Long-term contracts with customers

141 135 136 8. Vast vessel operational area, covering Indonesian domestic routes and South East Asia, India, and the Middle East routes. Despite of the guarantee from the implementation of cabotage principle in Indonesia, the Company continuously strives to expand its operations to countries other than Indonesia as demonstrated by the opening of the Company’s shipping routes to areas covering the Indonesian, South East Asia, India and Middle East waters.

3.2 Competitive advantages in shipyard business

1. Highly strategic shipyard location As previously discussed, there are several geographical advantages of the Company’s shipyard which is located in Tanjung Balai Karimun, Riau Islands as concluded below: a. Total shipyard size of 219 hectares, which can accommodate simultaneous building activities of several ships with large size and capacity, up to 300,000 DWT. The average size of shipyards located in the surrounding areas and in Singapore is around 50-60 hectares. b. Length of water face overlooking the sea of approximately 1.35 km. This condition is very helpful in planning shipyard expansion and construction of the docking area for ship maintenance activities and new shipbuilding. c. Depth of water draft of 12 metres, which allows for dockingbuilding of ships with large capacity up to 300,000 DWT in size. Field data indicated that the average draft of shipyards operating in Indonesia is only around 5-6 metres. d. The location of the Company’s shipyard is situated in Malacca Strait, one of the busiest international shipping lanes in the world, therefore ships repaired in the shipyard do not required significant amount of funds for mobilization and demobilization. 2. FTZ Incentive Tax, custom and excise incentives as the Company’s shipyard is located in the Free Trade Zone, which offers various convenience, for example, expeditious clearance or custom duties process for overseas, and cost wise, it is lower for all type of works carried out in the shipyard. Cost of shipbuilding carried out in the FTZ will be lower compared to shipyards operation in non-FTZ. This condition provides additional opportunities for the Company to compete with other shipyards in terms of ship construction cost and sales price. 3. The location of the shipyard which is in close proximity to Singapore. There are other advantages from the shipyard’s close proximity to Singapore, i.e., easy access to reliable and experienced contractors to work on projects in the shipyards and time efficiency for the purchase of ship components, which often need to be imported from the neighbouring countries, particularly Singapore.

4. The Company‟s Revenue in the Past 3 Years

in USD Type of Revenue 30 June 31 December 2014 2013 2013 2012 2011 Vessel Charter Services Time charter 37,223,934 27,720,128 61,696,073 52,783,473 44,778,512 Spot charter 12,493,191 18,340,390 40,801,995 18,172,124 20,353,255 Shipyard 5,053,909 221,904 3,906,506 435,876 - Total Revenue 54,771,034 46,282,422 106,404,574 71,391,473 65,131,767 5. Business Strategies The Company’s business strategies in conducting its business activities are as follows:

a. Vessel chartering business expansion

The Company will strive to develop the vessel chartering business organically through carefully planned addition of vessels, based on several considerations, among others: 1 annual vessel procurement budget, 2 development of a market intelligence system, the main function of which is to capture all information concerning future vessel requirement plan, 3 optimalization of marketing and administration professional function in participating in vessel charter tender, which often requires involves long documentation process.