TPA Strategic Holdings Ltd 50 Raffles Place #29

Transcription

press Media Pte Ltd • tel: (65) 6880 2838
18
TPA Strategic Holdings Ltd
Annual Report 2002
Designed & Produced by
50 Raffles Place #29-00 • Singapore Land Tower • Singapore 048623
www.tpa.com.sg
TPA STRATEGIC HOLDINGS LTD
Strength in every move
Annual Report 2002
Annual Report 2002
19
mission
“We are committed to scaling
new heights by nurturing trust
with our partners, whilst
providing value-added services
and excellence in quality”
2
Annual Report 2002
contents
ceo’s statement
2
board of directors
4
management team
5
our presence
6
corporate information
7
corporate profile
8
operations review
12
financial highlights
14
report on corporate governance
16
report of the directors
28
statements by directors
34
auditors’ report
35
balance sheets
36
profit and loss accounts
37
statements of changes in equity
38
consolidated statement of cash flows
40
notes to the financial statements
42
statistics of shareholdings
68
notice of annual general meeting
69
proxy form
Annual Report 2002
31
ceo’s statement
Year At A Glance
“ I am excited to report on some positive events that
we have initiated. . . .We have expanded into a new
niche for the company that has the potential to grow
into the region.”
• Mr Chan Nyuk Lin
Chief Executive Officer
FINANCIAL PERFORMANCE
On behalf of the Board of Directors, I am pleased to present the financial performance of TPA Strategic
Holdings Ltd for the year ended 31 December 2002.
Even with uncertainties prevalent in the global economy last year, we managed to grow our aviation
business by 4.74% to $21.8 million as compared to the $20.8 million recorded in 2001. Revenue growth
came mainly from our operations in China, Hong Kong and Australia. Despite the single digit turnover
growth, we posted a 153% jump in profit to $1.187 million, a major improvement over the $469,000 in
2001. One factor for the increase was a one-time gain of $116,000 resulting from the disposal of our
associated company, Bridport Aviation Asia Pte Ltd. Gross profit improved and our business in China made
significant contributions as well. We are pleased with the significant contributions from the aviation business.
Due to the absence of new projects and project deferrals, our industrial business experienced a decline in
turnover to $1.54 million as compared to $4.42 million in the previous year. The lower turnover resulted in
a loss of $210,000 in this business unit. Bad debts of $126,000 also contributed to the loss. In 2001, the
industrial business achieved a profit before tax of $1.021 million.
The performance of the industrial division impacted negatively on the Group’s profitability. As a result, the
Group’s profit before tax decreased to $977,000 for the financial year ended 31 December 2002 as compared
to the $1.49 million realised in 2001. Even then, the Group maintained its overall profitability and net
profit for the year declined 19.55% to $967,000, representing a drop of $235,000 from the previous financial
year.
DIVIDENDS
The Board, subject to the approval of shareholders, is recommending a first and final dividend of 4.1%
or 0.41 cents per ordinary shares less income tax of 22% in respect of the financial year ended 31
December 2002. If it is approved at the Annual General Meeting to be held on 19 May 2003 at 9.00 a.m,
the dividend will be paid on 12 June 2003.
2
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TPA
TPA Strategic
Strategic Holdings
Holdings Ltd
Ltd
Annual
Annual Report
Report 2002
2002
INVESTMENTS
CEO’s statement
Aviation Business
The financial year under review can be considered a year of investment for TPA as we continue to build for
our future. In July 2002, TPA became the single largest shareholder in a Chinese company called Sichuan
Aote Accessories Repair & Maintenance Co., Ltd (Aote) following the acquisition of a strategic 48% equity
stake for US$2.238 million. Aote is one of the largest privately owned companies specialising in the repair
of aircraft components for commercial and military aircraft in China.
Industrial Products and Services Business
Our fully-owned subsidiary, TechnoPlus Private Limited, acquired the defence business of Bridport Aviation
Asia Private Limited’s (BAA) in May 2002. This resulted in the appointment of TechnoPlus as Amsafe Bridport
Limited’s (BAP) exclusive agent and distributor for its manufactured defence products in South East Asia,
with the exception of Singapore and certain countries within the Asia Pacific region for a period of three
years.
In a related transaction, TPA Pte Ltd’s 40% equity stake in BAA was sold back to its parent company, BAP.
The business volume for repair services of restraint systems was insignificant at BAA and did not justify a
separate entity. This was the reason behind the sale of our share in BAA.
PROSPECTS
Aviation Business
The travel industry will face challenging times with the war in Iraq and the severe outbreak of the acute
respiratory syndrome (SARS). Coupled with the uncertain global economy, the world aviation industry
might go into a limbo. However, I am confident that the Asia Pacific region will not be as badly affected
once the SARS outbreak is contained.
In December 2002, TPA Private Limited, and Telair International of Germany were jointly awarded a
significant contract worth US$20.5 million. The agreement involves the supply and service support of airborne
cargo loading systems for the Y8F600 aircraft manufactured by Shaanxi Aircraft Industry (Group) Co Ltd. A
minimum of 75 Y8F600 aircraft will be supplied with the airborne cargo loading systems. With the increasing
aircraft manufacturing activities in PR China, we are expecting further growth in this market segment
There are many original equipment manufacturers (OEMs) in the aviation sector that are in the process of
consolidation. It is only a matter of time before they outsource their supply and service side of the business
to concentrate on research and development. This augments well for our Group and we are poised to take
advantage of such opportunities.
Industrial Products and Services Business
There are no known events or factors that will affect our industrial business. However, we are taking a
long-term view of this business. With the extension of MRT projects, which encompass the Circle line, Bukit
Timah line, and the Eastern region line, we remain confident that there will be lots of business opportunities
over the next 10 to 15years. Geopolitical uncertainties and the threat of terrorist activities in this region
will mean more demand of security and defence related products in the coming years.
ACKNOWLEDGEMENT
I wish to express my heartfelt appreciation to all employees of the Group for their contribution and
dedication over the past year. On behalf of the Board, I would like to thank all our valued customers,
business associates and shareholders for their support through the years.
Mr Chan Nyuk Lin
Chief Executive Officer
Annual Report 2002
53
board of directors
> Mr Chan Nyuk Lin
is one of the founders of our Group and is also our Chief Executive Officer. He has more than 19 years
of experience in the Industrial Product business, including 9 years of experience in the Aviation business. Prior
to forming our Group, Mr Chan was working as a Managing Director in Mitramas Pte Ltd with key responsibilities
in business development and overall management of various aspects of the company. He is the driving force
behind our growth and business expansion and is overall responsible for our business direction, policy-making,
profitability and strategic planning. Mr Chan holds a Bachelor of Engineering Degree in Civil Engineering
from the University of Singapore.
Mr Vincent Chan Nyuk Chong <
is our Senior Vice President, Aviation Business, responsible for marketing and customer support. Mr
Chan has more than 8 years of experience in the area of aviation product support since he joined our Group
in 1995. He holds a Bachelor Degree of Accountancy from the National University of Singapore and a
Diploma in Business Administration from the Australian Business Education Council.
> Mr Mark Yeo Wee Tiong
is our Group non-executive director. He was appointed to the Board of Director on 3 July 2000. Currently,
he is an Associate Director responsible for venture capital investments at UOB Venture Management Pte Ltd.
Prior to joining the venture capital industry in 1996, he spent 2 years working for Smith Barney Shearson, HG
Asia (Singapore) Pte Ltd and approximately 4 years working for N M Rothchild & Sons (Singapore) Ltd specialising
in corporate finance transactions where he was involved in advisory services on mergers and acquisitions,
corporate restructuring and public listings. Mr Yeo started his career in 1998 in the audit division of Ernst &
Young in New Zealand. He holds a Bachelor of Commerce Degree with a double major in Accounting and
Marketing from the University of Canterbury in New Zealand.
Mr Lim Soon Hock <
is an independent Director of our Group. He was appointed to the Board of Directors on 24 November
2000. He is the Chairman of Plan-B Technologies Pte Ltd and concurrently the President of SITA Inc. Asia
Pacific. He also sits on the board of several government agencies, public listed companies and hi tech startups. He is the Chairman of the Governing Council of the Singapore Institute of Management as well as of
the National Committee for Healthy Lifestyle, Health Promotion Board, of which he is a board member. He
was the Former Vice President and Managing Director of Compaq Computer Asia Pacific. He holds a Bachelor
of Engineering degree with Honours in Electrical Engineering from the University of Singapore.
> Mr Ng Teck Sim, Colin
is an independent Director of our Group. He was appointed to the Board of Directors on 24 November
2000. Currently, Mr Ng is the Managing Partner of Colin Ng & Partners, a firm of advocates and solicitors. He
graduated with a degree in law from the National University of Singapore in 1981. He has been in practice as
an advocate and solicitor since being admitted to the Singapore Bar in 1982.
Dr Cham Tao Soon <
is an independent Director of our Group. He was appointed to the Board of Directors on 01
September 2002. Dr Cham held the post of President of Nanyang Technological University from 1981 to
2002 and is currently an University Distinguished Professor. He is the Chairman of Natsteel Ltd and Singapore
Symphonia Company Ltd and a Director of Adroit Innovations Ltd, Keppel Corporation Ltd, Robinson &
Company Ltd, Singapore International Foundation, United Overseas Bank Ltd and WBL Corporation. He is
also a board member of the Land Transport Authority. He holds a PPA; BE Hons (Malaya); BSc Hons (London);
PhD (Cambridge); Hon. DUniv (Strathclyde); Hon. DUniv (Surrey); Hon. DTech (Loughborough); Hon.
DUnvi (Soka); Hon. DUniv (Sheffield). He is a fellow member of the Institution of Engineers, Singapore
and the Institution of Mechanical Engineers, UK.
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Annual Report 2002
management team
> Mr Liew Bo Chuan, John
is the Chief Financial Officer. He joined our Group in 1999 and oversees our financial and
human resource matters. Mr Liew has more than 19 years of experience in the financial and
management accounting field. Prior to joining us, he had worked as a Financial Controller with CSE
Systems and Engineering Ltd from 1996 to 1999 and Accounts and Administration Manager in Aida
Stamping Technology Pte Ltd from 1992 to 1996. He holds a Master of Business in Professional
Accounting and a Graduate Diploma in Accounting, both from the Victoria University of Technology
in Australia. He is an Associate Member of the CPA Australia, a Fellow Member of the Association
of Accounting Technicians, UK, Professional Member of the Singapore Human Resource Institute
and Member of the Singapore Institute of Directors.
Mr Ng Kok Weng <
is the Vice President of Sales and Marketing for the Industrial Products & Services Division of our
Group. He joined us in 1996 and oversees the marketing and sales of the Division. He had 10 years of
extensive experience in direct sales and technical support for the industrial product related to air conditioning
and mechanical ventilation for Civil Defence shelters. Prior to joining us, Mr Ng worked in Mitramas Pte Ltd
as a Sales Engineer from 1994 to 1996 and in the Ministry of Defence as a Staff Officer responsible for the
information system and training needs from 1989 to 1994. He holds a Bachelor of Engineering degree in
Mechanical Engineering from the University of Strathclyde, Scotland.
> Mr Anton Georg Noffke
is the Vice President of the Aviation Business since 22 July 2002, responsible for business
development and regional marketing. Prior to joining us he was with ASE Aerospace (S) Pte Ltd
from Sep 2001 to July 2002 as General Manager. He was formerly the President of Sheraton Suites
Le Soleil Hotel, Vancouver, Canada and also the Vice President, Vocalscape Communications Ltd,
Burnaby, Canada and worked for 8 years in South African Airways started as management trainee
and served as County Manager/General Manager/Regional General Manager from 1992 to 1999. He
holds an Honour Degree in Arts from the University of Stellenbosh, South Africa.
Annual Report 2002
57
our presence
South Korea
Japan
PR China
UAE
Pakistan
Macau
Bangladesh
India
Taiwan
Hong Kong
Vietnam
Philippines
Thailand
Myannma
Sri-Lanka
Brunei
Malaysia
Singapore
Indonesia
Australia
New Zealand
Australia • Bangladesh • Brunei • Hong Kong • Indonesia • India • Japan
Macau • Malaysia • Myannmar • New Zealand • Pakistan • Philippines
PR China • Singapore • South Korea • Sri-Lanka • Taiwan • Thailand • UAE • Vietnam
Customers
Customers and Offices
corporate structure
100%
TPA Pte Ltd
Singapore
TPA
STRATEGIC
HOLDINGS LTD
70%
TPA Airtech Korea Co., Limited
Seoul, Korea
15.1%
Chengdu Falcon Aircraft
Engineering
Service Co. Ltd
Chengdu, PR China
48%
Sichuan Anote Accessories
Repair & Maintenance Co. Ltd
Chengdu, PR China
100%
TechnoPlus Pte Ltd
Singapore
68
Annual Report 2002
29.5%
Telair International Services Pte Ltd
Singapore
100%
TPA Pte Ltd
Beijing, PR China
Representative office
Aviation Business
Industrial Products & Services
corporate information
Board of Directors
Mr Chan Nyuk Lin, Chief Executive Officer
Mr Vincent Chan Nyuk Chong, Senior Vice President
Mr Mark Yeo Wee Tiong, Non-Executive Director
Mr Ng Teck Sim, Colin, Independent Director
Mr Lim Soon Hock, Independent Director
Dr Cham Tao Soon, Independent Director
Nominating Committee
Dr Cham Tao Soon, Chairman,
Mr Lim Soon Hock
Mr Ng Teck Sim, Colin
Remuneration Committee
Mr Lim Soon Hock, Chairman
Dr Cham Tao Soon
Mr Chan Nyuk Lin
Audit Committee
Mr Ng Teck Sim, Colin, Chairman
Mr Lim Soon Hock
Dr Cham Tao Soon
Company Secretaries
Mr Pradeep Kumar Singh
Ms Elaine Beh Pur-Lin
Registered Office
50 Raffles Place #29-00 Singapore Land Tower Singapore 048623
Tel: 6323 8383
Fax: 6323 8282
Email: ir@tpa.com.sg
Website: www.tpa.com.sg
Auditors
Ernst & Young, Certified Public Accountants
Partner-In-Charge (since 2000) Mr Tan Chian Khong
Share Registrar
Lim Associates (Pte) Ltd
10 Collyer Quay #19-08 Ocean Building Singapore 049315
Principal Bankers
ABN AMRO Bank N.V.
The Development Bank of Singapore Limited
Oversea-Chinese Banking Corporation Limited
United Overseas Bank Limited
Malayan Banking Berhad
Annual Report 2002
97
corporate profile
As the global business community rides along the tide of change,
TPA Strategic Holdings Ltd, an investment holding company is
determined to stay abreast. Meeting new challenges ahead, our core
values – dependability, strength and commitment will be the
underpinning thrust in all our strategic endeavours.
By drawing on the virtues of our corporate culture, which embraces
trust, value creation and quality in service, we maintain a credible
presence in the field of our business commitment in Asia.
Complementing this culture are our knowledge and experience in
professional management, business integrity and corporate
responsibility. Through our subsidiaries, we have established a
reputation as a value-added service provider with a sound business
network in the Asia Pacific region and strategic business alliances
around the world.
Dedicated to staying focused on every task, TPA Strategic Holdings
Ltd is committed to scaling new heights in every business venture.
As our focus is on developing specialized businesses and to add value
to each level of our business chain, we are driven to develop
innovative solutions by utilizing our core values of teamwork,
integrity, professionalism, courage and perseverance. This has been
achieved through our two 100% owned subsidiaries, TPA Pte Ltd and
TechnoPlus Pte Ltd. Both companies have excelled and are
outstanding in their field of business.
TPA Pte Ltd
TPA Pte Ltd has grown to become a leading service provider and
distributor for aircraft components. The company is known for its
dependability and reliability. Our market coverage includes worldclass airline operators, aircraft maintenance repair and overhaul
companies, as well as aircraft manufacturers based in Asia.
In order to stay focused on each customer base, we have developed
three core strategic business units – airline spares support, expendable
product & logistics services and aero equipment marketing.
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Annual Report 2002
corporate profile
Airline Spares Support
Utilising our well-established core competencies as a foundation, we
are well positioned to accommodate the needs of our customers.
We repair aircraft parts manufactured by leading Original Equipment
Manufacturers (“OEM”), who have authorized us to be their sole
repair centre in the Asia-Pacific region. In addition to our 24-hour
Aircraft-On-Ground (AOG) support, we also maintain a well-stocked
inventory of aircraft parts and spares customized to our airline
customers. TPA Pte Ltd is hence well equipped and ever ready to
customize service agreements according to the specific needs of
airlines.
Expendable Products & Logistics Services
TPA Pte Ltd is one of the largest stockists of aviation electronic cables
and wires, and cable management products in the region. Our
customized inventory management programmes such as Zero-Base ®
inventory, just-in-time and annual fixed pricing are designed to reduce
inventory holding, administration and obsolescence costs for our
customers. The range of expendables covers electrical components
and bearings for Maintenance Repair and Overhaul Organisation
(“MRO”) companies and aircraft/ system manufacturers.
Aero Equipment Marketing
Due to increasing manufacturing activities on aircraft / system,
particularly in South Korea, People’s Republic of China and Taiwan,
TPA Pte Ltd has offices in South Korea and PR China. We are hence
poised to be a key player, together with our strategic partners, in
marketing aviation equipment in these fast growing markets. To
enhance aircraft service performance, we constantly market improved
performance system and equipment for aircraft / system
manufacturing and retrofitting programmes.
Some of the Certificates of Approval Awarded
•
Civil Aviation Authority of Singapore
•
Civil Aviation Authority, United Kingdom
- a member of Joint Aviation Authority
•
Civil Aviation Authority of China
•
Federal Aviation Administration, Department of
Transportation, USA
•
ISO 9002 audited by BVQI
•
AS9000 audited by BVQI
Achievements Awarded
•
1999 Top 50 Most Enterprising Private Company
•
2000 Top 50 Most Enterprising Private Company
This prestigious annual award is organized by Anderson
Consulting and The Business Times (Singapore) with the
support of the Economic Development Board of Singapore.
Annual Report 2002
11
9
corporate profile
TechnoPlus Pte Ltd
TechnoPlus Pte Ltd (TNP) is an ISO9002 certified operation. We
currently enjoy 90% of the market share in the supply of
specialized ventilation components and provision of related
engineering services for civil defence shelter application. Using our
existing specialized knowledge and pioneering spirit to match, we
continue to seek future growth in the business
Besides being a major player in the civil defence shelter business,
TechnoPlus Pte Ltd also supplies specialized components for
applications in the Petroleum, Oil and Lubricants industries. Our
division has an in-house capability for design, supply and
commissioning of the complete hot refueling system for military air
bases.
Civil Defence Components
TechnoPlus Pte Ltd is the agent and partner for Andair AG, a leading
Swiss specialist in shelter technology. We provide protection devices
for the construction of civil defence shelters such as explosion
protection valves, gas filters, gas tight shut-off valves and ventilation
units. Approved by the Swiss Federal Department of Defence and
Civil Protection, Andair enjoys 30 years of reputation in shelter
technology, offering products that are safe, simple and reliable.
Being ISO9001 certified, Andair shelter components undergo stringent
quality control during manufacturing. This remarkable product
reliability and quality is matched by TechnoPlus Pte Ltd’s commitment
to uncompromised safety standards, customer service and technical
support.
One-stop Service Provider
TechnoPlus Pte Ltd has a wide spectrum of services relating to shelter
ventilating programmes. As a one-stop service provider, we offer a
package that includes design, supply, installation and shelter integrity
testing and maintenance. This approach will best suit the
requirements of customers and gives TechnoPlus Pte Ltd the sole
responsibility of a specialist. Our flexibility in undertaking the total
package and customizing our service to suit customers’ needs have
given us a competitive edge in this specialized field.
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Annual Report 2002
corporate profile
Investment
Telair International Services Pte Ltd (TISS)
This is a Joint Venture company between Telair International GmbH
and TPA Pte Ltd in December 1996 which TPA Pte Ltd has a 29.5 per
cent equity stake. This company provides comprehensive repair and
maintenance contracting services of Airbus and Boeing airborne cargo
handling systems and components.
Sichuan Aote Accessories Repair & Maintenance Co., Ltd
(Aote)
Aote is a Sino-Joint Venture company, which TPA Strategic Holdings
Ltd (TPA) is the single major shareholders having an equity stake of
48 per cent. Certified by the China Aviation Authority of China, Aote
has repair capabilities of more than 1800 line items. Based in Chengdu,
PR China it is one of the largest privately owned companies specialising
in aircraft components repair for commercial and military aircraft.
Their repair capabilities include auxiliary power unit (APU), integrated
drive generator (IDG), starter motor, fuel control components,
equipped in Boeing, Airbus, and other regional aircraft such as
Embraer, etc.
Chengdu Falcon Aircraft Engineering Service Co Ltd (CFAES)
CFAES was established in September 2001, TPA has 15.1 per cent equity
stake in this pioneer company that provides aircraft engineering and
retrofitting services in Chengdu, PR China whereby China Southwest
Airlines is one of the major shareholders. The core business activities
include aircraft engineering and retrofit services, avionics system
enhancement, cabin reconfiguration, retrofit of narrow-body cargo
loading system, etc.
TPA Airtech Korea Co., Ltd (Airtech)
Airtech was established in October 2001 in Seoul, to supply aviation
equipments and expendables to major military aircraft manufacturing
operations, commercial airlines and MROs based in South Korea. TPA
has 70 per cent stake in this company.
Annual Report 2002
13
11
operations review
The principal activities of TPA Strategic Holdings Ltd Group
are as follows:
Aviation Business
The Group has grown to become a leading service provider and
distributor of aircraft components. Our market coverage includes
world-class airline operators, aircraft maintenance repair and overhaul
companies, as well as aircraft manufacturers based in Asia.
Industrial Products & Services Business
The Group serves as a one-stop service provider for the supply of
shelter ventilating components and the provision of related
engineering and testing services for civil defence shelter application
in Singapore. The Group has further enlarged its business scope in
the area of security and defence, such as providing detection systems
and security systems; and also military products to the government
of Singapore.
Group Review
Compared to FY2001, our FY2002 Group’s turnover decreased by $1.9
million or 7.55%, from $25.20 million to $23.30 million. This was due
to a decrease in turnover of $2.88 million in our Group’s industrial
business for FY2002.
Segmental Review
Aviation Business
Our aviation business turnover was $21.76 million or 93.39%,
registering an increase of $984,000 or 4.74%. This increase in our
aviation business turnover was mainly derived from Australia, the
Peoples’ Republic of China and Hong Kong.
Our aviation business contributed $1.187 million (net of $210,000 for
provision of stock obsolescence) to the Group’s profit before tax in
FY2002, as compared to $469,000 in FY2001. This represents an
increase of $718,000 or 153% due mainly to the following factors:
a) the increase in profit contribution from the joint venture of $80,000;
b) the disposal of our associated company, Bridport Aviation Asia Pte
Ltd, resulting in a one time gain of $116,000;
c) the increase in gross profit of $383,000 due to 7.76% growth from
yeartoyear.
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14
Annual Report 2002
operations review
Industrial Products & Services Business
Our industrial business contributed $1.54 million or 6.61% to our
Group’s turnover in FY2002 as compared with $4.42 million or 17.54%
in FY2001. The decrease in industrial business was due to an absence
of new projects and deferral of projects leading to later
implementation of the same.
In FY2002, our industrial business suffered a loss of $210,000 compared
to a profit before tax of $1.021 million in FY2001. This is attributed
by a decrease in turnover and written-off bad debts of $126,000.
Overall results
Our Group’s net profit after tax decreased by $235,000 or 19.55%
from $1.202 million in FY2001 to $967,000 in FY2002.
The basic earnings per share of the Group declined by 0.21cents from
1.05 cents to 0.84 cents while the net asset value increased by 0.5
cents from 15.31 cents in FY2001 to 15.81 cents in FY2002.
Balance sheet and cash flow
The Group’s stocks and trade debtors decreased in FY2002 as
compared to FY2001 due to the increase in collections from trade
receivables and an improved inventory control policy.
The increase in our Group’s borrowings was mainly due to the shortterm loan taken by its subsidiary TPA Pte Ltd (TPAPL) to finance its
newly acquired product line in FY2002, Nord-Micro AG & Co. OHG.
During the year TPAPL made payment on non-trade payables to the
Company. The funds received by the Company were utilized to acquire
a 48% stake in Sichuan Aote Accessories Repair and Maintenance
Co., Ltd. The Group’s net cash generated from operating activities
showed a surplus of $1.305 million in FY2002 as compared to a short
fall of $4.40 million in FY2001 due to the utilization of cash in
operating activities. The improvement was due to the disposal of
investment Bridport Aviation Asia Pte Ltd in May 2002 and the
decrease in trade debtors due to better collections during the year.
Overall the Group’s cash and cash equivalents in FY2002 increased to
$1,457 million.
Annual Report 2002
15
13
Proforma Group’s Results (S$’000)
2000
2001
2002
Turnover
$’000
$’000
$’000
Aviation
19,980
20,779
21,764
Industrial
11,315
4,423
1,536
Total
31,295
25,202
23,300
Profit Before Tax*
4,439
1,490
977
Profit after Tax
3,510
1,202
967
16,257
17,584
18,149
Shareholder Funds
*After adding income derived from associated companies
Net Asset Value
(cent)
Earnings Per Share
(cent)
18.0
16.0
4.5
#15.31 #15.80
#14.15
4.0
14.0
3.5
12.0
3.0
10.0
2.5
8.0
2.0
6.0
1.5
4.0
1.0
2.0
0.5
0.0
•3.55
#0.84
#1.05
0.0
2000
2001
2002
2000
2001
* Based on pre-Placement share capital of
97,588,390 shares
# Based on existing issued share capital
114,888,390 shares and after adjusting
negative goodwill
• Based on weighted average share capital
99,030,057 shares
2002
Note: For comparative reasons, the above figures are based on Proforma Group which have been prepared on the
basis that the Proforma Group had been in existence throughout the three years.
14
Annual Report 2002
MARKET SEGMENT & GEOGRAPHICAL PROFORMA GROUP’S TURNOVER (S$’000)
YEAR 2002
Aviation
18.96%
14.96%
12.24% 11.91%
10.33%
6.70%
6.59%
5.18%
4.45%
6.29%
2.39%
Industrial Australia Hong Kong India
Japan
Korea
P.R.C Singapore Thailand Taiwan
Aviation
16.87%
13.64%
10.96%
9.81%
7.88%
6.75%
5.06%
4.80%
4.37%
2.31%
Japan
Korea
Aviation
36.16%
11.44%
10.36%
7.02%
6.87%
5.52%
1.12%
2.24%
Note:
3.61%
2.63%
Japan
Korea
Aviation
Total
Australia
-
2,851
2,851
Hong Kong
-
2,775
2,775
India
-
558
558
Japan
-
1,037
1,037
Korea
-
1,562
1,562
P.R.C
-
4,417
4,417
Singapore
1,536
3,486
5,022
Thailand
-
1,207
1,207
Taiwan
-
1,466
1,466
Others
-
2,405
2,405
Total
1,536
21,764
23,300
Country
Industrial
Aviation
Total
Australia
-
583
583
Hong Kong
-
1,985
1,985
India
-
1,275
1,275
Japan
-
1,101
1,101
Korea
-
2,472
2,472
P.R.C
-
4,250
4,250
Singapore
4,423
3,438
7,861
Thailand
-
1,212
1,212
Taiwan
-
1,702
1,702
Others
-
2,762
2,761
Total
4,423
20,779
25,202
Country
Industrial
Aviation
Total
Australia
-
353
353
Hong Kong
-
1,728
1,728
India
-
700
700
Japan
-
824
824
Korea
-
2,198
2,198
P.R.C
-
3,243
3,243
Singapore
11,315
4,078
15,393
Thailand
-
2,149
2,149
Taiwan
-
1,131
1,131
Others
-
3,576
3,576
Total
11,315
19,980
31,295
Others
YEAR 2000
13.03%
Industrial
Others
YEAR 2001
17.55%
Country
Others
Others - These countries mainly include Macau, Indonesia, Sri Lanka, Bangladaeh, Pakistan, Phillipines, Vietnam,etc.
Annual Report 2002
15
17
TPA Strategic Holdings Ltd (the “Company”) is committed to maintaining a high standard of corporate
governance within the Company and its subsidiaries (the “Group”). Good corporate governance establishes
and maintains an ethical environment in the Group, which strives to enhance the interests of the shareholders
of the Company (the “Shareholders”). This Report describes the Company’s corporate governance processes
and activities with specific reference to the Code of Corporate Governance (the “Code”).
1.
Board of Directors (the “Board”)
1.1 The Board’s conduct of its affairs
The Board comprises six directors, two of whom are executive directors, three of whom are independent
directors, and one of whom is a non-executive director.
The Board’s principal functions include, among others, supervising the overall management of the
business and affairs of the Group and approving the Group’s corporate and strategic policies and
direction.
Matters which are specifically reserved for the approval of the Board include, among others, any
material acquisitions and disposals of assets and major undertakings (other than in the ordinary course
of business).
Certain functions have been delegated to various board committees, namely, the Audit Committee
(the “AC”), the Nominating Committee (the “NC”) and the Remuneration Committee (the “RC”).
In FY2002, the Board conducted two regular scheduled meetings. The Company’s Articles of Association
(the “Articles”) allow Board meetings to be conducted by way of tele-conferencing, provided that
the requisite quorum of at least two directors and the company secretary are present.
The number of Board and AC meetings held in FY2002 and the attendance of each Board member at
those meetings were as follows:Board
Audit Committee
No. of
No. of
No. of
No. of
meetings
meetings
meetings
meetings
held
attended
held
attended
Chan Nyuk Lin
Chan Nyuk Chong, Vincent
Chin Nyuk Hean
Yeo Wee Tiong, Mark
Ng Teck Sim, Colin
Lim Soon Hock
Cham Tao Soon
16
Annual Report 2002
2
2
2
2
2
2
2
2
2
1(1)
2
2
2
0(2)
3
0
0
0
3
3
3
3
0
0
0
3
3
2(2)
Notes:(1) Chin Nyuk Hean attended one Board meeting as he resigned as a director on 26 July 2002.
(2) Cham Tao Soon was appointed as a director on 1 September 2002.
New directors, upon appointment, are briefed on the business and organisation structure of the
Company. There are update sessions to inform the directors on new legislation and/or regulations
which are relevant to the Group.
1.2 Role of the Chairman and Chief Executive Officer (“CEO”)
Mr. Chan Nyuk Lin (“Mr. Chan”) currently fulfills the roles of the chairman of the Board (the
“Chairman”) and the CEO.
The Board has not adopted the recommendation of the Code to have separate directors appointed as
the Chairman and the CEO. This is because the Board is of the view that there is already a sufficiently
strong independent element on the Board to enable independent exercise of objective judgment on
corporate affairs of the Group by members of the Board, taking into account factors such as the
number of non-executive and independent directors on the Board, as well as the size and scope of the
affairs and operations of the Group.
As the Chairman, Mr. Chan is responsible for, among others, exercising control over quality, quantity
and timeliness of the flow of information between the management of the Company (the
“Management”) and the Board, and assisting in ensuring compliance with the Company’s guidelines
on corporate governance.
1.3 Access to information
For FY2002, Management provided the members of the Board with management accounts on a halfyearly basis, as well as relevant background information relating to items of business to be discussed
at a Board meeting before the scheduled meeting.
In order to ensure that the Board is able to fulfil its responsibilities and in line with the Company’s
intention to adopt the practice of quarterly reporting with effect from FY2003, Management intends,
from FY2003, to provide each member of the Board with management accounts on a quarterly basis.
The Board (both individually and as a group) has, in the furtherance of its duties, access to independent
professional advice, if necessary, at the Company’s expense.
In FY2002, the company secretary attended three AC meetings and two Board meetings. The company
secretary assists the Board to ensure that the Board procedures and the rules and regulations relating
thereto are complied with.
Annual Report 2002
17
2.
Nominating Committee (“NC”)
2.1 Board Membership
The NC was set up on 20 March 2003. The NC comprises three directors, all of whom (including the
chairman of the NC) are independent and non-executive. The chairman of the NC is Dr. Cham Tao
Soon and the other two members are Mr. Lim Soon Hock and Mr. Ng Teck Sim, Colin. The NC has
adopted specific written terms of reference. The first NC meeting was held on 3 April 2003.
According to the terms of reference of the NC, the members of the NC are responsible for, among
others, the appointment and re-nomination of directors having regard to their independence,
qualifications, performance and contributions. The NC also ensures that the Board as a whole, possesses
the core competencies required by the Code.
The NC adopted the Code’s definition on what constitutes an independent director under guidance
note 2.1 (a) to (d) of the Code.
For FY2002, the NC is of the view that the Company is headed and controlled by an effective Board,
as:(a) three of the Board’s four non-executive directors of the Company are independent (as defined in
the Code) and are able to exercise objective judgement on corporate affairs of the Group
independently from Management. This includes Ng Teck Sim, Colin who is a partner of the law
firm, Colin Ng & Partners (“CNP”). He does not participate in deliberations in CNP on matters
relating to the Company and is therefore considered an independent director of the Company,
notwithstanding that CNP provides legal services to the Company;
(b) there is no individual or small group of individuals on the Board who dominate the Board’s
decision making process;
(c)
the Board as a whole, possesses core competencies required for the effective conduct of the
affairs and operations of the Group; and
(d) the current size of the Board is adequate for the purposes of the Group.
2.2 Board Performance
As stated above, one of the terms of reference of the NC is to review and evaluate the performance of
each director and of the Board as a whole for each financial year. The NC adopted an appraisal process
to assess individual board members.
18
Annual Report 2002
The review parameters for evaluating each director include, among others, the following:(a) attendance at board/committee meetings;
(b) intensity of participation and candor at meetings;
(c)
expertise;
(d) strategic insight and business judgment; and
(e) sense of accountability.
However, the NC has decided to defer the assessment of individual directors to a later date.
The NC adopted an evaluation process for the assessment of the Board’s performance as a whole,
based on both quantitative and qualitative criteria such as the achievement of the strategic goals of
the Group, the quality of risk management of the Group, and the price of the Company’s shares over
a period of time. However, the NC felt that it would be more appropriate to assess the collective
Board performance at the same stage as the individual directors.
New directors are at present appointed by way of board resolutions and henceforth only after the NC
recommends and supports their appointment. Such new directors must submit themselves for reelection at the next annual general meeting of the Company. One third of the directors must also
retire by rotation at each annual general meeting as required under the Articles of Association of the
Company.
In this regard, Dr. Cham Tao Soon (independent director), Mr. Lim Soon Hock (independent director)
and Mr. Mark Yeo Wee Tiong (non-executive director) will retire at the forthcoming annual general
meeting. The NC has reviewed all three directors’ performance, and past and potential contributions
to the Group and recommend that the three directors be re-elected at the forthcoming annual general
meeting.
3.
Audit Committee (“AC”)
3.1 Audit Committee
The AC was reconstituted on 27 December 2002 and presently comprises three members, all of whom
(including the chairman of the AC) are independent and non-executive directors. The chairman of the
AC is Mr. Ng Teck Sim, Colin. The AC has adopted specific written terms of reference.
The AC was reconstituted to comply with the requirements of the Code. Pursuant to the reconstitution,
Mr. Chan, an executive director, stepped down as a member of the AC, while Dr. Cham Tao Soon (a
newly appointed independent director of the Company) was appointed as a new member to the AC.
Annual Report 2002
19
Mr. Ng Teck Sim, Colin is the Managing Partner of Colin Ng & Partners. The other members of the AC
namely, Mr. Lim Soon Hock is the founder and Chairman of Plan-B Technologies Pte Ltd, and Dr. Cham
Tao Soon is a Distinguished Professor of Nanyang Technological University. As the members of the AC
have many years of experience in legal, accounting, management and finance related matters, the
Board considers that the members of the AC are appropriately qualified to discharge the responsibilities
of the AC.
In FY2002, the AC met three times. Details of the members’ attendance at AC meetings in FY2002 are
provided in Section 1.1 of this Report. In line with the Company’s intention to adopt the practice for
quarterly reporting with effect from FY2003, the AC shall meet at least four times a year from FY2003.
(a) External Auditors
For FY2002, the AC reviewed together with the external auditors:(i)
the audit plan (including, among others, the nature and scope of the audit before the audit
commenced and the risk management issues of the Group);
(ii) their evaluation of the system of internal controls (including, among others, financial,
operational and compliance controls);
(iii) their audit report;
(iv) the assistance given to them by the Company’s officers; and
(v)
the consolidated balance-sheet and profit and loss account of the Company;
The AC has also conducted a review of the volume of non-audit services provided by Ernst &
Young to satisfy itself that the nature and extent of such services will not prejudice the
independence and objectivity of the external auditors before confirming their re-nomination.
The AC is of the view that Ernst & Young can be considered independent.
(b) Review of financial statements
For FY2002, the AC reviewed the half-yearly and full year financial statements of the Company
and the Group, including announcements relating thereto, to Shareholders and the SGX-ST. From
FY2003, the AC shall review the quarterly and full year financial statements of the Company and
the Group.
(c)
Review of interested person transactions
The AC has reviewed interested person transactions of the Group for FY2002 and reported its
findings to the Board. Please refer to page 27 of the annual report for further details on the
interested person transactions of the Group for FY2002.
20
Annual Report 2002
3.2 Internal Controls
Based on its review of internal controls, the AC is of the view that there are adequate internal controls
in the Group.
3.3 Internal Audit
Under the Code, all listed companies are required to establish an internal audit function that is
independent of the activities it audits. Pursuant to the recommendations of the Code, the Company
engaged Foo, Kon & Tan Consultants Pte Ltd after FY2002, as the internal auditors (the “IA”) to
perform the Company’s internal audit function. The Company will ensure that the IA will meet the
Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.
The IA will report directly to the chairman of the AC on audit matters and to the Chairman on
administrative matters. The AC shall also, among others, review (a) the adequacy of the IA’s activities
to ensure that the IA has adequate resources and appropriate standing within the Company; and (b)
the internal audit programme and ensure co-ordination between the IA, external auditors and
Management.
4.
Remuneration Committee (“RC”)
4.1 Procedures for Developing Remuneration Policies
The RC was set up on 20 March 2003. The RC comprises three members, the majority of whom (including
the chairman of the RC) are non-executive and independent directors. The chairman of the RC is Mr.
Lim Soon Hock (“Mr. Lim”), with Dr. Cham Tao Soon and Mr. Chan Nyuk Lin as the other members.
The RC has adopted specific written terms of reference. The first RC meeting was held on 3 April
2003.
The chairman of the RC, Mr. Lim, has a good working knowledge of human resource and executive
compensation, from his many years of general management experience.
According to the terms of reference of the RC, the functions of the RC include, among others, the
setting up and implementation of formal and transparent processes by which the remuneration
packages of all the executive directors (in the form of service agreements) and at least the top five
executives (in terms of aggregate remuneration and not being directors) are formulated and approved.
The RC also administers the Company’s Share Option Scheme established in 2000, in accordance with
the rules as approved by the shareholders.
No director or member of the RC has been involved in deciding his own remuneration, except for
providing information and documents specifically requested by the RC to assist it in its deliberations.
Annual Report 2002
21
4.2 Level and Mix of Remuneration
According to the respective service agreements of the executive directors:(a) the term of service is for a period of three years commencing 1 December 2000 (the “Initial
Term”) and thereafter for such period as the Board may decide;
(b) during the Initial Term and thereafter, the service agreements shall automatically terminate
without any notice or payment in lieu of notice where certain events (as set out in the agreements)
take place;
(c)
furthermore, after the Initial Term, (i) either party may terminate the respective service agreement
by giving the other party six months’ notice or in lieu or such notice or part thereof, any amount
equivalent to the six months’ notice of the executive directors’ last drawn salary or a pro-rated
amount thereof.
The remuneration of the executive directors includes, among others, a fixed salary and a variable
performance bonus, which is designed to align the executive directors’ interests with that of the
Shareholders.
The independent and non-executive directors do not have any service agreements with the Company.
Save for directors’ fees, which have to be approved by the Shareholders at every annual general
meeting (“AGM”), the independent and non-executive directors do not receive any remuneration
from the Company.
The Company has an employee share option scheme (the “Scheme”). The Company has not granted
any share options to date. The salient features of the Scheme are as follows:(a) The potential size of the Scheme does not exceed 10% of the total issued share capital of the
Company;
(b) The following persons shall be eligible to participate in the Scheme at the absolute discretion of
the Committee:(i)
full-time employees of the Company and/or its subsidiaries who have attained the age of
twenty-one (21) years on or before the Offering Date;
(ii) independent directors of the Company;
(iii) directors of the Company and/or its subsidiaries who perform an executive function;
(iv) employees who qualify under sub-paragraph (i) above and are seconded to a company in
the or an Associated company, or any company outside the Group in which the Company
and/or Group has an equity interest.
22
Annual Report 2002
For the avoidance of doubt, controlling shareholders and associates of controlling shareholders
(save for Chan Nyuk Chong,Vincent) are not entitled to participate in the Scheme. Chan Nyuk
Chong, Vincent can only participate in the Scheme if his participation and grant of options are
approved by independent shareholders of our Company.
(c)
Options that are granted under the Scheme may have exercise prices that are, at the Committee’s
discretion, set at a discount to the market price of a Share, in which event, such options may be
exercised after the second anniversary from the date of grant of the option (“Incentive Options”)
or fixed at a price (the “Market Price”) equal to the average of the last dealt market prices for a
Share for the five consecutive Market Days immediately preceding the grant of the relevant
option (“Market Price Options”) and such options may be exercised after the first anniversary
from the date of the grant of the option;
(d) The purpose of the Scheme is to provide an opportunity for employees and directors of the
Group to participate in the equity of the Company so as to motivate them to greater dedication,
loyalty and higher standard of performance, and to give recognition to employees of the Group
who have contributed to the success and development of our Company and/or our Group. The
Company recognises that it is important to the well-being and stability of the Group that the
Company acknowledges the services and contribution made by the categories of persons described
in the above, and the Group continues to receive their support and contribution.
4.3 Disclosure on Remuneration
For FY2002 the remuneration paid to each of the directors was less than $250,000. A breakdown of
the level and mix of remuneration paid to each director for FY2002 is as follows:-
Remuneration bands
Below S$250,000**
Chan Nyuk Lin
Lim Soon Hock
Chin Nyuk Hean
Yeo Wee Tiong, Mark
Lim Teck Sim, Colin
Cham Tao Soon
*
**
Salary
%
88.85
88.89
100
-
Breakdown of directors’ remuneration
Bonus *Directors’ fees Others
%
%
%
11.15
11.11
-
100
100
100
-
Total
%
100
100
100
100
100
100
Fees are subject to the approval of the Shareholders at the AGM for FY2002
The remuneration does not include Employer’s CPF contribution
Annual Report 2002
23
For FY2002, the remuneration paid to each of the top three key executives (in terms of salary and who
are not directors of the Company) was less than S$250,000. A breakdown of the level and mix of
remuneration of these top three key executives is as follows:-
Remuneration bands
Below S$250,000
Liew Bo Chuan, John
Ng Kok Weng
Anton Georg Noffke
Breakdown of the top three key executives remuneration
Salary
Bonus *Directors’ fees Others
Total
%
%
%
%
%
88.89
88.89
93
11.11
11.11
7
-
-
100
100
100
Chan Nyuk Chong, Vincent is the brother of Chan Nyuk Lin.The annual remuneration of Chan Nyuk
Chong, Vincent did not exceed S$150,000 for FY2002.
The Board has not included an annual remuneration report in its annual report for FY2002 (as suggested
by guidance note 9.1 of the Code) as the Board is of the view that the matters which are required to
be disclosed in the annual remuneration report have already been sufficiently disclosed in this Report
and in the financial statements of the Company.
5.
Communications with the Shareholders
5.1 Accountability
The Company intends to adopt quarterly reporting of its financial results with effect from FY2003.
Accordingly, from FY2003, quarterly financial results of the Company will be published via MASNET.
The Company may also, on an ad hoc basis, hold media and analysts’ briefings and publish press
releases of its financial results.
5.2 Communications with Shareholders
The Board is mindful of the obligation to provide timely and fair disclosure of material information in
accordance with the Corporate Disclosure Policy of the SGX-ST.
All Shareholders receive the annual report and the notice of AGM (the “Notice of AGM”). The
Notice of AGM is advertised in the newspapers and published via MASNET.
24
Annual Report 2002
5.3 Greater Shareholder Participation
The Board welcomes the views of Shareholders on matters affecting the Company, whether at
Shareholders’ meetings or on an ad hoc basis. At AGMs, Shareholders are given the opportunity to air
their views and to ask the directors and Management questions regarding the Group.
6.
Dealings in Securities
The Company has adopted the SGX-ST Best Practices Guide applicable in relation to dealings in the
Company’s securities by its officers. The Company has informed its officers not to deal in the Company’s
shares whilst they are in possession of unpublished material price sensitive information and during
the period commencing one month before the announcement of the Company’s financial results and
ending on the date of the announcement of such financial results.
7.
Further Information on Directors
Chan Nyuk Lin
Date of first appointment as director
Date of last re-election as director
Other Major Appointments
Current Directorships in listed companies
Directorships in listed companies for the past 3 years
5 May 2000
Not required as Managing Director
Nil
Nil
Nil
14 June 2000
20 May 2002
Nil
Nil
Nil
Yeo Wee Tiong, Mark
3 July 2000
15 May 2001
Nil
Hitchins Group Ltd
Tiong Woon Corporation Holding Ltd
Annual Report 2002
25
Lim Soon Hock
Ng Teck Sim, Colin
26
Annual Report 2002
24 November 2000
15 May 2001
Director, Health Promotion Board
Director, Defence Science and Technology
Agency
Chairman, Committee for Healthy Lifestyle
Chairman, Singapore Institute of
Management
Chairman, SIM International Pte Ltd
Executive Board Member, Singapore Indoor
Stadium
Director, SISTIC.Com Pte Ltd
Director, IHPC Technology Ventures Pte Ltd
Member, Board of Governors, Raffles Girls
Secondary School
President and Director, SITA INC Asia Pacific
Ltd
Director, SITA Greater China Holdings Pte Ltd
Director, CommerceNet Singapore Ltd
Director & Member, Advent Television
Director, Deep Video Imaging Technology Pte
Ltd
Director, Deep Video Imaging Ltd ( New
Zealand )
Director, Avation.net Inc ( USA )
Chairman and Member, Plan-B Technologies
Pte Ltd
Nil
Data & Commerce Ltd (ASX)
ei-Nets.com Ltd
Strike Engineering Ltd
24 November 2000
15 May 2001
Member, Appeals Committee, Singapore
Exchange Securities Trading Limited
Aztech Systems Ltd
Airocean Group Ltd
Cham Tao Soon
1 September 2002
Not applicable
A Distinguished Professor of Nanyang
Technological University
President of Nanyang Technological
University (1981 to 2002)
WBL Corporation Ltd
Keppel Corporation Ltd
Natsteel Ltd
United Overseas Bank Ltd
Adroit Innovations Limited
Robinson & Company Limited
Applied Research Corporation
Singapore MRT Ltd
Ei-Nets Ltd
Industrial & Commercial Bank Limited
Overseas Union Bank Ltd
8.
Interested Person Transactions
Name of interested person
Telair International Services Pte Ltd
Aggregate value of all
interested person
transactions during
the financial year
under review (excluding
transactions less
than $100,000 and
transactions conducted
under shareholders’
mandate pursuant to
Rule 920 of the
SGX-ST Listing Manual)
-
Aggregate value
of all interested
person transactions
conducted under
shareholders’ mandate
pursuant to Rule 920 of the
SGX-ST Listing Manual
(excluding transactions
less than $100,000)
$1,719,655
Annual Report 2002
27
for the year ended 31 December 2002
The Directors are pleased to present their report to the members together with the audited financial
statements of the Company and of the Group for the financial year ended 31 December 2002.
Directors
The names of the Directors of the Company in office at the date of this report are :Chan Nyuk Lin
Vincent Chan Nyuk Chong
Mark Yeo Wee Tiong
Lim Soon Hock
Colin Ng Teck Sim
Cham Tao Soon
Principal activities
The principal activity of the Company is that of investment holding.
The principal activities of the subsidiary companies are set out in Note 1 to the financial statements.
There have been no significant changes in the nature of the activities of the Company and of its subsidiary
companies during the financial year.
Results for the financial year
Profit for the financial year transferred to revenue reserve
Group
$
Company
$
967,016
1,449,598
Material movements in reserves and provisions
There were no material transfers to or from reserves or provisions during the financial year except for
normal amounts recognised as an expense for such items as depreciation, amortisation of goodwill and
provisions for doubtful debts, stock obsolescence and income tax as shown in the financial statements.
Acquisition and disposal of subsidiary companies
There was no acquisition or disposal of subsidiary companies during the year.
Issue of shares and debentures
The Company and its subsidiary companies did not issue any shares or debentures during the financial
year.
28
Annual Report 2002
Arrangements to enable Directors to acquire shares and debentures
Except as described in the subsequent paragraph, neither at the end of nor at any time during the financial
year, was the Company a party to any arrangement whose object is to enable the Directors of the Company
to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body
corporate.
Directors’ interests in shares and debentures
The following Directors of the Company who held office at the end of the financial year had, according to
the register of Director’s shareholdings required to be kept under Section 164 of the Companies Act, an
interest in shares of the Company, as stated below :-
Name of Director
Chan Nyuk Lin
Held in the name of Director
At
At
1.12.2002
31.12.2002
Ordinary shares of $0.10 each
49,697,640
7,937,100
49,697,640
7,050,100
No Director who held office at the end of the financial year had an interest in shares or debentures of the
Company, and its subsidiary companies, other than that stated above.
There was no change in any of the above-mentioned interests between the end of the financial year and
21 January 2003.
Dividends
During the financial year, a final dividend of 0.41 cents per ordinary share less tax, amounting to $356,000
was paid in respect of the previous financial year as proposed in the previous Directors’ report. The Directors
propose that a final dividend of 0.41 cents per ordinary share less tax, amounting to $367,413 be paid in
respect of the financial year under review.
Bad and doubtful debts
Before the profit and loss account and balance sheet of the Company were made out, the Directors took
reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts
and the making of provision for doubtful debts and have satisfied themselves that all known bad debts, if
any have been written off and that where necessary adequate provision has been made for doubtful
debts.
At the date of this report, the Directors are not aware of any circumstances which would render it necessary
to write-off or to provide for any bad and doubtful debts.
Annual Report 2002
29
Current assets
Before the profit and loss account and balance sheet of the Company were made out, the Directors took
reasonable steps to ascertain that any current assets which were unlikely to realise their book values in the
ordinary course of business had been written down to their estimated realisable values or adequate provision
had been made for the diminution in values of such current assets.
At the date of this report, the Directors are not aware of any circumstances which would render the values
attributed to current assets in the consolidated financial statements misleading.
Charges on assets and contingent liabilities
Since the end of the financial year, and up to the date of this report, no charge on the assets of the
Company or any corporation in the Group has arisen which secures the liabilities of any other person and
no contingent liability has arisen.
Ability to meet obligations
No contingent or other liability has become enforceable or is likely to become enforceable within the
period of twelve months after the end of the financial year which, in the opinion of the Directors, will or
may substantially affect the ability of the Company and of the Group to meet their obligations as and
when they fall due.
Other circumstances affecting the financial statements
At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this
report or in the consolidated financial statements which would render any amount stated in the financial
statements of the Company and consolidated financial statements misleading.
Unusual items
In the opinion of the Directors, the results of the operations of the Company and of the Group during the
financial year have not been substantially affected by any item, transaction or event of a material and
unusual nature.
Unusual items after the financial year
In the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen
in the interval between the end of the financial year and the date of this report which would affect
substantially the results of the operations of the Company and of the Group for the financial year in which
this report is made.
30
Annual Report 2002
Directors’ contractual benefits
Since the end of the previous financial year, other than those disclosed in the financial statements, no
Director of the Company has received or become entitled to receive a benefit by reason of a contract made
by the Company or a related corporation with the Director, or with a firm of which the Director is a
member, or with a company in which the Director has a substantial financial interest.
Share options
The Share Option Scheme was approved by the shareholders at an Extraordinary General Meeting held on
1 December 2000.
Under the rules of the Share Option Scheme, the Executive Directors and employees of the Group (excluding
employees of associated companies) are eligible to participate in the Share Option Scheme. Controlling
Shareholders and associates of Controlling Shareholders (save for Chan Nyuk Chong, Vincent) are not
entitled to participate in the Share Option Scheme. Chan Nyuk Chong, Vincent’s participation is subject to
the specific approval by the independent shareholders of the Company. Currently, the Company does not
intend to grant any share options to Chan Nyuk Chong, Vincent. The 2000 Scheme is administered by the
Remuneration Committee (the “Committee”). The members of the Committee are as follows :Lim Soon Hock
Cham Tao Soon
Chan Nyuk Lin
(Chairman of Remuneration Committee)
The Company has not granted any share options as at the date of this report.
During the financial year, no options to take up unissued shares of any subsidiary companies were granted
and there were no shares of any subsidiary companies issued by virtue of the exercise of an option to take
up unissued shares.
At the end of the financial year, there were no unissued shares of any subsidiary companies under option.
Audit Committee
The members of the Audit Committee during the financial year and at the date of this report are :Colin Ng Teck Sim
Lim Soon Hock
Cham Tao Soon
(Chairman, non-executive member)
(Non-executive member)
(Non-executive member)
The Audit Committee performs the functions specified by section 201B of the Companies Act, and the
Listing Manual and the Best Practices Guide of the Singapore Exchange.
Annual Report 2002
31
Audit Committee (cont’d)
The Audit Committee holds at least two meetings each year and discharges the following delegated
functions:(a) review with the external auditor the audit plan, their evaluation of internal accounting controls
together with management’s responses, the audit report and any matter which the external auditor
wishes to discuss;
(b) review the assistance given by the Company’s officers to the external auditor;
(c)
review the Company’s interim and annual announcements before they are submitted to the Board for
approval;
(d) review the financial statements of the Company and the Group before their submission to the Board,
together with the external auditor’s report thereon;
(e) review the Group’s compliance with such functions and duties as may be required under the relevant
statutes or the Listing Manual, and such amendments made thereto from time to time;
(f)
nomination of the external auditor; and
(g) review of interested person transactions, if any.
(h) review all non-audit services provided by the auditors and confirm that these non-audit services would
not affect the independence of the auditors.
Apart from the duties listed above, the Audit Committee may commission and review the findings of
internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal
controls or infringement of any Singapore law, rule or regulation which have or is likely to have a material
impact on the Group’s operating results and/or financial position.
The Audit Committee has full access to management and is given the resources required for it to discharge
its functions. It has full authority and discretion to invite any Director or executive officer to attend its
meetings.
The Directors believe that the Company has complied with the Best Practices Guide relating to Audit
Committee issued by the SGX-ST.
The Audit Committee has recommended to the Board of Directors that Ernst & Young, Certified Public
Accountants, be nominated for re-appointment as external auditor of the Company at the forthcoming
Annual General Meeting of the Company.
32
Annual Report 2002
Auditors
Ernst & Young, Certified Public Accountants, have expressed their willingness to accept re-appointment as
auditors.
On behalf of the Board,
Chan Nyuk Lin
Director
Director
Singapore
3 April 2003
Annual Report 2002
33
statement by directors
pursuant to section 201(15)
We, Chan Nyuk Lin and Vincent Chan Nyuk Chong, being two of the Directors of TPA Strategic Holdings
Ltd, do hereby state that, in the opinion of the Directors :(i)
the accompanying balance sheets, profit and loss accounts, statements of changes in equity and
consolidated statement of cash flow together with the notes thereto, set out on pages 36 to 67, are
drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as
at 31 December 2002 and of the results of the business, changes in equity of the Company and the
Group and cash flows of the Group for the year then ended; and
(ii) at the date of this statement there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they fall due.
The Board of Directors authorised these financial statements for issue on 3 April 2003.
On behalf of the Board,
Chan Nyuk Lin
Director
Director
Singapore
3 April 2003
34
Annual Report 2002
auditors’ report
We have audited the financial statements of TPA Strategic Holdings Ltd set out on pages 36 to 67. These
financial statements comprise the balance sheets of the Company and of the Group as at 31 December
2002, profit and loss accounts and statement of changes in equity of the Company and the Group and cash
flow statement of the Group for the year ended 31 December 2002, and notes thereto. These financial
statements are the responsibility of the Company’s Directors. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by the Directors, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion,
(a) the financial statements are properly drawn up in accordance with the provisions of the Singapore
Companies Act (“Act”) and Singapore Statements of Accounting Standard and so as to give a true and
fair view of :
(i)
the state of affairs of the Company and of the Group as at 31 December 2002, the results and
changes in equity of the Company and of the Group and cash flows of the Group for the financial
year ended on that date; and
(ii) the other matters required by section 201 of the Act to be dealt with in the financial statements
and consolidated financial statements;
(b) the accounting and other records, and the registers required by the Act to be kept by the Company
and by those subsidiary companies incorporated in Singapore of which we are the auditors have been
properly kept in accordance with the provisions of the Act.
We have considered the financial statements and auditors’ report of the subsidiary company of which we
have not acted as auditors, being financial statements included in the consolidated financial statements.
The name of the subsidiary company audited by other firms is stated in Note 1 to the financial statements.
We are satisfied that the financial statements of the subsidiary companies that have been consolidated
with the financial statements of the Company are in form and content appropriate and proper for the
purposes of the preparation of the consolidated financial statements and we have received satisfactory
information and explanations as required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiary companies were not subject to any
qualification and in respect of subsidiary companies incorporated in Singapore did not include any comment
made under section 207(3) of the Act.
ERNST & YOUNG
Certified Public Accountants
Singapore
3 April 2003
Annual Report 2002
35
balance sheets
as at 31 December 2002
Group
Fixed assets
Investment in club membership
Subsidiary companies
Associated companies
Joint venture
Other investment
Intangible assets, net
Deferred tax assets
Current assets
Stocks
Trade debtors
Other debtors
Amounts due from subsidiary companies
Amount due from an associated company
Fixed deposits
Cash and bank balances
Current liabilities
Trade creditors
Other creditors
Accrued operating expenses
Amounts due to associated companies
Amounts due to bankers
Provision for taxation
Notes
2002
$
2001
$
5
6
7
8
9
10
11
12
1,276,640
10,000
–
2,956,566
4,171,621
648,624
(158,365)
24,564
1,526,656
10,000
–
2,714,911
539,641
–
(458,200)
–
13
14
15
16
17
18
19
Net current assets
Non-current liabilities
Deferred tax liabilities
Share capital and reserves
Share capital
Share premium
Translation reserve
Revenue reserve
Minority interest
12
20
Company
2002
2001
$
$
100,969
–
8,019,872
–
4,171,621
648,624
–
–
125,820
–
7,519,872
–
539,641
–
–
–
11,175,161
4,427,128
320,840
–
–
175,200
1,282,417
11,610,481
8,505,710
288,644
–
524
210,000
1,047,443
–
–
1,941
2,104,422
–
–
152,956
–
–
8,680
5,776,866
524
–
149,073
17,380,746
21,662,802
2,259,319
5,935,143
1,750,559
248,908
397,259
1,265,995
4,270,298
228,279
3,576,225
164,510
413,560
3,089,277
657,926
261,087
–
19,895
86,950
–
–
5,790
–
14,651
96,212
–
–
5,218
8,161,298
8,162,585
112,635
116,081
9,219,448
13,500,217
2,146,684
5,819,062
–
(249,536)
(14,225)
(13,035)
18,149,098
17,583,689
15,073,545
13,991,360
11,488,839
2,041,233
5,766
4,528,744
11,488,839 11,488,839
2,041,233
2,041,233
(268)
–
3,929,141
1,543,473
11,488,839
2,041,233
–
461,288
18,064,582
17,458,945
15,073,545
13,991,360
84,516
124,744
–
–
18,149,098
17,583,689
15,073,545
13,991,360
The accounting policies and explanatory notes on pages 42 to 67 form an integral part of the financial statements.
36
Annual Report 2002
profit & loss accounts
Group
Revenue
Revenue
Other income
Cost and expenses
Cost of goods sold
Cost of services rendered
Staff costs
- salaries, bonuses and other costs
- defined contribution plan
Depreciation of fixed assets
Amortisation of negative goodwill
Amortisation of positive goodwill
Foreign exchange (loss)/gain
Other operating expenses
2001
$
2002
$
21
22
23,300,173
437,927
25,201,874
462,211
2,972,971
130
1,876,995
12,096
23,738,100
25,664,085
2,973,101
1,889,091
–
–
–
–
(17,166,356) (19,153,418)
(263,035)
(154,455)
23
5
11
(2,535,211)
(243,860)
(470,573)
195,835
(26,000)
(6,075)
(2,600,302)
(2,480,462)
(270,952)
(476,153)
195,835
–
132,440
(2,369,681)
(23,115,577) (24,576,846)
Profit from operations
Finance costs
24
25
622,523
(148,512)
Profit before taxation and
share of results of
associated companies
and joint ventures
Share of results of associated companies
Share of joint venture results
26
9
474,011
422,432
80,348
Profit before taxation
Taxation
27
976,791
(52,589)
Profit after taxation
Attributable to minority interests
Profit retained transferred
to revenue reserve
Earnings per share
- Basic
- Diluted
Company
2002
2001
$
$
Notes
1,087,239
(196,011)
(928,956)
(48,786)
(29,571)
–
–
(2,085)
(209,943)
1,219,341
(1,044,422)
(91,841)
(18,723)
–
–
3,795
(159,622)
(1,310,813)
1,753,760
(716)
578,278
(545)
1,753,044
–
80,348
577,733
–
(1,259)
1,490,151
(310,341)
1,833,392
(383,794)
576,474
(136,933)
924,202
42,814
1,179,810
22,309
1,449,598
–
439,541
–
967,016
1,202,119
1,449,598
439,541
0.84 cents
0.84 cents
1.05 cents
1.05 cents
891,228
600,182
(1,259)
28
Annual Report 2002
37
Group
Notes
Authorised share capital
Ordinary shares
Balance at beginning and end of year
Issued share capital
Ordinary shares
20
Share premium
Ordinary shares
25,000,000 250,000,000 250,000,000
11,488,839
11,488,839 114,888,390 114,888,390
2,041,233
12,785
–
(13,053)
–
(268)
–
Balance at beginning of year
As restated
Translation difference arising
on consolidation
6,034
(268)
Balance at end of year
5,766
(268)
Revenue reserve
Less : Dividends
Profit for the financial year
Total equity
38
2
Number of Shares
2002
2001
25,000,000
2,041,233
Translation reserve
As previously reported
Change in accounting policy
Amount
2002
2001
$
$
Annual Report 2002
35
3,929,141
(367,413)
967,016
2,727,022
–
1,202,119
4,528,744
3,929,141
18,064,582
17,458,945 114,888,390 114,888,390
Company
Issued capital
Ordinary shares
Notes
20
Share premium
Ordinary shares
Revenue reserve
As previously reported
Change in accounting policy
As restated
Less : Dividends
Amount
2002
2001
$
$
11,488,839
2,041,233
11,488,839 114,888,390 114,888,390
2,041,233
2
462,547
(1,259)
21,747
–
35
461,288
(367,413)
21,747
–
Profits for the financial year
1,449,598
439,541
1,543,473
461,288
Total equity
15,073,545
Number of Shares
2002
2001
13,991,360 114,888,390 114,888,390
Annual Report 2002
39
Group
2002
$
2001
$
474,011
891,228
(169,835)
470,573
(115,758)
(35,825)
–
73,369
(30,896)
5,063
(195,835)
476,154
–
(7,506)
44,000
121,396
(95,638)
(266)
670,702
435,320
4,046,386
524
(1,823,282)
(1,757,567)
1,233,533
84,893
(2,464,746)
43,584
1,793,774
(4,274,527)
Cash generated from/(used in) operations
Interest paid
Interest income
Income taxes paid
1,572,083
(73,369)
30,896
(218,959)
(3,583,489)
(121,396)
95,638
(815,652)
Net cash generated from/(used in) operating activities
1,310,651
(4,424,899)
Cash flow from operating activities:
Profit before taxation and share of results
of associated companies and joint ventures
Adjustments for :Amortisation of intangible assets
Depreciation of fixed assets
Gain in disposal of associated company
Gain on disposal of fixed assets
Provision for diminution in value of club membership
Interest expense
Interest income
Currency re-alignment
Operating income before reinvestment in working capital
Decrease in stocks
Decrease/(increase) in debtors
Decrease in amounts due from associated companies
(Decrease)/increase in amounts due to associated companies
Decrease in creditors
40
Cash flow from investing activities :
Investment in joint venture
Purchase of business goodwill
Purchase of fixed assets
Proceeds from sales of fixed assets
Proceeds from disposal of associated company
Capital contribution by minority interest
(4,197,195)
(130,000)
(305,316)
121,075
156,000
–
(540,900)
–
(939,052)
70,894
–
147,053
Net cash used in investing activities
(4,355,436)
(1,262,005)
Annual Report 2002
Group
2002
$
2001
$
Cash flows from financing activities :
Repayment of hire purchase creditors
Increase/(decrease) in bank borrowings
Dividend paid on ordinary shares
–
3,612,372
(367,413)
(120,791)
(4,116,912)
–
Net cash generated from/(used in) financing activities
3,244,959
(4,237,703)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
200,174
1,257,443
(9,924,607)
11,182,050
Cash and cash equivalents at end of period (Note 30)
1,457,617
1,257,443
Annual Report 2002
41
31 December 2002
1.
Corporate information
The consolidated financial statements of TPA Strategic Holdings Ltd for the year ended 31 December
2002 were authorised for issue in accordance with a resolution by the Directors on 3 April 2003.
The Company is a limited liability Company which was incorporated in Singapore on 5 May 2000 and
listed on the Stock Exchange of Singapore Dealing and Automated Quotation System (“SESDAQ”).
The registered office of the Company is located at 50 Raffles Place, #29-00 Singapore Land Tower,
Singapore 048623. The principal place of business of the Company is located at No. 12, Little Road,
#04-01 Lian Cheong Industrial Building, Singapore 536986.
The principal activity of the Company is that of investment holding.
The principal activities of the subsidiary companies are those of a dealer in aircraft components supply
and services, aviation consultants, importers, exporters, general trading, the design and supply of
specialised shelter ventilating components and its related engineering and testing services for civil
defence shelters.
There have been no significant changes in the nature of the activities of the Company and of its
subsidiary companies during the financial year.
The Group operates in 3 (2001 : 3) countries and the Group and Company employed 52 and 10 (2001
: 44 and 12) employees as of 31 December 2002 respectively.
The details of the subsidiary companies, associated companies and joint venture of the Company and
of the Group as at 31 December are :Percentage
Name of company
of equity held
(Country of incorporation)
Cost
by the Group
(Place of business)
2002
2001
2002
2001
$
$
%
%
Held by the Company
* TPA Pte Ltd
(Singapore)
6,676,480 6,676,480
100
100
Distributor in aircraft
components and repair
services, aero-equipment
marketing, importers,
exporters and general
trading. (Singapore)
* TechnoPlus Pte Ltd
(Singapore)
1,000,000
500,000
100
100
Provision of industrial
engineering products
and services. (Singapore)
**TPA Airtech Korea
Co., Ltd
(Korea)
343,392
343,392
70
70
Provision of aircraft
engineering services
and components. (Korea)
8,019,872 7,519,872
42
Annual Report 2002
31 December 2002
1.
Corporate information (cont’d)
Name of company
Percentage
of equity held
by the Group
2002
2001
%
%
Cost
(Place of business)
2002
$
2001
$
615,000
615,000
29.5
29.5
Distributor, repair and
servicing of aircraft
related parts.
(Singapore)
–
260,000
–
40.0
Distributor, repair and
servicing of aircraft
related parts.
(Singapore)
615,000
875,000
Held by TPA Pte Ltd
**Telair International Services
Pte Ltd
(Singapore)
* Bridport Aviation Asia
Pte Ltd (Singapore)
On 31 May 2002, a subsidiary company, TPA Pte Ltd entered into a sale and purchase agreement with
Amsafe Bridport Limited (“Amsafe”) under which it was agreed that TPA Pte Ltd’s 40% share in Bridport
Aviation Asia Pte Ltd be sold to Amsafe for a cash consideration of $156,000.
Name of company
Percentage
of equity held
by the Group
2002
2001
%
%
Cost
2002
$
2001
$
(Place of business)
Joint venture
Held by the Company
**Chengdu Falcon Aircraft
Engineering Services Co. Ltd
(People’s Republic of China)
–
540,900
**Sichuan Aote Accessories
Repair and Maintenance
Co., Ltd
4,197,195
–
–
30.0
Provision of aircraft
engineering services and
line maintenance services.
48.0
–
Provision of maintenance
and repair services for
aviation equipment and
air frame components,
research and development
of aviation equipment and
accessories, and also the
wholesale and retail of
aviation equipment and
accessories.
Annual Report 2002
43
31 December 2002
1.
Corporate information (cont’d)
On 17 July 2002, the Company entered into an investment agreement with Sichuan Haite High-Tech
Co., Ltd (“Haite”) to purchase 48% of the registered capital of Sichuan Aote Accessories Repair and
Maintenance Co., Ltd (“Aote”).
On 15 November 2002, the Company entered into a merger agreement and an amended joint venture
investment agreement with Xiang Yu Delta Aviation Technology Co Ltd (XY Delta) in relation to the
following matters.
ˇ
Chengdu Falcon Aircraft Engineering Services Co. Ltd (“CFAES”) will merge with XY Delta, another
sino-foreign joint venture company; and
ˇ
The merged entity will retain the name “Chengdu Falcon Aircraft Engineering Services Co Ltd
and the restructured registered share capital will be RMB 16,474,293 (2001 : US$1 million), of
which the Company will hold 15.1%.
With the dilution of investment in CFAES, of which the Company holds less than 20% of the total
share capital in CFAES, investment in CFAES is accounted for as “other investment” in the Company’s
financial statements. Details of the unquoted investment are shown in Note 10.
*
**
2.
Audited by Ernst & Young, Singapore
Audited by another firm of public accountants
Changes in accounting policies
SAS 12 (Revised 2001) Income Taxes became effective for the financial statements for the year ended
31 December 2002. The adoption of this standard has not given rise to any adjustments to the opening
balances of revenue reserves.
During the financial year, the Company changed its accounting policy for consolidating the share of
results of joint venture from proportionate consolidation to equity accounting. The consolidation of
the share of joint venture results is performed at Company level. Prior to the change, consolidation of
the share of joint venture results is performed at Group level.
The Company believes that this change in accounting policy would better present the contribution of
the joint ventures. The change has been applied retrospectively. The Company’s profit for financial
year ended 2001 and the other comparatives have been restated. Accordingly, the Group’s assets and
liabilities for financial year ended 2001 have been restated to account for the change in accounting
policy. This change in accounting policy has not given rise to any adjustments to the Group’s opening
reserves at 1 January 2002 and Group profit for the year ended 31 December 2001.
44
Annual Report 2002
31 December 2002
3.
Summary of significant accounting policies
(a) Basis of presentation
The financial statements of the Company and of the Group, which are expressed in Singapore
dollars are prepared under the historical cost convention and in accordance with Singapore
Statements of Accounting Standard and applicable requirements of Singapore law.
(b) Basis of consolidation
The accounting year of the Company and its subsidiaries ends on 31 December and the consolidated
financial statements incorporate the financial statements of the Company and its subsidiaries.
The results of subsidiaries acquired or disposed of during the period are included in or excluded
from the respective dates of acquisition or disposal, as applicable.
The excess of the cost of acquisition of a subsidiary over the fair value of the net underlying
assets acquired is dealt with as goodwill arising on consolidation. Such goodwill is amortised
against profit and loss account over the period the benefits are expected to be received.
Assets, liabilities and results of the overseas subsidiary companies are translated into Singapore
dollars on the basis outlined in paragraph (n) below.
Details of the Group’s subsidiary companies are shown in Note 1.
(c) Subsidiary companies
A subsidiary company is a company in which the Group, directly or indirectly, holds more than
50% of the issued share capital, or controls more than half of the voting power, or controls the
composition of the board of directors.
An assessment of investment in subsidiary companies is performed when there is indication that
the asset has been impaired or the impairment losses recognised in the prior year no longer exist.
Investment costs in subsidiary companies are stated at cost less any impairment.
(d) Associated companies
An associated company is defined as a company, not being a subsidiary, in which the Group has a
long-term interest of not less than 20% of the equity and in whose financial and operating policy
decisions the Group exercises significant influence. The accounting year of the associated company
ends on 1 December.
The Group’s share of the results of associated companies is included in the profit and loss account.
The Group’s share of the post-acquisition profit and loss is included in the cost of investment in
the consolidated balance sheet.
When associated companies are acquired, any excess of the consideration paid over the fair
values of the net assets at the date of acquisition is dealt with as goodwill and is amortised
against the share of post acquisition profit and loss over 5 years.
Annual Report 2002
45
31 December 2002
3.
Summary of significant accounting policies (cont’d)
(e) Joint ventures
A joint venture, not being a subsidiary or associated company, is defined as a contractual
arrangement between the Company and one or more parties to undertake an economic activity
which is subject to joint control.
The Company’s share of the results of joint ventures, based on the latest available audited financial
statements or unaudited management financial statements, is included in the consolidated profit
and loss account. The attributable share of post acquisition retained reserves less accumulated
losses is added to the cost of investments in joint ventures shown in the consolidated balance
sheet.
Equity accounting of joint venture company’s results is discontinued where the Company’s share
of losses equals or exceeds the cost of investment in the joint venture company unless the Company
has incurred obligations or made payments on behalf to satisfy obligations of the joint venture
company that the Company has guaranteed or otherwise committed.
Details of the Company’s joint venture company are given in Note 1.
(f) Intangible assets
Goodwill
Goodwill arising on acquisition represents the excess of the cost of acquisition over the fair value
of the Group’s share of the identifiable net assets acquired. Goodwill is stated at cost less
accumulated amortisation and impairment losses. In respect of associates and jointly controlled
entities, the carrying amount of goodwill is included in the carrying amount of the investment in
the associate or jointly controlled entity. Goodwill is amortised from the date of initial recognition
over its estimated useful life of not more than 20 years.
Negative goodwill
Negative goodwill arising on acquisition represents the excess of the fair value of the identifiable
net assets acquired over the cost of acquisition.
To the extent that negative goodwill relates to an expectation of future losses and expenses that
are identified in the plan of acquisition and can be measured reliably, but which have not yet been
recognised, it is recognised in the profit and loss account when the future losses and expenses are
recognised. Any remaining negative goodwill, but not exceeding the fair values of the non-monetary
assets acquired, is recognised in the profit and loss account over the weighted average useful life of
those assets that are depreciable or amortisable. Negative goodwill in excess of the fair values of
the non-monetary assets acquired is recognised immediately in the profit and loss account.
In respect of associates and jointly controlled entities, the carrying amount of negative goodwill
is included in the carrying amount of the investment in the associate or jointly controlled entity.
The carrying amount of other negative goodwill is deducted from the carrying amount of
intangible assets.
46
Annual Report 2002
31 December 2002
3.
(g) Revenue recognition
Revenue from sales of products are recognised upon passage of title to the customer which
generally coincides with their delivery and acceptance.
Revenue from the rendering of services is recognised when the service is rendered.
Dividend income is recognised on declaration of dividends by subsidiary companies.
(h) Stocks
Stocks are stated at the lower of cost and net realisable value and are valued on a first-in-firstout basis. Net realisable value represents the estimated selling price less anticipated cost of disposal
after making allowance for damaged, obsolete and slow-moving items.
(i)
Fixed assets
Fixed assets are stated at cost less accumulated depreciation. The cost of an asset comprises its
purchase price and any directly attributable costs of bringing the asset to working condition for
its intended use. Expenditure for additions, improvements and renewals are capitalised and
expenditure for maintenance and repairs are charged to the profit and loss account. When assets
are sold or retired, their cost and accumulated depreciation are removed from the financial
statements and any gain or loss resulting from their disposal is included in the profit and loss
accounts.
(j)
Depreciation
Depreciation is calculated on the straight line method to write off the cost of fixed assets over
their estimated useful lives. The estimated useful lives of fixed assets are as follows :Leasehold improvements
Office equipment, furniture and fittings
and computers
Renovation
Workshop equipment
Motor vehicles
-
5 years
-
5 years
5 years
5 years
5 years
Fully depreciated assets are retained in the financial statements until they are no longer in use
and no further charge for depreciation is made in respect of these assets.
(k) Investments
Investments are stated at cost and provision is made for any permanent impairment in value
which is considered to be other than temporary.
Annual Report 2002
47
31 December 2002
3.
(l) Deferred taxation
Deferred income tax is provided, using the liability method, on all temporary differences at the
balance sheet date between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences (unless the deferred
tax liability arises from goodwill amortisation or the initial recognition of an asset or liability in a
transaction that is not a business combination and at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss).
Deferred tax liabilities are recognised for all taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint ventures, except where the timing of
the reversal of the temporary difference can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax asses and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, carry-forward of unused tax assets
and unused tax losses can be utilised (unless the deferred tax asset relating to the deductible
temporary difference arises form the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss). For deductible temporary differences associated with investments
in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised
to the extent that it is probable that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the temporary difference can be utilised.
(m) Leased assets
Where assets are financed by lease agreements that give rights approximating to ownership
(finance lease), the assets are capitalised under fixed assets as if they had been purchased outright
at the values equivalent to the present values of total rental payable during the periods of the
leases and the corresponding lease commitments are included under liabilities. Lease payments
are treated as consisting of capital and interest elements. The interest is charged to profit and
loss accounts. Depreciation on the relevant assets is charged to profit and loss accounts on the
basis outlined in paragraph (j) above.
Annual rental on operating lease is charged to profit and loss accounts.
(n) Foreign currencies
Transactions arising in foreign currencies during the period are converted at exchange rates closely
approximating those ruling at the transaction dates. Monetary assets and liabilities denominated
in foreign currency are converted into local currency at exchange rates ruling at the balance
sheet date. All exchange differences arising from conversion are included in profit and loss account.
48
Annual Report 2002
31 December 2002
3.
(n) Foreign currencies (cont’d)
For inclusion in the consolidated financial statements, all assets and liabilities of the foreign
subsidiaries, associated companies and joint ventures are translated into Singapore dollars at the
exchange rates ruling at the balance sheet date and the results of foreign subsidiaries, associated
companies and joint ventures are translated into Singapore dollars at the average exchange
rates. Exchange differences due to such currency translations are included in the foreign currency
translation reserve.
(o) Trade and other debtors
Trade debtors, which generally have 30 to 60 day terms, are recognised and carried at original
invoice amount less an allowance for any uncollectible amounts. An estimate for provision for
doubtful debts is made when the collection of the full amount is no longer probable. Bad debts
are written off as incurred.
Receivables from related companies are recognised and carried at cost less an allowance for any
uncollectible amounts.
(p) Trade and other payables
Liabilities for trade and other payables which are normally settled on 30 day terms, are carried at
cost which is the fair value of the consideration to be paid in the future for goods and services
received, whether or not billed to the Company.
(q) Employee benefits
Defined contribution plan
As required by law, the Company makes contributions to the state pension scheme, the Central
Provident Fund (CPF). CPF contributions are recognised as compensation expense in the same
period as the employment that gives rise to the contribution.
Employee leave entitlement
In accordance with SAS 17 (2000), employee entitlements to annual leave are recognised when
they accrue to employees. An accrual is made for the estimated liability for leave as a result of
services rendered by employees up to the balance sheet date.
(r) Borrowing costs
Borrowing costs are recognised as expenses in the period in which they are incurred.
(s) Provisions
A provision is recognised when there is a present obligation (legal or constructive) as a result of
a past event and it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current
best estimate.
Annual Report 2002
49
31 December 2002
3.
(t) Minority interests
The minority interest reflects the share of the net results of operations and net assets of subsidiary
companies attributable to interests which are not owned, directly or indirectly, by the Group.
4.
Segment information
The Group’s operating businesses are organised and managed separately according to the nature of
products and services provided, with each segment representing a strategic business unit that offers
different products and services different markets. The aviation business is the supply of aircraft parts
such as Rotables and Expendables and the provision of aircraft components repair services in the
aviation industry. The Industrial Products and Services segment is the design and supply of specialised
shelter ventilating components and its related engineering and testing services for civil defence
applications in Singapore. Segment accounting policies are the same as the policies described in Note
3. Revenues are attributed to geographic areas based on the location of the customers.
The following tables present revenue and profit information regarding industry segments for the
years ended 31 December and certain assets and liabilities information regarding industry segments
at 31 December 2002 and 2001.
Business segments
Industrial
Products and
Services
2002
2001
$
$
Corporate
and others
2002
2001
$
$
21,764,318 20,778,375
432,715
365,196
–
–
–
–
1,535,855
5,082
–
–
4,423,499
4,394
–
–
–
–
2,972,968
–
–
–
1,876,995
–
–
– 23,300,173 25,201,874
–
–
437,797
369,590
(2,972,968) (1,876,995)
–
–
–
–
130
92,621
22,197,033 21,143,571
1,540,937
4,427,893
2,972,968
1,876,995
(2,972,968) (1,876,995) 23,738,100 25,664,085
Aviation
Business
2002
2001
$
$
Segment revenue
Sales to external
customters
Other revenue
Inter-segment charges
Unallocated revenue
Total revenue
Segment operating profit/(loss)
Finance costs
Share of results of associated
companies
Share of results of joint ventures
Taxation
Minority interest, net of taxes
Net profit transferred to
retained earnings
50
Annual Report 2002
Eliminations
2002
2001
$
$
Consolidated
2002
2001
$
$
827,783
(143,484)
52,961
(182,730)
(205,260)
(5,028)
1,034,278
(13,281)
622,523
(148,512)
1,087,239
(196,011)
422,432
80,348
600,182
(1,259)
–
–
–
–
422,432
80,348
600,182
(1,259)
1,187,079
469,154
(210,288)
1,020,997
976,791
(52,589)
42,814
1,490,151
(310,341)
22,309
967,016
1,202,119
31 December 2002
4.
Segment information (cont’d)
Aviation
Business
2002
2001
$
$
Industrial
Products and
Services
2002
2001
$
$
Corporate
and others
2002
2001
$
$
Consolidated
2002
2001
$
$
Segment assets
Investment in associated companies
Investment in joint ventures
Unallocated assets
15,473,640 18,160,227
2,956,567 2,714,911
4,171,621
539,641
–
–
949,850 2,544,624 1,276,539
–
–
–
–
–
–
–
–
–
778,965 17,700,029 21,483,816
– 2,956,567 2,714,911
– 4,171,621
539,641
– 1,482,179 1,257,442
Total assets
22,601,828 21,414,779
949,850 2,544,624 1,276,539
778,965 26,310,396 25,995,810
294,195
334,270
Segment liabilities
Unallocated liabilities
7,233,968
7,271,803
295,425
404,856
7,933,019 7,901,498
228,279
510,623
8,161,298 8,412,121
Other segment information :Capital expenditure
Depreciation
Amortisation
224,729
129,554
(195,835)
15,379
144,649
(195,835)
18,871
31,131
26,000
28,002
25,359
–
61,716
309,888
–
895,671
306,145
–
305,316
470,573
(169,835)
939,052
476,153
(195,835)
Geographical segments
The following table presents revenue regarding geographical segments for the years ended 31
December 2002 and 2001. The Group’s assets and capital expenditure are mainly situated in Singapore.
Accordingly, no segment assets, liabilities and capital expenditure analysis by geographical area is
provided.
Segment revenue
Sales to external
customers
2002
2001
$
$
Singapore
People’s Republic of China
Hong Kong
Thailand
Korea
Taiwan
Japan
Australia
India
Others
Consolidated
5,021,604
4,417,235
2,774,905
1,207,158
1,561,813
1,465,649
1,037,835
2,850,508
558,145
2,405,321
7,862,055
4,250,189
1,984,644
1,211,506
2,472,069
1,701,541
1,101,132
582,530
1,275,072
2,761,136
23,300,173
25,201,874
Annual Report 2002
51
31 December 2002
5.
Fixed assets
Group
52
Office
equipment,
furniture &
fittings
& computers
$
Renovation,
leasehold
improvements
$
Workshop
equipment
$
Total
$
Cost
As at 1 January 2002
Additions during the year
Disposals
1,636,713
73,614
(20,098)
769
707,163
800
–
–
687,423
230,902
(121,096)
–
3,031,299
305,316
(141,194)
769
As at 31 December 2002
1,690,998
707,963
797,229
3,196,190
Accumulated depreciation
Charge for the year
Disposals
695,314
265,723
(7,117)
278
489,309
71,185
–
–
320,020
133,665
(48,827)
–
1,504,643
470,573
(55,944)
278
954,198
560,494
404,858
1,919,550
Charge for 2001
207,748
122,994
145,411
476,153
Net book value
736,800
147,469
392,371
1,276,640
941,399
217,854
367,403
1,526,656
Annual Report 2002
31 December 2002
5.
Fixed assets (cont’d)
Group
6.
Office
equipment,
furniture &
fittings
& computers
$
Renovation,
leasehold
improvements Total
$
$
Cost
Additions during the year
21,193
4,720
123,350
–
144,543
4,720
25,913
123,350
149,263
Accumulated depreciation
Charge for the year
2,276
4,901
16,447
24,670
18,723
29,571
7,177
41,117
48,294
Charge for 2001
2,276
16,447
18,723
Net book value
18,736
82,233
100,969
18,917
106,903
125,820
Investment in club membership
Group
2002
$
Corporate club membership, at cost
Less : Provision for diminution in value
of investment (Note 24)
2001
$
54,000
54,000
(44,000)
(44,000)
10,000
10,000
Annual Report 2002
53
31 December 2002
7.
Company
2002
2001
$
$
Unquoted shares, at cost
Less : Pre-acquisition dividends received
8,019,872
–
8,319,872
(800,000)
8,019,872
7,519,872
Further details regarding subsidiary companies are set out in Note 1.
8.
Group
Unquoted shares, at cost
Share of post-acquisition reserve
2002
$
2001
$
615,000
2,341,566
875,000
1,839,911
2,956,566
2,714,911
Included in the unquoted shares at cost is goodwill of $119,274 (2001 : $119,274). The share of postacquisition reserve is stated after deducting accumulated goodwill amortisation of $95,420 (2001 :
$71,565).
Goodwill is analysed as follows :2002
$
2001
$
119,274
119,274
Amortisation
At beginning of year
Amortisation for the year
71,565
23,855
47,710
23,855
At end of year
95,420
71,565
Carrying amount at end of year
23,854
47,709
Cost
At beginning and end of year
Further details regarding associated companies are set out in Note 1.
54
Annual Report 2002
31 December 2002
9.
Joint venture
Group and Company
2002
2001
$
$
Unquoted equity investment, at cost
Share of post-acquisition reserves
The Group’s share of the results of the joint venture is as follows :Turnover
9.
4,197,195
(25,574)
540,900
(1,259)
4,171,621
539,641
1,071,917
65,082
Profit/(loss) before taxation
Taxation
82,523
(2,175)
(1,259)
–
Profit/(loss) after taxation
80,348
(1,259)
Joint venture
The Group’s share of the assets, liabilities and equity of the joint venture is as follows :Group and Company
2002
2001
$
$
Non-current assets
Current assets
Current liabilities
3,955,578
2,880,795
(2,298,369)
29,671
538,503
(15,480)
4,538,004
552,694
Fee of $50,000 in connection with the investment in a new joint venture was paid to auditors of the
Company during the year. The amount was included in the cost of investment in joint venture.
Further details regarding the joint venture are set out in Note 1.
10. Other investment
Company
2002
2001
$
$
Unquoted equity investment, at book value
648,624
–
Annual Report 2002
55
31 December 2002
11. Intangible assets, net
Group
2002
$
Negative goodwill
Cost
At beginning and end of year
Amortisation
At end of year
Carrying amount of negative goodwill at end of year
2001
$
(783,340)
(783,340)
325,140
195,835
129,305
195,835
520,975
325,140
(262,365)
(458,200)
The negative goodwill is being recognised in the profit and loss account as income on a straight-line
basis over the remaining weighted average useful life of the identifiable acquired depreciable assets
over a four-year period.
Group
2002
2001
$
$
Positive goodwill
Cost
Goodwill arising on purchase of business
130,000
–
Amortisation
–
(26,000)
–
–
(26,000)
–
104,000
–
At end of year
Carrying amount of positive goodwill at end of year
Carrying amount of net intangible assets
(158,365)
(458,200)
On 31 May 2002, one of the Company’s subsidiaries entered into a sales and purchase agreement with
Amsafe Bridport Limited (formerly known as Bridport (UK) Limited) and Bridport Aviation Asia Pte Ltd
(“BAA”) in relation to the purchase of BAA’s defence business for a consideration of $130,000.
The consideration of $130,000 paid for the purchase of BAA defence business has been recognised as
an intangible asset and is amortised over a period of five years.
56
Annual Report 2002
31 December 2002
12. Deferred tax asset/(liabilities)
Group
2002
$
Write-back/(provision) (Note 27)
Company
2002
2001
$
$
2001
$
(249,536)
274,100
(112,527)
(137,009)
(13,035)
(1,190)
–
(13,035)
24,564
(249,536)
(14,225)
(13,035)
(167,560)
(249,536)
(14,225)
(13,035)
Deferred tax liabilities
Excess of net book value over
tax written down value of fixed assets
Deferred tax assets
Exchange differences, net
Provision for doubtful debts
Provision for stock obsolescence
Other deferred tax assets
30,576
16,375
135,493
9,680
–
–
–
–
–
–
–
–
–
–
–
–
Gross deferred tax assets
192,124
–
–
–
Net deferred tax asset/(liabilities)
24,564
(249,536)
(14,225)
(13,035)
13. Stocks
Group
2002
$
Stock on hand, at cost
Stock on hand, at net realisable value
2001
$
10,622,219
552,942
11,037,512
572,969
11,175,161
11,610,481
Stocks are stated after deducting provision
for stock obsolescence analysed as follows :Balance at beginning of year
Provided during the year (Note 24)
Provision written off during the year
Stocks written off directly to profit and loss account (Note 24)
611,196
210,185
(205,503)
–
611,196
–
615,878
611,196
–
26,973
Annual Report 2002
57
31 December 2002
14. Trade debtors
Group
2002
$
Trade debtors are stated after deducting provision
for doubtful debts of
Analysis of provision for doubtful debts :Balance at beginning of year
Provided during the year (Note 24)
Provision written off during the year
Bad debts written off directly to profit and loss account
2001
$
74,432
151,654
151,654
–
(77,222)
–
151,654
–
74,432
151,654
126,201
–
15. Other debtors
Group
Deposits
Prepayments
Advance to staff
Others
Company
2002
2001
$
$
2002
$
2001
$
140,731
124,460
48,875
6,774
137,951
101,412
37,600
11,681
–
1,941
–
–
–
6,759
–
1,921
320,840
288,644
1,941
8,680
16. Amounts due from subsidiary companies
Amounts due from subsidiary companies are non-trade in nature, unsecured, interest-free and are
expected to be repaid on demand.
17. Amount due from an associated company
Amount due from an associated company is unsecured, interest-free and is expected to be repaid on
demand.
18. Amounts due to associated companies
Amounts due to associated companies are trade in nature, unsecured, interest-free and are expected
to be repaid on demand.
58
Annual Report 2002
31 December 2002
19. Amounts due to bankers
Group
2002
$
Trust receipts
Bank overdrafts
Short term bank loan
2001
$
1,079,738
–
3,190,560
279,048
378,878
–
4,270,298
657,926
The bank overdrafts, trust receipts and short term bank loan are secured by corporate guarantees
given by the Company. The bank loan bears interest of 3.79% to 3.825% (2001 : nil) per annum.
20. Share capital
Group and
Company
2002
2001
$
$
Authorised :250,000,000 ordinary shares of $0.10 each
25,000,000
25,000,000
Issued and fully paid up (1) :Ordinary shares
114,888,390 (2001 : 114,888,390 ordinary shares
of $0.10 each
11,488,839
11,488,839
(1)
The holders of ordinary shares are entitled to receive dividends as and when declared by the
Company. All ordinary shares carry one vote per share without restriction.
Annual Report 2002
59
31 December 2002
21. Revenue
Revenue represents invoiced trading sales and services after allowance for trade discounts and returns
from customers.
Group
Company
2002
2001
2002
2001
$
$
$
$
Revenue is analysed as follows :Sale of goods
Services rendered
Management fees from subsidiary
companies
Dividend income from subsidiary company
22,221,788
1,078,385
23,873,822
1,328,052
–
–
–
–
–
–
–
–
1,287,968
1,685,003
1,376,995
500,000
23,300,173
25,201,874
2,972,971
1,876,995
22. Other income
Group
Interest income
Management fees
Rental income
Other income
Gain on disposal of investment in an
associated company
Company
2002
2001
$
$
2002
$
2001
$
30,896
184,417
103,848
3,008
95,638
241,000
115,848
9,725
130
–
–
–
10,323
–
–
1,773
115,758
–
–
–
437,927
462,211
130
12,096
23. Staff costs
Group
2002
$
Staff costs include :Directors’ fee
- Directors of the Company
- Other directors of subsidiaries
Directors’ remuneration
- Directors of the Company
- Other Directors of subsidiaries
60
Annual Report 2002
2001
$
Company
2002
2001
$
$
93,333
37,100
80,000
19,320
93,333
–
80,000
–
481,447
102,891
596,440
–
481,447
–
596,440
–
31 December 2002
24. Profit from operations
Group
2002
$
2001
$
Profit from operations is stated after
charging/(crediting) the following :Amortisation of intangible assets
(169,835)
Auditors’ remuneration
- Auditors of the Company
40,850
Other auditors of the Group
- Current year
13,500
- Underprovision in prior year
1,808
Non-audit fees paid to auditors of the Company 18,250
Gain on disposal of fixed assets
(35,825)
Loss on fixed assets written off
–
Provision for diminution in value of
investment in club membership
–
Provision for doubtful trade debts
–
Provision for stocks obsolescence
210,185
Stocks written off
–
Bad trade debts written off
126,201
Rental expenses
534,081
Entertainment
303,638
Repair and maintenance
123,560
Exhibition cost
137,524
Telecommunications and utilities
225,160
(195,835)
Company
2002
2001
$
$
–
–
43,000
19,950
21,000
4,155
–
7,250
(8,193)
687
–
–
5,200
–
–
–
–
2,200
–
–
–
–
–
–
–
–
11,109
6,309
–
4,725
–
–
–
–
–
–
4,657
4,792
–
6,392
44,000
151,654
611,196
26,793
–
503,608
231,376
105,618
2,529
209,811
25. Finance costs
Group
2002
$
2001
$
Company
2002
2001
$
$
Interest expenses on :
- Hire purchase
- Bank overdrafts
- Trust receipts
- Short term bank loans
–
9,498
32,138
31,733
4,883
38,370
78,143
–
–
–
–
–
–
19
–
–
Bank charges
73,369
75,143
121,396
74,615
–
716
19
526
148,512
196,011
716
545
Annual Report 2002
61
31 December 2002
26. Share of results of associated companies
Group
Share of profits
Less : Amortisation of goodwill
2002
$
2001
$
446,287
(23,855)
624,037
(23,855)
422,432
600,182
27. Taxation
Group
Provision for taxation in respect
of profit for the year
Under/(over) provision of income
tax in respect of prior years
Provision/(write-back) of
deferred tax in the current year (Note 12)
Share of associated companies’ tax
2002
$
2001
$
Company
2002
2001
$
$
154,054
210,128
376,491
32,098
(70,833)
6,113
(3,821)
(274,100)
137,009
1,190
13,035
(87,948)
140,537
276,304
34,037
383,794
–
136,933
–
52,589
310,341
383,794
136,933
127,719
A reconciliation of the statutory tax rates to the Group’s and Company’s effective tax rate applicable
to pre-tax profits for the year ended 31 December was as follows :Group
Company
2002
2001
2002
2001
$
$
$
$
Taxation at statutory tax rate of
of 22 % (2001 : 24.5%)
Adjustments :
Income not subject to tax
Permanent differences for tax purposes
Under/(over) provision in prior years
Deferred tax assets not recognised
Deferred tax assets not previously
recognised, recognised in current year
62
Annual Report 2002
976,791
1,490,151
1,833,392
576,474
214,894
365,087
403,346
141,236
(21,395)
(13,614)
32,098
–
(36,535)
(89,111)
(70,833)
136,572
(6,438)
(19,227)
6,113
–
(177,281)
–
–
(3,617)
–
(3,821)
–
–
31 December 2002
27. Taxation (cont’d)
Group
2002
$
2001
$
Company
2002
2001
$
$
Effect of different tax rate
of overseas subsidiaries
Others
5,609
12,278
5,161
–
–
–
–
3,135
Current financial year’s taxation charge
52,589
310,341
383,794
136,933
As at 31 December 2002, the Group has unutilised capital allowances and tax losses amounting to
$43,964 and $360,044 (2001 : $nil and $54,030) respectively available for set-off against future taxable
profits subject to agreement with the tax authorities.
One of the Group’s associated companies has been granted pioneer status for its repair and overhaul
of aircraft cargo loading systems. The pioneer status is for the period commencing 1 October 1997 for
a qualifying period of 5 years provided that the associated company fulfils the condition of investing
in fixed assets of $4,000,000 by 30 September 2001. During the qualifying period, all income arising
from pioneer status activities is wholly exempt from income tax.
The associated company has not been able to fulfil the condition of investing in fixed assets of $4,000,000
by 30 September 2001. However, the Economic Development Board has verbally agreed to grant
exemption from tax on profits arising from its pioneer activities for a period of 4 years commencing
from1 October 1997.
28. Earnings per share
Earnings per share is calculated by dividing the Group’s profit for the year of $967,016 (2001 : $1,202,119)
with the weighted average of 114,888,390 (2001 : 114,888,390) ordinary shares in issue during the
year.
29. Directors’ remuneration
The following number of Directors of the Group in remuneration bands is disclosed in compliance
with paragraph 4 of Appendix 11 of the Singapore Exchange Securities Trading Limited Listing
Manual :-
Annual Report 2002
63
31 December 2002
29. Directors’ remuneration (cont’d)
Group
2002
Executive
Directors
$500,000 and above
$250,000 to $499,999
Below $250,000
2001
NonExecutive
Directors
Executive
Directors
NonExecutive
Directors
–
1
1
–
–
3
–
1
2
–
–
2
2
3
3
2
The Director’s remuneration includes Company CPF contributions.
30. Cash and cash equivalents
Group
Cash and cash equivalents comprise the following :Fixed deposits
Cash at bank balances
2002
$
2001
$
175,200
1,282,417
210,000
1,047,443
1,457,617
1,257,443
31. Operating lease commitments
Rental expense (principally for properties and office equipment) was $534,081 and $503,608 for the
years ended 31 December 2002 and 2001. Future minimum rentals under non-cancellable operating
lease are as follows as of 31 December :Group
Company
2002
2001
2002
2001
$
$
$
$
Within 1 year
Within 2 to 5 years
64
Annual Report 2002
430,584
454,311
517,783
137,955
2,856
6,902
2,856
9,758
884,895
655,738
9,758
12,614
31 December 2002
32. Contingent liabilities, unsecured
Group
Guarantees provided in respect of
performance of contracts
Company
2002
2001
$
$
2002
$
2001
$
232,132
240,982
–
–
–
–
29,645,600
32,953,600
Corporate guarantee given to
secure banking facilities for
subsidiary companies
33. Related party transactions
The following significant transactions took place during the year on terms agreed between the parties:Group
2002
$
Subsidiary companies :
Management fees charged
Dividend received
Associated companies :
Management fees charged
Rental income
Sales
Commission income
Purchases
Purchase of assets
Company
2002
2001
$
$
2001
$
–
–
(184,417)
(103,848)
(7,479)
(13,546)
5,655,558
2,600
–
–
(241,000)
(115,848)
(59,024)
(18,656)
5,545,739
–
(1,287,968)
(1,685,003)
(1,376,995)
(500,000)
–
–
–
–
–
–
–
–
–
–
–
–
In addition to the above, Colin Ng & Partners, a solicitor firm which is controlled by a Director of the
Company, performed certain legal services for the Group, for which the Group paid $102,572 (2001 :
$45,257), which was at market rate.
34. Material contracts
Since the end of the previous financial year, the Company and its subsidiaries did not enter into any
material contracts involving interests of the chief executive officer, directors or controlling shareholders
and no such material contract still subsist at the end of the financial year.
Annual Report 2002
65
31 December 2002
35. Dividends
Company
2002
2001
$
$
Final proposed 0.41 cents (2001 : nil) per ordinary share, less income tax
367,413
–
After the balance sheet date, the Directors proposed that a final dividend of 0.41 cents per ordinary
share, less tax at 22%, amounting to $367,413, be paid in respect of the financial year under review.
The dividends have not been provided for.
36. Financial instruments
Financial risk management objectives and policies
The main risks arising from the Group’s financial instruments are liquidity risk, credit risk, interest rate
risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks
and they are summarised below.
Liquidity risk
Short term funding is obtained through term loans and overdraft facilities.
Credit risk
The carrying amount of investments, trade and other debtors represents the Group’s maximum exposure
to credit risk. No other financial assets carry a significant exposure to credit risk.
The Group has no significant concentrations of credit risk.
Interest rate risk
The Group obtains additional financing through bank borrowings. The Group’s policy is to obtain the
most favourable interest rates available without increasing its foreign currency exposure.
Surplus funds are placed with reputable banks.
Information relating to the Group’s interest rate exposure is also disclosed in the notes on amounts
due to bankers.
Foreign currency risk
The Group’s purchases of products are mainly in US dollars, Swiss franc, Sterling Pounds and European
currencies. As a result, the Group is exposed to movements in foreign currency exchange rates.
Since the majority of the Group’s trade purchases and sales are denominated in foreign currencies,
there is a certain extent of a natural hedge. During the financial year, the Group did not use any
hedging instruments to protect against the volatility associated with the foreign currency purchase of
products and other assets and liabilities created in the normal course of business.
66
Annual Report 2002
31 December 2002
36. Financial instruments (cont’d)
Fair values
The carrying amounts of trade and other debtors, cash, amounts due to bankers and trade and other
payables approximate their fair values due to their short-term nature.
37. Comparatives
As a result of the change in accounting policy discussed in note 2, the presentation and classification
of items in the current year financial statements have been consistent with the previous financial year
except for the following :For the year ended 31 December 2001
As previously
As restated
reported
$
$
Profit and loss
Group
Revenue
Profit from operations
Finance costs
Profit before taxation and share of results
of associated companies and joint ventures
Share of joint venture’s results
Company
Share of joint venture’s results
Profit after taxation
25,664,085
1,087,239
(196,011)
25,731,212
1,085,988
(196,019)
891,228
(1,259)
889,969
–
(1,259)
576,474
439,541
–
577,733
440,800
As previously
As restated
reported
$
$
Balance sheet
Group
Fixed assets
Joint venture
Current assets
Current liabilities
Company
Joint venture
1,526,656
539,641
21,662,802
8,162,585
1,556,327
–
22,201,306
8,178,066
539,641
540,900
Annual Report 2002
67
statistics of shareholdings
DISTRIBUTION OF SHAREHOLDINGS
Size of Shareholdings
No. of Shareholder
%
No. of Shares
%
1 - 999
1,000 - 10,000
10,001 - 1,000,000
1,000,001 and above
17
374
458
13
1.97
43.39
53.13
1.51
9,960
2,721,880
27,612,270
84,544,280
0.01
2.37
24.03
73.59
Total
862
100.00
114,888,390
100.00
No. of Shares
%
Chan Nyuk Lin
Citibank Nominees Singapore Pte Ltd
Hong Leong Finance Nominees Pte Ltd
UOB Venture Investments II Limited
HL Bank Nominees (S) Pte Ltd
UOB Kay Hian Pte Ltd
Mayban Nominees (S) Pte Ltd
Kim Eng Ong Asia Securities Pte Ltd
Leyde Jurgen
DBS Vickers Securities (S) Pte Ltd
United Overseas Bank Nominees Pte Ltd
Ham Suk Tae
Lim Poh Hock Eric
Gng Hoon Liang
Tan Ah Cheng
DBS Nominees Pte Ltd
OCBC Securities Private Ltd
Ng Lai Fei
Oversea-Chinese Bank Nominees Pte Ltd
Citibank Consumer Nominees Pte Ltd
29,197,640
15,050,100
8,900,000
7,377,678
5,894,000
4,209,000
3,400,000
2,888,000
2,038,000
2,028,000
1,419,862
1,090,000
1,052,000
898,000
800,000
731,000
704,000
675,380
644,000
613,000
25.41
13.10
7.75
6.42
5.13
3.66
2.96
2.51
1.77
1.77
1.24
0.95
0.92
0.78
0.70
0.64
0.61
0.59
0.56
0.53
Total
89,609,660
78.00
TWENTY LARGEST SHAREHOLDERS
No. Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Substantial Shareholders
Chan Nyuk Lin
UOBVC
68
As at 7th April 2003
Annual Report 2002
No of shares
Direct Interest
No of Shares
Deemed Interest
29,197,640
7,377,678
20,500,000
7,050,100
-
NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of TPA Strategic Holdings Ltd will be held
at 12 Little Road #04-01 Lian Cheong Industrial Building Singapore 536986 on the 19th day of May 2003 at
9.00 a.m. for the following purposes:-
AS ORDINARY BUSINESS
1.
To receive, and if approved, to adopt the Audited Accounts for the year ended 31 December 2002
together with the Directors’ Report and Auditors’ Report thereon
Resolution 1
2.
To declare a first and final dividend of 4.1% per ordinary share less income tax of 22% for the year
ended 31 December 2002
Resolution 2
3.
To approve Directors’ fees of $93,333.33 for the year ended 31 December 2002
4.
To re-elect Mr Mark Yeo Wee Tiong who is retiring by rotation under Article 107 of the Articles of
Association
Resolution 4
5.
To re-elect Mr Lim Soon Hock who is retiring by rotation under Article 107 of the Articles of Association
Resolution 5
6.
To re-elect Dr Cham Tao Soon who is retiring under Article 117 of the Articles of Association
Resolution 6
7.
To re-appoint Messrs Ernst & Young, Certified Public Accountants as auditors of the Company and to
authorise the Directors to fix their remuneration
Resolution 7
8.
To transact any other ordinary business which may be properly transacted at an Annual General
Meeting.
Resolution 3
AS SPECIAL BUSINESS
To consider, and if thought fit, to pass the following resolutions (with or without amendments) as Ordinary
Resolutions:9.
THAT approval be and is hereby given to the Directors to offer and grant options under the TPA-SH
Share Option Scheme (the “Scheme”) and to allot and issue from time to time such number of shares in
the Company as may be required to be issued pursuant to the exercise of options under the Scheme,
provided always that the aggregate number of shares to be issued pursuant to the Scheme shall not
exceed 10 per cent of the total issued share capital of the Company from time to time Resolution 8
Annual Report 2002
69
10. THAT the Directors be and are hereby authorised pursuant to the provisions of Section 161 of the
Companies Act, Cap. 50 to allot and issue shares and convertible securities of the Company on such
terms and conditions and with such rights or restrictions as they may deem fit PROVIDED ALWAYS
THAT the aggregate number of shares and convertible securities to be issued pursuant to this resolution
shall not exceed fifty per cent (50%) of the issued share capital of the Company, of which the aggregate
number of shares and convertible securities to be issued other than on a pro rata basis to existing
shareholders shall not exceed twenty per cent (20%) of the issued share capital of the Company and
that such authority shall continue in force until the conclusion of the next Annual General Meeting or
the expiration of the period within which the next Annual General Meeting of the Company is required
by law to be held, whichever is the earlier. For the purposes of this resolution, the percentage of
issued share capital shall be based on the Company’s issued share capital at the time this resolution is
passed after adjusting for: (a) new shares arising from the conversion of convertible securities or employee share options on
issue when this resolution is passed; and
(b) any subsequent consolidation or subdivision of shares.
Resolution 9
NOTICE IS ALSO HEREBY GIVEN THAT the Transfer Book and the Register of Members of the Company
will be closed on 27 May 2003 for the purpose of preparing dividend warrants. Duly completed transfers
received by the Company’s Registrar, Lim Associates (Pte) Ltd, 10 Collyer Quay #19-08 Ocean Building,
Singapore 049315, up to 5.00 pm on 26 May 2003 will be registered to determine shareholders’ entitlement
to the proposed dividend. The first and final dividend of 4.1% per share less income tax of 22%, if approved
at the Annual General Meeting, will be paid on 12 June 2003.
BY ORDER OF THE BOARD
........................................
PRADEEP KUMAR SINGH
COMPANY SECRETARY
SINGAPORE
3 May 2003
70
Annual Report 2002
Notes:
(i)
A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and
vote in his stead. A member of the Company, which is a corporation, is entitled to appoint its authorised
representative or proxy to vote on its behalf.
A proxy need not be a member of the Company.
The instrument appointing a proxy must be deposited at the Company’s registered office at 50 Raffles
Place #29-00 Singapore Land Tower Singapore 048623 at least 48 hours before the time of the Meeting.
(ii) If re-elected, Mr Mark Yeo Wee Tiong will remain as a non-executive director of the Company
(iii) If re-elected, Mr Lim Soon Hock will remain as a non-executive director of the Company. The Board
considers Mr Lim Soon Hock to be independent.
(iv) If re-elected, Dr Cham Tao Soon will remain as a non-executive director of the Company. The Board
considers Dr Cham Tao Soon to be independent.
(v) Resolution 8 above, if passed, will empower the Directors to issue shares pursuant to the TPA-SH
Share Option Scheme (the “Scheme”), which was approved at the Extraordinary General Meeting of
the Company held on 1 December 2000 of up to an amount not exceeding in total of ten per cent
(10%) of the issued share capital of the Company for the time being pursuant to the exercise of the
options under the Scheme. This authority will, unless revoked or varied at a general meeting, expire
at the next Annual General Meeting of the Company.
(vi) Resolution 9, if passed, will empower the Directors of the Company to issue shares and convertible
securities in the Company up to a maximum of fifty per cent (50%) of the issued share capital of the
Company (of which the aggregate number of shares to be issued other than on a pro rata basis to
existing shareholders shall not exceed twenty per cent (20%) of the issued share capital of the Company)
for such purposes as they consider would be in the interests of the Company. The authority will continue
in force until the next Annual General Meeting of the Company, unless the authority is previously
revoked or varied at a general meeting.
Annual Report 2002
71
This page has been intentionally left blank.
72
Annual Report 2002
proxy form
I/We
of
being a member/members of the above-mentioned Company, hereby appoint:Name
Address
NRIC/
Passport No.
Proportion of
Shareholdings (%)
and/or (delete as appropriate)
as my/our proxy/proxies to attend and to vote for me/us on my/our behalf at the Annual General Meeting of
the Company to be held at 12 Little Road #04-01 Lian Cheong Industrial Building Singapore 536986 on the
19th day of May 2003 at 9.00 a.m. and at any adjournment thereof. I/We direct my/our proxy to vote for or
against the Resolutions to be proposed at the Meeting as hereunder indicated.
No. Ordinary Resolutions
Ordinary Business
1.
To adopt the Audited Accounts, Directors’ Report and Auditors’
Report
2.
To declare a first and final dividend of 4.1% per share less income
tax at 22%
3.
To approve the payment of Directors’ Fees
4.
To re-elect Mr Mark Yeo Wee Tiong as a Director under Article 107
5.
To re-elect Mr Lim Soon Hock as a Director under Article 107
6.
To re-elect Dr Cham Tao Soon as a Director under Article 117
7.
To re-appoint Auditors and authorise Directors to fix their
remuneration
Special Business
8. To authorise Directors to allot and issue shares in connection with
the exercise of options granted pursuant to TPA-SH share option
Scheme
9.
To authorise Directors to allot shares pursuant to Section 161 of the
Companies Act, Cap. 50
For
Against
Dated this ................................ day of ..................................................... 2003.
.......................................................................
Signature(s) of member(s) or Common Seal
No. of Shares Held
IMPORTANT: PLEASE READ NOTES OVERLEAF
Annual Report 2002
73
Fold this flap for sealing
Notes to the Proxy Form
1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section
130A of the Companies Act, Chapter 50), you should insert that number of shares. If you have shares registered in your name in the Register of
Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in
your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and
registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate
to all the shares held by you.
2. A member entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote in his stead.
3. Where a member appoints two proxies, he shall specify the percentage of his shares to be represented by each proxy and if no percentage is
specified, the first named proxy shall be deemed to represent 100 per cent of his shareholding and the second named proxy shall be deemed to be
an alternate to the first named.
4. A proxy need not be a member of the Company.
5. The instrument appointing a proxy or proxies together with the letter of power of attorney, if any, under which it is signed or a duly certified copy
thereof, must be deposited at the registered office of the Company at 50 Raffles Place #29-00 Singapore Land Tower Singapore 048623 at least 48
hours before the time appointed for the Annual General Meeting.
6. A corporation which is a member may authorise by resolution of its directors or other governing body such a person as it thinks fit to act as its
representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50.
7. Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be for or against the Resolutions as set out in the Notice of
Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any
other matter arising at the Annual General Meeting.
8. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where
the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or
proxies.
9. In the case of a member whose shares are entered against his name in the Depository Register, the Company may reject any instrument appointing
a proxy or proxies lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at
48 hours before the time appointed for holding the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.
2nd fold here
The Company Secretary
50 Raffles Place #29-00
Singapore Land Tower
Singapore 048623
1st fold here

TPA Strategic Holdings Ltd 50 Raffles Place #29

Transcription

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