 10,268,063 29,224,307 548,819,443 1,270,227,327 1,859,913,793
% of Issued Share Capital 0.00 0.07 0.56 1.57 29.51 68.29 100.00
Substantial Shareholders Nama 1. 2. RHB Nominees (Tempatan) Sdn Bhd

(Petroliam Nasional Berhad)
No. of Shares Held 1,161,256,460 108,970,867 1,270,227,327
% of Issued Share Capital 62.44 5.86 68.29
Employees Provident Fund Board
Thirty (30) Largest Shareholders Name 1. RHB Nominees (Tempatan) Sdn Bhd
(Petroliam Nasional Berhad)
No. of Shares Held 1,161,256,460 108,970,867 42,669,422 32,000,000 31,918,500 31,000,000 30,666,667 18,989,300 10,436,100 9,000,000 8,653,800 7,957,000 7,725,000 6,353,900 6,076,800 6,204,007 6,000,000 5,313,000 4,950,300 4,904,200 4,769,000 4,737,800 4,028,900 3,531,000 3,500,000 3,402,600 3,395,400 3,240,900 3,039,000 2,991,600 1,577,681,523
% of Issued Share Capital 62.44 5.86 2.29 1.72 1.72 1.67 1.65 1.02 0.56 0.48 0.47 0.43 0.42 0.34 0.33 0.33 0.32 0.29 0.27 0.26 0.26 0.25 0.22 0.19 0.19 0.18 0.18 0.16 0.16 0.16 84.82
2. 3. 4. 5.
Employees Provident Fund Board Lembaga Kemajuan Tanah Persekutuan (FELDA) Perbadanan Pembangunan Pulau Pinang Amanah Raya Nominees (Tempatan) Sdn Bhd
(Skim Amanah Saham Bumiputera) (Security Trustee (KCW Issue 1)
6. Cimsec Nominees (Tempatan) Sdn Bhd 7. State Financial Secretary Sarawak 8. Valuecap Sdn Bhd 9. Amanah Raya Nominees (Tempatan) Sdn Bhd
(Amanah Saham Wawasan 2020)
10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.
Citicorp Nominees (Asing) Sdn Bhd

(MLPFS for Grantham Resources Ltd)
Kerajaan Negeri Pahang HSBC Nominees (Asing) Sdn Bhd

(BBH And Co Boston for GMO Emerging Markets Fund)
ECM Libra Securities Nominees (Tempatan) Sdn Bhd

(PETRONAS Retirement Benefit Scheme)
HSBC Nominees (Asing) Sdn Bhd

(Stitching Pensionenfonds ABP.)

(Abu Dhabi Investment Authority)
Lembaga Tabung Haji Permodalan Nasional Berhad Cartaban Nominees (Asing) Sdn Bhd
(Government of Singapore Investment Corporation Pte Ltd for Government of Singapore)
Amanah Raya Nominees (Tempatan) Sdn Bhd

(Amanah Saham Didik)

(Saudi Arabian Monetary Agency)

(Pictet And CIE for VKF Investment Ltd)

(CB LDN for Stitching Pensioenfonds Voor De Gezondheid Geestelijken Maatschappelijke Belangen)

(CBHK for Kuwait Investment Authority)

(RTCC London for Sprucegrove International Pooled Fund)

(Amanah Saham Malaysia)

(Mellon Bank, N.A. for Commonwealth of Massachusetts Pension Reserve Investment Trust)

(Sekim Amanah Saham Nasional)

(Ing Insurance Berhad (INV IL PAR)

(General Motors Employees Global Group Pension Trust)

(Mellon Bank, N.A. for Emerging Markets Investors Fund)
11
Share Performance
Volume (shares) (Monthly 01/04/2003 to 31/05/2004) 25,000,000
MISC LOCAL SHARES
RM 15
20,000,000
12
15,000,000
10,000,000
5,000,000
30 Sep 2003
28 Nov 2003
31 Dec 2003
27 Feb 2004
30 Jun 2003
31 Jul 2003
31 Oct 2003
30 Jan 2004
30 May 2003
31 Mar 2004
Volume (shares) (Monthly 01/04/2003 to 31/05/2004) 50,000,000
MISC FOREIGN SHARES
31 May 2004
29 Aug 2003
30 Apr 2003
30 Apr 2004
RM 15
40,000,000
12
30,000,000
20,000,000
10,000,000
31 Dec 2003
30 Jan 2004
27 Feb 2004
31 Mar 2004
30 May 2003
Monthly volume
High
Low
SIGNIFICANT ANNOUNCEMENTS 27 22 26 12 25 19 Announcement of 4th Quarter Results MISC acquired NOL's Tanker Subsidiary, American Eagle Tankers Announcement of 1st Quarter Results Announcement of 2nd Quarter Results Announcement of 3rd Quarter Results Acquisition of MSE Holdings Sdn. Bhd. (MEH) shares from Kuok Brothers Sdn. Bhd. and IMC Enterprises Incorporated (IMC) 22 Mar 04 Proposed fund raising exercise 24 May 04 Announcement of 4th Quarter Results Source: Bursa Malaysia Berhad Bloomberg
May Jul Aug Nov Feb Mar
03 03 03 03 04 04
31 May 2004
30 Jun 2003
31 Jul 2003
30 Sep 2003
31 Oct 2003
30 Apr 2003
29 Aug 2003
28 Nov 2003
30 Apr 2004
12
MISC...At A Glance
Malaysia International Shipping Corporation Berhad (MISC), a subsidiary of PETRONAS, is the leading international shipping line of Malaysia. The principal business of the Corporation consists of ship-owning, ship management and other related logistics and maritime transportation services.
Since its establishment in 1968, MISC has developed into a sound, successful Corporation that continues to grow on the solid foundation upon which it was built. The public listing of its shares in 1987 and its current standings as the fourth largest company in terms of market capitalisation on the Main Board of Bursa Malaysia Berhad (formerly known as The Kuala Lumpur Stock Exchange) further demonstrates its sound standing and viability. As a member of the PETRONAS Group, MISC is expected to benefit and further strengthen
business synergies and economies of scale from related operations of its business.
Largest single owner-operator of LNG tankers in the world
Through the provision of reliable, efficient and competitive services, MISC has indeed become a truly
international player, plying over 700 ports in more than 100 countries around the world. Its modern and
well-diversified relatively young fleet of 138 vessels with a combined tonnage of more than 8 million deadweight tonnes and land based facilities managed by experienced personnel enable MISC to meet the various demands of its customers.
Through its wide network of shipping ports and land transportation systems, all linked by the latest information and logistics systems support, MISC offers the widest possible geographical coverage. This network also extends to many inland destinations and land-locked markets. Endowed with such diverse operations, MISC offers the total logistics solution to its customers.
Worlds second largest owner-operator of Aframax tanker fleet
MISC Fleet Strength

Excluding FPSO facility Bunga Kertas
As At 30 June 2004
LNG Tankers Aman Class (18,8000 cbm) Tenaga Class (130,000 cbm) Puteri Class (130,000 cbm) Puteri Satu Class (137,100 cbm) 3 5 17 5 4
Petroleum Tankers VLCC Aframax Product Tanker LPG 3 35 46 5 3
Chemical Tankers Melati Class (32,000 DWT) Anggerik Class (30,000 DWT) Semarak Class (16,000 DWT) Melawis Class (8,500 DWT) 7 4 15 2
2
Containerships Above 3000 TEUs 1000 3000 TEUs Below 1000 TEUs 4 8 12 24
Bulk Carriers Panamax Handymax Handysize Multipurpose 11 9 36 15 1
14
Countries & Ports Of Call 2003/2004

1. Algeria Algiers Arzew Bethioua Bejaia Oran Skikda Skikda Bejaia Angola Palanca Argentina Bahia Blanca Buenos Aires Campana Ensenada La Plata Necochea Racalada Rosario San Lorenzo Aruba Oranjestad Australia Adelaide Albany Auckland Bellbay Bluff Brisbane Bunbury Burnie (Tasmania) Cairns Dalrymple Bay Dampier Darwin Derby King Freemantle Geelong Geraldton Gladstone Gove Groote Eylandt Haypoint Kwinana Laminaria Melbourne Newcastle Port Hedland Port Kembla Port Pirie Port Stanvac Townsville Varanus Island Whitnell Bay Whyalla Bahrain Bahrain Bahamas, The Freeport, Bahamas Bangladesh Chittagong Mongla Belgium Antwerp Ghent 10. Brazil Altamira Antoninia Aratu Belem Fortaleza Itajai Manaus Paranagua Ponta Da Madeira Porto Trombetas Praia Mole Recife, Santos Rio De Janeiro Rio Grande Rio Grande Do Sul Santos Sao Francisco Do Sul Sepetiba Trombetas Tubarao Vitoria 11. Brunei Lumut Seria 12. Bulgaria Bourgas Varna 13. Cameroon Douala 14. Canada Becancour Brunswick Contrecouer Gros Cacouna Montreal Neptune Pointe Noire Point Tupper Port Alfred, Quebec Port Cartier Roberts Bank Seven Island St. John NB St. John, NFL Stewart Vancouver Victoria 15. Chile Antofagasta Caleta Caloso Chimbote Coronel Huachipato Huasco Lirquen Mejillones Penco San Antonio San Vicente Valparaiso 16. China Baoshan Bayuquan Beihai Bing Bong Changshu Chiwan Dalian Fangcheng Fuzhou Haikou Huangdao Huangpu Jiangyin Jinzhou Lanshan Liangyungang Longkou Mawan (Chiwan) Nantong Ningbo Qingdao Qinhuangdao Rizhao Shanghai Shuidong Shekou Tianjin Xiamen Xijang Terminal Xingang Yangpu Yangzhou Yantai Yantian Zhangjiagang Zhanjiang Zhapu Jiaxing Zhuhai 17. Colombia Buenaventura Covenas Porto Bolivar Puerto Bolivar Santa Marta 18. Croatia Omisaji 19. Costa Rica Caldera 20. Cyprus Limassol Vassiliko 21. Denmark Allborg Aarhus Copenhagen Fredericia Great Belt Kalunbourg Karstoe 22. Djibouti Djibouti 23. Ecuador Esmeraldas Guayaquil 24. Egypt Adabiya Ain Suknar Alexandria Damietta Dekhela El Dekheila Port Said Sidi Kerir Suez
2.
3.
4.
5.
6.
7.
8.
9.
15
25. El Salvador Acajutla 26. Estonia Tallin 27. Finland Kotka Raahe 28. France Donges Dunkirk For-sur-Mer Fos lavera Le Havre Montaire Montoir Nantes Rouen Sete 29. Gabon Oweido 30. Georgia Batumi 31. Germany Bremerhaven Bruke Hamburg Wilhem Shaven 32. Ghana Takoradi 33. Greece Agoi Theodoroi Adamas Mylaki Piraeus Volos Voudio Bay 34. Guatemala Puerto Quetzal 35. Guinea Port Kamsar Umuda 36. Hawaii Hilo Honolulu Kahului 37. Hong Kong Hong Kong 38. India Chennai Cochin Dahej Goa Haldia Jamnagar Kandla Mangalore Nava Sheva New Mangalore Mumbai Mundra
Paradip Pipavav Porbandar Sikka Tuticorin Vadinar Visakhapatnam 39. Indonesia Adang Bay Anyer Balikpapan Banjarmasin Blanlanchang Belawan Bitung Bontang Cengkareng Cigading Cilacap Cinta Dumai Gresik Jakarta Kalbut Karimun Kuala Tanjung Lawi-Lawi Lhokseumawe ManggisTerminal Merak NYPCT Padang Pontianak Pulau Laut Pulau Sambu Samarinda Santan Marine Terminal Semarang Senipah South Pulau Laut Surabaya Tanjung Bara Tanjung Priok Tanjung Uban Tarahan Teluk Semangka Tg. Pemancingan Tg. Wangi Ujung Padang Widuri 40. Iran Bandar Abbas Bandar Imam Bandar Mashahr Kharg Island 41. Iraq Mina Al Bakri 42. Ireland Aughinish Londonderry 43. Italy Ancona Augusta Bari Cagliari Genoa Gioa Tauro Livorno Millanzzo
Sarroch Trieste Vado Ligure 44. Jamaica Port Rhoades 45. Japan Chiba Chita Funabashi Futtsu Hakata Hekinan Hibikinada Higashi-Harima Higashi-Ohgishima Iota Ishigaki Iyomishima Kakogawa Kashima Kawasaki Kimitsu Kinuura Kobe Kushiro Mizushima Nagoya Nanao Negishi Niigata Niihama Ohgishima Oita Onahama Osaka Saganoseki Saiki Sakaiminato Senboku I, II Sendai Shemonoseki Shibushi Shimizu Sodegaura Sukumo Susaki Tachibana Tokachi Tokuyama Tomakomai Tokyo Tsukumi Ube Yokkaichi Yokohama 46. Jordan Aqaba 47. Kenya Mombasa 48. Kuwait Mina Al Ahmadi Ruwais Shuaiba Shuwaikh 49. Latvia Ventspils 50. Liberia Buchanan
16
Countries & Main Ports Of Call 2003/2004 (continued)
51. Lithuania Butinge Gruntartangi Klapeida 52. Madagascar Tamatave 53. Malaysia Bintulu Bunga Raya Marine Terminal Butterworth Dulang Marine Terminal Kapar Kekwa Marine Terminal Kemaman Kerteh Kota Kinabalu Kuantan Kuching Kunak Labuan Lahad Datu Lumut Malong Marine Terminal Manjung, Perak Melaka Miri Pasir Gudang Penang Port Dickson Port Klang Prai Sakai Sandakan Sibu Sungai Udang Port Tawau Teluk Ewa Terengganu Crude Oil Terminal 54. Mauritania Nouakchott 55. Mauritius Port Louis 56. Mexico Cayo Arcas Coatzacoalcos Dos Bocas Guayamas Lazaro Cardenas Pajaritos Santa Rosalia Ta Kuntah Tampico Vera Cruz 57. Morocco Agadir Casablanca Jorf Lasfar Safi 58. Mozambique Beira Maputo
59. Malta Valentte 60. Namibia Walvis Bay 61. Netherlands Amsterdam Flushing Ijmuiden Rotterdam Sluiskill & Terneuzen St Eustatius 62. Netherlands Antilles Aruba Bonaire St. Eustatia 63. New Zealand Dunedin Lyttelton Napier Nelson Picton Tauranga Timaru Wellington Whangarei 64. Nigeria Bonny Island Calabar Forcados Lagos Nigeria Ea Terminal Odudee Onne Port Harcourt Qua Iboe 65. Norway Farsund Fredrikstad Heroya Mongstad Narvik 66. Oman Mina Al Fahal Muscat Qalhat 67. Pakistan Karachi Port Qasim 68. Poland Dansk 69. Panama Balboa Cristobal Escobal Panama 70. Peru Callao Puta Lobitos 71. Philippines Batangas Bataan Isabel
Manila Mariveles Subic 72. Portugal Leixoes 73. Qatar Doha Mesaieed 74. Republic of Yemen Ash Shihr Terminal 75. Romania Constantza 76. Russia Kavkaz Primorsk Tuapse Murmansk Novorossiysk St. Petersburg 77. Rep Of Congo Djeno 78. Saudi Arabia Damam Jeddah Jubail Ras Tanura Ras Al Khafji Yanbu 79. Singapore Singapore 80. Slovenia Koper 81. South Africa Cape Town Durban Richards Bay Saldanha Bay 82. South Korea Busan Daesan Inchon Kunsan Kwangyang Masan Onsan Pohang Pusan Pyongtaek Tong Yeong Ulsan Yosu 83. Spain Alcanar Alicante Algeciras Aviles Barcelona Bilbao Cadiz
17
Canary Islands Cartagena El Ferrol Ferrol Garrucha Gijon Huelva La Pallice La Skihra La Spezia Las Palmas Leixoes Tarragona Tenerife Valencia 84. Sri Lanka Colombo 85. Sudan Bashayer Port Sudan 86. Surinam Paranam 87. Sweden Brofjorden Frederecia Gothenburg Lulea Oxelosund 88. Syria Banias Tartous 89. Taiwan Hoping Kaohsiung Mai Liao Taichung Sha Lung Yung An 90. Thailand Bangkok Bangsaphan Benchamas Marine Terminal Khanom Kohsichang Laem Chabang Mapthaput Platong Marine Terminal Rayong Sriracha 91. Togo Kpeme Lome 92. Trinidad & Tobago Galeota Point Point Fortin Point Lisas 93. Tunisia Sfax Tunis
94. Turkey Alliaga Bosporous Canakale Ceyhan Gebze Gemlik Marmara Mersin Nemrut Bay Tavsancil 95. United Arab Emirates Abu Dhabi Dubai Fujairah Hamriya Jebel Ali Khor Fakkan Sharjah 96. United Kingdom Birmingham Coryton Fawley Felixstowe Flotta Gilbraltar Hamble Houndpoint Immingham Liverpool London Niggi Bay Port Bury, Bristol Port Talbot Portbury Sollumvoe Southampton Teesport Tilbury Transmere Whitegate 97. Ukraine Odessa Ilichevsk Yuzhnyy 98. Uruguay Montevideo Nueva Palmira Zona Alpha 99. United States of America Baltimore Barbers Points Baton Rouge Baytown Bayway Beaumont Bridgeport Burnside Camden Chalmette Charleston Convent Cove Point Corpus Christi Deer Park Delaware City Everglades
Falmouth Freeport Texas Galveston Hampton Road Houston Hydaburg Jacksonville Lake Charles Long Beach Long View Loop Los Angeles Meraux Mobile, Alabama Mississipi River Nederland New Castle New Orleans New York Newark Norco, La Pasadena Pascagoula Paulsboro Perth Amboy Philadelphia Point Comfort, Texas Port Arthur Port Neches Portland Portsmouth Providence Sacramento San Francisco San Nicholas Seattle Smiths Bluff South Sabine Sparrow Point St. Charles St. Croix St. James St. Petersberg St. Rose St. Croix, US SW Pass Virgin Island Tacoma Tampa Texas City Wilmington 100. Venezuela Amuay Bay Jose Terminal La Salina Maracaibo Pertigalete Petrozuata Puerto Cabello Puerto La Cruz Puerto Miranda 101. Vietnam Campa Haiphong Ho Chi Minh Nha Trang Randong Vung Tau
18
MISC Group Structure

As At 30 June 2004
100% (Investment Holdings)
AET Holdings (L) Pte Ltd
100%
American Eagle Tankers Inc. Ltd-Bermuda

(Ship Owning & Operating)
100%
EBC Ltd - Bermuda

(Holding Co)
100%
MISC Enterprises Holdings Sdn Bhd

(Investment Co)
100%
MISC Agencies (Australia) Pty Ltd

(Shipping Agent)
100%
MISC Agencies Sdn Bhd

(Shipping Agent & Warehousing Services)
100%
MISA (B) Sdn Bhd

(Shipping Agent)
100%
MISC Agencies (Netherlands) B.V.

(Shipping Agent )
100%
Scheepvaartagentuur Nederland Overzee B.V. (Dormant)
100%
MISC Capital (L) Ltd

(Investment Holdings)
100%
MISC Agencies ( Trengganu) Sdn Bhd

(Voluntary Winding-up)
100%
MISC Agencies (UK) Ltd

(Shipping Agent)
100% (Integrated Logistics Services) 100%
MISC Integrated Logistics Sdn Bhd
65%
MISC Agencies (Sarawak) Sdn Bhd

(Shipping Agent)
100%
MISC (Japan) Ltd

(Port and General Agent)
51% 50%
Leo Launches Pte Ltd

(Launch Operator)
PETRONAS Tankers Sdn Bhd

(Ship Management)
100%
MISC Haulage Services Sdn Bhd

(Container Haulage)
100%
MISC (Singapore) Pte Ltd

(Shipping Agent)
Transasia Pool Pte Ltd

(Ship Management)
100%
Puteri Delima Satu (L) Pte Ltd

(Shipowning)
MISC Trucking and 100% Warehousing Services Sdn Bhd (Trucking, Warehousing &
Forwarding Services)
100% MISC Information Technology Sdn Bhd (Voluntary Winding-up) 100%
100% Malaysia Shipyard & Engineering Sdn Bhd (Shipbuilding / Shiprepairing & Heavy Engineering) 100% Malaysia Towage & Transport Sdn Bhd (Hire & Charter of Tug Boats) 100%
100%
Puteri Firus Satu (L) Pte Ltd

(Shipowning)
MISC Ferry Services Sdn Bhd

(Dormant)
100%
Puteri Nilam Satu (L) Pte Ltd

(Shipowning)
Puteri Delima Sdn Bhd 100% (Shipowning) Puteri Firus Sdn Bhd 100% (Shipowning)
100%
100% 65%
MISC Properties Sdn Bhd

(Dormant)
MSE Corporation Sdn Bhd

(Processing of Copper Grit)
100%
Puteri Intan Satu (L) Pte Ltd

(Shipowning)
MSE Holdings Sdn Bhd

60% (Process Equipment for Petrochemical,
MSE-ATB Sdn Bhd
Puteri Intan Sdn Bhd

(Shipowning)
50% Transware Distribution Services Pte Ltd (Warehousing) 49% 40% 37% 100%
Oil & Gas and Power Generation Plants)
100%
Puteri Intan Dua (L) Pte Ltd

(Shipowning)
100%
Techno Indah Sdn Bhd

(Sludge Treatment & Generation of Energy)
Puteri Nilam Sdn Bhd

(Shipowning)
100%
Puteri Zamrud Satu (L) Pte Ltd

(Shipowning)
MISC Agencies (Thailand) Co Ltd

(Shipping Agent)
100%
Malaysian Tank Cleaning Company Sdn Bhd (Dormant) Mapak Qasim Bulkers Pvt Ltd
Malaysian Maritime 70% Academy Sdn Bhd (Education & Training for
Seaman & Maritime Personnel)
60%
100% (Shipowning)
Puteri Zamrud Sdn Bhd
MISC Agencies Lanka (Pvt) Ltd

(Shipping Agent & Freight Forwarding Sevices)
75% (Storage of Edible Oil) 65%
Affin Merchant Bank Berhad

(Merchant Banking)
Mapak Edible Oil Pvt Ltd

(Dormant)
MISC Nigeria Ltd

(Ship operating & other activities related to shipping) (Shipowning/Ship Management)
25%
Malaysia Pakistan Venture Sdn Bhd

60%
Hubei Zhong Chang Vegetable Oil Co Ltd (Vegetable Oil Refinery) Tianjin Voray Bulking Installation Co Ltd (Storage of Vegetable Oil) Beijing King Voray Edible Oil Co Ltd (Vegetable Oil Refinery)
51% Asia LNG Transport Sdn Bhd
25%
Trans-ware Logistics (Pvt) Ltd

(Inland Container Depot)
50%
Asia LNG Transport 51% Dua Sdn Bhd

(Shipowning/Ship Management)
25%
Voray Holdings Ltd

25%
FPSO Ventures Sdn Bhd

35%
(Operations and Maintenance of Offshore Terminals)
19
100%
American Eagle Tankers UK Ltd

(Commercial Ops. & Chartering)
100%
American Eagle Tankers Agencies Inc (Property owning) Pelican Offshore Services Company Inc (Shipowning/Lightering) OMIP, Inc
(Property Owning)
100%
EBC Assets Ltd - Bermuda

25%
Moor Industrial Transport Ltd - Jersey

100%
American Marine and Offshore Services Ltd (Investment Holdings) MTL Petrolink Corp American Eagle Tankers Inc. Ltd
Singapore branch (Management Office)
100%
100%
EBC Assets Ltd - Liberia

100%
Thunder Bay Investment Ltd - Liberia

(Dormant)
100% (Investment Holdings) 100%
100%
100%
EBC Holdings Ltd - Liberia

100%
Peddler Shipping Ltd - Liberia

(Shipowning)
100% 100%
Offshore Marine Services Inc

(Property Owning)
Gangga Nagara Shipping Ltd - Liberia 100% (Dormant)

100%
Rhinestone Shipping Ltd - Liberia 100% (Shipowning)

100% (Dormant) 100%
100%
Crystal Shipowning Co. Pte Ltd

(Shipowning)
Harlink Corp
(Shipowning)
MISC Ship Management Sdn Bhd

(Dormant)
Skystrong Shipping Ltd - Liberia

100%
Eagle Shipmanagement Pte Ltd

(Ship Management)
100% (Shipowning)
Neulink Corp
100% (Dormant) 100%
Sea Maestro Shipping Ltd - Liberia Esperance Shipping Ltd - Liberia

(Dormant)
Dinosaur Shipping Ltd - Liberia

(Dormant)
100% (Shipowning) 100%
Trilith Shipping Pte Ltd
100%
EBC Shipping Ltd - Bermuda

(Ship Management)
Trilithon Shipping Pte Ltd

(Shipowning)
Fantasy Shipping Ltd - Liberia 100% (Dormant)

100%
100% EBC Shipping Ltd - Liberia (Ship Management) 100%
Fragrant Shipping Ltd - Liberia

(Dormant)
Bison Shipping Ltd - Liberia

(Shipowning)
100%
Growth Shipping Ltd - Liberia

(Dormant)
100%
Happy Venture Ltd - Liberia

50%
Olivier Shipping Ltd - Liberia

(Shipowning)
100%
Gunner Shipping Ltd - Liberia

(Dormant)
100%
Safety Shipping Ltd - Liberia

(Shipowning)
100%
Grand Way Investment Ltd - Liberia

(Dormant)
100%
Selesa Shipping Ltd - Liberia

(Shipowning)
100%
Humanity Shipping Ltd - Liberia

(Dormant)
100%
Logger Shipping Ltd - Liberia

(Dormant)
100%
Luminous Shipping Ltd - Liberia

(Dormant)
100%
Marquisa Shipping Ltd - Liberia

(Dormant)
100%
Pacific Trident Ltd - Hong Kong

(Dormant)
100% Pacific Mattsu Shipping Ltd - Liberia (Dormant) 100%
100%
Roseland Shipping Ltd - Liberia

(Dormant)
Plate Shipping Ltd - Liberia

(Dormant)
100%
Sea Maiden Shipping Ltd - Liberia

(Dormant)
100% (Dormant)
Spectrum Shipping Ltd - Liberia
100%
Sun Shipping Ltd - Liberia

(Dormant)
100%
Torrent Shipping Ltd - Liberia

(Dormant)
100%
Trailblazer Shipping Ltd - Liberia

(Dormant)
20
Corporate Information
Board of Directors
Tan Sri Dato Sri Mohd Hassan bin Marican
Dato Hj. Mohd Ali bin Hj. Yasin (Deceased on 19 April 2004)
Dato Shamsul Azhar bin Abbas (Appointed w.e.f. 1 July 2004)
Chairman Tan Sri Dato Sri Mohd Hassan bin Marican Managing Director/Chief Executive Officer Dato Hj. Mohd Ali bin Hj. Yasin
(Deceased on 19 April 2004)
Registered Office Level 25, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 03-2273 8088 Fax : 03-2273 6602 Telex : Naline MA 30325, MA 32449 Cable : MALAYASHIP KUALA LUMPUR Website : www.misc-bhd.com
Principal Bankers Bumiputra-Commerce Bank Berhad Malayan Banking Berhad Hongkong Bank Malaysia Berhad Share Registrar Symphony Share Registrars Sdn Bhd (formerly known as Malaysian Share Registration Services Sdn Bhd) Level 26, Menara Multi Purpose Capital Square No. 8, Jalan Munshi Abdullah 50100 Kuala Lumpur Tel : 603-2721 2222 Fax : 603-2721 2530/31 Stock Exchange Listing The Main Board of Bursa Malaysia Berhad
Dato Shamsul Azhar bin Abbas

(Appointed w.e.f. 1 July 2004)
Directors Dato Sri Liang Kim Bang Tan Sri Dato Seri Dr. Hj. Zainul Ariff bin Hj. Hussain Mr. Harry K. Menon Dato Halipah binti Esa
(Appointed w.e.f. 26 April 2004)
Auditors Ernst & Young Level 23A Menara Milenium Jalan Damanlela Pusat Bandar Damansara 50490 Kuala Lumpur
Secretary Fina Norhizah binti Hj. Baharu Zaman
21
Dato Sri Liang Kim Bang
Tan Sri Dato Seri Dr. Hj. Zainul Ariff bin Hj. Hussain
Harry K. Menon
Dato Halipah binti Esa
Fina Norhizah binti Hj. Baharu Zaman
22
Profile Of Directors
Tan Sri Dato Sri Mohd Hassan bin Marican, aged 51, is the President and Chief Executive Officer of Petroliam Nasional Berhad (PETRONAS). A Fellow of the Institute of Chartered Accountants in England and Wales, as well as a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public Accountants, he joined PETRONAS in 1989 as Senior Vice President of Finance and was appointed President and CEO in February 1995.
Tan Sri Dato Sri Mohd Hassan is a member of the PETRONAS Board of Directors, and is Chairman of three public listed companies under the Group, namely PETRONAS Dagangan Berhad, PETRONAS Gas Berhad and Malaysia International Shipping Corporation Berhad. He is also the Chairman of Engen Limited, South Africa, a subsidiary of PETRONAS.
Beyond PETRONAS, Tan Sri Dato Sri Mohd Hassan is a Board Member of the Malaysia-Thailand Joint Authority, which oversees petroleum development in the overlapping area between Malaysia and Thailand. He is also a member of the International Investment Council for the Republic of South Africa established by President Thabo Mbeki.
Tan Sri Dato Sri Mohd Hassan is an Energy Governor and the current Energy Community Chairman for the World Economic Forum (WEF) as well as a member of the WEFs Council of 100 Leaders. He is also a member of the Commonwealth Business Council.
23
Dato Shamsul Azhar bin Abbas, aged 52, is the Vice President of PETRONAS Logistics and Maritime Business and concurrently the Managing Director/Chief Executive Officer and Board Member of MISC, a subsidiary of PETRONAS since 1 July 2004. He is a member of the PETRONAS Board of Directors and sits on the Board of PETRONAS Carigali Sdn. Bhd., among other PETRONAS subsidiaries and associate companies in Malaysia and overseas.
Dato Shamsul Azhar holds a degree in Political Science from Science University of Malaysia, M. Sc. in Energy Management from University of Pennsylvania, USA and Technical Diploma in Petroleum Economics from Insitute Francaise du Petrole (IFP), France.
He joined PETRONAS in 1975 as an executive trainee and between 1975 to 1991, he held various managerial positions in PETRONAS including Manager, Product Trading and Supply (1980) and Manager, Economics and Planning (1986), Senior Manager Strategic Planning Department (1988) before becoming the Executive Assistant to the President (1991).
In 1994, he took up the position as General Manager, Corporate Planning & Business Development and was promoted to Senior General Manager, Corporate Planning the following year.
In 1997, Dato Shamsul Azhar was promoted to the position of Vice President, PETRONAS Petrochemical Business and was subsequently appointed as the Vice President of PETRONAS Oil Business in 1999. In 2002, he was appointed as the Vice President of PETRONAS Exploration & Production Business.
24
Profile Of Directors (continued)
Dato Sri Liang Kim Bang, aged 67, a Malaysian, is an Independent Non-Executive Director of MISC. He was appointed to the Board in 1972. Presently, he is the NonExecutive Chairman of CMS Steel Berhad and an Independent Non-Executive Director of PPB Group Berhad, PPB Oil Palms Berhad, Cahya Mata Sarawak Berhad, Rashid Hussain Berhad, CMS Trust Management Berhad and several other companies.
Dato Sri Liang graduated from the University of Malaya with Bachelor of Arts and Bachelor of Arts (Honours) degrees. He also undertook a post-graduate course in Public Administration in the University of Cambridge, England. Dato Sri Liang held various positions in the Sarawak Civil Service, and prior to his retirement in 1994, was the Sarawak State Financial Secretary.
Tan Sri Dato Seri Dr. Hj. Zainul Ariff bin Hj. Hussain, aged 58, is an Independent Non-Executive Director of MISC since 27 June 1998. He holds an MBA from Ohio University and a Ph.D in Public Policy from the University of Southern California Los Angeles, United States of America.
He has served in various capacities in the Ministry of Agriculture, Selangor State Government, the National Institute for Public Administration (INTAN), Ministry of Education, Socio Economic Research Unit, Prime Ministers Department and Secretary General of the Ministry of National Unity and Social Development. Since 7 May 1998, he has served as Director General, Implementation Coordination Unit, Prime Ministers Department.
He is also the Chairman of the MISC Board Audit Committee.
25
Mr. Harry K. Menon, aged 54, is an Independent Non-Executive Director of MISC since 30 August 2001. He is a Fellow of the Institute of Chartered Accountants in England and Wales, as well as a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public Accountants.
He spent 13 years in public practice at Hanafiah Raslan & Mohamad, 7 years of which as a Partner. He joined Public Bank Berhad as General Manager and was subsequently promoted to Executive Vice-President. After working with two public listed companies, he joined Putrajaya Holdings Sdn Bhd as its Chief Operating Officer from 1997 2000.
He is presently the Group Chief Executive Officer and Executive Director of AWC Facility Solutions Berhad and is a Non-Executive Director of SPK-Sentosa Corporation Berhad and AKN Messaging Technologies Berhad. He is also a Director of Putrajaya Holdings Sdn Bhd.
He is also a member of the MISC Board Audit Committee.
Dato Halipah binti Esa, aged 54, is an Independent Non-Executive Director of MISC since 26 April 2004. She graduated from the University of Malaya with an honours degree majoring in Economics and later was conferred the Masters of Economics degree from the same University.
She started her career with the Administrative and Diplomatic Services in 1973 as an Assistant Secretary in the Economic Planning Unit (EPU) in the Prime Ministers Department and subsequently held various other positions in the EPU. She is presently the Deputy Secretary General (Policy), Ministry of Finance.
She sits on the Board of Inland Revenue Board, Employees Provident Fund, Pensions Trust Fund, Kontena Nasional Berhad and Amanah Ikhtiar Malaysia.
She is also a member of the MISC Board Audit Committee.
26
Managing Director / Chief Executive Officer Dato Shamsul Azhar bin Abbas
Management Committee
Dato Shamsul Azhar bin Abbas, aged 52, is the Vice President of PETRONAS Logistics and Maritime Business and concurrently the Managing Director/Chief Executive Officer and Board Member of MISC, a subsidiary of PETRONAS since 1 July 2004. He is a member of the PETRONAS Board of Directors and sits on the Board of PETRONAS Carigali Sdn. Bhd., among other PETRONAS subsidiaries and associate companies in Malaysia and overseas.
Dato Shamsul Azhar holds a degree in Political Science from Science University of Malaysia, M. Sc. in Energy Management from University of Pennsylvania, USA and Technical Diploma in Petroleum Economics from Institute Francaise du Petrole (IFP), France.
He joined PETRONAS in 1975 as an executive trainee and between 1975 to 1991 he held various managerial positions in PETRONAS including Manager, Product Trading and Supply (1980) and Manager, Economics and Planning (1986), Senior Manager Strategic Planning Department (1988) before becoming the Executive Assistant to the President (1991).
In 1994, he took up the position as General Manager Corporate Planning & Business Development and was promoted to Senior General Manager, Corporate Planning the following year.
In 1997, Dato Shamsul Azhar was promoted to the position of Vice President, PETRONAS Petrochemical Business and was subsequently appointed as the Vice President of PETRONAS Oil Business in 1999. In 2002, he was appointed as the Vice President of PETRONAS Exploration & Production Business.
27
Senior General Manager Liner & Logistics Business Abdul Aziz bin Meor Ngah Senior General Manager Fleet Management Services Nordin bin Mat Yusoff Senior General Manager Group Business Development Abdul Rahim bin Abdul Rahman
Regional Business Director

(Europe, Americas, Africa & FSU)
Amir Hamzah bin Azizan General Manager LNG Business And Petronas Tankers Sdn Bhd Ahmad Zohri bin Ahmad Zohri General Manager Tanker Business Gunaseharan a/l R. Ganapathy
General Manager Bulk Services Baharudin bin Mydin General Manager Human Resource Mohd Hisham bin Mohd Rapee General Manager Financial Services Noraini binti Che Dan General Manager Corporate Planning Services Michael Ting Sii Ching
Abdul Aziz bin Meor Ngah, aged 53, is the Senior General Manager, Liner & Logistics Business. He has over 29 years of experience in the shipping industry and served in various capacities in MISC including Director Liner International Services, Director Corporate Planning and Director Offshore Services. He was the Managing Director of Hanjin Lines Agencies before moving on to begin his own consultancy work in areas of management turnaround, integrated logistics management and tax consultant on Customs and Excise issues. In his current capacity, he sits as a member of the International Council of Container Operators (Box Club), World Shipping Council and a Director of Through Transport Club of Bermuda and Eurasia and various subsidiaries of MISC Berhad. Abdul Aziz graduated with a Diploma in Accountancy from MARA Institute of Technology and is a member of the Chartered Institute of Logistics and Transport, United Kingdom and Malaysia Charter.
Nordin bin Mat Yusoff, aged 45, is the Senior General Manager, Fleet Management Services. He joined PETRONAS in 1989 and has served in various capacities in PETRONAS Carigali Sdn. Bhd. and PETRONAS Tankers Sdn. Bhd. before joining MISC in 2001. Prior to joining PETRONAS, he was with Malaysia Shipyard and Engineering (MSE) Sdn. Bhd. and was involved in project management of various new shipbuilding and offshore structures fabrication works. He currently sits as Committee member of the various Classification Societies and international shipping organisations. He is also a Director of P&I Club and various subsidiaries of MISC Berhad. Nordin graduated from University of Glasgow, Scotland with a degree in Naval Architecture & Ocean Engineering and is a registered professional engineer with the Board of Engineers, Malaysia.
Abdul Rahim bin Abdul Rahman, aged 50, is the Senior General Manager, Group Business Development. He serves as a Board Member of the Maritime Institute of Malaysia (MIMA) and also sits as a member of the Pasir Gudang Local Authority Advisory Council, a member of the Malaysian Defence Industry Council (MDIC) and Committee member of Classification Society. He is also Director of various subsidiaries of MISC Berhad. Prior to joining MISC in May 2004, he served the Shell Group of Companies for 13 years in various capacities including Head of Construction at Sarawak Shell Berhad, Company Site Representative, Zeit Bay Project at Shell Egypt and Project Manager at Shell Joint-Venture Operation in Netherlands. He also served in Malaysia Shipyard And Engineering Sdn. Bhd. for 13 years and was the Chief Executive Officer for 7 years until April 2004. Abdul Rahim graduated with an honours degree in Mechanical Engineering Malaysia and Member of the Institute of Engineers, Malaysia.
from Sheffield
University, United Kingdom and is a registered Professional Engineer with the Board of Engineers
28
Management Committee (continued)
Amir Hamzah Bin Azizan, aged 37 is the Regional Business Director (Europe, Americas, Africa and FSU) of MISC stationed in London, United Kingdom. He is a member of the Lloyds Asia Shipowners Committee. Within MISC, he also serves as Chairman of American Eagle Tankers Inc. Ltd and sits on the Boards of a number of subsidiaries of the MISC Group of Companies. He joined MISC in the year 2000 and was the Group's General Manager of Corporate Planning Services before assuming his current role. Prior to joining PETRONAS, he served the Shell Group of Companies for 10 years in various capacities including Head of Financial Services and Manager Planning & Support at Sarawak Shell Berhad, Marketing Credit Accountant at Shell Singapore Pte Ltd, Internal Auditor at Shell Eastern Petroleum Pte Ltd, and Senior Treasury Advisor at Shell International Ltd, London. Amir Hamzah graduated with Bachelor of Science degree in Management (majoring in Finance and Economics) from Syracuse University, New York. He also attended the Stanford Executive Progamme at Stanford University, USA. Ahmad Zohri bin Ahmad Zohri, aged 52, is the General Manager, LNG Business. He sits on the Board of PETRONAS Maritime Services Sdn Bhd, and also serves on the Boards of the LNG ship-owning subsidiaries of MISC. He has served in various capacities in the PETRONAS Group since 1981, covering upstream and downstream sectors, including as CEO of PETRONAS Maritime Services Sdn Bhd and Senior Manager in Malaysia LNG Sdn Bhd. Prior to joining PETRONAS, Ahmad Zohri was a Lecturer at Akademi Laut Malaysia and University Putra Malaysia, after graduating in 1977 from Liverpool Polytechnic, U.K. with Bachelor of Science (Hons.) degree in Nautical Studies majoring in Shipping Business and Port Management. He is a qualified mariner having served with Ocean Fleets Ltd., a U.K. based ship management company, for 8 years. Gunaseharan a/l R. Ganapathy, aged 49, is the General Manager, Tanker Business. He joined MISCs shore services in 1992 and was attached to the Petroleum Services Unit. In 1995, he was appointed the Project Manager of Petroleum Services and in 1996 as Manager Petroleum Services. In 2000, he was appointed as Head, Petroleum Business Unit and subsequently, in 2001, he was given the additional responsibility of leading the Chemical Business Unit. He serves on the Boards of a couple of subsidiaries of MISC Group of Companies. He is also an Exco Member of MASA (Malaysian Shipowners Association). Gunaseharan graduated with an MBA from University of Bath, U.K. and has also completed the Qualifying Examination of the Institute of Chartered Shipbrokers, London.
29
Baharudin bin Mydin, aged 54, is the General Manager, Bulk Services. He joined PETRONAS in 1975 and has served in various capacities within the PETRONAS Group including General Manager LPG and Petroleum Products Trading as well as Senior Manager Sales and Marketing, Malaysia LNG Sdn Bhd, Senior Manager Commercial, Malaysia LNG Tiga Sdn Bhd and Senior Manager Planning and Chartering, Petronas Tankers Sdn Bhd. Prior to assuming his current position, he was the Senior Manager Strategy and Business Development Corporate Planning Unit of MISC. Baharudin graduated from National University of Malaysia (UKM) with a Bachelor of Arts degree in Economics and Management.
Mohd. Hisham bin Mohd. Rapee, aged 52, is the General Manager, Human Resource. He joined PETRONAS in 1983 and has wide experience in Human Resource and Administration, having held senior managerial positions in human resource in PETRONAS Carigali Sdn Bhd, PETRONAS Tankers Sdn Bhd and PETRONAS Holdings. Mohd Hisham graduated from University of Malaya in 1975 with an honours degree in Arts (History). He is also a graduate of the Senior Management Development Programme INSEAD.
Noraini binti Che Dan, aged 48, is the General Manager, Financial Services. Prior to joining MISC, she served Pernas International Holdings Berhad for 15 years in various capacities including Group General Manager Finance and Chief Financial Officer. She sits on the Board of Labuan Re Insurance and also serves on the Board of MISC subsidiaries. She graduated from University of Manchester with an honours degree in Economics. She is a member of the Malaysian Institute of Accountants and The Malaysian Institute of Certified Public Accountants.
Michael Ting Sii Ching, aged 48, is the General Manager, Corporate Planning Services. Prior to joining MISC, he served the Arthur Andersen/HRM Consulting Division for around 9 years as Senior Consulting Manager (final position) before leaving to join the PhileoAllied Group to head its Corporate Finance Business Unit as General Manager/Executive Director for over 8 years. Subsequent to that, he started and managed his own Corporate, Management and Financial Advisory Practice for two and half years before joining MISC. He graduated with a Bachelor of Business Administration degree (majoring in Accounting and MIS) from Simon Fraser University, Canada.
30
31
to corporate committedthrough well-being strong leadership & good corporate governance

32
Our Corporate Governance Statement

The Company is committed to achieve high and excellent standards of corporate governance throughout the Group and to adhere to the highest level of integrity and ethical standards in all of its business dealings.
The Board of Directors of Malaysia International Shipping Corporation Berhad (the Board) is committed to the principles of corporate governance in the Malaysian Code of Corporate Governance (the Code) and to ensuring that the highest standards of corporate governance is applied throughout the Group. The Board strives to adopt the substance behind corporate governance prescriptions and not merely the form.
The Board is pleased to provide the following statement, which outlines the main corporate governance practices.
The Board of Directors
An experienced and dedicated Board consisting of members with a wide range of financial, business and public service backgrounds leads and controls the Group effectively. The Group recognises the vital role played by the Board of Directors in the stewardship of its direction and operations, and ultimately the enhancement of longterm shareholder value. The Directors bring depth and diversity in their expertise to the leadership of the challenging and highly competitive shipping and integrated logistic business.
The Board reserves material matters to itself for decision, which includes the overall Group strategy and direction, acquisition and divestment policy, approval of major capital expenditure projects and significant financial matters, as well as succession planning for top management.
33
Composition
Board Meetings
The Board comprises of 6 members, comprising of Chairman, who is a NonExecutive Director, an Executive Director who is the Managing Director/Chief Executive Officer and four (4) Independent Non-Executive Directors as defined under the Listing Requirements of Bursa Malaysia Berhad (formerly known as Kuala Lumpur Stock Exchange Berhad). The presence of independent non-executive directors of the calibre necessary to execute sufficient weight in Board decisions creates a balance in the Board.
During the 12 months period ended 31 March 2004, five meetings of the Board were held. A majority of the Directors attended all the Board
meetings held during their tenure. Details of attendance are presented on page 37 of this Annual Report.
A brief profile of each Director is presented on pages 22 to 25 of this Annual Report.
The agenda and a full set of papers for consideration are timely distributed
There is a clear division of responsibilities between the roles of the Chairman and the Managing Director/Chief Executive Officer to ensure a balance of power and authority. The Chairman is primarily responsible for the orderly conduct and working of the Board whilst the Managing Director/Chief Executive Officer is responsible for the overall operations of the business and the implementation of the Boards strategies and policies. The Managing Director/Chief Executive Officer is assisted in managing the business on a day-to-day basis by the Management Committee, which he chairs and which meets twice a month.
prior to each Board meetings of the Board to ensure that Directors have sufficient time to study them and be properly prepared for discussion and informed decision-making.
comprehensive
and
balanced
financial and non-financial informations are encapsulated in the papers covering
All the Non-Executive Directors are independent of management and free from any business or other relationships that could materially interfere with the exercise of their independent judgement. They have the calibre to ensure that the strategies proposed by the Management are fully deliberated and examined in the long term interest of the Group, as well as the shareholders, employees and customers.
amongst others, strategic, operational, regulatory, marketing and human
resources issues.
The
Company
Secretary of the
properly Board
maintains
minutes
meetings, which include a record of the decisions and resolutions of the Board meetings.
34
Our Corporate Governance Statement (continued)
The Directors have unhindered access to the advice and services of the Company Secretary who is responsible for ensuring that Board meeting
This Committee is empowered to bring to the Board its recommendations on the appointment of new Executive and Non-Executive Directors and the re-election of Directors who retire by rotation in accordance with the Corporations Articles of Association. Approved recommendations are then further recommended by the
procedures are followed and that applicable rules and regulations are complied with.
Board to the shareholders at the Annual General Meeting for the shareholders approval.
All members of the Committee participate in assessing, identifying, recruiting, Appointment and Re-election of Directors nominating, appointing and orienting suitable candidates who can contribute effectively to the growth of the Corporation. Any Committee member who has interest in any matter raised by the Committee abstains himself from the deliberations and voting. The Corporations Articles of The Committee also ensures that the Board has an appropriate balance of expertise and abilities. The effectiveness of the Board as a whole and the contribution of each Director are also assessed.
Association require that at least one third of the Directors shall retire at every Annual General Meeting and that each Director, shall retire from office at least once every three years but shall be eligible for re-election. Directors who are appointed by the Board shall hold office until the next Annual General Meeting of the Corporation when they shall retire and be eligible for re-election by the shareholders.
Mandatory Accreditation Programme/Continuing Education Programme
All Members of the Board have attended the Mandatory Accreditation Training Programme (MAP) as prescribed in Practice Note No. 5/2001 Training For Directors issued in relation to the Listing Requirements. Directors are encouraged and are attending continuous education programmes and seminars to keep abreast with developments in the market place.
Nomination Committee
Eventhough it is only compulsory for all public listed companies directors to attend MAP and CEP Courses to the satisfaction of Bursa Malaysia Training Sdn Bhd
The
Board
itself
functions
as
(formerly known as KLSE Training Sdn Bhd), we have encouraged non-public listed companies Directors in our Group to attend for both of the training programmes so as to place higher standard on them in equipping themselves to effectively discharge their duties as directors.
Nomination Committee.
35
Directors Remuneration
The
Companys
dialogue
with
shareholders at the Annual General The Board, as a whole, recommends the remuneration of each Director to the shareholders for approval at the Annual General Meeting. The Directors concerned do not participate in the deliberations and voting on decisions in respect of their own remuneration packages. Meeting (AGM) is the principal forum for interaction with its valued shareholders and it provides the opportunity to gather views of, and answer question from, both the private and institutional shareholders Remuneration Committee on all issues relevant to the Company.
The Board itself decides on the remuneration policy and terms of conditions of service for the Group as well as the remuneration of members of the Management Committee. The policy is to provide the remuneration packages necessary to attract, retain and motivate directors of the quality required to manage the business of the Company and to align the interest of the Directors with those of shareholders.
At each Annual General Meeting, the Board presents the progress and performance of the business and shareholders are encouraged to
participate in the question and answer session both on the resolutions to be
Matters concerning the remuneration of senior staff of the Group excluding members of the Management Committee are considered by the Management Development Committee.
passed as well as about the Groups operations in general.
Accountability and Audit In effect, therefore MISC has a Remuneration Committee at two levels. In terms of financial reporting the Board is Communication with Investors and Shareholders committed to provide and present a balanced and meaningful assessment of The Group values dialogue with investors and analysts. Briefing sessions are held for analysts twice a year on the Groups performance. Presentations are made as and when appropriate to explain the Groups strategy, performance and major developments. Any information that may be regarded as undisclosed material or price sensitive will not be disclosed in the presentation nor will it be given to any individual shareholder or shareholder group until after the announcement to Bursa Malaysia Berhad (formerly known as KLSE) has been made. the Groups financial performance and prospects at the end of the financial year, primarily through the annual financial statements, and quarterly announcement of results to shareholders as well as the Chairmans statement and review of operations in the Annual Report.
36
Our Corporate Governance Statement (continued)
The Board is assisted by the Board Audit Committee to scrutinise In addition to the duties and responsibilities set out in the Terms of Reference, the Board Audit Committee also acts as a forum for discussion on internal control issues and contributes to the Boards review of the effectiveness of the Companys internal control and risk management systems. The Board Audit Committee also conducts a review of the internal audit functions and ensures that no restrictions are placed on the scope of statutory audits and on the independence of the internal audit functions. Board Audit Committee The Board Audit Committee meets the external auditors to discuss the audit The Board Audit Committee consists of four independent Non-Executive memorandum, the annual financial statements and audit findings and whenever deemed necessary.
information for the Groups financial reporting adequacy, processes, completeness accuracy, and the
quality of its financial reporting.
Directors with Tan Sri Dato Seri Dr. Hj. Zainul Ariff bin Hj. Hussain as Chairman. The composition of the and Terms of The minutes of the Board Audit Committee are formally tabled to the Board for noting and action, where necessary.
Reference
Board
Audit Internal Control
Committee are also presented on page 49 of this Annual Report. The Board Audit Committee met four times during the financial year. Committee meetings. A majority of the attended all
Information on the Groups internal control is presented in the Statement on Internal Control set out on page 38 of this Annual Report.
members
Details of attendance are
Relationship with External Auditors
presented on page 37 of this Annual Report. The Board ensures that there are formal and transparent arrangements for the maintenance of an objective and professional relationship with the external auditors The Managing Director, the General Manager Financial Services, the in compliance with the accounting standards in Malaysia. The duties of the Board Audit Committee in relation to the role of the external auditors are included in the Board Audit Committees terms of reference as presented on pages 44 to 45 of this Annual Report.
General Manager Internal Audit, the Head of Ship Management Audit and the External Auditors, as required, were in attendance at all the meetings.
37
Details of Attendance at Meetings held in the Financial Year Ended 31 March 2004
Board Of Directors Board Meetings Board Audit Committee (BAC)
Directors Remuneration for the Financial Year Ended 31 March 2004

Board Annual Fees Attendance Fees BAC BAC
Annual Attendance Fees Fees Total
Maximum Meetings attended possible to attend Meetings attended
Maximum possible to attend
Tan Sri Dato Sri Mohd Hassan bin Marican+ 60,000 2,000 62,000
Tan Sri Dato Sri Mohd Hassan bin Marican 5 5 Dato Hj. Mohd Ali bin Hj. Yasin*
Dato Hj. Mohd Ali bin Hj. Yasin 5 5
Dato Sri Liang Kim BangI 36,000 2,000 8,400 1,200 47,600
Dato Sri Liang Kim Bang 5 5 3 4
Datuk Siti Hadzar binti Mohd IsmailI 32,647 1,200 8,400 800 43,047
Datuk Siti Hadzar Mohd Ismail 3 5 2 4
Tan Sri Dato Seri Dr Hj Zainul Ariff bin Hj. Hussain I 36,000 2,000 12,000 1,600 51,600
Tan Sri Dato Seri Dr. Hj. Zainul Ariff bin Hj. Hussain 5 5 4 4 Dato Hamzah bin Bakar I 9,666 800 10,466
Dato Hamzah bin Bakar 2 2
Mr. Harry K. Menon I 36,000 1,600 8,400 1,600 47,600
Mr. Harry K. Menon
Total
210,313
9,600
37,200
4,800
262,313
Note: + Non-Executive Director * Executive Director

I
Independent Non-Executive Director
38
Statement On Internal Control

Introduction The Malaysian Code on Corporate Governance requires the Board of Directors (Board) of public listed companies to maintain a sound system of internal control to safeguard shareholders investment and the Groups assets.
Bursa Malaysia Berhad Listing The Board defines risk parameters and standards guided by the corporate objective to maximize long term shareholders value whilst meeting the needs of the customers, employees and all related stakeholders. In discharging its stewardship responsibilities, the Board has defined the risk management framework to identify the key risk areas, evaluate the impact and set policies relating to the risks and the relevant control thereof, of which details are set-out in the following page. This is then The Board of Malaysia International Shipping Corporation Berhad (MISC) is committed to continuously improve the Groups system of internal control and is pleased to provide the following statement. Accountability of the Board The Board of MISC acknowledges its overall responsibility for the Groups system of internal control and its effectiveness shareholders the strategic to safeguard and the the The process is regularly reviewed by the Board and is in accordance with the guidance as contained in the publication Statement on Internal Control : Guidance for Directors of Public Listed Companies. investment direction, It should be noted that the system of internal control is designed to manage and control risks appropriately rather than eliminating the risk of failure, to achieve business objectives. Accordingly, these internal controls systems can only provide reasonable and not absolute assurance against material misstatement or loss or the occurrence of unforeseeable circumstances. The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks faced by the Group, which has been in place for the financial year under review. delegated to the Management to implement the Boards direction & policies on risk and control.
Requirements, Paragraph 15.27 (b) requires the Board to make a statement about the state of internal control of the listed entity as a Group.
Groups Assets. This includes reviewing financial, operational and compliance controls and the risk management policies and procedures.
39
Risk advisory group meeting in progress
Risk Management Framework The Board has endorsed the establishment of a Risk Advisory Group (RAG) and identified that MISC is exposed to four (4) major risks namely Maritime Risk, Credit Risk, Country Risk and Finance Risk. The identified four risk committee/councils shall report to the RAG on any issues and developments pertaining to the respective risk areas. A proper structure and reporting framework has been established to ensure risks are being monitored, assessed and reviewed regularly as reflected below:
The RAG in the capacity of overseeing overall risks in MISC is responsible to advise the Managing Director (MD) / Management Committee (MC) on issues relating to : reviewing policies, procedures and guidelines related to risk management in line with market changes over time reviewing positions and exposures to ensure compliance with group policy and recommend corrective actions addressing issues arising from business lines and recommend solutions to management
Board of Directors (Board)
Managing Director (MD) / Management Committee (MC)
Risk Advisory Group (RAG)
advising management on risk limits
Maritime Risk Council (MRC)
Finance Risk Council (FRC)
The RAG Meeting is scheduled to meet regularly and updates any risk management issues to the MD/MC and
MISC Credit Committee (MCC)
Country Risk Council (CRC)
Board on a quarterly basis respectively.
40
Statement On Internal Control (continued)
The Maritime Risk Council (MRC) is responsible to ensure various maritimerelated risks are identified and all necessary measures are in place for MISC to comply with the stringent international safety and environmental standards. Continual assessment and profiling is carried out to ensure preventive and recovery measures are adequate in the challenging maritime environment. A Maritime Risk Profiling workshop was conducted during the year to revalidate the Maritime Risk exposure. Further improvements on preventive and recovery controls have been identified to be implemented to ensure risk exposure are mitigated / reduced. The MISC Credit Committee (MCC) regularly reviews the credit risk and advises on appropriate measures to improve existing credit control
Risk Council (CRC). Proper assessments would ensure that risk associated with conducting business in a foreign country is properly assessed and managed. The Group has financial risk guidelines for managing the Groups foreign exchange, interest rate, liquidity, price and counter-party risks. The Group also leverages on PETRONAS group resources via the Finance Risk Council (FRC) when addressing / assessing financial risks. The FRC is a forum which proactively discusses, reviews and monitors finance risk exposure at Group level and makes appropriate recommendations to companies within the Group. It also fosters coordination of the Group Finance risk management practices and approaches in accordance with established policies and guidelines. MISC benefited from being a part of the PETRONAS Group, which has an established Risk Management Committee, of which MISCs Managing Director is a member, which defines, develops and recommends risk management strategies and policies for the PETRONAS group. In addition, the Risk Management Committee also coordinates group-wide risk management in terms of building risk management awareness and capabilities, monitoring the risk exposures and planning responses to potential major risk events. Key Processes The process of governing the effectiveness and integrity of the system of internal control is carried throughout the various areas as follows:1. The Board Audit Committee operating within its terms of reference and Management Audit Committee performs an important role in ensuring that there are effective risk monitoring and compliance procedures to provide the level of assurance required by the Board. 2. Senior Management sets the tone for an effective control culture in the organisation through the companys shared values, developed to focus on the importance of these four key values: Loyalty Integrity Professionalism Cohesiveness
procedures and practices and the quality of Trade Accounts Receivables. The MCC formulates its credit & trading risk based on the credit & trading operational guideline issued by the PETRONAS Groups Credit & Trading Risk Council (CTRC). The credit & trading policy and guidelines has been developed to ensure all matters relating to credit & trading risk are being addressed accordingly with proper guidelines. Country risk assessments where required, are made by leveraging on PETRONAS group resources ie Country
41
Management audit committee in discussion
The importance of the shared values is manifested in the Corporations Code of Conduct for Officers and Staff which is issued to all staff upon joining. Employees are required to strictly adhere to the Code in performing their duties. 3. The Internal Audit Division, reporting to the Board Audit Committee, performs scheduled reviews of operations and compliance with companys policies and procedures to assess effectiveness of internal controls. The Board Audit Committee reviews all reports from the Internal Audit Division and conducts annual assessment on the adequacy of Internal Audit Divisions scope of work and resources. Prior to submission to the Board Audit Committee, the Internal Audit Division would submit the findings and recommendations on Internal Controls to the Management Audit Committee for review, response and implementation of corrective actions, and updates the Management Audit Committee on the status of the action taken. The minutes of the Management Audit Committee meetings are also submitted to the Board Audit Committee. 4. The Ship Management Audit Division, which reports regularly to the Management and Board Audit Committee, conducts regular audits on the physical condition and operational health of the Groups vessels. The audits are designed to ensure vessels integrity and that maintenance is performed to enhance safety and reliability of vessels at all times. The audit also assesses crew discipline and competency. The Ship Management Audit Division would submit the findings and recommendations on corrective actions of each ship audited to the Fleet Management Services Division and conduct follow-ups on the status of the corrective actions. On a quarterly basis, the findings are analysed and compiled into quarterly reports and submitted to the Management Audit Committee for review, response and decisions on further actions. The Management Audit Committee is also updated on the status of the corrective actions. 5.
The organisation is subjected to periodic management reviews by our customers risk management entity. The customers are namely; EXXON MOBIL, British Petroleum Plc (BP), Chevron Texaco, SHELL and Broken-Hill Properties (BHP). In addition, MISCs vessels are also subject to stringent audits and vettings to meet the various regulatory and commercial include requirements. These
vettings by oil majors and audits by the Malaysian Maritime Authority and ship classification societies to maintain international safety management certification under the relevant Codes. There is a clear Health, Safety & Environmental (HSE) policy and framework as well as security procedures in place with continuous efforts made to ensure strict adherence to the specified standards and practices.
42
Statement On Internal Control (continued)
Other Significant Elements of Internal Control Systems The Board reviews quarterly reports from Management on the key operating performance, legal, environmental and regulatory matters. Financial performance is deliberated by the Management Committee and also tabled to the Board Audit Committee and Board on a quarterly basis.
There is a clear procedure for investment appraisal including equity investment or divestment and capital expenditure. Tender Committees are established to ensure tender evaluation exercises are conducted in an effective, transparent and fair manner. Information and Communication and Technology (ICT) is extensively employed in MISC to automate work processes and to collect key business information. There is a clear ITC guideline on ICT risk assessment and mitigation. The guideline spells out the risk management process by identifying the risk exposures, assessing and analysing the effect of the exposures and deriving a set of measures to manage and treat the identified risks. The Business Transformation Team (BTT) is established as a change agent in
Limits of Authority (LOA) manual provides a sound framework of authority and accountability within the organisation and to facilitate quality and timely corporate decision making at the appropriate level in the organisations hierarchy. The Group performs comprehensive annual budgeting and forecasting exercise including development of business strategies for the next five years, business and establishments and of performance indicators against which units subsidiary companies can be evaluated. Variances against budget are analysed and reported internally on a monthly and quarterly basis and reported quarterly to the Board. The Groups strategic directions are also reviewed semiannually taking into account changes in market conditions and significant business risks.
ensuring MISC is well equipped with the latest and advanced technology in improving work and decision making processes. The BTT has also been entrusted to manage change and organizational restructuring resulting from new systems and process rollout throughout the Group. Progress of systems implementation is monitored and reported at the Business Integration Committee to ensure smooth implementation. The professionalism and competency of staff are enhanced through a properly planned training, development program and also a stringent recruitment process. A performance appraisal system of staff is in place, with established targets and accountability and is reviewed on an annual basis. Action plans are prepared to ensure that staff obtain the required skills to fulfil their responsibilities and that the company can meet its future management requirements. The Board does not regularly review the internal control system of its associated companies and joint ventures, as the Board does not have any direct control over their operations. Notwithstanding, the groups interests are served through representation on the board of the respective associated companies and receipt and review of management accounts and inquiries thereon. These representations also provide the Board with information for timely decision making on the continuity of the Groups investments based on the performance of the associated companies. There were no material losses incurred during the current financial year as a result of weaknesses of internal control. Management would continue to take measures to strengthen the Groups control environment. This statement is made in accordance with the resolution of the Board of Directors dated 24 May 2004.
43
Board Audit Committee
From left: Tan Sri Dato Seri Dr. Hj. Zainul Ariff bin Hj. Hussain, Dato Sri Liang Kim Bang, Mr. Harry K. Menon, Dato Halipah binti Esa
44
Terms Of Reference Of Board Audit Committee

1. Constitution 3. Chairman of Board Audit Committee
The Board Audit Committee was established on 28 June 1993. 2. Membership 4.
The members of the Board Audit Committee shall elect a Chairman from among their number who shall be an independent Director. Attendance at Meetings
The Committee shall be appointed by the Board from amongst its Directors and shall consist of not less than three members with the majority Directors. being independent
The Managing Director, General Manager Financial Services, General Manager Internal Audit, General Manager Ship Management Audit and a representative of the external auditors shall normally attend meetings. However, at least once a year the Committee shall meet with the external auditors without any executive Board member present. The Company Secretary shall be the Secretary of the Committee.
At least one member of the Board Audit Committee must be a 5. Frequency of Meetings member of the Malaysian Institute of Accountants (MIA) or have at least 3 years working experience and have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967 or be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967. The Committee is authorised by the Board to obtain outside legal or other No Alternate Director can be appointed a member of the Board Audit Committee. A quorum shall be two members. 7. Duties independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to cooperate with any request made by the Committee. 6. Authority Meetings shall be held not less than three times a year. The external auditors may request a meeting if they consider that one is necessary.
The duties of the Committee shall include the following: review the following and report to the Board of Directors:a. with the external auditors, the audit plan;
45
b.
with the external auditors, their evaluation of the system of internal controls;
8.
Reporting Procedures
The Secretary shall circulate the minutes c. d. with the external auditors, their audit report; the assistance and cooperation given by the employees of the Corporation to the external auditors; e. the adequacy of the scope, functions and resources of the internal audit functions and that it has the necessary authority to carry out its work; f. the internal audit programme, processes, the results of the internal audits, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; g. the quarterly results and year end financial statements, prior to the approval by the Board of Directors, focusing particularly on: i. ii. iii. changes in or implementation of major accounting policy changes; significant and unusual events; and compliance requirements; h. any related party transaction and conflict of interest situation that may arise within the Corporation or Group including any transaction, procedure or course of conduct that raise questions of management integrity; i. j. any letter of resignation from the external auditors; and whether there is any reason (supported by grounds) to believe that the Corporations external auditors are not suitable for re-appointment; and recommend the nomination of a person or persons as external auditors. with accounting standards and other legal Note: * Independent Non-Executive Directors Audit Committee Members of meetings of the Committee to all Members of the Board.
Tan Sri Dato Seri Dr. Hj. Zainul Ariff bin Hj. Hussain* (Chairman) Dato Sri Liang Kim Bang* Mr. Harry K. Menon* Dato Halipah binti Esa*
46
The Year In Review
47
48
On behalf of the Board of Directors, I am pleased to present the Annual Report of Malaysia International Shipping Corporation Berhad (MISC) for the financial year ended 31 March 2004.
The period under review was an exceptionally good year for the shipping business on the back of a recovering global economy. Despite continuing geopolitical instability and uncertainties globally, the year saw increased demand for maritime logistics services, resulting in higher freight rates throughout most of the shipping segments. Against this backdrop, MISC registered the best ever results in its history by appropriately positioning itself to capitalise on the stronger freight rates environment and diligently following through its strategic initiatives in the areas of business
PROFIT BEFORE TAXATION RM Million 2500 2,326.4
acquisitions, operational efficiency and cost management. Financial Performance
2000
Operating in a favourable business environment, MISC turned in a record revenue of RM7,606.3 million, an increase of 40% from RM5,433 million recorded in the previous year. Group profit before tax surged 77.5% to a record high of RM2,326 million from
1,728.4
1500 1,417.3
1,415.6
1,310.3
1000
RM1,310 million. The exceptional performance was mainly attributed to better freight rates in most of the shipping segments and the incorporation of American Eagle Tankers Inc. Ltd. (AET) financial results into the Group. The inclusion of AET has increased the contribution of
500
+Based on annualised 15 months figures
04 20 3 0 20 2 0 20 1 0 20 0 + 0 20
the petroleum shipping business to the Groups bottomline from 9% to about 28%, effectively broadening MISCs earnings base and at the same time reducing the Companys reliance on the Liquefied Natural Gas (LNG) shipping business.
49
Chairmans Statement
Tan Sri Dato Sri Mohd Hassan bin Marican
Installation of propeller during the construction of LNG tanker, Puteri Nilam Satu.
The delivery of Puteri Zamrud Satu in January 2004 increased MISCs LNG fleet to 17.
50
Top: All of MISCs vessels undergo periodical auditing to ensure highest safety standards are maintained and the continuous improvement of work processes. Right: Duty engineer at the engine room during maneouvering.
MISC continued to focus on serving the energy sector particularly through the LNG, petroleum, and chemical shipping businesses, and offshore and heavy engineering businesses which contributed to more than 90% of the Groups profits. The Company managed to turn around its Liner business through business rationalization, better cost management and improved work processes. A lot of effort went into repositioning the Liner business towards higher yielding long haul segments. The bulk shipping business also showed a marked improvement in profitability due to record freight rates and lower operating cost. Through the implementation of the planned strategies and business acquisitions concluded during the year, MISC was able to deliver a higher Return on Shareholders
DIVIDENDS RM Million 600 558.0 558.0 558.0
Funds of 20.2% compared to 13.6% previously. The financing of the Groups business expansion strategy resulted in a higher Debt to Equity ratio of 0.82 times, but still well below the average for the shipping industry. Earnings per share increased to 123.1 sen from 70.5 sen previously while Net Tangible Assets per share rose to 557.9 sen from 496.6 sen before. Dividend
480 483.6
360
372.0
240
An interim dividend of 15 sen per share, tax exempt, was declared and paid in December 2003. The Board is recommending a final dividend of 15 sen per share, tax exempt, plus a special dividend of 10 sen per share, tax exempt, bringing the total dividend for the financial year to 40 sen per share, the highest dividend payout in
120
20
04 20 3 0 20 02 20 1 0 20 + 00
MISCs history. The dividend amount, coupled with the increasing payout over the past five years stand as a testimony to the Companys unwavering commitment to distribute value to its shareholders.
51
Floating out of Aframax tanker, Bunga Kelana 7 during construction.
MALAYSIAN INTERNATIONAL SHIPPING CORPORATION BERHAD
52
Right: Eagle Virginia, one of AETs two VLCC tankers. Left: LNG discharging operations at Kaohsiung Port, Taiwan.
Corporate Development
Additionally, Tenaga Empat completed its Life Extension Programme, which extended its life by another 20 years. MISC was also successful in securing the second third party LNG contract with J&S Cheniere. With the contract, MISC has two LNG tankers operating in the Mediterranean/Atlantic area, enhancing its presence in the region. MISC concluded the acquisition of AET from Neptune Orient Lines in July 2003, effectively transforming the Company into the second largest owner of Aframax petroleum tankers in the world. It also provided MISC the critical mass and the strategic positioning to serve its global customers with geographical coverage in both the Atlantic Basin and the Arabian Gulf-Far East sector. During the year, MISC commenced its offshore business with the chartering of a Floating Storage and Offloading (FSO) facility to Murphy Sarawak Oil Company Ltd. MISC also successfully completed the conversion of MT Bunga Kertas into its first Floating Production, Storage and Offloading (FPSO) facility, which was subsequently delivered to PETRONAS on a long-term charter. The conversion was performed at Malaysia Shipyard and Engineering Sdn Bhd (MSE). MISC increased its shareholding in MSE Holdings Sdn Bhd, the holding company of MSE, to 65% in March 2004. MISC will position MSE to spearhead its heavy engineering business concentrating on the energy sector. In April and May 2004, taking advantage of the increase in the second hand value of bulk vessels, MISC disposed fifteen bulk vessels in line with the rationalisation of its bulk shipping business.
Holding firm to its vision to be the preferred provider of world class maritime transportation and logistics services, especially in the energy transportation sector, MISC continued to grow its LNG shipping business with the deliveries of Puteri Nilam Satu and Puteri Zamrud Satu during the year resulting in a 17-strong LNG fleet. The two vessels have been employed to service long term contracts with MLNG Tiga Sdn Bhd. MISC also exercised the options for the construction of two new LNG tankers, bringing the number of LNG tankers under construction to six.
RETURN ON SHAREHOLDERS FUNDS Percent
28.0
22.4 21.6 21.0 16.8 15.2 11.2 5.6 0 20.2 13.6
Future Outlook
The global economic recovery driven by higher consumption is expected to continue to be sustained at least in the near term, affirming the optimism that freight rates will continue to remain firm in the current year. We at MISC however continue to remain vigilant and cautious as we continuously monitor the global economic and geo-
20
04 20 3 0 20 02 20 1 0 20 + 00
political environment, regulatory developments and the positioning of our global competitors.
53
Bunga Kertas - MISCs first Floating Production, Storage & Offloading (FPSO) facility.
54
Left: MISCs prime movers crossing Penang Bridge. Right: Loading operations at La Spezia Port, Cagliary, Italy.
MISC will continue to capitalise on the projected growth in the LNG trade by growing its LNG fleet beyond its current 17 vessels and the additional six vessels already contracted to support additional business from both PETRONAS and third party customers. MISC will also benefit from the broader income base resulting from the inclusion of AET, which will increase the contribution from the petroleum shipping business.
business, the attractiveness of the second hand value of bulk vessels provides further opportunity for MISC to consider divesting more of its older vessels. In summary, MISC will continue to focus on growing the high yielding energy transportation segment and retaining its leadership position in the LNG and petroleum shipping businesses. Efforts are being made to improve our capabilities and competencies to ensure the realization of our vision to become the preferred provider of world class maritime transportation and logistics services.
Appreciation
On behalf of the Board of Directors, I would like to place on record our heartfelt The consolidation of MSE and the introduction of offshore business will strengthen and grow MISCs income contribution from the targeted energy sector. Through the repositioning of MSE, increased participation of the offshore business, and the positioning of MISC Integrated Logistics Services (MILS) as a world class third party logistics provider to the energy and consumer product group sectors, MISC will be able to reap greater synergistic value within the Group and the PETRONAS Group as a whole. MISC will focus its Liner business on the long haul service where new investments will be required, rationalize its difficult Intra-Asia segment, and identify the older and less efficient vessels to be disposed. For the bulk shipping 24 May 2004 Kuala Lumpur TAN SRI DATO SRI MOHD HASSAN BIN MARICAN Chairman Finally, I would like to express my gratitude to the Board of Directors, Management and staff of MISC for their dedication, commitment and loyalty to the Company. I would also like to thank the Government of Malaysia, our clients, business associates and bankers for their continued support and assistance, and to our shareholders who have remained committed to MISC. condolences to the wife and family members of Allahyarham Dato Haji Mohd Ali bin Haji Yasin for the loss of a great man who has been instrumental in steering MISC into what it is today. Indeed, Allahyarham Dato Haji Mohd Alis selfless dedication, commitment, vision and leadership over the past seven years at the helm of MISC has transformed the Company into a truly global Malaysian company and the fourth largest on the Bursa Malaysia in terms of market capitalisation. His passing is truly a great loss to MISC and we will continue his work to transform MISC into the preferred global energy-based logistics service provider.
55
The consolidation of MSE and the introduction of the offshore business will strengthen and grow MISCs income contribution from the targeted energy sector.
56
57
world-class
committed to providing
customer service,
building a
loyal customer base

& strengthening
strong &
relationships
58
The financial year ended 31 March 2004 was a record year for the shipping industry after experiencing a difficult period in FY2002/2003. FY2003/2004 saw freight rates recovering across the board with some of them at historical highs. Despite heightened security concerns with the war in Iraq, the continued tensions in the Middle East and the SARS outbreak, the world economy started to show signs of recovery especially in the United States and Japan. Even the Euro zone, though fragile, managed to show positive growth.
The global economic recovery raised demand for oil towards the later part of 2003 (Autumn/Winter season), which moved freight rates for petroleum tankers higher. Besides the growth in LNG demand from the Asia Pacific region, we also witnessed strong demand in the Atlantic area, especially in the USA and Spain, driven mainly by demand in the power sector. The
During the year, we positioned ourselves to ride the wave of freight rate recovery, strengthened our marketing capabilities and continued to improve our operational efficiencies and cost competitiveness. As a result, our previously loss-making liner, bulk and chemical shipping business segments achieved a turnaround in their performance. In line with our focus on the energy sector, we completed the
acquisition of American Eagle Tankers Inc. Ltd. (AET) in July 2003. MISC benefited from the timing of the acquisition which coincided with the upswing of the shipping market and managed to realize the value of AET as shown in this years results. Going forward, MISC expects higher contribution from the enlarged petroleum shipping business through wider market coverage, cost and operational synergies, and a larger asset pool.
chemical shipping business despite firmer demand only saw a slight increase in freight rates due to an overhang in capacity. The economic
GROUP PROFIT FROM OPERATIONS

2003/2004 RM Million Shipping 2,466.4 47.8 (4.8) 2,509.4 (210.5) 27.5 2,326.4 2002/2003 RM Million 1,711.0 (271.7) 0.2 1,439.5 (169.6) 40.4 1,310.3
recovery also strengthened global trade, which contributed to the surge in container shipping demand and higher freight rates. Higher bulk shipping Integrated Liner Logistics Non-Shipping Profit from operations Finance cost Share of Results of Associated Companies Profit before taxation
demand, driven mainly by China, coupled with tight bulk shipping
capacity and port congestion, resulted in a dry bulk boom with a sharp upturn in bulk freight rates throughout the year.
59
Operations Review Financial Year 2003/2004
MISC funnel, a significant feature onboard MISCs vessels.
60
Top: The height of a typical 137,000 cbm MISC LNG cargo tank is equivalent to a standard 10-storey building. Right: Loading operations at MLNG Terminal, Bintulu.
LIQUEFIED NATURAL GAS (LNG) SHIPPING BUSINESS

Heavy Industries (SHI) in July 2003 upon PETRONAS confirmation of their requirement. To support PETRONAS LNG trading company, ASEAN LNG Trading Company (ALTCO) which allows PETRONAS to penetrate new LNG markets and access new LNG supply sources, MISC negotiated and inchartered three LNG tankers for time charter of six to eight months to ALTCO. In FY2003/2004, MISC also made several charter proposals to various potential charterers in the Atlantic region. In the process, we were successful to charter Tenaga Empat to J&S Cheniere, a London based oil and gas trading company (affiliated to Cheniere Energy of the USA) on a 20-month time charter. In February 2004, we delivered Tenaga Empat to the charterer in Algeria after having undergone life extension refurbishment works. Since then, she has made deliveries from Bethioua, Algeria to Marmara, Turkey and Cove Point, USA. Arising from the high activity in the Atlantic market, the refurbished Tenaga Satu, which was on time charter to Gaz de France, was fully utilized delivering cargoes from Algeria and Nigeria to South Korea, France and USA. Tenaga Dua also delivered one MLNG Tiga cargo from Bintulu to Lake Charles, USA, the longest haul laden voyage ever performed by a Tenaga vessel, made possible by its recent refurbishment works. On its return voyage, the vessel back-hauled a cargo from Oman to Japan. These new developments further strengthened our capabilities and broadened our service coverage in line with our strategy of becoming a truly global LNG shipping service provider. Last year, MISC safely completed 316 deliveries of around 16 million metric tonnes of LNG cargoes through its fleet of 17 LNG tankers. MISC marked another milestone last year when Puteri Firus, Puteri Intan and Puteri Nilam Satu delivered cargoes from Karratha, West Australia and Lumut, Brunei to South Korea. It was the first time the three vessels loaded cargoes from a terminal outside of Bintulu further strengthening our capabilities of plying outside traditional boundaries. In response to the additional LNG transportation demand indicated by PETRONAS and other customers, MISC exercised the option for two additional sister vessels with SHI in January 2004. With this exercised option, MISC has six new LNG tankers on order to support the growth strategy for our LNG shipping business. Going forward, MISC will continue to be active in the global shipping market looking for opportunities to further enhance our market position and expand our customer base.
Global LNG trade, driven mainly by increasing gas demand and declining domestic natural gas resources in gas consuming countries in East Asia, Europe and North America, expanded by 10% in 2003 to 123 million metric tonnes. Though LNG demand in the traditional Asian markets (Japan, Korea and Taiwan) grew by 9% in 2003, demand growth in the Atlantic market, especially in the USA and Spain, was much stronger. The USA recorded a 129% increase in LNG imports from 4.8 million metric tonnes to nearly 11.0 million metric tonnes in 2003. During the year, MISC received and delivered two more Puteri Satu vessels, namely Puteri Nilam Satu in September 2003 and Puteri Zamrud Satu in January 2004, to MLNG Tiga Sdn Bhd to start their 20-year time charters. MISC also signed shipbuilding contracts for two new 145,000 cubic metres LNG tankers with Samsung
MISCS LNG SHIPPING ROUTES
Cove Point Lake Charles
Europe Turkey Algeria to Europe and USA Oman
South Korea Taiwan
Japan
Nigeria to Europe and USA
Malaysia
Australia
MISC Existing Routes
61
GLOBAL LNG FLEET as at 30 June 2004
MAJOR LNG IMPORTERS & EXPORTERS as at 30 June 2004
MISC - 10% (17) Shell - 8% (13) MOL - 8% (13) Golar LNG - 6% (10) BGT - 5% (9) NYK - 5% (8)
ADNOC - 5% (8) Pronav - 5% (8) Hyundai - 4% (6) SNTM-Hyproc - 4% (6) Others - 40% (68) Total - 166
Japan- 47.9% South Korea- 14.4% Spain - 9.5% USA -8.4% France - 7.0% Taiwan - 4.5% Turkey - 2.8%
Italy - 2.4% Belgium - 2.1% Puerto Rico - 0.4% Greece - 0.3% Portugal - 0.2% Dominican Rep. - 0.2%
Indonesia- 21.3% Algeria- 17.3% Malaysia - 14.2% Qatar -11.4% Trinidad - 7.1% Nigeria - 6.6%
Australia - 6.3% Brunei - 5.8% Abu Dhabi - 4.3% Oman - 4.3% USA - 1.0% Libya - 0.5%
Importers
Exporters
Puteri Nilam Satu joined MISCs fleet as its 16th LNG vessel in September 2003.
62
Right: Lightering operations onboard Aframax tanker Eagle Charlotte. Bottom: The strategic acquisition of AET propelled MISC as the second largest Aframax tanker operator in the world with 39 Aframax vessels.
PETROLEUM SHIPPING BUSINESS

The first half of the year was relatively weak for the petroleum tanker market due to slower demand for oil. However, the sluggish market made a spectacular comeback with strong freight rates recorded from November 2003 to the end of the financial year. The strong tanker demand was evident on the back of increased global oil demand driven by the stronger global economic growth and the onset of Autumn/Winter seasonal demand. On 22 July 2003, MISC concluded the acquisition of AET from Neptune Orient Line. The strategic acquisition of AET increased MISCs Aframax fleet by 29 vessels, propelling MISC to become the second largest Aframax tanker operator in the world with 39 Aframax vessels. The larger fleet provides MISC with the critical mass it requires to better serve its customers globally. With the AET acquisition, MISC also owns three Very Large Crude Carriers (VLCCs), after it took delivery of Bunga Kasturi to service a ten-year time charter with PETRONAS in April 2003. On the commercial side, FY2003/2004 was a busy period for our petroleum shipping business. We successfully renewed time charter contracts for two of our clean petroleum product carriers, a contract of affreightment (COA) with ExxonMobil for one Aframax vessel, and one time charter contract with PETRONAS. Further, we secured a one year COA with PETRONAS Trading Corporation (PETCO) to transport fuel oil from Europe to the Far East via a charteredin VLCC. In October 2003, MISC formed a joint venture company, MISC Nigeria Limited, to explore petroleum shipping business opportunities in Nigeria. Initiatives to operationalise Bakkah Shipping Company commenced in February 2004 to develop and realize tanker business opportunities among members of the Organization of Islamic Countries. In FY2003/2004 through AET, we signed a COA with Bitumenes Orinoco (BITOR) to transport orimulsion from Venezuela for distribution to Asia. We also entered into a new lightering COA with ATMI (US subsidiary of Total), and entered into a new voyage COA with FINAVAL to ship orimulsion from Venezuela to Italy. Moving ahead, MISC plans to grow its petroleum fleet further in line with its focus on the energy transportation sector. Currently, MISC has two new Aframax vessels and six new VLCCs on order. With its plans to grow further its global petroleum fleet, develop strategic joint ventures and alliances, and explore new business opportunities in selected markets like Europe, USA, India, Africa and China, MISC is moving closer to become the leading global energy transporter.
TANKERS SPOT RATES AG-EAST (FY 2003/04) Worldscale 250
214 215
210
207
170
153
130
126 126
90
85
70
Source: Clarkson Research Studies
Q1
Q3
Aframax VLCC
Q2
Q4
MISC PETROLEUM TANKERS VOLUME OF CRUDE OIL LIFTED (FY 2003/04) Domestic vs Foreign
63
Domestic - 64% Foreign - 36% Quantity: 13.5 million metric tonnes
Bunga Kelana 8 - the second of a series of four 105,000 dwt Aframax tankers ordered by MISC.
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Right: Bunga Melati Dua, a 32,189 dwt chemical tanker at Port Kelang. Bottom: Loading operations onboard an MISC chemical tanker.
CHEMICAL SHIPPING BUSINESS

In FY2003/2004, the demand for chemical shipping was strong driven mainly by Chinas growth. However, this resulted in only marginally higher freight rates due to excess capacity in the market. We continued to see a shift in supply centers for petrochemical products from Europe to the Middle East/Arabian Gulf, which adversely affected our Far EastEurope chemical shipping service.
To overcome the challenges in the market, marketing efforts were stepped up which has shown results. During the year, we secured COAs with Vinmar International, IOI Edible Oils, Degussa AG, Iffcochart, Reliance Industries and Kaukomarkkinat.
MISC CHEMICAL TANKERS CARGO QUANTITY LIFTED FOR FY 2003/04 Vegetable oil vs Chemicals in metric tonnes
In addition, MISC secured time charter contracts for two chemical tankers with Kuok Oil. With the marginally stronger freight rate environment coupled with business growth, more efficient scheduling and selective increase of term to spot business, the chemical tanker business returned to profitability.
For the coming year, against the backdrop of a better global economic outlook and slower increase in capacity, we are confident that freight rates will at least maintain at current levels. As such, strategies have been put in place to exploit the positive
Chemicals - 51% Vegetable Oil - 49% Total Cargo Lifted: 2.873 million metric tonnes
market environment. We are also studying the opportunity to increase our capacity in order to gain market share in the chemical/vegetable oil market.
65
Bunga Mawar, a 29,974 dwt chemical tanker.
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Top: Bunga Kertas undergoing conversion into an FPSO facility at MSE Shipyard, Pasir Gudang, Johor. Right: MISCs FPSO project team in discussion.
OFFSHORE AND HEAVY ENGINEERING

field development. We have identified several feasible FPSO/FSO projects in the region, which we target to capture a portion.
Offshore Business In April 2003, MISC commenced its offshore business with the chartering of a Floating Storage and Offloading (FSO) facility to Murphy Sarawak Oil Company Ltd. Later in the year, MISC marked another milestone with the delivery of our first Floating Production, Storage and Offloading (FPSO) facility in March 2004. MT Bunga Kertas was one of our older petroleum tankers, which was converted into an FPSO facility by Malaysia Shipyard and Engineering Sdn Bhd (MSE) last year. With its completion, FPSO Bunga Kertas was delivered and deployed in Malaysian waters to begin serving a fifteen-year charter with PETRONAS. The offshore business provides MISC the opportunity to utilize our older petroleum tankers, which could be converted into FPSO/FSO facilities, thereby extending their useful life. It also offers synergistic opportunity within the Group as most of the engineering and conversion work could be performed by MSE. MISC is currently studying opportunities to enhance our presence in the Asian FPSO/FSO market by offering floating oil and gas terminal solutions for deepwater
To support this business development initiative, MISC will focus on strengthening the required technical and commercial capabilities. We have identified a leading global FPSO/FSO player to be our partner in our future business endeavours. With the relevant critical experience and capabilities in place, MISC aims to be a major player in the Asian FPSO/FSO market within the next five years. Heavy Engineering Business In March 2004, MISC completed the acquisition of an additional 22% of MSE Holdings Sdn Bhd (MSEH), the holding company of MSE, making MSEH a 65% subsidiary of MISC. This is part of MISCs strategy to strengthen and grow its heavy engineering business as well as realize the synergistic opportunities within MISC and the PETRONAS Group as a whole. During the year, MSE successfully delivered 13 oil and gas engineering projects and repaired 105 ships valued at over RM680 million. MSE also delivered two major FPSO/FSO conversion projects with a combined value of around RM240 million. The delivery of the conversion projects marked the success of pooling resources and expertise from MSEs ship repair, shipbuilding and engineering divisions to undertake more sophisticated projects. The main focus for MSE in the next financial year will be on enhancing its competitive edge through higher productivity and technical capabilities. MSE plans to undertake high value-added repair activities such as LNG carrier repairs and dry-docking and build up its project management capabilities for FPSO/FSO conversion especially for larger and more sophisticated deepwater projects. MISC will reposition MSE as its heavy engineering arm focused on supporting both upstream oil and gas projects and downstream repair and maintenance projects in addition to traditional businesses of ship repairing, conversions and ship maintenance.
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The completed FPSO Bunga Kertas is currently deployed in Malaysian waters to serve a long term charter with PETRONAS
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Right: Bunga Raya Dua, a 3,500 TEU container vessel at Jeddah Port, Saudi Arabia. Bottom: Warehousing - part of MISCs integrated logistics services aim at providing total logistics solutions for its customers.
INTEGRATED LINER LOGISTICS BUSINESS

MISCs Integrated Liner Logistics programmes that were positive to their bottom lines. Although the Liner market improved significantly in 2003, shipping lines had to grapple with increasing operating costs including higher costs of fuel, marine insurance and charter hire. These posed major challenges to the shipping lines, which had to focus on maximizing cargo yield and minimizing operational costs. During the year, rate restoration programmes were implemented for the Far EastEurope services and Australasia services. With these increased freight rates, coupled The Liner business experienced a turnaround in FY2003/2004 with the strengthening of global trade. Demand for container shipping grew by 10.4% compared to capacity growth of 7.3% the previous year. The higher container shipping demand enabled shipping lines to implement rate restoration with increases in container liftings and improved cost competitiveness, Liner Logistics succeeded in lifting its results into positive territory for these two trade services in FY2003/2004. MISC also continued to rationalize and optimize its Intra-Asia services. Despite these initiatives, the intensely competitive Intra-Asia market continued to be a difficult market for MISC in 2003. In the domestic market, the Perdana service was also restructured but this service continued to record deficits in FY2003/2004 under a highly competitive environment characterized by many small operators. However, with the improving Malaysian economy, this Perdana service is expected to turn in better results in the coming year.
MISC LADEN THRU-PUT (IMPORT/EXPORTS) FOR MALAYSIA IN FY 03/04 TEUS 64,000
60,443
business is positioned to provide total logistics services leveraging on supply chain management tools to meet its customers total logistics requirements. Liner Logistics
TRUNK FREIGHT RATES USD per teu 1000 932 996 987 859
In line with its strategy to focus on the profitable long haul services against the backdrop of an improving global container shipping market, MISC signed
739
51,200
800 696
667
38,400
32,690 20,340 19,689 14,304 12,405 8,732 7,810 2,080 6,988 6,939 817
600
645
shipbuilding contracts for two new post panamax 7,900 TEU vessels. The vessels will be delivered in FY2006/2007 and will be injected into the Far East-Europe service. The strategy to focus on long haul services has also prompted MISC to
431 377 341
25,600
400 332
12,800
200
SA
PE NA NG NG
P.K LA
SA
Imports - 82,555 Exports - 110,682
KU AN
P.G UD
BA H
AK W RA
QT
QT
QT
QT
N TA
AN G
Europe Australasia Asia
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Bunga Teratai Empat, a 1,550 TEU container vessel departing Durban for Cape Town, South Africa.
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The warehousing and freight forwarding facilities of MTW have been integrated with the distribution capabilities of MHS to offer clients customised logistics service business solutions.
INTEGRATED LINER LOGISTICS BUSINESS (CONTINUED)

review its asset portfolio mix for the Liner business. Some of the smaller and older liner vessels, which no longer fit into our long haul business strategy, will be disposed. With the improved service offering, better cost management and favourable freight environment, MISC expects earnings for the Liner business in FY2004/2005 to remain positive. In August 2003, MILS expanded its service offerings to include conventional and specialized transportation services, which are expected to contribute significantly to the overall future performance of MILS. In the same month, MILS also expanded its operations into Sarawak, offering haulage services. goods from Malaysia and Singapore to Thailand.
MISC LADEN CONTAINER LIFTINGS Teus 80,000 71,262
MISC Integrated Logistics Services (MILS)
The logistics market in Malaysia continues to be competitive with the entrance of new logistics players especially in the container haulage business. During the year, MILS implemented strategies to build its capabilities to be a world-class third party logistics provider, improved operational efficiencies and carried out cost saving initiatives with the help of the recently implemented Land Logistics computer system.
Towards the end of
FY2003/2004, MISC started its cross-border land logistics business transporting
Through MILS marketing efforts and extended service offerings, we succeeded in adding Yamaha Electronics Manufacturing, PETRONAS Dagangan, Samsung Group of Companies, British American Tobacco, Tenaga Nasional, Flextronics Industries, UMW Industries and Sime Tyres to our list of clientele in FY2003/2004.
49,668
64,000 61,097 48,525 33,606
66,761 52,940
65,745
48,000
48,603
32,000
Looking towards the future, the landscape for integrated logistics business will become more challenging and competitive, as trade liberalisation will continue to attract both local and foreign players who have integrated logistics capabilities. In the light of this competitive environment, MILS will continue to remodel its logistics business through the optimization and rationalization of initiatives, and pursue partnership/alliances with world-class consulting houses and industry experts to build capabilities within MISC to be a world-class third party logistics service provider.
26,907
30,639
26,772
16,000
Europe Australasia Asia
QT R 1
QT R 2
QT R 3
QT R 4
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MISC Integrated Logistics Services (MILS) brings to customers the best customised logistics solutions.
MISC Integrated Logistics Services (MILS)
Haulage
Consolidation Centre
Customs Clearance
Customs Clearance
Distribution Centre
Distribution
AIRFREIGHT
SEAFREIGHT
MISA
C F
Suppliers
Customers
A - Inland Transportation from plant to cargo Consolidation Centre and later to the port B - Custom Clearance C - Sea / Air Shipment D - Custom Clearance E - Inland Transportation from port to Distribution Centre & later to customer F - Insurance
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Top: Bunga Saga 10, a 73,127 dwt Panamax bulk carrier at high seas. Right: Coal - the major cargo carried by MISCs dry bulk fleet.
BULK SHIPPING BUSINESS

Financial year 2003/2004 was an exceptional year for the bulk shipping business as a series of unexpected spikes in the bulk freight rates was witnessed. Freight rates remained strong at very high levels, doubling in the second half compared to the first half of the year. The strong upward movements of the freight rates were driven mainly by strong demand for bulk shipping in China, lower supply growth of bulk shipping capacity in the market and port congestion in major bulk ports in Australia, Brazil and China. During the year, MISC successfully concluded several bulk business contracts. In September 2003, MISC signed a Memorandum of Understanding with Crescent Shipping to jointly explore potential business opportunities in India. The COA of MV
DRY BULK CARRIERS 1 - YEAR TIME CHARTER RATES USD/day 50,000
Pernas Amang with Tenaga Nasional Berhad was extended for another three years commencing September 2003. In addition, MISC was awarded a three-year COA by Tenaga Nasional Berhad to carry 1 million tonnes of coal to Janamanjung power station commencing 1 January 2004. In line with our focus on the energy transportation sector and to capitalise on the strength of prices of second-hand bulk ships, we identified 15 carriers which were subsequently disposed in April and May 2004. Going forward, the outlook for bulk shipping business remains favourable. Though freight rates have declined from the
40,000
30,000
20,000
10,000
historical highs seen in early 2004, they are expected to remain higher for the rest of 2004 than the lows that we saw in 2002. The continued positive market environment for bulk shipping business provides us with the opportunity to further rationalize the business.
Q1
Q1
04 3/ -0 Q4 04 3/ -0 Q3 04 3/ -0 Q2 4 /0 03 03
Panamax Handymax Handysize
Q2 03
Q3 03
Q4
/ 02
/ 02
/ 02 03
/ 02
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MISC BULK CARRIERS AGE PROFILE as at 31 March 2004
TYPE OF CARGO CARRIED BY MISC BULK CARRIERS IN FY 2003 / 2004
0-10 Years - 55% 11-20 Years - 37% 20+ Years - 9%

Discharging operations onboard Bunga Saga 9 at Lekir Bulk Terminal, Lumut, Perak.
Coal - 37% Ferrous Ore - 13% Fertilizer - 8% Grain - 14% Mineral - 12%
Scrap - 2% Steel Product - 6% Sugar - 3% Timber - 3% Steel Product - 2%
Total cargo carried for the year : 14.9 million tonnes
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MISCs main focus will be on building capabilities and leaders within the organisation to support MISCs global growth strategy.
HUMAN RESOURCE MANAGEMENT (HRM) SERVICES

During the financial year, MISC focused on developing, strengthening and optimizing the human resource (HR) infrastructures and capabilities as we believe that investment in human capital has direct impact on our value creation strategy. Various HR initiatives were successfully implemented particularly the integrated skill and competency development programmes with a balanced mix of technical, business and people skills to produce a pool of quality and effective workforce. To ensure that MISC has a continuous pool of Malaysian officers, we sponsored 258 Malaysians to pursue the cadetship and rating programmes in ALAM. This number is likely to increase in line with MISCs growth strategy. MISC also organized training programmes to address softer issues such as personal wellness and teambuilding. These programmes assisted in fostering a spirit of cohesiveness among employees and created a level of awareness for healthy living. In the past year, MISCs workforce was enlarged with the acquisition of AET and MSE. This added challenges to the HR function whereby we had to streamline and realign policies and procedures as well as provide change management support to address post acquisition workforce issues. During the financial year, MISC completed its
MISC STAFF STRENGTH as at 31 April 2004
manpower rationalization exercise for executive employees where about 5% or 56 executive employees accepted the Separation Package (SP). The SP was offered to the executive employees as part of the Groups Business Transformation and restructuring exercise, which was aimed to enhance operational efficiency and cost competitiveness. For the coming year, we will focus on building capabilities and leaders within the
Shore Staff (Executive) - 1506 Shore Staff (Non-Executive) - 2834
Sea Staff (Officers) - 2465 Sea Staff (Ratings) - 2732
organization to support our global growth strategy.
The emphasis will be on
enhancing capabilities and competencies in the areas of market intelligence, alliance management, ship management and leadership development.
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MISC SEA STAFF as at 31 April 2004
Sea Staff (Officer) Malaysian - 1236 Sea Staff (Officer) Non - Malaysian - 1229
Sea Staff (Ratings) Malaysian - 1802 Sea Staff (Ratings) Non - Malaysian - 930
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Top: Every year, MISC sponsors about 200 school leavers under its cadet sponsorship programme. Right: Akademi Laut Malaysia dedicated to produce highly qualified graduates in the maritime industry.
MARINE EDUCATION AND TRAINING

Akademi Laut Malaysia (ALAM) will continue to play a pivotal role in supporting the Governments call to be a maritime nation. During the year, in order to attract
potential cadets, ALAM conducted roadshows, career talks and exhibitions at various schools around Malaysia, resulting in the receipt of 23,000 applications for its Cadet and Rating programmes. To enhance the effectiveness of ALAMs training programmes, MISC presented MV Pernas Propane to ALAM to be used as a training vessel in May 2003.
ALAM also conducted relevant training programmes (Offshore and Ports) for related maritime industries such as the Royal Malaysian Customs, Marine Police, Institut Perikanan Malaysia, Port of Tanjung Pelepas, Penang Port and Kuantan Port. ALAM also succeeded in securing customers from Brunei and Singapore in line with its plan to expand into the ASEAN region.
For the coming year, ALAM will focus on strengthening and expanding its course offerings to cover the whole spectrum of the maritime sector. The number of courses offered will be increased and special emphasis will be made to ensure the seafarers produced by ALAM are competent and qualified in accordance with the high standards set by the maritime society.
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Top: Monitoring discharging operations onboard. Right: Chemical tankers Bunga Semarak (right) and Bunga Mawar (left) undergoing repair works at MSE Shipyard, Pasir Gudang, Johor.
FLEET MANAGEMENT SERVICES

With the buoyant shipping market in FY2003/2004, we were challenged to ensure optimal commercial availability of our vessels without compromising on their operational efficiency. The enlarged MISC fleet with the acquisition of AET and the deliveries of new vessels in FY2003/2004 added complexity to the way we managed our assets, but we were successfully guided and by our strategic theme of Continuous Cost Competitiveness Asset Reliability. In line with our aim of being a cost competitive operator, we moved most of the dry-docking of our bulk vessels to the Peoples Republic of China, where the cost for steel renewal, blasting and cargo hold repairs were more attractive. In the areas of procurement, MISCs strategy to perform planned periodic bulk purchases of store supplies resulted in realizing higher volume discounts and lower processing costs. Other cost reduction initiatives implemented during the year included continuous in-depth studies of vessels operational efficiency, and optimization of operational manning level and vendor management system. To ensure MISCs asset reliability, we are in the process of implementing the computerised Management Integrated System Asset for
AFRAMAX LNG VLCC CONTAINER 2 2 2 2 3 3 5 CONTRACTED VESSELS DELIVERY SCHEDULE
Maintenance on MISC vessels. With the planned completion of AMOS implementation in the coming year, MISC will be able to better manage its vessels, increase vessel availability and reduce downtime. During the year, we also embarked on a safety campaign towards achieving Zero Accident and Incident to inculcate a safety culture amongst MISC ship personnel. With improved control in managing our assets through AMOS and better safety awareness among MISC seafarers, we embarked on programmes to ensure that all our vessels conform to ship security requirements in response to increased threats of terrorism and piracy. MISC commenced International Ship and Port Facility Security Code (ISPS) certification in January 2004 and completed the exercise in May 2004, ahead of the 1 July 2004 deadline. MISC is proud to be the first company in Malaysia to be awarded with the International Ship Security Certificate on 19 January 2004. For the coming year, MISC will ensure that competent and experienced personnel are employed to serve both onboard the vessels and onshore. With that in mind, MISC will implement the revised Shipboard Management System, utilize AMOS and adopt best industry practices wherever practicable. Through these initiatives, MISC is confident that the condition and performance of all MISC vessels will be at optimal operating standards at all times to meet MISCs customer requirements.
Sustained
20 04
20
20 05
20 06
07
(AMOS)
Planned Preventive and Predictive
79 LIST OF VESSELS BY TYPE / CATEGORY as at 30 June 2004 in dwt NUMBER OF VESSELS BY TYPE / CATEGORY as at 30 June 2004
LNG Tankers - 1,005,074
Containerships - 537,009 Bulk Carriers - 1,605,079
LNG Tankers - 17 Petroleum Tankers - 46 Chemical Tankers - 15 Total : 138
Containerships - 24 Bulk Carriers - 36
MISCs vessels are constantly inspected to ensure their condition and performance are at optimal operating standards.
Petroleum Tankers - 4,585,720 Chemical Tankers - 395,545 Total : 8,128,427
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Top: Excellent customer service is one of the key drivers of MISCs business transformation. Right: Training on the new IT systems is crucial in ensuring their successful implementation.
BUSINESS TRANSFORMATION
The current Information Technology (IT) phase of our business transformation project is now at its final leg with target completion in FY2004/2005. Each of the four IT systems implemented will assist MISCs key business units to be more customer focused and enhance operational efficiencies through the right business processes and controls. The Non-Liner system went live successfully in October 2003. The Non-Liner System that was rolled out for the petroleum, chemical, bulk and LNG shipping businesses will assist the various business units in planning better fleet utilization while focusing on customer service through better chartering and operational efficiencies. Phase 2A of the Liner System went live in September 2003. The Liner and Land Logistics systems will substantially change the way we operate and manage our Integrated Liner Logistics business, making us more customer focused and operationally efficient. Full completion of the Liner system (Phase 2B) is targeted before the end of 2004. The end-to-end integrated logistics business supported by the underlying Liner and Land Logistics systems will enable MISC to offer Total Supply Chain Management Services to its customers. The AMOS System, comprising three modules was launched in November 2003. In FY2003/2004, we installed the system on board 51 vessels and we are in the process of rolling out the system to the remaining vessels. The AMOS System will facilitate total lifecycle maintenance of the vessels from preventive and predictive maintenance onboard to dry-docking of the vessels. With the completion of the IT projects, MISC will be better positioned in the global marketplace to capitalize on the opportunities presented to create value for its stakeholders.
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Top: Tioman T-9, built by MSE, is the first Made-in-Malaysia drill tender barge with the most modern and latest drilling rig facilities in the world. Right: The Mobile Offshore Application Barge (MOAB) being towed from MSE Shipyard to the offshore installation site for Talisman Malaysia.
FUTURE OUTLOOK
The shipping business outlook for the near future appears bright with freight rates projected to remain firm for the coming year. Demand for logistics services is expected to be strong in tandem with world economic growth. Despite optimism shown in the economy and shipping market, MISC will continuously monitor their development and strategize its operations accordingly. Going forward, MISC is poised to grow its targeted energy transportation business particularly in Europe and the Atlantic area (markets west of Suez). Special emphasis will also be made to grow the LNG shipping business in Europe and the USA beyond the two third party contracts with Gaz de France and J&S Cheniere. MISC will also explore and expand its reach into the Mediterranean, African and Indian markets for the petroleum shipping business capitalising on AETs strength in the Atlantic Basin. To this end, a new Regional Business Office headed by a Senior Management team member has been set up in London to drive the growth. MISC will also concentrate its effort on transforming MSE to be the premier heavy engineering business in the region and building its offshore business (OBU) into a significant regional player. MSE and OBU will focus on servicing the upstream oil and gas sector, leveraging on PETRONAS Groups strengths and business network. The current strategy of focusing on long haul services for the Liner business has worked well for MISC. However, the asset mix of the business will have to be reviewed to ensure long-term business sustainability. In line with the focus of its Liner business, MISC will also expand its land logistics assets to strengthen its integrated liner logistics business, thus expanding its service offering and providing seamless logistics service to its targeted customers in the energy and consumer product sectors. During FY2003/2004, MISC continued to build a strong platform for growth in the energy logistics sector with its enlarged LNG and petroleum fleets, controlling interest in MSE and emerging offshore business. With this continuing strategic focus on the energy transportation segment, improving cost competitiveness and emphasis on developing skills and resources, MISC is positioning itself to realize its vision to become the preferred provider of world-class maritime transportation and logistics services. Appreciation On behalf of Management, we would like to register our highest regard and gratitude to Allahyarham Dato Hj. Mohd Ali bin Hj. Yasin for his exemplary leadership and guidance over the past seven years in orchestrating MISC towards becoming the preferred provider of world-class maritime transportation and logistics services. Though we miss and grieve the loss of Allahyarham Dato Ali, the legacy he left in terms of exceptional commitment, dedication and professionalism will motivate us to continue the excellent work he had done in bringing MISC to its current position as a truly reputable global company. The Management would also like to thank the staff for their commitment and diligence, and our valued clients, the Government, its Agencies and stakeholders for their understanding and support. Last but not least, the Management wishes to express its gratitude to the Chairman, Board of Directors and Board Audit Committee for their guidance. On behalf of the Management Committee,
AMIR HAMZAH BIN AZIZAN Regional Business Director Europe, Americas, Africa and FSU Kuala Lumpur 24 May 2004
MICHAEL TING SII CHING General Manager Corporate Planning Services Kuala Lumpur 24 May 2004
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Energy transportation business will continue to be MISCs focus area of growth.
84
85
committed to a clean security
& safer environment,

while maintaining at all times
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Health, Safety, Security And Environment (HSSE) Report
MISC is committed towards achieving Health, Safety, Security and Environment (HSSE) performance excellence in all our business undertakings. This commitment has been translated to various process requirement and initiatives which has been rigorously implemented across all Business and Service Units in MISC. The organisation has also been proactively monitoring and following up all incidents, irrespective of severity. The lessons learnt has been incorporated and actioned upon as part of continual improvement. We have also launched the Fleet Management Services Safety Campaign with an objective of achieving Zero Incident Zero Accident. As a result of sound policy and framework, management commitment, initiatives and shipboard conformity, our HSSE performance has continued to improve. Our Total Recordable Case Frequency (TRCF) performance has improved with a reduction of Personal Accidents by nearly 15% from the previous year. By industry standards, our incident frequency has also improved with a reduction of incidents by nearly 50% over the last two financial years. No serious incidents have been recorded in the last financial year.
In areas of Security, MISC has always been in compliance with industry requirements and best practices. Thus the introduction of the International Ship and Port Facility Security Code (ISPS) in early 2003 was viewed as an opportunity to further improve our process and procedures. All our Ship Security Plans (SSP) have been approved by the relevant Recognised Security Organisations (RSO). MISC was the first shipowner in Malaysia to be awarded the International Ship Security Certificate (ISSC) when two of our vessels successfully underwent the external certification audit in January 2004. The certification onboard all our vessels were completed ahead of the 1 July 2004 deadline. As part of contribution towards national security and to enhance our preventive measures, we carry out annual integrated anti hijacking drills with the Royal Malaysian Navy (RMN). The recent drill was onboard the product tanker M.T. Bunga Kemiri off Lumut and was attended by the Managing Director of MISC and the Fleet Operations Commander of the Royal Malaysian Navy. Risk Management has been given priority in order to ensure structured approach towards risk identification and mitigation. The Maritime Risk Council has reviewed the various risk identified and has incorporated detailed preventive and recovery measures as part of continual improvement. In this financial year, there have been a number of management reviews carried out by our customers. We have since been accorded with improved management rating, which further facilitates employment of our vessels on Time Charters and Contract of Affreighment. Jabatan Laut Malaysia has also successfully audited us under the International Safety Management (ISM) Code requirement. No non-conformities were found during the annual audit, attesting to our commitment and conformance to international safety and environmental requirements.
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MISC Corporate Policy On HSSE

MISCS CORPORATE POLICY IS TO STRIVE FOR EXCELLENCE IN ALL ITS ACTIVITIES INCLUDING HEALTH, SAFETY AND ENVIRONMENT MATTERS.
MISC is committed to give priority to Health, Safety and Environment wherever MISC operates and shall endeavour to take every reasonable and practicable step to prevent and eliminate the risk of injuries, health hazards and damage to properties. MISC shall also take proactive steps towards the conservation and preservation of the environment. To achieve these objectives, MISC shall ensure that the facilities and services it designs, builds, operates and provides are in accordance with appropriate legal requirements, industry standards and best practices. MISC shall provide the necessary resources, organisation, system and training and shall communicate with employees, contractors, customers, suppliers and the public with regard to appropriate matters on Health, Safety and Environment. MISC shall also ensure that contingency plans are in place and maintained to deal with emergencies and shall periodically review the Health, Safety and Environment management system and practices to ensure their continual improvement. Drugs And Alcohol As the use of drugs and alcohol can impair performance at work, and can be a threat to Health, Safety, and Environment, it is MISCs policy that all its operations be DRUGS AND ALCOHOL FREE.This covers self use, manufacture, sale, possession and distribution of drugs and alcohol at work. In handling any drugs or alcohol related problem, MISC shall comply to the requirements of local legislation and industry codes of practice wherever such legislation and codes exist. All employees and contractors of MISC are required to comply with this policy.
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Corporate Highlights Of The Year

29 April 2003
14 April 2003 4 April 2003
10 May 2003
17 April 2003
4 April 2003 MISC took delivery of its first 299,999 dwt Very Large Crude Carrier (VLCC), Bunga Kasturi, the largest Malaysian flagged vessel to-date. Bunga Kasturi replaced the inchartered VLCC, MT Sakura, to service a long term charter with PETRONAS, marking MISCs foray into the VLCC market. 14 April 2003 MISC placed orders for two LNG tankers and two Aframax crude oil tankers from Samsung Heavy Industries Co. Ltd., Korea as part of its continuous growth strategy and strengthening of market position. 17 April 2003
realising its goal of becoming the premier energy-based shipping company in the world. 29 April 2003 History was created when MISC signed a Stock Purchase Agreement (SPA) with Neptune Orient Lines (NOL) for the acquisition of a 100% interest in American Eagle Tankers Inc. Ltd (AET), a petroleum tanker company wholly-owned by NOL. A major boost for MISC in its drive to become transport the leading global the energy provider, strategic
acquisition of AET will open up new geographical presence for MISC in the Atlantic Basin complementing its existing Arabian Gulf-Far East market. 10 May 2003
A second Very Large Crude Carrier (VLCC) was ordered from Universal Shipbuilding Corporation, Japan. This move forms part of MISCs planned expansion into the petroleum tanker services business and brings the Corporation closer towards Recognising its role in the training and development of professional seafarers, MISC donated one of its vessels, Pernas Propane, to Akademi Laut Malaysia (ALAM) to be used as ALAMs second training vessel.
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4 July 2003 15 August 2003
7 July 2003 22 August 2003
17 September 2003
18 September 2003
4 July 2003 MISC secured two 20-year time charter party contracts with MLNG Sdn Bhd for the two LNG carriers built at Samsung Heavy Industries, Korea, further strengthening its stable and strong earnings from the LNG business. 5 July 2003 MISC and its partners in The Grand Alliance started an additional China Europe Loop with the following port rotation on a weekly frequency - Dalian, Xingang, Kaohsiung, Qingdao, Busan, Port Ningbo, Klang, Singapore,
2003/2004 at 30 sen matches the highest total dividend that was declared in the previous financial year. 22 July 2003 Completion of the acquisition of American Eagle Tankers Inc. Ltd. (AET) from Neptune Orient Lines. MISC benefited from the timing of the acquisition to coincide with the upswing of the shipping market and managed to realize the value of AET as shown in this years results. 15 August 2003 MISC signed its second 3rd party time charter agreement outside the Petronas Group for LNG vessel, Tenaga Empat, with J & S Cheniere S.A., a result of MISCs aggressive marketing efforts and competitive pricing structure in LNG transportation opportunities presented by the strong growth in world LNG demand.
22 August 2003 MISC signed an agreement for the construction of its third 298,100 mt Very Large Crude Carrier (VLCC) with Universal Shipbuilding Corporation. 17 September 2003 MISC hosted a dinner in conjunction with the International Council of Containership Operators (ICCO) Meeting held in Kuala Lumpur. ICCO, or commonly known as the Box Club, held their bi-annual meeting in Malaysia for the first time since their inception twenty years ago. 18 September 2003 MISC consolidated its Straits India Pakistan (SIP) and China Straits Service (CSS) services into a single China Straits India (CSI ) service with joint partnership with PIL & K-Line. The new CSI service provides customers with better port pairs, coverage and transit times.
Southampton,
Rotterdam,
Hamburg,
Gioia Tauro, Singapore, Kaohsiung, Busan and Dalian. 7 July 2003 MISCs 34th Annual General Meeting and Extraordinary General Meeting were held. A final dividend of 15 sen was declared and approved during the AGM. The total dividend per share for the financial year
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Corporate Highlights Of The Year (continued)
12 January 2004 6 October 2003
14 January 2004 14 November 2003
19 September 2003
19 September 2003 Naming ceremony of MISCs 16th LNG tanker, Puteri Nilam Satu at Mitsubishi Heavy Industries Shipyard in Nagasaki, Japan. YBhg. Datin Laila Alias, wife of Allahyarham Dato Hj. Mohd Ali bin Hj. Yasin, named the vessel which is the third of the Puteri Satu series LNG tankers. 6 October 2003 MISC was the main sponsor for the 2nd Asia Maritime & Logistics Conference 2003 organised by Malaysian Shipowners Association (MASA) at Nikko Hotel Kuala Lumpur. A total of 450 persons involved in the maritime industry worldwide attended the Conference. 14 November 2003 MISC marked another milestone with the delivery of its first Floating Production, Storage and Offloading (FPSO) facility which will serve a long-term charter with PETRONAS Carigali. MT Bunga Kertas, one of our older petroleum tankers, was converted into a FPSO at Malaysia Shipyard & Engineering Sdn Bhd (MSE).
12 January 2004 Naming ceremony of MISCs first two Aframax crude oil tankers built by Samsung Heavy Industries. YBhg Puan Sri Datin Seri Norhainy Hj. Omar, wife of Board Member, YBhg. Tan Sri Dato Seri Dr. Hj. Zainul Ariff Hj Hussain named the vessels Bunga Kelana 7 and Bunga Kelana 8. The addition of these two crude oil tankers, each with a capacity of more than 105,500mt into MISCs petroleum fleet further strengthens MISCs position as the second largest Aframax fleet owner-operator in the world. 14 January 2004 YBhg. Datin Sri Ursula Teo, wife of Board Member, YBhg. Dato Sri Liang Kim Bang named MISCs 17th LNG tanker, Puteri Zamrud Satu. The naming ceremony was held at Mitsui Engineering & Shipbuilding Shipyard in Chiba, Japan. The addition of Puteri Zamrud Satu increased MISCs total gross LNG capacity to 1.91 million cubic metres, representing about 10 percent of the total world LNG capacity.The Corporations position as the largest single LNG fleet owner and operator in the world is further reaffirmed.
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21 January 2004
27 February 2004
February 2004
16 April 2004
13 May 2004
19 January 2004 MISC became the first shipowner in Malaysia to be awarded the International Ship Security Certificate (ISSC) when two of our vessels successfully underwent the external certification audit. The certification onboard all our vessels were completed ahead of the 1 July 2004 deadline. 21 January 2004
27 February 2004 Briefing to Analysts and Investors on MISCs Group Third-Quarter Results was held. The briefing is part of the Groups Corporate Governance practice that enabled investors and analysts to have latest information on the strategy, performance and major developments of MISC. 3 March 2004
13 May 2004 MISC took advantage of the recent increase in secondhand value of bulk vessels by divesting 15 of its older handysize bulk vessels. With the sale of these vessels, MISCs dry bulk fleet consists of 36 vessels with 11 panamaxes, 9 handymaxes, 15 handysizes and 1 multipurpose carrier. 11 June 2004 Moodys Investors Services upgraded MISCs Issuer rating to Baa1 from Baa2 and assigned a Baa1 rating to MISCs proposed USD1 billion senior unsecured notes. Standard & Poors Rating Services assigned a BBB+ rating to MISCs proposed USD1 billion senior unsecured notes. 2 July 2004 MISC successfully completed its inaugural USD bond issue. The issuance totalled USD1.1 billion consisting of a USD400 million 5-year tranche and a USD700 million 10-year tranche.
MISC ordered two 7,900 TEU containerships from Daewoo Shipbuilding & Marine Engineering Co. Ltd. February 2004 MISC LNG vessel, Aman Bintulu, was awarded Excellent Vessel by Japanese Pilot Association (JPA) in recognition of the vessels well upkeeping and excellent maintenance. The Award, established by JPA, recognises excellent vessels from the viewpoint of the pilots for the purpose of elevating a sense of awareness to protect ports and maritime environment through safe cargo operations. SS Aman Bintulu received the Award for vessels calling at Kyushu district ports.
Malaysia Rating Corporation reaffirmed ratings of MISCs RM1.5billion Murabahah commercial paper/medium term notes issuance facility (2000/2005) at MARC 11D/AAA ID. 17 March 2004 MISC acquired an additional 22% interest in MSE Holdings Sdn. Bhd. (MSE), making it a 65% subsidiary. The company will be MISCs heavy engineering arm focussing on the energy business. 16 April 2004 MISC exercised its option of ordering another two 145,000 m3 LNG tankers with Samsung Heavy Indusries Co. Ltd.
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93
to committedthecontributing towards
development of the nation, industry&society
94
Corporate Social Responsibility
As a corporate entity, MISC takes its commitment to Corporate Social Responsibility (CSR) seriously, and has focused on the area of youth development.The company is mindful of its social obligations, especially in the areas of training and development, the creation of employment opportunities and achieving Malaysianisation of our workforce. Ultimately, we want to improve the quality of life for all Malaysians. As the engine of growth propelling Malaysias development as a leading maritime nation, MISC realises fully the importance of socially responsible practices, improving the lives and harnessing the potentials of Malaysian Youth.
Our Contribution to the Nation Growing our Youth in the Maritime Industry MISC believes that it is important to be a loyal partner to the nations development and progress. What better way than to promote and enhance the skills of our youth and put the country at par with other great maritime nations. For the last 30 years, MISC has embraced the role of training and developing skilled manpower in the maritime and heavy engineering industry. Building this pool of skilled manpower is important as it reduces the domestic maritime industrys reliance on foreign manpower and expertise. MISC is committed to training the next generation of mariners and seafarers not just for the Groups advantage but also to the benefit of other seafaring industries in the country. The Groups efforts on this front began with the establishment of the Seamens Training School in Malacca, in collaboration with the Government in 1972. With this, the Cadet Sponsorship Programme was realised an idea that would eventually provide vast opportunities for the Malaysian maritime industry in terms of knowledge, experience and employment. In 1975, the school was upgraded to a Maritime Training Centre, which subsequently in 1981 led to the set up of Akademi Laut Malaysia (ALAM) as the training ground for deck cadets up to the level of Master. Two years later, Marine Engineering was introduced in ALAM, which enables the training of specialized engineers domestically. Today, ALAM is 70% owned by MISC and 30% by PETRONAS. In addition, MISCs heavy engineering business through its subsidiary, Malaysia Shipyard and Engineering (MSE), has not only contributed to the Group as a premier provider of services in Malaysias oil and gas industry, but also become an essential training ground for heavy engineering in the country, simultaneously providing employment opportunities for our youth. The Road to Malaysianisation MISC has actively participated in ALAM with the interest of creating a brighter future for youths while creating employment opportunities in the maritime industry taking the industry and the country to greater heights by having its vessels manned entirely by Malaysians. This policy of Malaysianisation is what MISC aspires to develop and prioritise in its training and development initiatives, while setting an example for other companies and industries. Commitment to Investing in the Youth the Nation's Future MISC spends more than RM16 million annually for the full programme at ALAM, South Tyneside College (United Kingdom) and Politeknik Ungku Omar. Presently, more than 200 students are recruited yearly for the Cadet Sponsorship Programme. Since 1972, the company has taken in some 3,200 deck and engine cadets, providing not just technical know-how, but also an environment to put this knowledge to use. These investments are geared towards facilitating a learning, development and employment ground for young aspirants. MISC is committed to contributing to Malaysia's progress as a maritime nation with the development of competent seafarers. Now, maritime and logistics organisations nationwide also seek the services of those trained in ALAM, hence putting Malaysia on the map in terms of training and developing the next generation of mariners.
Malaysians have outnumbered expatriates in all categories from Master, Officers, Engineers and Ratings. To-date, MISC has achieved 77% Malaysian Officers and Ratings working onboard Malaysian vessels, while the figure is substantially higher at 90% for the Liquefied Natural Gas (LNG) Fleet. This is especially remarkable, considering that expatriates wholly managed all vessels when MISC embarked on the LNG service in 1980s. MISC is now proud to be the largest single owner-operator of LNG fleet in the world, which is a major boost to the large number of Malaysians working onboard the vessels, considering the opportunities presented to them by the strong growth in world LNG demand for the future. The successful development of Malaysian seafarers together with the development of Malaysian-owned vessels has greatly reduced the nations dependence on foreign seafarers and foreign shipping services respectively. Therefore, the expenditure on invisible trade is reduced while boosting national revenues through foreign exchange earnings. Responsibility to the Maritime Industry As an active member of the Malaysian Shipowners Association (MASA) and the main sponsor of the annual Asia Maritime and Logistics Conference, MISC integrates social concerns with business operations on a voluntary basis, enriching the community and contributing to nation-building. Other Contributions As part of the Groups continuing corporate social responsibility commitment, MISC also contributed to various orphanages, charity homes and other nonprofit organisations as well as business and maritime associations and institutions of higher learning. At MISC, Corporate Social Responsibility is not just a social obligation, but also a way of life.
96
97
committed to harnessing team spirit & cohesiveness

amongst our dedicated
& developing leaders
professionals
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Staff Development & Welfare: Sustaining An Integrated Workforce
MISC has always considered employees to be the primary asset of the company. We constantly focus on developing our Human Resources framework to provide our people with valuable resources and avenues for growth. In line with MISCs objectives of building a capable workforce and fostering leadership qualities within the organisation, employee development programmes are put in place to complement the companys global growth strategy. Programmes that provide a balanced mix Education,Training and Development, Health and Recreational, and Staff Recognition are all exercised to build an integrated workforce and to realise these objectives.
Education, Training & Development Training programmes at MISC have played an important role in the Unity among employees are enhanced through staff organisations, such as PETRONITA, a womens organisation for female employees and wives of male employees at MISC that is aimed at promoting togetherness and the exchange of valuable ideas. In order to equip employees with additional skills and to help position the company globally, classes in English, Japanese and Mandarin have also been introduced. These classes better prepare employees for overseas postings and ensure improved communication between businesses, both locally and internationally. MISCs Education Assistance Plan is also extended to staff undertaking courses to enhance their work, where all tuition, registration and examination fees are provided for. Committed to Increasing Performance The Performance Management System (PMS) is an appraisal system where the superior and subordinate agree at the beginning of the year on what needs to be accomplished. PMS is complimented by Job Analysis Competency Development that assesses staff competency and identify gaps. Thereafter, a structured career development programme is executed to provide a phase-by-phase training module. development of our employees through sports, education as well as employee unity. Sports and recreational activities are carried out to promote wellness and healthy living among employees. MISC encourages the involvement of employees in major sporting activities through its sports club and annual events such as the World Maritime Day Sports, PETRONAS Sports Carnival, MISC Mini Sports Carnival, as well as participation in state-level sporting leagues. These activities not only promote a healthy lifestyle amongst MISC employees, but also bring staff closer together in sharing a sense of achievement outside of work. In advocating the overall development of our workforce, teambuilding and personal wellness programmes are also included to inculcate a spirit of unity among employees and create greater awareness towards healthy living.
99
This contributes towards the companys planning process to identify and develop the potential next-in-line management team. The system has indeed helped employees identify their potential and career development. Recognition Not forgetting those who to have the
An integrated workforce for a better future MISC believes that the elements of education, training and development, assessing employees strengths and enhancing their capabilities provide a complete package that forms an integrated workforce.
contributed
tremendously
As the engine of growth, employees of MISC are recognised as people we invest in for a better future.
company, awards are given to employees who have been committed and dedicated to MISC for more than 20 years, as well as those retiring from the company. MISC believes in recognising the efforts from employees, as they have in some way or the other, made a significant and positive difference in the company.
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Employees Activities For The Year

14 June 2003
May July 2003 April - September 2003
23 June 2003
12 15 June 2003
2 July 2003
April - September 2003 MISC football team participated in
15 21 June 2003 An orientation training programme was held for new Executives to give them a better perspective of MISC and the maritime industry. 23 June 2003 MISC contributed 30 used Personal Computers Selayang. to Sekolah Menengah Kebangsaan Ideal Heights, Batu Caves
Division One of the Selangor Football League and achieved 6th placing out of 42 teams. May - July 2003 MISC hockey team participated in the 2003 KL Hockey League. MISC achieved third placing. 12 15 June 2003
2 July 2003 A teambuilding programme was held for Managers and Executives at Allson Klana Resort, Negeri Sembilan. This programme was one of the many held during the year to build team spirit among employees within the Group. 14 June 2003 Management Committee members and some members of Petronita and Badan Islam MISC (BIM) visited Asrama Damai, an orphanage home in Kuang, Selangor. An award presentation ceremony was held for MISCs most outstanding cadets for the year. Every year, MISC sponsors more than 200 cadets under its Cadet Sponsorship Programme. 9 - 13 July 2003 MISC participated in various games held in conjunction with PETRONAS Sports Carnival. Our hockey team emerged champions.
9 13 July 2003 7 November 2003
25 July 2003 12 December 2003
12 November 2003
12 August 2003
17 January 2004
25 July 2003
Majlis Tilawah Quran MISC, a Quran reading competition was held for MISC Muslim employees. 12 August 2003 Five senior management personnel
13 - 15 October 2003
A training programme on Coaching for Managing Performance was conducted for several Managers and Executives on how to expand their employees ability to produce extraordinary results and become better leaders.
YBhg. Tan Sri Dato Sri Hassan bin Marican and Management Committee members were at hand to receive guests which included 40 children from Darul Kifayah, an orphanage home. 12 December 2003 A Retirement Award Presentation was
represented MISC in the KLSE Rat Race, a charity run organised by Bursa Malaysia Berhad together with The Edge.
14 - 16 October 2003
A Pre-Retirement Workshop was held for employees who were about to retire and their wives to help them prepare for retirement.
held at Mutiara Hotel Kuala Lumpur. Eight employees received their retirement award from Allahyarham Dato Hj. Mohd Ali Hj. Yasin. 17 January 2004 A Long Service Award Presentation was held at Mandarin Oriental Hotel. A total of 54 employees received their 30, 25 and 20 years award from MISC Chairman, YBhg. Tan Sri Dato Sri Mohd Hassan bin Marican.
14 - 16 August 2003
The Pursuit of Wellness programme was held at Awana Resort, Genting Highlands. It was one of the many health awareness programmes organised throughout the year to encourage staff to maintain a healthy and productive lifestyle.
7 November 2003
PETRONITAs Charity Curtain & Bedroom Soft Furnishing Making Competition was held.
1 - 12 October 2003
MISC took part in several sports events organised by the Marine Department, Port Klang in conjunction with World Maritime Day 2003.
12 November 2003
About 350 guests and staff attended the Annual Majlis Berbuka Puasa at Labuan Hall, Menara Dayabumi. MISC Chairman,
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103
committed to proper
financialmanagement, discipline & reporting to cultivate strong investor confidence
104
Financial Statements
Directors Report Statement By Directors Statutory Declaration Report Of The Auditors Income Statements Balance Sheets Statements Of Changes In Equity Cash Flow Statements Notes To The Financial Statements 105 109 110 111 112 113 114 115 116
105
Directors Report
For The Financial Year Ended 31 March 2004
The directors are pleased to present their report together with the audited financial statements of the Group and of the Corporation for the financial year ended 31 March 2004. PRINCIPAL ACTIVITIES The principal activities of the Corporation consist of shipowning, ship operating and other activities related to shipping services. The principal activities of the subsidiaries are described in Note 38 to the financial statements. There have been no significant changes in the nature of these activities during the financial year other than the Group is now involved in shipbuilding, ship repairing and heavy engineering works arising from additional acquisition of 22% equity interest in MSE Holdings Sdn. Bhd. group. RESULTS Group RM000 Profit after taxation Minority interests Net profit for the year 2,319,277 (29,706) 2,289,571 Corporation RM000 1,237,633 1,237,633
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statements of changes in equity. In the opinion of the directors, the results of the operations of the Group and of the Corporation during the financial year were not affected by any item, transaction or event of a material and unusual nature. DIVIDENDS The amount of dividends paid by the Corporation since 31 March 2003 were as follows: RM000 In respect of the financial year ended 31 March 2003 as reported in the directors' report of that year: Final tax exempt dividend of 15 sen per share, paid on 26 August 2003
278,987
In respect of the financial year ended 31 March 2004: Interim tax exempt dividend of 15 sen per share, paid on 30 December 2003
278,987
106
Directors Report (continued)
DIVIDENDS (CONTINUED) At the forthcoming Annual General Meeting, the following tax exempt dividends will be proposed for shareholders' approval in respect of the financial year ended 31 March 2004: RM000 Final tax exempt dividend of 15 sen per share on 1,859,913,793 ordinary shares 278,987
Special tax exempt dividend of 10 sen per share on 1,859,913,793 ordinary shares
185,991
The financial statements for the current financial year do not reflect these proposed dividends. Such dividends, if approved by the shareholders, will be accounted for in shareholders' equity as an appropriation of retained profits in the financial year ending 31 March 2005. DIRECTORS The names of the directors of the Corporation in office since the date of the last report and at the date of this report are: Tan Sri Dato Sri Mohd Hassan bin Marican Dato Sri Liang Kim Bang Dato' Seri Dr. Hj. Zainul Ariff bin Hj. Hussain Mr. Harry K. Menon Dato' Halipah binti Esa (appointed on 26 April 2004) Dato' Hj. Mohd Ali bin Hj. Yasin (demised on 19 April 2004) Datuk Siti Hadzar binti Mohd Ismail (resigned on 25 February 2004) Dato' Hamzah bin Bakar (resigned on 7 July 2003) DIRECTORS BENEFITS Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Corporation was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Corporation or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note 6 to the financial statements or the fixed salary of a full-time employee of the Corporation) by reason of a contract made by the Corporation or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.
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DIRECTORS INTERESTS According to the register of directors shareholdings, the interests of directors in office at the end of the financial year in shares in the Corporation and its related corporations during the financial year were as follows: Number of Ordinary Shares of RM1 Each 1 April 2003 The Corporation Direct Dato Sri Liang Kim Bang Indirect Dato Sri Liang Kim Bang Bought Sold 31 March 2004
152,000
152,000
68,000
68,000
Fellow Subsidiary PETRONAS Dagangan Berhad Direct Tan Sri Dato Sri Mohd Hassan bin Marican Fellow Subsidiary PETRONAS Gas Berhad Direct Tan Sri Dato Sri Mohd Hassan bin Marican
1,000
1,000
5,000
5,000
None of the other directors in office at the end of the financial year had any interest in shares in the Corporation or its related corporations during the financial year. OTHER STATUTORY INFORMATION (a) Before the income statements and balance sheets of the Group and of the Corporation were made out, the directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(ii)
108
Directors Report (continued)
OTHER STATUTORY INFORMATION (CONTINUED) (b) At the date of this report, the directors are not aware of any circumstances which would render: (i) (ii) (c) the amount written off for bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent; and the values attributed to the current assets in the financial statements of the Group and of the Corporation misleading.
At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Corporation misleading or inappropriate. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Corporation which would render any amount stated in the financial statements misleading. As at the date of this report, there does not exist: (i) any charge on the assets of the Group and of the Corporation which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group or of the Corporation which has arisen since the end of the financial year.
(d)
(e)
(ii) (f)
In the opinion of the directors: (i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Corporation to meet their obligations when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Corporation for the financial year in which this report is made.
(ii)
SIGNIFICANT EVENTS The significant events during the financial year are disclosed in Note 40 to the financial statements. AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors.
TAN SRI DATO SRI MOHD HASSAN BIN MARICAN Kuala Lumpur, Malaysia Date: 24 May 2004
DATO SERI DR. HJ. ZAINUL ARIFF BIN HJ. HUSSAIN
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Statement By Directors
Pursuant To Section 169(15) Of The Companies Act, 1965
We, TAN SRI DATO SRI MOHD HASSAN BIN MARICAN and DATO' SERI DR. HJ. ZAINUL ARIFF BIN HJ. HUSSAIN, being two of the directors of Malaysia International Shipping Corporation Berhad, do hereby state that in the opinion of the directors, the accompanying financial statements set out on pages 112 to 177 are drawn up in accordance with applicable Approved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Corporation as at 31 March 2004 and of the results and the cash flows of the Group and of the Corporation for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the directors
TAN SRI DATO SRI MOHD HASSAN BIN MARICAN
DATO SERI DR. HJ. ZAINUL ARIFF BIN HJ. HUSSAIN
Kuala Lumpur, Malaysia Date: 24 May 2004
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Statutory Declaration
Pursuant To Section 169(16) Of The Companies Act, 1965
I, NORAINI BINTI CHE DAN, being the officer primarily responsible for the financial management of Malaysia International Shipping Corporation Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 112 to 177 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the abovenamed NORAINI BINTI CHE DAN at Kuala Lumpur in Wilayah Persekutuan on 24 May 2004
Before me:
HARON HASHIM Commissioner for Oaths
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Report Of The Auditors

To The Members Of Malaysia International Shipping Corporation Berhad (Incorporated In Malaysia)
We have audited the accompanying financial statements set out on pages 112 to 177. These financial statements are the responsibility of the Corporations directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion: (a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia so as to give a true and fair view of: (i) the financial position of the Group and of the Corporation as at 31 March 2004 and of the results and the cash flows of the Group and of the Corporation for the year then ended; and the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
(ii) (b)
the accounting and other records and the registers required by the Act to be kept by the Corporation and by its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
We have considered the financial statements and the auditors' reports thereon of the subsidiaries of which we have not acted as auditors, as indicated in Note 38 to the financial statements, being financial statements that have been included in the consolidated financial statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Corporation are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors' reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and in respect of subsidiaries incorporated in Malaysia, did not include any comment required to be made under Section 174(3) of the Act.
ERNST & YOUNG AF: 0039 Chartered Accountants Kuala Lumpur, Malaysia Date: 24 May 2004
HABIBAH BTE ABDUL No. 1210/05/06(J) Partner
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Income Statements
For The Year Ended 31 March 2004
Group Note 2004 RM000 7,606,271 (4,483,721) 3,122,550 63,694 (676,824) 4 7 2,509,420 (210,493) 27,477 2,326,404 (7,127) 2,319,277 (29,706) 2,289,571 2003 RM000 5,432,996 (3,508,981) 1,924,015 60,749 (545,246 ) 1,439,518 (169,581 ) 40,363 1,310,300 3,507 1,313,807 (3,144) 1,310,663 Corporation 2004 2003 RM000 RM000 4,314,340 (3,098,856) 1,215,484 490,194 (432,663) 1,273,015 (35,382) 1,237,633 1,237,633 1,237,633 3,822,598 (2,915,708) 906,890 940,813 (606,244) 1,241,459 (41,149) 1,200,310 1,200,310 1,200,310
Revenue Cost of sales Gross profit Other operating income General and administrative expenses Profit from operations Finance costs Share of results of associated companies Profit before taxation Taxation Profit after taxation Minority interests Net profit for the year
Basic earnings per share (sen)
123.1
70.5
The accompanying notes form an integral part of the financial statements.
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Balance Sheets
As At 31 March 2004
Group Note NON-CURRENT ASSETS Ships Property and equipment Subsidiaries Associated companies Other investments Intangible assets Deferred tax assets 11 11 12 13 14 15 29 16,975,690 901,777 134,862 236,254 975,896 8,849 19,233,328 CURRENT ASSETS Due from group companies Due from associated companies Inventories Receivables Marketable securities Cash, deposits and bank balances 16 17 18 19 21 22 33,538 1,484 128,486 1,099,660 5,432 1,853,586 3,122,186 CURRENT LIABILITIES Due to group companies Due to associated companies Provision for taxation Payables and accruals Short term borrowings 23 24 25 26 105,812 1,147 3,951 1,204,020 5,189,770 6,504,700 NET CURRENT (LIABILITIES)/ASSETS (3,382,514) 15,850,814 CAPITAL AND RESERVES Share capital Share premium Other reserves Retained profits SHAREHOLDERS' FUNDS MINORITY INTERESTS NON-CURRENT LIABILITIES Long term borrowings Deferred taxation 26 29 4,166,481 81,295 15,850,814 2,095,808 14,925 11,804,101 400,000 3,704 10,611,889 400,000 9,932,230 27 28 1,859,914 460,882 99,993 8,931,002 11,351,791 251,247 1,859,914 460,882 96,802 7,200,722 9,618,320 75,048 1,859,914 460,882 35,217 7,852,172 10,208,185 1,859,914 460,882 38,921 7,172,513 9,532,230 102,010 3,052 1,198 667,043 2,148,899 2,922,202 (1,278,135) 11,804,101 287,823 813 535,211 600,000 1,423,847 819,144 10,611,889 119,983 2,789 486,160 1,110,671 1,719,603 1,213,159 9,932,230 49,968 17,921 61,715 479,705 5,106 1,029,652 1,644,067 1,235,399 1,479 81,284 421,527 5,432 497,870 2,242,991 2,273,436 17,960 57,541 333,419 4,695 245,711 2,932,762 11,747,304 382,766 334,345 236,502 381,319 13,082,236 6,719,637 345,735 2,675,924 51,449 9,792,745 5,911,846 304,503 2,451,273 51,449 8,719,071 2004 RM000 2003 RM000 Corporation 2004 2003 RM000 RM000
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Statements Of Changes In Equity

Share Capital* Ordinary Shares RM000 1,859,914 28 28 1,859,914 1,859,914 28 28 28 10 1,859,914
Group
Note
Non-distributable Share Other Premium Reserves RM000 RM000 460,882 460,882 460,882 460,882 86,916 4,384 5,502 9,886 96,802 96,802 5,523 1,317 6,840 (3,649) 99,993
Distributable Retained Profits RM000 6,453,535 (5,502) (5,502 ) 1,310,663 (557,974 ) 7,200,722 7,200,722 (1,317) (1,317) 2,289,571 (557,974 ) 8,931,002
Total RM000 8,861,247 4,384 4,384 1,310,663 (557,974) 9,618,320 9,618,320 5,523 5,523 2,289,571 (3,649 ) (557,974) 11,351,791
At 1 April 2002 Currency translation differences Transfer to reserves from retained profits Net gain not recognised in income statement Net profit for the year Dividends At 31 March 2003 At 1 April 2003 Currency translation differences Transfer to reserves from retained profits Net gain not recognised in income statement Net profit for the year Deferred tax liabilities recognised on revaluation reserve Dividends At 31 March 2004
10
Corporation At 1 April 2002 Net profit for the year Dividends At 31 March 2003 At 1 April 2003 Net profit for the year Deferred tax liabilities recognised on revaluation reserve Dividends At 31 March 2004 1,859,914 1,859,914 1,859,914 1,859,914 460,882 460,882 460,882 460,882 38,921 38,921 38,921 (3,704) 35,217 6,530,177 1,200,310 (557,974 ) 7,172,513 7,172,513 1,237,633 (557,974 ) 7,852,172 8,889,894 1,200,310 (557,974) 9,532,230 9,532,230 1,237,633 (3,704 ) (557,974) 10,208,185
10
10
* Included in share capital is one preference share of RM1 (2003: RM1).

115
Cash Flow Statements

Group Note 2004 RM000 7,518,841 (5,069,326) 2,449,515 (3,658) 2,445,857 (4,367,670) 2,750,056 828,243 1,018,981 6,362 1,853,586 2003 RM000 5,514,790 (3,155,738) 2,359,052 (3,827) 2,355,225 (1,851,170) (1,148,298) (644,243 ) 1,659,797 3,427 1,018,981 Corporation 2004 2003 RM000 RM000 5,225,585 (2,753,683) 2,471,902 2,471,902 (1,119,573) (1,093,493) 258,836 235,040 3,994 497,870 3,866,419 (2,748,638) 1,117,781 1,117,781 (1,019,350) 31,330 129,761 103,288 1,991 235,040
Cash receipts from customers Cash paid to suppliers and employees Cash from operations Taxation paid Net cash generated from operating activities Net cash used in investing activities Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of financial year Currency translation differences Cash and cash equivalents at end of financial year Cash and cash equivalents comprise: Cash, deposits and bank balances (Note 22) Bank overdraft (Note 26)
30 31
1,853,586 1,853,586
1,029,652 (10,671 ) 1,018,981
497,870 497,870
245,711 (10,671) 235,040
116
Notes To The Financial Statements

31 March 2004
1. CORPORATE INFORMATION The principal activities of the Corporation consist of shipowning, ship operating and other activities related to shipping services. The principal activities of the subsidiaries are described in Note 38. There have been no significant changes in the nature of these activities during the financial year other than the Group is now involved in shipbuilding, ship repairing and heavy engineering works arising from additional acquisition of 22% equity interest in MSE Holdings Sdn. Bhd. group. The Corporation is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of Bursa Malaysia Securities Berhad. The registered office of the Corporation is located at Level 25, Menara Dayabumi, Jalan Sultan Hishamuddin, 50050 Kuala Lumpur. The holding and ultimate holding company of the Corporation is Petroliam Nasional Berhad, a company incorporated and domiciled in Malaysia. The number of employees in the Group and in the Corporation at the end of the financial year were 8,780 (2003: 6,659) and 4,023 (2003: 4,472) respectively. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 24 May 2004. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation The financial statements of the Group and of the Corporation have been prepared under the historical cost convention unless otherwise indicated in the accounting policies below. The financial statements comply with the provisions of the Companies Act, 1965 and applicable Approved Accounting Standards in Malaysia. During the financial year ended 31 March 2004, the Group and the Corporation adopted the following Malaysian Accounting Standards Board (MASB) Standards for the first time: MASB 25 Income Taxes MASB 27 Borrowing Costs MASB 29 Employee Benefits The adoption of these MASBs have not given rise to any adjustments to the opening balances of retained profits of the prior and current year or to any material changes in comparatives.
117
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Basis of Consolidation (i) Subsidiaries The consolidated financial statements include the financial statements of the Corporation and all its subsidiaries. Subsidiaries are those companies in which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits therefrom. Subsidiaries are deconsolidated from the effective date of any circumstances or events giving rise to the cessation of control over their financial and operating policies. Subsidiaries are consolidated using the acquisition method of accounting except for the acquisition of subsidiaries which meet the criteria for merger, in which case such acquisitions are accounted for using merger accounting principles. Under the acquisition method, the results of subsidiaries acquired or disposed during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition and these values are reflected in the consolidated balance sheet. The difference between the cost of an acquisition over the fair value of the Groups share of the net assets of the acquired subsidiary at the date of acquisition is included in the consolidated balance sheet as goodwill or reserve arising on consolidation and is amortised or credited to income statement on a straight line basis over 5 to 20 years. Where an indication of impairment exists, the carrying value of goodwill is written down immediately to its recoverable amount. When the merger method is used, the cost of investment in the Corporations book is recorded at the nominal value of shares issued and the difference between the carrying value of the investment and the nominal value of shares acquired is treated as merger reserve or merger deficit. The results of the companies being merged are included as if the merger had been effected throughout the current and previous financial years. Intragroup transactions, balances and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Groups share of its net assets together with any unamortised balance of goodwill and exchange differences which were not previously recognised in the consolidated income statement. Minority interest is measured at the minorities' share of the post acquisition fair values of the identifiable assets and liabilities of the acquiree.
118
Notes To The Financial Statements (continued)
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Basis of Consolidation (continued) (ii) Associated Companies Associated companies are those companies in which the Group has a long term equity interest and is in a position to exercise significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the associated companies but not control over those policies. Investments in associated companies are accounted for in the consolidated financial statements by the equity method of accounting based on the audited or management financial statements of the associated companies. Under the equity method of accounting, the Group's share of post acquisition profits less losses of associated companies during the year is included in the consolidated income statement. The Group's interest in associated companies is carried in the consolidated balance sheet at cost plus the Group's share of post-acquisition retained profits or accumulated losses and other reserves as well as goodwill on acquisition. Goodwill or reserve arising on acquisition of associated companies is amortised or credited to the income statement on a straight line basis over 5 years or its estimated useful life, whichever is shorter. Where an indication of impairment exists, the carrying value of goodwill is written down immediately to its recoverable amount. Unrealised gains on transactions between the Group and the associated companies are eliminated to the extent of the Groups interest in the associated companies. Unrealised losses are eliminated unless cost cannot be recovered. (c) Other Intangible Assets Other intangible assets represent the consideration paid in respect of charter hire contracts of subsidiaries at the date of acquisition and are stated at the fair values of the charter hire contracts based on valuations performed by independent professional valuers. Where the aggregate of the fair values of separable net assets of the subsidiaries exceeds the fair value of purchase consideration, the fair value of the charter hire contract is reduced by this amount. Other intangible assets are amortised on a straight line basis over the remaining period of the respective charters ranging from 15 to 20 years or the estimated remaining useful lives of the vessels concerned, whichever is shorter. Where an indication of impairment exists, the carrying value of intangible assets is written down immediately to its recoverable amount. (d) Investments in Subsidiaries and Associated Companies Investments in subsidiaries and associated companies are stated at cost less impairment losses. Where an indication of impairment exists, the carrying value of investment is written down immediately to its recoverable value. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statement.
119
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Ship, Property and Equipment and Depreciation Ship, property and equipment are stated at cost less accumulated depreciation and impairment losses. Where an indication of impairment exists, the carrying value of the asset is assessed and written down immediately to its recoverable amount. Freehold land, ships under construction, systems work in progress and construction in progress are not depreciated. Leasehold land is depreciated on a straight line basis over the period of the respective leases which range from 15 to 99 years. Depreciation of ships under construction commences from the date of delivery of the ships. Depreciation of ships in operation is provided on a straight line basis to write off the cost of each ship to its residual value over its estimated useful life. Depreciation of ship, property and equipment is provided for on a straight line basis to write off the cost of each asset to its residual value over the estimated useful life at the following annual rates: Ships constructed Ships purchased Buildings Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Trailers and prime movers Plant and machinery Tugboats, engines and pushers Drydocks and waste plant Loose tools Lightering and warehouse equipment 20 years Remaining useful life 2% - 3% 8% - 15% 20% - 33.3% 10% - 33.3% 15% - 33.3% 10% - 20% 10% - 20% 6.7% - 20% 2% - 10% 20% 12.5% - 50%
Freehold land and building of the Corporation have not been revalued since they were revalued in 1984. The directors have not adopted a policy of regular revaluations of such assets. As permitted under the transitional provisions of IAS 16 (Revised): Property, Plant and Equipment, these assets continue to be stated at their original valuation less accumulated depreciation and impairment losses. Upon the disposal of an item of ship, property or equipment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement.
120
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (f) Inventories Inventories which comprise bunkers, lubricants, spares, raw materials and consumable stores are held for own consumption and are stated at the lower of cost and net realisable value. Cost is arrived at on the weighted average basis and comprises the purchase price and other direct charges. In prior years, the Group recognised the cost incurred on spares to the income statements. With effect from the current financial year, the Group changed its accounting policy on spares by capitalising as inventories and charging to income statement as and when used. The change in accounting policy has been applied to current and future years as the effect to the opening balances of retained profits of the Group and the Corporation for the prior and current year cannot be reasonably determined. (g) Cash and Cash Equivalents For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank, deposits at call and short term highly liquid investments which have an insignificant risk of changes in value, net of outstanding bank overdraft. (h) Operating Lease Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease expenses are recognised in the income statement on a straight-line basis over the lease term. (i) Provisions for Liabilities Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation. Provision for warranty is set up based on service histories to cover the estimated liability that may arise during the warranty period. Any surplus provision will be written back at the end of the warranty period while additional provision is made as necessary.
121
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (j) Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill. Prior to the adoption of MASB 25: Income Taxes on 1 April 2003, deferred tax was provided for using the liability method in respect of significant timing differences and deferred tax assets were not recognised unless there was reasonable expectation of their realisation. This change in accounting policy has not given rise to any adjustments to the opening balance of retained profits of the prior and current year or to changes in comparatives. (k) Dry Docking Expenditure Dry docking expenditure is recognised in the income statement as and when incurred. (l) Employee Benefits (i) Short term benefits Wages, salaries, bonuses, commission and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
122
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Employee Benefits (continued) (ii) Defined contribution plan As required by law, companies in Malaysia make contribution to the state pension scheme, the Employees Provident Fund ("EPF"). Some of the Group's foreign subsidiaries make contributions to their respective countries' statutory pension schemes. Such contributions are recognised as an expense in the income statement as incurred. Contributions in respect of defined contribution schemes are recognised in the income statement when they are payable to PETRONAS Retirement Benefit Fund for eligible employees. The details of the scheme are disclosed in Note 36. (iii) Termination benefits The Group pays termination benefits in cases of termination of employment within the framework of a separation scheme. Termination benefits are recognised as a liability and an expense on accrued basis. (m) Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. (i) Freight income Freight receivable and the relevant discharge costs of cargoes loaded onto ships up to the balance sheet date are accrued for in the financial statements. (ii) Charter income The results of ships employed and voyage charter and that of other services rendered by the Group are accounted for on a time accrual basis. (iii) Lightering income Income on lightering charges is recognised on percentage of completion of voyages calculated on a discharge-to-discharge basis. The voyage revenue is recognised evenly over the period from a vessel's departure from its previous discharge point to its projected departure from its next discharge point. (iv) Other shipping related income Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed.
123
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) Revenue Recognition (continued) (v) Construction contracts Where the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the balance sheet date. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When costs incurred on construction contracts plus recognised profits (less recognised losses) exceeds progress billings, the balance is shown as amount due from customers on contracts. When progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as amount due to customers on contracts. (vi) Dividend income Dividend income is recognised when the shareholders' right to receive payment is established. (n) Foreign Currencies (i) Foreign currency transactions Transactions in foreign currencies are converted into Ringgit Malaysia at rates of exchange ruling at the date of the transaction. At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling at that date. Non-monetary items which are carried at historical cost are translated using the historical rate as of the date of acquisition and non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined. All exchange rate differences are taken to the income statement.
124
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n) Foreign Currencies (continued) (ii) Foreign entities Financial statements of foreign consolidated subsidiaries are translated at year end exchange rates with respect to assets and liabilities, and at average exchange rates with respect to the income statement. All resulting translation differences are taken to the currency translation differences reserve in shareholders equity. On disposal of the foreign entity, such translation differences are recognised in the income statement as part of the gain or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the Group and translated at the exchange rate ruling at the date of the transaction. The principal exchange rates for every unit of foreign currency ruling at balance sheet date used are as follows: 2004 RM United States Dollar Sterling Pound Australian Dollar EURO Japanese Yen Singapore Dollar (o) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual agreement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously. The financial risk management objectives and policies are disclosed in Note 37. (p) Other Investments Other investments are stated at cost less provision for any permanent diminution in value. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statement. 3.80 6.44 2.64 4.47 0.03 2.20 2003 RM 3.80 6.08 2.25 4.09 0.03 2.19
125
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (q) Marketable Securities Marketable securities are carried at the lower of cost and market value, determined on an aggregate portfolio basis by category of investments. Cost is determined on the weighted average basis while market value is determined based on quoted market values. Increases or decreases in the carrying amount of marketable securities are recognised in the income statement. On disposal of marketable securities, the difference between net disposal proceeds and the carrying amount is recognised in the income statement. (r) Receivables Trade and other receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date. Amount receivable and payable with the same party are offset when they are permissable under the ordinary course of business. (s) Payables Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. (t) Interest-Bearing Borrowings and Borrowing Costs Interest-bearing bank loans and overdraft are recorded at the face value of loan amount. Borrowing costs comprise debts issuance costs and interest costs. Borrowing costs related to ship, property and equipment under construction are capitalised until the assets are ready for their intended use. All other borrowing costs are recognised in the income statement as an expense in the period in which they are incurred. (u) Non-Convertible Cumulative Redeemable Preference Shares ("NCRPS") NCRPS are classified as long term liability in the balance sheet and the related dividends are recognised in the income statement as interest expense in the period in which they are incurred. (v) Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
126
2.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (w) Derivative Financial Instruments Derivative financial instruments are not recognised in the financial statements on inception. Interest rate swap contracts Net differentials in interest receipts and payments arising from interest rate swap contracts are recognised as interest income or expense over the period of the contract. Forward foreign exchange contracts Subsequent to the acquisition of MSE Holdings Sdn. Bhd., the Group was involved in foreign currency forward contracts to protect the Group from movements in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled. Exchange gains and losses arising on contracts entered into as hedges of anticipated future transactions are deferred until the date of such transaction, at which time they are included in the measurement of such transactions. All other exchange gains and losses relating to hedge instruments are recognised in the income statement in the same financial year as the exchange differences on the underlying hedged items. Gains and losses on contracts which are no longer designated as hedges are included in the income statement. (x) Repairs and Maintenance Repairs and maintenance costs are recognised in the income statement as incurred. Major renewals and improvements are capitalised. (y) Charter Hire Expenses Charter hire expenses are recognised in the income statement as incurred.
3.
REVENUE Revenue of the Group and of the Corporation consists of the following: Group 2004 RM000 Freight income Charter and lightering income Other shipping related income 2,094,162 5,155,994 356,115 7,606,271 2003 RM000 1,625,694 3,526,332 280,970 5,432,996 Corporation 2004 2003 RM000 RM000 2,094,162 2,084,632 135,546 4,314,340 1,625,694 2,089,477 107,427 3,822,598
127
4.
PROFIT FROM OPERATIONS Profit from operations is stated: Group 2004 RM000 After charging: Charter hire expense Inventories used Ship, property and equipment: - Depreciation - Written off - Impairment loss Staff costs (Note 5) Dry docking expense Auditors' remuneration - Auditors of the Corporation - Statutory audits - Other services - Other auditors - Statutory audits - Other services Operating lease rental Rental of land and buildings Rental of equipment Amortisation of intangible assets Impairment loss in goodwill Waiver of amount due from a subsidiary Fees payable to ultimate holding company for services of a director Provision for: - Doubtful debts, net - Diminution in value of unquoted investments Bad debts written off Inventories written off 651,708 660,773 1,126,496 1,934 1,311 503,205 76,841 410,821 419,038 900,713 1,740 466,253 136,919 553,720 493,437 575,445 1,934 339,888 65,218 410,821 385,266 604,848 1,391 325,740 80,743 2003 RM000 Corporation 2004 2003 RM000 RM000
679 201 733 160 201 15,881 96,799 50,214 265 6,856 72 916 184
563 56 377 85 153 14,577 127,307 39,677 8,021 900 14,402 252 609
294 191 10,866 93,760 265 177
210 56 10,932 123,829 209,000 900 8,000
128
4.
PROFIT FROM OPERATIONS (CONTINUED) Group 2004 RM000 And crediting: Dividends receivable (gross): - Subsidiaries (unquoted) - Quoted in/outside Malaysia - Other unquoted investments Gain on disposal of property and equipment Gain on disposal of investment in associated company Gain on disposal of marketable securities Interest income from: - Subsidiaries - Deposits Rental income from: - Subsidiaries - Others Net exchange gains: - Realised - Unrealised 2003 RM000 Corporation 2004 2003 RM000 RM000
8,154 444 3,859 745 2,556 20,378 3,257 4,986 6,458
5,335 322 761 182 28,388 3,640 6,773 4,471
420,759 913 3,639 1,368 10,724 5,974 7,141 2,647 4,407 7,027
874,931 1,004 279 162 10,058 3,582 7,599 3,054 5,424 4,471
5.
STAFF COSTS Group 2004 RM000 Wages and salaries Bonus Termination benefits Social security costs Pension costs: - Employees Provident Fund and other statutory pension schemes - Contribution to PETRONAS Retirement Benefit Fund Other staff related expenses 393,862 18,162 8,685 1,732 2003 RM000 364,874 10,261 21,247 1,765 Corporation 2004 2003 RM000 RM000 268,492 7,180 6,739 431 257,384 5,935 11,512 244
15,638 1,085 64,041 503,205
14,744 1,414 51,948 466,253
5,606 51,440 339,888
6,444 44,221 325,740
Included in staff costs of the Group and of the Corporation are executive directors' remuneration amounting to RM1,549,000 (2003: RM1,453,000) and RM322,000 (2003: RMNil) respectively as further disclosed in Note 6.
129
6.
DIRECTORS REMUNERATION Group 2004 RM000 Directors of the Corporation Executive: Salaries and other emoluments Fees Benefits-in-kind 2003 RM000 Corporation 2004 2003 RM000 RM000
322 47 19 388
322 47 19 388
Non-Executive: Fees Other Directors Executive: Salaries and other emoluments Fees Benefits-in-kind
262
295
262
295
1,227 7 1,234
1,453 223 1,676
Non-Executive: Fees Total
230 2,114
47 2,018
650
295
Total (excluding benefits-in-kind)
2,095
1,795
631
295
The number of directors of the Corporation whose total remuneration during the year fell within the following bands is analysed below: Number of Directors 2004 2003 Executive director: RM350,001 - RM400,000 Non-Executive directors: RM1 - RM50,000 RM51,000 - RM100,000
4 2
4 2
130
7.
FINANCE COSTS Group 2004 RM000 Interest expense Islamic Private Debt Securities Non-convertible cumulative redeemable preference share dividend 172,698 35,382 2,413 210,493 2003 RM000 123,570 40,816 5,195 169,581 Corporation 2004 2003 RM000 RM000 35,382 35,382 333 40,816 41,149
8.
TAXATION Group 2004 RM000 Taxation for the financial year comprises the following charge/(credit): In Malaysia Income tax - current year - Charge - Credit Income tax - under provision in prior years Transfer (to)/from deferred taxation (Note 29) Outside Malaysia Income tax - current year Income tax - under provision in prior years Transfer to deferred taxation (Note 29) 2003 RM000 Corporation 2004 2003 RM000 RM000
15,148 (10,349) 586 (3,163)
3,124 (16,722) 318 531
1,903 183 (86) 4,222
1,704 223 (109) (10,931)
Share of taxation of associated companies: In Malaysia Income tax - current year Outside Malaysia Income tax - current year
2,632
8,382
273 2,905 7,127
(958) 7,424 (3,507)
131
8.
TAXATION (CONTINUED) A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Corporation is as follows: Group 2004 RM000 Profit before taxation Taxation at Malaysian statutory tax rate of 28% (2003: 28%) Effect of different tax rates in other countries Income not subject to tax: - Tax exempt shipping income - Other tax exempt income Expenses not deductible for tax purposes: - Depreciation and amortisation - Waiver of due from a subsidiary - Other expenses Tax losses not allowable for future utilisation Utilisation of previously unrecognised tax losses and capital allowances Deferred tax assets recognised during the year Deferred tax assets not recognised during the year Income tax underprovided in prior years Taxation for the year 2,326,404 651,393 29,337 (1,079,059) (5,546) 314,561 57,981 21,683 (12,067) (4,031) 32,106 769 7,127 2003 RM000 1,310,300 366,884 (1,115) (687,722) (18,486) 249,273 40,187 19,697 (11,224 ) (150) 38,608 541 (3,507) Corporation 2004 2003 RM000 RM000 1,237,633 346,537 (429,516) (117,813) 151,432 32,922 (7,900) 24,338 1,200,310 336,087 (360,939) (246,559) 159,698 58,520 24,371 (7,557) 36,379
Tax exempt shipping income are derived from the operations of the Group's sea-going Malaysian registered ships under Section 54A of the Malaysian Income Tax Act, 1967 and ships registered outside Malaysia under tax jurisdictions of other countries. The Corporation has sufficient tax exempt income to frank the payment of dividend out of its entire retained profits as at 31 March 2004, subject to agreement with Inland Revenue Board. 9. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net profit for the year by the weighted average number of ordinary shares in issue during the financial year. Group 2004 Net profit for the year (RM'000) Weighted average number of ordinary shares in issue ('000) Basic earnings per share (sen) 2,289,571 1,859,914 123.1 2003 1,310,663 1,859,914 70.5
Diluted earnings per share are not presented as there were no potential dilutive ordinary shares outstanding as at 31 March 2004.
132
10. DIVIDENDS Amount 2004 RM000 In respect of financial year: 31 March 2003 Final tax exempt dividend of 15 sen per share 31 March 2004 Interim tax exempt dividend of 15 sen per share 2003 RM000 Net Dividend per Share 2004 2003 Sen Sen
278,987
278,987
15.0
15.0
278,987 557,974
278,987 557,974
15.0 30.0
15.0 30.0
At the forthcoming Annual General Meeting, the following tax exempt dividends will be proposed for shareholders' approval in respect of the financial year ended 31 March 2004: RM000 Final tax exempt dividend of 15 sen per share on 1,859,913,793 ordinary shares 278,987
Special tax exempt dividend of 10 sen per share on 1,859,913,793 ordinary shares
185,991
The financial statements for the current financial year do not reflect these proposed dividends. Such dividends, if approved by the shareholders, will be accounted for in shareholders' equity as an appropriation of retained profits in the financial year ending 31 March 2005.
133
11. SHIP, PROPERTY AND EQUIPMENT

Assets of subsidiary acquired RM000 Disposals and write-offs RM000 Currency translation differences RM000
Group - 31 March 2004 Ships At cost: Ships in operation Ships under construction
At 1.4.2003 RM000
Additions RM000
Transfers RM000
At 31.3.2004 RM000
16,944,526 1,706,488 18,651,014
4,535,774 294,362 4,830,136
902,793 1,538,289 2,441,082
(6,352) (6,352)
1,346,412 (1,346,412)
23,723,153 2,192,727 25,915,880
Property and equipment At 1984 valuation: Freehold land Freehold buildings At cost: Freehold land Long leasehold land Short leasehold land Freehold buildings Leasehold buildings Drydocks and waste plant Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress Trailers and prime movers Plant and machinery Tugboats, engines and pushers
22,300 23,699
22,300 23,699
12,192 88,856 10,888 49,296 69,900 283,585 4,905 15,654 116,875 17,083 168,812 17,078 901,123
1,662 78,260 3,480 390,851 8,622 38,569 4,083 223,305 70,769 819,601
475 1,683 3,027 3,066 3,960 78,880 11,909 1,837 104,837
(29,066) (1,307) (218) (457) (101) (309) (31,458)
(32) 8,535 (8,503)
605 1,204 18 803 539 328 3,497
14,459 167,116 10,888 54,455 71,583 390,851 254,519 15,265 57,842 133,535 87,460 180,620 242,239 70,769 1,797,600
134
11. SHIP, PROPERTY AND EQUIPMENT (CONTINUED)

Accumulated depreciation at 1.4.2003 Group - 31 March 2004 Ships At cost: Ships in operation Ships under construction 6,903,710 6,903,710 Property and equipment At 1984 valuation: Freehold land Freehold buildings At cost: Freehold land Long leasehold land Short leasehold land Freehold buildings Leasehold buildings Drydocks and waste plant Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress Trailers and p rime movers 49,344 1,282 16,925 (457 ) 439 67,533 66,002 87,460 12,082 28,648 1,873 (209 ) 633 43,027 14,815 7,622 3,648 15,801 15,867 230,341 3,924 20,170 1,050 101,950 7,440 991 286 2,033 1,658 20,345 1,012 (29,010 ) (1,307 ) 524 5 28,783 3,934 19,408 17,525 101,950 221,676 11,074 14,459 138,333 6,954 35,047 54,058 288,901 32,843 4,191 10,452 474 10,926 22,300 12,773 966,368 966,368 1,073,219 1,073,219 1,311 1,311 (4,418 ) (4,418 ) 8,940,190 8,940,190 14,782,963 2,192,727 16,975,690 RM000 Assets of subsidiary acquired RM000 Depreciation charge for the year RM000 Impairment losses RM000 Disposals and write-offs RM000 Currency translation differences RM000 Accumulated depreciation at 31.3.2004 RM000 Net book value at 31.3.2004 RM000
Plant and machinery Tugboats, engines and pushers
159,829 9,447 518,357
152,698 40,427 353,665
5,037 2,643 53,277
(71 ) (309 ) (31,363 )
286 1,887
164,795 164,765 40,427 895,823
15,825 77,474 30,342 901,777
135

Assets of subsidiary acquired RM000 Disposals and write-offs RM000 Currency translation differences RM000
Group - 31 March 2003 Ships At cost: Ships in operation Ships under construction
At 1.4.2002 RM000
Additions RM000
Transfers RM000
At 31.3.2003 RM000
15,346,882 1,530,804 16,877,686
359,973 1,459,588 1,819,561
1,237,671 (1,283,904) (46,233)
16,944,526 1,706,488 18,651,014
Property and equipment At 1984 valuation: Freehold land Freehold buildings At cost: Freehold land Long leasehold land Short leasehold land Freehold buildings Leasehold buildings Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress Trailers and prime movers Plant and machinery
22,300 23,699
22,300 23,699
11,828 88,144 10,888 43,339 69,808 248,553 4,715 13,974 49,056 37,697 169,564 6,849 800,414
4,740 213 488 1,224 3,101 9,766
712 274 92 37,945 415 738 12,494 34,899 4,831 92,400
(2,913) (462) (87) (429 ) (1,391) (752) (1,750) (7,784)
54,122 (54,122)
364 943 24 541 408 4,047 6,327
12,192 88,856 10,888 49,296 69,900 283,585 4,905 15,654 116,875 17,083 168,812 17,078 901,123
136

Accumulated depreciation at 1.4.2002 Group - 31 March 2003 Ships At cost: Ships in operation Ships under construction 6,099,361 6,099,361 Property and equipment At 1984 valuation: Freehold land Freehold buildings At cost: Freehold land Long leasehold land Short leasehold land Freehold buildings Leasehold buildings Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress Trailers and prime movers Plant and machinery 39,313 152,369 5,053 466,724 309 874 2,032 9,484 8,137 1,238 50,131 (91) (677) (1,746) (5,860) 329 4,028 5,330 49,344 159,829 9,447 518,357 67,531 17,083 8,983 7,631 382,766 10,881 237 585 (79) 458 12,082 3,572 6,633 3,362 13,456 14,395 207,554 3,730 481 131 989 286 1,349 1,472 25,696 421 (2,909) (358 ) 515 7,622 3,648 15,801 15,867 230,341 3,924 12,192 81,234 7,240 33,495 54,033 53,244 981 9,978 474 10,452 22,300 13,247 850,582 850,582 (46,233 ) (46,233 ) 6,903,710 6,903,710 10,040,816 1,706,488 11,747,304 RM000 Assets of subsidiary acquired RM000 Depreciation charge for the year RM000 Disposals and write-offs RM000 Transfers RM000 Currency translation differences RM000 Accumulated depreciation at 31.3.2003 RM000 Net book value at 31.3.2003 RM000
137
11. SHIP, PROPERTY AND EQUIPMENT (CONTINUED) Disposals and write-offs RM000
Corporation 31 March 2004 Ships At cost: Ships in operation Ships under construction
At 1.4.2003 RM000
Additions RM000
Transfers RM000
At 31.3.2004 RM000
10,964,690 280,291 11,244,981
398,463 952,091 1,350,554
(6,352) (6,352)
355,455 (355,455)
11,712,256 876,927 12,589,183
Property and equipment At 1984 valuation: Freehold land Freehold buildings At cost: Freehold land Long leasehold land Short leasehold land Freehold buildings Leasehold buildings Containers Motor vehicles Furniture, fittings and equipment Computer software and hardware Systems work in progress
22,300 23,699
22,300 23,699
9,553 72,213 10,888 29,193 59,190 283,585 2,033 1,928 83,690 17,083 615,355
614 2,612 3,472 78,880 85,578
(29,065 ) (508 ) (29,573)
13 (1,911 ) (8,503) (10,401)
9,553 72,213 10,888 29,193 59,804 254,520 4,137 1,941 85,251 87,460 660,959
138
11. SHIP, PROPERTY AND EQUIPMENT (CONTINUED) Accumulated depreciation at 1.4.2003 RM000 Depreciation charge for the year RM000 Disposals and write-offs RM000 Accumulated depreciation at Transfers 31.3.2004 RM000 RM000 Net book value at 31.3.2004 RM000
5,333,135 5,333,135
540,829 540,829
(4,418) (4,418)
5,869,546 5,869,546
5,842,710 876,927 6,719,637
10,452
474
10,926
22,300 12,773
5,983 3,648 11,157 11,641 230,341 1,782 1,829 34,019 310,852
717 297 456 1,188 20,346 631 35 10,452 34,596
(29,008) (508) (29,516)
12 (720 ) (708 )
6,700 3,945 11,613 12,829 221,679 1,905 1,876 43,751 315,224
9,553 65,513 6,943 17,580 46,975 32,841 2,232 65 41,500 87,460 345,735
139
11. SHIP, PROPERTY AND EQUIPMENT (CONTINUED) Disposals and write-offs RM000
At 1.4.2002 RM000
Additions RM000
Transfers RM000
At 31.3.2003 RM000
10,185,821 1,530,804 11,716,625
356,646 1,459,207 1,815,853
422,223 (2,709,720) (2,287,497)
10,964,690 280,291 11,244,981
22,300 23,699
22,300 23,699
9,553 71,501 10,888 29,193 59,190 248,553 1,964 1,922 34,769 37,697 551,229
712 37,945 277 6 11,166 34,899 85,005
(2,913) (208) (1,391 ) (4,512)
37,755 (54,122) (16,367)
9,553 72,213 10,888 29,193 59,190 283,585 2,033 1,928 83,690 17,083 615,355
140
11. SHIP, PROPERTY AND EQUIPMENT (CONTINUED) Accumulated depreciation at 1.4.2002 RM000 Depreciation charge for the year RM000 Disposals and write-offs RM000 Accumulated depreciation at Transfers 31.3.2003 RM000 RM000 Net book value at 31.3.2003 RM000
4,591,962 4,591,962
570,350 570,350
170,823 170,823
5,333,135 5,333,135
5,631,555 280,291 5,911,846
9,978
474
10,452
22,300 13,247
5,255 3,362 10,700 10,460 207,554 1,935 1,783 28,444 279,471
728 286 457 1,181 25,696 55 46 5,575 34,498
(2,909) (208 ) (3,117)
5,983 3,648 11,157 11,641 230,341 1,782 1,829 34,019 310,852
9,553 66,230 7,240 18,036 47,549 53,244 251 99 49,671 17,083 304,503
141
11. SHIP, PROPERTY AND EQUIPMENT (CONTINUED) Certain properties were revalued by the directors in 1984 based on valuations carried out by a firm of professional valuers to reflect the current market value then. Surpluses on revaluation were taken to the revaluation reserve on that date. The net book value of revalued properties, had the assets been carried at cost less depreciation, is as follows: Group and Corporation 2004 2003 RM000 RM000 Freehold land - 1984 Freehold buildings - 1984 818 3,340 4,158 818 3,486 4,304
Included in long term leasehold land of the Group is carrying value of a long term leasehold and foreshore land of a subsidiary acquired during the year of RM58,089,000 which cannot be disposed off, charged or subleased without the prior consent of the Johor State Government. The long term leasehold and foreshore land were revalued in 1998 by an independent professional valuer based on an open market value basis. The carrying amount of the long term leasehold and foreshore land that would have been included in the financial statements had the assets been carried at cost less accumulated depreciation is RM8,230,000. Certain ships of the Group have been pledged as security for banking facilities as set out in Note 26. The net book value of these ships is as follows: Group 2004 RM000 Ships in operation 5,168,374 2003 RM000 505,149
Borrowing costs capitalised during the financial year under ships under construction of the Group amounted to RM23,344,525 (2003: RMNil).
142
12. SUBSIDIARIES Corporation 2004 2003 RM000 RM000 Unquoted shares at cost Loans and advances to subsidiaries 2,662,057 13,867 2,675,924 2,437,406 13,867 2,451,273
The loans and advances to subsidiaries are unsecured and interest-free and are not repayable within 12 months from the balance sheet date. Details of the subsidiaries are disclosed in Note 38. (a) Acquisition of subsidiaries (Note 40) (i) On 22 July 2003, the Corporation through its wholly-owned subsidiary, acquired 100% interest in American Eagle Tanker Inc. Limited ("AET"); and On 17 March 2004, the Corporation acquired an additional of 22% equity interest in MSE Holdings Sdn. Bhd. ("MSE"). As a result, MSE became a subsidiary of the Corporation. The effects of the acquisition on the financial results of the Group from the date of acquisition to 31 March 2004 are as follows: AET RM000 Revenue Operating costs Non operating costs Net profit * 1,277,127 (776,811) (30,673) 469,643 MSE* RM000 Total RM000 1,277,127 (776,811) (30,673) 469,643
(ii)
The effect of the acquisition on the financial results of the Group from the date of acquisition to 31 March 2004 is not material.
143
12. SUBSIDIARIES (CONTINUED) The effects of the acquisition on the financial position of the Group as at 31 March 2004 are as follows: AET RM000 Ship, property and equipment Investments Goodwill on consolidation, net Inventories Trade and other receivables Provision for doubtful debts Cash and balances Trade and other payables Amount due to holding company Deferred taxation Borrowings Minority interests Group's share of net assets 3,865,964 609,305 26,559 153,306 (6,216) 403,613 (121,769) (1,170,072) (10,564) (1,400,414) 2,349,712 MSE RM000 460,278 15 9,104 8,884 373,492 (6,646) 79,515 (285,375) (46,557 ) (100,975) (169,173) 322,562 Total RM000 4,326,242 15 618,409 35,443 526,798 (12,862) 483,128 (407,144) (1,170,072) (57,121) (1,501,389) (169,173 ) 2,672,274
The fair values of the assets acquired and liabilities assumed from the acquisition of the subsidiaries are as follows: AET 22.7.2003 RM000 Net assets acquired: Ship, property and equipment Other investments Inventories Trade and other receivables, net Cash and bank balances Trade and other payables Amount due to holding company Deferred taxation Borrowings Fair value of total net assets Less: Minority interest Group's share of net assets Less: Carrying amount accounted for as associated company, at date of acquisition Goodwill on acquisition Total consideration MSE 31.3.2004 RM000
Total RM000
3,869,426 47,074 101,088 80,355 (123,130) (1,217,331) (2,189) (1,492,230) 1,263,063 1,263,063 630,321 1,893,384
460,278 15 8,884 366,846 79,515 (285,375) (46,557) (100,975 ) 482,631 (169,173) 313,458 (207,363 ) 9,104 115,199
4,329,704 15 55,958 467,934 159,870 (408,505 ) (1,217,331) (48,746) (1,593,205) 1,745,694 (169,173) 1,576,521 (207,363) 639,425 2,008,583
144
12. SUBSIDIARIES (CONTINUED) AET 22.7.2003 RM000 Satisfied by cash Net cash outflow arising from acquisition: Cash consideration Cash and cash equivalents of subsidiary acquired 1,893,384 MSE 31.3.2004 RM000 115,199
Total RM000 2,008,583
1,893,384 (80,355) 1,813,029
115,199 (79,515) 35,684
2,008,583 (159,870 ) 1,848,713
(b)
On 19 May 2003, MISC Integrated Logistics Sdn. Bhd., a wholly-owned subsidiary of the Corporation acquired from Faber Haulage Sdn. Bhd. the remaining 25% equity interests in MISC Haulage Services Sdn. Bhd. ("MHS"). The acquisition was completed on 19 May 2003. As a result, MHS became a wholly-owned subsidiary of the Corporation.
13. ASSOCIATED COMPANIES Group 2004 RM000 In Malaysia: Unquoted shares at cost Outside Malaysia: Unquoted shares at cost 2003 RM000
112,620
119,711
21,093 133,713 (22,666) 16,555 127,602
25,186 144,897 124,978 55,839 325,714
Share of post-acquisition (losses)/profits Share of other post-acquisition reserves
Represented by: Share of net tangible assets Share of intangible assets
127,466 136 127,602 7,260 134,862
325,578 136 325,714 8,631 334,345
Loans to associated companies
The loans to associated companies are unsecured, interest-free and are not repayable within 12 months from the balance sheet date. Details of the associated companies are disclosed in Note 39.
145
14. OTHER INVESTMENTS Group 2004 RM000 At cost: Shares in corporations, unquoted Less: Provision for diminution in value 2003 RM000 Corporation 2004 2003 RM000 RM000
44,881 (1,435) 43,446 192,808 236,254
45,057 (1,363) 43,694 192,808 236,502
38,040 38,040 13,409 51,449
38,040 38,040 13,409 51,449
Shares in corporations, quoted in Malaysia
Market value of quoted shares 15. INTANGIBLE ASSETS
210,197
160,353
18,333
12,446
Reserve arising on consolidation RM000 Group Net book value at 1 April 2002 Acquisition of a subsidiary Additional interest in a subsidiary Amortisation charge Impairment loss in goodwill Net book value at 1 April 2003 Acquisition of subsidiaries (Note 12(a)) Additional interest in a subsidiary (Note 12(b)) Amortisation charge Net book value at 31 March 2004 (146 ) (88 ) 28 (206 ) 47 (159)
Goodwill RM000
Other intangible assets RM000
Total RM000
20,097 (11,542 ) (8,021 ) 534 639,425 5,366 (22,093) 623,232
409,154 (28,163) 380,991 (28,168 ) 352,823
429,251 (146) (88) (39,677 ) (8,021) 381,319 639,425 5,366 (50,214) 975,896
146
16. DUE FROM GROUP COMPANIES Group 2004 RM000 Trade: Due from holding company Due from fellow subsidiaries Due from subsidiaries Less: Provision for doubtful debts 2003 RM000 Corporation 2004 2003 RM000 RM000
330 28,642 28,972
104 49,864 49,968
4 414 521,699 (2,214) 519,903
24,701 254,264 (2,214 ) 276,751
Non trade: Due from fellow subsidiaries Due from subsidiaries
4,566 4,566 33,538
49,968
4,560 710,936 715,496 1,235,399
1,996,685 1,996,685 2,273,436
The amounts due from holding company, fellow subsidiaries and subsidiaries are unsecured, interest-free and have no fixed terms of repayment. 17. DUE FROM ASSOCIATED COMPANIES Group 2004 RM000 Trade Less: Provision for doubtful debts 1,580 (96) 1,484 2003 RM000 18,017 (96 ) 17,921 Corporation 2004 2003 RM000 RM000 1,575 (96) 1,479 18,056 (96 ) 17,960
The amounts due from associated companies are unsecured, interest-free and have no fixed terms of repayment.
147
18. INVENTORIES Group 2004 RM000 At cost: Bunkers, lubricants and consumable stores Spares Raw materials 2003 RM000 Corporation 2004 2003 RM000 RM000
78,972 38,692 10,822 128,486
61,715 61,715
52,635 28,649 81,284
57,541 57,541
19. RECEIVABLES Group 2004 RM000 Trade receivables Due from customers on contracts (Note 20) Less: Provision for doubtful debts 723,814 238,485 (67,094) 895,205 Staff housing and vehicle loans Non trade receivables Deposits Prepayments 622 119,664 5,484 76,927 202,697 (2,369) 200,328 Recoverable amount from deconsolidated subsidiaries 4,127 1,099,660 2003 RM000 435,657 (56,843) 378,814 657 61,358 4,859 32,198 99,072 (2,308) 96,764 4,127 479,705 Corporation 2004 2003 RM000 RM000 385,499 (37,517) 347,982 380 53,425 1,409 20,559 75,773 (2,228) 73,545 421,527 334,684 (37,517 ) 297,167 498 8,303 1,531 28,148 38,480 (2,228) 36,252 333,419
Less: Provision for doubtful debts
The Group's normal trade credit term ranges from 14 to 60 days (2003: 14 to 60 days). Other credit terms are assessed and approved on a case-by-case basis. The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors.
148
20. DUE FROM/(TO) CUSTOMERS ON CONTRACTS Group 2004 RM000 Construction contract costs incurred and recognised profits to date Less: Progress billings 1,348,062 (1,128,768) 219,294 2003 RM000
Due from customers on contracts (Note 19) Due to customers on contracts (Note 25)
238,485 (19,191) 219,294
21. MARKETABLE SECURITIES Group 2004 RM000 Quoted in Malaysia: At market value As at year end, no marketable securities are stated at cost. 22. CASH, DEPOSITS AND BANK BALANCES Group 2004 RM000 Deposits with: licensed banks licensed finance companies Cash and bank balances 2003 RM000 Corporation 2004 2003 RM000 RM000 2003 RM000 Corporation 2004 2003 RM000 RM000
5,432
5,106
5,432
4,695
1,411,288 92,213 350,085 1,853,586
773,911 20,519 235,222 1,029,652
367,795 80,471 49,604 497,870
78,350 5,489 161,872 245,711
149
22. CASH, DEPOSITS AND BANK BALANCES (CONTINUED) The range of interest rates and maturities of deposits as at 31 March 2004 were as follows: Range of Interest Rates 2004 2003 % % Group Licensed banks Licensed finance companies Corporation Licensed banks Licensed finance companies 1.00 - 2.80 2.60 - 2.80 2.60 - 2.80 2.75 - 2.95 1 - 30 1 - 30 1 - 30 7 - 90 2.60 - 2.80 2.60 - 2.80 2.60 - 2.80 2.75 - 2.95 1 - 30 1 - 30 1 - 30 7 - 90
Range of Maturities 2004 2003 Days Days
23. DUE TO GROUP COMPANIES Group 2004 RM000 Trade: Due to holding company Due to fellow subsidiaries Due to subsidiaries 2003 RM000 Corporation 2004 2003 RM000 RM000
26,563 59,318 85,881
3,000 60,125 63,125
54,901 203,971 258,872
53,559 41,950 95,509
Non trade: Due to holding company Due to fellow subsidiaries Due to subsidiaries
16,475 3,456 19,931 105,812
38,842 43 38,885 102,010
24,500 4,451 28,951 287,823
24,474 24,474 119,983
The amounts due to subsidiaries, fellow subsidiaries and holding company are unsecured, interest-free and have no fixed terms of repayment.
150
24. DUE TO ASSOCIATED COMPANIES Group 2004 RM000 Trade Non trade 334 813 1,147 2003 RM000 2,819 233 3,052 Corporation 2004 2003 RM000 RM000 813 813 2,789 2,789
The amounts due to associated companies are unsecured, interest-free and have no fixed terms of repayment. 25. PAYABLES AND ACCRUALS Group 2004 RM000 Trade payables Due to customers on contracts (Note 20) Non trade payables Accruals and provisions Provision for warranties Due to deconsolidated subsidiaries 772,205 19,191 195,244 197,863 16,445 3,072 1,204,020 2003 RM000 499,575 65,689 98,707 3,072 667,043 Corporation 2004 2003 RM000 RM000 395,057 106,980 33,174 535,211 385,299 46,576 54,285 486,160
The normal trade credit term granted to the Group ranges from 14 to 60 days (2003: 14 to 60 days). The amount due to deconsolidated subsidiaries is unsecured, interest-free and repayable upon completion of the liquidation exercise. The Group gives approximately one year warranties on certain products and undertakes to repair or replace items that fail to perform satisfactorily. A provision has been recognised at the financial year end of expected warranty claims based on past experience of the level of repairs and returns.
151
26. BORROWINGS Group 2004 RM000 Short Term Borrowings Secured: Term loans - Fixed rate - Floating rate 2003 RM000 Corporation 2004 2003 RM000 RM000
275,150 298,280 573,430
92,390 92,390
Unsecured: Bank overdraft Term loans Islamic Private Debt Securities - Al Murabahah Commercial Papers
4,016,340 600,000 4,616,340 5,189,770
10,671 945,838 1,100,000 2,056,509 2,148,899
600,000 600,000 600,000
10,671 1,100,000 1,110,671 1,110,671
Long Term Borrowings Secured: Term loans - Fixed rate - Floating rate
2,081,446 1,102,134 3,183,580
297,179 297,179
Unsecured: Term loans Islamic Private Debt Securities - Al Murabahah Medium Term Notes
560,094 400,000 960,094
1,375,822 400,000 1,775,822 22,807 2,095,808
400,000 400,000 400,000
400,000 400,000 400,000
7.5% Non-convertible Cumulative Redeemable Preference Shares ("NCRPS") of USD1.00 each
22,807 4,166,481
152
26. BORROWINGS (CONTINUED) Group 2004 RM000 Total Borrowings Bank overdraft Term loans Islamic Private Debt Securities - Al Murabahah Commercial Papers - Al Murabahah Medium Term Notes 8,333,444 600,000 400,000 9,333,444 22,807 9,356,251 Maturity of borrowings Bank overdraft Within one year Term loans Within one year More than one and less than two years More than two and less than five years Five years or more 4,589,770 794,876 1,689,963 1,258,835 8,333,444 Islamic Private Debt Securities Within one year More than one and less than two years More than two and less than five years 600,000 400,000 1,000,000 NCRPS No fixed maturity 22,807 9,356,251 22,807 4,244,707 1,000,000 1,510,671 1,100,000 400,000 1,500,000 600,000 400,000 1,000,000 1,100,000 400,000 1,500,000 1,038,228 888,229 752,382 32,390 2,711,229 10,671 10,671 10,671 2,711,229 1,100,000 400,000 4,221,900 22,807 4,244,707 600,000 400,000 1,000,000 1,000,000 10,671 1,100,000 400,000 1,510,671 1,510,671 2003 RM000 Corporation 2004 2003 RM000 RM000
NCRPS
153
26. BORROWINGS (CONTINUED) Term Loans The secured term loans of the Group comprise: Group 2004 USD000 US Dollar Term Loans US Dollar Term Loans on acquisition of a subsidiary 605,851 368,530 974,381 2003 USD000 102,518 102,518
The USD term loans are secured by mortgages over certain ships, together with assignments of earnings, charter agreements and insurance of the relevant ships. The carrying value of the ships pledged is stated in Note 11. These secured term loans bear interest at rates ranging from 6.8% to 7.4% (2003: 6.8% to 7.4%) per annum and are repayable at their various dates from 1994 to 2017 (2003: 1994 to 2007). The unsecured term loans of the Group comprise: Group 2004 USD000 US Dollar Term Loans 1,203,058 2003 USD000 610,963
On 16 July 2003, a wholly-owned subsidiary of the Corporation, AET Holdings (L) Pte. Ltd. obtained unsecured short term borrowings amounting to USD830 million from a consortium of financial institutions and licensed banks pursuant to a Bridge Facility Agreement. The borrowings are guaranteed by the Corporation, bear an interest rate of LIBOR+0.20% per annum and repayable in full on 14 July 2004. The Corporation has embarked on a fund raising exercise to replace this Facility. The remaining unsecured term loans bear interest at rates ranging from 1.2% to 1.5% (2003: 1.6% to 2.4%) per annum and are repayable at their various dates from 1994 to 2007.
154
26. BORROWINGS (CONTINUED) Islamic Private Debt Securities During the financial year ended 31 March 2004, the Corporation repaid Al-Murabahah Commercial Papers of RM1,100 million and issued new Al-Murabahah Commercial Papers of RM600 million. The amount, maturity date and yield as at issuance dates of the Islamic Private Debt Securities of the Group and the Corporation are as follows: Group and Corporation Amount 2004 2003 RM000 RM000 Issue No. 1 Issue No. 4 Issue No. 5 Issue No. 6 Issue No. 18 Issue No. 19 400,000 400,000 200,000 1,000,000 400,000 500,000 300,000 300,000 1,500,000
Maturity date 2004 2003
Yield at issuance date 2004 2003 % % 5.31 2.86 2.85 5.31 2.91 2.92 2.92
Issue No. 1 Issue No. 4 Issue No. 5 Issue No. 6 Issue No. 18 Issue No. 19 Preference Shares
11.7.2005 12.5.2004 24.6.2004
11.7.2005 10.4.2003 27.4.2003 30.4.2003
The 7.5% NCRPS of USD1.00 each issued to minority shareholders of certain subsidiaries shall confer the holders the following rights and privileges: (a) The right to receive out of net profit for the year of the subsidiaries a cumulative preferential dividend on each preferential dividend share at a net of 7.5% per annum; The NCRPS shall rank pari passu with the ordinary shares in all respects except that the NCRPS shall rank in priority with regard to dividend payment of the subsidiaries; The NCRPS shall not entitle its holder thereof to participate in the profits or surplus assets of the subsidiaries;
(b)
(c)
(d) The NCRPS shall not be converted to ordinary shares of the subsidiaries; and (e) The NCRPS shall be redeemed at any time at par together with a sum equal to arrears of the preferential dividend thereon after a period of ten years from the date of issue on 1 July 1997 extendable for a period of five years subject to the approval of the preference shareholders.
155
27. SHARE CAPITAL Number of Ordinary Shares of RM1 each 2004 2003 000 000 Authorised*: At 1 April/31 March Issued and fully paid*: At 1 April/31 March
Amount 2004 RM 000 2003 RM000
2,500,000
2,500,000
2,500,000
2,500,000
1,859,914
1,859,914
1,859,914
1,859,914
* Included in the authorised and issued and fully paid share capital is one preference share of RM1 (2003: RM1). The preference shareholder is not entitled to any dividend nor to participate in the capital distribution upon dissolution of the Corporation but shall rank for repayment in priority to all other shares. Other rights and restrictions attached to the preference share are set out in Article 3B of the Corporations Articles of Association.
28. OTHER RESERVES Group 2004 RM000 Non-distributable Revaluation reserve Capital reserve arising from bonus issues in subsidiaries Other capital reserve Statutory reserves Currency translation differences 35,272 1,185 41,618 18,123 3,795 99,993 38,921 1,185 41,733 16,691 (1,728) 96,802 35,217 35,217 38,921 38,921 2003 RM000 Corporation 2004 2003 RM000 RM000
156
28. OTHER RESERVES (CONTINUED) The movement in each category of reserve were as follows: Group 2004 RM000 Revaluation Reserve At 1 April 2003/2002 Deferred tax liabilities recognised (Note 29) At 31 March 2004/2003 Capital Reserve Arising From Bonus Issues in Subsidiaries At 31 March 2004/2003 Other Capital Reserve At 1 April 2003/2002 Transfer to retained earnings Exchange differences At 31 March 2004/2003 Statutory Reserves At 1 April 2003/2002 Transfer from retained earnings At 31 March 2004/2003 2003 RM000 Corporation 2004 2003 RM000 RM000
38,921 (3,649) 35,272
38,921 38,921
38,921 (3,704) 35,217
38,921 38,921
1,185
1,185
41,733 (115) 41,618
42,088 (350) (5) 41,733
16,691 1,432 18,123
10,839 5,852 16,691
Currency Translation Differences At 1 April 2003/2002 Arising in the year At 31 March 2004/2003
(1,728) 5,523 3,795 99,993
(6,117) 4,389 (1,728) 96,802
35,217
38,921
157
28. OTHER RESERVES (CONTINUED) The nature and purpose of each category of reserve are as follows: (a) Revaluation Reserve The revaluation reserve represents surplus arising from the revaluation of certain freehold land and buildings of the Corporation in 1984. (b) Other Capital Reserve Other capital reserve represents the Groups share of its associated companies reserve. (c) Statutory Reserves The statutory reserves are maintained by a merchant bank in compliance with Section 36 of the Banking and Financial Institutions Act, 1989 and by overseas companies in accordance with the laws of the respective countries. (d) Currency Translation Differences Reserve The currency translation differences reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries. 29. DEFERRED TAXATION Group 2004 RM000 At 1 April 2003 Recognised in the income statement (Note 8) - In Malaysia - Outside Malaysia Charged to equity (Note 28) Acquisition of subsidiaries At 31 March 2004 Presented after appropriate offsetting as follows: Deferred tax assets Deferred tax liabilities (8,849) 81,295 72,446 14,925 14,925 3,704 3,704 14,925 (3,163) (86) 3,649 57,121 72,446 2003 RM000 14,503 531 (109 ) 14,925 Corporation 2004 2003 RM000 RM000 3,704 3,704
158
29. DEFERRED TAXATION (CONTINUED) The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows: Deferred Tax Liabilities of the Group: Accelerated Capital Allowances RM000 At 1 April 2003 Recognised in the income statement (Note 8) - In Malaysia - Outside Malaysia Charged to equity Acquisition of subsidiaries At 31 March 2004 18,642 (1,047) 63,190 80,785
Revaluation of Land RM000 3,649 3,649
Others RM000 (23 ) 2,217 2,194
Total RM000 18,642 (1,047) (23) 3,649 65,407 86,628
Deferred Tax Assets of the Group: Tax Losses and Unabsorbed Capital Allowances RM000 (2,729) (2,178) (25) (4,932)
Other Payables RM000 At 1 April 2003 Recognised in the income statement - In Malaysia - Outside Malaysia Acquisition of subsidiaries At 31 March 2004 Deferred Tax Liabilities of the Company: (703 ) (98) (38 ) (8,286) (9,125)
Others RM000 (285 ) 160 (125 )
Total RM000 (3,717) (2,116) (63 ) (8,286) (14,182)
Revaluation of properties RM000 At 1 April 2003 Charged to equity (Note 28) At 31 March 2004 3,704 3,704
159
29. DEFERRED TAXATION (CONTINUED) Deferred tax assets have not been recognised in respect of the following items: Group 2004 RM000 Unused tax losses Unabsorbed capital allowances 1,019,536 25,166 1,044,702 2003 RM000 943,667 19,448 963,115 Corporation 2004 2003 RM000 RM000 968,876 12,030 980,906 904,650 14,325 918,975
The unused tax losses of the Corporation relate to the loss making non-resident ships and can only be utilised to offset against future taxable profits of the same ship. Deferred tax assets have not been recognised for certain subsidiaries as these subsidiaries have a recent history of losses. 30. CASH FLOW FROM INVESTING ACTIVITIES Group 2004 RM000 Purchase of ship, property and equipment Acquisitions of subsidiaries, net (Note 12(a)) Purchase of additional shares in a subsidiary (Note 12(b)) Investment in subsidiaries Subsidiaries deconsolidated, net Investment in quoted shares Repayment of loans by subsidiaries Dividends received from - Quoted investments - Unquoted investments Dividends received from associated companies Proceeds from disposal of ship, property and equipment Purchase of marketable securities Proceeds from disposal of marketable securities Proceeds from disposal of an associated company Investment in unquoted shares Interest received Net cash used in investing activities (2,545,924) (1,848,713) (19,500) 8,136 414 11,307 3,951 1,315 930 20,414 (4,367,670) 2003 RM000 (1,911,961) 2,218 (1,500 ) (71 ) (8,435) 5,179 322 24,708 945 (40) 826 (778 ) 37,417 (1,851,170) Corporation 2004 2003 RM000 RM000 (1,436,132) (115,199) 865 420,759 3,696 680 5,758 (1,119,573) (1,900,858) (1,500) (2,023) (8,435) 3,071 848 874,931 283 (40 ) 620 13,753 (1,019,350)
160
31. CASH FLOW FROM FINANCING ACTIVITIES Group 2004 RM000 Drawdown of bridging loan Drawdown of term loans Drawdown of Islamic Private Debt Securities Repayment of term loans Repayment of Islamic Private Debt Securities Dividends paid to shareholders of Corporation Dividends paid to minority shareholders of subsidiaries Interest paid Net cash generated from/ (used in) financing activities 3,154,000 2,220,143 600,000 (1,345,129) (1,100,000) (557,974) (8,561) (212,423) 2,750,056 2003 RM000 1,100,000 (1,095,954) (405,000) (557,974) (8,977 ) (180,393 ) (1,148,298) Corporation 2004 2003 RM000 RM000 600,000 (1,100,000) (557,974) (35,519) (1,093,493) 1,100,000 (63,333) (405,000) (557,974 ) (42,363) 31,330
32. SIGNIFICANT RELATED PARTY TRANSACTIONS In addition to related party disclosures elsewhere in the financial statements, set out below are other significant related party transactions and balances. The directors are of the opinion that the transactions below have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties, unless otherwise stated. Group 2004 RM000 (a) Provision of shipping and shipping related services Charter hire revenue - Holding company - Fellow subsidiaries Malaysia LNG Sdn. Bhd. Petronas Trading Corporation Sdn. Bhd. Forwarding charges - Fellow subsidiary Malaysia International Trading Corporation (Japan) Sdn. Bhd. Warehouse services - Fellow subsidiary Vinyl Chloride (Malaysia) Sdn. Bhd. 2003 RM000 Corporation 2004 2003 RM000 RM000
132,315
81,289
132,315
81,289
2,576,852 106,631
2,323,081 90,608
915,249 106,631
1,020,368 90,608
3,284
19,032
2,375
7,737
161
32. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED) Group 2004 RM000 (b) Purchases of goods and services Purchases of bunkers, lubricants and spare parts - Fellow subsidiaries Petronas Dagangan Berhad Petronas Trading Corporation Sdn. Bhd. Malaysia International Trading Corporation (Japan) Sdn. Bhd. Purchases of services for repairs, conversion of vessels and dry docking - Associated company Malaysia Shipyard & Engineering Sdn. Bhd. Purchase of crew services - Shareholder of subsidiaries Nippon Yusen Kaisha Net transfer of ship, property and equipment to - Subsidiaries Purchase of information technology services - Holding company Management fee - Shareholder of subsidiaries Nippon Yusen Kaisha 2003 RM000 Corporation 2004 2003 RM000 RM000
59,693 287,098 295,426
61,029 335,869 128,043
59,397 287,098 295,426
45,322 329,819 124,683
225,927
59,176
225,927
48,499
11,643
13,593
(9,693)
(2,133,041)
14,597
19,646
14,046
19,346
2,285
3,937
The transfer of ship, property and equipment to the subsidiaries are at their respective net book values. MSE became a subsidiary of the Corporation as at the year end, and accordingly, the transactions during the financial year have not been eliminated.
162
33. COMMITMENTS Outstanding commitments in respect of capital expenditure at balance sheet date not provided for in the financial statements are as follows: Group 2004 RM000 Capital expenditure for ship, property and equipment: Authorised and contracted for Authorised but not contracted for 2003 RM000 Corporation 2004 2003 RM000 RM000
4,527,972 1,709,468 6,237,440
1,695,895 5,697,618 7,393,513 112,633 1,816 114,449
3,750,179 42,930 3,793,109 37,085 37,085
469,989 5,688,371 6,158,360 112,633 1,816 114,449
Commitments for information technology projects: Authorised and contracted for Authorised but not contracted for
37,085 37,085
Commitments for equity investment: Authorised but not contracted for
3,500 6,278,025
7,507,962
3,500 3,833,694
6,272,809
Commitments under non-cancellable operating lease: Within one year Between one and two years Between two and five years
109,452 76,842 61,669 247,963
22,758 9,157 1,157 33,072
8,147 5,173 10,147 23,467
21,945 8,764 834 31,543
163
34. CONTINGENT LIABILITIES Group 2004 RM000 Unsecured Letters of guarantee issued in respect of banking facilities extended to third party agents Indemnity provided in respect of banking facilities extended to subsidiaries 2003 RM000 Corporation 2004 2003 RM000 RM000
16,349 16,349
11,171 11,171
13,370 6,308,026 6,321,396
8,192 60,018 68,210
35. SEGMENT INFORMATION (a) Business Segments: The Group is organised on a worldwide basis into four major business segments: (i) Shipping - the provision of liquefied natural gas ("LNG") services, petroleum tanker services, chemical tanker services and dry bulk carrier services; Integrated liner logistics - comprises liner services, haulage, trucking and warehousing and agency businesses;
(ii)
(iii) Shipbuilding and repairing and heavy engineering works; and (iv) Non-shipping - includes fleet management services, marine education and training and other diversified businesses. The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties.
164
35. SEGMENT INFORMATION (CONTINUED) (a) Business Segments: (continued)

Shipbuilding and Repairing Integrated and Heavy Liner Engineering Logistics Works RM000 RM000
2004 REVENUE AND EXPENSES Revenue Result Segment results Other operating income
Shipping RM000
NonShipping RM000
Total RM000
Eliminations Consolidated RM000 RM000
5,191,061
2,415,210
51,029
7,657,300
(51,029)
7,606,271
2,492,986 72,806
37,227 6,631 43,858
72,796 446,226 519,022
2,603,009 525,663 3,128,672
(157,283) (461,969) (619,252)
2,445,726 63,694 2,509,420 (210,493) 27,477 2,326,404 (7,127) 2,319,277 (29,706) 2,289,571
Profit from operations 2,565,792 Finance costs (unallocated) Share of results of associated companies 3,990 Profit before taxation Taxation Profit after taxation Minority interests Net profit for the year ASSETS AND LIABILITIES Segment assets 18,872,887 Investment in equity method of associated companies
1,371
15,607
6,509
27,477
920,485 1,148
912,329
1,514,951 133,714
22,220,652 134,862
22,220,652 134,862 22,355,514
Segment liabilities OTHER INFORMATION
6,615,284
527,662
430,461
3,179,069
10,752,476
10,752,476
Capital expenditure 6,324,799 Depreciation 994,661 Impairment losses 1,311 Non-cash expenses other than depreciation and impairment losses 54,815
88,350 126,594
460,278
2,195 5,241
6,875,622 1,126,496 1,311
6,875,622 1,126,496 1,311
2,504
57,324
57,324
165
35. SEGMENT INFORMATION (CONTINUED) (a) Business Segments: (continued)

Integrated Liner Logistics RM000
2003 REVENUE AND EXPENSES Revenue Result Segment results Other operating income Profit/(loss) from operations Finance costs (unallocated) Share of results of associated companies Profit before taxation Taxation Profit after taxation Minority interests Net profit for the year
Shipping RM000
NonShipping RM000
Total Eliminations Consolidated RM000 RM000 RM000
3,560,643
1,872,353
61,628
5,494,624
(61,628 )
5,432,996
1,671,137 87,695 1,758,832
(277,533) 6,978 (270,555)
56,334 875,275 931,609
1,449,938 969,948 2,419,886
(71,169 ) (909,199) (980,368)
1,378,769 60,749 1,439,518 (169,581) 40,363 1,310,300 3,507 1,313,807 (3,144) 1,310,663
(187)
40,550
40,363
ASSETS AND LIABILITIES Segment assets Investment in equity method of associated companies 11,982,847 2,159,952 28,758 249,159 305,587 14,391,958 334,345 14,391,958 334,345 14,726,303 Segment liabilities 4,604,348 413,028 15,559 5,032,935 5,032,935
OTHER INFORMATION Capital expenditure Depreciation Non-cash expenses other than depreciation and impairment losses 1,865,777 747,140 56,990 42,215 152,215 7,462 11,703 1,358 253 1,919,695 900,713 64,705 1,919,695 900,713 64,705
166
35. SEGMENT INFORMATION (CONTINUED) (b) Geographical Segments: Although the Group's four major business segments are managed on a worldwide basis, they operate in five principal geographical areas of the world. In Malaysia, its home country, the Group's areas of operation are principally shipping, integrated liner logistics and non-shipping. The Group also operates shipping and integrated liner logistics in other regions in the world as follows: - Asia and Africa - Europe - Australasia - The United States of America, arising from acquisition of AET group The United States of America Consolidated RM000 RM000 1,277,127 5,027,964 4,046,985 7,606,271 22,355,514 6,875,622
2004
Asia and Africa RM000 1,714,187 2,035,710 712,097
Malaysia RM000 2,807,658 14,023,372 2,053,199
Europe Australasia RM000 RM000 1,255,343 810,910 63,148 551,956 457,558 193
Total revenue from external customers Segment assets Capital expenditure 2003 Total revenue from external customers Segment assets Capital expenditure
1,572,143 4,242,587 34,218
2,507,268 9,191,179 1,857,036
940,044 820,818 17,134
413,541 471,719 11,307
5,432,996 14,726,303 1,919,695
36. RETIREMENT BENEFITS A subsidiary of the Group, PETRONAS Tankers Sendirian Berhad ("PTSB") contributes monthly to the PETRONAS Retirement Benefit Fund ("the Fund") based on eligible employees monthly salary, less statutory contribution, to finance the retirement benefits payable to eligible employees in accordance with the group retirement scheme of the ultimate holding company. The assets of the Fund are held separately for the Group by the Trustees and the liability of the Fund is determined by the accrued benefit calculated based on Projected Service Liability for eligible employees. The monthly maximum tax allowable contribution is paid to the Fund by the Group. The excess is paid by the Group to a special account in PETRONAS as a provision for retirement benefits. An actuarial valuation of the Fund is conducted by a qualified independent actuary at least once in every three years. The last valuation performed for the Fund was on 31 March 2004. This valuation showed that the fair value of the Fund assets is sufficient to meet the actuarially determined value of vested benefits.
167
37. FINANCIAL INSTRUMENTS (a) Financial Risk Management Objectives and Policies The Group is exposed to various risks that are particular to its core business of logistics and maritime. Finance risk can also arise as a consequence of the Group conducting its core businesses that entail financing and/or investment needs. The Group adopts an effective and progressive corporate risk management system to identify, analyse, appraise and monitor the risks facing the Group and to take specific measures to mitigate these risks. The risks can be broadly classified under credit/counterparty risk, interest rate risk, foreign exchange risk and liquidity risk. (i) Credit/Counterparty Risk The credit policy of the Group requires all credit exposures to be measured, monitored and managed proactively. Exposure to credit risk is monitored on an ongoing basis by the Credit Control Committee which is represented by the business units and subsidiaries in the Group. Credit evaluations are performed on customers requiring credit. (ii) Interest Rate Risk The Group's interest rate risks arise from the volatility of the benchmark interest rates both in Ringgit and US Dollar (which are its main borrowing currencies). The Group generally does not take any speculative view on the movement in interest rate and therefore does not actively use interest rate derivative instruments to hedge its exposures. By maintaining a balanced portfolio of floating and fixed interest rate debts in both local and foreign currencies, the risk arising from potential fluctuations in interest rates is mitigated. While the Group does not actively hedge its interest rate risk, the Group has existing interest rate swap contracts arising from its acquisition of a subsidiary in 1998. The interest rate swap contracts convert a portion of its floating interest rate obligations to fixed interest rate obligations. (iii) Foreign Exchange Risk The Group's foreign exchange risks comprise transaction risk which arises from day-to-day requirements to pay and to receive in currencies other than the local currency; foreign exchange exposures arising from debt repayment obligations which are denominated in currency other than the local currency; and structural foreign currency translation exposures arising from investments in foreign subsidiaries and associated companies which are denominated in the currencies where they are domiciled. The Group does not actively use foreign exchange derivative instrument as a means to hedge its transaction risk. The risk is, by and large, naturally hedged through matching, as far as possible, receipts and payments in each individual currency. The Group also borrows in foreign currency (mainly US Dollar) to meet its investment requirements that generate income in the same currency. The pegging of Ringgit to US Dollar by the Central Bank further reduces the transaction risks as far as conversion needs between the two currencies are concerned.
168
37. FINANCIAL INSTRUMENTS (CONTINUED) (a) Financial Risk Management Objectives and Policies (continued) (iii) Foreign Exchange Risk (continued) The major foreign currency financial assets and liabilities of the Group and the Corporation denominated in their functional currencies are as follows: Group 2004 RM000 Cash and bank balances United States Dollar Sterling Pound Australian Dollar EURO Receivables United States Dollar Sterling Pound Australian Dollar EURO Payables United States Dollar Sterling Pound Australian Dollar EURO (iv) Liquidity Risk As at 31 March 2004, the Group had at its disposal cash and short term deposits amounting to RM1.9 billion. A long term committed financing facility of USD820 million has been arranged with Japan Bank for International Cooperation to finance the progress payments for contracted capital commitments for 6 LNG vessels and as cash reimbursement for prior payments initially made using the Group's internal funds. In addition, the Group has Ringgit credit facility which can be redrawn until June 2005 amounting to RM1.5 billion. The Group's holdings of cash and short term deposits, together with committed funding facilities and net cash flow from operations, are expected to be sufficient to cover its cash flow needs (excluding merger and acquisition activities) in the next financial year. Any shortfall and additional cash requirements arising from the Group's merger and acquisition activities can be met by additional financing. The Group's strong balance sheet provides it with financial flexibility in determining the optimum financing source. The various options, among others, include bank borrowings, bond issuance and structured financing. (v) Forward Foreign Currency Contracts There are no open and outstanding forward foreign currency contracts entered into by the Group at the balance sheet date. 476,305 17,369 13,013 15,844 39,810 12,889 9,471 4,971 264,572 552 2,844 8,071 34,887 420 1,288 2,983 238,224 14,515 11,174 28,246 80,036 10,185 5,456 16,307 67,299 285 2,897 9,183 45,897 169 1,443 3,311 829,911 13,413 22,979 6,428 83,685 13,709 21,055 5,784 35,001 1,419 9,310 3,520 72,188 3,819 3,950 2,963 2003 RM000 Corporation 2004 2003 RM000 RM000
169
37. FINANCIAL INSTRUMENTS (CONTINUED) (b) Fair Values (i) Methods and Assumptions The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments: Cash and Cash Equivalents, Trade and Other Receivables/Payables, Due to/from Group Companies and Associated Companies (trade), and Short Term Borrowings The carrying amounts approximate fair values due to the relatively short term nature of these financial instruments. Marketable Securities The fair value of quoted shares is determined by reference to stock exchange quoted market bid prices at the close of the business on the balance sheet date. Borrowings The fair value of borrowings is estimated using discounted cash flow, based on current incremental lending rates for similar types of lending and borrowing arrangements. Derivative Financial Instruments The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. Other Financial Assets and Liabilities The fair value of all other financial assets and liabilities is deemed to be equal to their carrying value unless stated otherwise in the relevant notes to the financial statements. (ii) Recognised Financial Instruments The USD floating rate loan approximates the fair value determined using discounted cash flow, based on current interest rates for similar types of borrowing arrangements. The aggregate net fair values of financial assets and liabilities which are not carried at fair value on the balance sheet of the Group and of the Corporation as at 31 March 2004 are represented in the following table: Group Carrying Amount Fair Value RM000 RM000 Corporation Carrying Amount Fair Value RM000 RM000
Note
Financial Assets At 31 March 2004: Non-current quoted shares Non-current unquoted shares At 31 March 2003: Non-current quoted shares Non-current unquoted shares
14 14
192,808 44,881
210,197 *
13,409 38,040
18,333 *
14 14
192,808 45,057
160,353 *
13,409 38,040
12,446 *
170
37. FINANCIAL INSTRUMENTS (CONTINUED) (b) Fair Values (continued) (ii) Recognised Financial Instruments (continued) Group Carrying Amount Fair Value RM000 RM000 Corporation Carrying Amount Fair Value RM000 RM000
Note
Financial Liabilities At 31 March 2004: Secured: - USD term loans - RM term loans Unsecured RM Islamic Private Debt Securities At 31 March 2003: Secured: - USD term loans Unsecured RM Islamic Private Debt Securities
26 26 26
2,036,407 45,039 400,000
2,018,691 47,121 408,400
400,000
408,400
26 26
297,179 400,000
265,254 414,000
400,000
414,000
* The fair value of non-current unquoted shares is not disclosed as it is not practicable to determine the fair value with sufficient reliability. (iii) Unrecognised Financial Instruments EBC Limited, a subsidiary that was acquired in 1998 has interest rate swap contracts to convert a portion of its floating rate interest obligations to fixed rate obligations. Under these interest rate swap contracts, the subsidiary concerned agreed with the counterparties to receive interest at floating rates and to pay interest at a fixed rate of 7.0% per annum, calculated on the notional principal of USD130,000,000 (RM494,000,000). The average floating interest rate on these contracts during the year was 1.17% (2003: 1.4%) per annum. These interest rate swap agreements expire in year 2005. The interest rate swap contracts are secured by a counter-guarantee from certain subsidiaries of EBC Limited and mortgaged on the ships of these subsidiaries. The estimated fair value of the interest rate swap contracts as at 31 March 2004 was USD9,854,000 (RM37,446,000) (2003: USD15,794,000 (RM60,018,000)) and represents the amount the Group would have to pay to terminate the contracts.
171
38. SUBSIDIARIES AND ACTIVITIES Country of Incorporation Malaysia Effective Interest (%) 2004 2003 100 100
Name of Company PETRONAS Tankers Sendirian Berhad
Principal Activities Investment holding and provision of management services Shipping Shipping Shipping Shipping Shipping Investment holding Dormant Dormant Dormant Investment holding Shipping Shipping Shipping Shipping Investment holding Dormant Dormant Investment holding
Puteri Intan Sdn. Bhd. Puteri Delima Sdn. Bhd. Puteri Nilam Sdn. Bhd. Puteri Zamrud Sdn. Bhd. Puteri Firus Sdn. Bhd. EBC Limited MISC Ship Management Sdn. Bhd. Sea Maestro Shipping Limited Gangga Nagara Shipping Limited EBC Assets Limited Peddler Shipping Limited Dinosaur Shipping Limited Skystrong Shipping Limited Rhinestone Shipping Limited EBC Assets Limited Thunder Bay Investment Limited Pacific Trident Limited Mun Kim Limited
Malaysia Malaysia Malaysia Malaysia Malaysia British Virgin Islands Malaysia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Bermuda Liberia Hong Kong Liberia
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
172
38. SUBSIDIARIES AND ACTIVITIES (CONTINUED) Country of Incorporation Liberia Liberia Bermuda Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Liberia Effective Interest (%) 2004 2003 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Name of Company EBC Holdings Limited EBC Shipping Limited EBC Shipping Limited Pacific Mattsu Shipping Limited Logger Shipping Limited Marquisa Shipping Limited Bison Shipping Limited Selesa Shipping Limited Safety Shipping Limited Plate Shipping Limited Spectrum Shipping Limited Happy Venture Limited Grand Way Investment Limited Trailblazer Investment Limited Gunner Shipping Limited Growth Shipping Limited Fantasy Shipping Limited Esperance Shipping Limited Fragrant Shipping Limited Sea Maiden Shipping Limited Sun Shipping Limited
Principal Activities Investment holding Dormant Dormant Dormant Shipping Dormant Shipping Shipping Shipping Shipping Shipping Investment holding Dormant Shipping Dormant Shipping Shipping Shipping Dormant Dormant Shipping
173
38. SUBSIDIARIES AND ACTIVITIES (CONTINUED) Country of Incorporation Liberia Liberia Liberia Liberia Malaysia Malaysia Effective Interest (%) 2004 2003 100 100 100 97 100 100 100 100 100 97 100 100
Name of Company Humanity Shipping Limited Torrent Shipping Limited Luminous Shipping Limited Roseland Shipping Limited MISC Enterprises Holdings Sdn. Bhd. MISC Agencies Sdn. Bhd.
Principal Activities Dormant Dormant Dormant Dormant Investment holding Shipping agent and warehousing In liquidation Shipping agent Shipping agent Dormant In liquidation Shipping agent Dormant
MISC Agencies (Terengganu) Sdn. Bhd. ^ MISA (B) Sdn. Bhd. * MISC Agencies (Sarawak) Sdn. Bhd. MISC Properties Sdn. Bhd. MISC Information Technology Sdn. Bhd. ^ MISC Agencies (Netherlands) B.V. * Scheepvaartagentuur Nederland Oversee B.V. * MISC Agencies (Australia) Pty. Ltd. * Malaysia International Shipping Corporation Agencies (U.K.) Ltd. * MISC (Japan) Ltd. * MISC Ferry Services Sdn. Bhd. MISC (Singapore) Private Limited (formerly known as Leo Shipping Private Limited)*
Malaysia Brunei Darussalam Malaysia Malaysia Malaysia Netherlands Netherlands
100 65 100 100 100
100 100 65 100 100 100 100
Australia United Kingdom
100 100
100 100
Shipping agent Shipping agent
Japan Malaysia Singapore
100 100 100
100 100 100
Port and general agent Dormant Shipping agent
174
38. SUBSIDIARIES AND ACTIVITIES (CONTINUED) Country of Incorporation Singapore Malaysia Malaysia Effective Interest (%) 2004 2003 51 100 100 51 100 100
Name of Company Leo Launches Private Limited * MISC Integrated Logistics Sdn. Bhd. MISC Trucking and Warehousing Services Sdn. Bhd. MISC Haulage Services Sdn. Bhd. Asia LNG Transport Sdn. Bhd.
Principal Activities Launch operator Integrated logistics services Trucking, warehousing and forwarding services Container haulage Shipowning and ship management Shipowning and ship management Education and training for seamen and maritime personnel Shipping Shipping Shipping Shipping Shipping Shipping Investment holding Shipbuilding, ship repairing and engineering works Hiring and chartering of tugboat and pushers Processing of copper grit
Malaysia Malaysia
100 51
75 51
Asia LNG Transport Dua Sdn. Bhd.
Malaysia
51
51
Malaysian Maritime Academy Sdn. Bhd.
Malaysia
70
70
Puteri Intan Satu (L) Private Limited Puteri Delima Satu (L) Private Limited Puteri Nilam Satu (L) Private Limited Puteri Zamrud Satu (L) Private Limited Puteri Firus Satu (L) Private Limited Puteri Intan Dua (L) Private Limited MSE Holdings Sdn. Bhd.* Malaysia Shipyard and Engineering Sdn. Bhd.* Malaysia Towage and Transport Sdn. Bhd.* MSE Corporation Sdn. Bhd.*
Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia
100 100 100 100 100 100 65 65
100 100 100 100 100 100 43 43
Malaysia
65
43
Malaysia
65
43
175
38. SUBSIDIARIES AND ACTIVITIES (CONTINUED) Country of Incorporation Malaysia Malaysia Effective Interest (%) 2004 2003 65 58 26 38
Name of Company Techno Indah Sdn. Bhd.* MSE-ATB Sdn. Bhd.*
Principal Activities Sludge disposal management Process equipment for petrochemical, oil and gas and power generation plants Dormant
Malaysia Tank Cleaning Company Sdn. Bhd.* AET Holdings (L) Pte. Ltd. American Eagle Tankers Inc. Limited*
Malaysia
65
43
Malaysia Bermuda
100 100
Investment holding Investment holding and marine transportation services Shipping agent and lightering
American Marine & Offshore Services Limited * American Eagle Tankers Agencies Inc.*
Cayman Islands
100
The United States of America The United States of America United Kingdom
100
Shipping agent and lightering
Pelican Offshore Services Company, Inc.*
100
Lightering
American Eagle Tankers UK Limited *
100
Management services and commercial operations Shipping Shipping Shipping Ship management Marine transportation services and lightering Ship rental services and lightering Lightering
Trilith Shipping Pte. Ltd.* Trilithon Shipping Pte. Ltd.* Crystal Shipowning Pte. Ltd.* Eagle Shipmanagement Pte. Ltd.* MTL Petrolink Corporation*
Singapore Singapore Singapore Singapore The United States of America The United States of America The United States of America
100 100 100 100 100
OMIP, Inc.*
100
Offshore Marine Services, Inc.*
100
176
38. SUBSIDIARIES AND ACTIVITIES (CONTINUED) Country of Incorporation The United States of America The United States of America Nigeria Effective Interest (%) 2004 2003 100
Name of Company Harlink, Inc.*
Principal Activities Lightering
Neulink, Inc.*
100
Lightering
MISC Nigeria Ltd. * ^
60
Dormant
Audited by firms of auditors other than Ernst & Young In the process of liquidation
39. ASSOCIATED COMPANIES AND ACTIVITIES Country of Incorporation Liberia British Virgin Islands Singapore Malaysia Singapore Thailand Sri Lanka Effective Interest (%) 2004 2003 50 50 50 49 40 50 50 50 50 50 49 40
Name of Company Olivier Shipping Limited Yuasa Investment Limited Transware Distribution Services Pte. Ltd. Titar Travel Sdn. Bhd. Transasia Pool Pte. Ltd. MISC Agencies (Thailand) Company Limited MISC Agencies Lanka (Pvt) Ltd.
Principal Activities Shipowning Shipping Warehousing Travel agent Ship management Shipping agent Shipping agent and freight forwarding services Merchant banking Investment holding
Affin Merchant Bank Berhad Moor Industrial Transport Limited
Malaysia Jersey, Channel Island Sri Lanka China
37 25
37 25
Transware Logistics (Pvt) Ltd. Voray Holdings Limited
25 25
25 25
Inland container depot Investment holding
177
39. ASSOCIATED COMPANIES AND ACTIVITIES (CONTINUED) Country of Incorporation China Effective Interest (%) 2004 2003 15 15
Name of Company Hubei Zhong Chang Vegetable Oil Co. Ltd. Beijing King Voray Edible Oil Co. Ltd. Tianjin Voray Bulking Installation Co. Ltd. Malaysia Pakistan Venture Sdn. Bhd. Mapak Qasim Bulker Pte. Ltd. Mapak Edible Oil Pte. Ltd. 40. SIGNIFICANT EVENTS (i)
Principal Activities Vegetable oil refinery
China China Malaysia Pakistan Pakistan
6 13 25 19 16
6 13 25 19 16
Vegetable oil refinery Storage of vegetable oil Investment holding Storage of edible oil Dormant
On 5 November 2002, MISC Integrated Logistics Sdn. Bhd., a wholly-owned subsidiary of the Corporation entered into a sale and purchase of shares agreement with Faber Haulage Sdn. Bhd. to acquire 10,000,000 ordinary shares of RM1 each in MISC Haulage Services Sdn. Bhd. ("MHS"), representing 25% equity interests in MHS for a total cash consideration of RM19,500,000. The acquisition was completed on 19 May 2003. As a result, MHS became a wholly-owned subsidiary of the Corporation. On 29 April 2003, the Corporation through its wholly-owned subsidiary entered into an agreement with Neptune Orient Lines Ltd. for the acquisition of 100% interest in American Eagle Tankers Inc. Limited ("AET"), for a purchase price of USD445 million (equivalent to RM1,691 million) as adjusted upwards in net assets at completion date of USD53,260,000 (equivalent to RM202,388,000) and upwards, by reference to an "earn out" mechanism based on the performance of AET over a period of 24 months following the completion date on 22 July 2003.
(ii)
(iii) On 16 July 2003, the Corporation signed an agreement for USD830 million 364 day bridging loan facility with a consortium of international and domestic financial institutions. The proceeds were used to fund the acquisition of 100% interest in American Eagle Tankers Inc. Limited, a petroleum tanker company. (iv) On 18 December 2003, the Corporation entered into a sale and purchase agreement with Kuok Brothers Sdn. Bhd. and IMC Enterprises Incorporated to acquire an additional 22% equity interest in MSE Holdings Sdn. Bhd. ("MSE"), an associated company of the Corporation for a total consideration of RM115,199,000. The acquisition was completed on 17 March 2004. As a result, MSE became a subsidiary of the Corporation. (v) On 30 March 2004, the Corporation disposed enbloc, 15 bulk vessels owned and operated by the Corporation and its subsidiary for a total consideration of USD98 million resulting in a gain of USD84 million. The disposal was completed on 13 May 2004.
41. COMPARATIVE FIGURES The presentation and classification of items in the current year financial statements have been consistent with the previous financial year.
178
List Of Vessels
As At 30 June 2004
Excluding FPSO facility Bunga Kertas
Type of Vessel Liquefied Natural Gas Carriers 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.
Name of Vessel Puteri Intan Satu Puteri Delima Satu Puteri Nilam Satu Puteri Zamrud Satu Puteri Intan Puteri Delima Puteri Nilam Puteri Zamrud Puteri Firus Tenaga Satu Tenaga Dua Tenaga Tiga Tenaga Empat Tenaga Lima Aman Bintulu Aman Sendai Aman Hakata
Year Built 2002 2002 2003 2004 1994 1995 1995 1996 1997 1982 1981 1981 1981 1981 1993 1997 1998
Deadweight (Metric Tonnes) 76,110 76,110 76,110 76,110 62,719 62,719 62,719 62,719 62,719 72,083 72,083 72,083 71,588 71,588 9,220 9,220 9,214 1,005,074
Gross Tonnage 93,038 93,038 94,446 94,446 86,205 86,205 86,205 86,205 86,205 80,346 80,346 80,346 80,346 80,346 16,399 16,336 16,336 1,256,794
Crude Oil Tankers
18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36 37. 38. 39. 40. 41. 42. 43.
Bunga Kasturi Bunga Kelana Satu Bunga Kelana Dua Bunga Kelana 3 Bunga Kelana 4 Bunga Kelana 5 Bunga Kelana 6 Bunga Kelana 7 Bunga Kelana 8 Bunga Kenanga Quasar Eagle Virginia Eagle Vermont Eagle Charlotte Eagle Columbus Eagle Albany Eagle Anaheim Eagle Atlanta Eagle Tacoma Eagle Trenton Eagle Tucson Eagle Tampa Eagle Toledo Eagle Phoenix Eagle Austin Eagle Augusta
2003 1997 1997 1998 1999 1999 1999 2004 2004 2000 1989 2002 2002 1997 1997 1998 1999 1999 2002 2003 2003 2003 2003 1998 1998 1999
299,999 105,575 105,967 105,784 105,815 105,788 105,811 105,500 105,500 73,096 97,197 306,999 306,999 107,169 107,169 107,160 107,160 107,160 107,123 107,123 107,123 107,123 107,092 106,127 105,426 105,345
156,967 57,017 57,017 57,017 57,017 57,017 57,017 58,194 58,194 40,037 52,500 161,233 161,233 57,949 57,949 57,929 57,929 57,929 58,166 58,166 58,166 58,166 58,166 56,346 58,156 58,156
179
Type of Vessel Crude Oil Tankers (continued) 44. 45. 46. 47. 48 49. 50. 51. 52. 53. 54. 55.
Name of Vessel Eagle Memphis Eagle Milwaukee Eagle Auriga Eagle Baltimore Eagle Beaumont Eagle Birmingham Eagle Boston Eagle Subaru Eagle Otome Eagle Centaurus Eagle Carina Eagle Corona
Year Built 1987 1987 1993 1996 1996 1997 1996 1994 1994 1992 1992 1993
Deadweight (Metric Tonnes) 104,499 104,385 102,352 99,405 99,448 99,343 99,328 95,675 95,663 95,644 95,639 95,634 4,505,345
Gross Tonnage 53,483 53,483 55,962 57,456 57,456 57,456 57,456 52,504 52,504 52,504 52,504 52,504 2,438,905
Product Tankers
56. 57. 58. 59. 60.
Bunga Kekaras Bunga Kerayong Bunga Kemiri Bunga Kasai Pernas Rantau
1995 1994 1995 1994 1994
29,990 18,130 9,932 6,033 6,025 70,110
20,378 12,994 5,782 3,581 3,581 46,316
LPG Carriers
61. 62. 63.
Konsep Maju Bunga Kekwa Pernas Butane
1995 1995 1992
4,999 3,053 2,213 10,265
4,951 3,496 2,352 10,799
Chemical Tankers
64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78.
Bunga Melati Satu Bunga Melati Dua Bunga Melati 3 Bunga Melati 4 Bunga Melati 5 Bunga Melati 6 Bunga Melati 7 Bunga Anggerik Bunga Tanjung Bunga Mawar Bunga Cenderawasih Bunga Semarak Bunga Siantan Bunga Melawis Satu Bunga Melawis Dua
1997 1997 1999 1999 1999 2000 2000 1989 1991 1990 1990 1990 1991 1997 1997
32,127 32,169 31,983 31,967 31,975 31,981 31,972 29,995 29,980 29,974 29,928 16,924 16,924 9,025 8,621 395,545
22,254 22,254 22,116 22,116 22,116 22,116 22,116 18,453 18,453 18,453 18,453 9,951 9,951 6,544 6,373 261,719
180
List Of Vessels (continued)
Type of Vessel Containerships 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102.
Name of Vessel Bunga Pelangi Bunga Pelangi Dua Bunga Raya Satu Bunga Raya Dua Bunga Teratai Bunga Teratai Dua Bunga Teratai 3 Bunga Teratai 4 Bunga Terasek Bunga Delima Bunga Kenari Bunga Bidara Bunga Mas Satu Bunga Mas Dua Bunga Mas Tiga Bunga Mas Empat Bunga Mas Lima Bunga Mas Enam Bunga Mas Tujuh Bunga Mas Lapan Bunga Mas 9 Bunga Mas 10 Bunga Mas 11 Bunga Mas 12
Year Built 1991 1995 1998 1998 1998 1998 1998 1998 1991 1990 1991 1990 1995 1995 1995 1996 1997 1997 1997 1998 1998 1998 1998 1999
Deadweight (Metric Tonnes) 61,777 61,428 47,858 48,244 24,613 24,554 24,580 24,561 23,692 23,584 23,574 23,518 11,064 11,064 11,034 11,036 8,661 8,998 8,998 8,995 12,250 12,288 10,325 10,313 537,009
Gross Tonnage 53,521 53,379 39,582 39,582 21,339 21,339 21,339 21,339 17,215 17,215 17,215 17,215 7,998 7,998 7,998 7,998 8,957 8,957 8,957 8,957 9,380 9,380 8,612 8,612 444,084
Panamax Bulk Carriers
103. 104. 105. 106. 107. 108. 109. 110. 111. 112. 113.
Bunga Saga Satu Bunga Saga Dua Bunga Saga Tiga Bunga Saga Empat Bunga Saga Lima Bunga Saga Enam Bunga Saga Tujuh Bunga Saga Lapan Bunga Saga 9 Bunga Saga 10 Pernas Amang
1993 1993 1994 1994 1998 1998 1998 1998 1999 1999 1986
73,503 73,515 73,496 73,498 73,144 73,056 73,220 73,207 73,127 73,148 64,944 797,858
39,012 39,012 39,012 39,012 38,489 38,489 38,489 38,489 38,972 38,972 36,569 424,517
181
Type of Vessel Handymax Bulk Carriers 114. 115. 116. 117. 118. 119. 120. 121. 122.
Name of Vessel Bunga Orkid Satu Bunga Orkid Dua Bunga Orkid Tiga Bunga Orkid Empat Bunga Orkid Lima Bunga Melor Satu Bunga Melor Dua Bunga Melor Tiga Bunga Melor Empat
Year Built 1994 1994 1994 1995 1995 1994 1995 1995 1995
Deadweight (Metric Tonnes) 43,245 43,216 43,189 43,189 43,216 43,108 43,125 43,108 43,108 388,504
Gross Tonnage 25,498 25,498 25,498 25,498 25,498 24,550 24,550 24,550 24,550 225,690
Handysize Bulk Carriers
123. 124. 125. 126. 127. 128. 129 130. 131. 132 133. 134. 135. 136. 137.
Handy Tiger Handy Trader Handy Ruby Handy Emerald Handy Islander Handy Gunner Handy Roseland Happy Venture Nerano Pacific Mattsu Pacific Selesa Marquisa Gangga Nagara Sea Maestro Sea Maiden
1985 1985 1986 1986 1985 1995 1996 1996 1986 1996 1997 1997 1998 1997 1998
38,632 32,772 27,652 27,652 26,587 26,516 26,516 27,000 26,648 26,516 26,411 26,411 24,128 24,111 24,110 411,662
23,207 18,987 16,582 16,582 15,833 16,041 16,041 18,070 15,847 16,041 16,041 16,041 15,888 15,888 15,888 252,977
Multi-Purpose Bulk Carriers
138.
Pernas Proton
1987
7,055 7,055
5,548 5,548
Total Tonnage of MISC owned vessels:
8,128,427
5,367,349
182
List Of Vessels (continued)
Type of Vessel
Name of Vessel
Year Built
Deadweight (Metric Tonnes)
Gross Tonnage
Inchartered Vessels Liquefied Natural Gas Carriers 139. 140. 141. Golar Winter Galicia Spirit Methane Princess 2004 2004 2002 80,811 71,060 70,798 222,669 93,899 96,000 93,899 283,798
Crude Oil Tankers
142. 143. 144. 145. 146. 147.
Camden Bourgogne Glenross Lochness Sanko Brave Sanko Bright
1990 1996 1993 1994 2003 2003
298,306 296,230 90,679 90,607 105,400 105,400 986,622
156,802 161,178 53,135 53,135 56,400 56,400 537,050
Chemical Tanker
148.
MMM Galveston
1990
7,332
4,489
Containerships
149. 150. 151. 152.
Kota Jati Pacific Quest Order Trader Cape Charles
2000 1983 1998 1986
24,973 32,631 30,360 38,499 126,463
18,502 31,403 23,600 41,843 115,348
Total tonnage of inchartered vessels:
1,343,086
940,685
Total Tonnage (including inchartered vessels):
9,471,513
6,308,034
48
183
Properties Owned By MISC Bhd And Its Subsidiaries

As At 31 March 2004
Tenure & Year Lease Expires Area in sq. ft. Approx. Age of Bldg./Land (Years) Net Book Value (RM)
Location
Description
Existing Use
1.
No. 2 Jalan Conlay 50450 Kuala Lumpur Wisma MISC No. 2 Jalan Conlay 50450 Kuala Lumpur Lot 10 Lebuh Hishamuddin Satu (Kaw 20) Komplek Industri Baru P.K.N.S. Selat Klang Utara 42008 Pelabuhan Klang Selangor Darul Ehsan Lot 8 Lebuh Hishamuddin Satu (Kaw 20) Komplek Industri Baru P.K.N.S. Selat Klang Utara 42008 Pelabuhan Klang Selangor Darul Ehsan Lot 23, Lebuh Sultan Mohamad 1 Bandar Sultan Suleiman 42008 Port Klang Selangor Darul Ehsan
Land
Freehold
63,600
Rented
30
22,300,000.00
2.
Office Building
Freehold
262,500
Rented
28
13,461,729.00
3.
Land, Office Building & Warehouse
Leasehold/ 2086
191,296
MISA Head Office, Warehouse & Container Yard
20
3,815,249.99
4.
Land & Container Yard
Leasehold/ 2086
147,853
Container Yard
13
1,836,872.50
5.
Land, Office Building, Warehouse, Workshop, Repair Shed & Container Yard Double Storey Semi-Detached House
Leasehold/ 2089
2,221,560
Cargo cum 13 Office Complex and Container Yard
48,289,882.54
6.
No. 7 Lorong Merpati 1 Jalan Bukit Sekilau Taman Tas Mahkota 25200 Kuantan Pahang Darul Makmur Blok-H, Tgkt. 7 Unit No. 1 Mount Pleasure Apartment 12000 Batu Feringghi Pulau Pinang Westplein 6-7 3016 BM Rotterdam Holland
Freehold
4,117
Vacant
21
111,317.78
7.
Apartment
Freehold
1,300
Rented
24
164,011.76
8.
Office Building
Freehold
8,083
MISAN Head Office
25
2,212,427.51
184
Properties Owned By MISC Bhd And Its Subsidiaries (continued)
Location
Description
Tenure & Year Lease Expires
Area in sq. ft.
Existing Use
Approx. Age of Bldg./Land (Years)
Net Book Value (RM)
9. 231 The Collonades Porchester Square Bayswater London W2 6AS 10. H.S (D) 48445 No. P.T. 23991 Mukim Kapar Daerah Klang Selangor Darul Ehsan 11. Lot PLO 137 & 138 Tebrau II Industrial Estate Johor Darul Takzim
Apartment
Leasehold/ 2073
817
For Staff
12
602,860.00
Land & Container Yard
Leasehold/ 2087
1,119,492
Vacant Land & Container Yard
13
10,786,248.00
Land, Office Building, Warehouse, Workshop, Repair Shed & Container Yard Land & Container Yard
Leasehold/ 2023
894,287
Cargo cum, Office Complex & Container Yard
11
17,063,268.00
12. Plot 2 P.T. 2113 Air Keroh Industrial Estate Melaka 13. Lot 568-615 Mukim 16 Daerah Seberang Perai Utara Pulau Pinang
Leasehold/ 2091
241,326
Office Building & Container Yard
12
1,389,933.00
Land, Office Building, Warehouse, Workshop, Repair Shed & Container Yard Land, Office Building & Container Yard
Freehold
752,752
Cargo cum Office Complex & Container Yard
12
24,825,610.00
14. PLO 516, Jalan Keluli 3 Kaw. Perindustrian Pasir Gudang Mukim Plentong Johor Darul Takzim 15. Precint 3.8, Seksyen 14 Shah Alam Selangor Darul Ehsan 16. Lot 36, Seksyen 7, Fasa 1A Pulau Indah Industrial Park (West Port) Pelabuhan Klang Selangor Darul Ehsan
Leasehold/ 2025
217,800
Office Building & Container Yard
2,872,877.00
Land
Leasehold/ 2099
107,413
Vacant Land
10,913,367.00
Land
Leasehold/ 2097
1,725,978
Vacant Land
25,702,799.00
185
Location
Description
Area in sq. ft.
Existing Use
Net Book Value (RM)
17. Town Quay Wharf Barking Essex London 18. 447, Kent Street Sydney, Australia 19. Suite 40, Albert Squar e 37-39 Albert Road Melbourne 3004 Australia 20. Ground and 1st Floor Wisma Takada Jalan Gaya, Lorong EWAN 88000 Kota Kinabalu 21. Land in Kuching Section 66 Tanah Daerah Pekan Kuching a) Lot 1411 b) Lot 2115
Office Building
Leasehold/ 2990
10,000
MISC Europe Office and MISAL Office MISAU Sydney Office MISAU Melbourne Office
10
3,454,641.00
Office Premises
Freehold
3,767
10
1,565,201.38
Office Premises
Freehold
10,500
10
2,394,564.01
Office Premises
Leasehold/ 2092
6,000
MISA Agencies Kota Kinabalu Office
10
1,326,219.49
a) Land b) Land
Leasehold/ 2055 Leasehold/ 2046
227,296 85,987
Vacant Land Vacant Land
7 7
4,431,595.00 4,269,857.00
22. Land in Fremantle, Lot 77 & 78 North Bank Queen Victoria Street Fremantle, Australia a) Lot 77 b) Lot 78 23. No. 18 Jln. Tengku Ampuan Zabedah G 9/G, Section 9, Shah Alam Selangor Darul Ehsan 24. Part of Lot PT 4593 Kawasan Perindustrian Kerteh Mukim Kerteh, 24300 Kemaman Terengganu Darul Iman 25. Lot 154, Plot 3 Kawasan Perindustrian Kidurong Bintulu, Sarawak
a) Land b) Land 3 Storey Shop Office
Freehold Freehold Leasehold/ 2094
2,196 2,196 1,800
Vacant Land Vacant Land Rented
8 8 7
271,381.75 271,381.75 1,095,711.00
Land, Office Building & Warehouse
Leasehold/ 2060
47,522
Office Building & Warehouse
10,695,636.00
Land
Leasehold/ 2062
217,800
Vacant Land
1,325,685.00
186
Properties Owned By MISC Bhd And Its Subsidiaries (continued)
Location
Description
Area in sq. ft.
Existing Use
Net Book Value (RM)
26. Galveston, Texas, USA
Land & Office
Owned
290,415
Workboats Dockage Ltrg Support Operation Vacant Container yard
35
3,618,027.12
27. Sabine Pass, Texas, USA 28. PT 12701, Tengku Jaafar Industrial Park 71450 Seremban Negeri Sembilan 29. PTD 22805 Mukim Plentong Johor Bahru
Land & Office Upgrade of container yard
Owned Leasehold/ 2005
188,907 15,531
15 3
314,117.92 668,934.17
Land, shipyard, warehouse workshops and office buildings
Leasehold/ 2040
5,307,573
Shiprepair, 30 shipbuilding and engineering fabrication yards, ancillary facilities and office buildings Staff quarters 25
343,381,004.00
30. PTD 65616 Mukim Plentong Johor Bahru 31. PTD 65615 Mukim Plentong Johor Bahru 32. PTD 65617 Mukim Plentong Johor Bahru 33. PTD 65618 Mukim Plentong Johor Bahru Notes:
4 storey residential flats
Leasehold/ 2044
169,928
3,609,263.00
Land
Leasehold/ 2044
698,354
Vacant
Nil
Nil
Land
Leasehold/ 2044
374,093
Vacant
Nil
Nil
Land
Leasehold/ 2044
588,050
Vacant
Nil
Nil
MISA MISC Agencies Sdn Bhd MISAN MISC Agencies (Netherlands) B.V.
MISAU MISC Agencies (Australia) Pty. Ltd. MISAL MISC Agencies (U.K.)
187
MISC Group Of Companies

MISC HEAD OFFICE MALAYSIA INTERNATIONAL SHIPPING CORPORATION BERHAD Level 25, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur P.O. Box 10371 50712 Kuala Lumpur Malaysia Tel : 603-2273 8088 Fax : 603-2273 6602 Homepage : www.misc-bhd.com MISC REGIONAL OFFICES CENTRAL KUALA LUMPUR Malaysia International Shipping Corporation Berhad Level 19, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur P.O. Box 10371 50712 Kuala Lumpur Tel : 603-2273 8088 Fax : 603-2275 3135/2026 FAR EAST JAPAN Malaysia International Shipping Corporation Berhad c/o MISC (Japan) Ltd. Koizumi Building, 8th Floor 29-1 Nishigotanda 1-Chome Shinagawa-ku, Tokyo 141-0031 Tel : 813-5496 2382 Tlx : 2226618 MISCTK J Fax : 813-5496 2334 EUROPE UNITED KINGDOM Malaysia International Shipping Corporation Berhad (Europe) Suite 3.1, Exchange Tower 2 Harbour Exchange Square Marsh Wall London E14 9GE United Kingdom Tel : 44-(0)207-531-4950 Fax : 44-(0)207-987-7642 MISC GROUP OF COMPANIES WHOLLY-OWNED SUBSIDIARIES (In alphabetical order) AET Holdings (L) Pte. Ltd. Unit Level 13 (E) Main Office Tower Financial Park Labuan Jalan Merdeka 87000 Federal Territory of Labuan Tel : 087-451 688 Fax : 087-453 688 American Eagle Tankers Inc. Limited 1 HarbourFront Avenue #11-01 Keppel Bay Tower Singapore, 098632 Tel : 65-6100 2288 Fax : 65-6376 2791 American Eagle Tankers UK Limited Suite 3.01 Harbour Exchange Tower 2 Harbour Exchange Square London E14, 9GB United Kingdom Tel : 44-20 7987 3130 Fax : 44-20 7987 7642 American Eagle Tankers Inc. Limited Milner House , 18 Parliament Street Hamilton, Bermuda USA Tel : 02-6490 0302 Fax : 02-6376 2791 American Eagle Tankers Agencies Inc. American Marine & Offshore Services Limited 1900 West Loop South Suite 920 Houston Texas 77027 Tel : 1-832-615-2000 Fax : 1-713-622-2256 Bison Shipping Ltd-Liberia Level 18, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2051 Fax : 603-2275 2029 Crystal Shipowning Co. Pte Ltd 1 HarbourFront Avenue #11-01 Keppel Bay Tower Singapore 098632 Tel : 65-6100-2288 Fax : 65-6376 2791 Eagle Shipmanagement Pte Ltd 1 HarbourFront Avenue #11-01 Keppel Bay Tower Singapore 098632 Tel : 65-6100 2288 Fax : 65-6376 2791 EBC Assets Ltd-Bermuda EBC Assets Ltd-Liberia EBC Holding Ltd-Liberia EBC Limited-(Bermuda) EBC Shipping Ltd-Bermuda EBC Shipping Ltd-Liberia Level 25, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2580 Fax : 603-2275 2705 Happy Venture Ltd-Liberia Level 18, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2051 Fax : 603-2275 2029 Harlink Corp. 1900 West Loop South Suite 920 Houston Texas 77027 Tel : 1-832-615-2000 Fax : 1-713-622-2256 MISC (Singapore) Pte. Ltd. 1 HarbourFront Avenue Keppel Bay Tower #11-05/08 Singapore 098632 Tel : 65-6220 1522 Fax : 65-6271 0817 Malaysia International Shipping Agencies (UK) Ltd. Quayside House 13 Town Quay Wharf Abbey Road, Barking Essex IG11 7AT United Kingdom Tel : 44-181-591 3232 Fax : 44-181-594 0733
188
MISC Group Of Companies (continued)
MISC Agencies (Sarawak) Sdn. Bhd. No. 1, 1st Floor Bintulu Parkcity Commercial Centre Bintulu, 97012 Sarawak Malaysia Tel : 0686-318 311/312/313 Fax : 0686-311 326 MISC Agencies (Australia) Pty. Ltd. Suite 40, Albert Square 37-39 Albert Road Melbourne, Victoria 3004 Australia Tel : 61-3-9867 6299 Fax : 61-3-9867 6167 MISC Agencies (Netherlands) BV. Westplein 6-7, 3016 BM Rotterdam Netherlands Tel : 31-10-209 2222 Fax : 31-10-209 2299 MISC Agencies Sdn. Bhd. Lot 8 & 10, Leboh Sultan Hishamuddin 1 Bandar Sultan Suleiman Pel. Utara, P.O. Box 146 42008 Pelabuhan Klang Selangor Darul Ehsan Tel : 603-3176 5753 Fax : 603-3176 2857 MISC Capital (L) Ltd Level 23 , Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2688 Fax : 603-2275 2091 MISC Enterprises Holdings Sdn. Bhd. Level 25 , Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2688 Fax : 603-2275 2091 MISC Integrated Logistics Sdn. Bhd. Level 28 , Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2081 Fax : 603-2275 2182
MISC Haulage Services Sdn. Bhd. Lot 23, Lebuh Sultan Mohamed 1 Kawasan Perusahaan Fasa 2 Bandar Sultan Suleiman, P.O. Box 235 42008 Pelabuhan Klang Selangor Darul Ehsan Tel : 603-3169 6700 Fax : 603-3176 3800 MISC (Japan) Limited Koizumi Building 5th FIoor 1-29-1 Nishigotanda, 1-Chome, Shinagawa-ku Tokyo 141-op.31, Japan Tel : 81-3-5496 2388 Fax : 81-3-5496 2380 MISC Trucking & Warehousing Services Sdn. Bhd. Lot 23, Jalan Sultan Mohamed 1 Kawasan Perusahaan PKNS Bandar Sultan Suleiman 42000 Pelabuhan Klang Selangor Darul Ehsan Tel : 603-3176 4188 Fax : 603-3176 1833 MTL Petrolink Corp. Neulink Corp. Offshore Marine Services Inc. OMIP Inc. 1900 West Loop South, Suite 920 Houston Texas 77027 Tel : 1-832-615-2000 Fax : 1-713-622-2256 Peddler Shipping Ltd-Liberia Level 18, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2051 Fax : 603-2275 2029 Pelican Offshore Services Company Inc. 1900 West Loop South, Suite 920 Houston Texas 77027 Tel : 1-832-615-2000 Fax : 1-713-622-2256 Petronas Tankers Sdn. Bhd. (PTSB) Puteri Delima Sdn. Bhd. Puteri Firus Sdn. Bhd. Puteri Intan Sdn. Bhd. Puteri Nilam Sdn. Bhd. Puteri Zamrud Sdn. Bhd. Level 16, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 3201 Fax : 603-2275 3209
Puteri Delima Satu (L) Pte. Ltd. Puteri Firus Satu (L) Pte. Ltd. Puteri Intan Satu (L) Pte. Ltd. Puteri Intan Dua (L) Pte. Ltd. Puteri Nilam Satu (L) Pte. Ltd. Puteri Zamrud Satu (L) Pte. Ltd. Level 16, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 3201 Fax : 603-2275 3209 Rhinestone Shipping Ltd-Liberia Safety Shipping Ltd-Liberia Selesa Shipping Ltd-Liberia Level 18 , Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2051 Fax : 603-2275 2029 Trilith Shipping Pte Ltd Trilithon Shipping Pte Ltd 1 HarbourFront Avenue #11-01 Keppel Bay Tower Singapore 098632 Tel : 65-6100-2288 Fax : 65-6376 2791 PARTLY OWNED SUBSIDIARIES AND ASSOCIATE COMPANIES (In alphabetical order) Asia LNG Transport Sdn. Bhd. Asia LNG Transport Dua Sdn. Bhd. Level 16, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 3201 Fax : 603-2275 3209 Beijing King Voray Edible Oil Co. Ltd. 23 Nanyuan Road West Fengtoi District Beijing 100076, P R.China . Tel : 86-10-6799 1510 Fax : 86-10-6799 1214 FPSO Ventures Sdn Bhd Suite 2.03, 2nd Floor, Menara SPK No. 22 Jalan Sultan Ismail 56250 Kuala Lumpur Tel : 603-2145 2600 Fax : 603-2145 2700
189
Hubei Zhong Chang Vegetable Oil Co.Ltd. Ding Gong Miao Baisha Zhou Wuchang, Wuhan P.R.China 430064 Tel : 86-27-8811 4643 Fax : 86-27-8811 4641 Leo Launches Pte. Ltd. No. 1, Kim Seng Promenade Great World City, #07-01 Singapore 237994 Tel : 65-220 1522 Fax : 65-224 2753 Malaysia Pakistan Venture Sdn. Bhd. 9th Floor, Balai Felda Jalan Gurney Satu 54000 Kuala Lumpur Tel : 603-2692 5335 Fax : 603-2698 2677 Malaysia Shipyard & Engineering Sdn. Bhd. Pasir Gudang Industrial Area P.O. Box 77 81707 Pasir Gudang, Johor Tel : 607-251 2111 Fax : 607-251 7587 Malaysia Towage and Transport Sdn. Bhd. c/o MSE Sdn. Bhd. Pasir Gudang Industrial Area P.O. Box 77 81707 Pasir Gudang Johor Tel : 607-251 2111 Fax : 607-251 7587 Malaysia Maritime Academy Sdn. Bhd. P.O. Box 31, Kuala Sungai Baru 78207 Melaka Tel : 606-387 6201-5 Fax : 606-387 6700 Mapak Qasim Bulkers (Pvt.) Ltd. 1101, Uni Towers 1.1, Chundrigar Road Karachi - 74200 Pakistan Tel : 92-21-241 2265 Fax : 92-21-241 6791
MISC Agencies Lanka (Pvt) Ltd. P.O. Box 795 Level Seven, Valiant Towers 46/7, Navam Mawatha Colombo 2, Sri Lanka Tel : 94-1-348 933-6 Fax : 94-1-348 931 MISC Agencies (Sarawak) Sdn. Bhd. Lot 257, 1st Floor Jln Chan Chin Ann, P.O. Box 549 93100 Kuching Sarawak Tel : 60-82-411 324 Fax : 60-82-412 286 MISC Agencies (Thailand) Co. Ltd. Green Tower, 4th Floor 3656/9-10 Rama 4 Road Klong Toey, Bangkok 10110 Thailand Tel : 66-2-367 3558, 367 3581 Fax : 66-2-367 3586, 367 3587 MISC (Nigeria) Ltd. c/o Shield Petroleum Top Floor, Fortune Towers 27/29, Adeyomo Alakija Street Victoria Island Lagos, Nigeria Tel : 234-1269 3998 Fax : 234-1261 3221 Moor Industrial Transport Ltd-Jersey Level 25, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2580 Fax : 603-2275 2705 MSE-ATB Sdn. Bhd. Level 21, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2273 0266 Fax : 603-2273 8916 MSE Corporation Sdn. Bhd. c/o MSE Sdn. Bhd. Pasir Gudang Industrial Area P.O. Box 77 81707 Pasir Gudang, Johor Tel : 607-251 2111 Fax : 607-251 7587
MSE Holdings Sdn. Bhd. Level 25, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2703 Fax : 603-2275 2705 Olivier Shipping Ltd-Liberia Level 18, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Tel : 603-2275 2051 Fax : 603-2275 2029 Transasia Pool Pte. Ltd 5 Temasek Boulevard #12-01 Suntec Tower 5 Singapore 038985 Tel : 65-6336 2233 Fax : 65-6334 0618 Transware Distribution Services Pte. Ltd. 9 Gul Circle Singapore 629565 Tel : 65-861 2345 Fax : 65-861 6451 Trans-ware Logistics (Pvt) Ltd. 150, 150/1, Pamunugama Road Tudella, Ja-Ela, Sri Lanka Tel : 94-1 232 577 Fax : 94-1 232 588 Techno Indah Sdn. Bhd. c/o MSE Sdn. Bhd. Pasir Gudang Industrial Area P.O. Box 77 81707 Pasir Gudang, Johor Tel : 607-251 2111 Fax : 607-251 7587 Tianjin Voray Bulking Installation Co. Ltd. No. 2000, Nanjiang Road Nanjiang Port Area Tanggu, Tianjin P.R. China 300452 Tel : 86-22-2570 3079 Fax : 86-22-2570 3086 Voray Holdings Limited 34/F, The Lee Gardens 33, Hyson Avenue, Coriseway Bay Hong Kong, P.R. China Tel : 852-2909 5666 Fax : 852-2810 0032
190
Notice Of Annual General Meeting

Notice is hereby given that the Thirty-fifth Annual General Meeting of members of Malaysia International Shipping Corporation Berhad will be held on Thursday, 12 August 2004 at 11.00 a.m. at Nirwana Ballroom I, Lower Lobby, Mutiara Hotel Kuala Lumpur, Jalan Sultan Ismail, 50250 Kuala Lumpur, for the following purposes:As Ordinary Business: 1. To receive and adopt the audited financial statements for the financial year ended 31 March 2004 and the Reports of the Directors and Auditors thereon. 2. To declare a final dividend of 15 sen per share and a special dividend of 10 sen per share (Malaysian Income Tax exempted) in respect of the financial year ended 31 March 2004. 3. To re-elect the following Directors:Retiring pursuant to Article 95 Dato Halipah binti Esa Dato Shamsul Azhar bin Abbas Retiring pursuant to Article 97 Dato Sri Liang Kim Bang 4. 5. To approve the Directors fees for the financial year ended 31 March 2004. To re-appoint Messrs, Ernst & Young as auditors of the Company and to authorise the Directors to fix their remuneration. 6. To transact any other ordinary business of which due notice has been given.
191
Notice of Dividend Entitlement and Payment Notice is hereby given that subject to the approval of Members at the Annual General Meeting to be held on 12 August 2004, a final dividend of 15 sen per share and a special dividend of 10 sen per share (Malaysian income tax exempted) for the financial year ended 31 March 2004 will be paid on 30 August 2004 to Depositors whose names appear in the Record of Depositors on 17 August 2004. A Depositor shall qualify for entitlement to the dividend only in respect of:-
Notes: 1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and, on a poll, to vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company . In the case of a Corporate Body, the proxy appointed must be in accordance with its Memorandum and Articles of Associ a tion and the i nstru ment appointing a proxy shall be given under the Companys Common Seal or under the hand of an officer or attorney duly authorised. The form of proxy must be deposited at the Registered Office of the Company at Level 25, Menara Dayabumi, Jalan Sultan Hishamuddin, 50050 Kuala Lumpur not less than 48 hours before the time appointed for holding the Meeting.
2.
a.
Shares transferred into the Depositors securities account before 4.00 p.m. on 17 August 2004 in respect of transfers;
b.
Shares deposited into the Depositors securities account before 12.30 p.m. on 15 August 2004 in respect of securities exempted from mandatory deposit; and
3.
c.
Shares bought on Bursa Malaysia Berhad (The Bursa) on a cum entitlement basis according to the Rules of The Bursa.
By Order of the Board
Fina Norhizah binti Baharu Zaman Company Secretary Kuala Lumpur Date: 21 July 2004
192
Statement Accompanying Notice Of Annual General Meeting

Pursuant To Paragraph 8.28(2) Of The Listing Requirements Of Bursa Malaysia Berhad
1. Director who is retiring by rotation pursuant to the Articles of Association. Dato Sri Liang Kim Bang 2. Director who is retiring by casual vacancy pursuant to the Articles of Association. Dato Halipah binti Esa Dato Shamsul Azhar bin Abbas 3. Directors who are standing for re-election. Dato Sri Liang Kim Bang Dato Halipah binti Esa Dato Shamsul Azhar bin Abbas 4. Board meetings held during the Financial Year ended 31 March 2004. A total of five Board meetings were held during the financial year ended 31 March 2004 as follows:Date of Meeting 27 May 2003 7 July 2003 26 August 2003 12 November 2003 25 February 2004 Board of Directors Board of Directors Board of Directors Board of Directors Board of Directors
5.
Details of attendance at Board meetings held in the Financial Year ended 31 March 2004. Board Meetings Board of Directors Meetings attended Tan Sri Dato Sri Mohd Hassan bin Marican Dato Hj. Mohd Ali bin Hj. Yasin Dato Sri Liang Kim Bang Datuk Siti Hadzar binti Mohd. Ismail Tan Sri Dato Seri Dr. Hj. Zainul Ariff bin Hj. Hussain Dato Hamzah bin Bakar Mr. Harry K. Menon 5 5 5 3 5 2 4 Maximum possible to attend 5 5 5 5 5 2 5 Board Audit Committee Maximum possible to attend 4 4 4 4
Meetings attended 3 2 4 4
Proxy Form
I/We of being a member/members of the abovenamed Company, hereby appoint and/or of and failing the abovenamed proxies, the Chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the Thirty-Fifth Annual General Meeting of the Company to be held at Nirwana Ballroom I, Lower Lobby, Mutiara Hotel Kuala Lumpur, Jalan Sultan Ismail, 50250 Kuala Lumpur on Thursday, 12 August 2004 at 11.00 a.m. and at any adjournment thereof, on the following ordinary resolutions referred to in the notice of Annual General Meeting:Resolution For Against 1 2 3 4 5 6
Unless voting instructions are indicated in the spaces above the proxy will vote as he thinks fit.
No. of shares held
Signed this
day of
2004
Signature/Common Seal of Appointor
Notes: 1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and, on a poll, to vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section149(1)(b) of the Companies Act, 1965 shall not apply to the Company . 2. In the case of a Corporate Body, the proxy appointed must be in accordance with its Memorandum and Articles of Association, and the instrument appointing a proxy shall be given under the Companys Common Seal or under the hand of an officer or attorney duly authorised. This form of proxy must be deposited at the Registered Office of the Company at Level 25, Menara Dayabumi, Jalan Sultan Hishamuddin,50050 Kuala Lumpur not less than 48 hours before the time appointed for holding the Meeting.
3.
STAMP
Company Secretary Malaysia International Shipping Corporation Berhad Level 25, Menara Dayabumi Jalan Sultan Hishamuddin 50050 Kuala Lumpur Malaysia
Design: Johan Design Associates, Malaysia.

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104 178 183

MALAYSIA INTERNATIONAL SHIPPING CORPORATION BERHAD (8178-H)

Dato Hj. Mohd Ali bin Hj.Yasin

Current Year Financial Highlights

1500 1,389.4 1,417.3

90 90.6 1,415.6 1,343.9 1,310.7 1,310.3 74.7

+Based on annualised 15 months figures

MALAYSIA INTERNATIONAL SHIPPING CORPORATION BERHAD (8178-H)

BALANCE SHEET RM Million 25000 17,877.5 22,355.5

DEBT/EQUITY RATIO Ratio 1.0 0.98 0.8 0.73 0.70

20000 1,029.7 12,130.1 9,618.3 14,726.3

Total Debt/Equity Net Debt/Equity

MALAYSIA INTERNATIONAL SHIPPING CORPORATION BERHAD (8178-H)

Five-Year Group Financial Statistics

MALAYSIA INTERNATIONAL SHIPPING CORPORATION BERHAD (8178-H)

REVENUE RM Million 8,000

NET PROFIT FOR THE YEAR RM Million 2,500

DIVIDENDS RM Million 600

CAPITAL EXPENDITURE RM Million 3,000

INTEREST COVER RATIO No. of times

TOTAL BORROWINGS RM Million

NET TANGIBLE ASSETS PER SHARE Sen 600

RETURN ON ASSETS Percent

RETURN ON SHAREHOLDERS FUNDS Percent

+ Based on annualised 15 months figures

MALAYSIA INTERNATIONAL SHIPPING CORPORATION BERHAD (8178-H)

Announcement of Results & Dividends

Annual General Meeting

Annual Report (Issued)

MALAYSIA INTERNATIONAL SHIPPING CORPORATION BERHAD (8178-H)

Announcement of Results & Dividends

1 April 2003 31 March 2004

Results Quarter 1 Announced 26 August 2003

Quarter 2 Announced Quarter 3 Announced Quarter 4 25 February 2004 12 November 2003

Interim Announced Paid 12 November 2003 30 December 2003

Annual Report Annual General Meeting

21 July 2004 12 August 2004

24 May 2004 30 August 2004

MALAYSIA INTERNATIONAL SHIPPING CORPORATION BERHAD (8178-H)

MISC SUBSTANTIAL SHAREHOLDERS as at 30 June 2004

No. of Shareholders 283 1,839 2,779 838 491 2 6,232

% of Shareholders 4.54 29.51 44.59 13.45 7.88 0.03 100.00

No. Shares 6,738 1,367,915 10,268,063 29,224,307 548,819,443 1,270,227,327 1,859,913,793

Substantial Shareholders Nama 1. 2. RHB Nominees (Tempatan) Sdn Bhd

No. of Shares Held 1,161,256,460 108,970,867 1,270,227,327

% of Issued Share Capital 62.44 5.86 68.29

Employees Provident Fund Board

Citicorp Nominees (Asing) Sdn Bhd

Kerajaan Negeri Pahang HSBC Nominees (Asing) Sdn Bhd

ECM Libra Securities Nominees (Tempatan) Sdn Bhd

HSBC Nominees (Asing) Sdn Bhd

HSBC Nominees (Asing) Sdn Bhd

Amanah Raya Nominees (Tempatan) Sdn Bhd

HSBC Nominees (Asing) Sdn Bhd

HSBC Nominees (Asing) Sdn Bhd

Citicorp Nominees (Asing) Sdn Bhd

Citicorp Nominees (Asing) Sdn Bhd

HSBC Nominees (Asing) Sdn Bhd

Amanah Raya Nominees (Tempatan) Sdn Bhd

Citicorp Nominees (Asing) Sdn Bhd

Amanah Raya Nominees (Tempatan) Sdn Bhd

Citicorp Nominees (Asing) Sdn Bhd