1982 — Page 12

Notes on the Accounts

Accounting Policies

1.

(a)

Basis of consolidation

The consolidated accounts include the audited accounts of the Company and all its subsidiaries made up to 31st December, 1982.

Capital reserve arising on consolidation represents the excess of net tangible assets of the companies acquired as at the date of acquisition over the value of the consideration paid. Unrealised inter-company profits arising on sale of fixed assets, constructed by a subsidiary company, to the parent company are credited to capital reserve.

(b) Associated company

(c)

An associated company is defined as an investment where the Group holds for long term purposes between 20% and 50% of the issued share capital and exercises significant influence over that company's management. The investment in the associated company is stated at cost.

Depreciation

Depreciation is provided at rates calculated to write off the cost of fixed assets over their estimated useful lives on a straight line basis per annum as follows:-

Land held on long leases

(with an unexpired term in excess of 50 years!

Land held on medium term leases

Buildings

Nil

Over the unexpired term of the leases

4% or over the unexpired terms of the leases, if

less than 25 years

3.33% to 12.50% (1981 - 5%)

(d)

(e)

Vessels - Steel hull

Fibreglass hull

Motor vehicles

Machinery, furniture and other fixed assets

6.67% to 10% (1981 - 6.67%)

25%

10%

From 1982, steel hull vessels are depreciated over an estimated useful life of 30 years (1981 - 20 years) whilst re-conditioned vessels, both of steel hull and fibreglass hull, are written off over a period ranging from 8 to 15 years (1981 - 20 years and 15 years, respectively) from the year of re-conditioning. The overall effect of these changes has resulted in a reduction of the current year's charge by $3,079,000.

Stocks and work in progress

Stocks and work in progress are valued at the lower of cost and net realisable value. In respect of work in progress, cost includes cost of purchase of materials, direct labour and expenses and an appropriate proportion of production overheads, less any foreseeable losses and progress payments receivable to date. No profit is taken until the work is fully completed.

Assets under construction

(i) Vessels

(ii)

Construction cost is transferred to fixed assets on granting of the marine licence. Property

Land cost relating to property which is being developed for investment purposes is included in fixed assets under leasehold land.

Property development expenditure, inclusive of interest, is included as cost of development up to the date when the occupation permit is granted.