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P.T. BERLIAN LAJU TANKER Tbk AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 AND INDEPENDENT AUDITORS’ REPORT

P.T. BERLIAN LAJU TANKER Tbk AND ITS SUBSIDIARIES TABLE OF CONTENTS

Page DIRECTORS’ STATEMENT LETTER INDEPENDENT AUDITORS’ REPORT 1 CONSOLIDATED FINANCIAL STATEMENTS – as of December 31, 2010 and 2009

and for the years then ended Consolidated Statements of Financial Position 3 Consolidated Statements of Comprehensive Income 5 Consolidated Statements of Changes in Equity 6 Consolidated Statements of Cash Flows 7 Notes to Consolidated Financial Statements 8

P.T. BERLIAN LAJU TANKER Tbk AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL POSITIONDECEMBER 31, 2010 AND 2009

Notes 2010 2009US$'000 US$'000

ASSETS

NON-CURRENT ASSETSProperty, vessels and equipment - net 6 2,346,239 1,991,975 Deferred charges and security deposits 7 22,562 23,081 Goodwill 8 75,739 75,739 Investments in associates 9 7,955 76,125 Available-for-sale investments 12 34,302 - Derivative financial instruments 26 - 16,944

Total Non-Current Assets 2,486,797 2,183,864

CURRENT ASSETSDerivative financial instruments 26 - 2,259 Inventories 10 16,281 15,604 Trade accounts receivable 11 160,166 129,976 Other accounts receivable and other current assets 11,820 7,350 Prepaid expenses and taxes 17,572 10,786 Advances 13,801 8,546 Short-term investments 12 79,964 44,898 Cash 13 84,284 118,732 Total Current Assets 383,888 338,151

TOTAL ASSETS 2,870,685 2,522,015

See accompanying notes to consolidated financial statementswhich are an integral part of the consolidated financial statements.

December 31,

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P.T. BERLIAN LAJU TANKER Tbk AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL POSITIONDECEMBER 31, 2010 AND 2009 (Continued)

Notes 2010 2009US$'000 US$'000

EQUITY AND LIABILITIES

CAPITAL AND RESERVESShare capital 14 109,575 70,936 Additional paid-in capital 15 209,003 115,001 Treasury stocks 16 (86,628) (86,628) Translation adjustment 1,009 414 Net unrealized gain on available-for-sale investments 12 - 757 Revaluation reserve 17 300,731 235,671 Retained earnings 184,519 312,608

Total Equity 718,209 648,759

NON-CURRENT LIABILITIESLong-term liabilities - net of current maturities

Loans from financial institutions 18 708,505 771,454 Bonds payable 19 148,261 141,512 Notes payable 20 316,000 249,809 Obligations under finance lease 21 342,769 228,925 Other loans from non-financial institutions 22 17,634 11,228

Deferred income 23 1,850 2,058 Post-employment benefits 24 5,180 4,126 Convertible bonds 25 165,057 -Derivative financial instruments 26 75,775 17,407

Total Non-Current Liabilities 1,781,031 1,426,519

CURRENT LIABILITIESDerivative financial instruments 26 - 10,877 Short-term bank loans 27 14,459 65,225 Other loans from non-financial institutions 22 10,200 -Trade accounts payable 28 63,943 35,179 Other current liabilities 4,642 7,894 Dividends payable 486 468 Taxes payable 29 1,665 957 Accrued expenses 30 44,452 45,347 Unearned revenue 551 708 Current maturities of long-term liabilities

Loans from financial institutions 18 178,661 140,414 Bonds payable 19 - 6,355 Obligations under finance lease 21 49,383 32,572 Other loans from non-financial institutions 22 3,003 1,181 Convertible bonds 25 - 99,560

Total Current Liabilities 371,445 446,737

TOTAL EQUITY AND LIABILITIES 2,870,685 2,522,015


December 31,

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P.T. BERLIAN LAJU TANKER Tbk AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

Notes 2010 2009US$'000 US$'000

Operating Revenues 31 656,854 618,346 Voyage Expenses 32 (221,201) (176,087)

Operating Revenues after Voyage Expenses 435,653 442,259 Charter Expenses (55,763) (55,573) Vessel depreciation and ship operating expenses

Ship operating expenses 33 (139,854) (120,860) Vessel depreciation 6 (145,583) (133,589)

(285,437) (254,449)

Gross Profit 94,453 132,237 General and Administrative 34 (33,176) (31,153)

Income before financial and other items 61,277 101,084

Net financial and other itemsFinance cost 35 (137,599) (111,514) Investment income 36 8,303 18,426 Share in profits of associates 9 384 9,621 Other gains and losses 37 (81,307) (133,660)

(210,219) (217,127) Loss Before Tax (148,942) (116,043) Tax Expense 29 (1,185) (961)

Loss for the Year (150,127) (117,004)

Other Comprehensive IncomeTranslation adjustment 595 16 Net revaluation during the year 17 87,098 37,137 Net gain (loss) on revaluation of available-for-sale investments (757) 2,622

Other Comprehensive Income for the Year 86,936 39,775

Total Comprehensive Loss for the Year (63,191) (77,229)

Loss Per Share 38Basic (cents per share)

As originally reported (0.0168) (0.0229) As restated for the 2010 rights issue - (0.0191)


Years ended December 31,

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P.T. BERLIAN LAJU TANKER Tbk AND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITYDECEMBER 31, 2010 AND 2009

Net unrealized Subscribed gain (loss) on and paid-up Additional Treasury available-for-sale Translation Revaluation

Notes capital stock paid-in capital stock investments adjustment reserve Appropriated Unappropriated Total equityUS$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

Balance at January 1, 2009 62,191 65,000 (86,628) (1,865) 398 234,454 5,898 389,876 669,324

Profit for the year - - - - - - - (117,004) (117,004) Other comprehensive income for the year - - - 2,622 16 37,137 - - 39,775

Total comprehensive income for the year - - - 2,622 16 37,137 - (117,004) (77,229)

Transfer to retained earnings - - - - - (35,920) - 35,920 -Issuance of shares through exercise of warrants 14,15 8,745 50,001 - - - - - - 58,746 Dividends 39 - - - - - - - (2,082) (2,082)

Balance at December 31, 2009 70,936 115,001 (86,628) 757 414 235,671 5,898 306,710 648,759

Profit for the year - - - - - - - (150,127) (150,127) Other comprehensive income for the year - - - (757) 595 87,098 - - 86,936

Total comprehensive income for the year - - - (757) 595 87,098 - (150,127) (63,191)

Transfer to retained earnings - - - - - (22,038) - 22,038 -Issuance of shares through rights issue 14,15 38,639 94,002 - - - - - - 132,641

Balance at December 31, 2010 109,575 209,003 (86,628) - 1,009 300,731 5,898 178,621 718,209


Retained earnings

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P.T. BERLIAN LAJU TANKER Tbk AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED DECEMBER 31, 2010 AND 2009

2010 2009US$'000 US$'000

CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers 626,664 582,216 Payments to suppliers and employees (503,645) (356,907) Interest paid (102,581) (120,646) Profit sharing paid (7,488) (2,307) Income tax paid (1,206) (932) Receipts from insurance claim 631 215

Net Cash Generated from Operating Activities 12,375 101,639

CASH FLOWS FROM INVESTING ACTIVITIESWithdrawal of temporary investments 91,643 139,124 Net proceeds from sale of property, vessels and equipment 1,070 50,075 Placement of temporary investments (110,455) (48,176) Acquisitions of property, vessels and equipment (328,104) (137,297) Interest received 7,071 1,068 Decrease (increase) in advances for the purchase of property, vessels

and equipment 16,028 (46,905) Proceeds from sale (acquisition) of associates and subsidiary 34,270 (66,231)

Net Cash Used in Investing Activities (288,477) (108,342)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from bank loans and loans from financial institutions 127,743 290,868 Proceeds from loans from non-financial institutions 19,610 -Payments of bank loans and loans from financial institutions (182,805) (323,756) Payments of bonds payable and convertible bonds (95,331) -Payment of obligations under finance lease (25,849) (11,709) Dividends paid - (2,103) Payment of dividends payable (3) -Proceeds from issuance of bonds payable and convertible bonds 120,329 48,520 Proceeds from reissuance of notes payable and convertible bonds 18,082 -Payment of loans from non-financial institutions (1,182) (591) Proceeds from sale and leaseback transactions 130,000 -Proceeds from issuance of new shares through rights issue 132,641 58,746

Net Cash Generated from Financing Activities 243,235 59,975

NET INCREASE (DECREASE) IN CASH (32,867) 53,272

EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,581) 210

CASH AT BEGINNING OF YEAR 118,732 65,250

CASH AT END OF YEAR 84,284 118,732


December 31,

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P.T. BERLIAN LAJU TANKER Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 AND FOR THE YEARS THEN ENDED

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1. GENERAL

a. Establishment and General Information

P.T. Berlian Laju Tanker Tbk (the Company) is a limited liability company incorporated in Indonesia. Its activities comprise mainly of local and overseas shipping services. In 2010, the Company’s articles of association have been amended as stated in notarial deed No. 26 dated July 29, 2010 of Amrul Partomuan Pohan S.H., LLM, notary in Jakarta, concerning, among others, the increase in the Company’s paid up capital stock. The Company is domiciled in Jakarta and has two branches in Merak and Dumai, and representative offices in China, India, Brazil, United Arab Emirates and Taiwan. Its head office is located at Wisma BSG, 10th Floor, Jl. Abdul Muis No. 40, Jakarta.

b. Public Offering of Shares and Bonds

The Company's offering of 2,100,000 shares to the public through the stock exchanges in Indonesia, at a price of Rp 8,500 per share, was approved by the Minister of Finance of the Republic of Indonesia in his Decision Letter No. S1-076/SHM/MK.01/1990 dated January 22, 1990. These shares were listed on the stock exchanges in Indonesia on March 26, 1990. On January 27, 1993, the Company obtained the notice of effectivity from the Chairman of the Capital Market and Financial Institution Supervisory Agency (Bapepam&LK) in his letter No. S-109A/PM/1993 for its Rights Issue I to the stockholders totaling 29,400,000 shares at a price of Rp 1,600 per share. These shares were listed on the Jakarta and Surabaya stock exchanges (currently the Indonesian Stock Exchange) on May 24, 1993. On December 26, 1997, the Company obtained the notice of effectivity from the Chairman of Bapepam&LK in his letter No. S-2966/PM/1997 for its Rights Issue II with Pre-emptive Rights to stockholders totaling to 305,760,000 shares with 61,152,000 warrants at an exercise price of Rp 1,200 per warrant. The holders of warrants can exercise the right to purchase from July 16, 1998 to January 20, 2003. Based on notarial deed No. 32 dated October 17, 2002 of Amrul Partomuan Pohan, S.H., LLM, notary in Jakarta, the Company decided to extend the period of warrants for five (5) years until January 18, 2008. If the warrants are not exercised during this period, the warrants will expire and will have no value. The shares were listed on the Jakarta and Surabaya stock exchanges on January 16, 1998. The Company conducted a stock split of 4:1 in 2002 and 2:1 in 2004 thus, the warrants’ exercise price since 2005 became Rp 150 per share.

On December 18, 2000, the Company obtained the notice of effectivity from the Chairman of Bapepam&LK in his letter No. S-3690/PM/2000 for its Rights Issue III with Pre-emptive Rights to stockholders totaling 61,152,000 shares. The Company issued 53,958,150 new common shares with a nominal value of Rp 500 per share at a price of Rp 1,100 per share. On September 22, 2006, the Company obtained the eligibility to list all of the Company’s shares on the SGX-mainboard based on letter No. RMR/IR/YCH/260407 from the SGX-ST. In connection with the Company’s listing of shares, the Company also amended certain provisions of its Articles of Association as approved by the shareholders in their Extraordinary Shareholders Meeting held on September 11, 2006. On May 4, 2007, and May 17, 2007, BLT Finance B.V., a subsidiary, issued US$ 400 million 7.5% Guaranteed Senior Notes due 2014 and US$ 125 million Zero Coupon Guaranteed Convertible Bonds due 2012, respectively, which were both registered on the SGX-ST. On June 25, 2007, the Company obtained the notice of effectivity from the Chairman of Bapepam&LK in his letter No. S-3117/BL/2007 for its public offering of Sukuk Ijarah Bonds year 2007 amounting to Rp 200 billion and Berlian Laju Tanker III Bonds year 2007 amounting to Rp 700 billion.

P.T. BERLIAN LAJU TANKER Tbk AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010 AND 2009 AND FOR THE YEARS THEN ENDED (Continued)

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On May 15, 2009, the Company obtained the notice of effectivity from the Chairman of Bapepam&LK in his letter No. S-3908/BL/2009 for its public offering of Sukuk Ijarah II Bonds year 2009 amounting to Rp 100 billion and Berlian Laju Tanker IV Bonds year 2009 amounting to Rp 400 billion. On June 29, 2009, the Company obtained the notice of effectivity from the Chairman of Bapepam&LK in his letter No. S-5658/BL/2009 for its Rights Issue IV with Pre-emptive Rights to stockholders. In connection with such rights issue, the Company issued 1,392,310,059 new common shares at Rp 425 per share. On February 10, 2010 and March 29, 2010, BLT International Corporation, a subsidiary, issued US$ 100 million and US$ 25 million, respectively, 12% Guaranteed Convertible Bonds due 2015. On June 30, 2010, the Company obtained the notice of effectivity from the Chairman of Bapepam&LK in his letter No. S-5872/BL/2010 for its Rights Issue V with Pre-emptive Rights to stockholders. In connection with such rights issue, the Company issued 5,569,240,235 new common shares at Rp 220 per share. As of December 31, 2010 and 2009, issued shares of 11,550,831,470 and 5,981,591,235, respectively, have been listed on the stock exchanges in Indonesia and Singapore.

2. ADOPTION OF NEW AND REVISED STANDARDS

In the current year, the following new and revised Standards and Interpretations have become effective:

Amendments to IAS 1 Presentation of Financial Statements (as part of Improvements to

IFRSs issued in 2009)

Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards – Additional Exemptions for First-time Adopters

Amendments to IFRS 2 Share-based Payment – Group Cash-settled Share-based Payment

Transactions

Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (as part of Improvements to IFRSs issued in 2008)

Amendments to IAS 7 Statement of Cash Flows (as part of Improvements to IFRSs issued in 2009)

Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items

IFRIC 17 Distributions of Non-cash Assets to Owners

IFRIC 18 Transfers of Assets from Customers

Improvements to IFRSs issued in 2009

IFRS 3 (Revised) Business Combinations

IAS 27 (Revised) Consolidated and Separate Financial Statements

IAS 28 (Revised) Investments in Associates


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The amendments to IAS 1 clarify that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or noncurrent. In line with the revised Standard, the Company and its subsidiaries have classified the liability component of convertible bonds issued in the current year as non-current based on when cash settlement is required to be made. The adoption of IFRS 3 (Revised), has resulted to terminology changes. In line with the adoption of the revised standard the Company and its subsidiaries have elected to measure non-controlling interests at fair value at the date of acquisition. IFRS 3 (Revised) also requires acquisition-related costs to be accounted for separately from the business combination, generally leading to those costs being recognised as an expense in profit or loss as incurred, whereas previously they were accounted for as part of the cost of the acquisition. The application of IAS 27 (2008) has resulted to change in the accounting policies with respect to change in ownership interest in associates. Under IAS 27 (2008), when significant influence over an associate is lost, the investor measures any investment retained in the former associate at fair value, with any consequential gain or loss recognised in profit or loss.

This change in policy has affected the accounting for the partial disposal of 49% ownership of Asean Maritime Corporation in Nevaeh Limited and effective interests in Brilliant Hero Industrial Limited and Jiangsu Xinrong Shipyard Company Limited, in the current year. The difference of US$ 524 thousand between the carrying amount of the interest retained in Jiangsu Xinrong Shipyard Company Limited and its fair value has been recognised in profit or loss in the current year. Had the Company and its subsidiaries’ previous accounting policy been followed, the carrying amount of the investment retained would have been regarded as cost for the purpose of subsequent accounting as an available-for-sale investment under IAS 39 Financial Instruments: Recognition and Measurement and the movement in fair value would have been recognised in other comprehensive income. The profit reported for 2010 has therefore been increased by US$ 524 thousand as a result of the change in accounting policy. This increase will be offset by a decrease in profits of an equivalent amount when the investment is disposed of in future accounting periods. As of the date of authorization of these consolidated financial statements, the following IFRSs, IFRICs and amendments to IFRS that are relevant to the Company and its subsidiaries were issued but not yet effective:

Description Effective for accounting periods beginning on or after:

Amendments to IAS 32, Classification of

Rights Issues

1 February 2010

Amendments to IFRS 1, Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters

1 July 2010

IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments

1 July 2010

Improvements to IFRSs issued in 2010 1 July 2010 and 1 January 2011, as appropriate

Amendment to IFRIC 14, Prepayments of a

Minimum Funding Requirement

1 January 2011

IAS 24 (2009), Related Party Disclosures

1 January 2011

Amendments to IFRS 7, Financial Instruments – Disclosures (as part of Improvements to IFRSs issued in 2010)

1 January 2011


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Description Effective for accounting periods beginning on or after:

Amendments to IAS 1, Presentation of

Financial Statements (as part of Improvements to IFRSs in 2010)

1 January 2011

Amendments to IFRS 7, Disclosures – Transfers of Financial Assets

1 July 2011

IFRS 9 (as amended in 2010), Financial Instruments

1 January 2013

IFRS 10, Consolidated Financial Statements 1 January 2013

IFRS 11, Joint Arrangements 1 January 2013

IFRS 12, Disclosure of Interests in Other Entities

1 January 2013

IFRS 13, Fair Value Measurement 1 January 2013

IAS 27, Consolidated and Separate Financial Statements – Reissued as IAS 27, Separate Financial Statements (as amended in 2011)

1 January 2013

IAS 28, Investments in Associates – Reissued as IAS 28, Investments in Associates and Joint Ventures (as amended in 2011)

1 January 2013

The amendments to IAS 32, Classification of Rights Issues, address the classification of certain rights issues denominated in a foreign currency as either an equity instrument or as a financial liability. If the Company and its subsidiaries do enter into any arrangements that would fall within the scope of the amendments in future accounting periods, the amendments to IAS 32 will have an impact on the classification of those rights issues. IFRIC 19 provides guidance regarding the accounting for the extinguishment of a financial liability by the issue of equity instruments. In particular, under IFRIC 19, equity instruments issued under such arrangements will be measured at their fair value, and any difference between the carrying amount of the financial liability extinguished and the fair value of equity instruments issued will be recognised in profit or loss. The amendments to IFRS 7 titled Disclosures – Transfers of Financial Assets increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period. IFRS 9, Financial Instruments introduces, new requirements for the classification and measurement of financial assets and financial liabilities and will be effective from 1 January 2013, with earlier application permitted. The Standard requires all recognized financial assets that are within the scope of IAS 39, Financial Instruments: Recognition and Measurement to be measured at either amortized cost or fair value. Specifically, debt investments that (i) are held within a business model whose objective is to collect the contractual cash flows and (ii) have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost but can still be classified as fair value through profit or loss, if certain criteria are met. All other debt investments and equity investments are measured at fair value through profit or loss except that for equity securities, there is an option to classify as fair value through other comprehensive income. The application of IFRS 9 might affect the classification and measurement of the Company and its subsidiaries’ financial assets.


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The most significant effect of IFRS 9 regarding the classification and measurement of financial liabilities relates to the accounting for changes in fair value of a financial liability (designated as at fair value through profit or loss) attributable to changes in the credit risk of that liability. Specifically, under IFRS 9, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was recognised in profit or loss. The management anticipates that IFRS 9 will have a significant impact on amounts reported in respect of the Company and its subsidiaries financial liabilities carried at fair value through profit or loss. IFRS 12, Disclosure of Interests in Other Entities, requires entities to disclose information that helps users of its consolidated financial statements evaluate the nature of and risks associated with its interests in subsidiaries, associates or joint arrangements, and the effects of those interests on its consolidated financial statements. The disclosures are extensive and significant effort may be required from the Company and its subsidiaries to accumulate the necessary information. IFRS 13, Fair Value Measurement, establishes a single framework for measuring fair value, where that is required by other standards. The management anticipates that the adoption of the other new IFRSs, IFRICs and amendments to IFRS in future periods will not have a material impact on the consolidated financial statements of the Company and its subsidiaries in the period of their initial adoption.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statements of Compliance and Basis of Preparation

The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) in relation to the Company’s listing of equity securities on the SGX-ST. Such IFRS consolidated financial statements have been prepared on the historical cost basis, except for vessels and certain financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Further, such IFRS consolidated financial statements are presented in US Dollars, which is the currency of the primary economic environment in which the Company and the majority of its subsidiaries operate (their functional currency). Historical cost is generally based on the fair value of the consideration given in exchange for assets. The principal accounting policies are set out below.

b. Principles of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. Income and expenses of subsidiaries acquired or disposed of during the years presented are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in-line with those used by the Company.


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All intra-company transactions, balances, income and expenses are eliminated on consolidation. Changes in the ownership interests of the Company and its subsidiaries’ in subsidiaries that do not result in the Company and its subsidiaries losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Company and its subsidiaries’ interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Company and its subsidiaries lose control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Company had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity.

c. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred, liabilities incurred or assumed and equity interests issued by the Company and its subsidiaries in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred. The acquiree’s identifiable assets, liabilities assumed and contingent liabilities that meet the condition for recognition are recognised at their fair value at the acquisition date, except that: deferred tax assets or liabilities and liabilities or assets related to employee benefit

arrangements are recognised and measured in accordance with IAS 12, Income Taxes and IAS 19, Employee Benefits respectively;

liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Company and its subsidiaries entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2, Share-based Payment at the acquisition date; and

assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations are measured accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.


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Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

When the consideration transferred by the Company and its subsidiaries in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss. When a business combination is achieved in stages, the Company and its subsidiaries’ previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Company and its subsidiaries obtain control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company and its subsidiaries reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date. Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous version of IFRS 3.

d. Investments in Associates An associate is an entity over which the Company has significant influence, and is neither a subsidiary nor an interest in a joint venture. Significant influence, is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies. The results of operations and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting except when classified as held for sale, in which case it is accounted for in accordance with IFRS 5 “Noncurrent Assets Held for Sale and Discontinued Operations”. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Company’s share in the net assets of the associate, less any impairment in the value of individual investments. Losses of the associates in excess of the Company and its subsidiaries’ interest in those associates are not recognized, unless the Company and its subsidiaries have incurred legal or constructive obligations or made payments on behalf of the associate.


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Any excess of the cost of acquisition over the Company’s share in the fair values of the identifiable net assets of the associates at the date of acquisition is recognized as goodwill. Goodwill is included within the carrying amount of investment and is assessed for impairment as part of the investment. Any excess of the Company’s share in the fair values of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized in profit and loss in the year of acquisition.

The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36, Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, Any impairment loss recognised forms part of the carrying amount of the the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases. Where the Company or its subsidiaries transact with an associate of the Company, profits and losses are eliminated to the extent of the Company’s interest in the relevant associate.

e. Foreign Currency Transactions and Translation

Functional and presentation currency

The individual financial statements of each of the consolidated entities are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in US Dollar, which is the Company’s functional currency and presentation currency for the consolidated financial statements. Transactions and Balances

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the exchange rates prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Group Companies

The results and financial position of all the entities (none of which has the currency of a hyper inflationary economy) that have a functional currency different from the group presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities are translated at the closing rate at the end of the reporting period;

(ii) income and expenses are translated at average exchange rates (unless this average is not

a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions);

(iii) all resulting exchange differences are recognized as a separate component of equity. On

consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity. When a foreign operation is sold, exchange differences that were recorded in equity are recognized as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.


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f. Property, Vessels and Equipment

Vessels

Vessels are stated at their revalued amount, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the end of the reporting period. Depreciation of vessels is calculated on a straight line basis over the estimated useful life of the vessels between 5 – 25 years. Any revaluation increase arising on the revaluation of such vessels is credited to vessels revaluation reserve, except to the extent that it reverses a revaluation decrease, for the same asset which was previously recognized in profit or loss, in which case the increase is credited to profit and loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such vessels is charged to profit or loss to the extent that it exceeds the balance, if any, held in the vessels revaluation reserve relating to a previous revaluation of such vessels.

Depreciation on revalued vessels is charged to profit or loss. As the vessels are used, a transfer is made from revaluation reserve to retained earnings equivalent to the difference between depreciation based on revalued carrying amount of the vessels and depreciation based on the vessels’ original cost. On subsequent sale or retirement of a revalued vessel, the attributable revaluation surplus remaining in the vessels revaluation reserve is transferred directly to retained earnings. Vessels in the course of construction are carried at cost less any impairment loss. Costs, including professional fees, incurred while under construction are capitalized in accordance with the Company’s accounting policy. Depreciation of these vessels commences when the vessels are ready for their intended use. Borrowing costs are not capitalized because the vessels are measured at fair values. The vessels’ residual values, estimated useful lives and depreciation method are reviewed at each financial year end, with the effect of any changes in estimate accounted for on a prospective basis. The gain or loss arising on sale or retirement of vessels is determined as the difference between the sales proceeds and carrying amount of the vessel and is recognized in profit or loss. Dry docking cost

Included in the balance of property, vessels and equipment is dry docking cost which is capitalized when incurred and is amortized on a straight line basis over the period to the next dry docking. Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows: Years Buildings and premises

20

Oil tanks 10 Transportation equipment 5 Office furniture and fixtures 5 Office and dormitory equipment 5


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Landrights is accounted for as operating leases and amortized over the lease term. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. The cost of maintenance and repairs is charged to operations as incurred. Other subsequent expenditures which meet the asset recognition criteria are capitalized. When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation and any impairment loss are removed from the accounts and any resulting gain or loss is reflected in the current operations. Construction in progress is stated at cost, which includes the progress billing paid in accordance with the construction contracts. Construction in progress is transferred to the respective property and equipment account when completed and ready for use.

Depreciation begins when the property and equipment become available for use. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is recognized in profit or loss in the year the item is derecognized. The asset’s residual values, estimated useful lives and depreciation method are reviewed at each financial year end with the effect of any changes in accounting estimate accounted for on a prospective basis.

g. Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Company and its subsidiaries' cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

h. Inventories

Inventories are stated at cost or net realizable value, whichever is lower. Cost is determined using the first-in, first-out method.

i. Prepaid Expenses

Prepaid expenses are amortized over their beneficial periods using the straight-line method.

j. Post-Employment Benefits

The Company provides defined post-employment benefits to its employees in accordance with Indonesian Labor Law No. 13/2003. No funding has been made to this defined benefit plan.


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The cost of providing post-employment benefits is determined using the Projected Unit Credit Method with actuarial valuations being carried out at the end of each reporting period. The accumulated unrecognized actuarial gains and losses that exceed 10% of the present value of the Company’s defined benefit obligations is recognized on straight-line basis over the expected average remaining working lives of the participating employees.

Past service cost is recognized immediately to the extent that the benefits are already vested, or otherwise amortized on a straight-line basis over the average years until the benefits become vested. The post-employment benefits obligation recognized in the consolidated statement of financial position represent the present value of the defined benefit obligation, as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost.

k. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. The Company and the subsidiaries’ liability for current tax is calculated using tax rates that have been enacted or substantively enacted at by the end of the reporting period. Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are recognized for deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognized for taxable temporary differences arising on investment in subsidiaries and associates except when the Company is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. The carrying amount of deferred tax asset is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the liability is settled or the asset realized. The measurement of deferred tax liabilities and assets reflect the tax consequences that would follow from the manner in which the Company and subsidiaries expect, at the reporting date, to recover or settle the carrying amount of their assets and liabilities. Deferred tax assets and liabilities are offset in the consolidated statement of financial position when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and management intends to settle the current tax assets and current tax liabilities on a net basis.

Tax expense on revenues from vessels subject to final tax is recognized proportionately based on the revenue recognized in the current year. The difference between the final tax paid and current tax expense in the consolidated statement of income is recognized as prepaid tax or tax payable. Prepaid final tax is presented separately from final tax payable.


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l. Financial Assets

All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the time frame established by the market concerned, and are initially measured at fair value plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following categories: either as financial assets at ‘fair value through profit or loss’, ‘held-to maturity’, ‘available-for-sale' (AFS) financial assets’ and ‘loans and receivables'. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for debt instruments. Financial Assets at Fair Value through Profit or Loss (FVTPL) Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. A financial asset is classified as held for trading if: • it has been acquired principally for the purpose of selling it in the near term; or • on initial recognition it is part of a portfolio of identified financial instruments that the Group

manages together and has a recent actual pattern of short-term profit-taking; or • it is a derivative that is not designated and effective as a hedging instrument. A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if: • such designation eliminates or significantly reduces a measurement or recognition

inconsistency that would otherwise arise; or • the financial asset forms part of a group of financial assets or financial liabilities or both,

which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and IAS 39,

Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.


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Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘other gains and losses' line item in the consolidated statement of comprehensive income. Fair value is determined in the manner described in Note 43E. Held-to-Maturity Investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Company and its subsidiaries have the positive intent and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment. Available-for-Sale Investments (AFS) AFS financial assets are non-derivative financial assets that are either designated in this category or not classified in other categories and are initially measured at fair value plus directly attributable transaction cost. At subsequent reporting dates, available-for-sale investments except, unquoted AFS equity investments, are stated at fair value. Fair value is determined in the manner described in Note 43E. Gains and losses arising from changes in fair value are recognized in other comprehensive income, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognized in other comprehensive income is included in the profit or loss for the year. The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that are recognized in profit or loss are determined based on the amortized cost of the monetary asset. Other foreign exchange gains and losses are recognized in other comprehensive income. AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment losses at the end of each reporting period. 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 (including trade and other accounts receivables, bank balances and cash, and advances) are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. Impairment of Financial Assets Financial assets, other than those carried at fair value through profit and loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.


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For listed and unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, including fund under investment management classified as AFS, objective evidence of impairment could include: • significant financial difficulty of the issuer or counterparty; or • default or delinquency in interest or principal payments; or • it becoming probable that the borrower will enter bankruptcy or financial re-organization. For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Company and its subsidiaries’ past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. In respect of AFS equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. Derecognition of Financial Assets The Company and its subsidiaries derecognise a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company and its subsidiaries neither transfer nor retain substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company and its subsidiaries recognise their retained interest in the asset and an associated liability for amounts it may have to pay. If the Company and its subsidiaries retain substantially all the risks and rewards of ownership of a transferred financial asset, the Company and its subsidiaries continue to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.


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On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss. On derecognition of a financial asset other than in its entirety (e.g. when the Company and its subsidiaries retain an option to repurchase part of a transferred asset or retains a residual interest that does not result in the retention of substantially all the risks and rewards of ownership and the Company and its subsidiaries retain control), the Company and its subsidiaries allocate the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

m. Financial Liabilities and Equity Instruments Financial liabilities and equity instruments of the Company and its subsidiaries are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and equity instrument. The accounting policies adopted for specific financial liabilities are set out below. Equity Instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. Repurchase of the Company's own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.

Financial Liabilities The financial liabilities of the Company and its subsidiaries are classified as either financial liabilities at fair value through profit and loss or other financial liabilities.

Financial liabilities at fair value through profit and loss (FVTPL) Financial liabilities at FVTPL have two subcategories: financial liabilities held for trading and those designated as at FVTPL on initial recognition. A financial liability is classified as held for trading if: It has been incurred principally for the purpose of repurchasing in the near future: or It is a part of an identified portfolio of financial instruments that the Company and its

subsidiaries manages together and has a recent actual pattern of short-term profit-taking: or

It is a derivative that is not designated and effective as a hedging instrument.

A financial liability, other than a financial liability held for trading, may be designated as at FVTPL upon initial recognition if: Such designation eliminates or significantly reduces a measurement or recognition

inconsistency that would otherwise arise: or


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The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company and its subsidiaries’ documented risk management or investment strategy, and information about the grouping is provided internally on that basis: or

It forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement, permits the entire combined contract (asset or liability) to be designated as at FVTPL.

At each reporting date subsequent to initial recognition, financial liabilities at FVTPL are measured at fair value, with changes in fair value recognized directly in profit or loss in the period in which they arise. Fair value is determined in the manner described in Note 43E. Other Financial Liabilities Other financial liabilities (including bank and other borrowings, trade payables and other payables) are initially measured at fair value, and are subsequently measured at amortized cost, using the effective interest method. Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Derecognition of Financial Liabilities The Company and its subsidiaries derecognise financial liabilities when, and only when, the obligations of the Company and its subsidiaries are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

n. Derivative Financial Instruments

Derivative financial instruments are categorized as FVTPL and are initially measured at fair value on the contract date, and are remeasured to fair value at subsequent reporting dates. Changes in the fair value of derivative financial instruments are recognized in profit or loss as they are not designated and do not qualify for hedge accounting. Derivatives embedded in other financial instruments or other non-financial host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contract and the host contract is not carried at fair value with changes in fair value recognized in profit or loss. A derivative is presented as a non-current asset or non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realized or settled within 12 months. Other derivatives are presented as current assets or current liabilities. The use of financial derivatives is governed by the Company’s policies approved by the Board of Directors consistent with the Company’s risk management strategy. The Company does not use derivative financial instruments for speculative purposes.

o. Revenue and Expense Recognition Revenue from freight operations is recognized as income by reference to the percentage of completion of the voyage as at the end of the reporting period. Unearned revenue received is recognized as liability.


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Time charter revenue is recognized on accrual basis evenly over the terms of the time charter agreements. Voyage freight is recognized evenly over the duration of each voyage. Revenues from agency services and storage services are recognized when the services are rendered to customers. Interest income on interest-bearing instruments is recognized when it is probable that the economic benefits will flow to the Company and its subsidiaries. Interest income is accrued on a time basis by reference to the principal amount outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. Expenses are recognized when incurred.

p. Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Company or its Subsidiaries as Lessor Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term.

The Company or its Subsidiaries as Lessee Assets held under finance leases are initially recognized as assets of the Company or subsidiaries at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges, which are recognized directly in profit or loss, and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Contingent rentals are recognized as expenses in the periods in which they are incurred. Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Sale and Leaseback Assets sold under a sale and leaseback transaction are accounted for as follows: If the sale and leaseback transaction results in a finance lease, any excess of sales proceeds over the carrying amount of the asset is deferred and amortized over the lease term.


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If the sale and leaseback transaction results in an operating lease, and it is clear that the transaction is established at fair value, any profit or loss is recognized immediately. If the sale price is below fair value, any profit or loss is recognized immediately except that, if the loss is compensated for by future lease payments at below market price, it shall be deferred and amortized in proportion to the lease payments over the period for which the asset is expected to be used. If the sale price is above fair value, the excess over fair value is deferred and amortized over the period for which the asset is expected to be used. For operating leases, if the fair value at the time of a sale and leaseback transaction is less than the carrying amount of the asset, a loss equal to the amount of the difference between the carrying amount and fair value is recognized immediately. For finance leases, no such adjustment is necessary unless there has been an impairment in value, in which case the carrying amount is reduced to recoverable amount.

q. Finance Cost

Interest expense and similar charges are expensed in the year when they are incurred.

r. Loss per Share

Basic loss per share is computed by dividing loss for the year by the weighted average number of shares outstanding during the year. Diluted loss per share is computed by dividing loss for the year by the weighted average number of shares outstanding as adjusted for the effect of all dilutive potential ordinary shares.

s. Impairment of Tangible Assets Other than Goodwill

At the end of each reporting period, the Company and its subsidiaries review the carrying amounts of their tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company and its subsidiaries estimate the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimated of future cash flows have not been adjusted. If the recoverable amount of the asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.


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t. Provisions Provisions are recognized when the Company and its subsidiaries have a present obligation (legal or constructive) as a result of a past event, it is probable that the Company and its subsidiaries will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Critical judgments in applying the Company and its subsidiaries’ accounting policies In the process of applying the Company and its subsidiaries’ accounting policies, which are described in Note 3, management has made the following critical judgments that have a significant effect on the amounts recognized in the consolidated financial statements, apart from those involving estimations, which are dealt with below. Note 6 to the consolidated financial statements describes the sale and leaseback transactions of certain vessels entered into by the Company and its subsidiaries in 2010 and 2009. Management was required to consider whether to account for the sale and leaseback transactions as finance lease or operating lease and whether it was appropriate to immediately recognize a net loss on sale of vessels of US$ 2,900 thousand in 2010 and a net gain on sale of vessels of US$ 2,482 thousand in 2009.

In making its judgment, management considered the criteria set out in IAS 17 Leases, and in particular the transfer of risks and rewards incidental to ownership of the vessels. Following a detailed analysis of the transactions, In 2010, the Directors are satisfied that the Company retained the risks and rewards incidental to ownership of the vessels and that recognition of the lease transaction as finance leases are appropriate. In 2009, the Directors are satisfied that substantially all the significant risks and rewards incidental to ownership of the vessels have been transferred to and rest with the lessors and that recognition of the lease transactions as operating leases are appropriate. Key sources of estimation uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Vessels lives and impairment The carrying value of each of the vessels of the Company and its subsidiaries represent the revalued amount, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent impairment losses. The carrying value of revalued vessels at December 31, 2010 and 2009 amounted to US$ 2,131 million and US$ 1,812 million, respectively.


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Management depreciates vessels on a straight-line basis over a vessel’s estimated useful life of 25 years, from the date the vessel was originally delivered from the shipyard, or a shorter period if regulations prevent management from operating the vessels to 25 years. In the shipping industry, the use of the 25-year vessel life has become the prevailing standard. However, the actual life of a vessel may be different, with a shorter life potentially resulting in an impairment loss. Management reviews vessels and equipment for impairment whenever there is an indication that the carrying amount of the vessel may not be recoverable. Management measures the recoverability of an asset by comparing its carrying amount against its recoverable amount. Recoverable amount is the higher of the fair value less cost to sell and value in use, which is the future cash flows that the vessel is expected to generate over its remaining useful life, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the vessel. If a vessel is considered to be impaired, impairment loss is recognized to an amount equal to the excess of the carrying value of the asset over its recoverable amount.

Fair value of vessels in a volatile marketplace Vessels are stated at fair value based on the valuation reviewed by management and supported by an independent professional valuer. In determining the fair value, a method of valuation is used which involves certain estimates, including comparisons with recent sale transactions of similar vessels. However, the current market conditions has made the assessment of vessel values uncertain. Information on comparable transactions and market demand has, where available, been very limited. This has increased uncertainty around reported vessel fair values compared to normal market conditions. Impairment of Goodwill Goodwill is not amortized, but reviewed for impairment annually, and whenever impairment indicators arise. The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment at many points during the analysis. The fair values of the cash-generating units to which goodwill is identified is estimated based on discounted expected future cash flows. The estimates and assumptions regarding expected cash flows and the discount rate require considerable judgment and are based upon existing contracts, historical experience, financial forecasts, and industry trends and conditions. The carrying value of goodwill at December 31, 2010 and 2009 amounted to US$ 75,739 thousand each year (Note 8). Fair value of financial instruments The recent illiquidity in some financial markets has led to an increase in the use of key estimates in measuring fair values of financial instruments. In markets that are no longer active, management makes use of valuation techniques to measure fair value. Management selects the valuation techniques that maximize the use of observable parameters and minimize the use of unobservable parameters to estimate the fair values. Where applicable, management also uses multiple valuation techniques to corroborate the results of each model, and places more weight on approaches that use observable parameters. When estimating fair values in this way, management has taken into account current market conditions and includes appropriate risk adjustments that market participants would make e.g. for credit and liquidity risks.


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5. CONSOLIDATED SUBSIDIARIES Details of the Company’s subsidiaries, whether owned directly or indirectly, are as follows:

Subsidiary Domicile Type of Business 2010 2009

1. Indigo Pacific Corporation Labuan, Malaysia Investment holding 100% 100%1.1 Indigo Pacific Corporation British Virgin Investment holding 100% 100%

Islands 1.1.1 Melani Maritime Inc. Panama Owner and operator 100% 100%

of vessel1.1.2 Zona Overseas International Panama Owner and operator 100% 100%

Shipping S.A. of vessel1.1.3 Kunti Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.4 Jembawati Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.5 Tirtasari Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.6 Pergiwo Navigation Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.7 Fatmarini Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.8 Harsanadi Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.9 Hartati Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.10 BLT Finance Corporation British Virgin Financing 100% 100%

Islands1.1.11 Pujawati Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.12 Pertiwi Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.13 Anggraini Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.14 Emerald Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.15 BLT Finance B.V. The Netherlands Financing 100% 100%1.1.16 Tridonawati Maritime Corporation Liberia Owner and operator 100% 100%

of vessel1.1.17 Purbasari Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.18 Tridonawati Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.19 Trirasa Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.20 Pramoni Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.21 Fatmarini Shipping Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.22 Frabandari Shipping Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.23 Harsanadi Shipping Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.24 Hartati Shipping Pte. Ltd Singapore Owner and operator 100% 100%

of vessel1.1.25 Nogogini Shipping Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.26 Nolowati Shipping Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel1.1.27 Ratih Shipping Pte. Ltd. Singapore Owner and operator 100% 100%

1.1.28 Universal Grace Ltd. Hong Kong *** Owner and operator 100% -of vessel

2 Diamond Pacific International Labuan, Malaysia Investment holding 100% 100% Corporation

Percentage of Ownership

and Voting Power Held


- 29 -


2.1 Diamond Pacific International British Virgin Investment holding 100% 100% Corporation Islands

2.1.1 Lenani Maritime Inc. Panama Owner and operator 100% 100% of vessel

2.1.1.1 Ontari Maritime Pte. Ltd. Singapore Owner and operator 100% 100% of vessel

2.1.2 Averina Maritime S.A. Panama Shipping agency 100% 100%2.1.3 Gandari Navigation Pte. Ltd. Singapore Operator of vessel 100% 100%2.1.4 GBLT Shipmanagement Pte. Ltd. Singapore Ship management 100% 100%

2.1.4.1 GBLT Shipmanagement Ltd. United Kingdom Ship management 100% 100%

2.1.4.1.1 Harsanadi Shipping Ltd. United Kingdom Operator of Vessel 100% 100%

2.1.4.1.2 Hartati Shipping Ltd. United Kingdom Operator of Vessel 100% 100%

2.1.4.1.3 Frabandari Shipping Ltd. United Kingdom Operator of Vessel 100% 100%

2.1.4.1.4 Fatmarini Shipping Ltd. United Kingdom Operator of Vessel 100% 100%

2.1.4.1.5 Nolowati Shipping Ltd. United Kingdom Operator of Vessel 100% 100%

2.1.4.1.6 Nogogini Shipping Ltd. United Kingdom Operator of Vessel 100% 100%

2.1.4.1.7 Ratih Shipping Ltd. United Kingdom Operator of Vessel 100% 100%

2.1.5 Cendanawati Navigation Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

2.1.6 Frabandari Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

2.1.7 Brotojoyo Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

2.1.8 Berlian Laju Tanker Pte. Ltd. Singapore Operator of Vessel 100% 100%

2.1.9 Anjasmoro Maritime Pte. Ltd. Singapore Owner and operator 100% 100% of vessel

2.1.10 Gas Lombok Maritime Pte. Ltd. Singapore Owner and operator 100% 100% of vessel

2.1.11 Gas Sumbawa Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

2.2 BLT LNG Tangguh Corporation Marshall Islands Owner and operator 100% 100%of vessel

3. Asean Maritime Corporation Labuan, Malaysia Investment holding 100% 100%

3.1 Gold Bridge Shipping British Virgin Investment holding 100% 100% Corporation Islands

3.1.1 Bauhinia Navigation S.A. Panama Owner and operator 100% 100% of vessel

3.1.2 Cempaka Navigation S.A. Panama Owner and operator 100% 100% of vessel

3.1.3 Gold Bridge Shipping Ltd. Hong Kong Shipping agency 100% 100%

3.1.3.1 BLT Shipping Shanghai Co. Ltd. China Shipping agency 100% 100%

3.1.4 Great Tirta Shipping S.A. Panama Owner and operator 100% 100% of vessel

3.1.4.1 Dewayani Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.1.5 Hopeway Marine Inc. Panama Owner and operator 100% 100% of vessel

3.1.6 Lestari International Panama Owner and operator 100% 100% Shipping S.A. of vessel

3.1.6.1 Gandini Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.1.7 Quimera Maritime S.A. Panama Owner and operator 100% 100% of vessel

3.1.8 South Eastern Overseas Panama Owner and operator 100% 100% Navigation S.A. of vessel

3.1.9 Zenith Overseas Maritime S.A. Panama Owner and operator 100% 100% of vessel

3.1.9.1 Gandari Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.1.10 Zona Shipping S.A. Panama Owner and operator 100% 100%of vessel

Percentage of Ownership

and Voting Power Held


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3.1.11 Dahlia Navigation S.A. Panama Owner and operator 100% 100% of vessel

3.1.12 Eglantine Navigation S.A. Panama Owner and operator 100% 100%of vessel

3.1.13 Wulansari Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.1.14 Yanaseni Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.1.15 Indradi Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.1.16 Gold Bridge Logistic Ltd. Hong Kong **** Investment holding - 100%

3.1.16.1Beihai New Resources Logistic China **** Storage service - 100% Corporation

3.1.17 Gold Bridge Shipping Agencies S.A. Panama Shipping agency 100% 100%3.1.18 Elite Bauhinia Navigation Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.19 Cempaka Navigation Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.20 Dahlia Navigation Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.21 Freesia Navigation S.A. Panama Owner and operator 100% 100%

of vessel3.1.22 Gerbera Navigation S.A. Panama Owner and operator 100% 100%

of vessel3.1.23 Mustokoweni Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.24 Ulupi Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.25 Erowati Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.26 Gas Papua Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.27 Rasawulan Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.28 Gas Sulawesi Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.29 Tribuana Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.30 Gagarmayang Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.31 Prita Dewi Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.32 Purwati Martime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.33 Trijata Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.34 Pradapa Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.35 Pergiwati Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.36 Badraini Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.37 Barunawati Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.38 Gas Maluku Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel3.1.39 Barawati Maritime Pte. Ltd. Singapore Owner and operator 100% 100%

of vessel

Percentage of Ownershipand Voting Power Held


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3.1.40 Gas Bali Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.1.41 Eustoma Navigation S.A. Panama Owner and operator 100% 100%of vessel

3.1.42 Puspawati Maritime Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.1.43 Diamond Flow Ltd. Hong Kong Investment holding 100% 100%

3.1.44 Likabula International Limited Hongkong Investment holding 100% 100%

3.1.45 Richesse International Corp. British Virgin Investment holding 100% 100%Islands

3.1.45.1 Richesse Logistics (International) Hong Kong Investment holding 100% 100% Ltd.

3.1.45.1.1 Richesse Logistics (Fangcheng China Storage and sale of 100% 100% Port) Co. Ltd. chemical products

3.1.46 Hyacinth Navigation S.A. Panama Owner and operator 100% 100%of vessel

3.1.47 Irish Maritime International S.A Panama Owner and operator 100% 100%of vessel

3.2 BLT Chembulk Corp. BVI British Virgin Investment holding 100% 100%Islands

3.2.1 Chembulk Tankers LLC Marshall Islands Investment holding 100% 100%

3.2.1.1 Chembulk Trading II LLC Marshall Islands Owner and operator of 100% 100%vessel

3.2.1.2 Chembulk Management LLC United States of Ship management 100% 100%America

3.2.1.3 Chembulk Management B.V. The Netherlands Ship management 100% 100%

3.2.1.4 Chembulk Management Pte. Ltd. Singapore Ship management 100% 100%

3.2.1.5 CBL Tankers Do Brazil Ltda. Brazil Ship management 100% 100%

3.2.1.6 BLT Chembulk Group Corporation British Virgin *** Operator of vessel 100% -Islands

3.2.2 Chembulk Barcelona Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.3 Chembulk Gibraltar Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.4 Chembulk Hong Kong Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.5 Chembulk Houston Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.6 Chembulk Kobe Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.7 Chembulk New York Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.8 Chembulk Savannah Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.9 Chembulk Shanghai Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.10 Chembulk Ulsan Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.11 Chembulk Virgin Gorda Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.12 Chembulk Yokohama Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.2.13 Chembulk New Orleans Pte. Ltd. Singapore Owner and operator 100% 100%of vessel

3.3 BLT International Corporation Hongkong * Investment Holding 100% 100%

3.4 Nevaeh Limited British Virgin ** Investment Holding 51% 100%Island

4. PT Banyu Laju Shipping Indonesia Owner and operator 100% 100%of vessel

4.1 Banyu Laju Corporation Labuan, Malaysia Investment holding 100% 100%



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5. PT Brotojoyo Maritime Indonesia Owner and operator 100% 100%of vessel

6. PT Buana Listya Tama Tbk Indonesia Owner and operator 100% 100%of vessel

6.1 PT Anjasmoro Maritime Indonesia Owner and operator 100% 100%of vessel

6.2 PT Pearl Maritime Indonesia Owner and operator 100% 100%of vessel

6.3 PT Ruby Maritime Indonesia Owner and operator 100% 100%of vessel

6.4 PT Sapphire Maritime Indonesia Owner and operator 100% 100%of vessel

6.5 PT Citrine Maritime Indonesia Owner and operator 100% 100%of vessel

6.6 PT Diamond Maritime Indonesia Owner and operator 100% 100%of vessel

6.7 PT Emerald Maritime Indonesia Owner and operator 100% 100%of vessel

6.8 PT Jade Maritime Indonesia * Owner and operator 100% 100%of vessel

6.9 PT Onyx Maritime Indonesia * Owner and operator 100% 100%of vessel

6.10 PT Topaz Maritime Indonesia * Owner and operator 100% 100%of vessel

6.11 PT Bayu Lestari Tanaya Indonesia Shipping agency 100% 100%6.11.1 PT Berlian Dumai Logistics Indonesia General Trading 100% 100%6.12 PT Gemilang Bina Lintas Tirta Indonesia Operator of vessel 100% 100%6.13 PT Karya Bakti Adil Indonesia Crew Agency 100% 100%6.14 PT BLT International Group Indonesia * Investment holding 100% 100%6.15 PT BLT Meo Indonesia *** Owner and operator

vessel 50% -


* Newly established companies in 2009. ** Newly acquired company in 2009. *** Newly established companies in 2010. **** Sold in 2010.

6. PROPERTY, VESSELS AND EQUIPMENT

ExchangeJanuary 1, 2010 Difference Additions Deductions Reclassifications Revaluations Total Cost Valuation

US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000Cost/ Valuation :Owned vessels 1,952,241 - 165,517 - (14,780) 143,809 2,246,787 2,246,787 Leased vessels 381,302 - 647 (1,508) 133,824 37,536 551,801 551,801 Vessels under construction 107,174 - 156,910 - (109,044) - 155,040 155,040 -Others :

Storage tanks 1,625 (1) - (1,624) - - - - -Transportation equipment 1,919 - 137 (8) - - 2,048 2,048 -Office furniture and fixtures 4,056 54 96 (48) - - 4,158 4,158 -Office and dormitory

equipment 885 2 183 (49) - - 1,021 1,021 -Buildings and premises 2,846 (42) 481 (10) - - 3,275 3,275 -Building in progress 20,767 - 14,133 - - - 34,900 34,900 -Advances for purchase of vessels 46,905 - 20,250 (36,905) (10,000) - 20,250 20,250 -

Total 2,519,720 13 358,354 (40,152) - 181,345 3,019,280 220,692 2,798,588

Accumulated depreciation:Owned vessels 490,241 - 130,308 - 176 - 620,725 Leased vessels 31,302 - 15,275 - (176) - 46,401 Others :

Storage tanks 1,224 - - (1,224) - - - Transportation equipment 1,150 (1) 199 (8) - - 1,340 Office furniture and fixtures 2,581 41 623 (36) - - 3,209 Office and dormitory

equipment 574 (44) 20 (47) - - 503 Buildings and premises 673 35 155 - - - 863

Total 527,745 31 146,580 (1,315) - - 673,041

Net Carrying Amount 1,991,975 2,346,239

December 31, 2010


- 33 -

ExchangeJanuary 1, 2009 Difference Additions Deductions Reclassifications Revaluations Total Cost Valuation

US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000Cost/ Valuation :Owned vessels 1,915,733 - 30,855 (51,433) 92,641 (35,555) 1,952,241 - 1,952,241 Leased vessels 360,604 - 35,895 (2,090) (24,611) 11,504 381,302 - 381,302 Vessels under construction 78,485 - 96,719 - (68,030) - 107,174 107,174 -Others :

Storage tanks 1,405 (2) 222 - - - 1,625 1,625 -Transportation equipment 1,923 - 48 (52) - - 1,919 1,919 -Office furniture and fixtures 3,149 (4) 912 (1) - - 4,056 4,056 -Office and dormitory

equipment 863 - 22 - - - 885 885 -Buildings and premises 2,846 - - - - - 2,846 2,846 -Building in progress 12,248 - 8,519 - - - 20,767 20,767 -Advances for purchase of vessels - - 46,905 - - - 46,905 46,905 -

Total 2,377,256 (6) 220,097 (53,576) - (24,051) 2,519,720 186,177 2,333,543

Accumulated depreciation:Owned vessels 373,095 - 119,279 (2,133) - - 490,241 Leased vessels 16,992 - 14,310 - - - 31,302 Others :

Storage tanks 1,202 (3) 25 - - - 1,224 Transportation equipment 963 - 226 (39) - - 1,150 Office furniture and fixtures 2,000 (7) 589 (1) - - 2,581 Office and dormitory

equipment 467 - 107 - - - 574 Buildings and premises 277 - 396 - - - 673

Total 394,996 (10) 134,932 (2,173) - - 527,745

Net Carrying Amount 1,982,260 1,991,975

December 31, 2009

The vessels are stated at their revalued amounts being the fair value as of December 31, 2010 and 2009, reviewed by management, and supported by an independent professional valuation with reports dated January 31, 2011 and January 15, 2010, respectively. Had the vessels been carried at historical cost less accumulated depreciation and impairment, their carrying values would have been approximately US$ 1,731,205 thousand and US$ 1,787,573 thousand as of December 31, 2010 and 2009, respectively. The Company and its subsidiaries completed the sale of three vessels in 2010 and two vessels in 2009. In conjunction with the sale, the Company and its subsidiaries entered into lease agreements with the purchasers to lease back the three vessels for a period of 4 years – 5 years in 2010 and one vessel for a period of 12 years in 2009, respectively. After an evaluation of the terms and substance of the leaseback, the Company’s Directors are satisfied that for the 2010 leaseback, all the risks and rewards incidental to ownership of the vessels still rest with the Company and its subsidiaries (seller-lessee) and classified the transactions as finance lease, while in 2009, substantially, all the risks and rewards incidental to ownership of the vessels have been transferred to and rest with the purchaser-lessor and accordingly classified the transactions as operating leases. Details of the sale of vessels, which were made with third parties, are as follows:

2010 2009US$'000 US$'000

Selling price 130,000 50,118 Net carrying amount 132,000 49,300

Gain (loss) on sale of vessels (2,000) 818Commissions (900) (71)

Gain (loss) on sale of vessels - net (2,900) 747

Loss on ordinary sales - (1,735)Gain (loss) on sale and leaseback (2,900) 2,482

Gain (loss) on sale of vessels - net (2,900) 747

Vessel depreciation expense charged to operations is US$ 145,583 thousand and US$ 133,589 thousand in 2010 and 2009, respectively.


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Vessels and equipment with carrying amount of US$ 1,575 million and US$ 1,724 million as of December 31, 2010 and 2009, respectively, were used as collateral to guarantee obligations under finance lease, long-term loans from financial institutions, short-term bank loans and standby letter of credit facility (Notes 18, 21, 27 and 45e). Vessels under construction as of December 31, 2010 and 2009 consist of nine vessels and thirteen vessels, respectively, which are estimated to be completed between 2011 to 2012 (Note 45c). Advances for purchase of vessels as of December 31, 2010, represent advance payments made during the year for the purchase of three second hand vessels. Advances for purchase of vessels as of December 31, 2009 represent advance payments on the purchase of three second hand vessels. In 2010, one vessel was paid in full, while the advances made for the two second hand vessels were refunded. Building in progress represents construction of chemical storage tanks and related facilities. For the year ended December 31, 2010, the Company and its subsidiaries changed their estimate of residual values of vessels based on an independent professional valuation. This change resulted to a net decrease in depreciation expense by US$ 11,950 thousand in 2010. For the year ended December 31, 2009, management has determined that there is no change necessary in its estimate of residual values.

7. DEFERRED CHARGES AND SECURITY DEPOSITS 2010 2009

US$'000 US$'000

Security deposits 16,161 15,581 Deferred rent and landrights 7,043 8,131

Total 23,204 23,712Deferred rent and landrights - current portion (642) (631)

Non-current portion - net 22,562 23,081

In connection with the 2008 lease agreements, the Company and its subsidiaries paid non-interest bearing security deposits of US$ 22,195 thousand. The difference of US$ 7,164 thousand between the nominal value of the non-interest bearing deposit and its fair value is considered as deferred rent and amortized on a straight-line basis over the lease term. Amortization of deferred rent of US$ 597 thousand each in 2010 and 2009, are included under charter expenses. Interest income recognized on the security deposits amounted to US$ 513 thousand in 2010 and US$ 347 thousand in 2009.

8. GOODWILL

2010 2009US$'000 US$'000

Goodwill, beginning balance 84,286 84,286 Less accumulated impairment losses (8,547) (8,547)

Goodwill, ending balance 75,739 75,739

Goodwill represents the excess of the cost of acquisition over the Company’s interest in the fair value of the assets and liabilities of the acquired subsidiaries.


- 35 -

The Company and its subsidiaries test goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. For impairment testing purposes, goodwill amounting to US$ 72,354 thousand and US$ 11,932 thousand has been allocated to Chembulk Tankers LLC and Goldbridge Shipping Corporation, respectively, the cash generating units determined by the Company that is expected to benefit from the business combination. The recoverable amounts of the cash-generating units are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rate, growth rates and expected changes to selling prices and direct costs during the year. Management estimates the discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the cash-generating unit. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. The Company and its subsidiaries prepare cash flow forecasts derived from the most recent financial budgets approved by management. The rate used to discount the forecast cash flows from the cash generating units is the average borrowing rate at the end of the reporting period as adjusted to estimate the rate that the market would expect from the investment. This rate does not exceed the average long-term growth rate for the relevant markets.

9. INVESTMENTS IN ASSOCIATES 2010 2009

US$'000 US$'000

Cost 91,037 91,037 Long-term receivables 2,323 2,323

Sub-total 93,360 93,360 Less receipt of long-term receivables during the year (2,323) -

Total interest in associates 91,037 93,360 Less:

Share of post-acquisition loss (8,451) (8,835) Return of capital (8,400) (8,400) Sale of investment (32,453) - Reclassified as available-for-sale (33,778) -

Total 7,955 76,125

In April 2010, the long-term receivables amounting to US$ 2,323 thousand were paid by Teekay BLT Corporation.

In a Joint Unanimous Written Consent executed on June 23, 2008, the Board of Directors and Shareholders of Teekay BLT Corporation have determined that the existing stated capital of Teekay BLT Corporation is in excess of its capital requirements, and determined further that the amount of the stated capital be reduced proportionately among the shareholders. As a result, the subsidiary received a total amount of US$ 8,400 thousand from Teekay BLT Corporation as a return of capital. The percentage of ownership of the subsidiary in Teekay BLT Corporation did not change.


- 36 -

Details of the associates are as follows:

Name of Place of Place ofAssociate Incorporation Operation Nature of Business

2010 2009% %

PT Berlian Limatama *) Indonesia Indonesia Cargo shipping services 50 50Teekay BLT Corporation Marshall Islands Indonesia Cargo shipping services 30 30Thai Petra Transport Co. Ltd. Thailand Thailand Port services (agency) 30 30Briliant Hero Industrial Hongkong Hongkong Investment holding 22.69 45 LimitedJiangsu Xinrong Shipyard Ship repair, conversion Company Limited **) China China and steel structure - 21.80

Percentage of Ownership and Voting Power Held

In 2009, Asean Maritime Corporation acquired 45% ownership in Brilliant Hero Industrial Limited, an investment holding company, and an effective ownership of 21.80% in Jiangsu Xinrong Shipyard Company Limited, engaged in ship repair, conversion and steel structure, through the acquisition of 100% ownership in Nevaeh Limited, an investment holding company, at an acquisition cost of USD 66,231 thousand. On November 1, 2010, Asean Maritime Corporation sold 49% of its ownership in Nevaeh Limited to Mitsui & Co. Ltd., a third party, for US$ 32,957 thousand, wherein the US$ 32,886 thousand was paid in cash and the remaining amount of US$ 71 thousand will be payable on the Redemption Date of Brilliant Hero 3% Preference Shares. The Company and its subsidiaries have retained the 11.12% interest as an available-for-sale investment whose fair value at the date of disposal was US$ 34,302 thousand (Note 12). This transaction has resulted in the recognition of a gain (included in other gains and losses – others), calculated as follows:

2010US$'000

Selling price 32,957 Plus: Fair value of investment retained 34,302 Less: Carrying amount of investment on the date of loss of significant influence (66,231)

Gain recognized 1,028

The gain recognized in the current year comprises of realized profit of US$ 504 thousand (being the proceeds of US$ 32,957 thousand less US$ 32,453 thousand carrying amount of the interest disposed of) and an unrealized profit US$ 524 thousand (being the fair value of US$ 34,302 thousand less US$ 33,778 thousand carrying amount of the interest retained).

Summarized financial information in respect of the Company and its subsidiaries’ associates is set out below:

2010 2009US$'000 US$'000

Total assets 462,160 532,936 Total liabilities 435,873 449,680

Net assets 26,287 83,256

Company and subsidiaries' share of associates' net assets 7,955 40,010

Revenue 43,722 37,700

Profit for the year 1,161 36,315

Company and subsidiaries' share of associates' profit forthe year 384 9,621


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10. INVENTORIES Inventories mainly consist of bunker fuel.

11. TRADE ACCOUNTS RECEIVABLE

2010 2009US$'000 US$'000

Related parties 236 - Third parties 159,930 129,976

Total 160,166 129,976

Before accepting any new customer, the Company and its subsidiaries assess the potential customer’s credit quality. Of the trade accounts receivable balance at the end of 2010 and 2009, US$ 4,625 thousand and US$ 6,241 thousand, respectively, is due from PT Pertamina (Persero) (Pertamina), the Company’s largest customer (see Notes 43D and 45a).

The table below shows the aging of past due but unimpaired trade receivables:

2010 2009US$'000 US$'000

1 - 60 days 42,692 47,305 60 - 120 days 26,185 26,227 120 - 180 days 16,015 13,864 More than 180 days 44,865 18,694

Total 129,757 106,090

The Company and subsidiaries do not hold any collateral over these balances. Based on a review of the status of the individual receivable accounts at the end of the year, the Company’s management determined that there has not been a significant change in the credit quality and that all trade accounts receivable are collectible. Accordingly, no allowance for doubtful accounts was provided.

12. INVESTMENTS

Short-term investments Short-term investments consist of funds under investment management and investments in mutual funds, and are carried at fair value as follows:

2010 2009US$'000 US$'000

Held-for-trading 483 -

Available-for-saleFunds under investment management 79,481 44,639 Mutual funds - 259

Subtotal 79,481 44,898

Total 79,964 44,898


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The Company’s subsidiary entered into an Investment Service Agreement with Danatama Capital Management Limited in 2010 and Investment Management Contract Service Agreement with P.T. Danatama Makmur in 2010 and 2009 to manage funds which will be invested, in among others, government bonds corporate bonds, certificate of deposit and money market instruments. As of December 31, 2010 and 2009, the investment portfolio amounted to US$ 79,481 thousand and US$ 11,708 thousand, respectively.

The Company and its subsidiaries also entered into an Investment Management Agreement with First Strategic Advisors Inc. to manage an investment portfolio of the Company and its subsidiaries, which may be placed in cash, securities and other investments. As of December 31, 2009, the fair value of the investment portfolio amounted to US$ 9,070 thousand. The Company’s subsidiaries entered into an Investment Management Agreement with UBS AG in 2008 to manage an investment portfolio. As of December 31, 2009, the fair value of the investment portfolio amounted to US$ 61 thousand. The Company entered into an Investment Management Agreement with P.T. Andalan Artha Advisindo Sekuritas in 2009 to manage funds which will be invested in government securities, corporate bonds, mutual funds and money market securities. As of December 31, 2009, the fair value of the investment portfolio amounted to US$ 23,800 thousand. Long-term Investment Available-for-sale The long-term investment represents 11.12% ownership interest in Jiangsu Xinrong Shipyard Company Limited, carried of US$ 34,302 thousand (see also Note 9).

13. CASH 2010 2009

US$'000 US$'000

Cash on hand 1,059 992 Cash in banks and time deposits 83,225 117,740

Total 84,284 118,732

Interest rates per annum on time depositsU.S. Dollar 0.15% 0.03% - 3.00%Rupiah 6.00% - 6.60% 5.75% - 6.90%Singapore Dollar 0.7% 0.825%

14. SHARE CAPITAL

The Company has authorized capital stock of 14,676,480,000 ordinary shares with par value of Rp 62.50 per share. Movements in share capital are as follows:

2010 2009 US$'000 US$'000

Balance at beginning of the year 70,936 62,191 Issuance of shares through rights issue 38,639 8,745

Balance at end of the year 109,575 70,936


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Details of the Company’s number of shares outstanding (in full amounts) are as follows:

2010 2009

Balance at beginning of the year 5,569,240,235 4,176,930,176 Issuance of new shares through rights issue 5,569,240,235 1,392,310,059

Balance at end of the year 11,138,480,470 5,569,240,235

At the Extraordinary General Meeting of Stockholders as stated in notarial deed no. 26 dated July 29, 2010 of Dr. A Partomuan Pohan, SH., LL.M, notary in Jakarta, the stockholders approved the issuance of new shares through a Rights Issue with Pre-emptive Rights. The Company issued 5,569,240,235 common shares at an exercise price of Rp 220 per share. At the Extraordinary General Meeting of Stockholders as stated in notarial deed No. 44 dated June 30, 2009 of Dr. A Partomuan Pohan, SH., LL.M, notary in Jakarta, the stockholders approved the issuance of new shares through a Rights Issue with Pre-emptive Rights. The Company issued 1,392,310,059 new common shares at an exercise price of Rp 425 per share.

15. ADDITIONAL PAID-IN CAPITAL

This account represents additional paid-in capital in connection with the following : US$'000

Balance of additional paid-in capital as of January 1, 2009 65,000Issuance of shares through rights issue 50,001

Balance of additional paid-in capital as of December 31, 2009 115,001Issuance of shares through rights issue 94,002

Balance of additional paid-in capital as of December 31, 2010 209,003

16. TREASURY STOCKS

At the Extraordinary General Meeting of Stockholders in May 2006, the stockholders approved to repurchase a maximum of 10% of the issued and paid-up shares, at a purchase price of Rp 2,750 per share. As of December 31, 2010 and 2009, the details of treasury stocks are as follows:

Percentage Number to issued of shares shares Cost

% US$'000

Treasury stocks 412,351,000 3.57 86,628

2010

Percentage Number to issued of shares shares Cost

% US$'000

Treasury stocks 412,351,000 6.89 86,628

2009


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17. REVALUATION RESERVE

2010 2009US$'000 US$'000

Balance at beginning of year 235,671 234,454 Revaluation increase 92,565 67,303 Revaluation decrease (5,467) (30,166) Transfer to retained earnings (22,038) (35,920)

Balance at end of year 300,731 235,671

The revaluation reserve arises on the revaluation of vessels. Where revalued vessels are sold, the portion of the revaluation reserve that relates to that vessel, and is effectively realized, is transferred directly to retained earnings.

18. LONG-TERM LOANS FROM FINANCIAL INSTITUTIONS

2010 2009US$'000 US$'000

At amortized cost:DnB NOR Bank, ASA, Singapore / Fortis Bank S.A./N.V.

ING Bank N.V. / NIBC Bank Ltd. 494,386 572,765DVB Group Merchant Bank (Asia) Ltd. / Nordea Bank

Finland Plc, Singapore 71,481 80,029Bank Mandiri, Jakarta 38,597 47,351Bank Syariah Mandiri / Bank Pembangunan Daerah Jawa Timur /

Bank Muamalat Indonesia/ Bank Jabar Banten Syariah 35,924 -Bank Negara Indonesia 31,837 -Indonesia Eximbank 29,783 36,407 Deutsche Investitions und Entwicklungsgesselschaft MBH 29,354 -Mitsubishi UFJ Lease & Finance Co. Ltd. 29,175 28,168DVB Group Merchant Bank (Asia) Ltd., Singapore 25,344 41,864Bank UOB Indonesia 21,087 7,680 Bank Syariah Mandiri / Bank Syariah BRI / Bank Muamalat

Indonesia / BPD Jatim Divisi Usaha Syariah 16,840 18,735 Bank Mega 13,174 -DnB NOR Bank, ASA, Singapore 11,787 -Bank Central Asia 10,194 33,803ING Bank N.V., Singapore 9,911 11,883Mount Gede LLC 7,281 7,800 DnB NOR Bank, ASA, Singapore / NIBC Bank Ltd. 5,870 18,960 Dialease Maritime S.A., Japan 5,141 6,423Total 887,166 911,868Current maturities 178,661 140,414 Long-term portion - Net 708,505 771,454


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The ranges of average interest rates per annum are as follows:

2010 2009U.S. Dollar

Fixed 7.50% - 17.00% 7.75% - 15%Variable 0.7% - 4.75% 0.7% - 4%

above LIBOR/ above LIBOR/SIBOR SIBOR

RupiahFixed 12.5% - 17% 9.64% - 14.5%

Japanese YenVariable 1.5% - 2% above 2% above

JPY LIBOR JPY LIBOR

The details of the loans are as follows:

A. The loans from DnB NOR Bank ASA, Singapore, Fortis Bank S.A/N.V., ING Bank N.V., and NIBC Bank Ltd., consist of the following credit facilities:

1. US$ 165 million secured term loan facility which is payable in 20 quarterly installments

until 2013 and bears interest at LIBOR plus certain percentage, which is paid between 1-6 months, this facility is secured by vessels.

2. US$ 400 million term loan facility which is repayable in 40 consecutive quarterly installments of US$ 8 million for the 1st to 39th installments, and US$ 88 million for the 40th installment, and bears interest at LIBOR plus certain percentage depending on the value maintenance ratio of the vessels used as collaterals, which is paid between 1 - 3 months. This facility is also secured by a corporate guarantee from the Company and Gold Bridge Shipping Corporation.

3. US$ 100 million reducing revolving loan facility which is payable in 20 quarterly installments of US$ 5 million until 2012, and bears Interest at LIBOR plus certain percentage depending on the value maintenance ratio of the vessels used as collateral, which is paid between 1 - 3 months. This facility is also secured by a corporate guarantee from the Company and Gold Bridge Shipping Corporation.

4. US$ 65 million credit facilty which is is payable in 32 quarterly installments until 2015 and bears interest at LIBOR plus certain percentage depending on the value maintenance ratio of the vessels used as collateral, which is paid between 1 - 3 months.

All of these loans were paid in March 2011 (Note 46a).

B. The loans from DVB Group Merchant Bank (Asia) Ltd. and Nordea Bank Finland Plc, Singapore Branch was obtained through a US$ 114 million senior secured revolving credit facility. The credit facility shall be reduced quarterly by one-fortieth (1/40th) of such amount. The balance of all outstanding drawings is due to be paid in 2015. Interest rate is at LIBOR plus certain percentage, which is paid between 1 – 6 months.

This loan is secured by the following: (a) subsidiaries’ vessels, (b) assignment of insurances and earnings of the subsidiaries’ vessels, (c) a guarantee and indemnity from the Company, (d) bank accounts, money market accounts, dealer deposit accounts and other accounts of the subsidiaries established with Nordea Bank Finland Plc, and (e) a pledge on the shares of the subsidiaries. This loan was paid in March 2011 (Notes 46a and 46b).

C. In May 2009, the Company obtained a financing facility from Bank Mandiri with a maximum credit amount of Rp 500 billion payable in 18 quarterly installments until 2013. This loan is collateralized by the Company and certain subsidiaries’ vessels. Interest rate is at certain fixed percentage, which is paid monthly.


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D. In November 2010, the Company obtained a loan from Bank Syariah Mandiri (as lead manager), Bank Pembangunan Daerah Jawa Timur, Bank Muamalat Indonesia, and Bank Jabar Banten Syariah through a long-term investment loan facility under Syariah scheme with a total maximum credit of Rp 345 billion. These loan facilities are payable quarterly. Such loans are collateralized by a subsidiary’s vessel and a corporate guarantee from the subsidiary. The subsidiary’s receivable amounting to US$ 72.5 million was used as fiduciary collateral. Indicative return is at certain fixed percentage, which is payable quarterly.

E. In March 2010, the loan from Bank Negara Indonesia, Jakarta was obtained through an Investment Refinancing Credit Loan amounting to Rp 337 billion. This loan is payable in 60 monthly installments until March 2015 and secured by two subsidiary’s vessels. Interest rate is at certain fixed percentage which is paid monthly.

F. The loan from Indonesia Eximbank was obtained through a Rp 400 billion export facility loan with a maturity date of March 2014. This loan is payable in 20 quarterly installments and secured by the subsidiaries’ vessels. Interest rate is at certain fixed percentage, which is paid monthly.

G. In April 2010, a subsidiary obtained a loan from Deutsche Investitions und Entwicklungsgesellschaft MBH through a long-term investment facility amounting to US$ 29.75 million. This loan is payable in 13 semi-annual installments with balloon payment of US$ 8,925 thousand on the last repayment date and due on March 15, 2018. The loan is secured by a corporate guarantee from the Company and a subsidiary’s vessel. Interest is at LIBOR plus certain percentage, which is paid semi-annually.

H. The loan from Mitsubishi UFJ Lease & Finance Co. Ltd. is obtained through a JPY 2,537 million (equivalent to US$ 28,431 thousand) mortgage facility. This loan is payable in 84 monthly installments with a balloon payment of JPY 1,551 million on the last repayment date. Such loan is secured by the subsidiary’s vessel and corporate guarantees by the Company and Gold Bridge Shipping Corporation. Interest rate is at Yen LIBOR plus a certain percentage.

I. The loan from DVB Group Merchant Bank (Asia) Ltd. is obtained through a US$ 27 million credit facility. This loan is payable in 20 quarterly installments until 2014 and collateralized by a corporate guarantee from the Company and a subsidiary’s vessel. Interest rate is at LIBOR plus certain percentage, which is paid quarterly. This loan was paid in June 2010. In September 2005, subsidiaries obtained a loan from DVB Group Merchant Bank (Asia) Ltd., Singapore with maximum credit of US$ 43 million. This loan is payable in 32 quarterly installments until 2013 and collateralized by the corporate guarantee from the Company and the subsidiaries’ vessels. Interest rate is at LIBOR plus certain percentage depending on the loan to value percentage, which is paid between 1 - 3 months. In January 2010, a subsidiary and DVB Group Merchant Bank (Asia) Ltd agreed to extend the maturity date of its short-term bank loans from 2010 to 2012 (Note 27). As of the date of the amendment, this loan has an outstanding balance of USD 18,437 thousand. This loan is payable in 7 quarterly installments of USD 972 thousand each and a balloon payment of USD 11,634 thousand. Interest rate is at certain percentage. The above loans were paid in March 31, 2011.

J. The loan from UOB Indonesia is obtained through a Term Loan Facility amounting to US$ 8,760 thousand, payable in 10 quarterly installments of US$ 360 thousand each and a final installment payment of US$5,160 thousand upon maturity in October 2011. Such facility is secured by a registered mortgage on a subsidiary's vessel and the assignment of accounts receivable in respect of the vessel used as collateral. Interest is at SIBOR plus certain percentage.


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Also, in May 2010, the Company and Bank UOB agreed to extend the maturity date of its short-term bank loans from 2010 to 2013 (Note 27). As of the date of the amendment, this loan has an outstanding balance of Rp 150 billion. This loan is payable in 11 quarterly installments of Rp 7,500 million each and a balloon payment of Rp 67,500 million on the last payment date. Interest rate is at certain fixed percentage.

K. The loan from Bank Syariah Mandiri (as lead manager), Bank Syariah BRI, Bank Muamalat

Indonesia, and BPD Jatim Divisi Usaha Syariah with a total maximum credit of Rp 180 billion is a long-term investment loan facilities under Syariah scheme. These loan facilities are payable in 20 quarterly installments with balloon payments in the total amount of Rp 20 billion on the last repayment date. Such loans are collateralized, among others, by the subsidiaries’ vessels and a corporate guarantee from the Company. Indicative return is at certain fixed percentage, which is payable quarterly.

L. In August 2010, the Company obtained a loan from Bank Mega with a maximum credit of US$ 15.0 million or 60% value of a subsidiary’s vessel. This loan is payable in 84 monthly installments until August 2017 and secured by a subsidiary’s vessel. Interest is at certain fixed percentage which is paid monthly.

M. In May 2010, a subsidiary obtained a loan from DnB NOR Bank ASA, Singapore with maximum credit of US$ 12.5 million. This loan is payable in 20 quarterly installments until 2015 and secured by corporate guarantee from the Company and a subsidiary’s vessel. Interest rate is at LIBOR plus certain percentage which is paid quarterly. This loan was paid in March 31, 2011 (Note 46a).

N. The loan from Bank Central Asia was obtained through an installment loan facility with a total maximum credit of Rp 170 billion. This loan is payable in monthly installments until 2012 and bears interest at a certain fixed percentage, which is payable monthly. In November 2006, the Company obtained an investment credit facility with a maximum credit of US$ 34 million from Bank Central Asia. This loan is payable in 84 monthly installments until 2013 and collateralized by a subsidiary’s vessel. Interest rate is at SIBOR plus certain percentage, which is paid monthly. This loan was paid in December 2010. In January 2005, the Company obtained an investment credit facility with maximum credit of Rp 125 billion, due in 5 years and bears floating interest rate which is paid monthly. The loans are collateralized by certain vessels. This loan was paid in January 2010.

O. In November 2005, subsidiaries obtained loan facilities from ING Bank N.V., Singapore with a maximum credit of US$ 19,900 thousand. These loan facilities are payable in semi-annual installments until November 2015 and collateralized by the subsidiaries’ vessels. Interest rate is at LIBOR plus certain percentage, which is paid monthly.

P. Loan obtained from Mount Gede LLC is a Secured Junior Term Loan Facility with maximum credit of US$ 7,800 thousand. The loan is secured by a registered mortgage over the subsidiaries’ vessels and a guarantee by the Company. Such loan shall be repaid in full on December 31, 2011. Interest rate is at certain fixed percentage. This loan was paid in March 2011 (Note 46a).

Q. In April 2009, certain subsidiaries obtained a loan from Dnb NOR Bank ASA, Singapore and NIBC Bank Ltd. with a maximum credit of US$ 31.5 million. The loan is payable in 16 quarterly installments until 2013 and secured by the subsidiaries’ vessels. Interest rate is at LIBOR plus certain percentage, which is paid quarterly. This loan was paid in March 2011 (Note 46b).


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R. In December 2004, a subsidiary obtained loan from Dialease Maritime S.A., Japan with maximum credit of JPY 1,347,250 thousand (equivalent to US$ 12,859 thousand). This loan is payable in 28 quarterly installments until 2011 and collateralized by corporate guarantee from the Company and the subsidiary’s vessel. Interest rate is at LIBOR plus certain percentage, which is paid quarterly.

In relation to the above loan facilities, the Company and its subsidiaries are required to fulfill certain covenants, including among others, the maintenance of certain financial ratios.

19. BONDS PAYABLE

2010 2009US$'000 US$'000

At amortized costs:Berlian Laju Tanker III Bond 77,556 74,016 Berlian Laju Tanker IV Bond 37,512 42,181 Sukuk Ijarah I 22,159 21,147 Sukuk Ijarah II 11,034 10,523 Total 148,261 147,867 Current maturities - 6,355 Long-Term Portion - Net 148,261 141,512

Berlian Laju Tanker III Bond

On July 5, 2007, the Company issued Rupiah Bonds amounting to Rp 700 billion with fixed interest rate at 10.35% per annum, payable every three months. The bonds are unsecured and have a term of 5 years, due on July 5, 2012. The bondholders’ right is pari-passu without preferential rights with other creditors of the Company. All the bonds were sold at nominal value and are listed on the Indonesia Stock Exchange (formerly Surabaya Stock Exchange) with PT Bank Mandiri (Persero) Tbk as Trustee. On December 18, 2007, the Bondholders approved the replacement of PT Bank Mandiri (Persero) Tbk as Trustee and the appointment of PT CIMB Niaga Tbk as the new Trustee. On March 17, 2008, PT CIMB Niaga Tbk as the Trustee issued a notice for the Company’s failure to comply with one of the covenants under the Trustee Agreement, which is to maintain a ratio of Net Debt to Equity of not more than 2.5:1. On June 16, 2008, the Bondholders approved to amend the debt covenant on the Net Debt to Equity Ratio on the Trustee Agreement from 2.5:1 to 4.5:1 for the year ending December 31, 2008 and 3.5:1 after December 31, 2008 based on the Company’s statutory accounts prepared under generally accepted accounting principles in Indonesia. Berlian Laju Tanker IV Bond On May 29, 2009, the Company issued Rupiah Bonds amounting to Rp 400 billion, consisting of three series of bonds: (i) the Series A Bonds with a nominal value of Rp 60 billion bearing fixed interest rate of 14.25% per annum and are due on May 28, 2010, (ii) the Series B Bonds with a nominal value of Rp 150 billion, bearing interest rate of 15.50% per annum and are due on May 28, 2012, and (iii) the Series C Bonds with a nominal value of Rp 190 billion, bearing fixed interest rate of 16.25% per annum and are due on May 28, 2014. Interest is paid every three months.


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On May 28, 2010, the Company redeemed and retired the Series A Bonds at principal amount of Rp 60 billion. These bonds are unsecured and the bondholders' right is pari-passu without preferential rights with other creditors of the Company. At any time after the first anniversary of the Bonds, the Company may redeem the Bonds at prevailing market price. The Company is also required to comply with several covenants, which include among others, a Net Debt to Equity ratio of 3.5:1. All of the bonds were sold at nominal value and are listed on the Indonesia Stock Exchange with PT Bank CIMB Niaga Tbk as trustee.

Sukuk Ijarah I

On July 5, 2007, the Company issued Sukuk Ijarah amounting to Rp 200 billion. The Sukuk Ijarah are unsecured and have a term of 5 years, due on July 5, 2012. The Sukuk Ijarah were offered under the condition that the Company shall pay to Sukuk Ijarah holders a sum of Ijarah Benefit Installment amounting to Rp 20,600 million per annum. The Sukuk Ijarah holders’ right is pari-passu without preferential rights with other creditors of the Company. At anytime after the first anniversary of the Sukuk Ijarah, the Company may redeem the Sukuk Ijarah at prevailing market price. All of the Sukuk Ijarah were sold at nominal value and are listed on the Indonesia Stock Exchange (formerly Surabaya Stock Exchange) with PT Bank Mandiri (Persero) Tbk as trustee. On December 18, 2007, the Bondholders approved the replacement of PT Bank Mandiri (Persero) Tbk Trustee and the appointment of PT Bank CIMB Niaga Tbk as the new Trustee. On March 17, 2008, PT Bank CIMB Niaga Tbk as the Trustee issued a notice for the Company’s failure to comply with one of the covenants under the Trustee Agreement, which is to maintain a ratio between Net Debt to Equity of not more than 2.5:1. On July 4, 2008, the Holders approved to amend the debt covenant on the Net Debt to Equity Ratio on the Trustee Agreement from 2.5:1 to 4.5:1 for the year ending December 31, 2008 and 3.5:1 after December 31, 2008 based on the Company’s statutory financial statements prepared under generally accepted accounting principles in Indonesia. Sukuk Ijarah II On May 29, 2009, the Company issued Sukuk Ijarah II amounting to Rp 100 billion, consisting of two series of bonds: (i) the Series A which has a total nominal value of Rp 45 billion, due on May 28, 2012 and entitle the holders a sum of Ijarah Benefit Installment of Rp 155,000 thousand per annum for every Rp 1 billion nominal amount, and (ii) the Series B which has a total nominal value of Rp 55 billion, due on May 28, 2014, and entitle the holders a sum of Ijarah Benefit Installment of Rp 162,500 thousand per annum for every Rp 1 billion nominal amount.

These Sukuk Ijarah are unsecured and the holders' right is pari-passu with other creditors of the Company. At any time after the first anniversary of the Sukuk Ijarah II, the Company may redeem the Sukuk Ijarah at prevailing market price. The Company is also required to comply with several covenants, which include among others, a Net Debt to Equity ratio of 3.5:1 based on the Company’s statutory financial statements prepared under generally accepted accounting principles in Indonesia. All of the Sukuk Ijarah were sold at nominal value and are listed on the Indonesia Stock Exchange with PT Bank CIMB Niaga Tbk as trustee.

20. NOTES PAYABLE

On May 4, 2007, BLT Finance B.V. (BLTF BV), a subsidiary, issued Guaranteed Senior Notes (the Notes) amounting to US$ 400 million with fixed interest of 7.5% per annum payable every six months in arrears commencing November 15, 2007. The Notes have a term of seven years and mature on May 15, 2014. The Notes were offered at 100% of the nominal value and are listed on the Singapore Stock Exchange Securities Trading Limited. The Notes are unconditionally and irrevocably guaranteed on a senior basis by the Company and certain subsidiaries.


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The Notes may be redeemed at the option of BLTF BV as follows: i. At anytime prior to May 15, 2011 up to 35% of the Notes with the net proceeds of one or more

public equity offerings at a redemption price of 107.5% of their principal amount plus accrued and unpaid interest provided certain conditions are met;

ii. On or after May 15, 2012, all or any portion of the Notes at a redemption price equal to 100% of the principal amount plus the Applicable Premium (as defined in the Terms and Conditions of the Notes) as of, and accrued and unpaid interest if any, to the date of redemption;

iii. On May 15, 2012 until May 14, 2013 all or part of the Notes at a redemption price equal to 103.75% of the principal amount plus the accrued and unpaid interest if any, to the date of redemption;

iv. On May 15, 2013 until May 14, 2014 all or part of the Notes at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest if any, to the date of redemption, or

v. At anytime in the event of certain changes affecting taxation in Indonesia or Netherlands, in whole at their principal amount plus all additional amounts due as of, and accrued and unpaid interest if any, to the date of redemption.

In the occurrence of change in control, the holders of the Notes have the right to require BLTF BV to redeem all or some of the Notes at 101% of the principal amount plus the accrued and unpaid interest if any, to the date of redemption. The Notes are designated as fair value through profit or loss on initial recognition because of the embedded call and put options. The fair value as of the reporting date is determined based on quoted market price and may not be reflective of the repurchase price that BLTF BV will have to pay on maturity or early redemption.

The changes in carrying amount of the Notes are as follows:

2010 2009US$'000 US$'000

Fair value at beginning of the year 249,809 132,000 Changes in fair values (Note 37) 62,000 122,000

311,809 254,000Reissue (repurchase) of Notes 4,191 (4,191)

Fair value at end of year 316,000 249,809

In 2009, certain subsidiaries of the Company invested in the Notes through an investment manager.

21. OBLIGATIONS UNDER FINANCE LEASE

Present value Present valueMinimum lease of minimum Minimum lease of minimum

payments lease payments payments lease paymentsUS$'000 US$'000 US$'000 US$'000

Less than 1 year 51,932 49,383 34,090 32,572 1 - 2 years 220,110 204,089 193,191 167,319 More than 2 years 208,155 138,680 76,457 61,606 Total 480,197 392,152 303,738 261,497Less future finance charges 88,045 - 42,241 -

Present value of minimum lease payments 392,152 392,152 261,497 261,497

20092010

In 2010, additional sale and leaseback transactions were carried out by the Company’s subsidiaries for three vessels which were classified as finance lease (Note 6).


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In 2009, the finance lease relates to lease of vessels with lease terms of 3 years to 6 years and where the subsidiaries have options to purchase the vessel for an amount below the expected fair values at the conclusion of the lease agreements. The subsidiaries’ obligations under finance lease are secured by the lessors’ title to the leased vessels. In 2010 and 2009, the Company and its subsidiaries also reassessed and revised the estimated exercise dates of the purchase options on the leased vessels. This resulted to a decrease of US$ 861 thousand and US$ 2,090 thousand in the obligations under finance lease and a corresponding decrease in the carrying amount of the leased vessels.

22. OTHER LOANS FROM NON-FINANCIAL INSTITUTIONS 2010 2009

US$'000 US$'000Long-term

Teekay Corporation 11,227 12,409PRC Limited 9,410 -

Total 20,637 12,409

Current maturities (3,003) (1,181)

Long-term portion - net 17,634 11,228

Short-termTeekay BLT Corporation 10,200 -

The Company’s loan from Teekay Corporation is payable in 22 semi annual installments, unsecured, and bears annual interest of 8% which is payable on a quarterly basis. The subsidiary’s loan from PRC Limited bears floating interest rate based on People’s Bank of China’s interest rate over 5 years’ loan. US$ 1,822 thousand is repayable on February 9, 2011, US$ 3,794 thousand is repayable on June 29, 2014 and US$ 3,794 thousand is payable in full on April 22, 2015. The subsidiary’s loan from Teekay BLT Corporation is non-interest bearing, unsecured and have no fixed repayment terms.

23. DEFERRED INCOME In 2008, the Company and its subsidiaries entered into sale and leaseback of vessels to third parties where the selling price is higher by US$ 2,500 thousand than the fair values of the vessels, and the excess was accounted for as deferred income and amortized over the lease term. Details of the deferred income are as follows:

2010 2009US$'000 US$'000

Beginning balance 2,500 2,500 Accumulated amortization 442 234

Ending balance 2,058 2,266 Less current portion 208 208

Non-current portion 1,850 2,058

Amortization of deferred income of US$ 208 thousand each in 2010 and 2009, are accounted for as reduction of charter expenses.


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24. POST-EMPLOYMENT BENEFITS The Company and its subsidiaries provide post-employment benefits to its qualifying employees in accordance with Indonesian Labor Law No. 13/2003. The number of employees entitled to the benefits is 228 and 245 in December 31, 2010 and 2009, respectively. Amounts recognized in profit or loss in respect of these post-employment benefits are as follows:

2010 2009US$'000 US$'000

Current service cost 421 257 Interest costs 455 331 Net actuarial losses 66 65

Total 942 653

The amounts included in the statements of financial position arising from the Company’s obligation in respect of these post-employment benefits are as follows:

2010 2009US$'000 US$'000

Present value of unfunded obligations 5,657 5,326Unrecognized actuarial losses (477) (1,200)

Net liability 5,180 4,126

Movements in the present value of unfunded obligations are as follows:

2010 2009US$'000 US$'000

Beginning of the year 5,326 3,624Current service cost 421 257Interest cost 455 331Translation adjustment (556) 788 Actuarial loss 11 326

End of the year 5,657 5,326

< Movements in the net liability recognized in the consolidated statements of financial position are as follows:

2010 2009US$'000 US$'000

Beginning of the year 4,126 2,922 Employee benefits cost for the year (Note 34) 942 653 Payments during the year (83) (40) Translation adjustment 195 591

End of the year 5,180 4,126

The cost of providing post-employment benefits is computed using the following key assumptions:

Discount rate : 2010 and 2009: 8% and 10% per annum, respectively Salary increment rate : 2010 and 2009: 12% and 15% per annum, respectively Mortality rate : 2010 and 2009: Mortality Table 2 of Indonesia Resignation rate : 2010 and 2009: 10% per annum until age 36 then decreasing

linearly to 0% until age 55


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The history of experience adjustments is as follows:

2010 2009 2008 2007 2006US$'000 US$'000 US$'000 US$'000 US$'000

Present value of unfunded obligations 5,657 5,326 3,624 3,967 3,047

Experience adjustments 11 326 (574) 594 1,637

25. CONVERTIBLE BONDS

2010 2009US$'000 US$'000

At fair value through profit or loss US$ 125 million Zero Coupon Guaranteed

Convertible Bonds due 2012 - 99,560At amortized cost:US$ 125 million 12% Guaranteed Convertible Bonds

due 2015 (As amended in 2010) 46,607 -US$ 125 million 12% Guaranteed Convertible Bonds due 2015 118,450 -

Total 165,057 99,560 Current maturities - (99,560) Long-Term Portion - Net 165,057 -

The changes in the carrying amount of the Convertible Bonds due 2012 carried at fair value through profit or loss are as follows:

2010 2009US$'000 US$'000

Fair value at beginning of the year 99,560 36,250 Changes in fair values (Note 37) 22,393 74,420

121,953 110,670Reissue (repurchase) of Notes through an investment manager 13,891 (11,110)Redemption (88,900) - Repurchased and reissued by BLTF BV (46,944) -

Fair value at end of year - 99,560

US$ 125 million Zero Coupon Guaranteed Convertible Bonds due 2012 (Amended in 2010 to become US$ 125 million 12% Guaranteed Convertible Bonds due 2015). At the time of issue, the U$125 million Zero Coupon Guaranteed Convertible Bonds due 2012 were designated as fair value through profit or loss with any resultant gain or loss recognized in profit or loss. The fair value at the end of the reporting period is determined based on quoted market price and may not be reflective of the amount that BLTF BV will have to pay to the bondholders to satisfy their conversion rights or upon redemption of the Bonds. On May 17, 2010, BLTF BV redeemed and retired US$ 76,100,0000 of the Zero Coupon Guaranteed Convertible Bonds due 2012 at 116.82%. In December 2010, the bonds held by certain subsidiaries amounting to US$ 48,900,000 were redeemed by BLTF BV and subsequently reissued to investors on December 1, 2010 at 96%.

On December 14, 2010, the terms and conditions of the US$ 125 million Zero Coupon Guaranteed Convertible Bonds due 2012 were amended as described below.


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The Maturity Date is changed to February 10, 2015 and bears interest rate of 12%. The Conversion Price is Rp 409 per share with conversion period from June 27, 2007 to January 31, 2015. The number of shares to be delivered upon conversion will be determined by dividing the principal amount of the Bond to be converted (translated into Rupiah at the fixed rate of Rp. 9,362.00 = US$1.00 (the “Fixed Exchange Rate”) by the Conversion Price in effect at the Conversion Date. Notwithstanding the Conversion Right of the bondholders, BLT and/or any of BLT’s subsidiaries have the option to pay to the relevant bondholders an amount of cash in US Dollar equivalent to the weighted average market price of the shares converted, to satisfy the conversion right. In addition, at the option of the BLTF BV on or at any time after February 10, 2013 but not less than 20 days prior to the Maturity Date, redeem the Bonds in whole but not in part at their principal amount, plus accrued interest as at the date of redemption, provided that no such redemption may be made unless the closing price of the Shares on the Indonesian Stock Exchange for each of 20 consecutive Trading Days in any 30 consecutive Trading Day period immediately prior to the date upon which notice of such redemption is published is at least 130 per cent of the Conversion Price then in effect. BLTF BV will, at the option of the holder, redeem all or some of that holder’s Bonds on February 10, 2012, at principal amount plus any accrued interest as at the date of redemption. Unless previously redeemed, converted or purchased, BLTF BV will redeem the bonds at its principal amount plus accrued interest on February 10, 2015. The Company’s management believes that, for accounting purposes, there was a substantial modification on the terms of the convertible bonds that led to the extinguishment of the US$ 125 million Zero Coupon Guaranteed Convertible Bonds due 2012. The convertible bonds above were considered a hybrid instrument containing a debt host contract and embedded derivatives. The Company’s management also made an assessment of the embedded derivatives and decided to bifurcate the embedded derivatives which are not closely related to the host contract. The embedded derivatives are measured at fair value with changes in fair value recognized in profit and loss while the debt host contract was initially recognized at fair value and subsequently measured at amortized cost. US$ 125 Million 12% Guaranteed Convertible Bonds Due 2015 On February 10, 2010 and March 29, 2010, BLT International Corporation (BLT IC), a subsidiary, issued 12% Guaranteed Convertible Bonds amounting to US$ 100,000,000 and US$ 25,000,000, respectively. The bonds were issued at 100% of the face value and were unconditionally and irrevocably guaranteed by the Company. The bondholders have the right to convert the bonds into ordinary shares of the Company, with par value of Rp 62.50 each, at any time on or after March 23, 2010 up to January 15, 2015. The number of shares to be delivered upon conversion will be determined by dividing the principal amount of the bonds to be converted, translated into Rupiah at a fixed rate of Rp 9,362 to US$ 1, by the conversion price in effect at the time of the conversion date. The initial conversion price is Rp 737 per share, which is subject to adjustments. In August 2010, BLT IC had adjusted the conversion price to Rp 409 per share. Notwithstanding the Conversion Right of the bondholders, BLT IC has the option to pay the relevant bondholders an amount of cash equivalent to the Cash Settlement Amount of the shares converted, at any time to satisfy the Conversion Right. To the extent that the Company does not hold sufficient treasury shares or is unable to issue shares, the BLT IC shall pay an amount of cash to the bondholders equivalent to the Mandatory Cash Settlement Amount, to satisfy the Conversion Rights. BLT IC will, at the option of the bondholders, redeem the bonds on February 10, 2013 at principal amount plus accrued interest. The bond may also be redeemed at the option of BLT IC on or after February 10, 2013 at 100% of principal amount plus accrued interest.


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The convertible bonds above were also considered a hybrid instrument containing a debt host contract and embedded derivatives. The Company’s management also made an assessment of the embedded derivatives and decided to bifurcate the embedded derivatives which are not closely related to the host contract. The embedded derivatives are measured at fair value with changes in fair value recognized in profit and loss while the debt host contract was initially recognized at fair value and subsequently measured at amortized cost.

26. DERIVATIVE FINANCIAL INSTRUMENTS The Company utilizes cross currency and interest rate swap contracts to manage exposure to foreign currency and interest rate movement and crude oil target redemption swaps to manage exposures in crude oil price volatility. Details of the derivative contracts are shown below:

Notional amounts Notional amountsas at December 31, as at December 31,

2010 2009'000 '000 Asset Liability Asset Liability

US$'000 US$'000 US$'000 US$'000

Cross currency swaps US$ 102,273 US$ 258,949 - 6,688 1,597 17,407Interest rate swaps US$ 800,000 US$ 500,000 - 59,234 16,944 - Crude oil target

redemption swaps - 1,813 barrels - - 662 10,877Embedded options US$ 173,900 - - 9,853 - -

Total - 75,775 19,203 28,284Less current portion - - 2,259 10,877

Non-current portion - 75,775 16,944 17,407

Fair value as atDecember 31,

2010 2009December 31, Fair value as at

Cross currency swaps The cross currency swaps require periodic exchange of payments based on the Rupiah and US Dollar notional amounts and final exchange or net settlement of the notional (principal) amounts on the maturity of the contracts. The cross currency swaps outstanding as of December 31, 2010 will mature on July 2012.

Interest rate swaps The interest rate swaps require periodic exchange of floating and fixed interest payments on the US Dollar notional amounts and mature on January 2015. Crude oil target redemption swaps The crude oil target redemption swaps in 2009 require periodic exchanges of payments on a notional quantity of crude oil barrels at each settlement date and matured between March 2010 and October 2010. Embedded options The embedded options represent the fair value of the conversion option and cash settlement option in the US$ 125 million 12% Guaranteed Convertible Bonds due 2015 (as amended in 2010) and the US$ 125 million 12% Guaranteed Convertible Bonds due 2015. The above derivatives are measured at the present value of future cash flows estimated and discounted based on applicable yield curves for the duration of the instruments.


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For accounting purposes, these contracts are not designated and documented as hedging instruments, and therefore hedge accounting is not applied. Gains and losses on these contracts recognized in earnings consist of the changes in fair value of the contract and the periodic net settlements of the related interest on the notional amount, details of which are as follows:

2010 2009US$'000 US$'000

Net change in fair value (66,694) 166,902Net settlements 19,996 (18,004)

Net gain (loss) (Note 37) (46,698) 148,898

27. SHORT-TERM BANK LOANS

2010 2009US$'000 US$'000

Bank Mizuho Indonesia, Jakarta 14,459 13,830DVB Group Merchant Bank (Asia) Ltd - 18,437Bank Sumitomo Mitsui Indonesia,

Jakarta - 17,000Bank UOB Indonesia, Jakarta - 15,958

Total 14,459 65,225

Interest rates per annum during the yearU.S. Dollar

Fixed - 15%Variable - 1.75% - 3.5%

above LIBORRupiah

Fixed - 15%Variable 1.75% 1.5% - 1.75%

above cost of above cost of funds funds

A. Loan obtained from Bank Mizuho Indonesia is a time revolving loan with a total combined maximum credit of Rp 130 billion or its US Dollar equivalent, due on October 18, 2011. Interest rate per annum is at the bank’s cost of funds or SIBOR plus certain percentage, which is paid between 7 - 30 days.

B. Loan obtained from DVB Group Merchant Bank (Asia) Ltd. is a secured term loan facility with a maximum credit of US$ 25 million. The loan is secured by a registered mortgage over certain subsidiaries’ vessels and a corporate guarantee by the Company, and bears interest at LIBOR plus certain percentage which is payable monthly. On January 19, 2010, the maturity date of the term loan facility was extended until January 2012 and has been reclassified to long-term loans from financial institution (Note 18).

C. Loan obtained from Bank Sumitomo Mitsui Indonesia is a revolving credit facility with

maximum credit of Rp 150 billion or equivalent to US$ 17 million. This loan is collateralized by subsidiaries’ vessels. Annual interest rate is at cost of funds or LIBOR plus certain percentage, which is paid on a monthly basis. This loan was paid in full in December 2010.


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D. Loan obtained from Bank UOB Indonesia is a working capital credit facility with maximum credit of Rp 150 billion. This loan is secured by a subsidiary’s vessel and trade accounts receivable of M.T. Anjani with interest rate per annum at certain fixed percentage, which is paid monthly. On May 25, 2010, the maturity date of the term loan facility was extended until May 2013 and has been reclassified to long-term loans from financial institutions (Note 18).

28. TRADE ACCOUNTS PAYABLE

2010 2009US$'000 US$'000

Related parties 3,173 929 Third parties 60,770 34,250

Total 63,943 35,179

The accounts payable to third parties represent liabilities to other shipping companies as agents, sub-agents and to suppliers for purchases of oil, fuel and spare parts, vessel equipment, and other disbursements.

29. TAXATION

a. Details of taxes payable included in the consolidated statements of financial position are as follows:

2010 2009US$'000 US$'000

Corporate income tax of the Company and its subsidiaries 38 4 Income taxes

Article 21 974 516 Article 23 23 14 Article 25 4 4 Article 26 11 4

Value added tax 568 343 Final tax payable 47 72

Total 1,665 957

b. Details of tax expense included in the consolidated statements of comprehensive income are

as follows:

2010 2009US$'000 US$'000

Income tax of foreign and local subsidiaries 878 664 Final tax on vessel revenue - Company 123 161 Income tax on agency operations - Company 47 44 Final tax on storage revenue and agency 137 92

Total 1,185 961


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c. A reconciliation of tax expense included in the consolidated statements of comprehensive income and the amount computed by applying the applicable tax rates is as follows:

2010 2009

US$'000 US$'000

Operating revenues 656,854 618,346

Final tax at 1.2% of gross revenues 7,882 7,420

Tax effect of:Revenue of foreign subsidiaries not subject to tax (6,900) (6,606) Revenue of foreign subsidiaries subject to different final tax 19 11 Revenue subject to different tax rate:

Storage revenue 137 92 Agency revenue 47 44

Total tax expense per consolidated statements of income 1,185 961

Tax on agency operating income is computed as follows:Agency revenue 760 676 Non-taxable income (572) (517)

Taxable income 188 159

As of December 31, 2010 and 2009, no deferred tax liability has been recognized in respect of the temporary differences associated with undistributed earnings of subsidiaries because the Company is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

30. ACCRUED EXPENSES

2010 2009US$'000 US$'000

Vessel operating and docking 25,238 35,276 Interest 17,006 9,037 Others 2,208 1,034

Total 44,452 45,347

31. OPERATING REVENUES

2010 2009US$'000 US$'000

Vessels revenuesChemical 528,597 475,987 Oil 65,373 85,861 Gas 51,253 44,137 FPSO 9,801 10,367

Others 1,830 1,994

Total 656,854 618,346

There were no operating revenues made with related parties in 2010 and 2009.


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32. VOYAGE EXPENSES 2010 2009

US$'000 US$'000

Fuel 152,059 112,640 Port charges 69,142 63,447

Total 221,201 176,087

33. SHIP OPERATING EXPENSES

2010 2009US$'000 US$'000

Salaries 62,004 56,140 Repairs and maintenance 18,529 13,175 Spare parts 14,451 12,765 Insurance 10,158 8,669 Lubricants 7,416 7,528 Transportation 6,644 5,897 Processing of documents 4,251 2,791 Supplies 3,253 3,474 Employees' meal allowances 2,979 2,816 Others 10,169 7,605

Total 139,854 120,860

34. GENERAL AND ADMINISTRATIVE

2010 2009

US$'000 US$'000

Salaries 14,241 14,616 Professional fees 6,652 4,705 Office expenses 4,087 3,645 Transportation 1,849 1,998 Depreciation 997 1,343 Pension benefits (Note 24) 942 653 Telecommunication 825 821 Representation 784 545 Marketing 737 403 Bank charges 428 698 Others 1,634 1,726

Total 33,176 31,153


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35. FINANCE COSTS 2010 2009

US$'000 US$'000Interest expense on:

Bonds, convertible bonds and notes payables 61,020 41,434 Loans from banks and financial institution and other loans from

non-financial institutions 44,267 45,450 Obligations under finance leases 24,750 21,637 Profit sharing allocation and fees 7,562 2,993

Total 137,599 111,514

Interest expense includes interest on notes payable at fair value through profit and loss of US$ 30,417 thousand each in 2010 and 2009.

36. INVESTMENT INCOME 2010 2009

US$'000 US$'000Interest income from:

Current accounts and others 1,497 1,151 Time deposits 6,356 265

Total interest income 7,853 1,416 Realized gain on available-for-sale investments 450 17,010

Total 8,303 18,426

The following is an analysis of investment income earned on financial assets, by category of asset.

2010 2009US$'000 US$'000

Available-for-sale financial assets 450 17,010 Loans and receivables (including cash and bank balances) 7,853 1,416

Income relating to derivative financial assets classified as at fair value through profit or loss is included in other gains and losses in Note 37.

37. OTHER GAINS AND LOSSES

2010 2009US$'000 US$'000

Net revaluation increase (decrease) 94,247 (61,188) Change in fair value of convertible bonds and notes payable

designated as at fair value through profit and loss (Notes 20 and 25) (84,393) (196,420) Net gain (loss) on derivative transactions (Note 26) (46,698) 148,898 Foreign exchange loss - net (38,541) (26,662) Net gain (loss) on disposal of property, vessels and equipment (Note 6) (2,901) 762 Gain (loss) on insurance claim (631) 215 Others - net (2,390) 735

Total (81,307) (133,660)


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Others - net include gain on disposal of Gold Bridge Logistic Ltd. and its subsidiary, Beihai New Resources Logistic Corporation amounting to US$ 29 thousand, which is calculated as follows:

2010US$'000

Consideration received 1,385Net assets disposed of:

Total assets 2,701Total liabilities (1,345)

Net assets 1,356

Gain on disposal 29

38. LOSS PER SHARE Loss for the year

2010 2009US$'000 US$'000

Loss for the year for the computation of basic earnings per share (150,127) (117,004)

The effect of unrealized fair value change of convertible bonds designated as FVTPL on the loss per share is anti-dilutive, accordingly, diluted loss per share was no longer presented. Loss Per Share

2010 2009US$'000 US$'000

Net Residual Loss - Basic (150,127) (117,004)

As originally2010 As restated reported

Weighted average of outstanding shares for the purposes of basic loss per share (in full amount) 8,910,784,376 6,131,724,232 5,109,770,193

Theoretical ex-rights value per share Rp 275 - Rp 751.25Fair value of common share before the

exercise of rights Rp 330 - Rp 860Loss per share (in full amount)

- Basic (0.0168) (0.0191) (0.0229)

2009

In relation with the Rights Issue (Note 1) carried out in 2010, the basic earnings per share in 2009 were restated to give effect to the bonus element of the Rights Issue. In 2010 and 2009, the potential shares on convertible bonds are anti-dilutive, accordingly, therefore diluted earnings per share was no longer presented.


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39. DIVIDENDS AND APPROPRIATION FOR GENERAL RESERVES At the Annual General Meeting of Stockholders held on April 2009, the stockholders approved the declaration of dividends for 2008 amounting to Rp 5 per share (totaling US$ 2,082 thousand).

40. NATURE OF RELATIONSHIP AND TRANSACTIONS WITH RELATED PARTIES

Nature of Relationship

a. The ultimate controlling party of the Company and its subsidiaries is PT Bagusnusa Samudera

Gemilang (Bagusnusa).

b. PT Tunggaladhi Baskara is a major stockholder of the Company.

c. Bagusnusa is the parent company of PT Tunggaladhi Baskara. The majority stockholder of Bagusnusa is Mr. Hadi Surya, one of the Company’s commissioners.

d. Bagusnusa is the majority shareholder of PT Garuda Mahakam Pratama.

e. Pan Union Agencies Pte. Ltd., Poseidon Elite Navigation Pte. Ltd. and Pan Union Shipping

Pte. Ltd. are wholly-owned, directly or indirectly, by Ms. Siana Anggraeni Surya, one of the Company’s directors.

f. PT Arpeni Pratama Ocean Line Tbk is owned by a close member of the family of Mr. Hadi Surya.

Transactions with Related Parties In the normal course of business, the Company and its subsidiaries entered into certain transactions with related parties. These transactions included the following: a. Expenses paid to related parties accounted for 0.82% and 0.45% of total operating expenses

in 2010 and 2009, respectively. The details of expenses from related parties are as follows:

2010 2009US$'000 US$'000

Pan Union Agencies Pte. Ltd. 3,045 1,528 Thai Petra Transport Co. Ltd. 1,170 571 PT Arpeni Pratama Ocean Line Tbk 257 63 PT Garuda Mahakam Pratama 122 11

Total 4,594 2,173


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b. The remuneration of the Company’s key management (commissioners and directors) during the year are as follows:

2010 2009US$'000 US$'000

Short-term benefits 1,564 1,495 Post-employment benefits 585 287

Total 2,149 1,782

41. SEGMENT INFORMATION IFRS 8 requires operating segments to be identified on the basis of internal reports on components of the Company and its subsidiaries that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. For management reporting purposes, the Company and its subsidiaries are principally organized based on type of vessels chartered - chemical, gas, oil, and floating production, storage and offloading (FPSO). The following summary describes the operations in each of the reportable segments: a. Chemical tankers : provides maritime transportation of liquid chemical (organic and non-

organic) and vegetable oil and animal fats.

b. Gas tankers : provides maritime transportation of liquified gas, which include among others, LPG, propylene, propane and LNG.

c. Oil tankers : provides maritime transportation of lubricating oil (base oil and

additives), crude oil and petroleum products.

d. FPSO : provides processing and storage of oil.

The accounting policies of the operating segments are the same as the accounting policies described in Note 3. Assets and liabilities that relate jointly to two or more operating segments are allocated to their respective segments, if and only if, their related revenues and expense are also allocated to those segments.


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2010Chemical Gas Oil FPSO Others * TotalUS$'000 US$'000 US$'000 US$'000 US$'000 US$'000

REVENUESExternal revenues 528,597 51,253 65,373 9,801 1,830 656,854

Total segment revenues 528,597 51,253 65,373 9,801 1,830 656,854

Segment expensesVoyage Expenses

Port Charges 62,773 1,134 5,219 16 - 69,142 Fuel 130,853 1,785 18,655 766 - 152,059

Total Voyage Expenses 193,626 2,919 23,874 782 - 221,201

Charter Expenses 52,301 - 3,285 177 - 55,763 Vessel Depreciation and Ship Operating Expenses

Ship operating expenses:Salaries 43,767 8,269 8,723 1,245 - 62,004 Repairs and maintenance 15,483 539 2,470 37 - 18,529 Spare parts 8,754 2,319 2,857 521 - 14,451 Insurance 5,975 663 2,717 803 - 10,158 Lubricants 4,381 1,496 1,493 46 - 7,416 Transportation 3,675 1,146 1,458 365 - 6,644 Processing of documents 2,287 691 1,114 159 - 4,251 Supplies 2,015 577 596 65 - 3,253 Employees' meal allowances 1,579 473 714 213 - 2,979 Others 7,192 666 2,096 215 - 10,169

Total Ship Operating Expenses 95,108 16,839 24,238 3,669 - 139,854 Vessel Depreciation 94,378 20,250 28,522 2,433 - 145,583

Total segment expenses 435,413 40,008 79,919 7,061 - 562,401

Segment result 93,184 11,245 (14,546) 2,740 1,830 94,453

Unallocated income and expensesChange in fair value of convertible

bonds and notes payable (84,393) Other gains and losses - net (91,161) Finance costs (137,599) Net revaluation increase 94,247 General and administrative expenses (33,176) Investment income 8,303 Share in profits of associates 384

Loss before tax (148,942) Tax expense (1,185)

Loss for the year (150,127)

Other InformationCapital additions 165,829 86,145 25,696 65,654 - 343,324 Depreciation 94,378 20,250 28,522 2,433 - 145,583

AssetsSegment assets 1,677,252 316,182 285,560 74,231 164,885 2,518,110 Unallocated 352,575 Consolidated total assets 2,870,685

LiabilitiesSegment liabilities 48,784 10,993 8,835 6,729 33,053 108,394 Unallocated 2,044,082

Consolidated total liabilities 2,152,476

* Represents agency and storage services


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2009 Chemical Gas Oil FPSO Others * TotalUS$'000 US$'000 US$'000 US$'000 US$'000 US$'000

REVENUESExternal revenues 475,987 44,137 85,861 10,367 1,994 618,346

Total segment revenues 475,987 44,137 85,861 10,367 1,994 618,346

Segment expensesVoyage Expenses

Port Charges 56,800 1,398 5,219 30 - 63,447 Fuel 95,701 2,389 14,550 - - 112,640

Total Voyage Expenses 152,501 3,787 19,769 30 - 176,087

Charter Expenses 52,288 - 3,285 - - 55,573 Vessel Depreciation and Ship Operating Expenses

Ship operating expenses:Salaries 39,266 6,489 9,090 1,295 - 56,140 Repairs and maintenance 10,630 292 2,038 215 - 13,175 Spare parts 8,556 1,430 2,618 161 - 12,765 Insurance 5,150 620 2,158 741 - 8,669 Supplies 2,173 415 850 36 - 3,474 Transportation 3,471 789 1,420 217 - 5,897 Employees' meal allowances 1,614 354 648 200 - 2,816 Processing of documents 1,747 365 582 97 - 2,791 Lubricants 4,590 881 2,034 23 - 7,528 Others 3,672 1,187 2,533 213 - 7,605

Total Ship Operating Expenses 80,869 12,822 23,971 3,198 - 120,860 Vessel Depreciation 90,794 11,213 25,115 6,467 - 133,589

Total segment expenses 376,452 27,822 72,140 9,695 - 486,109

Segment result 99,535 16,315 13,721 672 1,994 132,237

Unallocated income and expensesChange in fair value of convertible

bonds and notes payable (196,420) Other gains and losses - net 123,948 Finance costs (111,514) Net revaluation decrease (61,188) General and administrative expenses (31,153) Investment income 18,426 Share in profits of associates 9,621

Loss before tax (116,043) Tax expense (961)

Loss for the year (117,004)

Other InformationCapital additions 141,808 36,613 14,048 17,905 222 210,596 Depreciation 90,794 11,213 25,115 6,467 - 133,589

AssetsSegment assets 1,578,283 249,911 257,084 47,189 71 2,132,538 Unallocated 389,477 Consolidated total assets 2,522,015

LiabilitiesSegment liabilities 54,105 9,193 16,141 1,086 67 80,592 Unallocated 1,792,664

Consolidated total liabilities 1,873,256

* Represents agency and storage services


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Geographical Information The Company is domiciled in Indonesia and the principal holding companies of foreign subsidiaries are domiciled in Malaysia. Management did not present an analysis of revenue from external customers attributed to the Company’s country of domicile and those attributed to all foreign countries in total from which the revenues are derived, because the necessary information is not available and the cost to develop it would be excessive.

Information about non-current assets by geographical locations based on the domicile of the Company and its principal holding companies is shown below:

Malaysia Indonesia Elimination ConsolidatedUS$'000 US$'000 US$'000 US$'000

Non-current assetsProperty, vessels and

equipment - net 1,965,718 380,184 337 2,346,239 Deferred charges and security

deposits 21,444 - 1,118 22,562 Goodwill 29,820 - 45,919 75,739 Investment in associates 7,783 879,310 (879,138) 7,955 Available-for-sale investment 34,302.00 - - 34,302

Total 2,059,067 1,259,494 (831,764) 2,486,797

2010

Malaysia Indonesia Elimination ConsolidatedUS$'000 US$'000 US$'000 US$'000

Non-current assetsProperty, vessels and

equipment - net 1,723,975 261,811 6,189 1,991,975 Deferred charges and

security deposits 15,073 59 7,949 23,081 Goodwill 63,075 - 12,664 75,739 Investment in associates 75,976 864,040 (863,891) 76,125 Derivative financial instruments 19,124 - (2,180) 16,944

Total 1,897,223 1,125,910 (839,269) 2,183,864

2009

Revenues from major services The Company and its subsidiaries’ operating revenues by type of services are as follows:

2010 2009US$'000 US$'000

Time charters 89,781 92,578Spot contracts and contracts of affreightment 565,243 523,774Agency fee and storage 1,830 1,994

Total 656,854 618,346


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42. RECONCILIATION OF IFRS AND INDONESIAN GAAP For statutory reporting purposes in Indonesia, the Company continues to prepare consolidated financial statements in accordance with Indonesian GAAP. IFRS varies in certain significant respect from Indonesian GAAP. The application of IFRS that affected the preparation and presentation of the consolidated financial statements is discussed below. a. Goodwill

Under Indonesian GAAP, goodwill arising from business acquisition is recognized as an asset and amortized as an expense over its useful life using straight-line method. The amortization period should not exceed five years, unless a longer period not exceeding 20 years can be justified. The Company is amortizing goodwill over 20 years. At each reporting date, management assessed whether there was any indication of impairment of the cash-generating unit to which the goodwill is attached to. Under IFRS, goodwill arising from business acquisition is initially recognized at cost, and is subsequently measured at cost less any accumulated impairment losses. In applying IFRS, the Company ceases amortizing goodwill starting January 1, 2003, the transition period when the Company first prepared its IFRS financial statements. The accumulated amortization of US$ 3,747 thousand recognized under Indonesian GAAP as of December 31, 2002 has been eliminated with a corresponding decrease in the cost of goodwill. Goodwill amortization for the years ended December 31, 2003 to 2010, which includes US$ 2,872 thousand each in 2010 and 2009, were also reversed under IFRS. In 2008, under Indonesian GAAP, the Company and its subsidiaries recognized goodwill impairment amounting to US$ 29,136 thousand. Under IFRS, goodwill impairment in 2008 amounted to US$ 8,547 thousand.

b. Property, Vessels and Equipment

Effective January 1, 2009, for Indonesian GAAP reporting purposes the Company and its subsidiaries adopted the revaluation model in measuring the vessels subsequent to initial recognition.

For IFRS reporting purposes, the Company and its subsidiaries adopted the Revaluation Model in measuring the vessels subsequent to initial recognition, since January 1, 2003, the time their first IFRS consolidated financial statements were prepared.

Also, under Indonesian GAAP, the cost of acquired landrights is capitalized as land, which is not depreciated. Under IFRS, land use rights are considered as leases and such rights are amortized over the period the holder is expected to retain the landrights.

c. Financial Instruments

Under Indonesian GAAP, prior to January 1, 2010, short-term and long-term bank loans are stated at nominal values, being the principal amount of the loan. Transaction costs on bank borrowings were classified as deferred charges and amortized on a straight-line basis over the period of the borrowings. For bonds payable, bonds issuance costs are deducted directly from the proceeds of the bonds. The difference between the net proceeds and principal amount of the bonds is amortized on a straight-line basis over the term of the bonds. All the proceeds obtained from the issuance of convertible bonds are recognized as liabilities.


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Effective January 1, 2010, financial liabilities other than those measured at FVTPL, are measured at amortized cost. As a result, transaction costs on the short-term and long-term bank loans and the bond issuance costs on the bonds payable were amortized using the effective interest rate, and deducted from the principal amount. Security deposits are recorded at fair value. Under IFRS, financial liabilities other than those measured at FVTPL, are measured at amortized cost.

Under Indonesian GAAP, prior to January 1, 2010, non-interest bearing security deposits on operating leases are recorded at undiscounted amounts. Effective January 1, 2010, non-interest bearing security deposits are accounted for similar with IFRS. Under IFRS, non-interest bearing security deposits on operating leases are recorded at fair value. The difference between the fair value and nominal amount is recorded as deferred rent and is amortized on a straight line basis over the lease term. Interest income is accreted on the security deposits using the effective interest rate. The change had an impact on amounts of reported net profits and retained earnings as follows:

2010 2009US$'000 US$'000

Net profits 231 304 Retained earnings 875 1,106

d. Investment in Associates

Under Indonesian GAAP, when significant influence over an associate is lost, the investor measures any investment retained on the former associate at cost. Under IFRS, the investor measures at fair value any investment the investor retains in the former associate and recognize in profit and loss any difference between: (i) the fair value of any retained investment and any proceeds from disposing of the part of interest in the associate and (ii) the carrying amount of the investment at the date the significant influence is lost.

e. Measurement and Reporting Currency

Effective January 1, 2009, the Company changed its recording and reporting currency under Indonesian GAAP from Indonesian Rupiah to U.S. Dollar. However, for statutory reporting purposes in Indonesia, the Company’s subsidiaries domiciled in Indonesia whose functional currency is the U.S. Dollar, maintain their books of accounts in Rupiah and present their financial statements also in Rupiah. For financial statement consolidation purposes, the Indonesian Rupiah financial statements of those subsidiaries were translated to U.S. Dollar, because of the change in reporting currency of the Company for Indonesian GAAP reporting purposes, from Indonesian Rupiah to U.S. Dollar. Under IFRS, the Company’s subsidiaries domiciled in Indonesia but whose functional currency is the U.S. Dollar should measure their transactions in terms of their functional currency. IFRS allows the use of a presentation currency other than the functional currency. Management has determined that the Company’s functional currency is the US. Dollar. For IFRS reporting purposes, the transactions of the Company’s subsidiaries whose functional currency is the U.S. Dollar were measured in terms of their functional currency.


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A summary of the significant adjustments to consolidated loss for the years ended December 31, 2010 and 2009 and to consolidated stockholders’ equity as of December 31, 2010 and 2009 from Indonesian GAAP to IFRS are set forth below:

Note 2010 2009US$'000 US$'000

Loss for the year according to the consolidated statements of income prepared under Indonesian GAAP (154,401) (285,876)

IFRS adjustments - increase (decrease) due to:Amortization of goodwill (a) 2,872 2,872 Depreciation of revalued vessels (b) (95) - Net revaluation decrease (b) 787 166,587 Amortization of landrights (b) (45) (34) Amortization of deferred rent (c) - (597) Interest on security deposits (c) - 348 Measurement of financial liabilities

at amortized cost (c) 231 (304) Unrealized gain on sale of an associate (d) 524 -

Total adjustments 4,274 168,872 Loss for the year in accordance with IFRS (150,127) (117,004)

Equity according to the consolidated balance sheets prepared under Indonesian GAAP 684,171 618,292

IFRS adjustments - increase (decrease) due to:Amortization of goodwill (a) 14,245 11,373 Impairment of goodwill (a) 20,589 20,589 Revaluation reserve (b) (3,803) (2,006) Depreciation of revalued vessels (b) (24,928) (24,833) Gain on sale of property adjustment based on

revalued amounts of vessels (b) (57,773) (57,773) Difference between depreciation expense based

on revalued amounts and historical cost (b) 95,020 95,020 Amortization of landrights (b) (167) (122) Revaluation decrease (b) (9,646) (10,433) Amortization of deferred rent (c) (687) (687) Interest on security deposits (c) 421 421 Foreign exchange loss (c) (190) (190) Option premium on convertible bonds (c) 177 177 Measurement of financial liabilities

at amortized cost (c) (875) (1,106) Unrealized gain on sale of an associate (d) 524 -Translation adjustment and effect of remeasurement (e) 1,131 37

Total adjustments 34,038 30,467 Equity in accordance with IFRS 718,209 648,759

December 31,


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a. Reconciliation of consolidated statements of financial position between IFRS and Indonesian GAAP at December 31, 2010.

INDONESIAN ReconcilingGAAP Items IFRSUS$ US$ US$

('000) ('000) ('000)

Property, vessels and equipment - net 2,327,320 18,919 2,346,239 Advance for purchase of property, vessels and

equipment 20,250 (20,250) - Investments in associates 7,955 - 7,955 Other non-current assets 96,722 35,881 132,603

Total Non-Current Assets 2,452,247 34,550 2,486,797

Trade accounts receivable 160,166 - 160,166 Available-for-sale investments 79,964 - 79,964 Cash 84,284 - 84,284 Other current assets 58,850 624 59,474 Total Current Assets 383,264 624 383,888

Total Assets 2,835,511 35,174 2,870,685

Share capital 109,575 - 109,575 Additional paid-in capital 208,826 177 209,003 Treasury stocks (86,628) - (86,628) Translation adjustment (16,292) 17,301 1,009 Revaluation reserve 304,534 (3,803) 300,731 Retained earnings 164,156 20,363 184,519

Total Equity 684,171 34,038 718,209

Long-term liabilities - net of current maturities Loan from financial institutions 707,562 943 708,505 Bonds payable 148,261 - 148,261 Obligations under finance lease 342,769 - 342,769 Notes payable 316,000 - 316,000

Other non-current liabilities 265,496 - 265,496

Total Non-current Liabilities 1,780,088 943 1,781,031

CURRENT LIABILITIESShort-term bank loans 14,459 - 14,459 Trade accounts payable 63,943 - 63,943 Current maturities of long-term liabilities 230,854 193 231,047 Other current liabilities 61,996 - 61,996

Total Current Liabilities 371,252 193 371,445

Total Equity and Liabilities 2,835,511 35,174 2,870,685


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b. Reconciliation of consolidated statements of financial position between IFRS and Indonesian GAAP at December 31, 2009.

INDONESIAN Reconciling

GAAP Items IFRSUS$ US$ US$

('000) ('000) ('000)

Property, vessels and equipment - net 1,946,389 45,586 1,991,975 Advance for purchase of property, vessels and

equipment 46,905 (46,905) - Investments in associates 76,125 - 76,125 Other non-current assets 90,993 24,771 115,764

Total Non-Current Assets 2,160,412 23,452 2,183,864

Trade accounts receivable 129,976 - 129,976 Available-for-sale investments 44,898 - 44,898 Cash 118,732 - 118,732 Other current assets 43,904 641 44,545 Total Current Assets 337,510 641 338,151

Total Assets 2,497,922 24,093 2,522,015

Share capital 70,936 - 70,936 Additional paid-in capital 114,824 177 115,001 Treasury stocks (86,628) - (86,628) Translation adjustment (16,828) 17,242 414 Unrealized gain on available-for-sale investments 757 - 757 Revaluation reserve 237,677 (2,006) 235,671 Retained earnings 297,554 15,054 312,608

Total Equity 618,292 30,467 648,759

Long-term liabilities - net of current maturities Loan from financial institutions 779,538 (8,084) 771,454 Bonds payable 141,575 (63) 141,512 Obligations under finance lease 228,925 - 228,925 Notes payable 249,809 - 249,809

Other non-current liabilities 34,819 - 34,819

Total Non-current Liabilities 1,434,666 (8,147) 1,426,519

CURRENT LIABILITIESShort-term bank loans 65,225 - 65,225 Trade accounts payable 35,179 - 35,179 Current maturities of long-term liabilities 278,309 1,773 280,082 Other current liabilities 66,251 - 66,251

Total Current Liabilities 444,964 1,773 446,737

Total Equity and Liabilities 2,497,922 24,093 2,522,015


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c. Reconciliation of consolidated statement of comprehensive income between IFRS and Indonesian GAAP for the year ended December 31, 2010.


('000) ('000) ('000)

Operating revenues 656,854 - 656,854

Voyage expenses (221,201) * - (221,201)

Operating revenues after voyage expenses 435,653 - 435,653

Charter expenses (55,763) * - (55,763)

Vessel depreciation and ship operating expenses

Ship operating expenses (139,854) * - (139,854)

Vessel depreciation (145,488) * (95) (145,583)

(285,342) (95) (285,437)

Gross profit 94,548 (95) 94,453

General and administrative (33,368) 192 (33,176)

Income before financial and other items 61,180 97 61,277

Net financial and other items

Finance cost (138,322) 723 (137,599)

Investment income 8,303 - 8,303

Share in profits of associates 384 - 384

Other gains and losses (84,761) 3,454 (81,307)

(214,396) 4,177 (210,219)

Loss before tax (153,216) 4,274 (148,942)

Tax expense (1,185) - (1,185)

Loss for the year (154,401) 4,274 (150,127)

* Presented as "Total direct costs" in Indonesian GAAP consolidated financial statements.


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d. Reconciliation of consolidated statement of comprehensive income between IFRS and Indonesian GAAP for the year ended at December 31, 2009.


('000) ('000) ('000)

Operating revenues 618,346 - 618,346

Voyage expenses (176,087) * - (176,087)

Operating revenues after voyage expenses 442,259 - 442,259

Charter expenses (54,976) * (597) (55,573)

Vessel depreciation and ship operating expenses

Ship operating expenses (120,860) * - (120,860)

Vessel depreciation (133,589) * - (133,589)

(254,449) - (254,449)

Gross profit 132,834 (597) 132,237

General and administrative (32,927) 1,774 (31,153)

Income before financial and other items 99,907 1,177 101,084

Net financial and other items

Finance cost (109,500) (2,014) (111,514)

Investment income 18,078 348 18,426

Share in profits of associates 9,621 - 9,621

Other gains and losses (303,021) 169,361 (133,660)

(384,822) 167,695 (217,127)

Loss before tax (284,915) 168,872 (116,043)

Tax expense (961) - (961)

Loss for the year (285,876) 168,872 (117,004)

* Presented as "Total direct costs" in Indonesian GAAP consolidated financial statements.

43. FINANCIAL INSTRUMENTS

A. Capital Risk Management

The Company and its subsidiaries manage their capital to ensure that they will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in Notes 18, 19, 20, 21, 22, 25 and 27, cash, short-term investments and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in Notes 12, 13, 14, 15, 16 and 17.


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The Company’s Board of Directors periodically reviews the Company’s capital structure. As part of this review, the Board of Directors considers the cost of capital and the related risks.

The gearing ratio as of December 31, 2010 and 2009 is as follows:

2010 2009 2010 2009US$'000 US$'000 US$'000 US$'000

Debt 1,952,794 1,754,609 1,953,932 1,748,235Cash and short-term investments 164,248 163,630 164,248 163,630

Net debt 1,788,546 1,590,979 1,789,684 1,584,605Equity 684,171 618,292 718,209 648,759

Net debt to equity ratio 261% 257% 249% 244%

Indonesian GAAP IFRS

B. Significant Accounting Policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 3 to the consolidated financial statements.

C. Categories of Financial Instruments Financial Assets

Financial Available- Held-to-assets at for-sale Loans and maturity

FVTPL investments receivables investmentsUS$'000 US$'000 US$'000 US$'000

As of December 31, 2010Security deposits - - 16,161 -Trade accounts receivable - - 160,166 -Other accounts receivable - - 11,790 -Short-term investments 483 79,481 - -Cash - - 84,284 -

483 79,481 272,401 -

As of December 31, 2009Derivative financial instruments 19,203 - - -Security deposits - - 15,581 -Trade accounts receivable - - 129,976 -Other accounts receivable - - 7,350 -Short-term investments - 44,898 - -Cash - - 118,732 -

19,203 44,898 271,639 -


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Financial Liabilities

Financial Other Financial Otherliabilities at financial liabilities at financial

FVTPL liabilities FVTPL liabilitiesUS$'000 US$'000 US$'000 US$'000

Long-term loans from financial institutions - 887,166 - 911,868

Bonds payable - 148,261 - 147,867 Notes payable 316,000 - 249,809 -Other loans from non-financial

institutions - 30,837 - 12,409 Convertible bonds - 165,057 99,560 -Obligations under finance lease - 392,152 - 261,497 Derivative financial instruments 75,775 - 28,284 -Short-term bank loans - 14,459 - 65,225 Trade accounts payable - 63,943 - 35,179 Other current liabilities and accrued

expense - 49,094 - 53,241 391,775 1,750,969 377,653 1,487,286

As of December 31, 2009As of December 31, 2010

The convertible bonds with a nominal value of US$ 125 million and notes payable with a nominal value of US$ 400 million were designated at fair value through profit or loss (FVTPL) upon initial recognition in 2007. In December 2010, there was a substantial modification on the terms of the convertible bonds that led to the extinguishment of the old convertible bonds and recognition of new convertible bonds. The new convertible bonds were recognized and considered as hybrid instrument containing a debt host contract and embedded derivatives. The embedded derivative liability is measured at fair value with changes in fair value recognized in profit and loss while the debt host contract was initially recognized at fair value and subsequently measured at amortized cost (Note 25). The fair value and the change in that fair value attributable to changes in credit risk are presented as follows:

Convertible Notes Convertible Notesbonds payable bonds payable

US$'000 US$'000 US$'000 US$'000Contractual amount to be

paid at maturity - 400,000 161,975 400,000 Fair values - 316,000 99,560 249,809 Changes in fair value attributable

to changes in credit risk - (130,973) (34,099) (140,924) Difference between carrying

amount and amount contractually required to be paid at maturity - (84,000) (62,415) (150,191)

20092010

The change in fair value attributable to change in credit risk is determined as the residual of the change in fair value attributable to the change in market risk from the total change in fair value of the financial liabilities. The change in fair value attributable to its change in market risk was computed using the benchmark interest rates as at the end of operating period. The change in fair value was impacted by the downgrade of the notes payable’s and convertible bonds’ credit rating.

D. Financial Risk Management Objective

The Company and its subsidiaries’ also have established financial risk management and policy which seeks to ensure that adequate financial resources are available for the development of the Company and its subsidiaries’ business while managing their foreign exchange, interest rate, credit and liquidity risks. The Company and its subsidiaries operate within defined guidelines that are approved by the Board of Directors, and policies in respect of the major areas of treasury activity.


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Foreign Exchange Risk Management

The Company and its subsidiaries conduct business in currencies other than their respective functional currency primarily in Indonesian Rupiah, Japanese Yen, Singapore Dollar and British Pound Sterling. Foreign currency exposures and fluctuations have not had a material impact on the Company and its subsidiaries in recent years. It is the Company and its subsidiaries’ policy to manage foreign exchange risks within prudent levels so as to maximize profits. The Company and its subsidiaries have practices that include the periodic review of the impact of movements in foreign exchange rates on profitability so that appropriate action is taken to mitigate these risks. Foreign exchange risk exposures are measured using a sensitivity analysis as shown below. The carrying amounts of the Company and its subsidiaries monetary assets and monetary liabilities denominated in currencies other than their respective functional currency at the reporting dates are as follows:

2010 2009 2010 2009US$'000 US$'000 US$'000 US$'000

Indonesian Rupiah 29,480 46,861 344,038 117,740 Japanese Yen 289 2,000 31,779 96 British Pound Sterling 3 418 41 -Euro 3,692 3,926 564 166 Chinese Renminbi 1,280 3 10,301 10 Hong Kong Dollar 1,619 25 290 1 Singapore Dollar 1,112 6,109 11,327 4,497 Others 337 - 396 -

37,812 59,342 398,736 122,510

LiabilitiesAssets

The following table details the Company and its subsidiaries’ sensitivity to changes in US Dollar against the above currencies. The sensitivity rate below are used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at period end for the change in foreign currency exchange rates. A positive number below indicates an increase in profit and equity where the above currencies strengthen at certain percentage against the U.S. Dollar. For the same percentage of weakening of the above currencies against the U.S. Dollar, there would be an equal and opposite impact on profit and equity.

Effect on Effect onSensitivity profit or loss Sensitivity profit or loss

rate and equity rate and equityUS$'000 US$'000

Indonesian Rupiah 7% 22,109 7% 4,962 Japanese Yen 10% 3,149 7% 133 British Pound Sterling 14% 5 12% 50 Euro 9% 282 10% 376 Chinese Renminbi 6% 541 6% 1 Hong Kong Dollar 1% 13 1% - *Singapore Dollar 5% 511 5% 81

20092010

* Less than US$ 500. In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year-end exposure does not reflect the exposure during the year.


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It is also the policy of the Company and its subsidiaries to enter into cross currency and interest rate swap derivative contracts to cover exposures on specific foreign currency principal and interest payments. These contracts are entered into as economic hedge of the risk exposure although hedge accounting has not been applied. The following table details the cross currency, interest rate swap and derivative contracts outstanding as at reporting date:

2010 2009 2010 2009US$'000 US$'000 US$'000 US$'000

Less than 1 year - 156,676 - 1,597 1 to 2 years 102,273 - (6,688) -2 to 5 years 800,000 102,273 (59,234) (17,407) More than 5 years - 500,000 - 16,944

902,273 758,949 (65,922) 1,134

Asset (Liability)Notional AmountsFair value

Interest Rate Risk Management The Company and its subsidiaries are also exposed to interest rate risk as they also borrow funds in Rupiah and U.S. Dollar at both fixed and floating interest rates. The risk is managed by maintaining an appropriate mix between fixed and floating rate borrowings and minimizing the exposure through cross currency swap contracts (combined interest rate swap contracts and forward foreign exchange contracts). The Company’s exposure to interest rate on financial assets and financial liabilities are detailed in the liquidity risk management section on this note. The sensitivity analyses below have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the reporting date was outstanding for the whole year. A 150 basis points (2009:150 basis points) increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates. If interest rates had been 150 basis points (2009: 150 basis points) higher or lower and all other variables were held constant, the Company and its subsidiaries’ loss for the year ended December 31, 2010 and December 31, 2009 would decrease/increase by US$ 10,390 thousand and US$ 12,788 thousand, respectively. This is mainly attributable to the exposure to interest rates on its variable rate borrowings. Credit Risk Management

The Company and its subsidiaries’ exposure to credit risk is primarily attributable to trade and other accounts receivable, investments and bank balances. In determining the credit terms for customers, the management considers the following factors: the financial strength of the customer, the customer’s historical payment record, the length of the relationship with the customer and the distance or duration of a specific voyage. Based on these factors, the Company and its subsidiaries’ credit terms may vary. The credit terms may also be modified based on negotiations with each customer. It is the Company and its subsidiaries’ policy to monitor the financial standing of these receivables on an on-going basis to ensure that the Company and its subsidiaries are exposed to minimal credit risk. Bank balances and investments are placed with credit worthy financial institutions. Although the Company and its subsidiaries generate more than 5% of their revenue from Pertamina (National Oil Company of Indonesia), there has been no history of credit default with Pertamina.

The carrying amount of financial assets recorded in the consolidated financial statements (Note 43C) represents the Company and its subsidiaries maximum exposure to credit risk without taking account of the value of any collateral obtained.


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Fuel Risk Management The Company and its subsidiaries’ earnings are affected by changes in the price of bunker fuel. Their strategy for managing the risk on fuel price, aims to provide their protection against sudden and significant increase in bunker fuel prices. In meeting these objectives, the fuel management program allows for the prudent use of approved instruments such as bunker swaps with approved counterparties and within approved credit limits. Liquidity Risk Management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Company and its subsidiaries’ short, medium and long-term funding and liquidity management requirements. The Company and its subsidiaries manage liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Liquidity and Interest Rate Risk Tables

The following tables detail the Company and its subsidiaries remaining contractual maturity for its non-derivative financial assets and liabilities. The tables have been drawn up based on the undiscounted cash flows of financial assets based on the contract and obligations of the counterparty and financial liabilities based on the earliest date on which the Company and its subsidiaries can be required to pay. The table includes both interest and principal cash flows. Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument. The other financial instruments of the Company and its subsidiaries that are not included in the tables are non-interest bearing and are therefore not subject to interest rate risk. The Company and its subsidiaries’ policy is to borrow principally on the floating rate basis but to retain a proportion of fixed rate debt. The objectives for the mix between fix and floating rate borrowings are set to reduce the impact of an upward change in interest rate while enabling benefits to be enjoyed if interest rates fall. Financial Liabilities

Weighted average effective interest

rate Less than 1

month 1-3 months 3 months to

1 year 1 - 5 years After 5 years Total US$'000 US$'000 US$'000 US$'000 US$'000 US$ 000

2010Non interest bearing 22,660 55,843 41,417 - - 119,920 Floating interest rate

instruments 2.85% 9,754 22,442 110,514 432,054 183,968 758,732 Fixed interest rate

instruments 8.07% 13,518 31,130 260,267 1,354,752 9,944 1,669,611 45,932 109,415 412,198 1,786,806 193,912 2,548,263

2009Non interest bearing 26,145 18,245 163,444 - - 207,834 Floating interest rate

instruments 2.39% 27,594 37,810 117,029 396,188 311,577 890,198 Fixed interest rate

instruments 8.94% 10,172 14,034 108,562 1,050,019 7,209 1,189,996 63,911 70,089 389,035 1,446,207 318,786 2,288,028


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The following table details the Company and its subsidiaries’ expected maturity for its non-derivative financial assets. The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the Company and its subsidiaries anticipates that the cash flow will occur in a different period. Financial Assets

Less than 1 3 months to month 1 - 3 months 1 year 1- 5 years After 5 years Total

US$'000 US$'000 US$'000 US$'000 US$'000 US$'0002010Non interest bearing 31,011 68,877 152,032 - 16,161 268,081

31,011 68,877 152,032 - 16,161 268,081

2009Non interest bearing 57,098 76,474 3,755 - 15,601 152,928Floating interest rate - 44,898 42,858 - - 87,756

57,098 121,372 46,613 - 15,601 240,684

The Company and its subsidiaries expect to meet their other obligations by utilizing operating cash flows, proceeds of maturing financial assets, bank and equity financing. Other Price Risks In addition to market price risk on short-term investments, the Company is exposed to market price risks on the notes payable in 2010 and convertible bonds and notes payable in 2009 which were classified as financial liability at fair value through profit or loss (see Notes 20 and 25). To manage its price risk, the Company’s management supervises and monitors the Company and its subsidiaries’ performance. As of December 31, 2010 and 2009, if the market price of the financial liabilities had increased/decreased by the following sensitivity rates with all other variables held constant, loss for the year would have been lower/higher as follows, mainly as a result of the change in the fair value of the convertible bonds and notes payable recognized in profit or loss.

Effect on profit Effect on profit Sensitivity or loss and Sensitivity or loss and

Rate equity Rate equityUS$'000 US$'000

Convertible bonds - - 25% 24,890 Notes payable 5% 15,800 15% 37,471

20092010

If prices for short-term investments increase or decrease by 1% with all other variables being constant, the effect on equity is as follows:

2010 2009US$'000 US$'000

Increase/Decrease in equity 799 449


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E. Fair Value of Financial Instruments

Except as detailed in the following table, the management considers that the carrying amounts of financial assets and financial liabilities recorded at amortized cost in the consolidated financial statements (Note 43C) approximate their fair values:

Carrying Fair Carrying Fairamount value amount valueUS$'000 US$'000 US$'000 US$'000

Borrowings:Convertible bonds 165,057 176,724 - - Bonds payable 148,261 148,444 147,867 149,970Other long-term loans from

non-financial institutions at fixed rate 11,227 13,167 12,409 14,771

2010 2009

The fair values of financial assets and financial liabilities are determined as follows:

the fair values of financial assets and financial liabilities with standard terms and conditions and traded on active markets are determined with reference to quoted market prices;

the fair values of other financial assets and financial liabilities (excluding derivative

instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments;

the fair value of derivative instruments are calculated using quoted prices. Where such

prices are not available, discounted cash flow analysis is performed using the applicable yield curve for the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives. Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts. Interest rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves from quoted interest rates.

Fair value measurements recognized in the statement of financial position The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in

active markets for identical assets or liabilities.

Level 2 fair value measurements are those derived from 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 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).


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Level 1 Level 2 Level 3 TotalUS$'000 US$'000 US$'000 US$'000

Financial assets at AFS and FVTPLShort-term investments 79,964 - - 79,964

Total 79,964 - - 79,964

Financial liabillities at FVTPLDerivative financial liabllities - (75,775) - (75,775)Notes payable (316,000) - - (316,000)

Total (316,000) (75,775) - (391,775)

2010

Level 1 Level 2 Level 3 TotalUS$'000 US$'000 US$'000 US$'000

Financial assets at AFS and FVTPLDerivative financial assets - 19,203 - 19,203Short-term investments 44,898 44,898

Total 44,898 19,203 - 64,101

Financial liabillities at FVTPLDerivative financial liabllities - (28,284) - (28,284)Convertible bonds (99,560) - - (99,560)Notes payable (249,809) - - (249,809)

Total (349,369) (28,284) - (377,653)

2009

There are no transfers between Levels 1 and 2 in 2010 and 2009.

44. NON CASH TRANSACTIONS In 2010 and 2009, the Company and its subsidiaries entered into non-cash investing and financing activities through the acquisition of vessels under finance leases amounting to US$ 180,408 thousand and US$ 35,895 thousand, respectively.

45. COMMITMENTS a. The Company and its subsidiaries have some charter contracts with Pertamina amounting to

US$ 13 million - US$ 22 million per year, which will end between 2011 - 2016.

At the reporting date, the Company and its subsidiaries have contracts with Pertamina with the following future minimum lease receipts:

2010 2009US$'000 US$'000

Within one year 21,174 21,057 In the second to fifth years inclusive 80,914 80,914

Total 102,088 101,971


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Revenues earned by the Company on those contracts, which were included in operating revenues, amounted to US$ 38,062 thousand and US$ 49,684 thousand thousand in 2010 and 2009, respectively.

b. The Company and its subsidiaries have outstanding charter contracts under operating leases with third parties amounting to US$ 1 million to US$ 55 million per year, which will end between 2011 - 2021.

At the reporting date, the Company and its subsidiaries have outstanding commitments under non-cancellable charter contracts, with scheduled maturities as follows:

2010 2009US$'000 US$'000

Within one year 53,882 56,754 In the second to fifth years inclusive 143,144 197,027 After five years 129,471 129,471

Total 326,497 383,252

The minimum lease payments under charter contracts recognized as an expense amounted to US$ 55,763 thousand and US$ 55,573 thousand in 2010 and 2009, respectively.

c. The subsidiaries have several contracts with shipyards in Japan for the construction of new vessels with total contract price of approximately JPY 33,638 million in 2010 and JPY 46,387 million in 2009.

d. In 2010, the subsidiary entered into purchases of three second-handed vessels agreement amounting to USD 20,250 thousand.

e. In April 2008, Chembulk Tankers LLC, obtained an irrevocable Standby Letter of Credit (SBLC) facility from ING Bank N.V, Singapore Branch amounting to US$ 29,200 thousand. Such SBLC is secured by a subsidiary’s vessel and is reduced periodically by US$ 3,600 thousand and matures on January 19, 2019.

f. On January 17, 2008 Richesse Logistics (Fangcheng Port) Co., Ltd. entered into an agreement with Fangcheng Port Group Co. Ltd. for the reclamation and use of land with a total area of 360 million square meters. A total of 83 million square meters represent capital contribution of Fangcheng Port Group Co. Ltd. and the remaining 277 million square meters will be purchased for RMB 83 million. The agreement also mentioned that Richesse Logistics (Fangcheng Port) Co., Ltd. will be responsible for, among others, applying the license to use the property.

As of December 31, 2010, Richesse Logistics (Fangcheng Port) Co., Ltd, has paid US$ 20.9 million, which is included under the construction in progress account.

46. EVENTS AFTER THE REPORTING PERIOD a. In February 2011, a subsidiary obtained loans from DnB NOR Bank ASA (as lead manager),

BNP Paribas, ING Bank N.V., NIBC Bank Ltd., Nordea Bank Finland Pic, and Standard Chartered Bank through Senior Secured Credit facility with maximum credit of US$ 685 million, which consist of the following credit facilities: Facility A amounting to USD 615 million to settle the Company and its subsidiaries loan

from Mount Gede LLC, DVB Group Merchant Bank (Asia) Ltd., ING Bank N.V., DnB NOR Bank ASA (Note 18).This loan is payable in 18 quarterly installments of US$ 15,400 thousand and a final installment payment of US$ 337,800 thousand upon maturity on February 2016. Such facility is secured by a registered mortgage on a subsidiaries’ vessels.


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Facility B amounting to US$ 70 million to finance the construction of new vessels. The loan has a term of less than 5 years.

Interest rate is at LIBOR plus certain percentage.

b. In March 2011, the Company and its subsidiaries entered into sale and leaseback agreements for four chemical tankers with Standard Chartered Bank. Part of the proceeds were used to settle the loans with DVB Group Merchant Bank (Asia) Ltd. and Nordea Bank Finland Plc, Singapore (Note 18b) and DnB NOR Bank ASA, Singapore and NIBC Bank Ltd. (Note 18q).

c. On May 10, 2011, PT Buana Listya Tama, a subsidiary, obtained the notice of effectivity from

the Chairman of Bapepam&LK in his letter No. S5214/BL/2011 in connection with the initial public offering of 6,650,000,000 shares with Rp 100 par value per share and issuance of 3,325,000,000 series I warrants with total proceeds of US$ 114 million. The Company’s percentage of ownership before the Initial Public Offering (IPO) was 100% and became 62.3% after the IPO. The Company’s share in the net assets of the subsidiary as of December 31, 2010, prior to the IPO, amounted to US$ 176 million and, on a proforma basis, after the IPO amounted to US$ 181 million. The shares of PT Buana Listya Tama were listed on the Indonesian Stock Exchange on May 23, 2011.

47. CURRENT ECONOMIC CONDITIONS

While global trade and industrial production showed signs of recovery in 2009 and 2010, there were still a number of challenges being faced by the shipping industry, which includes among others, freight rates which have not returned to pre-crisis level. These conditions had an adverse effect on the Company and its subsidiaries' operations. Accordingly, in 2010, the Company and its subsidiaries experienced lower gross profit compared with the prior year. The Company and its subsidiaries also incurred losses of US$ 150,127 thousand in 2010 which was principally due to decrease in income from operations, and increase in finance cost and non-operating losses arising from changes in the fair value of the convertible bonds and notes payable. The ability of the Company and its subsidiaries to maintain operations and profitability, pay their debts as they mature and meet their financial covenants with lenders may be dependent to a large extent on the measures being instituted by management, which include, among others, the following: Generate new long-term contracts across diversified geographic areas and industries; Take advantage of the Indonesia cabotage opportunities; Improve the capital structure and liquidity; Secure access to financing of new vessel deliveries; and Implement cost efficiency measures. Note 43 to the consolidated financial statements also describe the Company and its subsidiaries' financial risk management and also their liquidity risk profile. Despite the current uncertain economic outlook, management has a reasonable expectation that the Company and its subsidiaries will be able to execute its strategies and manage its business and financial risks successfully. The Company and its subsidiaries' management also believe that they have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the consolidated financial statements.

48. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Board of Directors and authorized for issue on June 8, 2011.

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