Page 145 - ar2013.pdf

NOTES TO THE FINANCIAL STATEMENTS
For the Ànancial year ended 31 December 2013
143
Annual Report 2013
F i nanc i a l Statement s
37. Segment information (continued)
Geographical information
The Group’s business segments operate in two main geographical areas:
z People’s Republic of China - the operations in this area are principally in ship repair, ship building and marine
engineering activities; and
z Singapore - the operations in this area are principally in shipping, ship repair and marine related activities and
rental of property.
Sales are based on the country in which the services are rendered to the customer. Non-current assets are shown
by the geographical area where the assets are located.
Sales for
continuing operations Non-current assets
2013 2012 2013 2012
$’000 $’000 $’000 $’000
People’s Republic of China 3,435,034 3,663,535 2,385,232 2,360,699
Singapore * 73,100 70,726 138,140 144,264
3,508,134 3,734,261 2,523,372 2,504,963
* The Group’s shipping companies operate in worldwide shipping routes. Hence, it would not be meaningful to
allocate sales to any geographical segments for shipping activities.
Revenue of approximately $491,272,000 (2012: $671,334,000) is derived from a single customer. This revenue is
attributable to the People’s Republic of China ship repair, ship building and marine engineering activities segment.
38. Contingent liability
On 5 August 2013, a customer of a subsidiary served notice of termination on alleged grounds of delay in the
delivery of a vessel, the construction of which is substantially completed. On 5 September 2013, the customer
submitted a request for arbitration in London for which the customer claimed for a refund of the first instalment
paid on the contract amounting to US$110 million together with interest thereon, damages and interest thereon,
indemnity for future losses, further or other relief and costs. On 7 October 2013, the customer rejected the
subsidiary’s without prejudice proposal to settle the matter. The subsidiary has appointed legal advisers in London
in relation to the arbitration and is responding to the request for arbitration accordingly. Given the current stage of
arbitration proceedings, the directors are of the opinion that it is difficult to quantify the eventual financial impact of
the arbitration, if any, as at the date of these financial statements.
Notwithstanding the arbitration proceedings, the subsidiary has on 13 January 2014 refunded the first instalment
paid of US$110 million together with payment of interest thereon amounting to US$8.1 million to the customer.
39. Event occurring after balance sheet date
On 17 February 2014, the Group incorporated a wholly-owned subsidiary, COSCO (Hongkong) Shipyard Co.,
Limited (“COSCO HK”), through COSCO Shipyard Group Co., Ltd. COSCO HK has a share capital of US$500,000
and is domiciled in Hong Kong. The principal activities of COSCO HK relate to the provision of shipyard financing,
marketing and sales of shipbuilding and offshore projects. COSCO HK will be consolidated with effect from 17
February 2014.