Meridian Container Lines Group (the Group) operates a global container shipping network, carrying containerised cargo across eight principal trade lanes linking Asia, Europe, the Americas and the Middle East. Activities comprise ocean freight, feeder services, container terminal operation through a joint venture, inland logistics, port agency and technical ship management.

The parent company is incorporated and domiciled in Singapore. Its registered office and principal place of business is 1 Harbour Front Avenue, Singapore.

The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB).

The consolidated financial statements for the year ended 31 December 2026 were approved and authorised for issue by the Board of Directors on 26 February 2027 (Note 32).

The directors have assessed the Group's ability to continue as a going concern for a period of at least twelve months from the date of approval. The assessment considered the decline in freight rates during 2026, the Group's liquidity, committed facilities and covenant headroom under severe but plausible downside scenarios.

At 31 December 2026 the Group held cash of USD 983.4m and net debt, including lease liabilities, of USD 1,112.3m, representing 0.58x IFRS EBITDA. Under a bear-case scenario in which realised rates fall to USD 1,600 per FEU, the Group remains cash-generative and within all financial covenants.

The consolidated financial statements comprise the parent and its subsidiaries. Subsidiaries are entities the Group controls: it has power over the investee, exposure to variable returns, and the ability to use its power to affect those returns. Subsidiaries are consolidated from the date control is obtained. Intragroup balances, transactions, income and expenses are eliminated in full.

A joint venture is a joint arrangement in which the parties with joint control have rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method: the investment is recognised at cost and adjusted for the Group's share of post-acquisition profit or loss and other comprehensive income.

The functional and presentation currency of every Group entity is the US dollar. Transactions in euro, Singapore dollars and UAE dirhams are translated at the exchange rate at the transaction date. Monetary items are retranslated at the closing rate, with differences recognised in profit or loss.

Freight revenue arises from a single performance obligation: the carriage of a customer's cargo from load port to discharge port. The customer simultaneously receives and consumes the benefit as the voyage progresses, so revenue is recognised over time, measured by the proportion of voyage days elapsed at the reporting date.

Volume rebates and demurrage and detention waivers are variable consideration. They are estimated using the expected-value method and deducted from revenue to the extent it is highly probable that a significant reversal will not occur.

Where revenue recognised exceeds amounts invoiced for voyages in progress, a contract asset is recognised. Where freight is invoiced in advance of carriage, a contract liability is recognised.

The Group's internal management reports differ from these IFRS statements in two respects. The following reconciliations bridge the management figures to the amounts reported under IFRS.

Leases. Management reports present long-term vessel charters and container leases as operating costs. Under IFRS 16 these are capitalised as right-of-use assets with corresponding lease liabilities, applied from 1 January 2025 using the modified retrospective approach, with right-of-use assets measured equal to the lease liability at transition.

Consolidation. Management reports carry the Group's interests in its two joint ventures at cost. Under IAS 28 they are equity-accounted, recognising the Group's share of their post-acquisition profits. The six subsidiaries are consolidated line by line under both bases.

All revenue is recognised over time from a single performance obligation per shipment. The rate decline in 2026 was concentrated in Asia–Europe, which accounted for 59.4% of the rate variance against budget, following the redeployment of capacity to the Suez routing.

Vessels are depreciated on a straight-line basis over 25 years for hull and machinery and over the period to the next scheduled survey for the drydock component. Containers are depreciated over 13 years.

The decline in freight rates during 2026 was assessed as an indicator of impairment. The Group's vessels form a single cash-generating unit, as they are deployed interchangeably across the network. Recoverable amount, determined on a value-in-use basis using a pre-tax discount rate of 9.0% and freight rates recovering to USD 2,100 per FEU over five years, exceeded the carrying amount by a significant margin. No impairment was recognised.

Contractual commitments for the acquisition of vessels amounted to USD 640.0m at 31 December 2026 (Note 27).

Borrowings comprise a USD 1,250m syndicated term facility amortising in annual instalments, of which USD 150.0m falls due within twelve months. The facility bears interest at 5.5% and is secured on four vessels. The Group complied with all financial covenants throughout both years.

A deferred tax asset arises on the IFRS 16 adjustment because the tax base follows the lease payments, while the accounting base comprises the right-of-use asset and lease liability. Following the 2021 amendments to IAS 12, deferred tax is recognised on the temporary differences arising on initial recognition of leases. The asset is expected to be recovered against future taxable profits, which are forecast to be sufficient.

There are no restrictions on the use of cash held by any Group entity.

The parent's issued share capital comprises 500,000,000 fully paid ordinary shares of USD 1.00 each, unchanged in both years. Each share carries one vote and equal rights to dividends and to capital on a winding up.

Retained earnings comprise accumulated profits less dividends paid. There are no other reserves, as other comprehensive income is nil in both years (see the statement of other comprehensive income).

The Group participates in defined contribution plans in each jurisdiction of employment. Contributions are expensed as incurred. The Group has no defined benefit obligations.

New leases are non-cash transactions and are excluded from the statement of cash flows. Lease interest is paid in cash and presented within financing activities.

Transactions between the parent and its subsidiaries are eliminated on consolidation and are not disclosed. Transactions with joint ventures are conducted on arm's-length terms.

The Group is party to a dispute with a customer concerning demurrage charges of USD 6.4m. Management considers an outflow possible but not probable, and no provision has been recognised.

The Group has guaranteed its share of borrowings of Meridian Asia-Pacific Terminals JV, amounting to USD 42.0m. The guarantee is not expected to be called.

Capital commitments for two 15,000 TEU vessels under construction amount to USD 640.0m, payable in 2027 and 2028.

Credit risk arises principally on trade receivables. The Group's customers are freight forwarders and beneficial cargo owners across all trade lanes, and no single customer accounts for more than 4% of revenue. Credit limits are set for each customer and reviewed monthly for accounts more than 60 days past due.

The maximum exposure to credit risk is the carrying amount of trade receivables and cash, being USD 1,440.1m at 31 December 2026. Cash is held with banks rated A or above.

Borrowings bear a fixed rate of 5.5% and lease liabilities are discounted at fixed rates determined at commencement. The Group therefore has no material exposure to changes in market interest rates on its existing financial liabilities.

All financial assets and liabilities are measured at amortised cost. Their carrying amounts approximate fair value, as trade receivables and payables are short-term and borrowings bear a fixed rate close to current market rates for similar facilities.

The Group holds no assets or liabilities measured at fair value on a recurring basis. Fair value is used only in the impairment assessment of vessels, where it was not required, as value in use exceeded the carrying amount.

In January 2027 the Group entered into time charter agreements for three vessels for periods of five years, commencing April 2027. The lease liability to be recognised on commencement is estimated at USD 210.0m. This is a non-adjusting event.

No other events have occurred between the reporting date and the date of authorisation that require adjustment to, or disclosure in, these financial statements.

The consolidated financial statements for the year ended 31 December 2026 were approved and authorised for issue by the Board of Directors on 26 February 2027.

This appendix illustrates the alternative 'function of expense' presentation permitted by IAS 1.99. Cost of sales comprises vessel and voyage costs, crew costs and depreciation of vessels and right-of-use assets. Operating profit and profit for the year are identical under both presentations.

An entity presenting by function must disclose additional information on the nature of expenses, including depreciation and employee benefits expense. For the Group those amounts appear in Notes 10, 11 and 18.