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C O R P O R A T E P R O F I L E

SP CORPORATION LIMITED | annual report 2004 01

MARKETING SERVICES

Trading and Marketing

SP Resources International Pte. Ltd.carries out the trading and marketing of a broad range of products including coal, rubber, chemicals, oil, metals and other commodities used by manufacturers in the energy, rubber, automotive and petrochemical industries in Asia.

SP Machinery Group specialises in the trading and marketing of machinery and high precision equipment to serve the rubber, automotive and energy industries in the region.

Distribution

Globaltraco International Groupfocuses on the distribution of tyres and auto products. It holds exclusive distributorships in selected countries in ASEAN and Africa for PT Gajah Tunggal’s GT Radial tyres, GiTi Tire Group’s GT, Primewell and Runway tyres, Finland’s Nokian tyres and Slovakia’s Matador tyres. It also distributes automotive products such as alloy wheels, batteries, lubricants and intelligent tyre pressure sensors.

SP Global International Grouphandles the marketing and distribution of consumer products in selected markets. It distributes feminine napkins, baby diapers and food products produced by established manufacturers in China and Indonesia.

ENGINEERING SERVICES

Engineering & Construction

Bored Piling (Pte.) Ltd.specialises in foundation, civil engineering, infrastructure, building and plant development projects, as well as project management works.

SP Mining & Engineering Pte. Ltd.will be involved in the coal mining activities in the region. Commencing in 2005, these activities include the provision of management and consultancy services for mining plant and facilities, as well as removal of overburden, extraction and transportation of coal.

Environmental & Geotechnical

Soil & Foundation (Pte) Limitedis the market leader in geotechnical instrumentation and investigation works in Singapore. It offers quality and reliable services in advanced monitoring systems, remote or wireless data acquisition, laboratory testing and analysis services. The company also offers offshore site investigation and advanced environmental technical analysis work.

MANUFACTURING

Tyre Retreading

Singapore Bandag Groupcarries out retreading activities for truck and bus tyres. This activity complements Globaltraco’s tyre distribution business and enables the Group to offer tyre management systems for both new tyres and retread tyres.

C O R P O R A T E S T R U C T U R E

100% SP Resources International Pte. Ltd.

Trading &

Marketing

100% SP Machinery Holding Pte. Ltd. 100% SP Machinery International Pte. Ltd. MARKETING SERVICES 100% SP Precision Engineering (S) Pte. Ltd. 100% S3 Engineering (S) Pte. Ltd. 100% Globaltraco International Pte. Ltd. Distribution 60% Globaltraco (M) Sdn. Bhd. 100% SP Global International Pte. Ltd. 51% Global Noble International Corporation 100% SP Energy Pte. Ltd. 1 Engineering & Construction 100% SP Mining & Engineering Pte. Ltd. 2 100% Bored Piling (Pte.) Ltd. 100% Ground Engineering Technologies Pte. Ltd.

35% Bimstar, Inc. ENGINEERING SERVICES 60% 40% BPL Philippines, Inc. 100% BPL Engineering (M) Sdn. Bhd. 100% BPL (HK) Private Limited 3

100% BPL Engineering (HK) Limited Environmental & Geotechnical 100% Soil & Foundation (Pte) Limited

MANUFACTURING Tyre Retreading 100% Singapore Bandag (Private) Limited 100% Performance Retreads Sdn. Bhd. 81% Creative Industrial Packaging Sdn. Bhd.

SP CORPORATION

LIMITED

Up to 31 December 2004

Note: 1 Formerly known as WALLbilt Pte. Ltd. 2 Formerly known as Trenchless Construction Pte. Ltd. 3 Under members’ voluntary liquidation

02 SP CORPORATION LIMITED | annual report 2004

SingaporeInternational

F I V E - Y E A R F I N A N C I A L S U M M A R Y

2004 2003 2002 2001 2000GROUP PROFIT & LOSS ACCOUNT ($'000)

Revenue 184,254 219,824 122,411 66,584 65,504

Profit/(loss) before income tax 2,856 2,094 (2,963) (7,213) (17,764)Income tax (313) 51 152 506 1,916 Profit/(loss) after income tax 2,543 2,145 (2,811) (6,707) (15,848)Minority interests 437 323 9 (73) - Net profit/(loss) for the financial year 2,980 2,468 (2,802) (6,780) (15,848)

GROUP BALANCE SHEET ($'000)

Property, plant and equipment 4,402 10,587 12,644 14,522 20,033 Properties held for resale - - - - 24,051 Other assets 63,551 70,820 53,867 39,181 23,821 Total assets 67,953 81,407 66,511 53,703 67,905

Shareholders' funds 21,926 19,077 16,785 19,887 4,077 Minority interests 533 780 885 1,261 1,148 Total borrowings 4,497 9,759 11,208 9,141 44,616 Other liabilities 40,997 51,791 37,633 23,414 18,064 Total liabilities and equity 67,953 81,407 66,511 53,703 67,905

FINANCIAL RATIOS

Earnings/(loss) per share (cents) 0.85 0.70 (0.80) (2.55) (8.89)Net assets per share (cents) 6.25 5.44 4.78 5.67 2.29 Return on average shareholders' funds (%) 15 14 (15) (57) (145)Return on average assets (%) 4 3 (5) (10) (21)Debt-equity ratio (%) 21 51 67 46 1,094

REVENUE ($m)

220

122

6766

00 01 02 03 04

184

NET PROFIT/(LOSS) ($m)

2

-3

-7

-16

00 01 02 03 04

3

TOTAL ASSETS ($m)

81

67

54

68

00 01 02 03 04

68


C H A I R M A N ’ S S T A T E M E N T

The Group has attained profitability for the second year since turning around in 2003. Notwithstanding a lower turnover, the Group recorded an operating profit of $3 million for 2004, an increase of 41% over that of 2003.

The increase in operating profit was attributed mainly to higher profit of the Marketing Services Division which more than offset the lower profit of the Manufacturing Division. Also, the Engineering Services Division turned in higher earnings due mainly to profit recognition from a one-off settlement of a past project account, gains on disposal of plant, equipment and some construction materials.

The Group’s revenue of $184.3 million was 16% lower than 2003 due mainly to the winding down of certain activities by the Engineering Services Division.

The Marketing Services Division continued to be the largest revenue contributor accounting for about 70% of the Group’s revenue. Its revenue increased by 7% to $130 million mainly due to the higher volume of coal trades and increased sales of products that serve the automotive, tyre and rubber industries.

The Engineering Services Division continued to scale down its activities resulting in a 45% reduction in revenue. The Group will continue to focus on its specialty investigation

and instrumentation works under the Environmental and Geotechnical sub-division.

The Manufacturing Division achieved revenue of $3 million, marginally lower than 2003, as the result of lower sales of high precision equipment.

In early 2005, the Group diversified into the mining industry by entering into several agreements with an Indonesia coal mining company for exclusive coal sales agency, management services and coal mining contracts. The diversification is in line with the Group’s strategic direction and efforts to strengthen the foundation for sustainable growth.

We are pleased to welcome a new non-executive director, Mr Liem Chin Chiang, who joined our Board on 17 September 2004.

On behalf of the Board, I would like to put on record the Company’s thanks and appreciation to the Management and staff for their dedication and contributions in keeping the Group profitable for the second year running. I would also like to express the Board’s gratitude to all our valued customers, business associates, suppliers and our shareholders for their continuing support.

Peter SungChairman

1 March 2005

“The Group attained higher earnings

despite lower revenue. It has scaled

down the domestic construction

activities and diversified into the

mining industry.”


The Commodities & Specialty Products Trading Division will focus on its new exclusive coal agency trading activities and expects increasing trades related to tyre, rubber and petrochemical industries in Asia, in particular China and Indonesia.

The Energy and Engineering Services Division will expand its existing specialty environmental and geo-technical works into the region while its new mining & engineering unit will focus on its management services and coal mining contract works in Indonesia for mining and related activities.

Going forward, the Group aims to further strengthen its base for sustainable growth by enhancing its market position in the tyre and auto products fields, developing a notable presence in the energy and mining industries whilst increasing the trading activities of those selected commodities that offer good long term prospects.

The management would like to express its heartfelt thanks to its treasured customers, principals, suppliers, bankers, business partners and parent company for their continuing support. It also appreciates the valuable guidance from its Board of Directors and is very grateful to its dedicated staff for their ability to tackle the challenges posed by the rapidly changing business environment.

Low Kian BengManaging Director and CEO

1 March 2005

M A N A G I N G D I R E C T O R A N D C E O ’ S S T A T E M E N T

The Group again sustained profitability from all its three core divisions in 2004. While it has scaled down the construction activities in the tough domestic market, further growth was achieved from the Group’s trading activities with increase in coal trades and expansion of industrial commodities. In its continual effort to be a significant distributor of tyre and auto products in ASEAN, the Group’s tyre distribution unit further expanded its product ranges and extended its distribution network.

Towards the end of 2004, the Group divested its high precision equipment manufacturing business in China owing to the increasingly competitive market conditions and utilized the proceed to fund the new businesses of the Group.

The securing of the new term coal sales agency and mining related contracts (worth more than $275m in total for the contract period) in early 2005 has provided the Group with the opportunity to diversify into the energy and mining industries. These businesses, which synergize with the core skill and experience of the Group’s existing business operations, will enhance the Group’s current strategies to further increase its commodities trading activities and gain a foothold in these growing industries in the region.

Hence, the Group has re-organised its three core divisions to be more product and industry focus, namely Tyre and Auto Products Division, Commodities & Specialty Products Trading Division and Energy and Engineering Services Division.

The Tyre and Auto Products Division will specialize in the marketing and distribution of tyre and auto related products and retreading of commercial tyres. This division expects market demand to remain strong and will continue to expand its product ranges, strengthen its market presence in ASEAN, penetrate into other new markets and increase its business with transport and logistic operators by offering comprehensive solution in tyre management systems.


“SP Corp has evolved over the years

from a construction company to a

Group that derives its income from

the growing tyre, commodities,

energy and mining industries, which

shall now form the base for growth

and value creation.”

O P E R A T I O N S R E V I E W A N D O U T L O O K


MARKETING SERVICES

Trading and Marketing

SP Resources International Pte. Ltd. (SPRi)

SPRi achieved a 24% increase in revenue to $78 million in 2004. The revenue growth was attributable to increase in trading of coal and industrial commodities, such as aluminium, which commenced during the year. Throughout 2004, SPRi continued to serve the tyre, rubber and aquaculture industries by trading in their key raw materials and sales of petrochemical and chemical products.

In 2004, SPRi was awarded a short term exclusive sales and marketing rights of coal produced by an Indonesia coal mining company, namely PT Bukit Baiduri Energi (BBE). Since then, the trading of coal grew steadily with SPRi adopting appropriate sales and marketing strategies that capitalise on the surge in demand for energy related products. More importantly, this has led to the conclusion in early 2005 of a comprehensive business arrangement between BBE and SPRi for a longer term exclusive marketing agency. In line with its plans to expand its trading activities in Asia for selected commodities that offer good long term prospects, SPRi started supplying aluminium to automotive alloy wheel manufacturer in 2004.

To further strengthen the foundation for sustainable growth, SPRi commenced its chemical and rubber processing oil businesses in China by supplying these products, in smaller lot size, as feedstock to detergent, tyre and lubricant manufacturers in key provinces of China.

SPRi’s customer and supplier base was also expanded in 2004 as it continued to build on its existing business of trading in natural rubber, rubber compounds, oil, chemicals and feedstock for aquaculture industries. This network is valuable for SPRi to further increase its businesses in the growing Asia market.

For the coming years, SPRi would capitalise on the groundwork that it has built by strengthening its reputation, position and further expanding its network in the coal industry. In addition, it would also expand its industrial commodities business and take on trading of other new products that synergise and complement its existing trading activities by providing more products and services to the industries that it is in.

SP Machinery Group

This sub-group’s revenue decreased by 46% to $7 million with lower sales of tyre moulds and related products. The sub-group consists of SP Machinery Holding Pte. Ltd., SP Machinery International Pte. Ltd., SP Precision Engineering (S) Pte. Ltd. and S3 Engineering (S) Pte. Ltd.

In line with the Group’s intention to fortify its businesses in the growing automotive industries, this sub-group will stay focus in the trading and marketing of machinery and high precision equipment to serve the tyre, tyre-related and rubber industries in Asia by leveraging on the business network of the Group.

MARKETING SERVICES DIVISION’S REVENUE

This division increased its revenue by 7% to $130 million in 2004. Its revenue consists of sales of tyres, auto products, machinery and commodities linked to automotive, tyre and rubber industries, coal, as well as petrochemical, chemical and consumer products.

Products for automotive, tyre and rubber industries Coal

Petrochemical, chemical and other products

Consumer products

$70 m2002

$121 m2003

$130 m2004

39%

61%

70%

28%

2%

52%

33%

14%

1%

To increase its market presence under the competitive market condition, Globaltraco places great emphasis on further developing and widening its distribution network. Through appropriate strategies in product segmentation and territorial segregation as well as creating greater brand awareness, Globaltraco has captured a sizeable market share of replacement tyre in the commercial vehicle sector in Singapore, and a significant share in Thailand, Malaysia and Myanmar for both passenger and commercial vehicle sectors.

Going forward, Globaltraco will continue its efforts to be a significant player of tyre and auto products in Singapore and the ASEAN region through innovative and value adding

measures to both its principals and customers so as to better serve the needs of the sophisticated markets for tyre and auto products. Together with the Group’s tyre retreading unit, namely Singapore Bandag Group, Globaltraco seeks to increase the market introduction of GT’s truck and bus radial tyres and add value to transport and logistic operators by offering one-stop tyre management solutions. It will expand this type of business in overseas market.

Globaltraco intends to increase its product ranges as well for further business growth. The introduction of Runway Tyres, a new line from GiTi, into its distribution network and with new permitted territories from principals, will form part of



Distribution

Globaltraco International Group (Globaltraco)

This sub-group consisting of Globaltraco International Pte Ltd in Singapore and Globaltraco (M) Sdn. Bhd., a 60% subsidiary in Malaysia. It recorded revenue of $43 million in 2004 on sales of tyres and auto products which was comparable to 2003. The flat growth was attributable mainly to tight tyre supply and allocation from its principals during the year and lower sales of European tyres affected by the strong Euro currency.

Globaltraco is the exclusive distributor of tyres from some renowed manufacturers and they include, PT Gajah Tunggal’s GT Radial and Bias Tyres from Indonesia, GiTi Tire Group’s GT (佳通), Primewell and recently Runway Tyres from China, Nokian Tyres from Nokian Tyres PLC in Finland and Matador Tyres from Matador in Slovakia. Its two main principals, PT Gajah Tunggal and GiTi Tire Group are the largest tyre manufacturers in ASEAN and China respectively.

As the exclusive distributor for these established brands of tyre for selected countries in ASEAN and Africa, Globaltraco distributes a wide range of tyres including passenger car radial tyres, truck and bus bias and radial tyres, as well as off-the road and industrial tyres.

To complement its core tyre distribution business, Globaltraco also markets other auto products such as alloy wheels, batteries and lubricants through its own distribution channels as well as that of its principals for more extensive reach. It is the distributor for MAK wheels of Italy, AEZ, ENZO and Dotz wheels of Germany, Millennium wheels of Indonesia as well as GT wheels of Seyen Heavy Industries in China. It also markets lubricant produced by Fuchs of Germany in Vietnam and holds an in-house brand for battery.

the overall strategy to increase its market share. It will also grow its alloy wheels and other auto products businesses through strategic alliance with established players to supply these products for certain export markets as well as after market sales. In addition, Globaltraco will continue to carry out comprehensive advertising and promotional activities so as to secure brand loyalty from its customers and end users.

SP Global International Group (SP Global)

This sub-group, comprises SP Global International Pte. Ltd. in Singapore and its 51% subsidiary Global Noble International Corp. in the Philippines, recorded revenue

of $2 million in its second year of operation in 2004. SP Global’s main activities are the marketing and distribution of selected consumer products in the ASEAN region. In view of the highly competitive market environment, sales of this sub-group remained about the same as in 2003.

In Singapore, SP Global is primarily involved in the distribution of personal hygiene products, namely “Softex” feminine napkins and “Softlove” baby diapers to the retail markets. SP Global has also extended its span to overseas markets such as Vietnam, Myanmar and Madagascar by tapping on the business network of the Group. In addition, it started distributing the “Nissin” brand cream cake and biscuits in Malaysia market.

In the Philippines, Global Noble International Corp. has expanded its nationwide distribution network for its own “Confident” brand of feminine napkins through new marketing campaigns in 2004 to make the brand a familiar and acceptable one for its target market and position.

The sub-group expects market condition for the fast moving consumer products to remain challenging and it will examine its business strategy and options while continuing to take measures to improve performance.

ENGINEERING SERVICES

Engineering and Construction

Bored Piling (Pte.) Ltd. and its subsidiaries (BPL Group)

BPL Group’s revenue declined 55% to $38 million in 2004 due to scaling down of activities in the sluggish construction industry in Singapore.

BPL Group specializes in foundation piling, building and civil engineering works. The major projects undertaken by BPL Group in 2004 included piling and foundation works for the Republic Polytechnic, MRT Circle Line C821 and C822 projects, residential buildings for the Adam Park and Sunny Palms Condominium, construction of second south cross taxiway bridge at Singapore Changi Airport, improvement works for Alexandra Canal Phase 1 - Delta Road Culvert and Drainage Improvement at Admiralty Road West.

Its overseas units, namely BPL Philippines Inc and BPL Engineering (M) Sdn. Bhd., recorded revenue of $1.2 million and $0.1 million respectively in 2004.



In 2004, BPL Group has undertaken a limited scope of project and facility management works relating to mining activities in East Kalimantan for an Indonesia coal mining company, namely PT Bukit Baiduri Energi (BBE).

Going forward, with the award of a Management Services Agreement and the contract for removal of overburden, extraction and transportation of coal by BBE to the Group’s new mining and engineering unit under SP Mining & Engineering Pte. Ltd. in early 2005, the Group will further reduce the construction activities in the domestic construction market and move forward in the new direction by entering into the growing energy and mining industries in the region.

Environmental and Geotechnical

Soil & Foundation (Pte) Limited (S&F)

S&F, which specializes in environmental and geotechnical services as well as micro-piling works, recorded a 24% increase in revenue to $15 million in 2004.

S&F is a reputable market leader offering the latest methodology in soil investigation works, advance automation and Wireless Remote Automated Systems (WRAS) for soil instrumentation packages tailor made for applications in civil engineering and environmental related works.

In light of the construction mishaps in 2004 such as the collapse at the Nicoll Highway, there has been an increasing demand for S&F’s quality services for environmental and geotechnical works. During the year, the company enhanced its market leadership by securing some major

instrumentation and monitoring projects for MRT circle lines including the MRT Circle Line C855 project and the MRT Circle Line C854 project worth $3 million each, as well as micro-piling project for AMK-MUP 18A worth $1.5 million.

S&F has embarked upon innovative WRAS which incorporates technology of GSM, GPRS, Radio Frequency and Satellite Technology to automatically acquire and analyze data, as well as sending alarm/warning via SMS and email automatically.

In tandem with the growth in Asia Pacific region for such works and services, S&F will seek to expand its businesses in selected overseas markets. S&F will continuously up-

grade and invest in new technology and innovations while pursuing in-house R&D works to strengthen its core competencies. The company will continue to capitalize on its established market leadership position to deliver timely quality works and advance technical know-how to better serve its customers, domestically as well as in the region.



ENGINEERING SERVICES DIVISION’S REVENUE

The division’s revenue decreased by 45% to $52 million in 2004 as a result of the Group’s planned action to scale down domestic construction activities of the Engineering and Construction sub-division. Its revenue consists of foundation piling, building, civil engineering, soil instrumentation and investigation works.

Foundation piling Soil instrumentation, investigation and others

Building

Civil engineering

$54 m2002

$96 m2003

$52 m2004

50%

27%8%

14%

12% 13%

12%

63%

47%

15%

28%

10%

MANUFACTURING

Tyre Retreading

Singapore Bandag Group

This tyre retreading sub-group consists of Singapore Bandag (Private) Limited and its 100% owned subsidiary Performance Retreads Sdn. Bhd. in Johore, Malaysia. Acquired in 2003, Singapore Bandag Group recorded $0.7 million revenue in 2004.

Singapore Bandag Group’s main activity is retreading of truck and bus radial tyres. It operates as a franchisee of the US based Bandag tyre retreading systems, currently one of the most established retreading systems in the world. The tyre retreading activity of Singapore Bandag Group complements the tyre distribution business of Globaltraco International Group, which enables the Group to offer one-stop solutions for the management of both the new tyre and retread tyre requirements of customers.



Singapore Bandag Group is actively involved in the management systems for both new tyres and retread tyres and the supply of retreads to SBS Transit and SMRT / TIBS, the two largest public transport companies in Singapore.

Going forward, the sub-group will embark on business joint ventures to expand the business in China and the region.

High Precision Equipment

3S Engineering (Shanghai) Co., Ltd

This company recorded a 22% decrease in revenue to $2 million mainly due to lower orders of high precision equipment by its customer in the second half of the year.

Owing to the increasingly competitive market conditions, the Group decided to realize its value by exiting from this manufacturing activity and divested the company at end of 2004. The proceed from the divestment is utilized to fund the businesses of the Group.

MANUFACTURING DIVISION’S REVENUE*

This division’s revenue of $3 million was marginally lower than 2003. Its revenue consists of sales of tyre moulds and related products as well as tyre retreading services.

High precision equipment Tyre retreading

$3 m2003

$3 m2004

23% 27%

73%77%

*This division was only set up in 2003.

C O R P O R A T E S T R U C T U R E

With Effect from 1 January 2005


100% Globaltraco International Pte. Ltd.

Marketing & Distribution

60% Globaltraco (M) Sdn. Bhd. 100% SP Machinery Holding Pte. Ltd. 100% SP Machinery International Pte. Ltd. TYRE AND AUTO PRODUCTS 100% SP Precision Engineering (S) Pte. Ltd. 100% S3 Engineering (S) Pte. Ltd. Manufacturing 100% Singapore Bandag (Private) Limited 100% Performance Retreads Sdn. Bhd.

COMMODITIES Trading 100% SP Resources International Pte. Ltd. & SPECIALTY PRODUCTS TRADING Distribution 100% SP Global International Pte. Ltd. 51% Global Noble International Corporation

100% SP Energy Pte. Ltd. 1 Engineering & Mining & 100% SP Mining & Engineering Pte. Ltd. 2 Engineering 100% Bored Piling (Pte.) Ltd. 100% Ground Engineering Technologies Pte. Ltd.

35% Bimstar, Inc. ENERGY AND ENGINEERING 60% SERVICES 40% BPL Philippines, Inc. 100% BPL Engineering (M) Sdn. Bhd. 100% BPL (HK) Private Limited 3

100% BPL Engineering (HK) Limited Environmental & Geotechnical 100% Soil & Foundation (Pte) Limited 81% Creative Industrial Packaging Sdn. Bhd.

SP CORPORATION

LIMITED

Note: 1 Formerly known as WALLbilt Pte. Ltd. 2 Formerly known as Trenchless Construction Pte. Ltd. 3 Under members’ voluntary liquidation

SingaporeInternational

SP CORPORATION LIMITEDRegistered Office9 Oxley Rise#03-02 The OxleySingapore 238697Tel : (65) 6223 7211 Fax: (65) 6224 1085 (General) (65) 6733 3835 (Legal and Corporate)

Board of Directors:Peter SungChairmanLow Kian Beng Managing Director & CEOCheng Hong KokDavid Lee Kay TuanLei Huai ChinWilliam LiemLiem Chin ChiangOng Teck GheeTan Lye Huat

Lilian Tan Yin YenGroup Financial Controller

Chia Hue Siew Group Company Secretary

Share RegistrarB.A.C.S Private Limited63 Cantonment RoadSingapore 089758Tel : (65) 6323 6200Fax: (65) 6323 6990

Indonesia Representative OfficeSuite #303, 3rd Floor, Gedung GapuramasJl. S. Parman Kav. 91Jakarta 11420Tel : (6221) 566 8232 / 566 8242Fax: (6221) 566 8231

Edi Rusli Chief Representative

TYRE AND AUTO PRODUCTS

Marketing and Distribution

Globaltraco International Pte. Ltd.58 Tuas Basin Link Singapore 638774Tel : (65) 6265 3088Fax: (65) 6262 2133

Simon Hui Chee TeckGeneral Manager

Frank Lim Eng KhoonAssistant General Manager

Nelson Chua Kiang LikAssistant General Manager

Toh Bok ChuanCommercial & Fleet Sales Manager

Lim Swee HuatAssistant Manager, Whole Sales

Jimmy Choy Ren JyeAssistant Manager, Export Sales

Globaltraco (M) Sdn. Bhd.53 & 54 Senawang Industrial Estate70450 Seremban, Negeri Sembilan Darul KhususMalaysiaTel : (06) 677 1711Fax: (06) 677 7872

Steven Gan Seng PoeManaging Director

Manufacturing

Singapore Bandag (Private) Limited58 Tuas Basin LinkSingapore 638774Tel : (65) 6265 1383Fax: (65) 6262 2133

Performance Retreads Sdn. Bhd.53 Jalan CemerlangTaman Perindustrian Cemerlang81800 Ulu Tiram, Johor Darul TakzimMalaysiaTel : (07) 861 7671Fax: (07) 871 7672

Simon Hui Chee TeckGeneral Manager

Melvin Khaw Cheah JuenAssistant Manager

COMMODITIES & SPECIALTY PRODUCTS TRADING

Trading

SP Resources International Pte. Ltd.7 Harrison Road#05-00 Harrison Industrial BuildingSingapore 369650Tel : (65) 6281 7622Fax: (65) 6281 6028

Fong Seok Phoy Managing Director

Distribution

SP Global International Pte. Ltd.58 Tuas Basin LinkSingapore 638774Tel : (65) 6418 8970 / 6418 8996Fax: (65) 6862 1371

Frank Lim Eng KhoonGeneral Manager

Global Noble International Corporation2/F ILO Building, 195 G, Areneta AvenueQuezon CityMetro Manila, PhilippinesTel : (632) 714 0299Fax: (632) 714 2485 Edwin Francis OngManaging Director

ENERGY AND ENGINEERING SERVICES

Mining & Engineering

SP Mining & Engineering Pte. Ltd.7 Harrison Road#05-00 Harrison Industrial BuildingSingapore 369650Tel : (65) 6281 7622Fax: (65) 6281 6028

Ivan Chew Wee KeatManaging Director

Dr. Win NaingSenior Manager

Lee Hong KeowSenior Manager

Bored Piling (Pte.) Ltd.7 Harrison Road#02-00 Harrison Industrial BuildingSingapore 369650Tel : (65) 6281 7622Fax: (65) 6281 6028

Ivan Chew Wee KeatManaging Director

Environmental and Geotechnical

Soil & Foundation (Pte) Limited7 Harrison Road#02-00 Harrison Industrial buildingSingapore 369650Tel : (65) 6281 7622Fax: (65) 6281 6028

Allen Ng Keok HengExecutive Director

Zhang Qing HuaManager, Geotechnical Instrumentation

Yvonne Mak Moon ThengQuality ManagerManager, Geotechnical Investigation

Tan Seng HockOperations Manager

Zaw Win TheinManager, Sales and Marketing

C O R P O R A T E D I R E C T O R Y


Corporate Governance, Financials and

Corporate Information

(Company Registration No. 195200115K)

A N N U A L R E P O R T 2 0 0 4SP CORPORATION LIMITED

CONTENTS Corporate Governance Report 13 Key Management Team 26

Financial Reports

- Financial Highlights 27 - Value Added Statement 28- Productivity Ratios and Statistics 29 - Directors’ Report 30- Statement by the Directors 33- Auditors’ Report 34- Balance Sheets 35- Consolidated Profit and Loss Statement 36- Statements of Changes in Equity 37- Consolidated Cash Flow Statement 38- Notes to the Financial Statements 40

SGX Listing Manual Requirement 70

Corporate Information - Shareholding Statistics 71- Share Price Performance 73- Notice of Annual General Meeting 74- Renewal of Shareholder Mandate for Interested Person Transactions 76- Proxy Form 89

Financial Calendar

Financial year ended 31 December 2004

Announcement of half-year results 11 August 2004

Announcement of full-year results 3 February 2005 Despatch of Annual Report 31 March 2005

Annual General Meeting 22 April 2005

Financial year ending 31 December 2005

Proposed announcement of half-year results August 2005

Proposed announcement of full-year results February 2006

13

SP CORPORATION LIMITED | annual report 2004

Good governance has been and remains the commitment and responsibility of the whole Board. The Board is committed

to high standards of corporate governance and has applied the Code of Corporate Governance (“the Code”) principles as

set out in the following segments; and deviations from the Code are explained.

I Board Matters II Remuneration Matters III Accountability and Audit IV Communication with Shareholders

I BOARD MATTERS

1. The Board’s Conduct of Its Affairs

Company policy and procedures

The principal functions of the Board include:

• provide stewardship and corporate governance to the Company including charting its corporate directions

and strategies;

• monitor Management performance and to secure an adequate return for shareholders; and

• approve the Company’s annual business plan including the annual budget, capital expenditure and operational

plans.

At the end of each year, the Board approves the Company’s annual budget and business plan of next financial year;

and the Board may be requested to approve material transactions that arise in the course of the year as well as those

that exceed the limits of authority delegated to the CEO and EXCO (see section 2 below). Material transactions

requiring Board approval include material acquisitions and disposal of assets, corporate and financial restructuring

and share issuance.

In addition to the four scheduled Board meetings to approve the annual budget and periodic review of the Company’s

operations and performance, the Board also holds 2 ad-hoc meetings to resolve significant issues or transactions.

The Board is supported by three key Board committees, namely, the Nominating Committee (“NC”), the Remuneration

Committee (”RC”) and the Audit Committee (”AC”). The 2004 meetings of the Board and its committees, as well

as each Director’s attendance record are disclosed in this report.

Corporate Governance Report

14


2. Board Composition and Balance


The Company’s Board of Directors consists of nine members from different background experience in the private and

public sector, whose core competencies, qualifications, skills and experience are extensive. The directors collectively

bring with them a broad range of expertise and experience in areas such as accounting, finance, strategic & operation

management and industry knowledge.The NC is of the view that the board size of 9 is appropriate considering the

current needs and demands of the Company.

At least one-third of the Board is non-Executive and independent of Management and the principal shareholder. The

Board comprises four non-Executive and Independent Directors, four non-Executive and non-Independent Directors

and one Executive Director who is the CEO.

The Board delegates specific authorizations to the Executive Committee (EXCO) in connection with the running of

the Company. The EXCO comprises of Mr. David Lee Kay Tuan and the CEO.

3. Role of Chairman and Chief Executive Officer (CEO)


The Chairman and CEO functions are assumed by two different directors. The Chairman, who is non-Executive

and Independent, leads the Board, while the CEO has executive responsibilities for the Group’s businesses and is

responsible to the Board.

4. Board Membership

Company’s policy and procedures

The NC reviews and recommends to the Board the appointment of new directors as well as the submission for re-

nomination and re-election of directors. The other responsibilities of the NC are to:

• determine, based on the Company’s internal guidelines, if a Director is able to carry out his duties in the light

of his commitments to other companies;

• determine annually whether or not a Director is independent as defined under the Code;

• assess the effectiveness of the Board as a whole;

• assess the contributions of each Director to the effectiveness of the Board; and

• ensure that the Company has a succession plan for key Executive Directors and officers, including appointing,

training and mentoring senior management.

The NC consists of three members, the majority of whom, including the Chairman, are Independent Directors and

all are non-Executive.


15


The members of the NC are:

• Mr. Peter Sung, Chairman (Independent, non-Executive)

• Mr. Cheng Hong Kok (Independent, non-Executive)

• Mr. David Lee Kay Tuan (non-Independent, non-Executive)

During the year, the NC held one meeting.

The NC is of the view that four of the nine Directors are Independent as defined by the Code. No individual or group

of individuals dominates the decision making process of the Board.

The Company’s Articles require one-third of the Board to retire and stand for re-election at each AGM. The Company’s

Articles provide that a newly appointed Director must submit himself for election at the AGM immediately following

his appointment.

In line with the above, the following directors will retire under Article 94 and seek re-election at the coming AGM:

• Mr. Tan Lye Huat

• Mr. Ong Teck Ghee

• Mr. Lei Huai Chin

Mr. Liem Chin Chiang will retire under Article 99 and seek re-election at the coming AGM.


16


PETER SUNG Chairman (Non-Executive Director, Independent) Chairman, Remuneration Committee Chairman, Nominating Committee

Mr. Sung is the Chairman since 28 January 2002 and the Chairman of the Nominating Committee and Remuneration Committees since December 2002. He was last re-elected on 23 April 2004. He is concurrently a Director of Tuan Sing Holdings Limited (listed on the Singapore Exchange). Between 1966 and 1986, he worked in Shell, Sime Darby and Pilecon in the Corporate Planning, Marketing, Sales and Personnel functions. He was an Advisor to the Gajah Tunggal Group in Indonesia until 1998. He was the Chairman of Tuan Sing Holdings Limited and SP Corporation Limited until 1994. He was Singapore’s ambassador to the Philippines between 1986 and 1988.He was a Member of the Singapore Parliament from 1988 to 1996. Between 1988 and 1991, he was Minister of State with attachments in the Ministries of Foreign Affairs, Home Affairs and National Development. Mr. Sung holds a Bachelor of Arts degree with a First Class Honours in Economics from the University of Singapore.

LOW KIAN BENG Managing Director and Chief Executive Officer (CEO) Executive Director (Non-Independent) Member, Remuneration Committee

Mr. Low is the Managing Director and CEO since 23 June 2000, a Member of the Remuneration Committee since December 2002 and Member of the Executive Committee on 19 December 2003. He was earlier appointed as Executive Director on 10 March 2000 and was last re-elected on 23 April 2004. He is concurrently the Managing Director of Globaltraco International Pte Ltd. He previously worked with Nuri Holding (S) Pte. Ltd. as a senior business development manager. He was also assigned to take charge of Gajah Tunggal Group’s businesses in Indonesia as General Manager of its chemical division, head of its synthetic rubber company and senior advisor of procurement and logistic division of its tyre company. Prior to this, he was the Principal Planner of the Petrochemical Corporation of Singapore responsible for the overall co-ordination of the Petrochemical Complex in Jurong Island, including its second phase expansion project, process and operation of utilities and offsite plants. Mr. Low holds a Bachelor of Science (Engineering) degree from the Imperial College of Science & Technology, University of London, UK, and an MBA degree from the Oklahoma City University, USA.

CHENG HONG KOK Non-Executive Director (Independent) Chairman, Audit Committee Member, Nominating Committee

Mr. Cheng is a Non-Executive Independent Director since 24 May 2001, Chairman of the Audit Committee since 16 October 2001 and Member of the Nominating Committee since December 2002. He was last re-elected on 12 May 2003. He holds directorships in other Singapore listed companies namely, Gul Technologies Singapore Ltd, Orchard Parade Holdings Ltd and Singapore Petroleum Co Ltd. Mr. Cheng held various senior positions in Singapore Petroleum Company Limited in corporate planning, finance and administration, supply and trading, and marketing and distribution from 1970 to 1980 and became the President and Chief Executive Officer of the Company from 1981 to 1996. Through Singapore Petroleum Company Limited, he was involved in the Asean Council on Petroleum (ASCOPE) for many years. He was a Board Member of the Singapore Economic Development Board from 1987 to 1990 and a member of the Government Economic Planning Committee from 1989 to 1991. Mr. Cheng holds a Bachelor of Science (Chemical Engineering) degree with First Class Honours from the University of London and received an Advanced Executive Management Certificate from the J. L. Kellogg Graduate School of Management, Northwestern University in the USA. He was a Singapore State Scholar as well as an Eisenhower Fellow.

DAVID LEE KAY TUAN Non-Executive Director (Non-Independent) Member, Nominating Committee

Mr. Lee is the Executive Director, Legal and Administration from 28 January 2002 to 19 December 2003. He relinquished his executive director appointment and continues on the Board as a non-Executive Director and as a Member of the Nominating Committee. On 19 December 2003, he was appointed as Chairman of the Executive Committee of SP Corporation Limited. He was last re-elected on 23 April 2004. He is currently the CEO of Tuan Sing Holdings Limited and holds directorships in Tuan Sing Holdings Limited and its other listed subsidiaries, Gul Technologies Singapore Ltd (listed on the Singapore Exchange) as well as Grand Hotel Company Ltd (listed on the Australia Stock Exchange), an associated company of Tuan Sing Holdings Limited. He established Messrs Ang & Lee, a law firm and was its managing partner between 1994 and 2001. Mr. Lee holds a Bachelor of Laws (Hons) degree from the National University of Singapore.

Board of Directors

The Directors’ professional qualifications, other appointments, academic background and work experience are detailed in the biographic summaries presented below.

17


LEI HUAI CHINNon-Executive Director (Non-Independent) Member, Audit Committee

Mr. Lei is a Non-Executive Director and a Member of the Audit Committee since 1 December 2002. He was previously an Executive Director, Finance & CFO between June 2000 to December 2002 and a Non–Executive Director during March 1999 to June 2001. Mr. Lei was last re-elected as a director on 12 May 2003. He is an Executive Director, Corporate Finance & Services and CFO of Tuan Sing Holdings Limited (listed on the Singapore Exchange) from May 2000 to April 2004. He is also an Alternate Director to Mr. David Lee Kay Tuan in Gul Technologies Singapore Limited (listed on the Singapore Exchange). He previously worked in the following positions: as a Financial Analyst with Uniroyal Chemical Corporation (USA) from 1990 to 1993. From 1994 onwards, Mr. Lei held various positions in the Gajah Tunggal group of companies in Indonesia, namely, Financial Analyst, General Manager, Finance Director and Executive Vice President. From 1999, he has been the Finance Director of GT Asia Pacific Holdings Pte Ltd (Singapore). Mr, Lei holds a Bachelor of Science degree from the London School of Economics and Political Science and an MBA degree from the University of Southern California, USA.

WILLIAM LIEMNon-Executive Director (Non-Independent)

Mr. Liem is a Non-Executive Director since 7 March 2003. He was last re-elected on 12 May 2003. He is a Director in GT Asia Pacific Holdings Pte Ltd. He also holds directorships in other listed companies namely, Tuan Sing Holdings Limited and Gul Technologies Singapore Ltd (both listed on Singapore Exchange) and Australian Stock Exchange listed Company Grand Hotel Company Limited as an alternate director. Between 1999 and 2000, he was a Non-Executive director of Tuan Sing Holdings Limited and SP Corporation Limited. He has held the position of Analyst with Lehman Brothers and various management positions in Gajah Tunggal Group and Habitat Properties Pte Ltd prior to his current position. Mr. Liem holds a Bachelor of Science degree (Business) from the University of California at Berkeley and an MBA degree from the Massachusetts Institute of Technology.

LIEM CHIN CHIANGNon-Executive Director (Non-Independent)

Mr. Liem is non-Executive Director since 17 September 2004. He is an advisor to Zhongshan E-Fashion Dress & Ornaments Co., Ltd and Shanghai GT Nissin Food Co., Ltd. He is also the Commissioner of PT. Bukit Baiduri Energi. Mr. Liem was the founder and CEO of Habitat Properties Pte Ltd. He holds a Bachelor of Economics degree from UCLA.

ONG TECK GHEE Non-Executive Director (Independent) Member, Audit Committee

Mr. Ong is a Non-Executive Director since 1 January 1999 and a Member of the Audit Committee since 1999. He was last re-elected on 17 May 2002. He is concurrently a Managing Partner of the law firm Ong & Lau. He is also an Independent Director of Ecowise Holdings Limited, a company listed on the Singapore Exchange and is Chairman of its Nominating Committee and a member of its Audit Committee. Between 1986 and 1998, he was Managing Partner of the law firm, Ong Teck Ghee & Partners. Mr. Ong has been in private practice for 20 years engaged in all areas of corporate work. He is an Advocate & Solicitor of the Supreme Court of Singapore, a Commissioner for Oaths and a Notary Public. Mr. Ong holds a Bachelor of Laws (Honours) degree from the National University of Singapore.

TAN LYE HUAT Non-Executive Director (Independent) Member, Audit Committee Member, Remuneration Committee

Mr. Tan is a Non-Executive Director since 1 January 1999, a Member of the Audit Committee since 1999 and a Member of the Remuneration Committee since December 2002. He was last re-elected on 12 May 2003. He was previously the Group Finance Director of United Motor Works Group in Singapore between 1988 and 1993. Between 1993 and 1997, he was an Individual Non-clearing member of SIMEX. He is also a Non-Executive Director of Kian Ho Bearings Limited, a company listed on the Singapore Exchange. Mr. Tan is also a member of the Governing Council of the Singapore Institute of Management (SIM) and a member of the Singapore Institute of Directors’ (SID) Professional Development Sub-Committee. He was a member of the Board of the YMCA of Singapore between 1983 and 1986. Mr. Tan is a Fellow of the Chartered Association of Certified Accountants (FCCA), Fellow of the Chartered Institute of Management Accountants (FCMA) and a Chartered Director of the Institute of Directors, UK (C Dir). He is the founder and CEO of HIM Governance Private Limited, a governance solution and services organization.

18


5. Board Performance


The NC is responsible for assessing the Board’s effectiveness and ability to discharge its responsibilities in providing stewardship, corporate governance and monitoring management performance with the objective of enhancing long term shareholders’ value. In reviewing the Board’s effectiveness, the NC takes into account feedback from Board members as well as the directors’ individual skill sets and experience. The NC also considers the financial indicators included in the Code of Corporate Governance as well as achievement of strategic objectives.

With regard to an individual director’s performance, the Company has adopted a self appraisal system administered by the NC. The appraisal covers attendance at meetings, level of participation at meetings and contribution made by Directors in light of their individual expertise.

The Board, with the assistance of the NC, strived to ensure that the directors appointed to the Board possess the experience, knowledge and skills relevant to the Company’s businesses.

Attendance at Board and Committee Meetings

During the year, the Board held six meetings comprising four scheduled meetings and two special meetings.

Name of Director

Board Audit CommitteeRemuneration

Committee

Nominating

Committee

No.

of

sche

dule

d

mee

tings

Att

enda

nce

No.

of

spec

ial

mee

tings

Att

enda

nce

No.

of

sche

dule

d

mee

tings

Att

enda

nce

No.

of

sche

dule

d

mee

tings

Att

enda

nce

No.

of

sche

dule

d

mee

tings

Att

enda

nce

Peter Sung* 4 4 2 2 - - 1 1 1 1

Low Kian Beng 4 4 2 2 - - 1 1 - -

Cheng Hong Kok** 4 4 2 2 4 4 - - 1 1

David Lee Kay Tuan 4 4 2 2 - - - - 1 1

Lei Huai Chin 4 1 2 1 4 0 - - - -

William Liem 4 2 2 1 - - - - - -

Liem Chin Chiang*** 1 1 0 0 - - - - - -

Ong Teck Ghee 4 4 2 1 4 3 - - - -

Tan Lye Huat 4 4 2 2 4 4 1 1 - -

* Chairman of Board of Directors, Remuneration Committee and Nominating Committee

** Chairman of the Audit Committee

*** Mr. Liem Chin Chiang was appointed a Director of the Company on 17 September 2004.


19


6. Access to Information


New directors are given the relevant information and briefing to familiarize themselves with the structure, businesses and operations of the Company. The Directors are also kept up-to-date by Management on pertinent developments of corporate laws and governance.

Management endeavors to provide the Board with timely and adequate information before each Board meeting so that the Directors can better understand the issues and contribute effectively in the Board’s decision making process. Where complete information on certain matters could not be supplied to the Board, Management will advise the Board of available information pending the collation of the outstanding information. Additional information will be provided if requested by any Director. The members of the Board have separate and independent access to the Company’s Management, as well as to the Company Secretary at all times.

The Board is provided with monthly report which contains key performance indicators that inform the Directors of the Company’s on-going performance, position and prospects. The Board also reviews and approves for release the Company’s half-year and full-year results. When updating the Board of the Company’s performance, the Board is kept apprised (with the necessary explanation) of material variance between the projections (in the approved budget) and the actual results.

Directors, individually or as a group, may seek independent professional advice after consultation with the Chairman of the Board.

II REMUNERATION MATTERS

7. Procedures for Developing Remuneration Policies


The RC comprises three Directors, the majority of whom are non-Executive and Independent Directors. The RC is chaired by an Independent and non-Executive Director.

The members of the RC are:

• Mr. Peter Sung, Chairman (Independent and non-Executive) • Mr. Tan Lye Huat (Independent and non-Executive) • Mr. Low Kian Beng (non-Independent and Executive)

The Chairman of the RC has practical experience in the field of executive compensation; in addition, the members have extensive senior managerial or directorship experience. The members of the RC also have access to expert advice inside and/or outside the Company whenever it is required.


20


During the year, the RC held one scheduled meeting. The principal responsibilities of the RC are to:

• offer an independent perspective to assist the Board to review the annual remuneration framework for non-Executive Directors and Executive Directors which the Company has in place; and

• recommend to the Board, in consultation with the Chairman of the Board, for approval of the specific remuneration packages for the CEO, each Executive Director and any relative of a Director and/or substantial shareholder who is employed in managerial position by the Company, if any.

No member of the RC is involved in deciding his own remuneration. The CEO has an employment contract with the Company which can be terminated by either party giving three months’ notice. None of the non-Executive Directors is on service contract with the Company.

8. Level and Mix of Remuneration


The Company’s remuneration policy and package for Executive Directors is based on individual performance, Company performance and industry benchmarking compared with companies in similar industries. They are formulated to align Directors’ interests with those of shareholders’ and link rewards to both corporate and individual performance. Executive Directors do not receive Directors’ fees from the Company or from its subsidiaries/associated company where they have been appointed to these Boards, since their salaries compensate for services rendered as members of these Boards. Any Director fees for services rendered by the Executive Directors to these entities are paid to the Company.

The remuneration policy and package of Executive Director for the year ended 2004 has been approved by the entire Board.

The non-Executive Directors are paid pursuant to the Company’s Remuneration Framework for Directors of the Board. Under this framework, there will be a scale of fees divided into basic retainer fees as a director, fees for serving on board committees, fees for holding Chairmanship appointments on the Board and committees and fees for attendance. Payment of Directors’ fees is subject to shareholders’ approval at the AGM. The RC is of the view that remuneration of non-Executive Directors is appropriate to the level of contribution, taking into account factors such as effort and time spent, and responsibilities of the Directors. The RC and the Board are of the view that the remuneration of the Directors is adequate but not excessive.

The Board has not included an annual remuneration report (as suggested under Guidance Note 9.5 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 been sufficiently disclosed in this Report and in the Financial Statements of the Company.


21


9. Disclosure on Remuneration


A summary of each non-Executive and Executive Director’s remuneration payable for FY2004 is shown in the following table:

Name of Directors Status 1)

Breakdown of Remuneration in Percentage (%) Total Remuneration

in compensation

bands of

$250,000

Fees 2) Salary3) BenefitsVariable

Bonus 4)Total

Peter Sung NE, Ind 100% - - - 100% < $250,000

Cheng Hong Kok NE, Ind 100% - - - 100% < $250,000

Ong Teck Ghee NE, Ind 100% - - - 100% < $250,000

Tan Lye Huat NE, Ind 100% - - - 100% < $250,000

David Lee Kay Tuan NE, NI 100% - - - 100% < $250,000

Lei Huai Chin NE, NI 100% - - - 100% < $250,000

William Liem NE, NI 100% - - - 100% < $250,000

Liem Chin Chiang NE, NI 100% - - - 100% < $250,000

Low Kian Beng Exec, NI - 75% 12% 13% 100% $250,000 -

$499,999

Total Directors’ Remuneration (%) 33% 50% 8% 9% 100%

Notes: 1) NE – non-Executive / Ind – Independent / NI – non-Independent / Exec – Executive. 2) Directors’ fees as a lump sum are subject to approval by shareholders at the AGM on 22 April 2005. 3) The salary amount shown is inclusive of allowances and CPF.

4) The variable bonus amount shown is inclusive of CPF.

Remuneration of Top Executives (Other than the Company’s Executive Directors)

The Company’s staff remuneration policy is based on individual’s rank and role, his individual performance, his business unit’s performance, Company performance and industry benchmarking gathered from companies in comparable industries.

The table below shows the ranges of gross remuneration received by the Group’s five top Executives (excluding the Company’s Executive Director) in the Company and in the Group’s Singapore and overseas subsidiaries, but does not include any associated companies. There is no Group employee related to a Director, whose remuneration exceeded S$150,000 for the financial year ended 31 December 2004.


22


Name of top 5 executives

Position

Breakdown of Remunerationin Percentage (%)

Total Remuneration in Compensation

bands of$ 250,000

Salary 1) BenefitsVariable Bonus 2) Total

Chew Wee Keat, Ivan Managing Director of subsidiaries

85% - 15% 100% < $250,000

Fong Seok Phoy Managing Director of a subsidiary

85% - 15% 100%$250,000 - $499,999

Hui Chee Teck, Simon General Manager of subsidiaries

87% - 13% 100% < $250,000

Ng Keok Heng, Allen Director of subsidiaries 86% - 14% 100% < $250,000

Tan Yin Yen, Lilian Group Financial Controller 85% - 15% 100% < $250,000

Total Executives’ Remuneration (%) 85% - 15% 100%

Notes: 1) The salary amount shown is inclusive of allowances such as fixed transport allowance and CPF.

2) The variable bonus amount shown is inclusive of CPF.

III ACCOUNTABILITY AND AUDIT

10. Accountability


The Board recognizes that it is accountable to shareholders for the performance of the Group. In discharging this responsibility, the Board ensures the timely release of all significant information to shareholders as well as all statutory reporting requirements. To enable the Board to discharge this function, Management provides the Board with management accounts of the Group’s performance, position and prospects on a monthly basis and whenever any significant issue arises.

11. Audit Committee

Company policy and procedure

The AC consists of four Directors, all of whom are non-Executive and three of whom are Independent. They are:

• Mr. Cheng Hong Kok, Chairman (Independent, non-Executive) • Mr. Tan Lye Huat (Independent, non-Executive) • Mr. Ong Teck Ghee (Independent, non-Executive) • Mr. Lei Huai Chin (Non-Independent, non-Executive)

The Board is of the view that the AC members are appropriately qualified to discharge their responsibilities and its members have accounting and/or related financial management expertise.

During the year, the AC held four scheduled meetings.


23


The principal functions of the AC are to:

• assist the Board in fulfilling its responsibilities for reviewing the Company’s financial reporting process, systems of internal control and management of financial risks, the audit process, and the Company’s process for monitoring compliance with laws and regulations and its own code of business conduct;

• review the scope, results and cost effectiveness of the Company’s audit, as well as the independence and objectivity of the External Auditors;

• review the effectiveness and adequacy of the internal audit function which is outsourced to a professional firm;

• review the effectiveness of the Company’s system for monitoring compliance with laws and regulations and the results of any Management investigation and follow-up (including disciplinary action) of any fraudulent acts or non-compliance;

• be satisfied that all regulatory compliance matters have been considered in the preparation of the financial reporting/statements;

• review annually the independence of the External Auditors as well as the nature and extent of non-audit services provided by the External Auditors to the Company to ascertain that the independence and objectivity of the External Auditors is not prejudiced;

• develop and formalize a cost effective risk management framework for the Company; and

• conduct a review of interested person transactions as well as the Company’s procedures to identify, report and seek requisite approval for the interest person transactions.

The AC has explicit authority to investigate any matter within its terms of reference. It has full access to, and co-operation of, management and full discretion to invite any director or any member of Management to attend its meetings. At least once a year, the Company’s External Auditors, Messrs Deloitte & Touche meet separately with the AC without the presence of Management.

As part of the AC’s assessment of the External Auditors’ independence, the AC conducted an annual review of the non-audit services provided by the External Auditor in 2004. The AC is of the view that the non-audit services (namely, as a tax agent) provided by the External Auditors do not prejudice their objectivity and independence.

12. Internal Controls

Company policy and procedure

The Board believes in maintaining a sound system of internal controls to safeguard shareholders interests and the Group’s assets, and to appropriately manage risks that the Group is exposed to.

The Board is of the view that the Company has in place an adequate system of internal controls to meet the needs of the Group and its current business environment. The Board notes that the system of internal controls provides


24


reasonable, but not absolute, assurance that the Group will not be adversely affected by any event that could be reasonably foreseen as it strives to achieve its business objectives.

The AC’s responsibilities in the Group’s internal controls and risk management are complemented by the work of the Internal Auditor. The Board has established a risk management framework that supports and guides the Board of Directors, Management and staff in managing significant risks faced by the Group. The process shall cover key areas of the Company’s business activities and is carried out through a systematic and bottom-up approach from the business units to the Group that includes identification; documentation; treatment; reporting and monitoring of risks. The AC expects the risk assessment process to be a continuing process of review to ensure that the Company has an appropriate cost effective risk management framework that can operate effectively.

13. Internal Audit


The Company’s internal audit function is outsourced to PricewaterhouseCoopers. The AC reviews annually the adequacy of the internal audit function. The Internal Auditor (“IA”) is guided by the PricewaterhouseCoopers Global Internal Audit Services Outsourcing Engagement Framework (“Framework”). The standards developed in the Framework are consistent with the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.

The Company’s Internal Auditor annually reviews the effectiveness of the Company’s material internal controls, including financial, operational and compliance controls, and risk management practices.

The AC annually reviews the activities and organizational structure of the Company’s internal audit function to ensure that no unjustified restrictions or limitations are made. The AC reviews and approves the annual IA plan in order to ensure that the internal audit function is adequate. It also oversees the implementation of the internal audit plan and ensures that Management provides the necessary co-operation to enable the Internal Auditor to perform its function. The IA’s primary line of reporting is to the Chairman of the AC, although the IA also reports to the CEO on administrative matters. The AC reviews the Internal Audit function on an annual basis and at least once every year meets with the Internal Auditors without the presence of Management.

IV COMMUNICATION WITH SHAREHOLDERS

14. Communication with Shareholders


The Company communicates with shareholders and the investing community through announcements that are released to the SGX-ST via SGXNET. These include the half-year and full-year results, material transactions, and other developments relating to the Group requiring disclosure under the corporate disclosure policy of the SGX-ST.

The Company has investor relations officer who respond to investor queries, as well as ensure the fair and timely dissemination of all of the Company’s public releases. Information (as well as latest announcements) on the Company can be accessed at the website www.tuansing.com. All shareholders of the Company are sent a copy of the Annual Report and notice of the Annual General Meeting (AGM). The notice of AGM, giving notice of all items of business to be transacted at the AGM, is also advertised in the newspapers.


25


At the AGM, the Company’s shareholders have the opportunity to participate effectively through open discussions and to vote on the resolutions tabled at the AGM. At General Meetings, separate resolutions are put up for approval on each distinct issue. Shareholders can vote either in person or through proxies.

The Chairman of the Board, as well as the Chairmen of the Audit, Nominating and Remuneration Committees will be present and available to address questions at general meetings. The External Auditors will also be present to assist the Directors in addressing any relevant queries by shareholders.

Dealings in Securities

The Company believes that it has complied with the SGX-ST Best Practices Guide. Towards this end, the Company has adopted a policy whereby the Company’s officers are not allowed to deal in the Company’s securities during the period commencing one month before the announcement of the Company’s annual and half-year results and ending on the day of announcement of results. The Company’s officers are also to refrain from dealing in the Company’s securities for short-term consideration.


26


Key Management Team

FONG SEOK PHOYManaging Director of SP Resources International Pte. Ltd.

Fong Seok Phoy joined as Managing Director of SP Resources International Pte. Ltd. in April 2001. Prior to joining SP Corp Group, he held senior appointments in multinational companies in the petrochemical industry. He was involved in the development of petrochemical project when working in the Prime Minister’s office of the Singapore Government in the seventies. Under the Singapore Colombo Plan Scholarship, he graduated with a Bachelor of Engineering (Chemical and Materials) (Hons) from the University of Auckland, New Zealand in 1974.

SIMON HUI CHEE TECKGeneral Manager of Globaltraco International Pte. Ltd. and Singapore Bandag Pte. Ltd.

Simon Hui joined Globaltraco International Pte. Ltd. as an Assistant General Manager in April 2001 and was promoted to the position of General Manager in April 2002. He is also in-charged of the tyre retreading operation under Singapore Bandag Pte. Ltd. Prior to joining SP Corp Group, Simon Hui has extensive experience in the sales and marketing of tyres and alloy wheels, as well as in retail and construction industries. Simon Hui holds a Bachelor of Business (Marketing) degree from La Trobe University, Australia.

FRANK LIM ENG KHOONAssistant General Manager of Globaltraco International Pte. Ltd. and General Manager of SP Global International Pte. Ltd.

Frank Lim joined Globaltraco International Pte. Ltd. in 1996 and was promoted to the post of Assistant General Manager in January 2003 responsible for the regional sales of tyre and automotive products. He is concurrently the head of the consumer products operation under SP Global International Pte. Ltd. He holds a Bachelor of Science (Hons) degree in Business and Management studies from the University of Bradford, UK.

IVAN CHEW WEE KEATManaging Director of SP Mining & Engineering Pte. Ltd. and Bored Piling (Pte.) Ltd. group of companies

Ivan Chew was appointed Managing Director of Bored Piling Group in February 2004. He is also the head of the mining and engineering operation under SP Mining & Engineering Pte. Ltd. His career with SP Corp Group began in 1991. From 1993 to 1997, Ivan Chew was the General Manager of the Indonesia operation. He was appointed Director of Bored Piling Group in 1999 and held the position of Assistant Managing Director from September 2000. Ivan Chew graduated from the National University of Singapore with a Bachelor of Engineering degree in 1986.

ALLEN NG KEOK HENGDirector of Soil & Foundation (Pte.) Limited

Allen Ng joined Soil & Foundation (Pte.) Limited since 1980 and was appointed Director of Soil & Foundation (Pte.) Limited in March 1995. He was the head of instrumentation department from 1982 to 1989 and has been responsible for the planning and project management of instrumentation and soil investigation projects since 1990. He was also in-charged of the ready-mixed concrete and quarry operation of Bored Piling Group in the nineties.

LILIAN TAN YIN YENGroup Financial Controller

Lilian Tan joined Bored Piling Group in 1992 and was promoted to the position of Financial Controller in 1998. She was appointed Group Financial Controller of SP Corp Group in April 2002 and her key responsibilities include finance, human resource and administrative functions. Lilian Tan graduated from the National University of Singapore with a Bachelor of Accountancy degree in 1984. She is a Fellow member of the Institute of Certified Public Accountants of Singapore.

From left to right:Top row: Allen Ng Keok Heng, Frank Lim Eng KhoonMiddle row: Fong Seok Phoy, Ivan Chew Wee Keat, Simon Hui Chee TeckFront row: Lilian Tan Yin Yen, Low Kian Beng (Managing Director & CEO), David Lee Kay Tuan (Chairman of Executive Committee)(Information on Mr Low Kian Beng and Mr David Lee Kay Tuan are set out on page 16 of this Annual Report)

27


Revenue

The Group’s revenue of $184 million was 16% lower than 2003 due

mainly to the scaling down of construction activities in the domestic

market by the Engineering Services Division. Revenue from Marketing

Services Division increased by 7% to $130 million, constituting 70% of

Group’s revenue. Engineering Services Division recorded revenue of $52

million (45% lower than 2003) and Manufacturing Division recorded

revenue of $3 million in 2004.

Net Profit

The Group attained higher profitability with net profit increased by

20% to $3 million in 2004. This was attributed to higher earnings of

the Marketing Services and Engineering Services Divisions, which more

than offset the lower profit of the Manufacturing Division. The higher

earning of the Marketing Services Division was attributed to increase in

revenue, whilst those of the Engineering Services Division included the

profit recognition from a one-off settlement of a past project account

and higher other operating income.

Total Assets

The Group’s total assets decreased by 16% to $68 million due mainly

to divestment of the high precision equipment manufacturing unit

and lower trade and other receivables attributable to the reduced

construction activities by the Engineering Services Division. Total cash

and cash equivalents decreased by $7.3 million to $11.2 million due

mainly to repayment of borrowings during the year.

Financial Highlights

Total Assets ($m)

2003

220184

Revenue ($m)

2004

2003

2.5

3.0

Net Profit ($m)

2004

2003

81

2004

68

28


Value Added Statement

($’000)Marketing Services

Engineering Services Manufacturing

Corporate and others Elimination Consolidated

Revenue from operations 129,558 52,128 2,571 1,371 (1,374) 184,254

Less: Purchase of goods and services 124,879 43,968 1,611 980 (782) 170,656

Value added from operations 4,679 8,160 960 391 (592) 13,598

Other operating income 72 3,081 98 173 (305) 3,119

Finance income 65 24 11 4 (1) 103

Total value added available for distribution 4,816 11,266 1,069 568 (898) 16,821

Distributed as follows:

To employees

Salaries and other staff costs 2,367 7,945 531 686 – 11,529

To government

Corporate tax 334 (1) (20) 1 – 314

To suppliers of capital

Interest to banks and other lenders 32 106 – 145 (34) 249

Minority interests (264) (172) – – – (436)

Retained for re-investment and future growth

Depreciation 152 1,595 366 72 – 2,185

Retained profits/(lossess) 2,195 1,793 192 (336) (864) 2,980

Total value added 4,816 11,266 1,069 568 (898) 16,821

Value added from operations

2004 4,679 8,160 960 391 (592) 13,598

2003 3,375 10,617 1,180 568 97 15,837

29


Productivity Ratios and Statistics

Marketing Services


Corporate and others Consolidated

Productivity Ratios

Value added per employee ($’000)

2004 66 28 24 65 34

2003 66 34 35 114 40

Revenue per employee ($’000)

2004 1,824 182 64 229 456

2003 2,380 309 92 233 551

Value added per $ employment cost ($)

2004 1.98 1.03 1.81 0.57 1.18

2003 1.47 1.21 3.32 0.75 1.30

Value added per $ investment in property, plant and equipment ($)

2004 5.44 0.49 0.50 0.19 0.64

2003 5.05 0.47 0.45 0.26 0.56

Statistics

Average number of employees

2004 71 287 40 6 404

2003 51 309 34 5 399

Average investment in property, plant and equipment ($’000)

2004 860 16,533 1,924 2,092 21,409

2003 668 22,621 2,616 2,197 28,102

30


The Directors 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 2004.

1 Directors

The Directors of the Company in office at the date of this report are:

Mr Peter Sung ChairmanMr Low Kian Beng Managing Director and Chief Executive Officer (“CEO”)Mr Cheng Hong KokMr David Lee Kay TuanMr Lei Huai ChinMr William LiemMr Liem Chin Chiang (Appointed on 17 September 2004)Mr Ong Teck GheeMr Tan Lye Huat

In accordance with the Company’s Articles of Association, the following Directors retire, and being eligible, offer themselves for re-election:

Mr Lei Huai ChinMr Liem Chin ChiangMr Ong Teck GheeMr Tan Lye Huat

2 Arrangements To Enable Directors To Acquire Shares Or Debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object was to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Directors’ Report

31


3 Directors’ Interests In Shares And Debentures

The Directors of the Company holding office at the end of the financial year had no interests in the share capital and debentures of the Company and related corporations as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 164 of the Singapore Companies Act except as follows:

Direct Interest Deemed InterestAs at

1 January 2004

As at 31 December

2004

As at 21 January

2005

As at 1 January

2004

As at 31 December

2004

As at 21 January

2005Number of the Company’s ordinary shares of $0.05 eachMr David Lee Kay Tuan - - - - 281,463,197* 281,463,197*

Number of Tuan Sing Holdings Limited ordinary shares of $0.01 eachMr David Lee Kay Tuan 250,000 250,000 250,000 - 518,267,849** 518,267,849**

Number of Gul Technologies Singapore Ltd ordinary shares of $0.20 eachMr Low Kian Beng 12,000 12,000 12,000 - - -Mr David Lee Kay Tuan - - - - 193,431,996*** 193,431,996***

Number of Gul Technologies Singapore Ltd non-cumulative convertible preference shares of $0.20 eachMr David Lee Kay Tuan - - - - 11,000,000*** 11,000,000***

* By virtue of interest of his spouse (Ms Michelle Liem Mei Fung) in SP Corporation Limited.** By virtue of interest of his spouse (Ms Michelle Liem Mei Fung) in Tuan Sing Holdings Limited.*** By virtue of interest of his spouse (Ms Michelle Liem Mei Fung) in Gul Technologies Singapore Ltd.

4 Directors’ Contractual Benefits

Since the beginning of the financial year, no Director has received or has become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act (other than as disclosed in the consolidated financial statements), by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except that certain Directors have received remuneration from related corporations in their capacities as directors and/or executives of those related corporations.

5 Share Options

During the financial year:

(a) no option to take up unissued shares of the Company or any corporation in the Group was granted;

(b) no shares of the Company or corporations in the Group were issued by virtue of the exercise of an option to take up unissued shares; and

(c) there were no unissued shares of the Company or any corporation in the Group under option.

Directors’ Report

32


6 Audit Committee

The Audit Committee consists of four non-executive directors, three of whom including the Chairman of the Committee are independent directors. At the date of this report, the members of the Audit Committee are:

Mr Cheng Hong Kok (Chairman)Mr Lei Huai ChinMr Ong Teck GheeMr Tan Lye Huat

The Audit Committee performed the functions specified in the Singapore Code of Corporate Governance, Singapore Companies Act and the Singapore Exchange Securities Trading Limited Listing Manual.

In relation to the financial statements of the Company and the Group for the year ended 31 December 2004, the Audit Committee reviewed the audit plans and scope of the audit examination of the external and internal auditors of the Company. The external and internal auditors’ findings on the internal controls of the companies within the Group, and management’s response to these findings were also discussed with the auditors and management. The Audit Committee’s activities included a review of the financial statements of the Company and the Group for the year ended 31 December 2004, and the report of the external auditors thereon.

The Committee recommends to the Board of Directors the nomination of Deloitte & Touche as external auditors at the forthcoming Annual General Meeting of the Company.

7 Auditors

Deloitte & Touche have expressed their willingness to accept re-appointment as auditors of the Company.

On behalf of the Directors

Low Kian Beng David Lee Kay TuanManaging Director & CEO Director

Singapore1 March 2005

Directors’ Report

33


In the opinion of the Directors,

(i) the accompanying balance sheets, consolidated profit and loss statement, consolidated cash flow statement and statements of changes in equity together with the notes thereon 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 2004, the results of the Group, changes in equity of the Company and of the Group and the cash flows of the Group for the financial 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.

On behalf of the Directors

Low Kian Beng David Lee Kay TuanManaging Director & CEO Director


Statement By The Directors

34


We have audited the accompanying financial statements of SP Corporation Limited set out on pages 35 to 69 for the year ended 31 December 2004. 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards and so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2004, the results of the Group, changes in equity of the Group and of the Company, and cash flows of the Group for the financial year then ended; and

(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

Deloitte & ToucheCertified Public Accountants

William Lim Choon HockPartnerAppointed on 12 May 2003


Auditors’ ReportTo the Members of SP Corporation Limited

35


Group CompanyNote 2004 2003 2004 2003

$’000 $’000 $’000 $’000

Assets

Non-current assetsProperty, plant and equipment 4 4,402 10,587 46 89

Investments in subsidiaries 5 – – 15,825 14,532

Investment in associate 6 16 16 – –

Total non-current assets 4,418 10,603 15,871 14,621

Current assetsInventories 8 4,418 4,096 – –

Trade and other receivables 9 47,888 48,206 8,460 9,350

Cash and bank balances 10 11,229 18,502 15 52

Total current assets 63,535 70,804 8,475 9,402

Total assets 67,953 81,407 24,346 24,023

Equity and Liabilities

EquityShare capital 14 17,550 17,550 17,550 17,550

Reserves 39,520 39,651 40,816 40,816

Accumulated losses (35,144) (38,124) (41,891) (42,638)

Total equity 21,926 19,077 16,475 15,728

Minority interests 533 780 – –

Non-current liabilitiesBorrowings 15 3,824 9,634 3,720 4,186

Deferred tax 17 38 160 – –

Total non-current liabilities 3,862 9,794 3,720 4,186

Current liabilitiesTrade and other payables 18 40,294 51,402 4,151 4,081

Income tax payable 665 229 – –

Borrowings 15 673 125 – 28

Total current liabilities 41,632 51,756 4,151 4,109

Total equity and liabilities 67,953 81,407 24,346 24,023

Balance SheetsAs at 31 December 2004

The accompanying notes form an integral part of these financial statements.

36


GroupNote 2004 2003

$’000 $’000

Revenue 19 184,254 219,824

Cost of sales (171,698) (207,062)

Gross profit 12,556 12,762

Other operating income 20 3,119 1,148

Distribution costs (3,308) (3,466)

Administrative expenses (7,011) (7,144)

Other operating expenses 21 (2,354) (1,171)

Operating profit 3,002 2,129

Finance income 22 103 129

Finance costs 23 (250) (164)

Profit before income tax and share of result of associate 2,855 2,094

Share of result of associate 1 –

Profit before income tax 24 2,856 2,094

Income tax 25 (313) 51

Profit after income tax 2,543 2,145

Minority interests 437 323

Net profit attributable to the shareholders of the Company 2,980 2,468

Basic earnings per share (cents) 26 0.85 0.70

Consolidated Profit And Loss StatementFor the year ended 31 December 2004


37


Share CapitalShare

PremiumTranslation

ReserveAccumulated

Losses Total$’000 $’000 $’000 $’000 $’000

Group

Balance at 1 January 2003 17,550 40,816 (989) (40,592) 16,785

Translation loss arising on consolidation – – (83) – (83)

Translation loss arising on inter-company non-trade monetary items – – (93) – (93)

Net loss not recognised in the profit and loss statement – – (176) – (176)

Net profit for the financial year – – – 2,468 2,468

Balance at 31 December 2003 17,550 40,816 (1,165) (38,124) 19,077

Balance at 1 January 2004 17,550 40,816 (1,165) (38,124) 19,077

Translation gain arising on consolidation – – 86 – 86

Translation loss arising on inter-company non-trade monetary items – – (217) – (217)

Net loss not recognised in the profit and loss statement – – (131) – (131)

Net profit for the financial year – – – 2,980 2,980

Balance at 31 December 2004 17,550 40,816 (1,296) (35,144) 21,926

Company

Balance at 1 January 2003 17,550 40,816 – (42,152) 16,214

Net loss for the financial year – – – (486) (486)

Balance at 31 December 2003 17,550 40,816 – (42,638) 15,728

Balance at 1 January 2004 17,550 40,816 – (42,638) 15,728

Net profit for the financial year – – – 747 747

Balance at 31 December 2004 17,550 40,816 – (41,891) 16,475

Statements Of Changes In EquityFor the financial year ended 31 December 2004


38


Group2004 2003$’000 $’000

Cash Flows From Operating ActivitiesProfit before income tax and share of result of associate 2,855 2,094

Adjustments for:

Depreciation of property, plant and equipment 2,186 2,713

Interest expense 250 164

Interest income (103) (129)

Impairment loss on property, plant and equipment 173 499

Write off of property, plant and equipment 161 –

Gain on disposal of property, plant and equipment, net (1,602) (157)

Negative goodwill recognised – (78)

Loss on disposal of a subsidiary 41 –

Operating profit before working capital changes 3,961 5,106

Inventories (1,072) (1,032)

Trade and other receivables (703) (7,836)

Restricted bank balances (1,212) 607

Trade and other payables (5,875) 13,668

Cash (used in)/generated from operations (4,901) 10,513

Interest paid (250) (164)

Interest received 103 129

Income tax paid, net (3) (51)

Net cash (used in)/generated from operating activities (5,051) 10,427

Cash Flows From Investing ActivitiesProceeds from disposal of property, plant and equipment 3,409 1,534

Payments for acquisition of property, plant and equipment (2,373) (2,445)

Net cash outflow on acquisition of subsidiaries (Note A) – (324)

Proceeds from disposal of a subsidiary, net (Note B) 650 –

Payment to minority interests due to capital reduction by a subsidiary – (117)

Net cash generated from/(used in) investing activities 1,686 (1,352)

Cash Flows From Financing ActivitiesRepayment of borrowings (5,863) (1,497)

Proceeds from borrowings 601 48

Proceeds from issue of shares by subsidiaries to minority shareholders 217 406

Net cash used in financing activities (5,045) (1,043)

Foreign currency translation adjustment (75) (128)

Net (decrease)/increase in cash and cash equivalents (8,485) 7,904

Cash and cash equivalents at beginning of financial year 16,300 8,396

Cash and cash equivalents at end of financial year (Note 10) 7,815 16,300

.

Consolidated Cash Flow StatementFor the year ended 31 December 2004

39


Group2004 2003$’000 $’000

Note A: Acquisition of subsidiaries

Fair values of identifiable net assets of subsidiaries acquired:

Property, plant and equipment – 205

Inventories – 144

Trade and other receivables – 375

Cash and cash equivalents – 103

Trade and other payables – (303)

Income tax payable – (8)

Deferred tax – (11)

– 505

Negative goodwill arising from acquisition of subsidiaries – (78)

Total consideration – 427

Cash and cash equivalents of subsidiaries acquired – (103)

Net cash outflow – 324

Note B: Disposal of a subsidiary

Property, plant and equipment 4,075 –

Inventories 750 –

Trade and other receivables 1,025 –

Cash and cash equivalents 222 –

Trade and other payables (5,232) –

Currency translation 73 –

Group’s share of net assets disposed 913 –

Loss on disposal of a subsidiary (41) –

872 –

Proceeds from disposal of a subsidiary 872 –

Cash and cash equivalents disposed (222) –

Net cash inflow 650 –

Consolidated Cash Flow Statement For the financial year ended 31 December 2004


40


1 General

The financial statements of SP Corporation Limited (the “Company”) (Reg. No. 195200115K) and consolidated financial statements of the Company and its subsidiaries (the “Group”) for the financial year ended 31 December 2004 were authorised for issue in accordance with a resolution of the Directors on 1 March 2005. The Company is domiciled and incorporated in Singapore with its registered office at 9 Oxley Rise, #03-02 The Oxley, Singapore 238697. The Company is listed on the Singapore Exchange Securities Trading Limited.

The immediate and ultimate holding company is Tuan Sing Holdings Limited, a company incorporated in Singapore and listed on the Singapore Exchange Securities Trading Limited. Related companies in these financial statements refer to members of the holding company’s group of companies.

The principal activity of the Company is that of an investment holding company. The principal activities of the subsidiaries are set out in Note 32 to the financial statements.

During the financial year, there have been no significant changes in the nature of the business activities.

2 Summary of Significant Accounting Policies

(a) Basis of Preparation

The financial statements are prepared in accordance with the historical cost convention.

The financial statements are prepared in accordance with Singapore Financial Reporting Standards (“FRS”) as required by the Singapore Companies Act.

The accounting policies have been consistently applied by the Group and Company and are consistent with those used in the previous year.

The financial statements are presented in Singapore dollars.

(b) Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles includes the use of estimates made by the Directors. Actual results could differ from those estimates.

(c) Consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiaries made up to 31 December. All significant inter-company balances and transactions and resulting unrealised profits or losses are eliminated on consolidation. These subsidiaries include companies in which the Group has an interest of over 50% in the issued share capital at balance sheet date or in which the Group controls the composition of the board of directors or has the power to govern the financial and operating policies of the investee. The results of subsidiaries acquired or disposed during the financial year are consolidated from the respective dates of acquisition or up to the dates of disposal.

On acquisition, the assets and liabilities of the relevant subsidiaries are measured at their fair values at the date of acquisition. The interest of minority shareholders is stated at the minority’s proportion of the fair value of the assets and liabilities recognised at the time of acquisition, adjusted for the appropriate share of post acquisition profit or loss and other reserve movements.

Notes To The Financial Statements31 December 2004

41


2 Summary of Significant Accounting Policies (cont’d)

(c) Consolidation (cont’d)

The financial statements of subsidiaries are prepared for the same reporting period as the parent company using consistent accounting policies. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

In the Company’s financial statements, investments in subsidiaries are stated at cost less any amounts provided for impairment in value not recoverable which are recognised in the profit and loss statement.

In translating the financial statements of a foreign entity for incorporation in the consolidated financial statements, the assets and liabilities are translated at the year end exchange rates. Revenue and expenses are translated at average rates for the year.

The resulting exchange differences arising from translating the financial statements of foreign entities are taken directly to translation reserve.

On the acquisition of foreign subsidiaries, the goodwill arising is translated at the exchange rate prevailing at the date of acquisition. And on the disposal of a foreign entity, accumulated exchange differences are recognised in the profit and loss account as a component of the gain or loss on disposal.

(d) Investments in Associates

An associate 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 Group’s investments in associates are recorded at cost and adjusted to recognise the Group’s share of net assets of the associates, using equity method.

The Group’s share of the results of associates is included in the consolidated profit and loss statement. The Group’s share of the post-acquisition reserves of associates is included in the investments in associates in the consolidated balance sheet.

Where the accounting policies of associates do not conform with those of the Group, adjustments are made where the amounts involved are considered significant to the Group.

Dividend income from associates is recognised when shareholder’s right to receive the dividend is legally established.

(e) Joint Ventures

A joint venture is a contractual arrangement whereby a subsidiary and other party/parties undertake an economic activity which is subject to joint control. For jointly controlled entities, the proportionate consolidation accounting method is used for the joint ventures whereby the Group’s share of each of the assets, liabilities, revenue and expenses is combined on a line-by-line basis with similar items in the financial statements. For jointly controlled operations, the Group recognises in its financial statements, the assets it controls, the liabilities it incurs, the expenses it incurs and its share of its income that it earns from the sales of goods or services by the joint venture.


42



(f) Property, Plant and Equipment

Property, plant and equipment are stated at historical cost less depreciation and impairment loss where the recoverable amount of the asset is estimated to be lower than its carrying amount.

The initial cost of property, plant and equipment comprises its purchase price including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use, any trade discounts and rebates are deducted in arriving at the purchase price. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance costs, is normally charged to the profit and loss statement in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditure is capitalised as an additional cost of property, plant and equipment.

Depreciation of property, plant and equipment is calculated on the straight line method to write off the cost of the assets over their estimated useful lives as follows:

Number of yearsLeasehold land, building and improvements 5 to 99Plant and equipment 1 to 15Motor vehicles 5

Fully depreciated assets are retained in the financial statements until no longer in use.

Assets held under finance lease agreements are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant leases.

(g) Intangibles

Goodwill

Goodwill represents the excess of the cost of the acquisition over the Group’s share of the fair value of identifiable net assets of a subsidiary, associate or joint venture at the date of acquisition. Goodwill is amortised using the straight-line method over its useful economic life up to a maximum of 10 years.

Negative Goodwill

Negative goodwill represents the excess of the Group’s share of the fair value of net assets acquired over the cost of acquisition. To the extent that negative goodwill relates to expectations of future losses and expenses that can be reliably measured, but do not represent identifiable liabilities, the portion of negative goodwill is recognised in the profit and loss statement when the future losses and expenses are incurred. Any remaining negative goodwill, not exceeding the fair values of the non-monetary assets acquired is recognised in the profit and loss statement over the remaining weighted average useful lives of those assets. Negative goodwill in excess of the fair value of the non-monetary assets acquired is recognised in the profit and loss statement immediately.


43



(h) Current Assets

Current assets include items realisable over operating cycles which may be in excess of one year.

(i) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes all costs in bringing the inventories to their present location and condition and is accounted for as follows:

• Raw materials – purchase cost on a first-in, first-out basis• Finished goods and work in progress – weighted average basis

The costs of work-in-progress and finished goods include costs of raw materials, direct labour and an appropriate proportion of overheads based on normal operating capacity.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs to completion and the estimated costs necessary to make the sale.

Provision is made where necessary for obsolete, slow moving items and defective inventories.

(j) Construction Contracts

Contracts work-in-progress are stated at cost plus estimated profits earned to-date, less provision for foreseeable losses to completion. Costs include costs that relate directly to the contract, costs that are attributable to the contract activities in general and costs that are specifically chargeable to the customer. Progress billings are deducted against contracts work-in-progress.

Contract revenue and contract costs are recognised as revenue and expenses respectively, when the outcome of a construction contract can be estimated reliably.

Revenue arising from fixed price contracts and cost plus contracts is recognised in accordance with the percentage of completion method. The stage of completion is measured by surveys of work performed.

Losses, if any, are recognised in the profit and loss statement immediately when their existence is foreseen.

(k) Trade and Other Receivables

Trade receivables, which generally have 30 to 90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. Trade receivables of construction projects include progress claim and retention money which are subject to final certification from clients and expiration of each project defect liability period. They are recognised based on contractual claims less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Receivables from related parties are recognised and carried at cost less an allowance for any uncollectible amounts.


44



(l) Cash and Bank Balances

Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

Cash on hand and in banks and short-term deposits which are held to maturity are carried at cost.

For the purposes of the consolidated cash flow statement, cash and cash equivalents consist of unsecured cash on hand and deposits in banks but exclude restricted bank balances.

(m) Share Capital

Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares, other than on a business combination, are shown as a deduction, net of tax, in equity from proceeds. Dividends on ordinary shares are recognised in shareholders’ equity in the period in which they are declared.

(n) Borrowings

All borrowings are recognised at cost.

(o) Leases

Finance lease

Finance leases, which effectively transfer to the group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at amounts equal, at the inception of the lease, to the fair value of the leased item or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. Finance charges are charged directly to the profit and loss statement.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Conversely, if there is reasonable certainty, the period of expected use is the estimated useful life of the asset.

Operating lease

Leases where the lessor effectively does not transfer substantially all the risks and rewards of ownership of the leased item are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss statement on a straight-line basis over the lease term.


45



(p) Income Tax

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 assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, based on the tax rates enacted or substantively enacted at the balance sheet date.

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-forwards of unutilised capital allowances and unused tax losses, to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, carry-forwards of unutilised capital allowances and unused tax losses can be utilised.

At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same tax authority.

Current tax and deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

(q) Trade and Other Payables

Liabilities for trade and other amounts payable, which are normally settled on 30 to 90 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 Group.

Payables to related parties are carried at cost.

(r) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.


46



(s) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.

Revenue from sale of products comprises revenue earned from the sale of the products net of returns, trade allowances and duties and taxes paid. Revenue from sale of products is recognised when significant risks and rewards of ownership are transferred to the buyer.

For revenue recognition policy relating to long-term construction contracts, please refer to the accounting policy on Construction Contracts [Note 2(j)].

Revenue from the rendering of services that are of short duration is recognised when the services are rendered.

Rental income is recognised on an accrual basis.

Interest income is recognised on a time-proportion basis using the effective interest rate.

Dividend income is recognised when the shareholder’s right to receive the dividend is legally established.

(t) Impairment of Assets

The Group’s assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the profit and loss statement. The recoverable amount is the higher of an asset’s net selling price and value in use. The net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit.

Reversal of an impairment loss recognised in prior years is recorded when there is an indication that the impairment loss recognised for an asset no longer exists or has decreased. The reversal is recorded in the profit and loss statement. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for that asset in prior years.

(u) Retirement Benefit Costs

Payments to defined contribution retirement plans are charged as expenses as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as defined contribution plans where the Group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit plan.


47



(v) Employee Leave Entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

(w) Foreign Currency Transactions

Transactions in foreign currencies are converted to the respective currencies at the rates of exchange ruling at the dates of the transactions. Foreign currency monetary assets and liabilities are translated to the respective currencies at the rates of exchange ruling at the balance sheet date. Exchange differences arising are taken to profit and loss statement except where the exchange differences arising from the conversion of monetary items that, in substance, forms part of the Group’s net investment in a foreign entity are taken directly to translation reserve until disposal of the net investment.

(x) Borrowing Costs

Borrowing costs are recognised as expenses in the period in which they are incurred.

3 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.

The Group is organised into core divisional activities as follows:

(a) Marketing Services Division

The marketing services division trades and markets industrial products, machinery and equipment for tyres, tyre-related and rubber industries and distributes tyres, auto-products and consumer products.

(b) Engineering Services Division

The engineering services division provides a range of construction services including piling and foundation, pipe jacking, civil engineering and infrastructure works, building construction, project management consultancy works, geotechnical instrumentation and investigation and environmental services.

(c) Manufacturing Division

The manufacturing division manufactures high precision equipment (tyre moulds and related products) and engages in tyre retreading activities.

(d) Corporate and Others

The Corporate and Others segment includes general corporate activities.


48


3 Segment Information (cont’d)

Primary reporting format - business segments

Marketing Services



$’000 $’000 $’000 $’000 $’000 $’000

Year ended 31 December 2004

Revenue- External customers 129,548 51,800 2,320 586 – 184,254

- Inter segment 10 328 251 785 (1,374) –

Total revenue 129,558 52,128 2,571 1,371 (1,374) 184,254

ResultSegment result 1,277 1,841 160 (334) 58 3,002

Finance income 65 24 11 3 – 103

Finance costs (250)

Share of result of associate – 1 – – – 1

Profit before income tax 2,856

Income tax (313)

Profit after income tax 2,543

Minority interests 437

Net profit for the financial year 2,980

AssetsSegment assets 40,132 24,783 432 2,037 42 67,426

Investment in associate – 16 – – – 16

Unallocated assets 511

Total assets 67,953

LiabilitiesSegment liabilities 23,738 15,764 118 692 (18) 40,294

Unallocated liabilities 5,200

Total liabilities 45,494

Other informationCapital expenditure 69 474 1,822 8 – 2,373

Depreciation 152 1,595 368 71 – 2,186

Property, plant and equipment written off – 161 – – – 161

Impairment loss of property, plant and equipment – – – 173 – 173


49



Primary reporting format - business segments

Marketing Services



$’000 $’000 $’000 $’000 $’000 $’000

Year ended 31 December 2003

Revenue- External customers 121,236 95,594 2,806 188 – 219,824

- Inter segment 157 – 329 978 (1,464) –

Total revenue 121,393 95,594 3,135 1,166 (1,464) 219,824

ResultSegment result 1,071 573 706 (174) (47) 2,129

Finance income 111 13 3 2 – 129

Finance costs (164)

Share of result of associate – – – – – –

Profit before income tax 2,094

Income tax 51

Profit after income tax 2,145

Minority interests 323

Net profit for the financial year 2,468

AssetsSegment assets 24,962 47,208 6,712 2,016 (14) 80,884

Investment in associate – 16 – – – 16

Unallocated assets 507

Total assets 81,407

LiabilitiesSegment liabilities 13,959 33,597 2,949 897 – 51,402

Unallocated liabilities 10,148

Total liabilities 61,550

Other informationCapital expenditure 347 1,015 1,062 21 – 2,445

Depreciation 157 2,285 201 74 (4) 2,713

Impairment loss of property, plant and equipment – 499 – – – 499

Segment revenue and expense are the operating revenue and expense reported in the Group’s profit and loss statement that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment.

Inter-segment pricing is on an arms’ length basis.

Segment assets consist of property, plant and equipment, inventories, receivables and operating cash. Segment liabilities comprise operating liabilities and exclude items such as taxation and corporate borrowings. Capital expenditure comprises additions to property, plant and equipment.


50



Secondary reporting format - geographical segments

Revenue is based on the country in which the customer is located. Total assets and capital expenditure are shown by the geographical areas in which the assets are located.

Revenue Total Assets Capital Expenditure2004 2003 2004 2003 2004 2003$’000 $’000 $’000 $’000 $’000 $’000

Singapore 92,274 139,762 65,903 71,676 515 745China & Hong Kong 18,474 31,941 15 5,493 1,820 1,055Europe 17,931 – – – – – Malaysia 14,152 15,341 2,017 2,797 19 7Indonesia 12,926 11,186 – – – – Thailand 9,006 8,986 – – – – Japan 3,526 – – – – – Philippines 2,065 3,602 18 1,441 19 638Others 13,900 9,006 – – – –

184,254 219,824 67,953 81,407 2,373 2,445

4 Property, Plant and Equipment

Leasehold land, building and

improvements

Plantand

equipmentMotor

vehicles Total$’000 $’000 $’000 $’000

GroupCost:

Balance at beginning of financial year 2,566 23,373 1,646 27,585Translation differences (67) (191) (4) (262)Additions – 2,197 176 2,373Disposals (2) (8,075) (399) (8,476)Disposal of a subsidiary – (4,567) – (4,567)Write offs (572) (676) – (1,248)

Balance at end of financial year 1,925 12,061 1,419 15,405

Accumulated depreciation:Balance at beginning of financial year 934 15,005 1,059 16,998Translation differences (10) (94) (3) (107)Depreciation for the financial year 33 1,952 201 2,186Impairment loss 173 – – 173Disposals – (6,359) (310) (6,669)Disposal of a subsidiary – (492) – (492)Write offs (572) (514) – (1,086)

Balance at end of financial year 558 9,498 947 11,003

Depreciation for last financial year 39 2,493 181 2,713

Net book value:Balance at beginning of financial year 1,632 8,368 587 10,587

Balance at end of financial year 1,367 2,563 472 4,402


51


4 Property, Plant and Equipment (cont’d)

Details of the leasehold land and building are as follows:

Tenure of land and buildingDescription/Location (Gross floor area) Last valuation

Leasehold land and building 99 years from 1971 NALot 28 & 30, Jalan Beliong (4,682 sm)Section 15, 40000 Shah AlamSelangor, West Malaysia

Plantand

equipment

Motorvehicles

Total

$’000 $’000 $’000

Company

Cost:

Balance at beginning of financial year 21 220 241

Additions 5 – 5

Balance at end of financial year 26 220 246

Accumulated depreciation:

Balance at beginning of financial year 5 147 152

Depreciation for the financial year 4 44 48


Depreciation for last financial year 5 44 49

Net book value:Balance at beginning of financial year 16 73 89


The impairment loss represents the write-down of certain property, plant and equipment to recoverable amount as the usage of these property, plant and equipment will be limited. The recoverable amount was determined based on the value of the property, plant and equipment in its limited use or indicative resale value. The impairment loss is included in the “other operating expenses” on the profit and loss statement.

Plant and equipment with net book values of $259,000 (2003 : $356,000) and $Nil (2003 : $73,000) for the Group and the Company respectively are under finance lease agreements.


52


5 Investments in Subsidiaries

Company2004 2003$’000 $’000

Unquoted equity shares, at cost 73,425 73,425

Less: Impairment loss in value (57,600) (58,893)

15,825 14,532

Analysis of impairment loss in value:

At beginning of financial year 58,893 58,189

During the year 550 1,177

Write back during the year (1,843) (473)

At end of financial year 57,600 58,893

Further details regarding the subsidiaries are set out in Note 32.

6 Investment in Associate

Group2004 2003$’000 $’000

Unquoted equity shares, at cost – –

Group’s share of post acquisition results 16 16

16 16

Further details regarding the associate are set out in Note 33.

7 Interests in Joint Ventures

The Group has joint ventures involved in the provision of engineering and construction services detailed as follows:

Interest held by the Group

2004 2003% %

Jointly controlled entities:

J.V. with Beng Soon Machinery Services (S) Pte. Ltd. (d) 50 50

J.V. with Downer Engineering (S) Pte. Ltd. (b) 50 50

J.V. with Hua Kok Realty (Private) Limited (a), (b) 51 51

Jointly controlled operation:

J.O. with Asia World Co Ltd (c) 50 50


53


7 Interests in Joint Ventures (Cont’d)

(a) Although the Group has an equity interest of more than 50%, the interest in the joint venture has been structured in such a manner that the Group and the joint venture partner have joint control over the operations of the entity.

(b) Audited by Deloitte & Touche, Singapore.

(c) Audited by another firm of auditors, Win Group, Myanmar.

(d) Not audited.

The Group’s share of the assets, liabilities, revenue and expenses of the jointly controlled entities, which are included in the consolidated financial statements, are as follows:

Group2004 2003$’000 $’000

Current assets 1,798 3,763

Current liabilities (2,284) (3,955)

Revenue 6,025 12,868

Costs and expenses (5,706) (13,486)

8 Inventories

Atcost

At netrealisable

value Total$’000 $’000 $’000

Group

2004Raw materials 256 – 256

Finished goods 3,948 214 4,162

4,204 214 4,418

2003Raw materials 67 72 139

Work-in-progress 263 – 263

Finished goods 3,689 5 3,694

4,019 77 4,096

The net realisable value of inventories are stated net of provision for obsolescence of $246,000 (2003 : $50,000).


54


9 Trade and Other Receivables

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Trade receivables (Note 11) 46,131 46,074 300 –

Other receivables (Note 12) 1,757 2,132 8,160 9,350

47,888 48,206 8,460 9,350

10 Cash and Bank Balances

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Fixed deposits

- secured 3,414 2,202 – –

- unsecured 1,109 5,390 – –

4,523 7,592 – –

Cash at bank and on hand

- unsecured 6,706 10,910 15 52

Cash and bank balances 11,229 18,502 15 52

Less: Restricted bank balances (3,414) (2,202)

Cash and cash equivalents per consolidated cash flow statement 7,815 16,300

Fixed deposits of the Group amounting to $3,414,000 (2003 : $2,202,000) are held by banks as collateral security for credit facilities granted to certain subsidiaries.

11 Trade Receivables

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Trade receivables 39,648 37,650 – –

Amounts due from related parties - trade (Note 28) 5,020 5,809 300 –

Amounts due from related companies - trade (Note 28) 1,661 2,228 – –

Retention monies receivables 4,255 4,008 – –

Amounts due from customers for contracts work-in- progress (Note 13) – 102 – –

50,584 49,797 300 –

Less: Provision for doubtful trade receivables (4,453) (3,723) – –

46,131 46,074 300 –


55


12 Other Receivables

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Sundry debtors 411 252 13 16

Prepayments 96 386 8 8

Deposits 739 987 30 30

Tax recoverable 511 507 66 66

Amounts receivable from subsidiaries – – 13,252 14,439

1,757 2,132 13,369 14,559

Less: Provision for doubtful other receivables - subsidiaries – – (5,209) (5,209)

1,757 2,132 8,160 9,350

The amounts receivable from subsidiaries are unsecured, interest free and have no fixed terms of repayment except for an amount of $1,069,000 (2003 : $1,579,000) receivable from a subsidiary which bears effective interest at 2.7% (2003 : 2.39%) per annum.

13 Contracts Work-In-Progress

Group2004 2003$’000 $’000

Contracts costs incurred 4,016 88,971

Attributable profits less losses recognised 419 1,856

4,435 90,827

Progress billings (4,605) (91,824)

(170) (997)

Amounts due from customers for contracts work-in-progress (Note 11) - 102

Amounts due to customers for contracts work-in-progress (Note 18) (170) (1,099)

(170) (997)


56


14 Share Capital

Group and Company2004 2003 2004 2003

Shares Shares $’000 $’000

Authorised:

At beginning and end of financial year

Ordinary shares of $0.05 each 2,000,000,000 2,000,000,000 100,000 100,000

Issued and fully paid:

At beginning and end of financial year

Ordinary shares of $0.05 each 350,991,516 350,991,516 17,550 17,550

15 Borrowings

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

(i) Non-current: Finance leases (Note 16) 104 135 – –

Amount payable to a related company (Note 28) – 5,313 – –

Amount payable to holding company 3,720 4,186 3,720 4,186

3,824 9,634 3,720 4,186

(ii) Current: Finance leases (Note 16) 72 125 – 28

Bank loan (unsecured) 601 – – –

673 125 – 28

The amount payable to a related company as at 31 December 2003 was secured by the Company’s entire shareholding in a subsidiary, with consolidated net assets of $6,020,000 as at 31 December 2003, covered by negative pledge on the assets of certain subsidiaries in favour of the lender. The amount payable to a related company was fully repaid during the financial year and bore effective interest of 2.39% per annum.

The amount payable to holding company is unsecured, has no fixed terms of repayment and repayment is not expected within the next twelve months. The amount payable to holding company amounting to $3,666,000 (2003: $Nil) bears effective interest of 3.57% (2003 : Nil%) per annum.

The bank loan bears interest at 11% (2003: Nil%) per annum.


57


16 Finance Leases

Group Company

MinimumPresent value of

minimum MinimumPresent value of

minimumlease payments lease payments lease payments lease payments2004 2003 2004 2003 2004 2003 2004 2003$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Within one year 81 138 72 125 – 29 – 28

After one year but not more than five years 113 146 104 135 – – – –

194 284 176 260 – 29 – 28

Less: Future finance charges (18) (24) – – – (1) – –

Present value of lease obligations 176 260 176 260 – 28 – 28

All finance leases are on a fixed repayment basis. The average effective borrowing rate was 6.13% (2003 : 5.37%) per annum.

17 Deferred Tax

Group2004 2003$’000 $’000

Balance at beginning of financial year 160 202

Acquisition of subsidiaries - 11

Write back during the financial year (122) (53)

Balance at end of financial year 38 160

Deferred tax at 31 December related to the following:

Deferred tax liabilities

Differences in depreciation 100 192

Deferred tax assets

Other deferred tax assets (62) (32)

Net deferred tax liability 38 160


58


18 Trade and Other Payables

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Trade creditors 32,566 34,653 2 20

Amounts due to related parties - trade (Note 28) 3,032 8,400 – –

Amounts due to related companies - trade (Note 28) 28 22 – –

Accrued expenses 2,484 2,601 482 456

Provision for completed projects 1,558 1,599 – –

Provision for cessation expenses 142 315 – –

Sundry creditors 314 2,713 66 65

Amounts due to customers for contracts work-in-progress (Note 13) 170 1,099 – –

Amounts payable to subsidiaries (Note 5) – – 3,601 3,540

40,294 51,402 4,151 4,081

The amounts payable to subsidiaries are non-trade related, unsecured, interest free and have no fixed terms of repayment.

19 Revenue

Group2004 2003$’000 $’000

Sale of products 124,523 124,042

Revenue from construction contracts 48,397 86,630

Services rendered 11,212 8,994

Rental income 122 158

184,254 219,824


59


20 Other Operating Income

Group2004 2003$’000 $’000

Construction equipment hiring income 427 392

Gain on disposal of property, plant and equipment, net 1,602 157

Bad debts recovered for trade receivables 7 327

Write back of provision for doubtful trade receivables 286 32

Write back of provision for inventory obsolescence 3 36

Negative goodwill recognised – 78

Foreign currency exchange gain, net – 66

Sale of construction materials 495 9

Write back of provision for cessation expenses 173 –

Sundry income 126 51

3,119 1,148

21 Other Operating Expenses

Group2004 2003$’000 $’000

Property, plant and equipment:

Impairment loss 173 499

Write off 161 –

Provision for doubtful trade receivables 1,403 584

Bad trade receivables written off 204 13

Inventories written off – 75

Provision for obsolescence of inventories 245 –

Loss on disposal of a subsidiary 41 –

Foreign currency exchange loss, net 127 –

2,354 1,171

22 Finance Income

Group2004 2003$’000 $’000

Interest income:

Bank deposits 72 55

Others 31 74

103 129


60


23 Finance Costs

Group2004 2003$’000 $’000

Interest expense:

Bank loans 23 –

Trust receipts 8 18

Finance leases 18 20

Related companies 56 126

Holding company 145 –

250 164

24 Profit Before Income Tax

The profit before income tax is arrived at after charging / (crediting) the following:

Group2004 2003$’000 $’000

Remuneration paid or payable to:

Directors of the Company 683 587

Other Directors of subsidiaries 859 827

Auditors’ remuneration:

Auditors of the Company - Current year - Adjustments for prior years

109(7)

1133

Other auditors 18 23

Fees for non-audit services by:

Auditors of the Company 22 20

Other auditors 1 8

25 Income Tax

Group2004 2003$’000 $’000

Income tax

Current year – Singapore 435 (17)

Current year – Overseas 27 21

Overprovision in prior years (29) (2)

433 2

Write back of deferred tax (120) (53)

313 (51)


61


25 Income Tax (Cont’d)

Reconciliations of the statutory income tax rate to the effective tax rates applicable to income from operations for the financial years ended 31 December are as follows:

Group2004 2003

Domestic statutory tax rate 20.0% 22.0%

Exempt income (2.8%) (16.5%)

Tax losses not available for set-off against future taxable income 8.2% 10.5%

Expenses not deductible for tax purposes 11.3% 6.9%

Income capital in nature (6.2%) (2.0%)

Utilisation of losses and capital allowance previously not recognised (12.1%) (20.0%)

Others (7.4%) (3.3%)

Effective tax rate 11.00% (2.4%)

At 31 December 2004, the Group had unutilised tax losses and capital allowances of approximately $21,107,000 (2003 : $22,570,000) and $7,467,000 (2003 : $7,930,000) respectively available for offset against future taxable income, subject to the conditions imposed by law in the countries of incorporation where the companies in the Group operate.

Future tax benefits of $5,715,000 (2003 : $6,100,000) arising from such unutilised tax losses and capital allowances have not been recognised as there is no reasonable certainty of their recovery in future periods.

At balance sheet date, the Company has Section 44 balance, as defined in the Singapore Income Tax Act, of $5,372,000 (2003 : $5,372,000) available for declaration of dividends to shareholders in the next three years. This amount is subject to agreement by the Comptroller of Income tax.

26 Earnings Per Share

Basic earnings per share is calculated by dividing the net profit for the financial year after minority interests by the weighted average number of ordinary shares in issue during the year:

Group2004 2003

Net profit for the financial year ($’000) 2,980 2,468

Weighted average number of ordinary shares in issue (in ’000s) 350,992 350,992

Basic earnings per share (cents) 0.85 0.70

There are no dilutive potential ordinary shares on the above basic earnings per share.


62


27 Staff Costs

Group2004 2003$’000 $’000

Wages and salaries 10,570 11,143

Employer’s Singapore contribution to defined contribution plans including Central Provident Fund 646 779

Others 315 221

11,531 12,143

Group2004 2003

Number of employees at end of financial year 351 456

28 Related Party Transactions

For the purposes of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to exercise significant influence over the parties in making the financial and operating decisions, or vice versa, or where the Group and the parties are subject to common significant influence. Related parties may be individuals or other entities.

Related companies in these financial statements refer to members of the holding company’s group of companies.

During the financial year, these were the following significant transactions with related parties which were carried out in the normal course of business based on terms agreed between the parties:

Group2004 2003$’000 $’000

Sales of goods 20,779 53,886

Sales of services 675 433

Construction revenue 2,918 7,803

Management fee income 23 45

Interest income 29 69

Consideration for disposal of a subsidiary 872 –

Interest expense (201) (126)

Rental expense (276) (289)

Management fees expense (128) (200)

Purchases of goods (52,112) (36,875)

Purchases of services (221) (412)

Consideration for acquisition of subsidiaries – (427)

Consultancy fees (41) –


63


29 Commitments

(a) Operating lease

Group2004 2003$’000 $’000

Rental expense - operating lease in respect of rental of office premises and workshops 873 1,008

The commitments in respect of non-cancellable operating leases contracted for but not recognised as liabilities are payable as follows:

Group2004 2003$’000 $’000

Within one year 534 880

After one year but not more than five years 336 791

870 1,671

(b) Other commitments

Group2004 2003$’000 $’000

Principal amounts of forward foreign exchange contracts with maturities of less than twelve months 5,245 6,687

The net fair values of the Group’s forward foreign exchange contracts are disclosed in Note 31(c).

30 Contingent Liabilities

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Corporate guarantees for performance bonds 6,965 12,292 1,370 1,895

Letters of credit 690 1,849 - -

Corporate guarantees for credit facilities granted to subsidiaries - - 16,501 21,058

7,655 14,141 17,871 22,953

In June 2000, a damage occurred to an underground cable at the site where a wholly-owned subsidiary of the Group carried out land site investigation work. If liable, the subsidiary may face penalty of up to $1 million. Except for repair costs, no claim has been received by the subsidiary in respect of the incident.

No provision has been made in the financial statements as the Directors are unable to determine the amount of liability, if any.


64


31 Financial Risk Management

(a) Financial risk management objectives and policies

The Group manages its exposure to financial risks using a variety of techniques and instruments. The Group does not hold or issue derivative financial instruments for speculative trading purposes.

The Group has established risk management policies and guidelines which set out its overall risk management strategies. Such policies are reviewed annually, and periodic checks are undertaken to ensure such guidelines are adhered to.

Interest rate risk

The Group has cash and cash equivalents placed with reputable banks and financial institutions, which generate interest income for the Group. The Group’s debts include bank borrowings, finance lease commitments and borrowings from a related company and holding company. The Group does not use derivative financial instruments to hedge its debt obligations. The Group’s policy is to manage its interest cost using a mix of fix and variable rate debt.

Information relating to the Group’s interest rate exposure is disclosed in Note 15 - Borrowings and Note 16 - Finance Leases.

Foreign exchange risk

The Group buys and sells its products and services in several countries and, as a result, is exposed to movements in foreign currency exchange rates. The primary purpose of the Group’s foreign currency hedging activities is to protect against the volatility associated with foreign currency assets and liabilities created in the normal course of business. As far as possible, the Group relies on natural hedges of matching foreign currency denominated assets and liabilities. In addition, the Group utilises forward foreign exchange contracts with maturities of less than twelve months to hedge against foreign exchange risk on certain financial assets and liabilities. The Group does not use forward foreign exchange contracts or currency options for speculative trading purposes.

Credit risk

It is the Group’s policy to enter into financial instruments with a diversity of credit-worthy counterparties. The Group manages these risks by monitoring credit-worthiness and limiting the aggregate risk to any individual counterparty. Where appropriate, the Group obtains collaterals from the customers. Therefore, the Group does not expect to incur material credit losses on its financial instruments.

Funding risk

The Group’s ability to meet its existing and prospective funding requirements is managed by maintaining the availability of adequate committed funding lines from high quality lenders.


65


31 Financial Risk Management (cont’d)

(b) Credit risk exposures

The Group’s maximum exposure to credit risk in the event the counterparties fail to perform their obligations as of the balance sheet date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the balance sheet.

The Group’s portfolio of financial instruments is broadly diversified along industry, product and geographic lines, and transactions are entered into with diverse credit-worthy counterparties, thereby mitigating any material concentration of credit risk.

(c) Fair values

Financial assets include cash and cash equivalents and trade and other receivables. Financial liabilities, which include trade and other payables and borrowings, are classified according to the substance of the contractual arrangements entered into.

The carrying values of cash and cash equivalents, trade receivables and payables, other receivables and payables approximate their fair values due to their short-term maturity. Information on the principal characteristics of the underlying financial instruments that is pertinent to the fair values of borrowings is included in Note 15 - Borrowings and Note 16 - Finance Leases.

Forward foreign exchange contracts

The fair value of forward foreign exchange contracts is estimated based on the difference between the applicable forward rates prevailing at the balance sheet date and the contracted forward rates, multiplied by the notional amount and discounted to present value.

The Group’s outstanding forward foreign exchange contracts are disclosed in Note 29(b).

The net fair values of the Group’s forward foreign exchange contracts at the balance sheet dates were:

Group2004 2003$’000 $’000

Unfavourable forward foreign exchange contracts, net (36) (56)


66


32 List of Subsidiaries

Name of subsidiary,country of Cost ofincorporation/operation investment held Interest heldand name of other auditors Principal activities by the Company by the Group 2004 2003 2004 2003 $’000 $’000 % %

Bored Piling (Pte.) Ltd. Foundation piling, 58,982 58,982 100 100(Singapore) civil engineering, building construction and project management consultancy works

BPL Engineering (HK) Dormant (a) (a) 100 100Limited (Hong Kong) (Horwath Hong Kong CPA Limited)

BPL Engineering (M) Foundation piling, (a) (a) 100 100Sdn. Bhd. civil engineering and(Malaysia) (d) building construction

BPL (HK) Under members’ (a) (a) 100 100Private Limited voluntary liquidation(Hong Kong)(Horwath Hong Kong CPA Limited)

BPL Philippines, Inc. Foundation and (a) (a) 61 61(Philippines) geotechnical consultants,(Diaz Murillo piling and civil engineeringDalupan) contractors

Creative Industrial Rental of property (b) (b) 81 81Packaging Sdn. Bhd. (Malaysia)(Y.C. Chong & Co.)

Globaltraco International Distribution of tyres 3,506 3,506 100 100Pte. Ltd. and auto-products(Singapore)

Globaltraco (M) Sdn. Bhd. Distribution of tyres (a) (a) 60 60(Malaysia) and auto-products(KH Goh & Co)


67


32 List of Subsidiaries (cont’d)


Global Noble International Distribution of consumer (a) (a) 51 51Corporation products(Philippines)(SyCip Gorres Velayo & Co.)

Ground Engineering Geotechnical contractor (a) (a) 100 100Technologies Pte. Ltd. specialising in foundation(Singapore) and soil improvement works

Performance Retreads Retreading of tyres (a) (a) 100 100Sdn. Bhd.(Malayisa) (d)

Singapore Bandag Retreading of tyres 427 427 100 100(Private) Limited(Singapore)

Soil & Foundation Geotechnical instrumentation (a) (a) 100 100(Pte) Limited and investigation,(Singapore) laboratory testing, environmental services and micro-piling

SP Global Distribution of consumer 3,019 3,019 100 100International Pte. Ltd. products(Singapore)

SP Resources Trading and marketing 7,491 7,491 100 100International Pte. Ltd. of industrial products(Singapore)

SP Machinery Holding Investment holding (b) (b) 100 100Pte. Ltd.(Singapore)

SP Precision Engineering Investment holding (b), (c) - 100 - (S) Pte. Ltd.(Singapore)


68


32 List of Subsidiaries (cont’d)


SP Machinery Investment holding and (a) (a) 100 100International Pte. Ltd. trading and marketing(Singapore) of machinery and equipment

S3 Engineering (S) Pte. Ltd. Trading and marketing (a) (a) 100 100(Singapore) of tyre moulds and related products

SP Mining & Engineering Engineering contractor (a) (a) 100 100Pte. Ltd.(formerly known asTrenchless ConstructionPte. Ltd.)(Singapore)

SP Energy Pte. Ltd. Engineering contractor (b) (a) 100 100(formerly known as and rental of equipmentWALLbilt Pte. Ltd.)(Singapore)

3S Engineering (Shanghai) Manufacturing of high (e) (a) - 100Co., Ltd precision products(China) (tyre moulds and related(Horwath China Shanghai products)Limited) 73,425 73,425

(a) Held by subsidiaries.

(b) Cost of investment held by the Company amounts to less than $1,000.

(c) During the financial year, the Group incorporated a 100% owned subsidiary, SP Precision Engineering (S) Pte. Ltd. The Group’s initial contribution to its capital amounted to $2.

(d) Audited by overseas member firms of Deloitte Touche Tohmatsu.

(e) During the financial year, the Group divested its entire interest in the capital at 3S Engineering (Shanghai) Co., Ltd for a consideration of US$530,000.


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33 List of Associate

Name of associate,country of Cost ofincorporation/operation investment held Interest heldand name of other auditors Principal activities by the Group by the Group 2004 2003 2004 2003 $’000 $’000 % %

Bimstar, Inc. Investment holding (a) (a) 35.0 35.0(Philippines)(Diaz Murillo Dalupan)

(a) Cost of investment held by the Group amounts to less than $1,000.


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Interested Person Transactions

Interested person transactions carried out during the financial year pursuant to the Shareholders’ Mandate obtained under Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX) by the Group are as follows:

Group

Aggregate value of all interested person transactions

(excluding transactions less than $100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920)

Aggregate value of all interested person transactions conducted under shareholders’ mandate pursuant to Rule 920 (excluding transactions less

than $100,000)Name of interested person 31.12.04 31.12.03 31.12.04 31.12.03

$’000 $’000 $’000 $’000

Sales

Lei Huai Chin & associates – – 5,834 14,320

William Liem & associates – – 14,269 –

Liem Tek Siong, Go Giok Lian & associates – – – 38,962

Tuan Sing Holdings Limited & associates – – 3,152 8,237

– – 23,255 61,519

Purchases

William Liem & associates – – 40,704 –

Liem Tek Siong, Go Giok Lian & associates – – – 9,740

– – 40,704 9,740

Interest expense

Tuan Sing Holdings Limited & associates – – 145 126

Rental expense


Management fees income

William Liem & associates – – 351 –

Management fees expense


Acquisition of company (Singapore Bandag Pte Ltd)

Tuan Sing Holdings Limited – 427 – –

Disposal of subsidiary (3S Engineering Shanghai Co., Ltd)

Nuri Holdings (S) Pte Ltd & associates 872 – – –

Total interested persons transactions 872 427 64,791 71,805

Listing Manual Requirement31 December 2004

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Statistics Of Shareholdings As at 7 March 2005

Authorised Share Capital : S$100,000,000.00Issued and fully paid-up Capital : S$17,549,575.80 Class of Shares : Ordinary Shares of S$0.05 each with equal voting rights

Size of shareholdingsNo. of

shareholders % No. of shares %

1 - 999 122 2.26 54,051 0.02

1,000 - 10,000 4,193 77.62 19,133,304 5.45

10,001 - 1,000,000 1,083 20.05 38,863,964 11.07

1,000,001 & ABOVE 4 0.07 292,940,197 83.46

TOTAL 5,402 100.00 350,991,516 100.00

Top Twenty Shareholders As at 7 March 2005 No. of Shares %

Tuan Sing Holdings Limited 281,463,197 80.19

United Overseas Bank Nominees Pte Ltd 8,399,000 2.39

DBS Nominees Pte 1,648,000 0.47

Jen Shek Chuen 1,430,000 0.41

Philip Securities Pte Ltd 677,739 0.20

OCBC Nominees Singapore Pte Ltd 671,250 0.19

Lee Keng Hua 593,000 0.17

HSBC (Singapore) Nominees Pte Ltd 572,500 0.16

Citibank Nominees Singapore Pte Ltd 509,000 0.15

Mak Hing Kwai 452,000 0.13

Mayban Nominees (S) Pte Ltd 350,000 0.10

Tan Jui Yak 311,000 0.09

DBS Vickers Securities (S) Pte Ltd 292,000 0.08

Ang Bok Eng 278,000 0.08

OCBC Securities Private Ltd 271,853 0.08

Lim Yong Seng 259,000 0.07

Mak Chui Ling 252,000 0.07

UOB Kay Hian Pte Ltd 223,000 0.06

Kim Eng Securieis Pte Ltd 221,500 0.06

Yap Siew May 220,000 0.06

299,094,039 85.21

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Substantial Shareholder No. of Shares %

Tuan Sing Holdings Limited 1 281,463,197 80.19

Shareholdings held in the hands of the public

Based on information available to the Company as at 7 March 2005, 19.81% of the issued ordinary shares of the Company is held by the public and therefore, Rule 723 of the Listing Manual issued by SGX-ST is complied with.

Note: 1 By virtue of (i) Nuri Holdings (S) Pte Ltd’s (“Nuri”) interest in Tuan Sing Holdings Limited (“TSH”), and (ii) their interest in Nuri, Ms Michelle Liem Mei Fung and Ms Liem Mei Kim are deemed to be interested in the 281,463,197 shares of the Company held by TSH. Mr David Lee Kay Tuan, a Director of the Company and spouse of Ms Michelle Liem Mei Fung is deemed to be interested in the said 281,463,197 shares.

Statistics Of Shareholdings As at 7 March 2005

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Share Price Performance

Share Prices (cents) 2000 2001 2002 2003 2004

Last Transacted 11.5 6.0 4.0 8.0 5.0

High 33.0 25.0 9.0 13.0 12.0

Low 8.0 4.0 3.5 3.0 4.0

Average 20.5 14.5 6.3 8.0 8.0

Turnover (million shares) 5.2 3.0 2.2 6.9 4.0

Per Share 2000 2001 2002 2003 2004

Earnings/(loss) (cents) (8.89) (2.55) (0.80) 0.70 0.85

Net price-earnings ratio (times) (2) (6) (8) 11.0 6.0

Net asset backing (cents) 2.29 5.67 4.78 5.44 6.25

Turnover (million shares) Share Prices (cents)

2000 2001 2002 2003 20042000 2001 2002 2003 2004

30

40

20

10

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NOTICE IS HEREBY GIVEN that the 52nd Annual General Meeting of SP Corporation Limited (the “Company”) will be held at 9 Oxley Rise, 1st Storey Foyer, Podium Block, The Oxley, Singapore 238697 on Friday, 22 April 2005 at 10.00 a.m. for the purpose of considering and, if thought fit, passing with or without modifications, the following Resolutions which will be passed as Ordinary Resolutions:

Ordinary Business

1. To receive and adopt the Directors’ Report and the Audited Accounts for the year ended 31 December 2004 with the Auditors’ report thereon. (Resolution 1)

2. To approve the payment of Directors’ fees of S$ 229,750 for the financial year ended 31 December 2004 (2003: S$151,750). (Resolution 2)

3. To re-elect Mr Liem Chin Chiang, a Director retiring pursuant to Article 99 of the Company’s Articles of Association. (Resolution 3)

4. To re-elect the following Directors retiring by rotation pursuant to Article 94 of the Company’s Articles of Association (the “Articles”) and who, being eligible, offer themselves for re-election:

(a) Mr Tan Lye Huat (Resolution 4a)(b) Mr Ong Teck Ghee (Resolution 4b)(c) Mr Lei Huai Chin (Resolution 4c)

5. To re-appoint Messrs Deloitte & Touche as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 5)

Special Business

6. Authority to allot and issue share up to 10 per centum (10%) of the issued share capital

That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be empowered to allot and issue shares in the capital of the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be allotted and issued pursuant to this Resolution shall not exceed ten per cent. (10%) of the issued share capital of the Company for the time being and that such authority shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the Company’s next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. (Resolution 6)

7. Renewal of the Shareholder Mandate for Interested Person Transactions

That:

a. approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual (“Chapter 9”) of the Singapore Exchange Securities Trading Limited, for the Company, its subsidiaries and associated companies that are considered to be “entities at risk” under Chapter 9, or any of them, to enter into any of the transactions falling within the types of Interested Person Transactions described in Appendix A of the Company’s letter to shareholders dated 31 March 2005 (the “Letter”), with any party who is of the classes of Interested Persons described Appendix A of the Letter, provided that such transactions are carried out in the ordinary course of business and on normal commercial terms and in accordance with the guidelines and review procedures for Interested Person Transactions as set out in the Letter (the “Shareholder Mandate”);

Notice Of Annual General Meeting

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b. such Shareholder Mandate shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and

c. the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the Shareholder Mandate and/or this Resolution.

(Resolution 7)

To transact any other ordinary business that may properly be transacted at an Annual General Meeting.

By Order of the Board

Chia Hue SiewCompany Secretary

31 March 2005

Singapore

Notes:

1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint one or two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

2. An instrument appointing a proxy must be deposited at the registered office of the Company at 9 Oxley Rise #03-02, The Oxley, Singapore 238697 not less than 48 hours before the time for holding the Annual General Meeting or any adjournment thereof.

3. Statement pursuant to Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited

a. Mr Tan Lye Huat will, upon re-election as a Director of the Company, remain as a member of the Audit Committee and will be considered independent.

b. Mr Ong Teck Ghee will, upon re-election as a Director of the Company, remain as a member of the Audit Committee and will be considered independent.

c. Mr Lei Huai Chin will, upon re-election as a Director of the Company, remain as a member of the Audit Committee and will be considered non-independent.

4. Statement pursuant to Article 56 of the Company’s Articles of Association

a. Ordinary Resolution 6 is to empower the Directors to issue shares in the capital of the Company up to an amount not exceeding in aggregate 10 per cent of the issued share capital of the Company for the time being.

b. Ordinary Resolution 7, if passed, is to renew effective up to the next Annual General Meeting (unless earlier revoked or varied by the Company in general meeting) the Shareholder Mandate for the Company, its subsidiaries and associated companies that are considered “entities at risk” to enter in the ordinary course of business into certain types of transactions with specified classes of the Company’s interested persons. The Shareholder Mandate renewal of which was previously approved by shareholders at the 51st Annual General Meeting of the Company on 23 April 2004, will be expiring at the forthcoming 52nd Annual General Meeting. Particulars of the Shareholder Mandate, and the Audit Committee’s confirmation (pursuant to Rule 920(1) of the Listing Manual) in respect of the proposed renewal of the Shareholder Mandate, are contained in the Company’s letter to shareholders dated 31 March 2005.

Notice Of Annual General Meeting

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SP CORPORATION LIMITED(Company Registration No.: 195200115K)Registered office: 9 Oxley Rise #03-02 The Oxley, Singapore 238697

To: The Shareholders of SP Corporation Limited (“Shareholders”)

Dear Sir/Madam

Renewal of the Shareholder Mandate for Interested Person Transactions

We refer to item 7 of the Notice of the 52nd Annual General Meeting (“52nd AGM”) of the Company, which is an Ordinary Resolution (“Resolution 7”) to be proposed at the 52nd AGM for the renewal of the Company’s shareholder mandate for interested person transactions. The purpose of this letter is to provide Shareholders with information relating to Resolution 7.

1. Background

At the 51st Annual General Meeting of the Company held on 23 April 2004 (the “51st AGM”), Shareholders had approved the renewal of a shareholder mandate for the purposes of Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”) to enable the Company, its subsidiaries and associated companies that are considered to be “entities at risk” within the meaning of Chapter 9 of the Listing Manual, or any of them, to enter into certain types of transactions with specified classes of the Company’s interested persons, provided that such transactions are entered into in the ordinary course of business, are on normal commercial terms and are not prejudicial to the interests of the Company and its minority Shareholders (the “Shareholder Mandate”).

2. Renewal of the Shareholder Mandate

Under Chapter 9 of the Listing Manual, a general mandate for transactions with interested persons is subject to annual renewal. The Shareholder Mandate approved at the 51st AGM was expressed to continue in force until the next Annual General Meeting of the Company, being the 52nd AGM, which is to be held on 22 April 2005. Accordingly, it is proposed that the Shareholder Mandate be renewed at the 52nd AGM, to take effect until the conclusion of the next Annual General Meeting of the Company.

The types of transactions and classes of interested persons in respect of which the Shareholder Mandate is sought to be renewed remain unchanged. Particulars of the Shareholder Mandate, including the rationale for, the benefits to be derived by the Company, as well as the review procedures for determining transaction prices with the specified classes of interested persons, are set out in Appendix A of this letter.

General information on the listing rules relating to interested person transactions, including the meanings of terms such as “associate”, “controlling shareholder” and “interested person” used in Chapter 9 of the Listing Manual, is set out in Appendix B of this letter.

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3. Audit Committee’s statement

The Audit Committee of the Company confirms that:

(a) the methods or procedures for determining the transaction prices under the Shareholder Mandate have not changed since the 51st AGM; and

(b) the methods or procedures referred to in (a) above are sufficient to ensure that the transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders.

4. Directors’ and substantial shareholders’ interests

The interests of the Directors and substantial shareholders of the Company in the issued share capital of the Company can respectively be found on pages 31 and page 72 of the Company’s Annual Report 2004.

Certain Directors of the Company, namely, Messrs David Lee Kay Tuan, Lei Huai Chin, Liem Chin Chiang and William Liem are regarded as being interested in the proposed renewal of the Shareholder Mandate, as, Mr Lei Huai Chin and Mr William Liem are each within the classes of interested persons covered by the Shareholder Mandate, Mr Liem Chin Chiang is a brother of Mr William Liem, and Mr David Lee Kay Tuan, Mr Lei Huai Chin and William Liem are each a nominee of Tuan Sing Holdings Limited (the Company’s holding company) on the Board of Directors of the Company. These Directors, and their respective associates will abstain from voting their respective shareholdings (if any) on Resolution 7 relating to the renewal of the Shareholder Mandate at the forthcoming 52nd AGM.

Tuan Sing Holdings Limited, Nuri Holdings (S) Pte Ltd, and their respective associates, being within the classes of interested persons in relation to the proposed renewal of the Shareholder Mandate, will abstain from voting their respective shareholdings (if any) on Resolution 7 relating to the renewal of the Shareholder Mandate at the forthcoming 52nd AGM.

5. Recommendation

The Directors who are considered independent for the purposes of the proposed renewal of the Shareholder Mandate are Messrs Peter Sung, Cheng Hong Kok, Ong Teck Ghee, Tan Lye Huat and Low Kian Beng. They are of the opinion that the entry into of the Interested Person Transactions (as described in paragraph 2 of Appendix A) between the SP Group (as described in paragraph 1 of Appendix A) and the Interested Persons (as described in paragraph 3 of Appendix A) in the ordinary course of business will enhance the efficiency of the SP Group and is in the best interests of the Company. For the reasons set out in paragraphs 1 and 2 of Appendix A, they recommend that Shareholders vote in favour of Resolution 7 for the renewal of the Shareholder Mandate at the forthcoming 52nd AGM.

6. Responsibility statement

The Directors collectively and individually accept responsibility for the accuracy of the information given in this letter and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and opinions expressed in this letter are fair and accurate and that there are no material facts the omission of which would make any statement in this letter misleading.

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The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made or opinions expressed in this letter.

Shareholders who are in any doubt as to the action they should take, should consult their stockbrokers or other professional advisers immediately.

Yours faithfullySP CORPORATION LIMITED

Chia Hue SiewCompany Secretary31 March 2005Singapore

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APPENDIX A

SHAREHOLDER MANDATE FOR INTERESTED PERSON TRANSACTIONS

1. Rationale for the Shareholder Mandate

It is envisaged that in the normal course of their businesses, transactions between SP Corporation Limited (the “Company”), its subsidiaries and associated companies with the Company’s interested persons are likely to occur, and may arise from time to time or at any time.

In view of the time-sensitive nature of commercial transactions, the obtaining of a mandate from Shareholders (“Shareholder Mandate”) pursuant to Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited, will enable the Company, its subsidiaries and associated companies which are considered to be “entities at risk” within the meaning of Chapter 9 of the Listing Manual (together, the “SP Group”) or any of them, to enter into certain types of transactions as set out in Paragraph 2 below, with the Company’s interested persons set out in Paragraph 3 below (the “Interested Persons”), provided that such transactions are entered into in the ordinary course of business of the SP Group, are on normal commercial terms and are not prejudicial to the interests of the Company and its minority Shareholders.

The Shareholder Mandate will provide the SP Group with added means to underpin its diversification and growth strategy by leveraging on the SP Group’s network and its close working relationship with Interested Persons. In particular, it would enable the SP Group to pursue commercial transactions in the ordinary course of business in an expedient manner with Interested Persons, particularly in the areas of trading, marketing, distribution and manufacturing and related specialist services, that would value add and provide new engines of growth for the SP Group.

The Shareholder Mandate is intended to enhance the SP Group’s ability to pursue business opportunities which are time-sensitive in nature, and will eliminate the need for the Company to announce, or to announce and convene separate general meetings on each occasion to seek Shareholders’ prior approval for, the entry by the relevant company in the SP Group into such transactions. This will substantially reduce the expenses associated with the convening of general meetings on an ad hoc basis, improve administrative efficacy considerably, and allow manpower resources and time to be channelled towards attaining other corporate objectives.

2. Nature and Scope of Interested Person Transactions

The types of transactions with Interested Persons to be covered by the Shareholder Mandate relate principally to the provision or obtaining of services and products in the normal course of the SP Group’s businesses (“Interested Person Transactions”) but not in respect of purchase or sale of assets, undertakings or businesses as provided under Rule 920(1) of the Listing Manual. The Interested Person Transactions are as described below.

(a) Construction and Engineering Services Transactions

The Company’s principal subsidiaries and associated companies carry out building and construction works as building, engineering and foundation contractors as well as project managers. They also provide specialist engineering services including but not limited to foundation piling, soil and foundation work consultancy, geotechnical works, ground improvement works, pipe jacking and diaphragm wall construction.

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Transactions with Interested Persons under this category will consist of the following:

(i) the tender by companies in the SP Group (whether by way of public tender, invitation or otherwise) and/or the award of contracts by Interested Persons to companies in the SP Group, or, as the case may be, the tender by Interested Persons (whether by way of public tender, invitation or otherwise) and/or the award of contracts by companies in the SP Group to Interested Persons, whether as main contractors or as sub-contractors, for construction and engineering services including turnkey projects for residential, commercial, industrial and engineering works or infra-structural development (including build, operate and transfer (“BOT”)) or other projects;

(ii) the provision by companies in the SP Group to, or receipt from Interested Persons of, project management, consultancy, engineering services, geo-technical soil investigation and/or instrumentation services for residential, industrial, commercial, infrastructural or other building, construction, engineering works and/or development projects undertaken by the Interested Persons or (as the case may be) companies in the SP Group; and

(iii) the provision by the companies in the SP Group to, or receipt from Interested Persons of, industrial, commercial, infrastructural or other building, construction, engineering works and/or development projects undertaken by Interested Persons or (as the case may be) companies in the SP Group including but not limited to treated water supply and water treatment services, power and natural resources mining services.

As construction and engineering services constitute one of the core businesses of the SP Group, the inclusion of the above category of transactions in the Shareholder Mandate will facilitate such transactions by the SP Group with Interested Persons that arise in the normal course of operations of the SP Group in a more expeditious manner.

(b) Construction and Engineering Materials and Equipment Transactions

Related to its activities in building, construction and engineering services, the SP Group may also engage in sourcing, purchasing, supplying and trading in building, construction and engineering materials including but not limited to concrete and granite aggregates, steel bars, steel sheet piles, timber products, wall and floor tiles, and construction equipment.

Transactions that may be carried out with Interested Persons under this category consist of the following:

(i) the design, installation, supply and provision of equipment and machinery and/or building, construction and engineering materials including but not limited to paint, electric motors and generators by companies in the SP Group to Interested Persons or vice versa; and

(ii) the purchase or sale, and/or rental of equipment and machinery and/or building, construction and engineering materials including but not limited to paint, electric motors and generators by companies in the SP Group from, or to Interested Persons for on-sale or for use in the construction and/or engineering services activities of the SP Group or, as the case may be, the Interested Persons.

These transactions relate to the supply of materials and equipment used in the building, construction and engineering industry. The inclusion of this category of transactions in the Shareholder Mandate will allow the SP Group to transact with Interested Persons in an expeditious manner to meet business needs for the supply and/or provision of materials and equipment.

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(c) Trading and Marketing Transactions

The SP Group is engaged in the trading and marketing of various products relating to the automotive, tyre and rubber, chemical, petrochemical, mining, aquaculture, power, electronics and agriculture industries.

Transactions coming within this category consist of the following:

(i) the marketing, sale by or purchase of, fish meal, shrimp feed and their related feedstock materials, shrimps and other products in the aquaculture industry;

(ii) the marketing, sale by or purchase of, the provision or receipt of, technical, operation, maintenance and engineering services for machinery, equipment and spare parts related to tyre and rubber, power, petrochemical, chemical, aquaculture, agriculture, mining and other industries referred to in sub-paragraphs (c)(i) above and (c)(iii) to (vi) below;

(iii) the marketing, sale by or purchase of, palm oil and related products, fertilizers and other natural produce items in the agriculture industry;

(iv) the marketing, sale by or purchase of, natural resources including but not limited to coal, metals like iron, aluminium, zinc, gold and copper and their alloys for various industries such as the power and cement industries, automotive manufacturing industries, chemicals, tyre and rubber industries;

(v) the marketing, sale by or purchase of, printed circuit boards, electrical and electronics parts and electrical cables and motors and other products related to the electronics and electrical industries;

(vi) the marketing, sale by or purchase of, paint, basic and intermediate petrochemicals including but not limited to ethylene, monoethyleneglycol, polyester, synthetic rubber, nylon fibres and others related to the petrochemical industries;

(vii) the distribution, marketing, sale and purchase of rubber and tyre related stocks and related products (including raw materials and auxiliary products);

(viii) the sale, purchase, rental and/or leasing of rubber, tyre and tyre related retreading machinery and equipment or components and parts in respect thereof; and

(ix) the provision and/or receipt of commissions, rebates and other trade-related or marketing incentives to or by counter-parties including but not limited to dealers, distributors and principals.

The entry into and/or renewal of distribution, commission, agency or other marketing or representation agreements with Interested Persons, and the purchase, sale, import and export of products set out above will come within the ambit of this category of transactions.

(d) Distribution Transactions

The SP Group is engaged in the distribution of various consumer, automotive and related products.


(i) distribution of consumer products including but not limited to hygiene, paper and food products; and

(ii) distribution of tyres and automotive related products including but not limited to alloy wheels, rubber belts, batteries, electrical and pneumatic sensors.

The entry into and/or renewal of distribution, commission, agency or other marketing or representation agreements with Interested Persons, and the purchase, sale, import and export of products set out above, will come within the ambit of this category of transactions.

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(e) Manufacturing Transactions


(i) the provision by the companies in the SP Group to, or the receipt from, Interested Persons of, tyre retreading services and logistic services related to the rubber, tyre and automotive industries;

(ii) the provision by the companies in the SP Group to, or the receipt from, Interested Persons of, design, technical expertise, operation, maintenance, manufacturing and purchase or sales of tyre machinery and equipment and related parts and products.

(f) Business, Management and Technical Services Transactions

It is expected that with further diversification of the activities of the SP Group, overhead costs and administrative costs may increase with the establishment of more business units. As such, the centralisation of management and support services staff within Tuan Sing Holdings Limited (“TSH”), its subsidiaries and associated companies (together with TSH, collectively, the “TSH Group”) and between the SP Group and the Interested Persons will enable business services costs to be shared, avoid duplication of efforts and enhance communication within the TSH Group, the SP Group and the Interested Persons. The latter results in savings for all operating companies within the TSH Group, the SP Group and the Interested Persons through shared resources and economies of scale, and ensures that the services provided are of a uniform approach and consistent standard throughout the operating subsidiaries.

Further, it is expected that TSH (the holding company of the Company) and other Interested Persons may provide certain corporate functions and support to the SP Group in areas including but not limited to finance, treasury, investment risk review and management; corporate planning and business development; management information systems; human resource management and development; information technology management and development; legal and corporate secretarial affairs; and internal audit.

Additionally, as part of the TSH Group, the Company can benefit in treasury transactions from competitive rates or quotes from TSH and third party financial institutions in an expedient manner. By transacting directly with TSH, the Company may obtain better yields through the elimination of margins which third party intermediaries might ordinarily be expected to earn.

The SP Group may also lease premises to or from, Interested Persons for meeting various business needs.

Transactions covered by this category consist of the following:

(i) the provision by the companies in the SP Group to, or the receipt from, Interested Persons of, corporate, administrative and support services including but not limited to the areas of internal audit, corporate planning and development, treasury and fund management services and staff secondments;

(ii) the borrowing of funds from Interested Persons or vice versa on a short-term and medium-term basis; the placement of funds with the TSH Group on a short-term and medium-term basis; and the entry into with Interested Persons of foreign exchange, swap, and option transactions for hedging purposes (collectively, “Treasury Transactions”);

(iii) the leasing or letting of office, warehouse and other business premises to or from the TSH Group and/or other Interested Persons; and

(iv) the provision by the companies in the SP Group to, or the receipt from, Interested Persons of, subcontracting and outsourcing services, supply chain management services (including but not limited

83


to packaging, transport and logistic services), sharing of logistic facility management including but not limited to rental and subletting of premises.

These transactions relate to the supply of corporate, support and administrative services, subcontracting and outsourcing services, supply chain services and premises by the TSH Group and other Interested Persons to companies in the SP Group. The inclusion of this category of transactions in the Shareholder Mandate will allow the SP Group to transact with the TSH Group and other Interested Persons in an expeditious manner to meet its business needs and requirements.

3. Classes of Interested Persons with which the SP Group is transacting

The Shareholder Mandate will apply to the following classes of Interested Persons:

(a) TSH;(b) Nuri Holdings (S) Pte Ltd;(c) Mr Lei Huai Chin; (d) Mr William Liem; and(e) any company which, at the time at which the transaction is entered into, is an associate of the Interested

Persons named in (a) to (d) above.

4. Review Procedures for Interested Person Transactions

Pursuant to the Shareholder Mandate, the Company has formed a special review committee (the “Review Committee”) to ensure that transactions with Interested Persons are undertaken on the SP Group’s normal commercial terms under the Shareholder Mandate. The Review Committee comprise senior executives of the Company namely, the Managing Director, up to two executive Directors, the head of the relevant business units and the Financial Controller, who have been tasked by the Board of Directors of the Company (based on the recommendation of the Audit Committee of the Company (the “Audit Committee”) from time to time) with the review and approval of such transactions.

To ensure that the Interested Person Transactions arising from the normal course of business of the SP Group are undertaken at arm’s length and on the SP Group’s normal commercial terms, and will not be prejudicial to the interests of the Company and its minority Shareholders, the SP Group has implemented the following guidelines for the review and approval of Interested Person Transactions under the proposed renewal of the Shareholder Mandate:

(a) A transaction equal to or exceeding S$100,000 in value but below S$3 million (the “Financial Threshold”), will be reviewed and approved by any two members of the Review Committee, who shall ensure that the Interested Person Transactions are made on arm’s length basis and on terms and conditions no more favourable than those which would be granted to an unrelated third party in similar circumstances, and which are on the SP Group’s normal commercial terms or otherwise in accordance (where applicable) with industry norms and that they are not prejudicial to the interests of the Company and its minority Shareholders.

(b) A transaction equal to or exceeding the Financial Threshold will be reviewed and approved by any two members of the Audit Committee, who shall ensure that the Interested Person Transactions are made on arm’s length basis and on terms and conditions no more favourable than those which would be granted to an unrelated third party in similar circumstances, and which are on the SP Group’s normal commercial terms

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or otherwise in accordance (where applicable) with industry norms and that they are not prejudicial to the interests of the Company and its minority Shareholders.

(c) Any member of the Review Committee and the members of the Audit Committee may, as he/they deem fit, request for additional information pertaining to the transaction under review from independent sources or advisers, including the obtaining of valuations from independent professional valuers.

(d) If a member of the Review Committee or the Audit Committee has an interest in a transaction, he shall abstain from participating in the review and approval process in relation to that transaction. If more than three members of the Review Committee are interested in the transaction, the review and approval process shall be undertaken by the Chairman of the Audit Committee or another member of the Audit Committee (who has no interest in the transaction) designated by the Chairman of the Audit Committee for such purpose.

The Audit Committee will also:

(i) carry out periodic reviews (on a quarterly basis) to ascertain that the established guidelines and procedures for Interested Person Transactions have been complied with; and

(ii) consider from time to time whether the established guidelines and procedures for transactions with Interested Persons have become inappropriate or are unable to ensure that the transactions will be carried out on normal commercial terms, and are not prejudicial to the interests of the Company and its minority Shareholders.

(e) For the purpose of the above review procedures, where goods and/or services (other than Treasury Transactions) are to be purchased or obtained by the SP Group from Interested Persons, quotations will be obtained (wherever possible or available) from at least two other unrelated third party suppliers for similar quantities and/or quality of the materials, equipment, machinery or services concerned as a basis for comparison to determine whether the price and terms offered by the Interested Person are fair and reasonable. Where it is impractical or not possible for such quotes to be obtained, the Review Committee or the Audit Committee will ensure that the terms of supply are fair and reasonable, in accordance with industry norms and in line with business practices of the relevant industry taking into consideration, factors such as but not limited to pricing, payment terms, credit worthiness, the strategic purpose for the transaction and market conditions.

In relation to Treasury Transactions, the following guidelines shall apply:

Borrowings. The SP Group will only borrow funds from an Interested Person if the interest rate quoted by the Interested Person is not more than the lowest rate quoted by the SP Group’s principal bankers for loans of an equivalent amount and tenure. Quotations of rates will be procured from at least two of the SP Group’s principal bankers each time that funds are proposed to be borrowed from an Interested Person.

Placements. The SP Group will only place funds with the TSH Group if the interest rate quoted by the TSH Group is not less than the highest of the rates quoted by the SP Group’s principal bankers for deposits of an equivalent amount and tenure. Quotations of rates will be procured from at least two of the SP Group’s principal bankers each time that funds are proposed to be placed with the TSH Group.

Forex, swaps and options. The SP Group will only enter into forex, swap and option transactions with an Interested Person if the rates quoted by the Interested Person are no less favourable to the SP Group than those quoted by the SP Group’s principal bankers. Quotations of rates will be procured from at least two of

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the SP Group’s principal bankers each time that a forex, swap or option transaction is proposed to be entered into with an Interested Person.

In addition, the Company will monitor the Treasury Transactions entered into with Interested Persons as follows:

(i) Where the aggregate value of funds placed with the TSH Group shall at any time exceed the consolidated shareholders’ funds of the Company (based on its latest audited accounts), each subsequent placement of funds with the TSH Group shall require the prior approval of the Audit Committee.

(ii) Where the aggregate principal amount of all forex, swap and option transactions entered into with the same Interested Person (as such term is construed under Chapter 9 of the Listing Manual) exceeds at any one time the equivalent of the consolidated shareholders’ funds of the Company (based on its latest audited accounts), each subsequent forex, swap or option transaction to be entered into with the same Interested Person shall require the prior approval of the Audit Committee.

5. Interested Person Transactions Register

The Company maintains a register of transactions carried out with Interested Persons pursuant to the Shareholder Mandate (recording the basis on which they are entered into). Further, the Company’s annual internal audit plan will incorporate a review of transactions entered into in the relevant financial year pursuant to the Shareholder Mandate.

6. Excluded Transactions

The Shareholder Mandate will not cover any transaction by a company in the SP Group with an Interested Person that is below S$100,000 in value as the threshold and aggregation requirements of Chapter 9 of the Listing Manual would not apply to such transactions.

Transactions with interested persons (including the Interested Persons) which do not fall within the ambit of the Shareholder Mandate shall be subject to the relevant provisions of Chapter 9 of the Listing Manual, or other applicable provisions of the Listing Manual and/or the Companies Act (Cap. 50), if any.

7. Validity Period of the Shareholder Mandate

The Shareholder Mandate will take effect from the passing of the resolution relating thereto, and will (unless revoked or varied by the Company in general meeting) continue in force until the conclusion of the next annual general meeting of the Company. Approval from Shareholders will be sought for the renewal of the Shareholder Mandate at the next annual general meeting and at each subsequent annual general meeting of the Company, subject to satisfactory review by the Audit Committee of its continued application to the transactions with Interested Persons.

8. Disclosure in Annual Report

Disclosure will be made in the Company’s annual report of the aggregate value of transactions conducted pursuant to the Shareholder Mandate during the financial year and in the annual reports for subsequent financial years that the Shareholder Mandate continues in force in accordance with the requirements of Chapter 9 of the Listing Manual.

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APPENDIX B

GENERAL INFORMATION RELATING TO CHAPTER 9 OF THE LISTING MANUAL

1. Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”) deals with transactions in which a listed company or any of its subsidiaries or associated companies (that are not listed on the SGX-ST or an approved exchange, provided that the listed group, or the listed group and its interested person(s) (as defined in Chapter 9), has control over the associated company) proposes to enter with a party who is an interested person of the listed company.

2. Transactions with interested persons which do not come within the ambit of a general mandate for interested person transactions approved by shareholders of the listed company pursuant to Chapter 9 of the Listing Manual (including any renewal thereof) will be subject to applicable provisions of Chapter 9 and/or other applicable provisions of the Listing Manual. As such, an immediate announcement and/or shareholder approval would be required in respect of transactions with interested persons if certain financial thresholds as set out in Chapter 9 of the Listing Manual are reached or exceeded. In particular, an immediate announcement is required where:

2.1 the value of a proposed transaction is equal to or exceeds 3% of the listed company’s latest audited net tangible assets (“NTA”); or

2.2 the aggregate value of all transactions entered into with the same interested person during the same financial year, is equal to or more than 3% of the listed company’s latest audited NTA. An announcement will have to be made immediately of the latest transaction and all future transactions entered into with that same interested person during the same financial year,

and shareholders’ approval (in addition to an immediate announcement) is required where:

2.3 the value of a proposed transaction is equal to or exceeds 5% of the listed company’s latest audited NTA; or

2.4 the aggregate value of all transactions entered into with the same interested person during the same financial year, is equal to or more than 5% of the listed company’s latest audited NTA. The aggregation will exclude any transaction that has been approved by shareholders previously, or is the subject of aggregation with another transaction that has been approved by shareholders.

3. For the purposes of aggregation, interested person transactions below S$100,000 each are excluded.

4. For illustration purposes, based on the audited accounts of the Company and its subsidiaries (the “Group”) for the financial year ended 31 December 2004, the latest audited NTA of the Group is S$21.9 million. Accordingly, in relation to the Company, for the purposes of Chapter 9 in the current financial year, shareholders’ approval would be required where:

(a) the transaction is of a value equal to, or more than, S$1.1 million, being 5% of the Group’s latest audited NTA; or

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(b) the transaction, when aggregated with other transactions entered into with the same interested person during the same financial year, is of a value equal to, or more than, S$1.1 million. The aggregation will exclude any transaction that has been approved by shareholders previously, or is the subject of aggregation with another transaction that has been approved by shareholders.

5. Chapter 9 of the Listing Manual allows for a listed company to seek a mandate from its shareholders for recurrent transactions with interested persons of a revenue or trading nature necessary for its day-to-day operations such as the purchase and sale of supplies and materials, but not in respect of the purchase or sale of assets, undertakings or businesses.

6. For the purposes of Chapter 9 of the Listing Manual:

6.1 an “interested person” means a director, chief executive officer or controlling shareholder of the listed company, or an associate of such director, chief executive officer or controlling shareholder;

6.2 a “controlling shareholder” is a person who holds directly or indirectly 15% or more of the nominal amount of all voting shares in the listed company (unless otherwise excepted by SGX-ST) or in fact exercises control over a company; and

6.3 an “associate” in relation to any director, chief executive officer or controlling shareholder (being an individual) means his immediate family (i.e. spouse, children, adopted children, step-children, siblings and parents), the trustees of any trust of which he or his immediate family is a beneficiary or, in the case of a discretionary trust, is a discretionary object, and any company in which he and his immediate family together (directly or indirectly) have an interest of 30% or more. An “associate” in relation to a controlling shareholder (being a company) means any other company which is its subsidiary or holding company or is a subsidiary of such holding company or one in the equity of which it and/or such other company or companies taken together (directly or indirectly) have an interest of 30% or more.

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PROXY FORMSP CORPORATION LIMITED

The Company SecretarySP Corporation Limited9 Oxley Rise #03-02 The OxleySingapore 238697

I/We ____________________________________________________________________________________________ (Name) of ____________________________________________________________________________________________ (Address)

being a member/members of SP Corporation Limited (the “Company”), hereby appoint the Chairman of the Meeting* or:

Name Address NRIC/Passport Number

Proportion of Shareholdings (%)

and/or (delete as appropriate)

as my/our proxy/proxies to attend and vote for me/us on my/our behalf and, if necessary, to demand a poll, at the 52nd Annual General Meeting of the Company to be held at 9 Oxley Rise, 1st Storey Foyer, Podium Block, The Oxley, Singapore 238697 on Friday, 22 April 2005 at 10.00 a.m. and at any adjournment thereof.

*A member may appoint not more than two proxies to attend and vote at the same Meeting. If you wish to appoint some person other than the Chairman of the Meeting to be your proxy, please delete the words “Chairman of the Meeting”.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary 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.)

No. Ordinary Resolutions For Against1. To adopt the Directors’ Report and the Audited Accounts

2. To approve Directors’ Fees of S$229,750

3. To re-elect Mr Liem Chin Chiang who retires pursuant to Article 99 as a Director

4. (a) To re-elect Mr Tan Lye Huat who retires by rotation pursuant to Article 94 as a Director

(b) To re-elect Mr Ong Teck Ghee who retires by rotation pursuant to Article 94 as a Director

(c ) To re-elect Mr Lei Huai Chin who retires by rotation pursuant to Article 94 as a Director

5. To re-appoint Auditors and authorize Directors to fix their remuneration.

6. Authority to issue and allot shares

7. To approve the renewal of the Shareholder Mandate for Interested Person Transactions

Dated this ______ day of _____________________ 2005

_____________________________________Signature(s) of Member(s) or Common Seal

IMPORTANT: PLEASE READ NOTES BELOW

IMPORTANT

1. For investors who have used their CPF monies to buy SP Corporation Limited shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

Number of shares held:

Register of Members

Depository Register

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Notes:

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 of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint one or two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 9 Oxley Rise #03-02, The Oxley Singapore 238697, not less than 48 hours before the time appointed for the Annual General Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such 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.

General:

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. In addition, in the case of Shares entered 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.

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