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Apex-Pal International Ltd.2003 ANNUAL REPORT

Apex-Pal is a home grown Food and Beverage solutionprovider that is on the fast track of global growth. TheCompany was established in 1996 and began focusing andinvesting in the fast paced Food and Beverage Industry in 1997with the founding of Sakae Sushi.

As a young, dynamic Company with a flair for understandingour consumers and finding the pulse of trend setting solutions,we were able to develop and grow five different Food andBeverage solutions and restaurant brands in our brief history.

Today Apex-Pal is involved in food import and distribution,business-to-business supplies and event catering through ourcentral commissary, Nouvelle Events.

As an innovative dining solutions provider, we were pioneersin offering Singaporeans a taste of international dining trendsthrough Sakae Sushi, Crepes & Cream, Skål and Hibiki.

Apex-Pal is committed to global growth through rewardingpartnerships with our associates, and building relationships inthe communities we are a part of.

What’s Cooking

CORPORATE PROFILE

Mission and Vision 2 Our Core Values 3 Chairman’s Statement 4 Corporate Structure 7 5-Year Financial Highlights 9

Board of Directors 10 Management Team 10 Operations Review 12 Corporate Information 20

CONTENTS

VISION AND MISSION

To be above the best

FOOD &

BEVERAGE COMPANYglobally.

To provide GOOD QUALITY FOOD and

EXCELLENT SERVICEat the best value.

We a r e c o m m i t t e d t o p r o v i d e g o o d q u a l i t y f o o d & e x c e l l e n t s e r v i c e t o e n s u r e c u s t o m e r s a t i s f a c t i o n .

2 Apex-Pal International Ltd. 2003 Annual Report

2003 Annual Report Apex-Pal International Ltd. 3

Our Core Values –epice - Excellence is our minimum standard

p - Productivity in everything we do

i - Innovation to simplify and compete

c - Compassion to all

CHAIRMAN’S STATEMENT


Letter to Shareholders

I remember fondly the days when I founded the first Sakaeoutlet at OUB Centre in 1997. I was involved in the day-to-day operations of this first outlet, the 24/7 workingschedules. Against all odds, my team rode through theAsian Financial Crisis and over the last 6 years, my visionof a home-grown F&B chain took root.

We have not looked back since. Today, we are Singapore’slargest home-grown chain of kaiten Japanese restaurant.In the last 3 years, we have managed to leap-frog to 4neighbouring countries. In addition to building up SakaeSushi, we managed to grow another 5 brands in the last 3years.

As a testament to our strong business foundation, weembarked on our listing on SESDAQ. It was a dream cometrue for my team and I. By the close of subscription toour IPO on 26th August 2003, the initial offer of 16.5 millionshares at $0.26 each was approximately 47.4 timessubscribed. The public offer tranche of 836,000 shareswas 916 times subscribed. It was a vote of confidence forthe Company and its management team.

With the listing, I am given this opportunity to addressyou, my pals and partners in growth. I am proud to sharewith you our first annual report card as a listed F&B groupin providing innovative F&B solutions.

The early part of 2003 had been turbulent and challenging,to say the least. With our accumulated experience in ridingout the Asian Financial Crisis, our team managed theonslaught of the SARS epidemic and the uncertainty ofthe Iraq War with tact. Not only did we increase ourrevenue, we opened another 9 new Sakae Sushi outlets,propelling us ahead of the pack and securing our positionas the market leader in kaiten sushi restaurant chain inSingapore. We also opened 5 new outlets through ournewly created brands and existing brands - Skål Restaurant(“Skål”), Hibiki Japanese Restaurant (“Hibiki”), SakaeExpress and Crepes & Cream.

The F&B market in 2003 remained competitive. Operatingcosts continued to rise, while consumers’ sentiments wereedgy due to the SARS epidemic. The Company remainedsteadfastly focused on deepening its domestic marketshare of the kaiten sushi market segment and concurrentlyidentifying opportunities to internationalize its foodservices operations.

FINANCIAL REVIEW

Group turnover and profit before tax for the financial yearended 31 December 2003 amounted to $36.6 million and$2.7 million respectively. The increase of 56.1% in Groupturnover was mainly attributed to the continued strong

performance and expansion of the F&B division, especiallySakae Sushi. The decline in profit before tax of 18.9% wereattributed to higher expenses in rental and start-up costdue to faster pace of expansion in the second half ofFY2003. While earnings per share registered at 2.14 cents,lower from the previous period, a strong net cash inflowfrom operations of $3.9 million was recorded.

The Group maintained a healthy balance sheet. Groupnet tangible asset value per share as at 31 Dec 2003 was8.82 cents compared to 6.03 cents a year ago.

DIVIDEND

The Directors have recommended a first and final dividendof 1 cent per share less income tax to be approved by ourshareholders.

F&B REVIEW

Nine new Sakae Sushi outlets were opened in Singaporeduring FY2003, bringing the total number of outlets to21 restaurants.

We also introduced new food services solutions in 2003through Skål, Hibiki and Sakae Express.

Nouvelle Events continued expanding its business as thecentral commissary, distribution, trading and cateringfunctions.

FRANCHISE REVIEW

Contributions to revenue from franchising fell 72.6% inFY2003 compared to FY2002 last year. This was attributedto a review of our franchising strategy in 2003 to ensurethat franchisees are able to meet our stringentrequirements and ability to commit substantialinvestments in any given franchised territory.Consequently, no new franchisees were appointed in 2003.

CORPORATE GOVERNANCE

As a newly listed company, the Company, with theresolution of its Directors and Management, strives tomaintain its high standard of corporate governance byadhering, adopting and practicing corporate bestpractices.

Community Out-Reach Programs

The Group continued its yearly tradition of encouragingand inculcating compassion among employees. Weadopted MINDS Jurong Gardens School and celebratedMid-Autumn festival with residents of the Lion’s Old FolksHome (Bedok) followed by a Chinese New Year celebrationfor the residents of the Moral Home for the Aged andSick in 2004.

CHAIRMAN’S STATEMENT


ACHIEVEMENTS

In recognition of our offerings and food services solutions, we receivedthe following recognition and awards in 2003.

• Singapore Promising Brand Award 2003 – Sakae Sushi• Singapore Innovation Class 2003• Singapore Innovation Award 2003 – portable conveyor belt• Singapore Service Class

Several of our employees were also recipients of the Excellent ServiceAward.

The Company was given the Singapore Health Award 2003 in recognitionof our contribution to the general well-being of our employees. Inrecognition of our support to employees to take part in their NationalService so that we can significantly help build-up a strong Total Defencefor Singapore, the Company was awarded the MHA Award 2003(Commendation Category).

LOOKING AHEAD – PROSPECTS

The Singapore F&B market remains extremely competitive. With morepeople becoming more health conscious due to recent health scares, weexpect an uptrend in demand for our healthy food solutions in fulfillingthe needs of our customers.

We expect to open new outlets in Singapore to bring our food solutionswithin easy reach of our customers.

The Group continues to be focused on excelling in the F&B industry inSingapore, concurrently identifying and seeking new opportunities inforeign markets.

ACKNOWLEDGEMENT

I wish to express my appreciation to all shareholders for their strongsupport. I would like to thank all our customers, business partners,suppliers and employees for their faith in my management.

I thank my fellow Directors whose advice, experience and independentreview of issues have contributed to the growth of the Group. I concludeby thanking my Management and staff for their steadfast dedication tothe continued growth of the Company.

I look forward to continuously providing our customers innovative foodservices solutions in the new year.

Douglas Foo

Founder, Chairman and CEO


excellence -is our minimum standard


CORPORATE STRUCTURE


SakaeSushi®

Crepes &Cream®

NouvelleEvents®

InnotechConsulting®

SakaeExpress®

SKÅL

Apex-PalMalaysiaSdn Bhd

Restaurant®

PT. Apex-PalInternational

HibikiJapaneseRestaurant

productivity - in everything we do



1999 2000 2001 2002 2003

S$’000 S$’000 S$’000 S$’000 S$’000

Turnover 6,185 10,303 15,251 23,481 36,645

Profit before tax 1,173 1,027 2,381 3,305 2,679

Profit attributable to shareholders 899 732 1,787 2,570 2,049

Non-current assets 533 1,681 2,791 4,662 4,169

Net current assets 1,315 1,024 2,130 2,409 5,553

Non-current liabilities 63 187 616 1,600 298

Shareholder’s equity 1,785 2,518 4,305 5,471 9,424

Net tangible assets per share (cents) 1.98 2.76 4.72 6.03 8.82

Earnings per share (cents) 1.00 0.81 1.99 2.86 2.14

5-YEAR FINANCIAL HIGHLIGHTS


Turnover(S$’000)

99 00 01 02 03

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

Profit before tax(S$’000)

99 00 01 02 03

3,500

3,000

2,500

2,000

1,500

1,000

500

0

6,185

10,303

15,251

23,481

36,645

1,1731,027

2,381

3,305

2,679

Net tangible assets pershare (cents)

99 00 01 02 03

10.00

8.75

7.50

6.25

5.00

3.75

2.50

1.25

0

Earnings per share(cents)

3.00

2.50

2.00

1.50

1.00

0.50

0

1.98

2.76

4.72

6.03

8.82

1.000.81

1.99

2.86

2.14

99 00 01 02 03


DOUGLAS FOO Chief Executive Officer

LILIAN FOO Executive Director/ Executive Vice President

ANDY ONG SIEW KWEE Non-executive Director

NG SAN TIONG Independent Director

LIM CHEE YONG Independent Director

KOH YEN KHOON Executive Vice President

GOH KOK WEE Senior Vice President

MANAGEMENT TEAM

BOARD OF DIRECTORS

1 2 3

1. DOUGLAS FOOChief Executive Officer

Douglas Foo has been a Director ofour Company since 17 February 1997and is the founder and current CEOof our Company. He is responsible forthe overall management, strategicplanning and business developmentof our Company. In 1992, he pursuedhis Bachelor’s Degree in BusinessAdministration (Finance) at the RoyalMelbourne Institute of Technology.Upon his graduation in 1994, Mr Foojoined Tokyu Corporation Ltd as amarketing executive where heworked until 1996 before setting upour Company in July of the same year.Mr Foo has been awarded the Rotary-ASME Entrepreneur of the Year 2002by the Association of Small andMedium Enterprises (ASME) and theRotary Club of Singapore, the TopOutstanding Young Person Award2002 by the Junior Chamber ofSingapore, the Yazhou Zhoukan

Chinese Entrepreneur Award 2002(Merit Award) by Yazhou ZhoukanLimited and the Singapore YouthAward 2003 - Entrepreneurship by theNational Youth Council.

2. FOO LILIANExecutive Director

Foo Lilian was appointed as ourExecutive Director on 2 May 2002 andis responsible for the generalmanagement of our Company as wellas the support, consultancy,maintenance and R&D work for allIT-related matters of our Company.Ms Foo is also responsible for all legalmatters of our Company. In 1997, MsFoo joined the Central Provident FundBoard where she worked as adatabase administrator until February2000. She subsequently joined KeppelTatLee Bank Limited in March 2000 asan assistant manager. Ms Foo leftKeppel TatLee Bank Limited inDecember 2000 to join our Company

in January 2001. Ms Foo holds aBachelor’s Degree in Science(Information Systems & ComputerScience) from the National Universityof Singapore and a Master’s Degreein Business Administration fromLeicester University in the UnitedKingdom.

3. ANDY ONG SIEW KWEENon-executive Director

Andy Ong Siew Kwee was appointedas our Non-executive Director on 14July 2003. Mr Ong is currently theChief Executive Officer of ERCHoldings Pte. Ltd. In addition, Mr Ongis a director of Entrepreneur’sResource Centre Pte Ltd and is alsocurrently the managing editor of theAsia Financial Planning Journal. FromJanuary 1997 to 1999, Mr Ong was themanaging editor of Financial Planner.In December 1999, Mr Ong foundedthe Financial Planning Association ofSingapore (FPAS). FPAS is the

PHYLLIS PHUA LEE BOON Vice President (Group Finance & Administration)

MAY FOO BEE KEE Vice President (Group Human Resource)

GLADYS LIM CHENG LENG Vice President (Nouvelle Events)

PATRINA LIM KAI LIN Assistant Vice President (Group Marketing & Communications)

ELSIE YIM LOK FOONG Vice President (Business Development)

JENNY CHUA SZE MEI Assistant Vice President (Business Development)

VANIA IRAWATY Assistant Vice President (Business Development)

MANAGEMENT TEAM


BOARD OF DIRECTORS

4 5

professional association for financialplanners and the licensee of theCertified Financial Planner Board ofStandards in Singapore. He iscurrently still a member of theexecutive committee of FPAS,heading the Public AwarenessCommittee. Mr Ong holds a Bachelor’sDegree in Science from the NationalUniversity of Singapore. He is also amember of the Financial PlanningAssociation of Singapore, theFinancial Planning Association(America) and the InternationalCertified Financial Planning Council.Mr Ong is also a Certified FinancialPlanner as certified by the FPAS.

4. NG SAN TIONGIndependent Director

Ng San Tiong was appointed as anIndependent Director of ourCompany on 14 July 2003. Mr Ng iscurrently the managing director ofTat Hong Holdings Ltd, a company

listed on the Main Board of the SGX-ST, and is also a member of itsremuneration committee. From 1976to 1978, Mr Ng served as a civilengineer in Jurong TownCorporation. In 1978, he joined theTat Hong group of companies wherehe was involved primarily in theoperations of Tat Hong HeavyEquipment Pte Ltd and Tat Hong PlantLeasing Pte Ltd. Mr Ng has been themanaging director of Tat HongHoldings Ltd since 1991 and was alsoappointed as a director of CSCHoldings Ltd, a company listed on theMain Board of the SGX-ST in 2002where he is a member of the auditcommittee. Mr Ng holds a Bachelor’sDegree (Honours) in Science fromthe University of TechnologyLoughborough, United Kingdom.

5. LIM CHEE YONGIndependent Director

Lim Chee Yong was appointed as ourIndependent Director on 14 July 2003.

From October 1982 to April 1987, MrLim served as a senior corporatebanking officer in Overseas UnionBank Limited. In May 1987, he joinedBanque Paribas, Singapore Branch asa deputy manager of banking, wherehe stayed until April 1989. He wasappointed an executive directorof Alliance Technology andDevelopment Limited, a companylisted on the Main Board of the SGX-ST, in May 1989. Mr Lim left AllianceTechnology and Development Limitedin March 2000. Mr Lim has been anexecutive director of GlobalComInformation Services Pte Ltd sinceSeptember 2000 and an independentdirector of Twinwood EngineeringLimited, a company listed on the SGX-SESDAQ, since November 1997. MrLim holds a Bachelor’s Degree(Honours) in Banking, Insurance andFinance from the University of Wales,United Kingdom.


The Apex-Pal GroupApex-Pal GroupApex-Pal GroupApex-Pal GroupApex-Pal Group posted a strong performance in FY 2003, with strong revenue growth

from the financial year before. Turnover increased by 56.1%, from approximately S$23.5 million

in FY 2002, to S$36.6 million in FY 2003. Profit before tax however fell by 18.9% to S$2.7

million in FY 2003.

As at 31 December 2003, total assets stood at S$14.5 million and total liabilities stood at S$5.0

million, while earnings per share registered at 2.14 cents, falling from the previous period, a

strong net cash inflow from operations of S$3.9 million was recorded.

OPERATIONSreview

F&B Franchising BusinessThe Group currently offers a franchise system for our Sakae Sushi restaurants and Crepes & Cream restaurantsand kiosks.

As for overseas markets, we believe that there is potential for growth for the Sakae Sushi, Sakae Express andCrepes & Cream franchise businesses in the Asia-Pacific. Our first franchise in Beijing, PRC, commenced operationsin December 2003. The 100-seater restaurant is attractively located in the main shopping belt of Beijing city. Byintroducing the brand in China this year, we pave the way for new outlets in other parts of the country. Otheroutlets were also opened in the Philippines and Indonesia during the year.

IT ServicesInnotech Consulting was initially set up to provide IT support services to the Group. The scope of servicesprovided by Innotech Consulting has since expanded to include provision of IT support to all the business divisionswithin our Company.


OPERATIONS REVIEW

Sakae Sakae

Sakae

Sakae Sushi is the flagship brand of Apex-Pal International Ltd. The first outlet was established in September1997 at Raffles Place, in the heart of Singapore’s financial district.

In a period of six short years, Sakae has leap frogged to being Singapore’s largest kaiten Sushi chain, with close to over21 outlets island-wide.

Its appeal is undoubtedly its high quality cuisine at great value. As a brand that is dedicated to healthy dining solutions,Sakae offers its customers only the freshest ingredients. In addition, our high grade sushi rice is also enriched withVitamin E. Customers dine in causal comfort while enjoying a feast for the eyes as varieties of food pass by on conveyerbelts.

Besides innovating on our menu, Sakae introduced its unique Interactive Menu ordering system to enhance the Sakaeexperience. Sakae also offered Singapore diners the ease of a two-tier pricing system.

“Sakae” means growth in Japanese and this is the brand’s guiding vision. The Sakae frog symbolizes a brand that is farsighted and poised to grow by leaps and bounds. Its smile indicates a friendly company, welcoming all. Our Asianheritage is reflected through the lower body of the frog that is reminiscent of a Chinese gold ingot, and a bowl filledwith rice. The Chinese Character “ ” means ‘growth’. The frog’s head and belly also symbolizes the number ‘8’ whichis an auspicious number.

Currently, Sakae Sushi operates in Singapore, Indonesia, Thailand, Philippines and China with more internationallocations on the drawing board.

innovation - to simplify and compete



OPERATIONS REVIEW


Soup of the Day • Find out what homemade soup our chef is cooking todayCreamy Mushroom Soup • Our bestseller homemade flavorsome creamy mushroom soupC&C Chef Salad • Lettuce with thousand island dressing, topped with turkey ham, pastrami beef, boiled egg, cheese, tomato,

olives and onionGrilled Teriyaki Chicken • Grilled Chicken thigh braised in Teriyaki Sauce, served with Rice RollChicken Ragout Crepe • Creamy chicken ragout with sauteed mushroom and farm-fresh eff with mushroom sauceSuper Bowl • Choose eight of your favourite flavors, served with strawberry sauce, chocolate fudge, roasted almond

nuts, cream, cherry & waffle biscuitBanana Bonkers • Cocoa crepe wrapped with fresh banana & whipped cream, flanked by chocolate, strawberry, vanilla ice-cream,

sweet berry sauce & choco sauceMango Mania • Fresh mango cubes, custard, mango ice-cream and mango sauceMushroom Ham Crepe • Turkey ham with sauteed mushroom, mozarella cheese, lettuce & mushroom sauce in sun-dried tomato crepe

Crepes &Cream

Crepes &Cream

Crepes & Cream Restaurant was established in August 2001, with its first outlet at the Heeren Shops, OrchardRoad. To date, there are 3 cafes/restaurants in Singapore.

At Crepes & Cream, customers can enjoy a range of culinary delights that offers 10 types of sweet and savory crepecreations like Banana Bonkers, Caribbean Cruise, Berry Crazy, Teriyaki Chicken, Chicken Ragout and Mushroom andHam.

Other than our sweet crepes we have an assortment of delectable dessert and ice cream creations to tempt even themost staunch dieters ! For starters we serve Bud’s ice cream of San Francisco, rated one of the world’s best ice cream…sogood, you won’t believe it’s made from skimmed milk ! Using Bud’s ice cream, our culinary team have further createdtemptations like Oreo Oreo Oreo, Moussy Brownie and a range of thick wholesome shakes.

Crepes & Cream offers more than just desserts, it’s a dining destination suitable for whole families or friends to havea complete meal ending with one of our sweet creations. Customers can choose from pasta, grilled teriyaki chicken,char-grilled ribeye or poached salmon as their main courses.

compassion - to all



OPERATIONS REVIEW


Make Your Function a Real Experience with Nouvelle Events !

Established since 2001, Nouvelle’s key attraction as a catering specialist is that it is the only caterer in Singapore thatoffers a unique kaiten (conveyor belt) sushi experience. Its patented portable conveyor belt, a Singapore InnovationClass award winner, was developed in-house by the R&D team at Apex-Pal International Ltd..

With over 20 chefs trained in International, Asian and Western cuisine in our kitchen, you can be assured that everyevent we manage offers a mouthwatering and extensive menu. We not only offer you your very own kaiten sushiexperience but also fresh made crepes and a selection of Bud’s ice cream for a party your guests will talk about longafter the event is over!

Nouvelle operates and manages F&B facilities, club houses and supplies some of Singapore’s best restaurants andhotels with our fresh air-flown Norwegian salmon and fresh baked pastries. From product launches to private cateringevents, our sales team is ready to meet your requirements for an event that’s a real experience!

nouvelle

nouvelle

nouvellenouvelle

OPERATIONS REVIEW


Skål

Skål SkålIntroducing Skål Scandinavian Cuisine

“Skål” (pronounced skol) means cheers in the Swedish language. An often heard toast round Scandinavian diningtables, we celebrate the everyday joys of ;

The brilliance of a sun that never setsThe blessings of an abundant earthThe richness of the vast blue seaThe joy of friends round a laden table

The vibrant colours of orange and yellow reflect the brilliance of the midnight sun that pervades all aspects ofScandinavian life in the summer months. The colours are a symbol of life and light which complements our philosophyof fresh foods and quality ingredients presented simply without excesses.

The long oval shape is reminiscent of a large, long table on which Scandinavian Smorgasbords are laid out.

Our aim is to introduce a selection of Scandinavian staples, and the wide variety of seafood from the region to theincreasingly sophisticated, adventurous and curious Singaporean palate. This is also an evident trend in majorcosmopolitan cities where Scandinavian, and more appropriately perhaps, Swedish chefs and their cuisine haveincreasingly won accolades.

Skål is helmed by Executive Chef, Anders Atte. A Swedish national, Chef Atte is at the heartbeat of the revival of theSwedish kitchen having worked alongside celebrated Swedish chef Örjan Klain at KB Restaurant in Stockholm.Established in the 1930’s , KB has earned its reputation as a bastion of Swedish cuisine popular amongst discerningclientele of distinction.

Chef Atte’s international experience includes one of New York’s most elegant instituitions, the Petrossian Restaurant,reporting to yet another Swedish chef of distinction, P.G. Gustafsson. In Malaga, Chef Atte helmed both the diningand catering kitchens at Sombra Restaurant.

His clean, honest style with his choice of ingredients and dishes translates well across intimate dining or mass catering.

The Skål experience is about simplicity and understated quality.

Diners can choose to experience this in our current restaurant at Wheelock Place, #03-04 or bring this experience intotheir homes with our Private Events services.


hibiki

hibiki

hibiki

OPERATIONS REVIEW

Hibiki Japanese Restaurant & Sake Salon

Hibiki describes a resounding sound; a resonance. Our aspiration for Hibiki is that its offerings would be like itsnamesake, creating waves of resonance in our culinary landscape and memories. Where fine food is simply qualityingredients paired with tradition and imagination.

Hibiki offers discerning diners a taste of contemporary Japanese cuisine combining strong Japanese culinary traditionswith the finest ingredients sourced from Japan and worldwide. With over 20 years of experience under his belt,Executive Chef Toshihiro Ueda (Tommy as his customers know him) heads the culinary team at Hibiki. Chef Ueda hascooked internationally in Australian cities and international 5 star hotel restaurants.

Our guests dine amidst a sleek, modern interior that’s simple yet cosy, allowing guests to enjoy fine food and companyin ease. In addition to teasing your palate with a range of inspired creations by our Executive Chef, Hibiki has anadjourning Sake salon where guests can choose from a well-stocked list of premium sake.

A select menu of Japanese style delicacies are also available from our kitchen for guests who wish to have accompanyingsnacks with their sake.

Hibiki is centrally located at The Legends Fort Canning Park amidst a lush, historical ambience that’s a respite from thecity’s crowd. While situated within the Club grounds, Hibiki welcomes both non-club members and club membersalike. Our close proximity to the Registry of Marriages positions us to offer newly-weds a unique reception that’selegant and contemporary.

BOARD OF DIRECTORSDouglas Foo Peow Yong (Chief Executive Officer)Foo Lilian (Executive Director/Executive Vice President)Andy Ong Siew Kwee (Non-executive Director)Ng San Tiong (Independent Director)Lim Chee Yong (Independent Director)

AUDIT COMMITTEELim Chee Yong (Chairman)Ng San TiongAndy Ong Siew Kwee

NOMINATING COMMITTEELim Chee Yong (Chairman)Ng San TiongDouglas Foo Peow Yong

REMUNERATION COMMITTEENg San Tiong (Chairman)Lim Chee YongDouglas Foo Peow Yong

COMPANY SECRETARIESPhyllis Phua Lee Boon (CPA, Singapore)Rachel Eng Yaag Ngee (LLB. Hons)


CORPORATE INFORMATION

REGISTERED OFFICE1 Raffles Place#49-00 OUB Centre,Singapore 048616

SHARE REGISTRARLim Associates (Pte) Ltd10 Collyer Quay #19-08Ocean BuildingSingapore 049315

AUDITORSDeloitte & ToucheCertified Public Accountants6 Shenton Way#32-00 DBS Building Tower TwoSingapore 068809

Partner-in-charge: Aric Loh Siang KheeDate of appointment: 19 March 2003

PRINCIPAL BANKERStandard Chartered Bank6 Battery Road#05-00Singapore 049909


FINANCIAL CONTENTS

Statements 38 Statement of Directors 51 Statistics of Shareholdings 52 Notice of Annual General Meeting 53

Proxy Form

statements 35 Statements of Changes in Equity 36 Consolidated Cash Flow Statement 37 Notes to the Financial

Corporate Governance 22 Report of the Directors 30 Auditors’ Report 33 Balance Sheets 34 Profit and Loss

22 Apex-Pal International Ltd. Annual Report 2003

Apex-Pal International Ltd. (the "Company") is committed to maintaining a high standard of corporate governanceand has put in place self-regulatory corporate practices to protect the interests of its shareholders and enhance long-term shareholder value.

The Board of Directors (the "Board") is pleased to report compliance of the Company with the Code of CorporateGovernance (the "Code"), except where otherwise stated.

BOARD MATTERS

Principle 1: Board's Conduct of its Affairs

Apart from its statutory duties and responsibilities, the Board oversees the management and affairs of the Group. Itfocuses on strategies and policies, with particular attention paid to growth and financial performance. It delegatesthe formulation of business policies and day-to-day management to the Executive Directors.

The principal functions of the Board are:

(a) to approve the Group's key business strategies and financial objectives;

(b) to approve major investments and divestments, and funding proposals;

(c) to oversee the processes for evaluating the adequacy of internal controls, risk management, financial reportingand compliance; and

(d) to assume responsibility for corporate governance.

The Board discharges its responsibilities either directly or indirectly through various committees comprising membersof the Board.

Every Executive Director receives appropriate training to develop individual skills in order to discharge his or herduties. The Group also provides extensive information about its history, mission and values to the Directors.

The Board holds at least two scheduled meetings each year to review and deliberate on the key activities and businessstrategies of the Group, including reviewing and approving acquisitions, financial performance, and to endorse therelease of the interim and annual results. Where necessary, additional meetings may be held to address significanttransactions or issues. The Company's Articles of Association permits a Board meeting to be conducted by way of tele-conference and video-conference.

Since the Initial Public Offering ("IPO") of the Company in August 2003, the Board had met once in FY2003 and theattendance of each member of the Board is as follows:-

Name of Director Attendance at Meeting

Douglas Foo Peow Yong 1Foo Lilian 1Lim Chee Yong 1Ng San Tiong 1Andy Ong Siew Kwee 1

CORPORATE GOVERNANCE REPORT


Principle 2: Board Composition and Balance

The Board comprises:

Executive Directors:

Douglas Foo Peow Yong (Executive Director and CEO)Foo Lilian (Executive Director)

Non-Executive Directors:

Andy Ong Siew Kwee (Non-executive Director)Lim Chee Yong (Non-executive and Independent Director)Ng San Tiong (Non-executive and Independent Director)

The Directors appointed are qualified professionals who possess a diverse range of expertise to provide a balancedview within the Board. Key information regarding the Directors' academic and professional qualifications and otherappointments is set out on pages 10 to 11 of the Annual Report.

The independence of each Director is reviewed by the Nominating Committee. The Nominating Committee adoptsthe definition of what constitutes an Independent Director from the Code. The Nominating Committee is of the viewthat the Non-Executive Directors are independent.

The Board has examined its size and is of the view that it is an appropriate size for effective decision-making, takinginto account the scope and nature of the operations of the Company.

Principle 3: Role of Chairman and Chief Executive Officer

It is the view of the Board that it is in the best interests of the Group to adopt a single leadership structure, i.e. wherethe CEO and the Chairman of the Board is the same person, so as to ensure that the decision-making process of theGroup would not be unnecessarily hindered.

The Board is of the view that there are sufficient safeguards and checks to ensure that the process of decision makingby the Board is independent and based on collective decisions without any individual exercising any considerableconcentration of power or influence. Further, all the Board committees are chaired by Independent Directors.

The Group's Chairman and CEO is Mr Douglas Foo Peow Yong, who is responsible for the day-to-day operations of theGroup, as well as monitoring the quality, quantity and timeliness of information flow between the Board and themanagement. Mr Foo is the founder of the Group and has played a key role in developing the Group's business.Through the Group's successful development in these few years, Mr Foo has demonstrated his vision, strong leadershipand enthusiasm in this business.

Principle 6: Access to Information

To assist the Board in fulfilling its responsibilities, the Board is provided with management reports containing complete,adequate and timely information, and papers containing relevant background or explanatory information required tosupport the decision-making process. The Board is also provided with updates on the relevant new laws, regulationsand changing commercial risks in the Company's operating environment. Orientation to the Company's businessstrategies and operations is conducted as and when required.

All Directors have separate and independent access to senior management and to the Company Secretaries. TheCompany Secretaries administer, attend and prepare minutes of Board meetings, and assist the Chairman in ensuringthat Board procedures are followed and reviewed so that the Board functions effectively, and the Company's Articlesof Association and relevant rules and regulations, including requirements of the Companies Act and the SingaporeExchange Securities Trading Limited (SGX-ST), are complied with.



In the event that the Directors, whether as a group or individually, require independent professional advice in thefurtherance of their duties, the cost of such professional advice will be borne by the Company.

BOARD COMMITTEE

Nominating Committee ("NC")

Principle 4: Board Membership

The NC comprises Mr Lim Chee Yong as Chairman, Mr Ng San Tiong and Mr Douglas Foo Peow Yong as members.

The Board has approved written terms of reference of the NC. The NC is responsible for :-

(a) reviewing and making recommendations to the Board on all candidates nominated for appointment to theBoard;

(b) reviewing all candidates nominated for appointment as senior management staff;

(c) reviewing and recommending to the Board on an annual basis, the Board structure, size and composition,taking into account the balance between Executive and Non-Executive, Independent and Non-IndependentDirectors and having regard at all times to the principles of corporate governance and the Code;

(d) procuring that at least one-third of the Board shall comprise Independent Directors;

(e) making recommendations to the Board on the continuation of the services of any Director who has reachedthe age of 70;

(f) identifying and making recommendations to the Board as to which Directors are to retire by rotation and to beput forward for re-election at each Annual General Meeting ("AGM") of the Company, having regard to theDirectors' contribution and performance, including Independent Directors;

(g) determining whether a Director is independent (taking into account the circumstances set out in the Code andother salient factors); and

(h) proposing a set of objective performance criteria to the Board for approval and implementation, to evaluatethe effectiveness of the Board as a whole and the contribution of each Director to the effectiveness of theBoard.

All Directors are subject to the provisions of the Company's Articles of Association whereby one-third of the Directorsare required to retire and subject themselves to re-election by shareholders at every AGM.

A newly-appointed Director will have to submit himself for re-election at the AGM immediately following hisappointment and, thereafter, be subjected to the one-third-rotation rule.

The NC recommended to the Board that Mr Douglas Foo Peow Yong, Mr Lim Chee Yong, Mr Ng San Tiong and Mr AndyOng Siew Kwee be nominated for re-appointment at the forthcoming AGM.

In making the recommendation, the NC had considered the Directors' overall contribution and performance.



Principle 5: Board Performance

The NC will assess the effectiveness of the Board as a whole and the contribution of each Director to the effectivenessof the Board. In drawing up the objective performance criteria for such evaluation and determination, the NC considersa number of factors, including achieving financial targets, performance of the Board, performance of individual Director'svis-à-vis attendance and contributions during Board meetings.

The NC will be initiating Board performance evaluation to assess the effectiveness of the Board as a whole in FY2004.

Remuneration Committee ("RC")

Principle 7: Procedures for Developing Remuneration Policies

The RC comprises Mr Ng Tiong San as Chairman and Mr Lim Chee Yong and Mr Douglas Foo Peow Yong as members.

The Board has approved written terms of reference of the RC. The RC is responsible for :-

(a) recommending to the Board a framework of remuneration for the Board and the key executives of the Groupcovering all aspects of remuneration such as Director's fees, salaries, allowances, bonuses, options and benefits-in-kind;

(b) proposing to the Board, appropriate and meaningful measures for assessing the performance of the ExecutiveDirectors;

(c) determining the specific remuneration package for each Executive Director;

(d) considering the eligibility of Directors for benefits under long-term incentive schemes; and

(e) considering and recommending to the Board the disclosure of details of the Company's remuneration policy,level and mix of remuneration and procedure for setting remuneration and details of the specific remunerationpackages of the Directors and key executives of the Company to those required by law or by the Code.

The members of the RC do not participate in any decisions concerning their own remuneration.

Principle 8: Level and Mix of Remuneration

The Company sets remuneration packages to ensure that it is competitive and sufficient to attract, retain and motivateDirectors and senior management of the required experience and expertise to run the Company successfully. Thefollowing tables show a breakdown of the remuneration of Directors and five key executives for 2003.

Remuneration Directors' Incentive andband & name of director Salary Bonus Fees other benefits Total

% % % % %

$500,000 and aboveNil

$250,000 to below $500,000Douglas Foo Peow Yong 91 6 - 3 100

Below $250,000Foo Lilian 88 6 - 6 100Lim Chee Yong - - 100 - 100Ng San Tiong - - 100 - 100Andy Ong Siew Kwee - - 100 - 100



Remuneration band & Incentive andname of key executive Salary Bonus other benefits Total

% % % %

$500,000 and aboveNil

$250,000 to below $500,000Koh Yen Khoon 88 7 5 100

Below $250,000Goh Kok Wee 84 7 9 100Lim Cheng Leng, Gladys 53 4 43 100Phua Lee Boon, Phyllis 80 7 13 100Foo Bee Kee, May 80 7 13 100

One of the employees, whose remuneration exceeds $150,000 during the year, is an immediate family member of MrDouglas Foo Peow Yong, CEO.

The remuneration of the Non-Executive and Independent Directors is in the form of a fixed fee. The remuneration ofthe Directors will be subject to approval at the AGM.

The two Executive Directors of the Company, Mr Douglas Foo Peow Yong and Ms Foo Lilian, have entered into separateservice agreements with the Company which are renewable every three years. The service agreements cover the termsof employment, specifically salaries and bonuses.

The Company has a share option scheme known as Apex-Pal Employee Share Option Scheme (the "ESOS") which wasapproved by shareholders of the Company. The ESOS complies with the relevant rules as set out in Chapter 8 of theListing Manual. The ESOS will provide eligible participants with an opportunity to participate in the equity of theCompany and to motivate them towards better performance through increased dedication and loyalty. The ESOS isadministered by the RC. No options have been granted under the ESOS during the current financial period.

Audit Committee ("AC")

Principle 11: Audit Committee

The AC comprises Mr Lim Chee Yong, Mr Ng San Tiong and Mr Andy Ong Siew Kwee. The Chairman of the AC is Mr LimChee Yong. The AC held its first meeting with full attendance on 4 December 2003.

The Board has approved the written terms of reference of the AC. Its functions are as follows:-

(a) review and evaluate financial and operating results and accounting policies;

(b) review audit plan of external auditors, their evaluation of the system of internal accounting controls and theiraudit report;

(c) review the Group's financial results and the announcements before submission to the Board for approval;

(d) review the assistance given by the management to external auditors;

(e) consider the appointment/ re-appointment of external auditors;

(f) review interested person transactions; and

(g) other functions as required by law or the Code.



The AC meets regularly and also holds informal meetings and discussions with the management from time to time.The AC has full discretion to invite any Director or executive officer to attend its meetings.

The AC has been given full access to and obtained the co-operation of the Company's management. The AC hasreasonable resources to enable it to discharge its functions properly.

The AC has met with the external auditors without the presence of the management. The AC also met with theexternal auditors to discuss the results of their examinations and their evaluations of the systems of internal accountingcontrols.

The AC has reviewed the volume of non-audit services to the Group by the external auditors, and being satisfied thatthe nature and extent of such services will not prejudice the independence and objectivity of the external auditors, ispleased to recommend their re-appointment.

Principle 12 and 13: Internal Controls and Internal Audit

The Board is cognizant of its responsibility for maintaining a sound system of internal controls to safeguard theshareholders' investments and the Group's assets and business. The Company's external auditors, Deloitte & Touche,carry out, in the course of their statutory audit, a review of the effectiveness of the Company's material internalcontrols, annually to the extent of their scope as laid out in their audit plan. Material non-compliance and internalcontrol weaknesses noted during their audit, and the auditors' recommendations, are reported to the AC members.For FY2003, the Board is of the view that based on the reports from the auditors, the system of internal controls thathas been maintained by the Company's management throughout the financial year is adequate to meet the needs ofthe Company. The Board shall consider expanding its internal audit resources as and when the need arises.

COMMUNICATION WITH SHAREHOLDERS

Principle 10: Accountability

The Board provides the shareholders with a detailed and balanced explanation and analysis of the Company'sperformance, position and prospects on a half-yearly basis.

The management provides the Board with appropriately detailed management accounts of the Group's performance,position and prospects on a half-yearly basis.

Principles 14 and 15: Communications with Shareholders

The Company does not practise selective disclosure. Information on any new initiatives is disseminated via MASNET,news releases and the Company's website. Price-sensitive information is publicly released, and is announced withinthe mandatory period and is available on the Company's website.

The AGM of the Company is a principal forum for dialogue and interaction with all shareholders. All shareholders willreceive the Annual Report and the notice of AGM. At the AGM, shareholders will, be given the opportunity to voicetheir views and to direct questions regarding the Group to the Directors including the chairpersons of each of theBoard committees. The Company ensures that there are separate resolutions at general meetings on each distinctissue.




SECURITIES TRANSACTIONS(Listing Manual Rule 710(2)(b))

The Company has adopted the SGX-ST Best Practices Guide with respect to dealings in securities by Directors andofficers of the Group. Directors, management and officers of the Group who have access to price-sensitive, financial orconfidential information are not permitted to deal in the Company's shares during the periods commencing onemonth before the announcement of the Group's annual or half-yearly results and ending on the date of announcementsof such results, or when they are in possession of unpublished price-sensitive information on the Group. To providefurther guidance to employees on dealing in the Company's shares, the Company has adopted a code of conduct ontransactions in the Company's shares. The code of conduct was modeled after the Best Practices Guide with somemodifications.

MATERIAL CONTRACTS(Listing Manual Rule 1207(8))

Save for the service agreements between the Executive Directors and the Company, there were no material contractsof the Company or its subsidiaries involving the interest of any Director or controlling shareholders subsisting as at thefinancial year ended 31 December 2003.

INTERESTED PARTY TRANSACTIONS(Listing Manual Rule 907)

The Company has established procedures to ensure that all transactions with interested persons are reported in atimely manner to the AC and that the transactions are on an arm's length basis.

The aggregate value of interested person transactions entered during the financial year under review is as follows:

Aggregate value of all interested Aggregate value of all interestedperson transactions during the person transactions during the

financial year under review financial year under review(excluding transactions less than under shareholders' mandate

$100,000 and under review under pursuant to Rule 920 (excludingshareholders' mandate) transactions less than $100,000)

Name of Interested Person $'000 $'000

Mr Douglas Foo Peow Yongand Ms Koh Yen Khoon 2,524 Nil

Black Tea Box Pte Ltd(now known as Fusion Tea Pte. Ltd.) 208 Nil

Prior to the IPO of the Company in August 2003, all amounts in respect of the above interested person transactions hasbeen fully settled.


Risk Management

We are affected by any rent hikes in our restaurant premises or any inability to renew existing leases or procure newleases

All of our F&B outlets are housed in leased premises. Upon expiry of such leased tenures, the landlords have the rightto review and alter the terms and conditions of the lease agreements. We face the possibility of an increase in therental prices by the landlords or not being able to renew the leases on terms and conditions that are favourable to us.There is also the likelihood that we are unable to maintain our leases or secure new leases over strategic locations.The Group will continue to foster good relationships with the landlords and we will continue to seek to procurestrategic locations for our F&B outlets.

We may be affected by an outbreak of contagious or virulent disease, disease in livestock or food scares

In the event of any outbreak of contagious or virulent disease, consumer sentiment may be adversely affected, leadingto a reduced willingness of our customers to dine at our F&B outlets. In addition, if any of our employees in any of ourF&B outlets, food processing facility or catering division becomes infected with the disease, we may be required toshut down the relevant outlet or facility to prevent the spread of the disease. Similarly, any outbreak of diseases inlivestock and food scares in the region and around the world may have a material adverse impact on our business. TheGroup will monitor the surroundings closely for any possible indication of disease outbreak and take immediateappropriate actions eg making arrangements for the segregation of operation staff into 2 or more groups working inseparate shift, for the purpose of ensuring that if a quarantine order is enforced on 1 group, another group will beable to continue operations.

We are affected by political, social, economic and regulatory conditions, consumer preference or discretionary consumerspending

Our F&B business is subject to prevailing political, social, economic and regulatory conditions in the countries weoperate. Factors such as economic recession, inflation, developments in government or regulatory policies, labourconditions can affect the Group’s operations and financial results. Any changes in market and economic conditionsmay affect consumers’ disposable income, consumer confidence and hence discretionary consumer spending. TheGroup recognizes such potential risk and therefore keeps abreast of developments and applies appropriate measuresto reduce the adverse consequences, if any.

We are reliant on certain key personnel and our business is largely service oriented

We are dependent on certain senior management staff, in particular, our founder and CEO, Mr Douglas Foo PeowYong. Douglas Foo plays a vital role in the continual expansion of our business as he is responsible for our businessdevelopment and overall business strategy. Our continued success also depends on our ability to attract, motivate andretain a sufficient number of skilled and qualified employees. The Group will implement succession-planning policiesto ensure that there is timely backup. We will continue to formulate and implement attractive reward packages toretain and motivate existing staff and attract quality personnel in joining the Group.

For further details on the risk faced by the Group, please refer to page 40 and 41 of the annual report.


REPORT OF THE DIRECTORS

The directors present their report together with the audited financial statements of the company and the consolidatedfinancial statements of the group for the financial year ended December 31, 2003.

During the financial year, the company changed its name from Apex-Pal International Pte Ltd to Apex-Pal InternationalLtd. and was admitted to the official list of Stock Exchange of Singapore Dealing and Automated Quotation System onAugust 28, 2003.

1 DIRECTORS

The directors of the company in office at the date of this report are:

Douglas Foo Peow YongFoo LilianAndy Ong Siew Kwee (Appointed on July 14, 2003)Ng San Tiong (Appointed on July 14, 2003)Lim Chee Yong (Appointed on July 14, 2003)

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OFSHARES AND DEBENTURES

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangementwhose object is to enable the directors to acquire benefits by means of the acquisition of shares or debentures inthe company or any other body corporate.

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors holding office at the end of the financial year had no interests in the share capital and debenturesof the company and related corporations as recorded in the register of directors’ shareholdings kept by thecompany under Section 164 of the Singapore Companies Act except as follows:

Name of At beginning ofdirector and company year or date of At Atin which interests are held appointment, if later end of year 21.1.2004

Interest in Apex-Pal International Ltd.- Ordinary shares of $0.04 each

Douglas Foo Peow Yong 89,999,700 * 89,999,700 89,999,700Andy Ong Siew Kwee 100,000 100,000 100,000

* Represents 299,999 ordinary shares of S$1.00 each as adjusted for bonus issue, stock split and stockconsolidation.

4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS

Since the beginning of the financial year, no director has received or become entitled to receive a benefit whichis required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made bythe company or a related corporation with the director or with a firm of which he is a member, or with a companyin which he has a substantial financial interest except as disclosed in the financial statements.


5 SHARE OPTIONS

a) The Apex-Pal Employees’ Share Option Scheme (“the ESOS”) was approved by the shareholders of thecompany at an Extraordinary General Meeting held on July 14, 2003.

The committee administering the Scheme comprise:

Ng San Tiong - ChairmanDouglas Foo Peow YongLim Chee Yong

Under the Share Option Scheme, an option entitles the option holder to subscribe for a specific number ofnew ordinary shares of $0.04 each in the company comprised in the option at the subscription price pershare determined with reference to the market price of the shares at the time of grant of the option. TheShare Option Committee may at its discretion, fix the subscription price at a discount up to 20% off marketprice but not lower than the par value of the shares. Options granted with the subscription price set at themarket price shall only be exercised after the first anniversary of the date of grant of that option. Optionsgranted with the market price set at a discount to the market price shall only be exercised after the secondanniversary. The shares under option may be exercised in whole or in part on the payment of the relevantsubscription price. Options granted under the ESOS will have a life span of ten years.

There were no unissued shares of the company under options granted pursuant to the Share Option Scheme.

b) During the financial year, no options to take up unissued shares of the company or its subsidiaries weregranted and there were no shares of the company or its subsidiaries issued by virtue of the exercise of anoption to take up unissued shares.

c) At the end the financial year, there were no unissued shares of the company or its subsidiaries under option.

6 AUDIT COMMITTEE

The Audit Committee comprises three non-executive Directors – Mr Lim Chee Yong, Chairman of the Committee,Mr Ng San Tiong and Mr Ong Siew Kwee.

The Committee meets with the auditors to review the scope and results of the audit, financial and operatingresults and the recommendations made by the auditors with respect to the group’s accounting methods andsystems of internal control and the assistance given by the company’s officers to the auditors.

The Committee recommends to the Board of Directors the nomination of Deloitte & Touche as external auditorsat the forthcoming Annual General Meeting of the company.



7 AUDITORS

The auditors, Deloitte & Touche, have expressed their willingness to accept re-appointment.

ON BEHALF OF THE DIRECTORS

Douglas Foo Peow Yong

Foo Lilian

February 27, 2004



We have audited the consolidated financial statements of the group and the financial statements of the company forthe year ended December 31, 2003 as set out on pages 34 to 50. These financial statements are the responsibility ofthe 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 planand perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates madeby the directors, as well as evaluating the overall financial statements presentation. We believe that our audit providesa reasonable basis for our opinion.

In our opinion:

a) the consolidated financial statements of the group and the financial statements of the company are properlydrawn up in accordance with the provisions of the Singapore Companies Act (“Act”) and Singapore FinancialReporting Standards (“FRS”) to give a true and fair view of the state of affairs of the group and company as atDecember 31, 2003 and the results and changes in equity of the group and company, and cash flows of the groupfor the financial year ended on that date;

b) the accounting and other records required by the Act to be kept by the company have been properly kept inaccordance with the provisions of the Act.

We have considered the management accounts of all the subsidiaries of which no audit was performed during thefinancial year, being management accounts that have been included in the consolidated financial statements of thegroup. The names of these subsidiaries are stated in Note 7 to the financial statements.

We are satisfied that the management accounts of the subsidiaries that have been consolidated with the financialstatements of the company are in form and content appropriate and proper for the purposes of the preparation of theconsolidated financial statements and we have received satisfactory information and explanations as required asrequired by us for those purposes.

DELOITTE & TOUCHECertified Public Accountants

Aric Loh Siang KheePartner

Singapore

February 27, 2004

AUDITORS’ REPORTto the members of APEX-PAL International Ltd.


Group CompanyNote 2003 2003 2002

$’000 $’000 $’000

ASSETSCurrent assets:Cash and bank balances 6,154 5,899 2,442Trade receivables 5 1,090 1,090 1,091Other receivables and prepayments 6 2,359 2,344 1,194Inventories 693 693 402Due from related parties 4 - - 1,242

Total current assets 10,296 10,026 6,371

Non-current assets:Subsidiaries 7 - 254 -Plant and equipment 8 4,137 4,137 2,490Investment properties 9 - - 2,126Intangible asset 10 32 32 46

Total non-current assets 4,169 4,423 4,662

Total assets 14,465 14,449 11,033

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:Trade payables 3,316 3,316 1,546Other payables 11 973 973 797Due to related parties 4 - - 306Due to a shareholder 12 - - 120Current portion of bank loans 13 - - 99Income tax payable 454 454 1,094

Total current liabilities 4,743 4,743 3,962

Non-current liabilities:Bank loans 13 - - 1,440Deferred taxation 14 298 298 160

Total non-current liabilities 298 298 1,600

Capital and reserves:Issued capital 15 4,260 4,260 300Share premium 2,728 2,728 -Currency translation reserve 16 - -Accumulated profits 1,589 1,589 3,671Proposed dividend 831 831 1,500Total equity 9,424 9,408 5,471

Total liabilities and equity 14,465 14,449 11,033

BALANCE SHEETSDecember 31, 2003

See accompanying notes to the financial statements.


Group CompanyNote 2003 2003 2002

$’000 $’000 $’000

Revenue 16 36,645 36,645 23,481

Cost of sales (12,485) (12,485) (7,761)

Gross profit 24,160 24,160 15,720

Other operating income 17 147 147 180Staff costs (11,383) (11,383) (7,146)Rental expenses (4,706) (4,706) (2,178)Depreciation 8 (1,130) (1,130) (780)Administrative expenses (1,654) (1,654) (1,178)Other operating expenses (2,707) (2,707) (1,283)

Profit from operations 18 2,727 2,727 3,335

Finance cost 19 (48) (48) (30)

Profit before income tax 2,679 2,679 3,305

Income tax expense 20 (630) (630) (735)

Profit after income tax 2,049 2,049 2,570

Earning per share (cents) 21 2.14 N.A. 2.86

PROFIT AND LOSS STATEMENTSYear ended December 31, 2003



CurrencyIssued Share translation Accumulated Proposedcapital premium reserve profits dividend Total$’000 $’000 $’000 $’000 $’000 $’000

Group

Balance at January 1, 2003 300 - - 3,671 1,500 5,471Issue of shares:

Bonus share issue 3,300 - - (3,300) - -Initial Public Offer 660 3,630 - - - 4,290

Share issue expenses # - (902) - - - (902)Currency translation differences - - 16 - - 16Net profit for the year - - - 2,049 - 2,049Dividend paid - - - - (1,500) (1,500)Proposed dividend - - - (831) 831 -

Balance at December 31, 2003 4,260 2,728 16 1,589 831 9,424

Company

Balance at January 1, 2002 300 - - 4,005 - 4,305Net profit for the year - - - 2,570 - 2,570Interim dividend - - - (1,404) - (1,404)Proposed dividend - - - (1,500) 1,500 -

Balance at December 31, 2002 300 - - 3,671 1,500 5,471

Issue of shares:Bonus share issue 3,300 - - (3,300) - -Initial Public Offer 660 3,630 - - - 4,290

Share issue expenses # - (902) - - - (902)Net profit for the year - - - 2,049 - 2,049Dividend paid - - - - (1,500) (1,500)Proposed dividend - - - (831) 831 -

Balance at December 31, 2003 4,260 2,728 - 1,589 831 9,408

# Share issue expenses include professional fees of $138,000 paid to auditors of the company.

STATEMENTS OF CHANGES IN EQUITYYear ended December 31, 2003



Group Company2003 2002$’000 $’000

Cash flows from operating activities:

Profit before income tax 2,679 3,305Adjustments for:

Depreciation expense 1,130 780Amortisation of intangible assets 14 14Gain on disposal of investment properties (82) -Loss on disposal of plant and equipment 6 -Allowance for doubtful trade receivables 13 -Interest expense 48 30Interest income (3) (4)

Operating profit before working capital changes 3,805 4,125

Due from related parties - net 936 (29)Trade receivables (12) (702)Other receivables and prepayments (1,165) (774)Inventories (291) (166)Trade payables 1,770 479Other payables 176 444Due to/from a shareholder - net (120) 722

Cash generated from operations 5,099 4,099

Interest paid (48) (30)Interest received 3 4Income tax paid (1,132) (134)

Net cash from operating activities 3,922 3,939

Cash flows used in investing activities:Proceeds on disposal of plant and equipment 1 32Purchase of plant and equipment (2,784) (1,666)Payment for investment properties (316) (1,031)Proceeds on disposal of investment properties 2,524 -

Net cash used in investing activities (575) (2,665)

Cash flows from (used in) financing activities:Proceeds from issuing shares 3,388 -(Decrease) Increase in bank loans (1,539) 1,017Dividend paid (1,500) (1,404)

Net cash from (used in) financing activities 349 (387)

Net effect of exchange rate changes in consolidating subsidiaries 16 -

Net increase in cash 3,712 887Cash at beginning of year 2,442 1,555

Cash at end of year 6,154 2,442

CONSOLIDATED CASH FLOW STATEMENTYear ended December 31, 2003



1 GENERAL

The company is incorporated in the Republic of Singapore with its registered office and principal place of businessat 1 Raffles Place, #49-00 OUB Centre, Singapore 048616. The financial statements are expressed in Singaporedollars.

The principal activities of the company consists of the business of operating restaurants, kiosks and cafes, trading,and operating as caterer and franchiser.

The principal activities of its subsidiaries are described in Note 7 to the financial statements.

During the financial year, the company changed its name from Apex-Pal International Pte Ltd to Apex-PalInternational Ltd. and was admitted to the official list of Stock Exchange of Singapore Dealing and AutomatedQuotation System on August 28, 2003.

The financial statements of the group and the company for the financial year ended December 31, 2003 wereauthorised for issue by the Board of Directors on February 27, 2004.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) BASIS OF ACCOUNTING - The financial statements are prepared in accordance with the historical costconvention and are drawn up in accordance with the provisions of the Singapore Companies Act, SingaporeFinancial Reporting Standards (“FRS”) and Interpretations of Financial Reporting Standards (“INT FRS”).

The company and the group have adopted all the applicable new/revised FRS and INT FRS which becameeffective during the year. The adoption of the new/revised FRS and INT FRS does not affect the results ofthe company and the group for the current or prior periods.

b) BASIS OF CONSOLIDATION - The consolidated financial statements incorporate the financial statements ofthe company and enterprises controlled by the company (its subsidiaries) made up to 31 December eachyear. Control is achieved when the company has the power to govern the financial and operating policiesof an investee enterprise so as to obtain benefits from its activities. On acquisition, the assets and liabilitiesof the relevant subsidiaries are measured at their fair values at the date of acquisition. The interest ofminority shareholders is stated at the minority’s proportion of the fair values of the assets and liabilitiesrecognised. The results of subsidiaries acquired or disposed of during the year are included in the consolidatedprofit and loss statement from the effective date of acquisition or to the effective date of disposal, asappropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bringthe accounting policies used in line with those used by other members of the group. All significantintercompany transactions and balances between group enterprises are eliminated in full on consolidation.

In the company’s financial statements, investment in subsidiaries is carried at cost.

c) FINANCIAL ASSETS - Financial assets include cash and bank balances, trade and other receivables and amountdue from related parties. These are stated at their nominal value as reduced by appropriate allowances forestimated irrecoverable amounts.

d) FINANCIAL LIABILITIES AND EQUITY - Financial liabilities and equity instruments are classified according tothe substance of the contractual arrangements entered into. Financial liabilities include trade payables,other payables, and amount due to related parties and a shareholder. These are stated at their nominalvalues. Bank loans are recorded at the proceeds received, net of transaction costs. Finance costs are accountedfor on an accrual basis (effective yield method) and are added to the carrying amount of the instrument tothe extent that they are not settled in the period in which they arise. Equity instruments are recorded atthe proceeds received, net of direct issue costs.

NOTES TO THE FINANCIAL STATEMENTSDecember 31, 2003


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

e) SHARE OPTIONS - Share options are not recorded as an expense. Share options are recorded when exercisedby allocating the exercise price to share capital for the par value of the shares and the remaining amount iscredited to its share premium account.

f) INVENTORIES - Inventories comprising beverages and food supplies, are stated at the lower of cost (first-infirst-out method) and net realisable value. Cost includes all costs of purchase, cost of conversion and othercosts incurred in bringing the inventories to their present location and condition. Net realisable valuerepresents the estimated selling price less all estimated costs to completion and costs to be incurred inmarketing, selling and distribution.

g) PLANT AND EQUIPMENT - Plant and equipment are carried at cost, less accumulated depreciation and anyimpairment loss where the recoverable amount of the asset is estimated to be lower than its carryingamount.

Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, using thestraight-line method, on the following bases:

Restaurant equipment - 20%Renovation - 20%Furniture and fitting - 20%Computer - 100%Motor vehicles - 20%Office equipment - 20%

Fully depreciated assets still in use are retained in the balance sheet.

h) INVESTMENT PROPERTIES - Investment properties held for their investment potential and rental income arestated at cost. No depreciation is provided on investment properties. Provision for diminution in value ismade when in the opinion of the directors, there has been a decline other than temporary, in the value ofthe investment properties.

i) INTANGIBLE ASSET – Franchise costs are capitalised and amortised on a straight-line basis over the period oftheir expected benefit of 5 years.

j) IMPAIRMENT OF ASSETS - At each balance sheet date, the company reviews the carrying amounts of itstangible and intangible assets to determine whether there is any indication that those assets have sufferedan impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in orderto determine the extent of the impairment loss (if any). If the recoverable amount of an asset is estimatedto be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.Impairment losses are recognised as an expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revisedestimate of its recoverable amount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognised for the asset in prioryears. A reversal of an impairment loss is recognised as income immediately.

k) PROVISIONS - Provisions are recognised when the company has a present obligation as a result of a pastevent where it is probable that it will result in an outflow of economic benefits that can be reasonablyestimated.

l) LEASES - Rental payable under operating leases are charged to income on a straight-line basis over the termof the relevant lease.



2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)

m) REVENUE RECOGNITION – Revenue from rendering of food and beverage services are recognised at thepoint of consumption or sale.

Revenue from sales of equipment and materials to franchisee is recognised when significant risks and rewardsof ownership are transferred to the buyer and the amount of revenue and the costs of the transaction canbe measured reliably.

Revenue from franchise fees is recognised when the right to receive payment has been established.

Royalties is recognised based on certain percentages of the revenue generated by the franchisees.

n) GOVERNMENT GRANTS - Government grants relating to expenditures which are not capitalised are creditedto the profit and loss statement to match the related expenditure when incurred.

o) RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefit plans (including state-managed retirement benefit schemes) are charged as an expense when incurred.

p) INCOME TAX - Tax expense is determined on the basis of tax effect accounting, using the liability method,and it is applied to all significant temporary differences arising between the carrying amount of assets andliabilities in the financial statements and the corresponding tax bases used in the computation of taxableprofit.

Deferred tax is charged or credited to the profit and loss statement, except when it relates to items chargedor credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assetsand liabilities are offset when they relate to income taxes levied by the same tax authority.

q) FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION - Transactions in foreign currencies are recordedusing the rates ruling on the dates of the transactions. At each balance sheet date, recorded monetarybalances and balances carried at fair values that are denominated in foreign currencies are reported at therates ruling at the balance sheet date. All realised and unrealised exchange adjustment profits and lossesare dealt with in the profit and loss statement.

For inclusion in the consolidated financial statements, assets and liabilities of the foreign subsidiaries aretranslated at the rates of exchange approximating those ruling at the balance sheet date. The profit andloss statements are translated at the average rates of exchange for the year, and the opening net investmentin the foreign subsidiaries are translated at the historical rates. The resulting currency translation differencesare taken to the currency translation reserve. On disposal of a foreign subsidiary, the accumulated currencytranslation differences are recognised in the profit and loss statement as part of the profit or loss on disposal.

3 FINANCIAL RISKS AND MANAGEMENT

The group’s overall risk management programme seeks to minimise potential adverse effects on the financialperformance of the group.

i) Foreign currency risk

Foreign exchange risk arising from the change in foreign currency exchange rate has a financial effect onthe group in the current reporting period and in future years. The group has foreign exchange risk primarilydue to bank balances denominated in foreign currency, which are not hedged by any financial instruments.Foreign exchange risk is minimal as the group transacts mainly in Singapore dollar.



3 FINANCIAL RISKS AND MANAGEMENT (cont’d)

ii) Interest rate risk

Interest rate risk refers to the risk experienced by the group as a result of the fluctuation in interest rates.Interest rate risk is minimal, as the group does not have significant interest-bearing balances as at end ofthe financial year.

iii) Credit risk

Credit risk refers to the risk that debtors will default on their obligations to repay the amounts owing to thecompany, resulting in a loss to the group. The group deals mainly with customers that are of good reputationand strong financial backing and with retail customers who pay with cash and credit cards. In addition,monitoring of the payment made by the customers is done regularly and reviewed by the management.

(iv) Liquidity risk

The group is exposed to minimal liquidity risk as a substantial portion of its financial assets and financialliabilities are due within one year and it can finance its operations from existing shareholders’ funds.

(v) Fair values of financial assets and financial liabilities

The carrying amounts of financial assets and financial liabilities reported on the balance sheets approximatethe fair values of those assets and liabilities.

4 RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are consideredto be related if one party has the ability to control the other party or exercise significant influence over the otherparty in making financial and operating decision.

Some of the transactions and arrangements are with related parties and the effect of these on the basis determinedbetween the parties are reflected in these financial statements. The balance are unsecured, interest-free andwithout fixed repayment terms unless stated otherwise.

a) Due from related parties comprises:Group Company2003 2003 2002$’000 $’000 $’000

Related parties (non-trade) - - 810Related parties (trade) - - 432

- - 1,242

b) Due to related parties comprises:

Related parties (trade) - - 293Related parties (non-trade) - - 13

- - 306c) Significant transactions with related parties:

Sale of investment properties (2,524) (2,524) -Sales of food and beverages (31) (31) (331)Payments made on behalf for the related parties - - (394)Purchases of food and beverages - - 326Payments received on behalf for the related parties - - 20Purchase of plant and equipment 177 177 -



5 TRADE RECEIVABLESGroup Company2003 2003 2002$’000 $’000 $’000

Outside parties 1,160 1,160 1,159Less allowance for doubtful debts (70) (70) (68)

1,090 1,090 1,091

Movements in allowance:

Balance at beginning of year 68 68 68Utilised (11) (11) -Charge to profit and loss 13 13 -

Balance at end of year 70 70 68

6 OTHER RECEIVABLES AND PREPAYMENTSGroup Company2003 2003 2002$’000 $’000 $’000

Deposits 2,107 2,107 997Prepayments 194 179 56Other prepaid expenses - - 99Other receivables 58 58 42Total 2,359 2,344 1,194

7 INVESTMENT IN SUBSIDIARIESCompany

2003 2002$’000 $’000

Unquoted equity shares, at cost 254 -

Details of the subsidiaries of the company are described below:

Principal activities/Cost of investment Equity interest Country of incorporation

Name of subsidiaries 2003 2002 2003 2002 and operation$’000 $’000 % %

Apex-Pal Malaysia * - 100 - Operation of restaurants,Sdn Bhd # kiosks and cafes,

Malaysia

PT. Apex-Pal 254 - 100 - Operation of restaurants,International # kiosks and cafes,

Indonesia

254 -

* Amount less than $1,000# Not audited as newly incorporated during the financial year



8 PLANT AND EQUIPMENT

Restaurant Furniture Motor Officeequipment Renovation and fitting Computer vehicles equipment Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Group and Company

Cost:At beginning of year 1,755 1,163 702 504 517 55 4,696Additions 924 892 517 305 141 5 2,784Disposals - (6) (13) - - - (19)

At end of year 2,679 2,049 1,206 809 658 60 7,461

Accumulated depreciation:At beginning of year 921 329 427 395 102 32 2,206Depreciation for the year 359 285 138 223 116 9 1,130Disposals - (2) (10) - - - (12)

At end of year 1,280 612 555 618 218 41 3,324

Depreciation for last year 278 164 97 172 59 10 780

Net book value:At beginning of year 834 834 275 109 415 23 2,490

At end of year 1,399 1,437 651 191 440 19 4,137

9 INVESTMENT PROPERTIESGroup Company2003 2003 2002$’000 $’000 $’000

Freehold residential apartments under construction,at cost - - 2,126

a) During the financial year, the company entered into sale and purchase agreements to sell the 2 investmentproperties to a director and a related party for an aggregate consideration of $2,524,000 comprising thepurchase cost for the investment properties paid up by the company as at the date of the sale and purchaseagreements, stamp duties paid by the company in relation to the purchase of the investment properties,and interest and sundry expenses paid by the company.

b) In 2002, the investment properties were mortgaged to a bank to secure loan facility granted to the company(Note 13). As at December 31, 2002, the directors estimated the fair value of the investment properties tobe approximately $2,299,000 based on existing transacted market value and the directors had provided anundertaking to purchase these properties at the higher of cost or prevailing market value.



10 INTANGIBLE ASSETGroup Company2003 2003 2002$’000 $’000 $’000

Franchise costs:

At beginning and end of year 70 70 70

Accumulated amortisation:

At beginning of year 24 24 10Amortisation for the year 14 14 14

At end of year 38 38 24

Net book value:

At beginning of year 46 46 60

At end of year 32 32 46

11 OTHER PAYABLESGroup Company2003 2003 2002$’000 $’000 $’000

Accruals 973 973 589Advance from a potential joint venture partner - - 208Total 973 973 797

In 2002, the advance from a potential joint venture was non-trade in nature, unsecured, interest-free and had nofixed repayment terms. The amount was fully repaid to the potential joint venture partner during the financialyear.

12 DUE TO A SHAREHOLDER

In 2002, the amount due to a shareholder was non-trade in nature, unsecured, interest-free and without fixedrepayment term.



13 BANK LOANSGroup Company2003 2003 2002$’000 $’000 $’000

Bank loans - - 1,539Current portion - - (99)Non-current portion - - 1,440

In 2002, the 30-year bank loans were repayable in monthly instalments of $8,000. The interest rate was 0.5%below the bank’s financial rate as defined in the agreements. The bank loans were secured by a mortgage of thecompany’s investment properties (Note 9).

In 2003, these bank loans were fully repaid after the sale of the investment properties to a director and a relatedparty (Note 9).

14 DEFERRED TAXATIONGroup Company2003 2003 2002$’000 $’000 $’000

At the beginning of year 160 160 122Charge for the year (Note 20) 138 138 38At end of year 298 298 160

The balance comprises mainly the tax effect of the excess of tax depreciation over book depreciation of plantand equipment.

15 ISSUED CAPITAL

Group and Company2003 2003 2002 2003 2002’000 ’000 ’000 $’000 $’000

Number of shares Number of sharesof $0.04 each of $1.00 each

Authorised:Ordinary shares 200,000 - 300 8,000 300

Issued and fully paid:At beginning of year - 300 300 300 300

Arising during the year:Bonus issue of 3,300,000 ordinary shares

of $1.00 each - 3,300 - 3,300 -Sub-divided into ordinary shares of

$0.04 each on the basis of 25 shares forevery $1.00 share 90,000 (3,600) - - -

Issuance of 16,500,000 ordinary shares of$0.04 each at an issue price of $0.26 onInitial Public Offering 16,500 - - 660 -

At end of year 106,500 - 300 4,260 300



16 REVENUEGroup Company2003 2003 2002$’000 $’000 $’000

Food and beverage sales 33,523 33,523 20,861Service charge 2,907 2,907 1,834Franchise fees 148 148 285Royalties 44 44 60Sales of equipment to franchisees 18 18 410Sales of materials to franchisees 5 5 31

Total 36,645 36,645 23,481

17 OTHER OPERATING INCOMEGroup Company2003 2003 2002$’000 $’000 $’000

Government grants 20 20 172Interest income 3 3 4Gain on disposal of investment properties 82 82 -Others 42 42 4

Total 147 147 180

18 PROFIT FROM OPERATIONSGroup Company2003 2003 2002

Number of employees at end of year 794 794 448

Number of directors of the company in remunerationbands is as follows:

$500,000 and above - - 1$250,000 to $499,999 1 1 -Below $250,000 4 4 1

Total 5 5 2

Group Company2003 2003 2002$’000 $’000 $’000

Depreciation 1,130 1,130 780Directors’ remuneration 691 691 728Directors’ fees 13 13 -Cost of defined contribution retirement plans included in staff costs 925 925 550Remuneration paid to immediate family of the chief executive officer 361 361 418Auditors’ remuneration 36 36 15Amortisation of intangible asset (1) 14 14 14Foreign currency exchange adjustment loss 1 1 5Non audit fees paid to auditors - - 2

(1) This item is included under other operating expenses.



19 FINANCE COSTGroup Company2003 2003 2002$’000 $’000 $’000

Interest expense on bank loans 47 47 28Others 1 1 2

48 48 30

20 INCOME TAX EXPENSEGroup Company2003 2003 2002$’000 $’000 $’000

Current 492 492 697Deferred (Note 14) 138 138 38

Total 630 630 735

The income tax expense varied from the amount of income tax expense determined by applying the Singaporeincome tax rate of 22% to profit before income tax as a result of the following differences:

Group Company2003 2003 2002$’000 $’000 $’000

Income tax expense at statutory rate 589 589 727Tax rebates (12) (12) (12)Non-allowable items 53 53 20

630 630 735

21 EARNINGS PER SHAREGroup Company2003 2002

Profit after income tax ($’000) 2,049 2,570

Number of ordinary shares used to compute earnings per share [shares (’000)] - Weighted average shares 95,651 - - Pre-invitation share capital - 90,000

Earning per share (cents) 2.14 2.86

There is no dilution of earnings per share as no share options were granted.



22 DIVIDENDS

During the financial year, the company declared and paid a final dividend of $5.00 per ordinary share less tax onthe 300,000 ordinary shares of the company each with a par value of $1.00 totalling $1,500,000 in respect of thefinancial year ended December 31, 2002.

Subsequent to December 31, 2003, the directors of the company recommended that a final dividend be paid at$0.01 per ordinary share less tax for the financial year just ended on the ordinary shares of the company. Theproposed dividends are not accrued as a liability for the current financial year in accordance with FRS 10 – EventsAfter The Balance Sheet Date.

23 CAPITAL EXPENDITURE COMMITMENTSGroup Company2003 2003 2002$’000 $’000 $’000

Capital commitments for purchase of freehold residential apartments - - 364

24 OPERATING LEASE COMMITMENTS

At the balance sheet dates, the commitments in respect of operating leases with a term of more than one yearwere as follows:

Group Company2003 2003 2002$’000 $’000 $’000

Within one year 5,580 5,580 3,030In the second and fifth years inclusive 7,065 7,065 3,211

25 SEGMENT INFORMATION

A segment is a distinguishable component of the group within a particular economic environment (geographicalsegment) and a particular industry (business segment) which is subject to risks and rewards that are differentfrom those of other segments.

Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include itemsdirectly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated itemsmainly comprise corporate assets and liabilities.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that areexpected to be used for more than one period.

Primary segment information is presented based on the group’s business segments. The primary segment bybusiness segments is based on the group’s management and internal reporting structure. In presenting informationon the basis of business segments, segment revenue and segment assets are based on the nature of the productsprovided by the group.



25 SEGMENT INFORMATION (cont’d)

Business segments

The group mainly operates in the following business segments:

(a) Food and Beverages Business (“F&B Business”). The group operates restaurants, kiosks and cafes. The groupalso operates clubhouses and food processing facility, and acts as a trader and caterer of foodstuff.

(b) Food and Beverages Franchising (“F&B Franchising”). The group acts as a franchiser for the brand ‘SakaeSushi’ and ‘Crepes & Cream’. The group also sells equipments and materials to the franchisees.

F&B Business F&B Franchising Total$’000 $’000 $’000

Group

Year ended December 31, 2003

Revenue:Sales 36,430 215 36,645

Results:Segment results 2,596 128 2,724Finance cost (48)Interest income 3

Profit before income tax 2,679Income tax expense (630)

Net profit for the year 2,049

Assets:Segment assets 14,160 286 14,446Unallocated corporate assets 19

Total assets 14,465

Liabilities:Segment liabilities 4,282 7 4,289Unallocated corporate liabilities 752

Total liabilities 5,041

Other information:Capital expenditure 2,784 - 2,784Depreciation 1,130 - 1,130Amortisation of intangible asset - 14 14



25 SEGMENT INFORMATION (cont’d)

F&B Business F&B Franchising Total$’000 $’000 $’000

Company

Year ended December 31, 2002

Revenue:Sales 22,695 786 23,481

Results:Segment results 2,772 559 3,331Finance cost (30)Interest income 4

Profit before income tax 3,305Income tax expense (735)

Net profit for the year 2,570

Assets:Segment assets 8,343 343 8,686Unallocated corporate assets 2,347

Total assets 11,033

Liabilities:Segment liabilities 2,649 - 2,649Unallocated corporate liabilities 2,913

Total liabilities 5,562

Other information:Capital expenditure 1,666 - 1,666Depreciation 780 - 780Amortisation of intangible asset - 14 14

Geographical segment

The group’s principal market is in Singapore. Therefore geographical segment information is not presented.



STATEMENT OF DIRECTORS

In the opinion of the directors, the financial statements of the company and consolidated financial statements of thegroup set out on pages 34 to 50 are drawn up so as to give a true and fair view of the state of affairs of the companyand of the group as at December 31, 2003 and of the results of the group and equity changes of the company and thegroup and cash flows of the group for the financial year then ended and at the date of this statement there arereasonable grounds to believe that the company will be able to pay its debts as and when they fall due.

ON BEHALF OF THE DIRECTORS

Douglas Foo Peow Yong

Foo Lilian

February 27, 2004


STATISTICS OF SHAREHOLDINGSas at 11 March 2004

Authorised share capital : S$8,000,000Issued and fully paid-up capital : S$4,260,000Number of shares : 106,500,000Class of shares : Ordinary shares of S$0.04 eachVoting rights : One vote per share

DISTRIBUTION OF SHAREHOLDINGS

No. ofSize of Holdings Shareholders % No. of Shares %

1 - 999 1 0.23 300 0.001,000 - 10,000 268 60.77 1,403,000 1.32

10,001 - 1,000,000 168 38.09 10,481,000 9.841,000,001 and above 4 0.91 94,615,700 88.84

TOTAL 441 100.00 106,500,000 100.00

TWENTY LARGEST SHAREHOLDERS

No. Name No. of Shares %

1 Douglas Foo Peow Yong 89,999,700 84.512 Tjiong Boen Ngiap @ Bushar Tomi 2,000,000 1.883 Fraser Securities Pte Ltd 1,340,000 1.264 Phillip Securities Pte Ltd 1,276,000 1.205 G K Goh Stockbrokers Pte Ltd 685,000 0.646 Kim Eng Securities Pte. Ltd. 617,000 0.587 Lim & Tan Securities Pte Ltd 583,000 0.558 Citibank Nominees Singapore Pte Ltd 459,000 0.439 Ng Chwee Cheng 398,000 0.37

10 Hong Leong Finance Nominees Pte Ltd 312,000 0.2911 Chia Thian Hee Hilary 300,000 0.2812 Lee Oon Hoo 300,000 0.2813 Thamma Pinsukhanchana 280,000 0.2614 Ng Seng Choo 200,000 0.1915 Goh Cheng Chua Silvester 150,000 0.1416 DBS Nominees Pte Ltd 145,000 0.1417 United Overseas Bank Nominees Pte Ltd 119,000 0.1118 Mak Ho Yin Horace 108,000 0.1019 ABN Amro Nominees Singapore Pte Ltd 100,000 0.0920 Fan Hua 100,000 0.09

TOTAL 99,471,700 93.39

SUBSTANTIAL SHAREHOLDERS

Substantial shareholders of the Company (as recorded in the Register of Substantial Shareholders) as at 11 March 2004

No. of ordinary shares of S$0.04 each

Name Direct Interest % Indirect Interest %

Douglas Foo Peow Yong 89,999,700 84.5 - -

FREE FLOAT

As at 11 March 2004, approximately 15.5% of the issued share capital of the Company was held in the hands of thepublic (on the basis of information available to the Company).

Accordingly, the Company has compiled with Rule 723 of the Listing Manual of the Singapore Exchange SecuritiesTrading Limited.


NOTICE IS HEREBY GIVEN that the Annual General Meeting of Apex-Pal International Ltd. (the "Company") will beheld at 25 International Business Park Level 5 German Centre Singapore 609916, on Wednesday, 21 April 2004 at 3.00p.m. for the following purposes:

Ordinary Business

1. To receive and adopt the Directors' Report and Audited Accounts of the Company for the year ended 31 December2003 together with the Auditors' Report thereon.

(Resolution 1)

2. To declare a first and final dividend of 1 cent per share less income tax for the year ended 31 December 2003.(Resolution 2)

3. To re-elect the following Directors retiring pursuant to Articles 92 and 97 of the Company's Articles of Association:

Mr Douglas Foo Peow Yong [Article 92] (Resolution 3)Mr Lim Chee Yong [Article 97] (Resolution 4)Mr Ng San Tiong [Article 97] (Resolution 5)Mr Andy Ong Siew Kwee [Article 97] (Resolution 6)

Mr Lim Chee Yong and Mr Ng San Tiong will, upon re-election as Directors of the Company, remain as membersof the Audit Committee and will be considered independent for the purposes of Rule 704(8) of the Listing Manualof the Singapore Exchange Securities Trading Limited.

Mr Andy Ong Siew Kwee will, upon re-election as a Director of the Company, remain as a member of the AuditCommittee and will be considered non-independent for the purposes of Rule 704(8) of the Listing Manual of theSingapore Exchange Securities Trading Limited.

4. To approve the payment of Directors' fees of S$13,000 for the year ended 31 December 2003.(Resolution 7)

5. To re-appoint Messrs Deloitte & Touche as the Company's Auditors and to authorise the Directors to fix theirremuneration.

(Resolution 8)

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

Special Business

To consider and, if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without anymodifications:

7. Authority to allot and issue shares up to fifty per cent. (50%) of issued capital

"That, pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806(2) of the Listing Manual of theSingapore Exchange Securities Trading Limited (the "Listing Manual"), authority be and is hereby given to theDirectors to:-

(a) allot and issue shares in the Company; and

(b) issue convertible securities and any shares in the Company pursuant to convertible securities

NOTICE OF ANNUAL GENERAL MEETING



(whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and for suchpurposes and to such persons as the Directors shall in their absolute discretion deem fit, provided that the aggregatenumber of shares (including any shares to be issued pursuant to the convertible securities) in the Company to beissued pursuant to such authority shall not exceed fifty per cent. (50%) of the issued share capital of the Companyfor the time being and that the aggregate number of shares in the Company to be issued other than on a pro-rata basis to the then existing shareholders of the Company shall not exceed twenty per cent. (20%) of the issuedshare capital of the Company for the time being. Unless revoked or varied by the Company in general meeting,such authority shall continue in full force until the conclusion of the next Annual General Meeting of the Companyor the date by which the next Annual General Meeting is required by law to be held, whichever is earlier, exceptthat the Directors shall be authorised to allot and issue new shares pursuant to the convertible securitiesnotwithstanding that such authority has ceased.

For the purposes of this Resolution and Rule 806(3) of the Listing Manual, the percentage of issued share capitalis based on the issued share capital of the Company at the time this Resolution is passed after adjusting for:-

(i) new shares arising from the conversion or exercise of convertible securities;

(ii) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at thetime of the passing of this Resolution, provided the options or awards were granted in compliance with therules of the Listing Manual; and

(iii) any subsequent consolidation or subdivision of shares." [See Explanatory Note (i)] (Resolution 9)

8. Authority to grant options and issue shares under the Apex-Pal Employee Share Option Scheme

"That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors of the Company be and are herebyauthorised to offer and grant options in accordance with the Apex-Pal Employee Share Option Scheme (the"Scheme") and to issue such shares as may be required to be issued pursuant to the exercise of the optionsgranted under the Scheme provided always that the aggregate number of shares to be issued pursuant to theScheme shall not exceed fifteen per centum (15%) of the issued share capital of the Company from time totime." [See Explanatory Note (ii)]

(Resolution 10)

By Order of the Board

Phyllis Phua Lee BoonCompany Secretary

Singapore, 5 April 2004


Explanatory Notes:

(i) The Ordinary Resolution 9 proposed in item 7 above, if passed, will empower the Directors from the date of theabove Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertiblesecurities in the Company. The aggregate number of shares (including any shares issued pursuant to theconvertible securities) which the Directors may allot and issue under this Resolution will not exceed fifty percent. (50%) of the issued share capital (as defined in Resolution 9) of the Company. For issues of shares otherthan on a pro rata basis to all shareholders, the aggregate number of shares to be issued shall not exceedtwenty per cent. (20%) of the issued share capital (as defined in Resolution 9) of the Company. This authoritywill, unless previously revoked or varied at a general meeting, expire at the next Annual General Meeting ofthe Company or the date by which the next Annual General Meeting of the Company is required by law to beheld, whichever is the earlier. However, notwithstanding the cessation of this authority, the Directors areempowered to issue shares pursuant to any convertible securities issued under this authority.

(ii) The Ordinary Resolution 10 proposed in item 8 above, if passed, will empower the Directors of the Company, togrant options and to allot and issue shares upon the exercise of such options in accordance with the Apex-PalEmployee Share Option Scheme.

Notes:

1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote insteadof him. A proxy need not be a member of the Company.

2. If the appointor is a corporation, the proxy must be executed under seal or the hand of its duly authorisedofficer or attorney.

3. The instrument appointing a proxy must be deposited at the registered office of the Company at 1 Raffles Place#49-00 OUB Centre, Singapore 048616 not less than forty-eight hours (48) before the time for holding theMeeting.


56 Apex-Pal International Ltd Annual Report 2003

This page has been intentionally left blank.

APEX-PAL INTERNATIONAL LTD.(Incorporated in the Republic of Singapore)

PROXY FORM

I/We _________________________________________________________________________________________________ (Name)

of __________________________________________________________________________________________________ (Address)

being a member/members of Apex-Pal International Ltd. (the "Company") hereby appoint:

NRIC/Passport Proportion ofName Address Number Shareholdings (%)

and/or (delete as appropriate)

NRIC/Passport Proportion ofName Address Number Shareholdings (%)

as my/our proxy/proxies to vote for me/us on my/our behalf, at the Annual General Meeting of the Company (the"Meeting") to be held at 25 International Business Park Level 5 German Centre Singapore 609916 , on Wednesday, 21April 2004, at 3.00 p.m. and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against theResolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to voting is given, theproxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any matter arising at theMeeting.

No. Resolutions Relating to: For Against

1. Directors' Report and Accounts for the year ended 31 December 2003

2. Payment of proposed first and final dividend

3. Re-election of Mr Douglas Foo Peow Yong

4. Re-election of Mr Lim Chee Yong

5. Re-election of Mr Ng San Tiong

6. Re-election of Mr Andy Ong Siew Kwee

7. Approval of Directors' fees

8. Re-appointment of Messrs Deloitte & Touche as Auditors

9. Authority to issue and allot shares pursuant to Section 161 of the Companies Act,Cap. 50

10. Authority to grant options and issue shares under the Apex-Pal Employee ShareOption Scheme

Dated this ____________ day of ____________________ 2004.Total No. of Shares No. of Shares

In CDP Register

In Register of Members

Signature(s) of Member(s)or, Common Seal of Corporate Member

IMPORTANT: PLEASE READ NOTES OVERLEAF

�

NOTES

1. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend andvote in his stead.

2. Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies theproportion of his holding (expressed as a percentage of the whole) to be represented by each proxy.

3. A proxy need not be a member of the Company.

4. A member should insert the total number of shares held. If the member has shares entered against his name inthe Depository Register (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), he shouldinsert that number of shares. If the member has shares registered in his name in the Register of Members of theCompany, he should insert that number of shares. If the member has shares entered against his name in theDepository Register and registered in his name in the Register of Members, he should insert the aggregatenumber of shares. If no number is inserted, this form of proxy will be deemed to relate to all shares held by themember.

5. The instrument appointing a proxy or proxies must be deposited at the Company's registered office at 1 RafflesPlace #49-00 OUB Centre, Singapore 048616, not less than 48 hours before the time set for the Meeting.

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

7. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter orpower of attorney or a duly certified copy thereof must (failing previous registration with the Company) belodged with the instrument of proxy, failing which the instrument may be treated as invalid.

GENERAL:

The Company shall be entitled to reject a proxy form which is incomplete, improperly completed, illegible or wherethe true intentions of the appointor are not ascertainable from the instructions of the appointor specified on theproxy form. In addition, in the case of shares entered in the Depository Register, the Company may reject a proxy formif the member, being the appointor, is not shown to have shares entered against his name in the Depository Registeras at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limitedto the Company.

ourrecipes for growth · planning and business development of our company. in 1992, he pursued his...

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