Psa Ar2010

The Orchestra
An ensemble of instrumentalists comprising string, brass, woodwind and percussion sections is a fitting metaphor for PSA; an organisation global and expanding, having diverse talents, bridging different nations and cultures, incorporating the best experience and expertise; all in all, whose whole is far greater than the sum of its parts! Every member of PSA plays an important role, brings unique value, and contributes to PSAs success; much as each musician in an orchestra comes together to deliver a beautiful musical performance.
Our M ission
To be the port operator of choice in the worlds gateway hubs, renowned for best-in-class services and successful partnerships.
Our Values
Committed to Excellence We set new standards by continuously improving results and innovating in every aspect of our business. Dedicated to Customers We help our customers, external and internal, succeed by anticipating and meeting their needs. Focused on People We win as a team by respecting, nurturing and supporting one another. Integrated Globally We build our strength globally by embracing diversity and optimising operations locally.
Program
Our Mission & Values Setting the Tempo Group Chairmans Message Group CEOs Message Keeping Our Rhythm Board of Directors Senior Management Council Raising the Bar Global Footprint Group Financial Highlights World Class Performances The Rhythm of Business Round of Applause In Harmony Touching the Heartstrings The Ascending Fish! Motif Financial Review Corporate Directory 1 4 6
10 12
16 18
22
26 27 28 31 100
Setting the Tempo

Using his baton, a conductor shapes the melodic direction of the musical piece. He unites his musicians to create harmonious melodies. Likewise, our Group Chairmans vision and Group CEOs business acumen guide PSA onwards towards greater crescendos of success.
Every Note Counts
Group Chairmans
M essage
PSA must therefore continue to remain very vigilant and focused so that we can be prepared for any challenges and seize any opportunities that come.
2010 would surely be remembered as a year that saw exuberance and dark clouds in equal measure. The world economies were greeted with caution and uncertainty as they entered year 2010, prayerfully hoping that the nascent recovery which started in the second half of 2009 would be sustainable. In the past year, economic recovery gathered pace leading to improved economic activities worldwide and stronger than expected recovery of global trade f lows. According to the IMF, world trade was projected to expand by 4.8% from 2009 to 2010, which represents a remarkable surge, given the low base in 2009. However, the global economic recovery has been patchy. Economists now predict a two-speed recovery, slow in advanced countries and fast in emerging market countries. Indeed, significant economic woes continue to besiege the advanced Western economies. The United States, still beleag uered by its stubbornly high unemployment rate, has committed to a second stimulus package; however, the world monitors, with bated breath, whether this stimulus will indeed strengthen United States nascent economic recovery or just plunge it into bigger national debt. In Europe, the sovereign debt default in Greece and the continuing worry over the solvency of the PIIGS countries have forced many European governments to initiate austerity measures to contain national spending, in the process setting off social protests and unrest, and depressing consumption. There is no easy solution and Eurozone countries are expected to be bogged down by these problems for months or even years ahead. In Japan, the strong yen is crippling its exports and faltering its economic recovery. In 2010, China has supported the global economic initiatives by the implementation of its own stimulus package to encourage consumption by its citizenry. Whilst its stimulus package has resulted in the maintenance of a relatively high GDP growth, it has not as yet been able to meaningfully right the imbalance of global trade flows and to have a strong, positive knock-on effect on the rest of the world. For these to happen, it will take some time. Whilst we continue to witness better growth rates in Asian economies, a gradual slowdown may be inevitable given rapidly mounting inflationary pressures, especially in China.
PSA International Pte Ltd Annual Report 2010
The mixed world economic performance, however, belied the unexpectedly strong recovery in the shipping industry, not only in volumes but also in freight rates. This is due in no small measure to the skilful management of shipping capacity by lines through the postponement of new builds, the lay-up of excess capacity, the scrapping of old ships, and the slow steaming of deployed ships. In all, Clarkson Research Services estimated that 2010 saw 140 million TEUs shipped, a record volume surpassing the previous high of 137 million TEUs in 2008. We a re ver y plea sed t hat ou r c ustomers have per for med exceedingly well and their stellar output helped PSA achieve a record volume of 65.1 million TEUs on a group-wide basis, representing a 14.4% increase over 2009. At PSA Singapore Terminals, the 2010 throughput of 27.7 million TEUs was 10.1% higher than the year before. The Groups revenue and net profit reached S$4.08 billion and S$1.18 billion respectively last year. At this point, I would like to express my sincere thanks to our valued customers, for placing their continued trust in us and allowing us the privilege of sharing in their success. Our promise of providing uncompromising and constant care has gratifyingly been recognised by the industry, and the PSA Group was conferred the Seatrade Asia Container Terminal Operator Award for the third consecutive year, Lloyds List Asia Award for Container Terminal Operator of the Year for the 10th year, and the Asian Freight & Supply Chain Award (AFSCA) for Best Global Container Terminal Operating Company for the fifth year. Regionally, Fuzhou International Container Terminal also garnered the China Freight Industry Award for Top 10 Best Container Terminals in China, while PSA Singapore Terminals was the recipient of AFSCA for Best Container Terminal (Asia) for the 21st time. Apart from the vote of support by our customers, these awards would not have been possible without the dedication and fortitude of our staff, unions and management. Their sustained efforts ensured that PSA maintained the world class service quality to which our customers have become accustomed. Steering the colossal PSA Group through such challenging times is a mammoth responsibility and I am much indebted to the dedicated members of the PSA Board whose staunch support, astute counsel and vast experience have greatly lightened the burden; for which I am deeply thankful. Here, I would also like to extend a warm welcome to Ms Chan Lai Fung, who joined our Board of Directors in March 2010 and quickly immersed herself in the Board Committees and deliberations. Alongside our ongoing business operations, PSA has also been actively involved in contributing back to society. The Howe Yoon Chong PSA scholarships, open to Singaporean students from low-income families, are uniquely aimed at providing education
opportunities for deserving students entering Institutes of Technical Education, Polytechnics and Universities. Besides other worthwhile projects, PSAs Corporate Social Responsibility (CSR) work was extended to include the adoption of Nor t h Lig ht School, wh ich a i m s to help st udent s f rom underprivileged or troubled family backgrounds by preparing them for lifelong learning and employability. Besides cash donation, PSA will provide industrial attachment opportunities to NorthLight students. A rou nd t he world , ou r t er m i n a l s h ave a l s o cont r i but e d significantly towards charities throughout the year. Through staff events and the CSR fund, PSA Singapore Terminals has donated some S$500,000 to its adopted charities. Other efforts include PSA Antwerps contributions and staff volunteerism to the Belgian Paralympic Committee, the SolidarBus refugee and education support program in Italy and the Wheelchair Campaign of Trkiye Disabled Federation. Wit h in t he Group, a cor porate cult u re cha nge process is infectiously spreading to make PSA a more caring and fun work place. Based on four simple principles of Being There , Making Their Day , Choosing Your Attitude and Play , this change management initiative motivates our staff and harnesses their collective energies, strengths and passions. Some a na lysts a nd economists have high expectations for 2011, believing that global economic recovery is now on a solid foundation. I hope they are right. As for me, I continue to be bothered by the lingering and troubling economic problems in the developed countries and the severity of credit market pressures and unbalances in global trade f lows, all of which require considerable time to cure. PSA must therefore continue to remain very vigilant and focused so that we can be prepared for any challenges and seize any opportunities that come. Most importantly, PSA will continue to work closely with our customers to serve them with alacrity and dedication. I have every confidence that we will remain fleet and versatile in our responses to change, while leveraging on our core strength in the pursuit of excellence.
FOCK SIEW WAH Group Chairman
Every Note Counts
Group CEOs
M essage
2010, the year of the Tiger in the Chinese zodiac, certainly lived up to its characterisation, .. I seek the unattainable, and try the untried. A converg ence of a l l t he mea su res m ac ro a nd m ic ro governments putting the balance sheet of the State at the disposal of the financial systems, continued quantitative easing to support demand, slow steaming by container shipping lines to soak up surplus capacity all collectively had the desired effect of calming the global markets. PSA and the port and shipping sector in tandem with all other industries benefited from the resulting outcome. Container volumes recovered strongly in 2010 from the previous year and, with the contribution of volumes from newly commissioned terminals in Busan in South Korea, Chennai in India and Vung Tau in Vietnam, PSA Group ended the year with a new peak of 65.1 million TEUs (14.4% increase year on year) handled across its network of terminals worldwide, surpassing the previous high of 63.2 million TEUs achieved during the heady and tumultuous times in 2008.
In 2010, two new terminal projects were completed: Zeebrugge International Port, in the deep-sea harbour of Zeebrugge in Flanders, Belgium, and Panama International Terminals in Panama City, on the Pacific coast of Panama. Both terminals will commence full commercial operations this year. Also in 2010 capital expenditure deferred during the global economic crisis to upgrade and expand the Groups deep-sea capabilities to service the expanding fleet of mega-size container vessels was revived; and I am pleased to report that additional capacity to berth and handle these mega vessels has been added in Singapore, Tianjin in China, Sines in Portugal, and Zeebrugge during 2010, and barring any further major economic shocks, this capability upgrading will continue through 2011 and beyond. The Group is also continually reviewing its network and portfolio of port investments to match the changing landscape of global trade.
We have also continued to align our internal organisation to manage effectively our growing network of terminals worldwide and to meet the challenges posed by an ever-evolving competition landscape in a fast changing world of new emerging economies and geo-politics.
The expansion of the Groups portfolio into overseas markets to diversify the earnings base started in earnest post corporatisation in 1997, and at the end of last year, the volumes handled at our overseas terminals made up 37.4 million TEUs or 57.5% of the Groups total volumes. This diversification into overseas markets mitigates exposure to any single market, and has stood us well through the economic turbulence of the recent two years. Building strategic joint venture partnerships with key shipping lines including MSC, PIL, CMA, Cosco, NYK and K-Line in Singapore, Antwerp, Zeebrugge and Sines has also provided some measure of support when global trade went into a tailspin in 2009; today, a sizeable portion of global volumes is handled with these strategic partnerships, the first of which was entered into in 2003 with MSC. The Group has also been working to enhance its human capital leadership and bench strength commensurate with an expanding Multinational Corporation (MNC). The Groups Fish! teambuilding and leadership program, which was first rolled out in 2006 by Group HR, has now evolved into a global corporate culture change platform encompassing the whole organisation worldwide, and Fish! is now prevalent as a unifying language, within the PSA family. As part of the ongoing transformation of PSA into a global MNC, we have continued to groom young and capable talents from within the organisation, supplemented by good potential talent from without, to build a strong, competent and committed global leadership team. We have also continued to align our internal organisation to manage effectively our growing network of terminals worldwide and to meet the challenges posed by an ever-evolving competition landscape in a fast changing world of new emerging economies and geo-politics. The seeds of human capital development we have planted over the years have taken root and dovetailed well with my personal plan of retiring by 62. This year in August, I shall have attained this milestone age, and after close consultations with the Group Chairman, Fock Siew Wah, I shall be stepping down later this year as Group CEO. An internal and external global search process for my replacement was started earlier this year and I will continue to serve as Special Advisor to the Group Chairman after my retirement. I wish to thank all partners and customers for their continued patronage all these years; PSA is grateful for the privilege of working with and serving them. I also wish to express my gratitude to the past and present Chairmen and Board Directors for their strong support and expert advice given to me. I am equally appreciative of the wholehearted support from my colleagues in the management team as they rallied around me to face and surmount all the challenges that came our way. My heartfelt thanks also go out to the PSA staff and unions for their selfless effort in helping the Group grow to what it is today. Their determined and relentless drive to go the extra mile for our customers, unparalleled commitment to getting the job done, and willingness to change and adapt have enabled PSA to grow from strength to strength. I feel a sense of humility and fulfilment in helming this excellent organisation, which is also The Worlds Port of Call, knowing that I am a part of its success story!
EDDIE TEH Group CEO
K eeping ourRhythm
Our Board of Directors and Senior Management Team keep PSA moving forward together amid the challenging and swiftly-evolving business environment, akin to an orchestra having to negotiate changing keys and complex rhythms! It requires the rapport of every member to hold the ranging tempo.
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Every Note Counts
FOCK SIEW WAH Group Chairman Main Committees: Chairman, EXCO Chairman, LDCC
EDDIE TEH Deputy Group Chairman Main Committee: Member, EXCO Member, Supervisory Committees: Southeast Asia, Northeast Asia, Middle East South Asia, Europe & Mediterranean, Marine Services
Board of
D irectors
TAN CHIN NAM FRANK WONG Main Committee: Member, LDCC Chairman, Supervisory Committee: Northeast Asia Main Committee: Member, Audit Member, Supervisory Committee: Middle East South Asia
CHAN LAI FUNG Member, Supervisory Committees: Europe & Mediterranean Marine Services
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KUA HONG PAK Main Committees: Chairman, Audit Member, EXCO Chairman, Supervisory Committee: Southeast Asia KOH POH TIONG Main Committee: Member, EXCO Member, Supervisory Committee: Northeast Asia
MICHAEL LIM Main Committees: Member, EXCO Member, LDCC Chairman, Supervisory Committee: Middle East South Asia
NG CHEE KEONG Main Committee: Member, Audit Chairman, Supervisory Committee: Europe & Mediterranean
DAVINDER SINGH Main Committee: Member, LDCC Member, Supervisory Committee: Southeast Asia
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Every Note Counts
EDDIE TEH Group CEO CAROLINE LIM Global Head of HR & Corporate Affairs
Senior M anagement
Council
ONG KIM PONG Regional CEO Northeast Asia
LEE CHEN YONG Regional CEO Middle East South Asia
KENNY ONG Regional CEO Americas Head of Group Business Development
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LIM PEK SUAT Group CFO
GOH MIA HOCK Head of Group Risk Management / Technology & Operations Development
TERENCE TAN Head of Group Legal & Company Secretary
TAN PUAY HIN Regional CEO Southeast Asia
DAVID YANG Regional CEO Europe & Mediterranean
Raising the Bar

Music is created when musical notes are played; more musicians playing notes together give rise to an enriching experience of harmony, texture and emotions. At PSA, the different port projects support and build on each other, strengthening the PSA Group and enriching its financial performance.
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Every Note Counts
Global
F ootprint
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SOUTHEAST ASIA SINGAPORE PSA SINGAPORE TERMINALS THAILAND EASTERN SEA LAEM CHABANG TERMINAL VIETNAM SP-PSA INTERNATIONAL PORT MIDDLE EAST SOUTH ASIA INDIA TUTICORIN CONTAINER TERMINAL CHENNAI INTERNATIONAL TERMINALS PSA ABG KOLKATA CONTAINER TERMINAL PSA ABG KANDLA CONTAINER TERMINAL PAKISTAN PSA GWADAR INTERNATIONAL TERMINALS NORTHEAST ASIA CHINA DALIAN TERMINALS FUZHOU TERMINALS GUANGZHOU CONTAINER TERMINAL TIANJIN TERMINALS DONGGUAN CONTAINER TERMINAL HONG KONG TERMINALS SOUTH KOREA INCHEON CONTAINER TERMINAL PUSAN NEWPORT INTERNATIONAL TERMINAL JAPAN HIBIKI CONTAINER TERMINAL
1 2 3
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4 5 6 7 8
9 10 11 12 13 14 15 16 17
EUROPE & MEDITERRANEAN BELGIUM & THE NETHERLANDS PSA Antwerp PSA ZEEBRUGGE ITALY VOLTRI TERMINAL EUROPA VENICE CONTAINER TERMINAL PORTUGAL SINES CONTAINER TERMINAL TURKEY MERSIN INTERNATIONAL PORT UNITED KINGDOM PSA GREAT YARMOUTH CONTAINER TERMINAL AMERICAS PANAMA PSA PANAMA INTERNATIONAL TERMINAL ARGENTINA EXOLGAN CONTAINER TERMINAL
18 19 20 21 22 23
24
25 26
17
24 19 18 20 22 21 12 23 9 15 16 17
7 6
11
10 13 14
2 5 4 3
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Every Note Counts
Group Financial
Highlights
TEUs - Twenty-foot Equivalent Units All amounts in Singapore dollars Volume Throughput (million TEUs) Singapore Overseas Global Consolidated Income Statement ($ million) Revenue Operating Expenses Operating Profit Other Income/(Expenses) Profit from Operations Finance Costs Share of Profit of Associates Profit before Income Tax Income Tax Expense Profit for the year Non-Controlling Interests Profit attributable to Owner of the Company Consolidated Financial Position ($ million) Total Assets Total Liabilities Total Equity Financial Ratios Operating Margin1 Return on Average Total Assets2 Return on Average Total Equity3 Total Debt/Equity (times)4 Value-added per Employment Cost ($) Economic Value Added ($ million) Earnings per Share ($)
Operating profit expressed as a percentage of revenue Profit for the year, add back finance costs, expressed as a percentage of average total assets Profit for the year, expressed as a percentage of average total equity 4 Total debt divided by total equity
1 2 3
2010
2009
2008
2007
2006
27.7 37.4 65.1
25.1 31.8 56.9
29.0 34.2 63.2
27.1 31.8 58.9
24.0 27.3 51.3
4,076 (2,622) 1,454 14 1,468 (340) 261 1,389 (191) 1,198 (19) 1,179
3,835 (2,631) 1,204 3 1,207 (342) 244 1,109 (145) 964 12 976
4,392 (2,922) 1,470 (28) 1,442 (393) 260 1,309 (265) 1,043 (4) 1,039
4,151 (2,573) 1,578 875 2,453 (504) 239 2,188 (248) 1,940 (15) 1,925
3,736 (2,400) 1,336 348 1,684 (405) 202 1,481 (256) 1,225 (16) 1,209
18,950 10,101 8,849
19,611 11,318 8,293
19,090 11,369 7,721
18,198 11,029 7,169
17,206 11,635 5,571
35.7% 8.0% 14.0% 0.93 4.0 220 1.94
31.4% 6.8% 12.0% 1.13 3.6 173 1.61
33.5% 7.7% 14.0% 1.19 3.6 503 1.71
38.0% 13.8% 30.5% 1.20 4.0 507 3.17
35.8% 11.9% 23.3% 1.73 3.8 573 1.99
Volume (million TEUs)

70
Revenue ($ million)
4,500 4,000 3,500
60
50 3,000 40 2,500 2,000
30 2006 2007 2008 2009 2010
2006
2007
2008
2009
2010
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Geographical Contribution
SEGMENT REVENUE 2009 South East Asia Europe North East Asia Others 2010 South East Asia Europe North East Asia Others
58% 30% 7% 5%
59% 28% 7% 6%
SEGMENT NON-CURRENT ASSETS 2009 South East Asia Europe North East Asia Others 43% 27% 23% 7% 2010 South East Asia Europe North East Asia Others 44% 25% 23% 8%
World Class P erformances

The world is our stage, and PSA is an award-winning performer, thanks to the support and patronage of its customers. Just as each inspired performance comes about only through diligent practice and sensitive appreciation of the composers intentions, PSA pledges to relentlessly improve its service offering to customers through diligence and an innate understanding of their needs.
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Every Note Counts
The Rhythm of Business

PSA operations worldwide improved in 2010 in tandem with the global economic recovery from the doldrums a year and a half before. Besides catering to organic growth, PSA started new terminal operations and invested in infrastructure and equipment to meet the growing needs and rigorous service requirements of customers. SOUTHEAST ASIA PSA Singapore Terminals (ST) recorded a 10.1% growth in throughput over 2009 and handled an annual throughput of 27.7 million TEUs in 2010. That represented an incremental volume of more than 2 million TEUs, an exceptional increase in demand which ST effectively met by ramping up resources through the close co-operation of management, unions and staff. In 2010, 44 new container shipping services were added with about 60% of the services focusing on the key growth markets of Intra-Asia and North-South trade. More than 200 large ships of 10,000 TEU or bigger capacity called at ST, a testimony to its hub status which allowed customers to capitalise on its connectivity network, and superior infrastructure designed to handle mega vessels efficiently. Meanwhile, the Pasir Panjang Automobile Terminal (PPAT) handled more than a million vehicles in 2010. The year also marked the physical completion of Pasir Panjang Terminal (PPT) Phases 1 and 2, comprising 23 container berths and three Ro-Ro berths.Presently, ST is working closely with the Ministry of Transport and Maritime and Port Authority of Singapore to develop Phases 3 and 4 of PPT in order to meet customers growth requirements in the new decade. Throughout the year, PSA ST received numerous accolades. Among them were the titles of Best Container Terminal Asia (over 4 million TEUs) at the 24th Asian Freight & Supply Chain Awards 2010, Container Terminal of the Year at the Supply Chain Asia Logistics Awards 2010, and the Cheaper Bet ter Fa ster Model Pa r t nership Awa rd (Inst it ut iona l Category), a Special May Day Award 2010 for enhancing labour productivity. Additionally, Brani Terminal received the Safety & Health Award Recognition for Projects (SHARP) at the Workplace Safety and Health Performance Awards 2010 for implementing sound safety and health management systems at the workplace. PSAs investment in Laem Chabang, Thailand, registered strong growth keeping pace with the favourable exports-driven economic recovery. Two new shipping services plying ChinaThailand and Thailand-Vietnam-China also called at PSAs terminal facility. In Vietnam, SP-PSA saw a landmark year with more than 200% growth over 2009 to almost 294,000 TEUs in 2010, and by setting four successive vessel productivity records for Vietnamese container ports in the course of the year. NORTHEAST ASIA In China, Fuzhou saw an increase in container throughput, reflecting the improvement in global economy and world trade. PSAs Fuzhou Qingzhou Container Terminal and Fuzhou International Container Terminal had a combined throughput of 1.17 million TEUs, notching up a growth of 17% over 2009. PSAs Tianjin Port Pacific International Container Terminal saw its volumes surge by 60% to reach 1.27 million TEUs and is shaping up to be the largest PSA port project in mainland China. Guangzhou Container Terminal handled a throughput of 0.96 million TEUs in 2010, thanks to the strong growth of China domestic boxes. In South Korea, our Incheon Container Terminal handled in excess of million TEUs, showing a 19.2% growth, despite strong regional competition. The Pusan Newport International Terminal (PNIT) is PSAs other investment in South Korea. Commencing operations in March 2010, PNIT ended the year with more than 548,000 TEUs. With 1.2 kilometres of deepwater berths, PNIT is operationally tailored to efficiently handle hub and spoke as well as relay transhipment volumes for the Transpacific and North East Asian trade routes.
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MIDDLE EAST SOUTH ASIA The India economy weathered the global financial crisis well and, by 2010, it had bounced back strongly with a GDP growth of 8%. PSAs Chennai International Terminals, seizing the robust growth momentum, increased their container throughput to cross the 300,000-TEU mark in 2010, up from 26,000 TEUs handled in the three months of operations since start up in 2009. PSA ABG Kandla Container Terminal experienced a 19.1% growth in volume at 155,717 TEUs for 2010 while ABG Kolkata Container Terminals throughput of over 249,000 TEUs represented almost its full capacity. The multipurpose-built PSA Gwadar International Terminals handled 815,000 metric tonnes of urea in 2010. EUROPE & MEDITERRANEAN PSA Antwerp in Belgium is the other PSA flagship terminal outside of Singapore. It handled 14.7% more containers in 2010 over 2009. Even more spectacularly, its joint venture with Mediterranean Shipping Company achieved a 16.2% increase in throughput at 5.3 million TEUs, which is a record. Meanwhile, PSA Zeebrugge pulled out all the stops to get Zeebrugge International Port (ZIP) operational in November 2010. ZIP is fully equipped with four double hoist twin lift cranes and 16.5 metres of water depth alongside to handle mainhaul mega vessels. It also has on dock rail intermodal capacit y of over 120 block trains weekly and an 80,000 square metres on dock Distripark facility. In close proximity, Container Handling Zeebrugge (CHZ), a PSA joint venture with Terminal Link SA, achieved over 1 million TEUs for the first time.Upgrading works are planned in 2011 to deepen alongside water depth to 17 metres, enabling CHZ to handle mega vessels without restrictions. Elsewhere in Italy, Voltri Terminal Europa (VTE) achieved a 10.8% increase in volume, resulting in an annual throughput exceeding 980,000 TEUs in 2010. In May 2010, VTE obtained
the concession to Module 6, which added 233 metres of quay and 10 hectares of yard. Despite Portugal facing severe pressure on sovereign debts, PSAs investment in Sines turned in a respectable 50.7% volume increase. MSCs Eastbound Far East Lion Service which was launched in May 2010 contributed to the strong transhipment traffic in Sines. Mersin International Port in Turkey did very well in 2010, recording volume highs in three areas: highest annual container volume, highest monthly container volume and the highest monthly volume of container freight station boxes handled. The terminal also reached 1 million TEUs for the first time in its history. AMERICAS Exolgan Container Terminal rode on the positive economic sentiments in Argentina to handle more than 600,000 TEUs in 2010. It is currently expanding its quay to provide for three container berths and the capability to serve Post-Panamax vessels. Construction is expected to be completed by March 2011. PSA Panama International Terminal handled its first vessel on 23 December 2010.This vessel carried a shipment of steel for the Panama Canal expansion project. MARINE PSA Marinedeployed 32 tugs tosupport towage operations in Singapore and 20 tugs for its overseas towage business. To meet the demands of thepilotage service, PSA Marine continued to recruit and train pilots. At year end, there were219 pilots, an increase of16 over the previous year. PSA Marine continued to exploit technolog y to enhance customer service. Since April 2010, customers of PSA Marine have enjoyed amore convenient way to order, amend and enquiremarine services orders with the launch of the Internet Marine Ordering System via Smartphones, which is available on a 24/7 basis.
Round of Applause
The audience affirms their appreciation for good music by applauding the orchestra at the end of a performance. PSA appreciates its staff for their contribution and support by empowering them through culture change, continual learning, and involving them in corporate social responsibility activities it is our way of applauding our people and thanking them for their unwavering commitment.
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Every Note Counts
In H armony
PSA Internationals Board of Directors plays a pivotal role in overseeing its business affairs and providing guidance on strategic planning, particularly in growth and financial performance. The Board holds quarterly meetings to steer business directions, review investment opportunities, and approve budgets and audited accounts. Decisions are made based on a majority vote; in the event of equal votes, the Chairman holds the deciding vote. The Board is supported by the following Committees: Executive Committee (EXCO) The EXCO reviews and develops strategies for the long term role and position of the Group. It is responsible for approving major acquisitions and disposal of investments, capital expenditures, the taking of loans and provision of guarantees, investment policies for financial projects, customer contracts, tenders and purchase contracts. Audit Committee The Audit Committee identifies significant risk areas and reviews the effectiveness of control procedures and processes to mitigate risks. It assesses the reliability of management reporting and compliance with applicable laws and regulations, and reviews the statutory accounts. Leadership Development & CompensationCommittee (LDCC) The LDCC oversees leadership development, ta lent management and remuneration. It ensures that companies within the Group have in place appropriate programs and consistent policies for grooming leaders, developing global talent and preparing potential successors to key leadership positions. It also reviews the performance and approves the remuneration of PSAs senior management. Supervisory Committees (SCs) The SCs align management resources to better manage PSAs portfolio of terminals worldwide. There are five SCs, namely: Southeast Asia SC, Northeast Asia SC, Middle East South Asia SC, Europe & Mediterranean SC and Marine Services SC. Each SC reviews and plans growth strategies, a nd approves major capita l expendit ures, customer contracts, tenders and purchase contracts for all PSA entities within its respective business purview. The commercial practices within the PSA Group are further guided by the Code of Business Conduct to ensure utmost business integrity.
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Touching the H eartstrings

Embracing the responsibilit y of an organisation to the communities and the environment in which it operates, PSA has sustained its support of charitable causes and green initiatives through the course of 2010. Underscoring its commitment to the community and the less privileged, PSA Group HQ oversaw the second batch of bondfree scholarships awarded to 13 students in Singapore, under the Howe Yoon Chong PSA Endowment Fund. The Fund, which consists of contributions from PSA, Temasek Holdings and NSL, is endowed to perpetuity to provide deserving students from low income families the opportunity to pursue a formal education. Our Group Chairman, Fock Siew Wah, also led the way towards PSA adopting NorthLight School as one of its social causes. A pioneering school which helps students who are unable to cope with mainstream education, NorthLight prepares them for lifelong learning and employability through a values-focused and career-oriented education. In addition to a cash donation, PSA Group in collaboration with Singapore Terminals led educational visits (Learning Journeys) for its teachers and affiliates to gain a better understanding of potential job opportunities in the port. We will also be providing places for selected NorthLight students for industrial attachment within the company. PSA Groups charitable efforts continued with the sponsorship of various notable causes, including the Assisi Hospice, St Lukes Hospital and the Community Chest. On the cultural and education front, we also contributed to the National Heritage Board and Nanyang Technological University, among others. In tandem with PSAs g rowing global footprint, we are taking active steps to reduce our carbon footprint on the planet. Spearheading these efforts in terms of corporate sponsorship, the PSA Group made a significant donation to Singapores National Parks Board. PSA Singapore Terminals (ST) continued its Go Green campaign for the second year in 2010, during which its Operations Division organised an inaugural Go Green road show to highlight PSA STs green initiatives and raise awareness among staff. Across PSA ST, eco-friendly practices were carried out. These included the planting of trees inside the terminals, testing of new equipment with lower carbon emissions, adapting existing engineering products and practices to reduce emissions, continued efforts to reduce fuel usage through more efficient deployment of equipment and achievement of Green Mark (a benchmark scheme administered by Singapores Building and Construction Authority to recognise environmentally friendly buildings) for PSA STs office buildings. Reaffirming our support to the community, PSA terminals around the world were also actively engaged in a wide variety of charitable causes. The Beyond Social Services, Lions Home for the Elders and Muscular Dystrophy Association Singapore benefited from corporate donation by PSA ST and funds collected by its management, staff and their family members. Our creative fund raising initiatives included the annual PSA Charity Cook-out which raised some $24,000 for the Lions Home for the Elders. In all, PSA ST contributed close to $500,000 to its adopted charities. In October, the Community Chest of Singapore conferred PSA ST the SHARE Platinum Award in recognition of its sustained high staff participation rate in the SHARE monthly donation program. In other parts of the world, PSA Gwadar in Pakistan donated to a local charity organization Khidmat-e-Khalq in Karachi, which freely distributes food and clothes to the local community during the month of Ramadan. In Thailand, Eastern Sea Laem Chabang (ESCO) aided in the renovation of the Bang Wang Ree School in Prachinburi Province as part of its community outreach efforts. ESCO was also involved in the collection of flood relief aid for the province of Ayutthaya, under the auspices of the Ruamkatanya Foundation. In Vietnam, SP-PSA contributed to the Gratitude Fund of Tan Thanh Commune, the Saigon Childrens Charity, as well as the Consular Club Charity Bazaar which aids homeless children. The terminal also donated to flood victims in Central Vietnam. Over in Europe, Voltri Terminal Europa in Italy continues to champion the SolidarBus project a mobile vehicle that collects relief items for Africas refugees and educates the community on their plight. Turning to Turkey, employee volunteers from Mersin International Port were involved in a project organised by the Turkish Human Resources Association to raise the awareness in youths from rural villages on the importance of healthcare and first-aid. PSA terminals also strongly backed causes for children beneficiaries in India and Argentina; for the former, organising sailing programs and a dinner for impoverished children in Chennai and Kandla, and for the latter, making provisions for school clothing, toys, education and first-aid campaigns, as well as food donations for over 2000 children. In its continuing patronage of the arts and sports, the PSA Group supported the Singapore Symphony Orchestra, Arts Sentral Asia activities and PSA ST was the official Maritime & Shipping Sponsor for the inaugural Singapore Youth Olympic Games 2010 in August, while PSA Antwerp sustained its sixyear partnership with the Belgian Paralympics Committee to prepare for the 2012 London Meet. At PSA, we remain resolute in the belief that a company is measured not only by its bottom-line but by how it upholds the ethics of good corporate citizenship through philanthropy, and giving back to the communities from which it has prospered actions which are integral to our mission of being The Worlds Port of Call.
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Every Note Counts
The Ascending Fish! Motif

Teamwork, synergy and professionalism continue to be the hallmarks of the partnership among PSA management, staff and unions, a partnership which has been further enhanced since the launch of the Fish! Philosophy, our common language of corporate culture change. All across the organisation, efforts are made to cascade the simple yet powerful Fish! Philosophy for camaraderie, teamwork, a positive attitude and outstanding customer service, with the aim of creating engagement and fulfilment at work. While Fish! continues to be espoused to all employees, the Leader Fish! program, launched in 2009 as a workshop for culture change at the highest corporate level, continued to make an impact in 2010. Facilitated by Group Human Resource and graced by Group Chairman as a guest speaker of leadership values, the LeaderFish! program challenged our leaders first in Singapore and then overseas to be change champions for a great workplace culture. In the latter part of the year, LeaderFish! was cascaded to senior leaders as well as young high-potentials in the Europe & Mediterranean region. The playing of handbells was chosen as one of the teambuilding activities to reinforce the learning on Leader Fish! . The simple act of a group of participants ringing bells musically becomes a challenge of coordination, precision and teamwork. Individuals soon discover that a single bell can produce a note but when a song is called for, all the bells must ring in synergy. Just as successful teamwork produces stunningly beautiful musical experiences in the handbells exercise; we believe the same truly positive experience can be multiplied powerfully in our teams when every participant, at their own workplaces, puts into practice what was imbibed from LeaderFish!. The ultimate goal is for every individual to live the Fish! Philosophy as naturally as breathing. It was the passion for Fish! that led Caroline Lim, Global Head of HR & Corporate Affairs, to accept an invitation from the International Transport Workers Federation (ITF) a global affiliation of labour unions in the transport sector including ports to share her diverse and refreshing experiences in corporate culture change, and in so doing, inspired the union representatives with the power of Fish! at the ITF annual conference held in Long Beach, USA, in October 2010. Currently, PSA has 9,000 employees learning and living the Fish! Philosophy. The employees of PSA International, PSA Marine and Singapore Terminals completed their first Have Fish! Will Travel contest in July 2010, after 18 months of nominating one another for demonstrating good Fish! behaviour. The winners with the highest nominations were sponsored to a vacation in Seattle, USA, where the Fish! Philosophy had originated. With the success of the first contest in creating enthusiasm for Fish!, the second 18-month contest is already underway. Over time, just as music transcends boundaries, we firmly believe that Fish! will be a unifying language for the global PSA family.
F inancial Review
Directors Report Statement by Directors Independent Auditors Report Group Financial Statements 32 35 36 37
32
Every Note Counts
D irectors Report
Directors
Year ended 31 D ecember 2010

We are pleased to submit this annual report to the member of the Company together with the audited financial statements for the financial year ended 31 December 2010.
The directors in office at the date of this report are as follows: Mr Fock Siew Wah (Group Chairman) Mr Eddie Teh Ewe Guan (Deputy Group Chairman and Group Chief Executive Officer) Ms Chan Lai Fung (Appointed on 22 March 2010) Mr Davinder Singh s/o Amar Singh Mr Frank Kwong Shing Wong Mr Koh Poh Tiong Mr Kua Hong Pak Mr Michael Lim Choo San Mr Ng Chee Keong Dr Tan Chin Nam
Directors interests
According to the register kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants and share options in related corporations are as follows: Name of director and corporation in which interests are held Fock Siew Wah Singapore Telecommunications Limited - Ordinary shares Chan Lai Fung Singapore Telecommunications Limited - Ordinary shares Davinder Singh s/o Amar Singh Singapore Airlines Limited - S$300 million 2.15% Bonds due 2015 Singapore Technologies Engineering Ltd - Ordinary shares - Unvested restricted shares (performance period from 01/01/2008 to 31/12/2008) - Conditional award of 14,500 restricted shares to be delivered after 2009 - Unvested restricted shares (performance period from 01/01/2009 to 31/12/2009) - Time-based restricted shares to be delivered after 2010 Singapore Telecommunications Limited - Ordinary shares Vertex Investment (II) Ltd - Ordinary shares Vertex Technology Fund (II) - Ordinary shares - Redeemable preference shares Holdings at beginning of the year/date of appointment Holdings at end of the year
3,240
3,240
1,550
1,550
Nil 2,547 5,095 #1 up to 21,750 #2 Nil Nil 3,170 50 500 486
S$500,000 8,192 2,548 #1 Nil 6,197 #1 11,300 #3 1,810 Nil 500 486
33
D irectors Report

Name of director and corporation in which interests are held Koh Poh Tiong Singapore Telecommunications Limited - Ordinary shares Kua Hong Pak Singapore Telecommunications Limited - Ordinary shares Ng Chee Keong Singapore Telecommunications Limited - Ordinary shares Tan Chin Nam Singapore Airlines Limited - Ordinary shares Singapore Telecommunications Limited - Ordinary shares Holdings at beginning of the year/date of appointment Holdings at end of the year
1,490
1,490
3,027
3,027
49,850
42,570
1,870 367
1,870 367
#1
Balance of unvested restricted shares to be released according to the stipulated vesting periods. A minimum threshold performance over a one year period is required for any restricted shares to be released. A specified number of restricted shares to be released will depend on the extent of achievement of all performance conditions and will be delivered in phases according to the stipulated vesting periods.
#2
#3
The shares under the time-based restricted award will be vested in 2011.
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year. Except as disclosed under the Share Options section of this report, neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Except for salaries, bonuses and fees that are disclosed in note 33 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive, a benefit by reason of a contract made by the Company 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.
34
Every Note Counts
D irectors Report
Share options
The Company has not granted any share option. The PSA Employee Share Option Plan (the Plan) granted by a subsidiary was approved and adopted by its then members at an Extraordinary General Meeting held on 22 March 2001. In the event of an initial public offering of the shares of the subsidiary, certain employees may be allotted a number of share options based on the monetary value of the underlying shares at the initial public offering price. The options shall vest one year after any initial public offering of the shares. No options have been granted since the commencement of the Plan. Since the end of the last financial year, none of the Companys subsidiaries have granted any options.
Auditors
The auditors, KPMG LLP, have expressed their willingness to accept re-appointment.
On behalf of the Board of Directors
Fock Siew Wah Director
Eddie Teh Ewe Guan Director
25 February 2011
35
Statement by Directors
In our opinion: (a) the financial statements set out on pages 37 to 98 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and of the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and (b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. The Board of Directors has, on the date of this statement, authorised these financial statements for issue.
On behalf of the Board of Directors
Fock Siew Wah Director
Eddie Teh Ewe Guan Director
25 February 2011
36
Every Note Counts
Independent A uditors Report

Member of the Company PSA International Pte Ltd Report on the financial statements
We have audited the accompanying financial statements of PSA International Pte Ltd (the Company) and its subsidiaries (the Group), which comprise the statement of financial position of the Group and the Company as at 31 December 2010, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 37 to 98. Managements responsibility for the financial statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards. Management has acknowledged that its responsibility includes devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and the results, changes in equity and cash flows of the Group for the year ended on that date.
Report on other legal and regulatory requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
KPMG LLP Public Accountants and Certified Public Accountants Singapore 25 February 2011
37
Statement Of F inancial P osition

Group Company 2010 2009 $000 $000 Note 2010 $000 2009 $000
Non-current assets Property, plant and equipment Intangible assets: - Port use rights - Other intangible assets Subsidiaries Associates Financial assets Other non-current assets Current assets Inventories Trade and other receivables Cash and bank balances Total assets
6,680,208 966,055 609,370 1,575,425 7,622,888 334,432 32,156 16,245,109 68,908 583,446 2,052,092 2,704,446 18,949,555
6,942,194 1,094,893 678,593 1,773,486 8,139,748 183,959 35,254 17,074,641 65,034 628,785 1,842,438 2,536,257 19,610,898
386 138 138 9,739,673 9,740,197 224,387 1,095,101 1,319,488 11,059,685
156 415 415 8,284,148 8,284,719 219,445 1,001,668 1,221,113 9,505,832
5 6 7 9 10
11 14
Share capital Reserves Equity attributable to owner of the Company Non-controlling interests Total equity Non-current liabilities Borrowings Provisions Other non-current obligations Deferred tax liabilities Current liabilities Trade and other payables Borrowings Current tax payable Bank overdrafts Total liabilities Total equity and liabilities
15 16
1,135,372 7,399,074 8,534,446 314,373 8,848,819
1,135,372 6,849,367 7,984,739 308,599 8,293,338
1,135,372 6,472,153 7,607,525 7,607,525
1,135,372 5,695,715 6,831,087 6,831,087
17 18 19 21
7,292,818 62,114 54,028 300,441 7,709,401 1,186,372 940,825 247,744 16,394 2,391,335 10,100,736 18,949,555
8,510,414 66,234 42,918 301,587 8,921,153 1,198,010 859,742 293,168 45,487 2,396,407 11,317,560 19,610,898
2,377,790 642 2,378,432 403,632 644,096 26,000 1,073,728 3,452,160 11,059,685
2,266,987 669 2,267,656 380,046 27,043 407,089 2,674,745 9,505,832
22 17 14
The accompanying notes form an integral part of these financial statements.
38
Every Note Counts
Consolidated Income Statement

Note 2010 $000 4,076,480 80,744 (678,906) (596,885) (358,559) (460,963) (20,073) (573,535) 27 28 1,468,303 (340,462) 261,343 1,389,184 29 (190,699) 1,198,485 2009 $000 3,835,432 83,006 (681,857) (589,721) (315,862) (528,234) (22,920) (572,630) 1,207,214 (342,383) 243,728 1,108,559 (144,648) 963,911 Revenue Other income Staff and related costs Contract services Running, repair and maintenance costs Other operating expenses Property taxes Depreciation and amortisation Profit from operations Finance costs Share of profit of associates, net of tax Profit before income tax Income tax expense Profit for the year 24 25 26
Attributable to: Owner of the Company Non-controlling interests Profit for the year 1,179,002 19,483 1,198,485 975,875 (11,964) 963,911
39
Consolidated Statement Of Comprehensive Income

Note 2010 $000 1,198,485 2009 $000 963,911 Profit for the year
Other comprehensive income Translation differences of foreign operations Exchange differences on monetary items forming part of net investment in foreign operations Exchange differences on hedge of net investment in a foreign operation Effective portion of changes in fair value of cash flow hedges Net change in fair value of cash flow hedges transferred to income statement Net change in fair value of available-for-sale financial assets Share of capital reserve in associates Share of fair value reserve in associates Share of hedging reserve in associates Share of foreign currency translation reserve in associates Income tax on other comprehensive income Other comprehensive loss for the year, net of income tax Total comprehensive income for the year 21 (722,025) (301,909)
(121,232) 335,141 (30,496) 16,877 164,355 440 3,673 (356) (3,199) 1,239 (355,583) 842,902
17,982 73,431 20,922 25,476 75,288 170 (1,011) 604 10,199 (6,541) (85,389) 878,522
Attributable to: Owner of the Company Non-controlling interests Total comprehensive income for the year 841,100 1,802 842,902 894,324 (15,802) 878,522
40
Every Note Counts
Consolidated Statement Of Changes In Equity

Share capital $000 Group At 1 January 2009 Total comprehensive income Profit for the year Other comprehensive income Translation differences of foreign operations Exchange differences on monetary items forming part of net investment in foreign operations Exchange differences on hedge of net investment in a foreign operation Effective portion of changes in fair value of cash flow hedges Net change in fair value of cash flow hedges transferred to income statement Net change in fair value of available-for-sale financial assets Share of reserves in associates Income tax on other comprehensive income Total other comprehensive income Total comprehensive income for the year Transactions with owner, recorded directly in equity Contributions by and distributions to owner of the Company Capital contribution by non-controlling shareholders of subsidiaries Dividend paid to non-controlling shareholders of subsidiaries Final tax exempt dividend declared and paid of $0.49 per share Total contributions by and distributions to owner of the Company Changes in ownership interests in subsidiaries Acquisition of non-controlling interests without a change in control Total changes in ownership interests in subsidiaries At 31 December 2009 Capital reserve $000 Insurance reserve $000
1,135,372
51,390
97,357
170 170 170
1,135,372
51,560
97,357
41
Foreign currency translation reserve $000
Hedging reserve $000
Fair value reserve $000
Accumulated profits $000
Total attributable to owner of the Company $000
Non controlling interests $000
Total equity $000
(251,421)
(71,220)
12,295
6,416,642
7,390,415
330,944
7,721,359
975,875
975,875
(11,964)
963,911
(298,805) 17,982 73,431 10,199 (197,193) (197,193)
21,656 25,476 604 (6,541) 41,195 41,195
75,288 (1,011) 74,277 74,277
975,875
(298,805) 17,982 73,431 21,656 25,476 75,288 9,962 (6,541) (81,551) 894,324
(3,104) (734) (3,838) (15,802)
(301,909) 17,982 73,431 20,922 25,476 75,288 9,962 (6,541) (85,389) 878,522
(300,000) (300,000)
(300,000) (300,000)
7,608 (9,402) (1,794)
7,608 (9,402) (300,000) (301,794)
(448,614)
(30,025)
86,572
7,092,517
7,984,739
(4,749) (4,749) 308,599
(4,749) (4,749) 8,293,338
42
Every Note Counts
Consolidated Statement Of Changes In Equity

Share capital $000 Group At 1 January 2010 Total comprehensive income Profit for the year Other comprehensive income Translation differences of foreign operations Exchange differences on monetary items forming part of net investment in foreign operations Exchange differences on hedge of net investment in a foreign operation Effective portion of changes in fair value of cash flow hedges Net change in fair value of cash flow hedges transferred to income statement Net change in fair value of available-for-sale financial assets Share of reserves in associates Income tax on other comprehensive income Total other comprehensive income Total comprehensive income for the year Transactions with owner, recorded directly in equity Contributions by and distributions to owner of the Company Capital contribution by non-controlling shareholders of subsidiaries Dividend paid to non-controlling shareholders of subsidiaries Final tax exempt dividend declared and paid of $0.49 per share Total contributions by and distributions to owner of the Company Changes in ownership interests in subsidiaries Disposal of non-controlling interests without a change in control Acquisition of non-controlling interests without a change in control Total changes in ownership interests in subsidiaries Changes in ownership interests in subsidiaries of an associate At 31 December 2010 Capital reserve $000 Insurance reserve $000
1,135,372
51,560
97,357
440 440 440
1,135,372
52,000
97,357
43
Foreign currency translation reserve $000
Hedging reserve $000
Fair value reserve $000
Accumulated profits $000
Total attributable to owner of the Company $000
Non controlling interests $000
Total equity $000
(448,614)
(30,025)
86,572
7,092,517
7,984,739
308,599
8,293,338
1,179,002
1,179,002
19,483
1,198,485
(704,386) (121,232) 335,141 (3,199) (493,676) (493,676)
(29,447) 15,870 (356) 1,239 (12,694) (12,694)
164,355 3,673 168,028 168,028
1,179,002
(704,386) (121,232) 335,141 (29,447) 15,870 164,355 558 1,239 (337,902) 841,100
(17,639) (1,049) 1,007 (17,681) 1,802
(722,025) (121,232) 335,141 (30,496) 16,877 164,355 558 1,239 (355,583) 842,902
(300,000) (300,000)
(300,000) (300,000)
20,708 (10,704) 10,004
20,708 (10,704) (300,000) (289,996)
(169) (169) (942,459)
545 545 (42,174)
254,600
(1,268) (4,305) (5,573) 13,804 7,979,750
(892) (4,305) (5,197) 13,804 8,534,446
7,199 (13,231) (6,032) 314,373
6,307 (17,536) (11,229) 13,804 8,848,819
44
Every Note Counts
Consolidated Statement Of Cash F lows

Note 2010 $000 2009 $000
Operating activities Profit for the year Adjustments for: Depreciation and amortisation Impairment made for: Financial assets Intangible assets Property, plant and equipment Dividend income from financial assets Gain on disposal of: Associates Property, plant and equipment Share of profit of associates, net of tax Finance costs Interest income Income tax expense Net fair value (gain)/loss on fair value hedge Changes in working capital: Inventories Trade and other receivables Trade and other payables Cash generated from operations Income taxes paid Cash flows from operating activities Investing activities Purchase of property, plant and equipment and intangible assets Proceeds from disposal of: Associates Financial assets Property, plant and equipment and intangible assets Proceeds from capital distribution from equity securities Dividends received from associates and financial assets Interest received Cash flows used in investing activities 47,125 115,855 52,542 (274,166) 15,719 4,483 81,457 575 110,290 54,866 (719,180) (489,688) (986,570) (3,874) (10,438) 22,720 2,047,290 (219,099) 1,828,191 (3,324) 10,232 (10,594) 1,781,211 (200,301) 1,580,910 28 25 25 (11,027) (261,343) 340,462 (50,550) 190,699 (4,123) 2,038,882 (565) (8,366) (243,728) 342,383 (59,472) 144,648 3,187 1,784,897 27 27 27 25 309 61,017 5,275 (3,857) 492 61,172 12,740 (4,135) 573,535 572,630 1,198,485 963,911
45
Consolidated Statement Of Cash F lows

Note 2010 $000 2009 $000
Financing activities Proceeds from bank loans and notes Repayment of bank loans and notes Interest paid Payment of finance lease liabilities Dividends paid to owner of the Company Dividends paid to non-controlling shareholders of subsidiaries Capital contribution by non-controlling shareholders of subsidiaries Repayment of loans from non-controlling shareholders of subsidiaries Proceeds from loans from non-controlling shareholders of subsidiaries Acquisition of partial interest in a subsidiary Disposal of partial interest in a subsidiary Cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate fluctuations on cash held Cash and cash equivalents at end of the year Cash and cash equivalents at end of the year comprises: Cash and bank balances Bank overdrafts 14 2,052,092 (16,394) 2,035,698 1,842,438 (45,487) 1,796,951 14 1,908,327 (2,568,278) (331,710) (4,813) (300,000) (10,704) 20,708 (5,488) (17,536) 6,307 (1,303,187) 250,838 1,796,951 (12,091) 2,035,698 3,292,367 (2,957,613) (356,617) (3,933) (300,000) (9,402) 7,608 (19,140) 8,205 (338,525) 523,205 1,277,381 (3,635) 1,796,951
46
Every Note Counts
N otes to the Financial Statements

These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Board of Directors on 25 February 2011.
Domicile and activities

PSA International Pte Ltd (the Company) is incorporated in the Republic of Singapore and has its registered office at 460 Alexandra Road, PSA Building, #38-00, Singapore 119963. The principal activities of the Company are investment holding and the provision of consultancy services on port management, port operations and information technology. The principal activities of the subsidiaries are mainly those of a provider of port and marine services. The immediate and ultimate holding company during the financial year is Temasek Holdings (Private) Limited, a company incorporated in the Republic of Singapore. The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the Group) and the Groups interests in associates and jointly-controlled entities.
2
2.1
Summary of significant accounting policies

Basis of preparation The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities that are carried at fair value and/or amortised cost as disclosed in the accounting policies set out below. The financial statements are presented in Singapore dollars which is the Companys functional currency. All financial information presented in Singapore dollars have been rounded to the nearest thousand, unless otherwise presented. The preparation of financial statements in conformity with FRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is set out in note 3. In 2010, the Group adopted the following revised FRSs which are relevant to its operations: FRS 103 Business combinations (2009) Business combinations are now accounted for using the acquisition method as at the acquisition date (see note 2.2). The change in accounting policy has been applied prospectively to new business combinations occurring on or after 1 January 2010 and has no material impact on the Groups profit after tax.
47

FRS 27 Consolidated and separate financial statements (2009) Acquisitions of non-controlling interests are now accounted for as described in note 2.2. The change in accounting policy has been applied prospectively and has no material impact on the Groups profit after tax. 2.2 Consolidation Business combinations In 2003, the Group effected a Scheme of Arrangement (Scheme) under Section 210 of the Companies Act, Chapter 50, as sanctioned by the High Court of Singapore. The Scheme resulted in an amalgamation of subsidiaries held by the Company with those held by PSA Corporation Limited. Such interests acquired from parties under common control are consolidated on the historical cost method in a manner similar to the pooling of interest method. All other business combinations are accounted for under the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in income statement. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in income statement. Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been adjusted where necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. Associates Associates are those entities in which the Group has significant influence, but not control, over their financial and operating policies. Associates are accounted for in the consolidated financial statements under the equity method. The consolidated financial statements include the Groups share of the post-acquisition results and reserves of associates, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. The latest audited financial statements of the associates are used and where these are not available, unaudited financial statements are used. Any differences between the unaudited financial statements and the audited financial statements obtained subsequently are adjusted for in the subsequent financial year.
48
Every Note Counts

The Groups investments in associates include goodwill on acquisition and other intangible assets acquired from business combinations. Where the Groups share of losses exceeds its interest in an associate, the carrying amount of that interest is reduced to zero and the recognition of further losses is discontinued except to the extent that the Group has incurred an obligation or has made payments on behalf of the associate. Jointly-controlled entities Jointly-controlled entities are those entities over whose activities the Group has contractual agreements to jointly share the control over the strategic financial and operating decisions of the jointly-controlled entities. The Groups interests in jointly-controlled entities are recognised in the consolidated financial statements by including its proportionate share of the income and expenses, assets and liabilities and cash flows with items of a similar nature on a line-by-line basis, after adjustments to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases. Loss of control Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the income statement. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained. Acquisitions of non-controlling interests Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Groups interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Accounting for subsidiaries, associates and jointly-controlled entities Investments in subsidiaries, associates and jointly-controlled entities are stated in the Companys statement of financial position at cost less accumulated impairment losses.
49

2.3 Foreign currencies Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in the income statement, except for differences arising on the retranslation of available-for-sale equity instruments, a financial liability designated as a hedge of the net investment in a foreign operation that is effective (see 2.13 below), which are recognised in other comprehensive income. Foreign operations The assets and liabilities of foreign operations, excluding goodwill and fair value adjustments arising on acquisition, are translated to Singapore dollar at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollar at the average exchange rates for the year. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2005, the exchange rates at the date of acquisition were used. Foreign currency differences are recognised in other comprehensive income and presented within equity in foreign currency translation reserve. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed such that control, significant influence or joint control is lost, the relevant proportion of the cumulative amount in the foreign currency translation reserve is transferred to the income statement as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is transferred to the income statement. Net investment in a foreign operation Foreign currency differences arising from monetary items that in substance form part of the Groups net investment in a foreign operation are recognised in other comprehensive income and presented within equity in the foreign currency translation reserve. When the net investment is disposed of, the relevant amount in the foreign currency translation reserve is transferred to the income statement as an adjustment to the gain or loss arising on disposal.
50
Every Note Counts

2.4 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, the cost of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognised net in the income statement. Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Group and its cost can be measured reliably. Other subsequent expenditure such as repairs and maintenance is recognised in the income statement as incurred. Depreciation is recognised in the income statement on a straight-line basis over the estimated useful life (or lease term, if shorter) of each part of an item of property, plant and equipment. Estimated useful lives are as follows: Leasehold land Buildings Wharves, hardstanding and roads Plant, equipment and machinery Floating crafts Motor vehicles Computers 20 to 80 years 5 to 50 years 3 to 50 years 3 to 25 years 2 to 20 years 2 to 10 years 3 to 5 years
No depreciation is provided on capital work-in-progress until the related property, plant and equipment is ready for use. Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date. 2.5 Intangible assets Intangible assets with finite useful lives are stated at cost less accumulated amortisation and impairment losses. Intangible assets with infinite useful lives or not ready for use are stated at cost less accumulated impairment losses. Port use rights The expenditure incurred in relation to the right to operate a port are capitalised as port use rights. Port use rights are amortised in the income statement on a straight-line basis over the period of the operating rights being available.
51

Goodwill Goodwill arising on the acquisition of subsidiaries and jointly-controlled entities is presented in intangible assets. Goodwill arising on the acquisition of associates is presented together with investments in associates. Goodwill represents the excess of: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in income statement. Goodwill is measured at cost less accumulated impairment losses and is subject to testing for impairment, as described in note 2.6. Software development costs Development expenditure attributable to projects where the technical feasibility and commercial viability of which are reasonably assured, is capitalised and amortised over the time period for which the tangible benefits of the projects are expected to be realised. Software development costs are not amortised until the completion date and when the software is ready for use. Amortisation is charged to the income statement on a straight-line basis over its estimated useful life of 3 years. Computer software Computer software, which is acquired by the Group, where it is not an integral part of the related hardware, is treated as an intangible asset. Computer software is amortised in the income statement on a straight-line basis over its estimated useful life of 3 years, from the date on which it is ready for use. 2.6 Impairment of non-financial assets The carrying amounts of the Groups non-financial assets with finite useful lives, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts are estimated. Non-financial assets with infinite useful lives or not available for use are tested for impairment on an annual basis. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of cash-generating units that are expected to benefit from the synergies of the combination.
52
Every Note Counts

Impairment losses are recognised in the income statement unless it reverses a previous revaluation, credited to equity, in which case it is charged to equity. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Goodwill that forms part of the carrying amount of an investment in an associate is not recognised separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single asset when there is objective evidence that the investment in an associate may be impaired. 2.7 Financial assets A financial asset is recognised if the Group becomes a party to the contractual provisions of the asset. Financial assets are derecognised if the Groups contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Financial assets are recognised initially at fair value plus, for financial assets not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, financial assets are measured according to the following categories: Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are subsequently measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise cash and cash equivalents and trade and other receivables. Cash and cash equivalents comprise cash balances, bank deposits and bank overdraft. For the purpose of the consolidated statement of cash flows, cash and cash equivalents are presented net of bank overdrafts which are repayable on demand and which form an integral part of the Groups cash management. Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group has the positive intention and ability to hold to maturity. Held-to-maturity investments are subsequently measured at amortised cost using the effective interest method, less any impairment losses.
53

Available-for-sale financial assets The Groups investments in equity securities and debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than for impairment losses (see note 2.8) and foreign exchange gains and losses on available-for-sale debt instruments, are recognised in other comprehensive income and presented within equity in the fair value reserve. When the financial asset is derecognised, the cumulative gain or loss in fair value reserve is transferred to the income statement. 2.8 Impairment of financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. An impairment loss in respect of loans and receivables and held-to-maturity investments is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in fair value reserve is transferred to the income statement. Impairment losses for loans and receivables, held-to-maturity investments and available-for-sale financial assets that are debt securities are reversed if the subsequent increase in fair value can be related objectively to an event occurring after the impairment loss was recognised. Impairment losses once recognised in the income statement in respect of availablefor-sale financial assets that are equity securities are not reversed through the income statement. Any subsequent increase in fair value of such assets is recognised directly in fair value reserve. 2.9 Intra-group financial guarantees Financial guarantee contracts are accounted for as insurance contracts. A provision is recognised based on the Companys estimate of the ultimate cost of settling all claims incurred but unpaid at the reporting date. The provision is assessed by reviewing individual claims and tested for adequacy by comparing the amount recognised and the amount that would be required to settle the guarantee contract. 2.10 Leases When entities within the Group are lessees of a finance lease Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Leased assets are depreciated over the shorter of the lease term and their useful lives. Lease payments are apportioned between finance expense and reduction of the lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
54
Every Note Counts

At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions even though the arrangement is not in the legal form of a lease. When entities within the Group are lessees of an operating lease Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expenses. Contingent rentals are charged to the income statement in the financial year in which they are incurred. 2.11 Inventories Inventories mainly comprise stores and consumables which are valued at cost of purchase (including cost incurred in bringing the inventories to their present location and condition) on a weighted average cost method less any applicable allowance for obsolescence. When inventories are consumed, the carrying amount of these inventories is recognised as an expense in the year in which the consumption occurs. 2.12 Financial liabilities A financial liability is recognised if the Group becomes a party to the contractual provisions of the liability. Financial liabilities are derecognised if the Groups obligations specified in the contract expire or are discharged or cancelled. Financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. 2.13 Derivative financial instruments and hedging activities The Group holds derivative financial instruments to hedge its foreign exchange, fuel price and interest rate risk exposures. The use of hedging instruments is governed by the Groups policies which provide written principles on the use of financial instruments consistent with the Groups risk management strategy. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the combined instrument is not measured at fair value through profit or loss. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in the income statement when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. Cash flow hedges The effective portion of changes in the fair value of the derivative designated as a hedging instrument of a cash flow hedge is recognised in other comprehensive income and presented within equity in the hedging reserve. The ineffective portion of changes in the fair value is recognised in the income statement.
55

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in other comprehensive income and presented within equity in the hedging reserve remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in other comprehensive income is transferred to the carrying amount of the asset when it is recognised. In other cases, the amount recognised in other comprehensive income is transferred to the income statement in the same period that the hedged item affects the income statement. Fair value hedges Changes in the fair value of a derivative designated as a hedging instrument of a fair value hedge are recognised in the income statement. The hedged item is also stated at fair value in respect of the risk being hedged; the gain or loss attributable to the hedged risk is recognised in the income statement and the carrying amount of the hedged item is adjusted. Hedge of net investment in a foreign operation Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in a foreign operation are recognised in the Companys income statement. On consolidation, such differences are recognised as other comprehensive income and presented within equity in the foreign currency translation reserve, to the extent that the hedge is effective. The ineffective foreign currency differences are recognised in the income statement. If the hedging instrument no longer meets the criteria for hedge accounting, hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in foreign currency translation reserve is transferred to the income statement as an adjustment to the gain or loss on disposal when the investment in the foreign operation is disposed. Economic hedges Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and liabilities denominated in foreign currencies. Changes in the fair value of such derivatives are recognised in the income statement as part of foreign currency gains and losses. Separable embedded derivatives Changes in the fair value of separable embedded derivatives are recognised immediately in the income statement. 2.14 Employee benefits Defined contribution plans Obligations for contributions to post-employment benefits and employees retirement gratuities under defined contribution plans are recognised as an expense in the income statement as incurred. Defined benefit obligations The Groups net obligations in respect of defined benefit pension and healthcare plans and unfunded defined benefit employees leaving entitlements are calculated separately for each defined benefit plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine the present value, and the fair value of any plan assets is deducted. The calculation is performed by a qualified actuary every year using the projected unit credit method.
56
Every Note Counts

When the benefits of a plan change, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement. In calculating the Groups obligation in respect of a plan, any actuarial gain or loss is recognised as income or expense when the net cumulative unrecognised actuarial gains and losses for each individual plan at the end of the previous reporting year exceed 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains or losses are recognised over the expected average remaining working lives of the employees participating in the plans. When the calculation results in a benefit to the Group, the recognised asset is limited to the net total of any unrecognised past service cost and the present value of any future refunds from the plan or reductions in future contributions to the plan. Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. Equity compensation benefits The Employee Share Option Plan (the Plan) allows the employees of a subsidiary participating in the Plan to acquire shares of the said subsidiary. The fair value of options, when granted, will be recognised as an employee expense with a corresponding increase in equity. The fair value will be measured at grant date and spread over the period during which the employees of the subsidiary become unconditionally entitled to the options. At each reporting date, the subsidiary will revise its estimates of the number of options that are expected to be exercisable. It will recognise the impact of the revision of original estimates in employee expense and in a corresponding adjustment to equity over the remaining vesting period. The proceeds received net of any directly attributable transaction costs will be credited to share capital when the options are exercised. 2.15 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. 2.16 Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
57

2.17 Revenue recognition Income from services Income from services rendered is recognised as and when such services are rendered, provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be reliably measured. Dividend income Dividend income is recognised when the right to receive payment is established. Interest income Interest income is recognised as it accrues, using the effective interest method, except where the collection is contingent upon certain conditions being met, then such income is recognised when received. 2.18 Finance costs Finance costs comprise interest expense on borrowings and the unwinding of the discount on provisions. All borrowing costs are recognised in the income statement using the effective interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. 2.19 Income tax expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly-controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable entity. A deferred tax asset is recognised for deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
58
Every Note Counts

2.20 Interest-free inter-company loans In the Companys financial statements, interest-free inter-company loans to subsidiaries are stated at fair value at inception. Subsequently, these loans are measured at amortised cost using the effective interest method. The unwinding of the difference is recognised as interest income in the income statement over the expected repayment period. Such balances are eliminated in full in the Groups consolidated financial statements. 2.21 Assets held for sale Assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Groups accounting policies. Thereafter generally the assets (or disposal groups) are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets and deferred tax assets, which continue to be measured under different rules in accordance with the Groups accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in the income statement. Gains are not recognised in excess of any cumulative impairment loss.
59

3 Critical accounting estimates and judgements
The accounting policies that are deemed critical to the amounts recognised in the financial statements, in terms of materiality, or which involve a significant degree of judgement and estimation, are discussed below. Impairment of property, plant and equipment and intangible assets The Group has made substantial investments in tangible and intangible non-current assets in its port business. Changes in technology or changes in the intended use of these assets may cause the estimated period of use or value of these assets to change. Assets that have an infinite useful life are tested for impairment annually. Assets that are subject to depreciation and amortisation are reviewed to determine whether there is any indication that the carrying value of these assets may not be recoverable and have suffered an impairment loss. If any such indication exists, the recoverable amounts of the assets are estimated in order to determine the extent of the impairment loss, if any. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. Such impairment loss is recognised in the income statement. Management judgement is required in the area of asset impairment, particularly in assessing: (1) whether an event has occurred that may indicate that the related asset values may not be recoverable; (2) whether the carrying value of an asset can be supported by the net present value of future cash flows which are estimated based upon the continued use of the asset in the business; (3) the appropriate key assumptions to be applied in preparing cash flow projections including whether these cash flow projections are discounted using an appropriate rate. Changing the assumptions selected by management to determine the level, if any, of impairment, including the discount rates or the growth rate assumptions in the cash flow projections could materially affect the net present value used in the impairment test and as a result affect the Groups results of operations. Depreciation and amortisation Depreciation and amortisation of non-financial assets constitute substantial operating costs for the Group. The costs of these non-financial assets are charged as depreciation/amortisation expense over the estimated useful lives of the respective assets using the straight-line method. The Group periodically reviews changes in technology and industry conditions, asset retirement activity and residual values to determine adjustments to estimated remaining useful lives and depreciation rates. Actual economic lives may differ from estimated useful lives. Periodic reviews could result in a change in depreciable lives and therefore depreciation expense in future periods. Residual values of the port assets are estimated after considering the price that could be recovered from the sale of the port assets and the expected age and condition at the end of their useful lives, after deducting the estimated costs of disposal.
60
Every Note Counts

4 Property, plant and equipment
Leasehold land $000
Note
Buildings $000
Group Cost At 1 January 2009 Reclassifications Additions Disposals Transferred to intangible assets Translation differences on consolidation At 31 December 2009 Reclassifications Additions Disposals Transferred to intangible assets Translation differences on consolidation At 31 December 2010 Accumulated depreciation and impairment losses At 1 January 2009 Reclassifications Depreciation charge for the year Disposals Impairment losses Translation differences on consolidation At 31 December 2009 Reclassifications Depreciation charge for the year Disposals Impairment losses Translation differences on consolidation At 31 December 2010 Carrying amount At 1 January 2009 At 31 December 2009 At 31 December 2010
1,627,662 46,048 3,835 (59,604) (10,030) 1,607,911 10,902 286 (15,043) 1,604,056
887,469 93,341 43,875 (34,347) (13,168) 977,170 22,773 9,161 (2,235) (83,976) 922,893
27
27
475,225 50,770 (37,450) 12,310 (808) 500,047 50,185 3,927 (984) 553,175
358,446 (18) 34,446 (24,109) 323 (2,518) 366,570 33,682 (1,357) (37,515) 361,380
1,152,437 1,107,864 1,050,881
529,023 610,600 561,513
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Wharves, hardstanding and roads $000 Plant, equipment and machinery $000 Floating crafts $000 Motor vehicles $000 Capital workin-progress $000
Computers $000
Total $000
2,476,132 404,743 54,292 (43,743) (30,227) 2,861,197 67,870 5,698 (8,002) (94,064) 2,832,699
4,196,598 248,676 177,010 (57,075) (31,452) 4,533,757 250,393 150,217 (94,233) (272,662) 4,567,472
437,049 23,492 20,194 (9,356) (5,485) 465,894 2,065 17,779 (25,837) (6,129) 453,772
21,363 569 577 (552) (459) 21,498 948 736 (806) (837) 21,539
140,817 20,498 6,047 (4,795) (706) 161,861 5,387 4,901 (11,936) (5,912) 154,301
815,373 (837,367) 506,106 (11,710) (2,643) (2,749) 467,010 (360,338) 389,254 (1,794) (1,137) (13,457) 479,538
10,602,463 811,936 (221,182) (2,643) (94,276) 11,096,298 578,032 (144,843) (1,137) (492,080) 11,036,270
683,004 276 107,625 (24,461) (4,403) 762,041 753 118,898 (3,780) (20,772) 857,140
2,034,656 (617) 262,127 (47,750) 70 (16,147) 2,232,339 (753) 260,581 (72,760) 1,348 (144,273) 2,276,482
134,605 209 30,299 (9,229) (1,519) 154,365 31,147 (19,725) (2,174) 163,613
6,430 (95) 2,551 (513) (548) 7,825 2,511 (655) (501) 9,180
113,516 245 23,304 (4,579) 37 (1,606) 130,917 20,718 (11,385) (5,158) 135,092
3,805,882 511,122 (148,091) 12,740 (27,549) 4,154,104 517,722 (109,662) 5,275 (211,377) 4,356,062
1,793,128 2,099,156 1,975,559
2,161,942 2,301,418 2,290,990
302,444 311,529 290,159
14,933 13,673 12,359
27,301 30,944 19,209
815,373 467,010 479,538
6,796,581 6,942,194 6,680,208
62
Every Note Counts

Company Cost At 1 January 2009 Additions Disposals At 31 December 2009 Additions Disposals At 31 December 2010 Accumulated depreciation At 1 January 2009 Depreciation charge for the year Disposals At 31 December 2009 Depreciation charge for the year Disposals At 31 December 2010 Carrying amount At 1 January 2009 At 31 December 2009 At 31 December 2010 Plant, equipment and machinery $000 Motor vehicles $000 Computers $000 Total $000
42 (4) 38 7 45
303 303 347 650
1,021 23 (11) 1,033 15 (15) 1,033
1,366 23 (15) 1,374 369 (15) 1,728
36 4 (4) 36 2 38
183 60 243 60 303
855 92 (8) 939 76 (14) 1,001
1,074 156 (12) 1,218 138 (14) 1,342
6 2 7
120 60 347
166 94 32
292 156 386
The carrying amount of property, plant and equipment of the Group includes an amount of approximately $117.7 million (2009: $11.2 million) held under finance leases (note 17). Impairment loss At 31 December 2010, a shortfall in the carrying amount of property, plant and equipment of certain subsidiaries was identified. The shortfall was determined when the value in use of the asset fell below the carrying value. Based on the assessment, an impairment loss of $5.3 million (2009: $12.7 million) was recognised in other operating expenses in the income statement.
63

5 Intangible assets
Goodwill on consolidation Note $000 Group Cost At 1 January 2009 Reclassifications Additions Disposals Transferred from property, plant and equipment Translation differences on consolidation At 31 December 2009 Reclassifications Additions Disposals Transferred from property, plant and equipment Translation differences on consolidation At 31 December 2010 Software development costs $000 Total Capital other work-in- intangible Port progress assets use rights $000 $000 $000 Total intangible assets $000
Computer software $000
714,181 4 (1,349) 712,832 4 (20,805) 692,027
25,670 2,044 4,741 (4) 2,425 (223) 34,653 5 5,342 (1,183) 1,053 (5,341) 34,529
84,871 7,945 206 (203) 92,819 7,931 177 (1,567) 84 (3,418) 96,026
10,203 (10,295) 8,882 218 (47) 8,961 (7,936) 5,634 2 6,661
834,925 (306) 13,829 (4) 2,643 (1,822) 849,265 11,153 (2,750) 1,137 (29,562) 829,243
1,267,205 306 20,576 (29,186) 1,258,901 4,712 (1,367) (99,154) 1,163,092
2,102,130 34,405 (4) 2,643 (31,008) 2,108,166 15,865 (4,117) 1,137 (128,716) 1,992,335
64
Every Note Counts

Goodwill on consolidation Note $000 Group Accumulated amortisation and impairment losses At 1 January 2009 Amortisation charge for the year Disposals Impairment losses Translation differences on consolidation At 31 December 2009 Amortisation charge for the year Disposals Impairment losses Translation differences on consolidation At 31 December 2010 Carrying amount At 1 January 2009 At 31 December 2009 At 31 December 2010 Software development costs $000 Total Capital other work-in- intangible Port progress assets use rights $000 $000 $000 Computer software $000 Total intangible assets $000
52,906 12,147 (89) 64,964 47,500 (1,805) 110,659
16,092 7,145 (2) (208) 23,027 6,771 (551) (3,953) 25,294
74,909 7,931 (159) 82,681 6,011 (1,539) (3,233) 83,920
143,907 15,076 (2) 12,147 (456) 170,672 12,782 (2,090) 47,500 (8,991) 219,873
70,638 46,432 49,025 (2,087) 164,008 43,031 (1,110) 13,517 (22,409) 197,037
214,545 61,508 (2) 61,172 (2,543) 334,680 55,813 (3,200) 61,017 (31,400) 416,910
27
27
661,275 647,868 581,368
9,578 11,626 9,235
9,962 10,138 12,106
10,203 8,961 6,661
691,018 678,593 609,370
1,196,567 1,094,893 966,055
1,887,585 1,773,486 1,575,425
65

Software development costs $000 Total intangible assets $000 Computer software $000 Company Cost At 1 January 2009/ 31 December 2009/ 31 December 2010 Accumulated amortisation At 1 January 2009 Amortisation charge for the year At 31 December 2009 Amortisation charge for the year At 31 December 2010 Carrying amount At 1 January 2009 At 31 December 2009 At 31 December 2010
832
411
1,243
140 277 417 277 694
411 411 411
551 277 828 277 1,105
692 415 138
692 415 138
Impairment testing for cash-generating units (CGUs) containing goodwill For the purpose of impairment testing, goodwill is allocated to the Groups port business in the country of operation, which represents the lowest level within the Group at which the goodwill is monitored for internal management purposes. The carrying value of goodwill primarily relates to the Groups port business CGUs in Europe of $469.5 million (2009: $477.8 million). The remaining goodwill relates to the Groups port business CGUs in Asia. The recoverable amounts of these port business CGUs were based on the value-in-use approach. They were determined by discounting the future cash flows generated from the continuing use of these units. The cash flow projections were done as part of the financial budgets approved by management. Key assumptions include the expected growth in revenues and gross margin, timing of future capital expenditures, growth rates and market development expectations in the port business based on both external sources and internal sources (historical data). The discount rates for the test were based on country specific risk adjusted discount rates and ranged from 6.00% to 15.50% (2009: 6.50% to 14.00%). Judgement is required to determine key assumptions adopted in the cash flow projections and changes to the key assumptions can significantly affect these cash flow projections and therefore the results of the impairment tests. At 31 December 2010, the recoverable amount of a CGU in Asia was determined to be lower than the carrying amount and an impairment loss of $47.5 million (2009: impairment loss of $12.1 million in a CGU in Europe) was recognised in other operating expenses in the income statement. Impairment loss on port use rights At 31 December 2010, a shortfall in the carrying amount of port use rights of a foreign subsidiary was identified. The shortfall was determined when the value in use of the asset fell below the carrying value. Based on the assessment, an impairment loss of $13.5 million (2009: impairment loss of $49.0 million in the port use rights of a foreign jointlycontrolled entity) was recognised in other operating expenses in the income statement.
66
Every Note Counts

6 Subsidiaries
Equity investments, at cost Loans to subsidiaries Impairment losses Company 2009 $000 1,056,366 7,558,814 8,615,180 (331,032) 8,284,148 2010 $000
1,120,481 8,950,224 10,070,705 (331,032) 9,739,673
The loans to subsidiaries form part of the Companys net investments in these subsidiaries. The loans are unsecured and settlement is neither planned nor likely to occur in the foreseeable future. Accordingly, these loans are stated at cost less impairment losses. The loans are principally denominated in Singapore dollars, US dollars and Hong Kong dollars, and comprise: (i) $1,686.7 million (2009: $947.8 million) loans bearing fixed interest rates ranging from 2.50% to 4.63% (2009: 2.50% to 4.63%) per annum; and (ii) $174.0 million (2009: $43.1 million) loans bearing floating interest rates ranging from 0.97% to 2.08% (2009: 1.14% to 4.43%) per annum and the interest rates are repriceable at intervals of one to six months. The remaining loans to subsidiaries are interest-free. Details of significant subsidiaries are as follows: Country of incorporation Effective percentage held by the Group 2010 2009 % % 100 100 100 100 100 100
Name of subsidiary
PSA Corporation Limited PSA Marine (Pte) Ltd PSA Antwerp N.V.
Singapore Singapore Belgium
67

7 Associates
Group 2010 $000 2009 $000 6,046,942 2,105,422 8,152,364 (12,616) 8,139,748
Investments in associates Loans to associates Impairment losses
5,701,744 1,933,760 7,635,504 (12,616) 7,622,888
The loans to associates form part of the Groups net investments in these associates. The loans are unsecured and settlement is neither planned nor likely to occur in the foreseeable future. Accordingly, these loans are stated at cost less impairment losses. The loans are principally denominated in US dollars and Hong Kong dollars, and comprise: (i) $1.56 billion (2009: $1.70 billion) loans bearing floating interest rates of 1.21% to 3.25% (2009: 1.21% to 5.00%) per annum and the interest rates are repriceable at intervals of three to six months; and (ii) $368.9 million (2009: $401.2 million) loan bearing fixed interest rate of 1.00% (2009: 1.00%) per annum.
The Groups net investments in associates include port concession rights of $1.03 billion (2009: $1.16 billion). The amortisation of port concession rights totalling $35.3 million (2009: $35.3 million) is included in the Groups share of profit of associates in the income statement. The summarised aggregated financial information relating to associates set out below is not adjusted for the percentage of ownership held by the Group. Group
2010 $000
2009 $000
Assets and liabilities Total assets Total liabilities Results Revenue Profit for the year
49,219,328 9,982,527
52,453,740 10,758,879
6,615,197 1,226,620
6,519,276 1,111,873
The Groups share of contingent liabilities of the associates is $84.9 million (2009: $85.3 million).
68
Every Note Counts

Details of significant associates are as follows: Place of incorporation and business Effective percentage held by the Group 2010 2009 % % 33.3 20.0 20.0 30.5 33.3 20.0 20.0 30.5 Name of associate
HIT Investments Limited Hutchison Port Holdings Limited Hutchison Ports Investments S. r.l. Vopak Terminals Singapore Pte Ltd
British Virgin Islands British Virgin Islands Luxembourg Singapore
Jointly-controlled entities
The following amounts represent the Groups share of the assets and liabilities and revenue and expenses of jointlycontrolled entities which have been included in the consolidated statement of financial position and income statement: Statement of financial position Non-current assets Current assets Current liabilities Non-current liabilities Net assets Income statement Revenue Expenses Profit before income tax Income tax expense Profit for the year The Groups share of commitments of jointly-controlled entities is as follows: Operating lease commitments payable Within 1 year After 1 year but within 5 years After 5 years Capital commitments Group Group
2010 $000
2009 $000
2,558,852 350,589 (330,074) (1,133,835) 1,445,532
2,876,908 307,169 (235,365) (1,356,179) 1,592,533
875,096 (739,673) 135,423 (55,224) 80,199
786,497 (723,958) 62,539 (41,154) 21,385
2010 $000
2009 $000
7,440 15,949 31,766 7,428
7,547 16,370 37,955 14,188
69

Details of significant jointly-controlled entities are as follows: Place of incorporation and business Effective percentage held by the Group 2010 2009 % % 34.6 40.0 50.0 49.0 34.6 40.0 50.0 49.0 Name of jointly-controlled entity
Dalian Container Terminal Co., Ltd. International Trade Logistics S.A. Mersin Uluslararasi Liman Isletmeciligi A.S. Tianjin Port Pacific International Container Terminal Co., Ltd.
Peoples Republic of China Argentina Turkey Peoples Republic of China
Financial assets
Quoted equity securities, available-for-sale Unquoted equity securities, at cost Impairment losses Group
2010 $000 330,049 201,882 (197,499) 4,383 334,432
2009 $000 179,133 202,016 (197,190) 4,826 183,959
10
Other non-current assets

Loan to a joint venture partner Other receivables Non-current portion of loans and receivables Transferable corporate club memberships Group
2010 $000 21,699 8,461 30,160 1,996 32,156
2009 $000 21,132 11,516 32,648 2,606 35,254
The loan to a joint venture partner is unsecured, bears floating interest at LIBOR plus a margin and is repayable in 2020. The effective interest rates range from 1.26% to 2.18% (2009: 1.26% to 4.55%) per annum. Interest rates are repriceable at intervals of one to six months.
70
Every Note Counts

11 Trade and other receivables
Group Company 2009 $000 260 504 214,452 3,616 22 218,854 174 417 219,445 Note 2010 $000 411,412 97,931 19,105 17,137 545,585 35 29,863 7,963 583,446 2009 $000 435,832 100,814 20,939 18,410 575,995 180 32,148 20,462 628,785 2010 $000
Trade and accrued receivables Deposits and other receivables Amounts due from: Subsidiaries Associates Related corporations Current portion of loans and receivables Tax recoverable Prepayments Swap hedging instruments
12 13
52 440 220,231 1,018 28 221,769 1,830 788 224,387
The amounts due from subsidiaries, associates and related corporations are unsecured, interest-free and repayable on demand. Transactions with these related entities are priced on terms agreed between the parties.
12
Trade and accrued receivables

Group 2009 $000 519,312 (83,480) 435,832 Company 2010 2009 $000 $000 52 52 260 260
Trade and accrued receivables Allowance for doubtful receivables
2010 $000 478,312 (66,900) 411,412
The Groups primary exposure to credit risk arises through its trade receivables. Concentration of credit risk relating to trade receivables is limited due to the Groups internationally dispersed customers. Due to the nature of the Groups business, credit risk is not concentrated in any specific geographical region but concentrated in companies exposed to business cyclical fluctuations that are commonly found in the shipping industry. The Groups historical experience in the collection of accounts receivable falls within the recorded allowances. Due to these factors, management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Groups trade receivables.
71

The ageing of trade and accrued receivables, net of allowance for doubtful receivables at the reporting date is: Group 2010 $000 Not past due Past due less than 30 days Past due 30 - 120 days More than 120 days 337,996 66,428 4,821 2,167 411,412 2009 $000 340,684 55,276 39,072 800 435,832
The change in allowance for doubtful receivables in respect of trade and accrued receivables during the year is as follows: Group
2010 $000 At 1 January (Reversal)/allowance recognised Allowance utilised Translation differences on consolidation At 31 December 83,480 (13,815) (1,463) (1,302) 66,900
2009 $000 29,827 59,594 (5,979) 38 83,480
13
Deposits and other receivables

Group Company 2009 $000 504 504 504
2010 $000 7,118 91,127 (314) 90,813 97,931
2009 $000 6,938 94,263 (387) 93,876 100,814
2010 $000 440 440 440
Deposits Other receivables Allowance for doubtful receivables
The Groups other receivables include an amount recoverable from a third party of $13.0 million (2009: $17.7 million) arising from an existing customers termination of contract in a foreign subsidiary. The remaining balance relates mainly to miscellaneous recoverables.
72
Every Note Counts

14 Cash and cash equivalents
Group Company 2010 2009 $000 $000 31,352 1,063,749 1,095,101 85,088 916,580 1,001,668 Cash at bank and in hand Fixed deposits Bank overdrafts Cash and cash equivalents in the statement of cash flows 2010 $000 372,058 1,680,034 2,052,092 (16,394) 2,035,698 2009 $000 334,741 1,507,697 1,842,438 (45,487) 1,796,951
The range of effective interest rates per annum at the reporting dates is as follows: Group Company 2009 % 0.01 - 0.56 -
2010 % Cash and cash equivalents, excluding bank overdrafts Bank overdrafts
2009 %
2010 %
0.01 - 8.39 2.15 - 4.98
0.01 - 9.75 2.31 - 7.00
0.09 - 0.55 -
Interest rates are repriceable at intervals of one to twelve months.
15
Share capital
Group and Company 2010 No. of shares (000) Issued and fully-paid: At 1 January and 31 December 2009 No. of shares (000)
607,372
607,372
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Companys residual assets.
73

Capital management The Group defines capital as share capital and all components of equity. The Groups primary objectives when managing capital are to safeguard the Groups ability to continue to provide returns for shareholders and to support the Groups stability and growth. The Group regularly reviews and manages its capital structure to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions. There were no changes to the Groups approach to capital management during the year. Certain subsidiaries within the Group are subject to externally imposed capital requirements as required by law. These subsidiaries have complied with the requirements during the financial year. The Company and rest of its subsidiaries are not subject to any externally imposed capital requirements.
16
Reserves
Group Company 2010 2009 $000 $000 6,472,153 6,472,153 5,695,715 5,695,715
Note
2010 $000 52,000 97,357 (942,459) (42,174) 254,600 7,979,750 7,399,074
2009 $000 51,560 97,357 (448,614) (30,025) 86,572 7,092,517 6,849,367
Capital reserve Insurance reserve Foreign currency translation reserve Hedging reserve Fair value reserve Accumulated profits
(a) (b) (c) (d) (e)
(a) (b)
Capital reserve The capital reserve comprises: (i) statutory reserve of foreign jointly-controlled entities set aside as required under local laws; and (ii) the Groups share of capital reserve of associates.
Insurance reserve
The insurance reserve relates to a sum transferred from the former Port of Singapore Authority to PSA Corporation Limited in 1997 as part of the vesting of property, rights and liabilities. This reserve is to cover potential past liabilities and for funding future potential liabilities in relation to the port related activities undertaken by PSA Corporation Limited.
74
Every Note Counts

(c) Foreign currency translation reserve The foreign currency translation reserve comprises: (i) all foreign exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from the functional currency of the Company; (ii) the effective portion of the cumulative net change in fair value of foreign currency loans used to hedge the Groups net investment in foreign operations; (iii) foreign exchange differences on monetary items which form part of the Groups net investment in foreign operations; and (iv) the Groups share of foreign currency translation reserve of associates.
(d)
Hedging reserve The hedging reserve comprises: (i) the effective portion of the cumulative net change in fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred; and (ii) the Groups share of hedging reserve of associates. Fair value reserve The fair value reserve comprises: (i) the cumulative net changes in the fair values of available-for-sale financial assets until the investment is derecognised; and (ii) the Groups share of fair value reserve of associates.
(e)
75

17 Borrowings
Group Company 2010 2009 $000 $000 Note 2010 $000 2009 $000
Non-current Unsecured fixed and floating rate notes Secured bank loans Unsecured bank loans Finance lease liabilities Loans from non-controlling shareholders of subsidiaries Current Unsecured fixed and floating rate notes Secured bank loans Unsecured bank loans Finance lease liabilities Loans from non-controlling shareholders of subsidiaries Total borrowings Total borrowings comprise: Total unsecured fixed and floating rate notes Total secured bank loans Total unsecured bank loans Total finance lease liabilities Total loans from non-controlling shareholders of subsidiaries
3,376,465 1,100,402 2,644,174 119,070 52,707 7,292,818 644,096 188,417 103,804 3,080 1,428 940,825 8,233,643
2,869,203 1,266,371 4,307,583 7,429 59,828 8,510,414 600,643 105,350 147,267 4,907 1,575 859,742 9,370,156
2,377,790 2,377,790 644,096 644,096 3,021,886
2,266,987 2,266,987 2,266,987
(a) (b) (c)
4,020,561 1,288,819 2,747,978 122,150 54,135 8,233,643
3,469,846 1,371,721 4,454,850 12,336 61,403 9,370,156
3,021,886 3,021,886
2,266,987 2,266,987
(a)
Secured bank loans
The loans are secured by mortgages on the borrowing subsidiaries property, plant and equipment of $863.5 million (2009: $872.2 million), and pledges of shares of subsidiaries which have net assets value as at 31 December 2010 amounting to $252.7 million (2009: $212.9 million).
76
Every Note Counts

(b) Finance lease liabilities The Group has finance lease liabilities that are repayable as follows: Payable within 1 year Payable after 1 year but within 5 years Payable after 5 years Total (c) Principal 2010 $000 3,080 9,265 109,805 122,150 Interest 2010 $000 10,133 38,479 84,074 132,686 Total 2010 $000 13,213 47,744 193,879 254,836 Principal 2009 $000 4,907 7,429 12,336 Interest 2009 $000 763 887 1,650 Total 2009 $000 5,670 8,316 13,986
The effective interest rates of finance lease liabilities range from 0.70% to 20.28% (2009: 1.58% to 14.50%) per annum. Loans from non-controlling shareholders of subsidiaries
The loans from non-controlling shareholders are unsecured and bear floating interest rates plus a margin. Interest rates are repriceable at intervals of six to twelve months. (d) Terms and debt repayment schedule The terms and conditions of outstanding loans and borrowings are as follows: Nominal interest rate % Group Unsecured fixed and floating rate notes Secured bank loans Unsecured bank loans Loans from noncontrolling shareholders of subsidiaries Company Unsecured fixed and floating rate notes 2010 2009
Year of maturity
Face value $000
Carrying amount $000
Face value $000
Carrying amount $000
0.97 - 5.90 0.55 - 13.50 0.29 - 6.16
2011 - 2025 2011 - 2024 2011 - 2020
4,038,930 1,288,819 2,747,978
4,020,561 1,288,819 2,747,978
3,483,735 1,371,721 4,454,850
3,469,846 1,371,721 4,454,850
0.66 - 2.50
2011 - 2018
54,135 8,129,862
54,135 8,111,493
61,403 9,371,709
61,403 9,357,820
0.97 - 5.90
2011 - 2025
3,038,930
3,021,886
2,283,735
2,266,987
77

18 Provisions
Group At 1 January 2010 Provisions made Translation differences on consolidation At 31 December 2010 50,389 (7,521) 42,868 15,845 3,401 19,246 66,234 3,401 (7,521) 62,114 Compensation sum $000 Site restoration costs $000 Total $000
The compensation sum relates to a provision made by a foreign subsidiary arising from an existing customers termination of contract with a third party. The estimated amount provided is based on actual claim made against the foreign subsidiary. A corresponding recoverable amount of $13.0 million (2009: $17.7 million) from another third party is included in other receivables (see note 13). An agreement to lease and grant the usage of pipeline wayleave between a subsidiary and a local authority requires the subsidiary to remove the pipeline at the end of the wayleave term. The provision for site restoration is based on an independent quotation received from a consultant. These costs are included as part of the carrying value of the pipeline capitalised in property, plant and equipment.
19
Other non-current obligations

Group
Note
2010 $000 25,945 12,187 15,896 54,028
2009 $000 26,106 15,220 1,592 42,918
Loans from non-controlling shareholders of subsidiaries Defined benefit obligations Other non-current obligations
20
The loans from non-controlling shareholders of subsidiaries form part of the shareholders investment in the subsidiaries. The loans are unsecured, interest-free and settlement is neither planned nor likely to occur in the foreseeable future. Accordingly, they are stated at cost.
78
Every Note Counts

20 Employee benefits
Defined benefit obligations Certain subsidiaries of the Group operate defined benefit plans that provide pension and healthcare benefits, as required under the labour laws of the respective countries. These pension plans are unfunded. Details of defined benefit obligations in respect of the subsidiaries are as follows: Group
2010 $000 13,481 (144) 13,337
2009 $000 17,185 (223) 16,962
Present value of unfunded obligations Unrecognised net actuarial losses Recognised liability for defined benefit obligations Recognised liability comprises:
Note
2010 $000 1,150 12,187 13,337
Group
2009 $000 1,742 15,220 16,962
Current Non-current
23 19
Movements in the liability for defined benefit obligations are as follows: Group
Note
2010 $000 16,962 (1,847) 554 462 (221) (2,573) 13,337
2009 $000 15,996 (1,845) 2,355 579 (123) 16,962
At 1 January Benefits paid by the plan Current service costs recognised in the income statement Interest costs recognised in the income statement Provision written off Translation differences on consolidation At 31 December
26 26
79

Principal actuarial assumptions at the reporting dates (expressed as weighted averages): Group 2010 % p.a. 2.50 - 4.90 0 - 2.00 2.00 2.00 2009 % p.a. 5.10 - 6.00 0 - 2.00 2.00 2.00
Discount rate at 31 December Future salary increases Future pension increases Inflation
Assumptions regarding future mortality are based on published statistics and mortality tables. The average life expectancy of an individual retiring between age 60 to 65 is 23 for males and 27 for females. Past service costs and net actuarial results are amortised over the estimated service life of the employees under plan benefits. Historical information Group 2008 $000 15,966 329
2010 $000 Present value of recognised defined benefit obligations Experience adjustments arising on plan liabilities 13,337 (130)
2009 $000 16,962 (330)
2007 $000 20,952 365
2006 $000 18,384 (222)
The Group expects to pay $1.7 million in contributions to defined benefits plans in 2011. Equity compensation benefits The PSA Employee Share Option Plan (the Plan) in relation to shares of a subsidiary was approved and adopted by its then members at an Extraordinary General Meeting in March 2001. In the event of an initial public offering of the shares of the subsidiary, certain employees may be allotted a number of share options based on the monetary value of the underlying shares at the initial public offering price. The options shall vest one year after any such initial public offering of the shares of the subsidiary. No options have been granted since the commencement of the Plan.
80
Every Note Counts

21 Deferred tax
Movements in deferred tax assets and liabilities of the Group (prior to offsetting of balances) during the year are as follows: At 1 January 2009 $000 Group Deferred tax liabilities Property, plant and equipment Other items Total Deferred tax assets Provisions Hedging reserves Other items Total Recognised in income statement (note 29) $000
Recognised in equity $000
270,927 17,196 288,123
55,271 6,166 61,437
8,623 14,884 1,973 25,480
19,129 10,888 30,017
(6,541) (6,541)
Deferred tax liabilities of the Company are attributable to the following: Company
2010 $000
2009 $000
Deferred tax liabilities Property, plant and equipment
642
669
Deferred tax liabilities and assets are offset when there is legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The amounts determined after appropriate offsetting are included in the statements of financial position as follows: Group Company
2010 $000 300,441
2009 $000 301,587
2010 $000 642
2009 $000 669
Deferred tax liabilities, net
81

Translation differences on consolidation $000
At 31 December 2009 $000
Recognised in income statement (note 29) $000
Recognised in equity $000
Translation differences on consolidation $000
At 31 December 2010 $000
(1,437) 2,382 945
324,761 25,744 350,505
15,297 (2,237) 13,060
(15,327) (4,444) (19,771)
324,731 19,063 343,794
(144) 106 (38)
27,608 8,449 12,861 48,918
(3,554) 1,969 (2,379) (3,964)
1,239 1,239
(1,472) (1,359) (9) (2,840)
22,582 10,298 10,473 43,353
82
Every Note Counts

Deferred tax assets have not been recognised in respect of the following items: Group 2010 $000 3,747 3,747 2009 $000 57,565 15,508 73,073
Tax losses Other items
The tax losses are subject to agreement by the tax authorities and compliance with tax regulations in the respective countries in which certain subsidiaries operate. Deferred tax assets have not been recognised in respect of these items because there is no indication that future taxable profit will be available against which certain subsidiaries of the Group can utilise the benefits.
22
Trade and other payables

Group Company 2009 $000 51,156 10,723 913 317,246 8 380,046
Note
2010 $000 829,373 322,333 33,412 1,254 1,186,372
2009 $000 827,952 340,335 28,794 929 1,198,010
2010 $000 45,933 30,278 666 326,755 403,632
Trade payables and accrued operating expenses Other payables Advances and deposits Amounts due to: Subsidiaries Related corporations
23
The amounts due to subsidiaries and related corporations are unsecured, interest-free and repayable on demand.
23
Other payables
Group Company 2009 $000 10,723 10,723
Note
2010 $000 187,746 79,843 53,594 1,150 322,333
2009 $000 192,960 92,054 53,579 1,742 340,335
2010 $000 29,490 788 30,278
Other payables Accrued capital expenditure Swap hedging instruments Defined benefit obligations
20
The Groups other payables include interest payable of $41.4 million (2009: $32.6 million) and other sundry creditors.
83

24 Revenue
This comprises revenue from container handling, marine services, operation of multi-purpose terminals, warehousing and logistics related services, consultancy fees but excludes intra-group transactions.
25
Other income
Group
2010 $000 3,857 40,232 8,660 834 466 358 11,027 4,123 11,187 80,744
2009 $000 4,135 50,288 8,128 778 278 565 8,366 10,468 83,006
Dividend income from financial assets Interest income from: Associates Financial institutions Trade and other receivables Joint venture partner Non-controlling shareholder of a subsidiary Gain on disposal of associates Gain on disposal of property, plant and equipment, net Net fair value gain on fair value hedge Others
26
Staff and related costs

Group
Note
2010 $000 608,709 69,181 1,016 678,906
2009 $000 599,955 78,968 2,934 681,857
Wages and salaries Contributions to defined contribution plans Defined benefit obligations
20
84
Every Note Counts

27 Profit from operations
The following items have been included in arriving at profit from operations: Group
2010 $000
2009 $000
Impairment made for: Financial assets Intangible assets Property, plant and equipment Operating lease expense Net fair value loss on fair value hedge Exchange loss, net
309 61,017 5,275 58,734 518
492 61,172 12,740 50,632 3,187 3,043
28
Finance costs
Group
2010 $000
2009 $000
Interest paid and payable to: Banks and other financial institutions Fixed and floating rate notes holders Non-controlling shareholders of subsidiaries
158,511 180,783 1,168 340,462
201,549 139,100 1,734 342,383
29
Income tax expense

Group
Note
2010 $000
2009 $000
Current tax expense Current year Over provided in prior years Deferred tax expense Movements in temporary differences Underprovided in prior years 21 Income tax expense
256,996 (83,321) 173,675 15,863 1,161 17,024 190,699
177,156 (63,928) 113,228 24,511 6,909 31,420 144,648
85

Tax reconciliation Group 2010 $000 1,389,184 (261,343) 1,127,841 191,733 (322) 30,342 (13,105) (12,574) (12,814) 89,599 (82,160) 190,699 2009 $000 1,108,559 (243,728) 864,831 147,021 (9,852) 15,142 (16,451) (20,548) 3,689 82,666 (57,019) 144,648
Profit before income tax Share of profit of associates, net of tax Profit before income tax excluding share of profit of associates, net of tax Tax calculated using Singapore tax rate of 17% (2009: 17%) Effect of reduction in tax rate Effect of different tax rates in other countries Tax rebates and incentives Income not subject to tax Effect of unrecognised tax benefits Expenses not deductible for tax purposes Over provided in prior years Income tax expense
30
Operating segments
The Group is organised into business units based on their services and has two reportable operating segments as follows: Port business: The provision of container handling, operation of multi-purpose terminals and other port related services. Marine business: The provision of marine services. The Executive Committee and Senior Management Council of the Company monitor the operating results of the business units separately for the purpose of making strategic decisions. Performance is measured based on segment operating profit. Inter-segment pricing is determined on an arms length basis.
86
Every Note Counts

Information about reportable segments Group 2010 Revenue Total revenue Inter-segment revenue External revenue Operating profit Material items Depreciation and amortisation Impairment made for property, plant and equipment and intangible assets Share of profit of associates, net of tax Segment assets Segment assets include: - Associates - Capital expenditure Segment liabilities 2009 Revenue Total revenue Inter-segment revenue External revenue Operating profit Material items Depreciation and amortisation Impairment made for property, plant and equipment and intangible assets Share of profit of associates, net of tax Segment assets Segment assets include: - Associates - Capital expenditure Segment liabilities Port business $000 Marine business $000 Total $000
3,843,445 (27,049) 3,816,396 1,376,670
263,117 (3,033) 260,084 105,325
4,106,562 (30,082) 4,076,480 1,481,995
540,607 66,292 260,388 16,254,509 7,617,996 572,451 1,089,781
32,513 955 300,559 4,892 21,077 56,058
573,120 66,292 261,343 16,555,068 7,622,888 593,528 1,145,839
3,609,945 (38,079) 3,571,866 1,110,159
265,848 (2,282) 263,566 124,317
3,875,793 (40,361) 3,835,432 1,234,476
541,625 73,912 242,950 17,238,534 8,135,046 779,412 1,123,923
30,572 778 325,505 4,702 66,906 46,892
572,197 73,912 243,728 17,564,039 8,139,748 846,318 1,170,815
87

Reconciliations of reportable segment operating profit, assets and liabilities Group 2010 $000 2009 $000
Operating profit Operating profit for reportable segments Other income Impairment made for property, plant and equipment and intangible assets Impairment made for financial assets Corporate and unallocated expenses Share of profit of associates, net of tax Finance costs Profit before income tax Segment assets Segment assets for reportable segments Cash and bank balances Financial assets Swap hedging instruments
1,481,995 80,744 (66,292) (309) (27,835) 261,343 (340,462) 1,389,184
1,234,476 83,006 (73,912) (492) (35,864) 243,728 (342,383) 1,108,559
16,555,068 2,052,092 334,432 7,963 18,949,555
17,564,039 1,842,438 183,959 20,462 19,610,898
Segment liabilities Segment liabilities for reportable segments Corporate liabilities Borrowings Loans from non-controlling shareholders of subsidiaries Bank overdrafts Current tax payable Deferred tax liabilities Swap hedging instruments
1,145,839 77,136 8,233,643 25,945 16,394 247,744 300,441 53,594 10,100,736
1,170,815 56,662 9,370,156 26,106 45,487 293,168 301,587 53,579 11,317,560
88
Every Note Counts

Geographical information The Group operates principally in South East Asia, Europe and North East Asia. Contributions from the other individual overseas operations are not significant and are therefore presented in aggregate as others. Segment revenue is based on geographical location of the operations. Segment assets are based on the geographical location of the assets. Group
2010 $000
2009 $000
Revenue South East Asia Europe North East Asia Others
2,419,203 1,128,242 293,549 235,486 4,076,480
2,240,385 1,161,404 248,651 184,992 3,835,432
Non-current assets South East Asia Europe North East Asia Others
3,655,213 2,072,571 1,908,331 651,674 8,287,789
3,813,302 2,327,666 1,981,454 628,512 8,750,934
31
Financial risk management

Overview Risk management is integral to the whole business of the Group. Exposure to credit, liquidity and market risks (including interest rate, currency and price risks) arises in the normal course of the Groups business. The Group has written risk management policies and guidelines. In addition, the Group has established processes to monitor and manage major exposures. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Groups activities. Credit risk The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. Cash and fixed deposits are placed with banks and financial institutions which are regulated. Investments and transactions involving swap hedging instruments are allowed only with counter parties that are of certain credit standing. At 31 December 2010, there is no significant concentration of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including swap hedging instruments, in the statement of financial position. The principal risk to which the Company is exposed is credit risk in connection with the guarantee contracts it has issued. The credit risk represents the loss that would be recognised upon a default by the parties to which the guarantees were given on behalf of. To mitigate these risks, management continually monitors the risks and has established processes including performing credit evaluations of the parties it is providing the guarantee on behalf of. The Company only issues guarantees on behalf of its subsidiaries and jointly-controlled entities, which amounted to $1.84 billion (2009: $3.53 billion) as at 31 December 2010.
89

Liquidity risk The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Groups operations and to mitigate the effects of fluctuations in cash flows. The following are the expected contractual undiscounted cash (inflows)/outflows of financial liabilities, including interest payments and excluding the impact of netting agreements: Cash flows Carrying amount $000 Group 2010 Non-derivative financial liabilities Interest-bearing liabilities Loans from non-controlling shareholders of subsidiaries Bank overdrafts Trade and other payables Interest rate swaps - Assets - Liabilities Contractual cash flows $000 Within 1 year $000 Within 1 to 5 years $000 More than 5 years $000
8,179,508 54,135 16,394 1,132,778
10,018,904 58,704 16,394 1,132,778
1,137,616 1,570 16,394 1,132,778
3,761,029 31,269 -
5,120,259 25,865 -
(7,963) 53,594 9,428,446
(7,963) 76,539 11,295,356
(7,963) 17,806 2,298,201
19,023 3,811,321
39,710 5,185,834
2009 Non-derivative financial liabilities Interest-bearing liabilities Loans from non-controlling shareholders of subsidiaries Bank overdrafts Trade and other payables Cross currency interest rate swaps - Assets - Liabilities Interest rate swaps - Assets - Liabilities Forward contracts on fuel hedging - Assets
9,308,753 61,403 45,487 1,144,431
10,657,369 64,035 45,487 1,144,431
1,093,733 1,918 45,487 1,144,431
5,839,814 17,570 -
3,723,822 44,547 -
(9,529) 3,618
(9,721) 4,185
2,634 (482)
(12,355) 4,667
(9,998) 49,961
(9,998) 50,454
(9,998) 27,602
23,372
(520)
(935) 10,593,191
(935) 11,945,307
(935) 2,304,390
5,873,068
3,767,849
90
Every Note Counts

Cash flows Carrying amount $000 Company 2010 Interest-bearing liabilities Trade and other payables 2009 Interest-bearing liabilities Trade and other payables Contractual cash flows $000 Within 1 year $000 Within 1 to 5 years $000 More than 5 years $000
3,021,886 403,632
3,938,129 403,632
741,175 403,632
429,925 -
2,767,029 -
2,266,987 380,046
2,996,727 380,046
120,954 380,046
1,043,722 -
1,832,051 -
The table above indicates the periods in which the swap hedging instruments that are cash flow hedges are expected to impact the income statement. Market risk Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates, equity prices and fuel prices will affect the Groups income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. (i) Interest rate risk
The Groups exposure to changes in interest rates relates primarily to the Groups interest-earning financial assets and interest-bearing financial liabilities. The Groups objective is to maintain a balance of fixed and floating rate exposures as well as a balanced maturity period. At the reporting date, the interest rate profile of the interest-bearing financial assets and liabilities was: Group Company 2010 2009 $000 $000
2010 $000
2009 $000
Fixed rate Cash and cash equivalents Borrowings Floating rate Other non-current assets Cash and cash equivalents Borrowings
1,680,034 (4,098,838) (2,418,804) 21,699 355,664 (4,134,805) (3,757,442)
1,507,697 (3,559,546) (2,051,849) 21,132 289,254 (5,810,610) (5,500,224)
1,063,749 (2,893,092) (1,829,343) 31,352 (128,794) (97,442)
916,580 (2,266,987) (1,350,407) 85,088 85,088
91

Hedging The Group has raised funding with issuance of debt capital market instruments and bank loans to diversify funding sources. Interest rate swaps, which are denominated in Singapore dollars, US dollars and Euro, have been entered to achieve an appropriate mix of fixed and floating rate exposures within the Groups policy. Fair value hedge A portion of the fixed rate Singapore dollar notes with a notional amount of $150.0 million (2009: $300.0 million) has been hedged against the exposure to changes in the fair value of the notes. In connection with this, the Group entered into interest rate swap contracts to receive fixed rate interest and pay variable rate on the $150.0 million notes. The Group is therefore exposed to market fluctuations in interest rates on the $150.0 million notes and the corresponding interest rate swap contracts. The net fair value of the swaps as at 31 December 2010 comprises assets of $2.2 million (2009: assets of $3.5 million and liabilities of $0.4 million). Cash flow hedge A portion of the floating rate bank loans amounting to $0.52 billion (2009: $0.81 billion) has been hedged against the exposure to market fluctuations in interest rate payments. In connection with these loans, the Group entered into interest rate swap contracts to receive variable rate interest and pay fixed rate on the notional amounts. Both the floating rate bank loans and interest rate swaps have the same terms and conditions. The net fair value of the swaps as at 31 December 2010 comprises assets of $8.0 million and liabilities of $53.6 million (2009: assets of $10.0 million and liabilities of $50.0 million). Sensitivity analysis At 31 December 2010, it is estimated that a general increase of 100bps in interest rates would decrease the Groups profit before tax by approximately $33.3 million (2009: $49.9 million). A general decrease of 100bps in interest rates would have the equal but opposite effect on the Groups profit before tax. The general increase of 100bps in interest rates is not expected to have significant impact on the Groups equity. This analysis assumes that all other variables, in particular foreign currency rates, remain constant and does not take into account the associated tax effects and share of non-controlling interest. (ii) Foreign currency risk The Group is exposed to foreign currency risk on sales, purchases, bank deposits, bank loans and fixed and floating rate notes that are denominated in a currency other than the functional currencies of the Group entities. The functional currencies of the Group entities are primarily Singapore dollars, Euro and Renminbi. In respect of other monetary assets and liabilities held in currencies other than the functional currencies of the Group entities, the Group monitors the net exposure.
92
Every Note Counts

The Groups and Companys significant exposures to foreign currencies are as follows: 31 December 2010 HK Dollar US Dollar $000 $000 31 December 2009 HK Dollar US Dollar $000 $000
Group Financial assets Other non-current assets Cash and cash equivalents Trade and other receivables Interest-bearing liabilities Trade and other payables 22,553 1,018 (330,686) (10,072) (317,187) 5,765 21,699 91,368 27,255 (3,910,365) (33,823) (3,798,101) 63,581 3,616 (180,414) (3,268) (116,485) 4,570 21,132 228,540 22,514 (4,328,752) (26,252) (4,078,248)
Company Loans to subsidiaries Cash and cash equivalents Trade and other receivables Interest-bearing liabilities Trade and other payables 331,400 22,512 1,018 (330,686) (10,072) 14,172 1,418,230 43,115 (2,691,200) (19,417) (1,249,272) 180,810 63,148 3,616 (180,414) (1,321) 65,839 700,975 172,732 150 (2,086,573) (10,068) (1,222,784)
Cash flow hedge At 31 December 2009, a portion of the Singapore dollar and Euro denominated bank loans amounting to $0.40 billion has been hedged against the exposure to market fluctuations in foreign exchange rates. In connection with these loans, the Group entered into cross currency interest rate swap contracts to receive variable rate interest in Singapore dollars and Euro and pay variable rate interest in Hong Kong dollars. Both the bank loans and cross currency interest rate swaps have the same terms and conditions. The net fair value of swaps as at 31 December 2009 comprised assets of $9.5 million and liabilities of $3.6 million. Hedge of net investment in foreign operation The Groups US dollar and Hong Kong dollar denominated unsecured bank loans, fixed and floating rate notes amounting to $4.13 billion (2009: $4.53 billion) are designated as hedging instruments for the Groups investment in its associated companies.
93

Sensitivity analysis At 31 December 2010, it is estimated that a 10% strengthening in Singapore dollar against Hong Kong dollar and US dollar would decrease the Groups profit before tax by approximately $1.4 million (2009: $6.4 million) and increase the Groups profit before tax by approximately $2.4 million (2009: decrease by $10.9 million) respectively. A 10% strengthening in Singapore dollar against Hong Kong dollar and US dollar is not expected to have a significant impact on the Groups equity as the bank loans, fixed and floating rate notes are designated as a hedge of the Groups investment in its associated companies. At 31 December 2010, it is estimated that a 10% strengthening in Singapore dollar against Hong Kong dollar and US dollar would decrease the Companys profit before tax by approximately $1.4 million (2009: $6.6 million) and increase the Companys profit before tax by approximately $124.9 million (2009: $122.3 million) respectively. This analysis assumes that all other variables, in particular interest rates, remain constant and does not take into account the associated tax effects and share of non-controlling interest. (iii) Equity price risk Equity security price risk is the risk of changes in fair value of the Groups investments due to changes in the underlying equity securities prices. The risk is concentrated in the Groups investments in equity securities. Sensitivity analysis At 31 December 2010, it is estimated that a 10% increase in the underlying equity securities prices would increase equity by $33.0 million (2009: $17.9 million). A 10% decrease in the underlying equity securities prices would have the equal but opposite effect on the Groups equity. This analysis assumes that all other variables, in particular foreign currency rates, remain constant and does not take into account the associated tax effects and share of noncontrolling interest. Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
94
Every Note Counts

Level 1 $000 Group 31 December 2010 Available-for-sale financial assets Swap hedging instruments assets Level 2 $000 Total $000
330,049 330,049 179,133 179,133 -
7,963 7,963 (150,922) (53,594) (204,516)
330,049 7,963 338,012 (150,922) (53,594) (204,516)
Non-derivative financial liabilities Swap hedging instruments liabilities
31 December 2009 Available-for-sale financial assets Swap hedging instruments assets
20,462 20,462 (305,975) (53,579) (359,554)
179,133 20,462 199,595 (305,975) (53,579) (359,554)
Non-derivative financial liabilities Swap hedging instruments liabilities
Estimation of fair values The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments of the Group and Company. Quoted equity securities Fair value is based on quoted bid prices at the reporting date, without any deduction for transaction costs. Hedging instruments The fair value of cross currency/interest rate swaps and fuel forward contracts is based on broker quotes. These quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Fixed rate interest-bearing loans Fair value is calculated based on quoted offer price or discounted expected future principal and interest cash flows using market interest rates. Floating rate interest-bearing loans The Group believes that the carrying amounts of floating rate interest-bearing loans, which are repriced at least semiannually, reflect the corresponding fair values.
95

Finance lease liabilities The fair value of finance lease liabilities is estimated as the present value of future cash flows, discounted at market interest rates for homogeneous lease agreements. The estimated fair values reflect changes in interest rates. Non-derivative financial assets and liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. Other financial assets and liabilities The notional amounts of financial assets and liabilities with a maturity of less than one year (including cash and cash equivalents, trade and other receivables, bank overdrafts, trade and other payables, short-term borrowings) are assumed to approximate their fair values. The fair values of the financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:
Swap Loans Availablehedging and instruments receivables for-sale Other financial liabilities Total carrying amount
Note
Fair value
$000 Group 31 December 2010 Financial assets Other non-current assets Trade and other receivables Swap hedging instruments Cash and cash equivalents
$000
$000
$000
$000
$000
9 10 11 11 14
30,160 545,585 2,052,092 2,627,837 -
330,049 330,049 -
7,963 7,963 (53,594) (53,594)
(16,394)
330,049 30,160 545,585 7,963 2,052,092 2,965,849 (16,394)
330,049 30,160 545,585 7,963 2,052,092 2,965,849 (16,394) (4,137,235) (1,287,830) (2,746,420) (116,551) (54,135) (1,132,778) (53,594) (9,544,937)
Bank overdrafts Unsecured fixed and floating rate notes Secured bank loans Unsecured bank loans Finance lease liabilities Loans from non-controlling shareholders of subsidiaries Trade and other payables Swap hedging instruments
14 17 17 17 17 17 23
(4,020,561) (4,020,561) (1,288,819) (1,288,819) (2,747,978) (2,747,978) (122,150) (122,150) (54,135) (54,135) (1,132,778) (1,132,778) (53,594) (9,382,815) (9,436,409)
96
Every Note Counts

Note Loans and receivables Other Available- Swap hedging financial for-sale instruments liabilities Total carrying amount Fair value
$000
Group
$000
$000
$000
$000
$000
31 December 2009 Financial assets

Other non-current assets Trade and other receivables Swap hedging instruments Cash and cash equivalents
9 10 11 11 14
32,648 575,995 1,842,438 2,451,081 -
179,133 179,133 -
20,462 20,462 (53,579) (53,579)
(45,487)
179,133 32,648 575,995 20,462 1,842,438 2,650,676 (45,487)
179,133 32,648 575,995 20,462 1,842,438 2,650,676 (45,487) (3,589,503) (1,371,687) (4,453,792) (11,557)
Bank overdrafts
Unsecured fixed and floating rate notes Secured bank loans Unsecured bank loans Finance lease liabilities Loans from non-controlling shareholders of subsidiaries Trade and other payables Swap hedging instruments
14 17 17 17 17 17 23
(3,469,846) (3,469,846) (1,371,721) (1,371,721) (4,454,850) (4,454,850) (12,336) (12,336)
(61,403) (61,403) (61,403) (1,144,431) (1,144,431) (1,144,431) (53,579) (53,579) (10,560,074) (10,613,653) (10,731,439)
Company 31 December 2010 Trade and other receivables Swap hedging instruments Cash and cash equivalents
11 11 14
221,769 1,095,101 1,316,870 -
788 788 (788) (788)
221,769 788 1,095,101 1,317,658
221,769 788 1,095,101 1,317,658 (3,140,227) (402,844) (788) (3,543,859)
Unsecured fixed and floating rate notes Trade and other payables Swap hedging instruments
17 23
(3,021,886) (3,021,886) (402,844) (402,844) (788) (3,424,730) (3,425,518)
31 December 2009 Trade and other receivables Cash and cash equivalents
11 14
218,854 1,001,668 1,220,522 -
218,854 1,001,668 1,220,522
218,854 1,001,668 1,220,522 (2,377,066) (380,046) (2,757,112)
Unsecured fixed and floating rate notes Trade and other payables
17
(2,266,987) (2,266,987) (380,046) (380,046) (2,647,033) (2,647,033)
97

32 Commitments
As at the reporting dates, the Group has the following commitments: Group
2010 $000
2009 $000
(i) Capital commitments which have been authorised and contracted but not provided for in the financial statements (ii) Non-cancellable operating lease commitments payable: Within 1 year After 1 year but within 5 years After 5 years
250,424
446,466
19,917 66,458 209,661
18,322 63,593 226,829
The Group leases a number of office premises under operating leases. The leases run over various periods with some leases containing an option to renew the lease after that date. Lease terms are reviewed at renewal of leases.
33
Related parties
Key management personnel compensation Key management personnel of the Group are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The Board of Directors and Senior Management Council of the Company are considered as key management personnel of the Group. Key management personnel compensation comprises: Group
2010 $000 1,378 11,517 12,895
2009 $000 1,463 12,185 13,648
Directors fees Senior management council remuneration* * Comprises short-term employment benefits
98
Every Note Counts

Other related party transactions Other than disclosed elsewhere in the financial statements, transactions with related parties are as follows: Provision of services to related corporations Purchase of services from related corporations Group
2010 $000 237,598 (27,095)
2009 $000 209,960 (27,803)
34
New accounting standard not yet adopted

The Group has not applied the following accounting standard (including its consequential amendments) that has been issued as of 31 December 2010 but is not yet effective: FRS 24 (revised) Related Party Disclosures
The revised FRS 24 clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised FRS 24 expands the definition of a related party and would treat two entities as related to each other whenever a person (or a close member of that persons family) or a third party has control or joint control over the entity, or has significant influence over the entity. The initial application of the standard (and its consequential amendments) is not expected to have any material impact on the Groups financial statements. The Group has not considered the impact of accounting standards issued after 31 December 2010.
35
Subsequent event
Subsequent to year end, the directors proposed a net final dividend of $0.66 per share amounting to $400 million. The dividend has not been provided for in the financial statements.
99
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100
Every Note Counts
PSA Headquarters PSA INTERNATIONAL PTE LTD 38th Floor PSA Building, 460 Alexandra Road, Singapore 119963 Tel +65 62794010 Fax +65 62794213 www.internationalpsa.com SOUTHEAST ASIA PSA SOUTH EAST ASIA 36th Floor PSA Building, 460 Alexandra Road, Singapore 119963 Tel +65 62795190 Fax +65 62795463 SINGAPORE SINGAPORE TERMINALS 36th Floor PSA Building, 460 Alexandra Road, Singapore 119963 Tel +65 62747111 Fax +65 62744261 www.singaporepsa.com THAILAND EASTERN SEA LAEM CHABANG TERMINAL Laem Chabang Port, B3, Toong Sukhla, Sriracha, Chonburi 20230 Tel +66 (0) 38 490094 Fax +66 (0) 38 490095 www.esco.co.th VIETNAM SP-PSA INTERNATIONAL PORT CO., LTD Road #3, Phu My Industrial Zone, Phu My Town, Tan Thanh District, Ba Ria - Vung Tau Province Tel + 84 64 3924567 Fax +84 64 3924555 www.sp-psa.com.vn NORTHEAST ASIA CHINA PSA CHINA OFFICE 4/F Main Office Building, Container Terminal 8 West, Kwai Chung Container Terminal, New Territories, Hong Kong Tel +852 22768241 Fax +852 21484023 DALIAN TERMINALS Dayaowan Port Area, Dalian 116601 Tel +86 411 87597547 Fax +86 411 87598307 www.dpcmterminal.com www.dct.com.cn FUZHOU TERMINALS Xin Jiang Road, Jiangyin, Fuqing, Fujian 350309 Tel +86 591 85966888 Fax +86 591 85966666 www.fict-fuzhou.com.cn 113 Luoxing Road Mawei, Fuzhou, Fujian 350015 Tel +86 591 83682473 Fax +86 591 83986897 www.fqct-fuzhou.com.cn
GUANGZHOU CONTAINER TERMINAL 1 Huangpu Xingang Road, Guangzhou Economic and Technological Development Zone, Guangzhou 510730 Tel +86 20 82256328 Fax +86 20 82256233 www.gct.com.cn TIANJIN TERMINALS Tianjin Port Alliance International Container Terminal Co. Ltd No. 1068, Lin Hai Road, Tanggu District, Tianjin 300461 Tel + 86 22 25702990 Fax + 86 22 25702990 www.tact.com.cn Tianjin Port Pacific International Container Terminal Co. Ltd No. 3889, Meizhou Road, Tianjin East Port Free Trade Zone, Tianjin 300463 Tel + 86 22 25603502 Fax + 86 22 25603502 www.tpct.cc PSA DONGGUAN CONTAINER TERMINAL Humen Port Avenue, Shatian Xidatan Section, Dongguan, Guangdong 523990 Tel +86 769 88666181 Fax +86 769 88666180 www.psa-dgct.com HONG KONG TERMINALS 4/F Main Office Building, Container Terminal 8 West, Kwai Chung Container Terminal, New Territories, Hong Kong Tel +852 22768241 Fax +852 21484023 SOUTH KOREA PSA KOREA 126-1, 7-ga, Hang-dong, Jung-gu, Incheon 400-037 Tel +82 32 8908900 Fax +82 32 8908996 INCHEON CONTAINER TERMINAL 126-1, 7-ga, Hang-dong, Jung-gu, Incheon 400-037 Tel +82 32 8908880 Fax +82 32 8908990 www.psa-ict.co.kr PUSAN NEWPORT INTERNATIONAL TERMINAL 1488 Seongbuk-dong, Gangseo-gu Busan, Korea 618-821 Tel +82 51 290 8001 Fax +82 51 290 8002 www.pnitl.com JAPAN HIBIKI CONTAINER TERMINAL Chisaki, 3-chome, Hibiki-machi, Wakamatsu-ku, Kitakyushu City Tel +86 13672128266 MIDDLE EAST SOUTH ASIA PSA MIDDLE EAST SOUTH ASIA #34-01 PSA Building, 460 Alexandra Road, Singapore 119963 Tel +65 62794010 Fax +65 62794213 www.internationalpsa.com
INDIA PSA INDIA LIAISON OFFICE 5th Floor, Bhupati Chambers, 13 Mathew Road, Charni Road (E), Mumbai 400 004 Tel +91 22 30404730 Fax +91 22 23683653 TUTICORIN CONTAINER TERMINAL Tuticorin Container Terminal Building, Berth No.7, Harbour Estate, Tuticorin 628004 Tel +91 461 6451001 / 2354001 Fax +91 461 2352260 CHENNAI INTERNATIONAL TERMINALS 2nd Floor, North Wing, Jawahar Building (Opp. Customs House), 17 Rajaji Salai, Chennai 600001 Tel +91 44 25613000 Fax +91 44 25613111 www.citpl.co.in KOLKATA CONTAINER TERMINAL 5th Floor, Bhupati Chambers, 13 Mathew Road, Charni Road (E), Mumbai 400 004 Tel +91 22 66563000 Fax +91 22 23649236 KANDLA CONTAINER TERMINAL 5th Floor, Bhupati Chambers, 13 Mathew Road, Charni Road (E), Mumbai 400 004 Tel +91 22 66563000 Fax +91 22 23649236 PAKISTAN PSA GWADAR INTERNATIONAL TERMINALS Office: 37A, Harbour House, 2nd Floor, Lalazar Area, Off Moulvi Tamizuddin Khan Road, Karachi 74000. Terminal: Control Tower Building, Pak China Friendship Road, Gwadar Port, Gwadar, Balochistan Tel +92 21 35636400 Fax +92 21 35611962 www.psagwadar.com EUROPE & MEDITERRANEAN PSA EUROPE Napelsstraat 79, 2000 Antwerp, Belgium Tel +32 3 2606111 Fax +32 3 2606271 BELGIUM & THE NETHERLANDS PSA ANTWERP Napelsstraat 79, 2000 Antwerp, Belgium Tel +32 3 260 6126 Fax +32 3 2606200 www.psa-antwerp.be PSA ZEEBRUGGE Caxtonweg Q140-143, 8380 Zeebrugge, Belgium Tel +32 50 543612 Fax +32 50 547520 www.psa-zeebrugge.be ITALY VOLTRI TERMINAL EUROPA Porto di Pra-Voltri, 16158 Genoa Tel +39 010 6164403 Fax +39 010 6132308 www.vte.it
VENICE CONTAINER TERMINAL Porto Commerciale Molo B 30175, Marghera (VE) Tel +39 041 2582796 Fax +39 041 5380944 www.vecon.it PORTUGAL SINES CONTAINER TERMINAL Terminal de Contentores de Sines, Apartado 195, 7520-903 Sines Tel +351 26 9870600 Fax +351 26 9870614 www.psasines.pt TURKEY MERSIN INTERNATIONAL PORT Yeni Mahalle 101 Cad. 5307 Sk. No:5, 33100 Mersin Tel +90 324 2390939 Fax +90 324 2390849 www.mersinport.com.tr AMERICAS PANAMA PSA PANAMA INTERNATIONAL TERMINAL, S.A. Suite 11188, APDO 0832-1236, World Trade Center, Panama City Tel +507 3783800 Fax +507 3783801 ARGENTINA EXOLGAN CONTAINER TERMINAL Alberti 1780, (1871) Dock Sud, Buenos Aires, Argentina Tel +54 11 42290000 / 58119100 (switchboard) Fax +54 11 42290031 www.exolgan.com MARINE SINGAPORE PSA MARINE (PTE) LTD 70 West Coast Ferry Road, Singapore 126800 Tel +65 67772288 Fax +65 63799800 www.psamarine.com
38TH FLOOR PSA BUILDING 460 ALEXANDRA ROAD SINGAPORE 119963 TEL +65 62794010 FAX +65 62744677 www.internationalpsa.com Registration No. : 197200399R

Psa Ar2010

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The Orchestra

Setting the Tempo

Every Note Counts

PSA International Pte Ltd Annual Report 2010

FOCK SIEW WAH Group Chairman

Every Note Counts

PSA International Pte Ltd Annual Report 2010

EDDIE TEH Group CEO

Every Note Counts

PSA International Pte Ltd Annual Report 2010

Every Note Counts

ONG KIM PONG Regional CEO Northeast Asia

LEE CHEN YONG Regional CEO Middle East South Asia

KENNY ONG Regional CEO Americas Head of Group Business Development

PSA International Pte Ltd Annual Report 2010

LIM PEK SUAT Group CFO

TERENCE TAN Head of Group Legal & Company Secretary

TAN PUAY HIN Regional CEO Southeast Asia

DAVID YANG Regional CEO Europe & Mediterranean

Raising the Bar

Every Note Counts

PSA International Pte Ltd Annual Report 2010

Every Note Counts

27.7 37.4 65.1

25.1 31.8 56.9

29.0 34.2 63.2

27.1 31.8 58.9

24.0 27.3 51.3

18,950 10,101 8,849

19,611 11,318 8,293

19,090 11,369 7,721

18,198 11,029 7,169

17,206 11,635 5,571

35.7% 8.0% 14.0% 0.93 4.0 220 1.94

31.4% 6.8% 12.0% 1.13 3.6 173 1.61

33.5% 7.7% 14.0% 1.19 3.6 503 1.71

38.0% 13.8% 30.5% 1.20 4.0 507 3.17

35.8% 11.9% 23.3% 1.73 3.8 573 1.99

Volume (million TEUs)

50 3,000 40 2,500 2,000

30 2006 2007 2008 2009 2010

PSA International Pte Ltd Annual Report 2010

World Class P erformances

Every Note Counts

The Rhythm of Business

PSA International Pte Ltd Annual Report 2010

Every Note Counts

PSA International Pte Ltd Annual Report 2010

Touching the H eartstrings

Every Note Counts

The Ascending Fish! Motif

Every Note Counts

Year ended 31 D ecember 2010

Nil 2,547 5,095 #1 up to 21,750 #2 Nil Nil 3,170 50 500 486

PSA International Pte Ltd Annual Report 2010

Year ended 31 D ecember 2010

Every Note Counts

Year ended 31 D ecember 2010

On behalf of the Board of Directors

Fock Siew Wah Director

Eddie Teh Ewe Guan Director

PSA International Pte Ltd Annual Report 2010

On behalf of the Board of Directors