The Art of Beauty

Novena Holdings LimitedANNUAL REPORT 2008

This document has been prepared by the Company and its contents have been reviewed by the Company’s Sponsor, CIMB-GK Securities Pte Ltd (“Sponsor”) for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the “SGX-ST”). The Sponsor has not independently verified the contents of this document.

This document has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this document including the correctness of any of the statements or opinions made or reports contained in this document.

The contact person for the Sponsor is Mr Benjamin Choy, Senior Vice President, Corporate Finance, CIMB-GK Securities Pte Ltd, 50, Raffles Place, #19-00 Singapore Land Tower, Singapore 048623, Telephone: (65) 6225-1228

Contents

1 About Novena2 Corporate Structure3 Our Philosophy4 Corporate Information5 CEO’s Message

6 Board of Directors7 Key Management8 Financial Highlights9 Investments10 FMCG Distribution

12 Shine @ Spring 15 Training16 Community Development 200818 Achievements20 Financial Contents

About Novena

Novena Holdings Limited is an integrated beauty and wellness provider who takes care of consumers’ concerns from head to toe, offering choices through a diverse range of products and services.

Our core business is in the Fast-Moving Consumers Goods (FMCG) distribution, retail of products and services.

Community development and charity efforts continue to be our key priorities in the realisation of our values.

VisionThe strong belief in branding

is behind Novena’s vision to be the leading consumer lifestyle group in providing products

and services of superior quality and value to improve consumer lifestyles, and in contributing to

the community development.

MissionContinuous upgrading to offer the best experience, products

and services of superior quality and value to our consumers.

ValuesWe are creative, sincere and we care.

01

02

Corporate Structure

NOVENA HOLDINGS LIMITED

100%

80%

100%

Chuan Seng Leong Pte Ltd

Novena Strategic Investments Pte Ltd

100%

75%

100%

NiClas International Pte Ltd

Novena Investment Pte Ltd

Suzhou Novena Furniture Co. Ltd (China)

Shine @ Spring Pte Ltd (Formerly known as Beaute Spring Pte Ltd)

B.S.P. Global Pte Ltd

100%

100%

Fasta International Pte Ltd

03

Novena’s growth and healthy prospects are represented by the curves that point upward and forward, depicting the Group’s push forward and its efforts to scale greater heights of success.

The ripple effect of the curves represents Novena’s extending reach. While the Group continues on its growth path in the region, it will also endeavour to achieve global status.

As we strive for excellence in our day-to-day operations, we understand that our success is driven by our creativity, sincerity and care for our people and the community. At the core of these achievements is the understanding and need for compassion, represented in each stroke that forms the image of a heart in our logo.

Our Philosophy

Corporate Information

04

BOARD OF DIRECTORSToh Soon Huat Acting Chairman and CEO

Chong Hon Kuan Ivan Independent Director

Tay Beng Chuan Independent Director

Wong Meng Yeng Independent Director

Lien Kait Long Non-Executive Director

Li Ling Xiu Non-Executive Director

Chow Hock Meng Alternate Director to Li Ling Xiu

AUDIT COMMITTEEWong Meng Yeng Chairman

Tay Beng Chuan

Chong Hon Kuan Ivan

NOMINATING COMMITTEEChong Hon Kuan Ivan Chairman

Tay Beng Chuan

Wong Meng Yeng

REMUNERATION COMMITTEETay Beng Chuan Chairman

Wong Meng Yeng

Chong Hon Kuan Ivan

COMPANY SECRETARYLow Mei Mei Maureen

REGISTERED OFFICENovena Holdings Limited521 Bukit Batok St 23, Level 3, Singapore 659544Tel: (65) 6899 0900 Fax: (65) 6899 0010Email : admin@novenaholdings.comWebsite:www.novenaholdings.com

SHARE REGISTRAR AND SHARE TRANSFER OFFICEM&C Services Private Limited

138 Robinson Road #17-00

The Corporate Office,

Singapore 068906

AUDITORErnst & Young LLPCertified Public Accountant1 Raffles Quay North Tower Level 18Singapore 048583

PARTNER-IN-CHARGEHo Shyan Yan (With effect from financial year ended 31 December 2008)

COMPANY’S SPONSORCIMB-GK Securities Pte. Ltd. 50 Raffles Place #19-00Singapore Land TowerSingapore 048623Telephone: (65) 6225 1228Contact Person: Benjamin Choy

BANKERSUnited Overseas Bank LimitedDBS Bank LtdOversea-Chinese Banking Corporation LimitedStandard Chartered BankMalayan Banking Berhad RHB Bank Berhad

CEO’s Message

Dear Shareholders,

On behalf of the Board, I am pleased to present the Group’s Annual Report for the financial year ended 31 December 2008.

FY 2008 has been a difficult year with the fallout from the global financial crisis which has a tremendous impact on the global economy as a whole. The Group’s turnover for the year ended 31 December 2008 decreased by 30.4% from S$54.2 million to S$37.8 million in current year. The decrease in gross profit margin is partly due to the significant decline in dividend income received during the year.

The Group recorded a loss before tax of S$ 45.1 million as compared to the prior year where the Group recorded a profit before tax of S$48.3 million. The profit

key priorities in the realization of the core value of giving and caring for the less fortunate. Of the many efforts, the major event which Novena Group co-organised, “Sichuan Earthquake Charity Show” telecast on 25 May 2008, raised a total of S$10,249,954 from the public. This fund is being used to build schools and to provide education assistance. In total, 7 primary and secondary schools were constructed which indirectly will benefit about 10,000 children every year. During the year, the Group contributed about S$175,500 in cash and in kind to various charity events and organizations. It is hoped that through our giving, we do our part to encourage a spirit of giving and to greater corporate social responsibility and all the more so in these economically and financially challenging times.

On behalf of the Board of Directors, I would like to express our gratitude for the dedication, hard work and contribution of each and every staff member. I would also like to express my heartfelt gratitude to all our loyal customers in supporting our brands and products in both the beauty and Fast Moving Consumer Goods divisions. Last but not least, my sincere thanks to all our business associates, the Board of Directors and our shareholders for their commitment and support which they have rendered. We look forward to your continuous and valuable support in the year ahead.

Thank you for your continuous support.

Toh Soon Huat (PBM)Acting Chairman / CEO

in FY 2007 was mainly due to a “one off” capital gain of about S$15 million from the sale of property, a “one off” capital gain from the divestment of the furniture business amounting to about S$25 million and dividend income of S$12 million from investment in quoted shares. The current year loss was mainly attributed to non-cash charges of S$44.9 million from the impairment charge on the quoted equity investments and S$0.45 million of impairment loss of property owned by one of the subsidiaries. However, it was mitigated by a “one off” gain of about S$5.2 million for land compensation from an overseas subsidiary. During the current year, shareholders exercised 117,563,297 warrants for conversion into ordinary shares, resulting in an increase in share capital from S$35.2 million to S$44.6 million. However, an amount of S$10.5 million was paid as dividend during the year, resulting in reduction in cash and bank balances.

In our ongoing process in building the beauty business, the Group remains committed to strengthening our products branding and concepts, widening our range of beauty products and sourcing for products of the highest quality to broaden our customer appeal. The Group will also continue to grow its distribution business by looking for new agencies to represent and new brands to distribute. Notwithstanding the poor global economic conditions, we remain cautious in our investments and continue to explore new business opportunities to enhance the value to our shareholders.

Corporate social responsibility has not been neglected either especially in a year remembered for the many natural disasters that occurred around the world. Community development and charity efforts continue to be one of the Group’s

05

Board of Directors

06

Toh Soon HuatActing Chairman and CEO

Toh Soon Huat is the Acting Chairman and Chief Executive Officer. His responsibilities include the management of the Group’s overall business, particularly in the areas of business investments, business developments and expansion. He possesses more than 20 years of experience in business development, especially in the area of retail and branding.

Wong Meng YengIndependent Director

Wong Meng Yeng was appointed as our Independent Director on 4 December 2000. He graduated from the National University of Singapore in 1983 with a Bachelor of Laws (Honours) degree. He has been an advocate and solicitor in Singapore for 25 years of which the last 19 years were spent as a corporate lawyer. He is currently a director of Alliance LLC, a law corporation he cofounded and an independent director of several companies listed on the Singapore Exchange.

Tay Beng ChuanIndependent Director

Tay Beng Chuan was appointed as our Independent Director on 4 December 2000. He was also appointed as an Independent Director of United Envirotech Ltd with effect 1 October 2008. He was a Nominated Member of Parliament from 1 October 1997 till dissolution of Parliament on 18 October 2001. He is a Member of the Singapore Parliamentary Society. A Board Member of the Traditional Chinese Medicine Practitioners Board since April 2005, he is now the Board’s Chairman effective 7 February 2007. He was the President of The Singapore Chinese Chamber of Commerce and Industry from March 1997 till March 2001 and is currently the Honorary President of the said Chamber. He is the Chairman of Premium Funding Singapore Pte Ltd, which is an insurance premium funding and licenced money-lending company. He is also the Managing Director of Winnow Investments Pte Ltd, Ocean Navigation Pte Ltd and Alor Star Shipping Pte Ltd. These companies are involved in general trading and investments, ship chartering and shipping related activities. He holds a Diploma of Commerce from the Gordon Technical Institution in Geelong, Victoria, Australia.

Chong Hon Kuan IvanIndependent Director

Chong Hon Kuan Ivan was appointed as our Non-Executive Director on 4 December 2000. On 1 June 2007, he became our Independent Director. He is currently a member of the Executive

Committee of the Consumers Association of Singapore (CASE) and chairs the Business Practice Committee and concurrently, the advisor to the Advertising Standards Authority of Singapore (ASAS), the treasurer of CSR Singapore Compact, and has been conferred “Friend of Labour” Award by National Trade Union Congress. In the past, he had served as President of the Association of Accredited Advertising Agents and Chairman of ASAS. On 5 June 2008, he was appointed as a Non-Executive Director and has subsequently been appointed as Executive Director of Rockeby Biomed Ltd, an Australian listed, Singapore based biotechnology company, with effect from 16 February 2009.

Lien Kait LongNon-Executive Director

Lien Kait Long was appointed as Non-Executive Director to the Board in May 2008. He has extensive experience in accounting and finance, corporate management and business investments. He is currently serving as an Independent Director on the boards of several Singapore and Chinese companies listed on the Singapore Exchange. The listed companies that he has present and prior experience in, are from diverse industries including manufacturing, telecommunications, oil and gas, textiles as well as food and beverage. Apart from being an Independent Director, he also holds a number of senior management positions as well as executive directorships in various public and private corporations in Singapore, Hong Kong and China. Mr Lien holds a Bachelor’s degree in Commerce from Nanyang University, and is a fellow of the Institute of Certified Public Accountants of Singapore and of CPA Australia.

Li Ling XiuNon-Executive Director

Li Ling Xiu was appointed as Non-Executive Director to the Board in April 2008. She is also currently serving as Non-Executive Director to Centillion Environment & Recycling Limited, a company listed on the Singapore Exchange. In addition, she also holds a number of directorships in various private corporations in Australia, Hong Kong and China. She is currently holding the position as Chief Executive Officer in Chip Lian Investments (HK) Limited since Apr 2001.

Chow Hock MengAlternate Director to Li Ling Xiu

Chow Hock Meng is an alternate director to Miss Li Ling Xiu in Novena Holdings Limited and Centillion Environment & Recycling Limited. He is the General Manager of Oei Hong Leong Foundation Pte Ltd and has about 25 years of experience in corporate finance and investments. He holds a degree in Banking and Finance from Monash University.

from top to bottom, left to right

Lee Lai ChuanLee Lai Chuan is our Executive Director for the Fast-Moving Consumers’ Goods (FMCG) distribution division. He founded Chuan Seng Leong Pte Ltd in 1976 and has been actively involved in the management of the business. He was appointed as Executive Director of Chuan Seng Leong after the acquisition by Novena in 2005. Mr Lee’s responsibilities include the management of the overall operations, particularly in the areas of strategic sourcing, business planning and development. He possesses more than 30 years of business experience in the FMCG industry, particularly in the areas of merchandise sourcing and trading.

Chan Lay May KathyChan Lay May Kathy is our Managing Director for the beauty division. She joined the Group in May 1994 as a Project Manager cum Personal Assistant to the CEO to undertake business expansion projects and administrative operations. Prior to joining the Group, she was with Richard Ellis Property Consultant Pte Ltd as a Licensed Property Valuer & Marketing Executive for 3 years. She was promoted to Director Corporate Planning in September 2002 and Managing Director for the beauty division in January 2006. She is currently responsible for the branding, product development, merchandise sourcing, and overseeing the operations of the beauty division. She obtained her Bachelor of Business from Curtin University of Western Australia and Master of Business Administration from American University of Hawaii.

Yeo Ngen Huay SerineYeo Ngen Huay Serine is our Group Financial Controller. She joined the Group in July 2008. She is responsible for the overall financial management for the Group. Prior to joining the Group, she was with Uniseal Waterproofing Pte Ltd as an Assistant General Manager. She has acquired vast amount of

working experience working as Finance Manager with various private and public corporations. She obtained her Bachelor of Commerce (Major in Accounting & Finance) from The University of Southern Queensland of Australia and Diploma in Computer Studies from The National Centre For Information Technology of United Kingdom. She is also an Associate Member of CPA, Australia.

Ang Song LenAng Song Len is our Assistant General Manager for the FMCG distribution division. He joined the Group in August 2006 as the Business Development Manager. He was responsible for all aspects of business development, including sales strategy and new business expansion. He was promoted to Assistant General Manager in 2007 and he is currently responsible for all aspects of sales operations, including sales strategy, new business development and other operational strategies. Prior to joining us, he was with Colgate-Palmolive (Eastern) Pte Ltd as Business Account Manager for 31 years.

Chong Siew Lan SheilaChong Siew Lan Sheila is our Human Resource (HR) / Training & Development Manager. She joined the beauty division in May 2004 as a Marketing & Training Manager and was promoted to her current position June 2007. She is responsible for all Human Resource functions and management of intra-department manpower matters. She is also involved in strategic training and development planning to facilitate the human capital management efforts of the organization. She obtained her Bachelor of Engineering Degree (Mechanical Engineering) from Nanyang Technological University and Graduate Diploma in Training & Development from the Singapore Human Resources Institute (SHRI). She is also a certified therapist with I.T.E.C (UK) (International Therapy Examination Council).

Key Management

07

Financial Highlights for the year ended 31 dec 2008

# excludes furniture division.* in relations to right issue made during the year

08

2004S$ ‘000

2005S$ ‘000

2006#

S$ ‘0002007#

S$ ‘0002008

S$ ‘000

(restated)

Turnover 61,546 70,033 40,195 54,270 37,761

Profit/(loss) before tax (1,330) 2,131 81 48,271 (45,189)

Profit/(loss) after tax (1,397) 1,847 (76) 46,101 (46,006)

Total assets 44,080 46,214 57,224 71,689 41,613

Share capital and reserves 20,509 22,504 26,092 60,452 33,008

Net assets value per share 0.19 0.20 0.24 0.20 0.08

Earning per share (1.15) cents 1.56 cents (0.02) cents 16.80 cents (12.26) cents

Gross dividend per share - 1 cent 1 cent 0.5 cents -

Special gross dividend per share - - - 2.0 cents -

Special rights issue gross dividend per share - - - 5.1 cents* -

Investments

In year 2008, the Group has received a total gross dividend of S$ 210,664 and as at the date of this report, the Group has substantial shareholdings in the following listed companies:

1 TT International Limited (14.30%)2 Tung Lok Restaurants 2000 Limited (14.29%)3 United Envirotech Limited (13.44%)4 Old Chang Kee Limited (11.03%)5 Nico Steel Holdings Limited ( 8.86%)

The Group’s approach is to manage investment returns and equity price risk using a mix of investment-grade shares with

steady and superior returns and non-investment grade shares

with higher volatility. The Group believes investments would offer opportunities

for the Group to grow. Henceforth, moving forward,

the Group will still continue to invest in companies that have potential growth. In view of the current economic crisis,

the Group will be even more prudent prior committing to

any investment.

09

FMCG Distribution

10

A leading distributor in the supply of Fast-Moving Consumers Goods (FMCG) household and personal care essentials, Chuan Seng Leong Pte Ltd began its humble beginnings in 1976.

Brands distributed by CSL include:

11

In 2005, amidst growing competition and the need to achieve a stronger fi nancial strength, Novena Holdings Ltd successfully acquired the privately owned decade-old family business and began to expand its business operations. The company has grown rapidly over the years and established a network of over 1,200 distributions accounts in Singapore, on top of exports business to neighbouring countries.

Today, its distribution network is growing island-wide, spanning supermarkets, hypermarts, pharmacies, mini-marts, provision shops, convenience stores and petrol kiosks.

Over the years, CSL has secured a portfolio of household brandnames under its distribution rights in Singapore.

CSL is continuously upgrading and expanding its range of consumer essential merchandises and services, so that it can continue to provide the best products and value to all consumers.

Shine @ Spring

Personal Care

Accessories

Exclusive brands

Skin Care,Professional Colours

Professional Skin Care Professional Skin Care, Hair Care

Skin Care, Body Care, Accessories

by

Body Care

by

Health Food

Professional Hair Care Skin Care, Body Care Skin Care, Hair Care

Professional Skin CareSkin Care Skin Care

Make-up colours

12

Shine @ Spring Pte Ltd, formerly known as Beaute Spring Pte Ltd, was renamed in December 2008 for the purpose of consolidation and re-branding the business activities at Beaute Spring Pte Ltd and BSP Global Pte Ltd under one roof. After consolidation, Shine @ Spring business activities comprise of beauty care products retail by Beaute Spring and Kitoko Kalani, and beauty treatment services by Beaute Spring Professional face and body.

Our R&D (research & development) efforts by NiClas International Pte Ltd is committed to source the highest quality products at the best value possible. The development of beauty care products includes skin care, hair care, body care, make-up, accessories and health care supplements. Holding exclusive distribution rights of brands from France, Japan, Korea, Switzerland and Taiwan, NiClas is constantly seeking for new and latest technology in beauty and health care products to provide greater selection to the consumers. Brands distributed by NiClas include Biologie Pierre Boutigny, Dale & Eke, Just@100, Kitoko Kalani, Mugens, mik@vonk, Nozomi, O’ulla, PLUS, Putom, TSAIO and retail in Beaute Spring and Kitoko Kalani chain stores.

Beaute Spring Retail ChainBeaute Spring with a retail network of 5 stores strategically located at the major neighbourhood providing a wide variety of quality and great value beauty and health care products. The chain retails more than 200 brands of skin care, hair care, body care, fragrance, make-up, accessories and health care products from a wide range of brand profi les, including exclusive international brands and popular mass brands.

Locations:Ang Mo Kio Block 705 Ang Mo Kio Avenue 8, #01-2575 Tel: 65526883

Bedok Central Block 208 New Upper Changi Road #01-671 Tel: 6444 4544

Bugis Village 247 Victoria Street #01-247 Tel: 6333 0535

Toa Payoh Block 183 Toa Payoh Central #01-272 Tel: 6251 5535

West Mall 1 Bukit Batok Central Link #02-20 Tel: 6862 2004

Operating Hours: 10am - 10pm

13

SkincareHaircare

Bodycare

accessories

Fragrance

Makeup Color

14

Kitoko Kalani Retail ChainKitoko Kalani is a new concept beauty care store dedicated to deliver quality and effective beauty care solutions based on the benefi ts of the botanical treasures. The fi rst fl agship store has been set up at the end of 2008, targeting to reach out to consumers of all age groups. Solutions for hair, face and body extending to beautify with the professional make up range, Kitoko Kalani goes around the world to bring you the best in beauty care products.

BSP Face & Body Beaute Spring Professional Face & Body is a one-stop beauty care center for face & body care excellence, where we pilot new & effective treatments with strict safety and quality standards to deliver total wellness in a tranquil setting.

Consolidate in one fl agship salon, we offer comprehensive range of beauty services by a team of trained professional therapists and consultants, using the state-of-art technology such as the ENERGIST ULTRA Variable Pulsed Light VPL system from the United Kingdom and advanced bio-tech professional France products from Biologie Pierre Boutigny to perform treatments in the following main categories:

VPL Skin Rejuvenation VPL Hair Removal Face Enhancement Body Enhancement Hand and Foot Care Body Massage

Variable Pulsed Light is a non-laser, emitting light across a range of wavelengths that are preferentially absorbed by the skin. These variable pulses ensure more controlled absorption whilst minimising heating of the surrounding skin. This means that a greater range of hair and skin types can be safely and effectively treated than was possible with other pulsed light technology. The ENERGIST ULTRA is built to the highest international quality standards and it has proven to be highly effective for:

Location: Jurong Point, 63 Jurong West Central 3, #01-06 Jurong Point Shopping Mall

Operating Hours: 10am - 10pmTelephone No: 6794 2239

Permanent hair reduction Skin rejuvenation; improving the signs of ageing and sun damage to the skin Thread vein and other red blemish treatments Acne management

Location: Bugis Village, 247 Victoria Street #02-00Operating Hours: Mon - Fri: 12pm to 9pm Sat, Sun & PH: 12pm to 7pmBooking Hotline: 6336 0002

We believe looking good and feeling confi dent is within reach. All it takes is right products, basic knowledge, and daily simple beauty care routine to look your best.

- from the beauty concept people

Our Promise, Quality & Effectivebeauty care solutions

14

Training

As we grapple with unstable economic conditions and embrace ourselves for the more diffi cult days ahead, Novena Holdings will take on a different approach to position ourselves to ride out the coming diffi cult months. We shall continue to be committed to the employees, customers and shareholders.

CONTINUOUS JOURNEY FOR SERVICE EXCELLENCEWe continue to believe in service excellence. Consistent efforts were dedicated towards improvement in the management systems and processes in our retail division, to deliver excellent customer service standards. Our belief is further grounded by the outstanding achievements of our award winners for the national level Excellence Service Award (EXSA) 2008.

FOCUSED TRAININGSFor the past year, we focused on work skills development for employees in the retail division, using On-the-Job Training (OJT) framework in its retail division, to provide skills development and work experience for new employees and employees who are deployed or promoted to perform a higher level of job tasks.

This year, emphasis shall be on the development and growth of the key performers and high potential employees. As we strive for creativity and innovation, we are adaptive to change the traditional role of training via advanced learning techniques, such as Neuro-Linguistics Programming (NLP), to create a dynamic environment for learning and development of the employees at a strategic level, to achieve astounding results and make an impact on the business.

We are committed and continue to keep a consistent training budget and intensity to groom and upgrade our employees.

KEEPING EMPLOYEES MOTIVATION HIGHKeeping staff motivated in this challenging business environment may be more diffi cult, but it is critical for business to sail on. The promise of job security and career advancement is the power tools for the key management team to uphold the spirits of their employees.

The group would continue to promote staff based on individual performance and promote from within the company as much as possible. The management would also continue to engage with all levels of team members and do frequent “ground visits” in order to maintain a good understanding of employees’ needs and to stay close with them to fi ght on this economic turmoil together.

15

Community Development 2008

The major events of the year in review are as follows:-

FEBRUARY 2008

China SnowstormS$30,000 was donated towards the Relief Fund for China Snowstorm Victims, a fund-raising event initiated by Singapore Chinese Chamber of Commerce and Industry (“SCCCI”).

Boon Lay CCCS$5,000 was contributed towards Boon Lay Lunar New Year Celebration Cum Hong Baos Presentation event held on 25 February 2008 in Boon Lay CC where Hong Baos were presented to more than 300 senior citizens aged 70 & above.

As part of our continuous efforts in community development and charity work, Novena contributed approximately S$175,500 in cash and kind to various charity organizations in FY 2008.

MAY 2008

CSCDD Community Sports FestivalSponsored S$10,000 in support of the CSCDD Community Sports Festival.

Jurong Central Fund-raising EventS$10,000 was donated towards Jurong Central Fund Raising Golf Tournament. Donations raised will be used to provide scholarship/busary awards to children of Jurong Central residens, welfare aid to the needy in the constituency and for organizing meaningful activities for residents.

JUNE 2008

Sichuan Earthquake Charity ShowApart from S$60,000 in donations, Novena contributed time and effort in organizing the Charity Show which was telecast on 25 May 2008 on channel 8 and repeated on 1 June 2008. A total of S$10,249,954 was raised and the funds will be used for children’s education and welfare.

16

JULY 2008

Radin Mas Oldies NiteNovena contributed $30,000 towards organizing a concert for 1,400 senior citizens from Radin Mas GRC. Ulu Pandan 43rd National Day CelebrationsS$5,000 was contributed towards Ulu Pandan 43rd National Day Activity Fund.

AUGUST 2008

Kampong Chai Chee PCF Charity EventS$5,000 was donated towards Kampong Chai Chee PCF Charity event where proceeds were used to build a new child care center for 100 children to be operational in fi rst quarter 2009.

Lions Club of Singapore WestS$5,000 was donated towards the Lions Club of Singapore West charity fund raising event to raise fund for the Lions Community Service Foundation Singapore (Lions Foundation). Lions Foundation was registered as a charity in 2003 and its benefi ciary charities are the Lions Nursing Home, Lions Befrienders Service Association, scholarships for poor students and hardship cases caused by the loss of income as a result of sudden illness or premature death of the main breadwinner of the family.

SEPTEMBER 2008

Industrial & Services Co-operative Society Ltd (ISCOS)S$3,000 was donated towards “Pledge of Reintegration” in aid of the Yellow Ribbon Project, to raised funds for their various programmes and services.

“The Children’s Tomorrow”S$2,000 was contributed towards “The Children’s Tomorrow”, a human-interest centric documentary which provide insight into the lives of children who have experienced great trauma, the 512 Sichuan Earthquake. The documentary mainly focus on the positive aspects of how children are resilient and have overcome physical/mental/emotional diffi culties. It portray more on the recovery and rebuilding process that are ongoing as well as the outcomes of these efforts.

Gala Premier Charity Hall Sponsorship “Dragon Hunters”S$2,500 was sponsored for a cinema hall for Children Charities to attend the Gala Premiere event of the movie “Dragon Hunters”. Participating children charities include: Children’s Cancer Foundation; Asian Women’s Welfare Assocation Headquarters; Beyond Social Services; Children-At-Risk Empowerment Association (CARE); Rainbow Centre; Chen Su Lan Methodist Children’s Home; SE CDC Metta Student Care (Bedok); Salvation Army Gracehaven; Sun Beam Place.

OCTOBER 2008

Victoria Junior CollegeDonations of S$2,000 was made towards Victoria Junior College’s 25th Anniversary to raise funds to give fi nancial assistance to needy students and upgrade existing non-standard infra-structure in the college to further enhance their capacity to provide an all-round education to their students.

NOVEMBER 2008

Chinese Schools to Showcase PastExhibition by 20 schools’ alumni in Malaysia and Singapore aims to share rich

history with students. The main aim is to tell younger Singaporeans about the history of our education system. Novena supported S$2,000 towards this event.

DECEMBER 2008

National Crime Prevention Council (“NCPC”)NCPC is a non-profi t organization committed to promote public awareness and concern about crime and to propagate the concept of self-help in crime prevention. It is incorporated as a charity and depends entirely on donations and sponsorships to run its programmes and activities. Novena sponsored S$2,000 towards part of NCPC fund-raising activity.

Past Years’ Contributions2002 $100,0002003 $140,0002004 $150,0002005 $260,0002006 $192,0002007 $274,0002008 $175,500Total $1,291,500

17

18

1998/1999

1999 Excellent Sales AwardAwarded for Novena group outstanding performance by FIRAC.

1998/99 Singapore 500 SME Achievement AwardCastilla Design (subsidiary of Novena Holdings) awarded Singapore SME 500 Achievement Award.

1998 Excellent Business Development Award (Local and Overseas)Organised for the fi rst time by the Furniture & Interior Advisory Committee (FIRAC), the Top Ten Achievement Awards 1998 gives recognition to top fi rms in the furniture industry. Novena Group was awarded for its innovative business development projects in the local and overseas market. Other criteria for winning this prestigious award include company profi tability, productivity and management focus.

2000

Listed In SGX SESDAQ in 2000Novena Group was successfully admitted to the Offi cial List of the Stock Exchange of Singapore Dealing and Automated Quotation System (“SGX SESDAQ) on 18 December 2000.

2000 Enterprise 50 AwardNovena Group was ranked 32nd in the Enterprise 50 Award (organized by Business Times and Andersen Consulting).

2000 Quality Service AwardThe White Collection (subsidiary of Novena Holdings) was awarded FIRAC Top Achievement –

Quality Service Award Year 2000. The objective of this award is to give recognition to those who believe what FIRAC pledges: to render quality products and service to customers.

2001

2001 Excellent Service AwardBeing awarded Excellent Service Award with 6 of our staff achieving 1 Star winner, 1 Gold winner and 4 Silver winners.

2001 Patron of the Arts AwardBeing awarded Associate of the Arts for having contributed towards promoting the cultural and artistic activities in Singapore.

2002

2002 Retail Courtesy AwardAwarded to Novena Group by SPRING Singapore, Singapore Retailers Association and Retail Promotion Centre. Winning outlets comprises 10 outlets from Novena, 2 outlets from Modern Living, 7 outlets from The White Collection, 2 outlets from Castilla, 2 outlets from Leewah Essentials and 1 outlet from NC Essentials.

2002 Excellent Service AwardExcellent Service Award to Novena Group by SPRING Singapore (formerly PSB Singapore), with 21 of our staff achieving 12 Star winners, 7 Gold winners and 2 Silver winners.

2002 5th Global Top Enterprise Golden Earl AwardOrganised by the Medium Business Development Association of China, the Golden Earl award is symbolic of excellence in entrepreneurial performance and business stability. It aims to recognize outstanding contributions made by enterprises

towards overall economic development, promotes global cross learning in the area of enterprise management and networking.

2003

2003 Retail Courtesy Gold AwardAwarded to Novena Group by SPRING Singapore, Singapore Retailers Association and Retail Promotion Centre for a total of 35 winning outlets.

2003 Excellent Service Award29 of our staff will be receiving the Excellent Service Award organized by SPRING Singapore comprising 3 Star winners, 8 Gold winners and 18 Silver winners.

2003 Singapore Furniture Industry AwardOrganised by SFIC (Singapore Furniture Industries Council), the award seeks to promote entrepreneurship within the furniture industry, profi le local capabilities in internationalization and retailing as well as recognize the vital contributions to the Singapore economy.

2003 Singapore Promising Brand AwardOrganised by ASME (The Association of Small and Medium Enterprises) and Lianhe Zaobao. Recognising the signifi cance of branding to a business, ASME inaugurated the award in 2002 to promote branding as a strategic tool and to recognize promising local brands.

2002-2003 Superbrands SingaporeSuperbrands is an award which recognizes some of the world’s greatest brands by the Superbrands organization originated from

England for nearly a decade. The Superbrands Council has set up in Singapore to recognize the strongest performing brands in the market. The Novena Group is proud to be included in this prestigious list for the Singapore edition which acknowledges excellence in retail sales and services.

2004

DP Credit RatingNovena was certifi ed as a DP 4 credit rated company by DP Information Group. The certifi cate is an affi rmation of the company’s excellent credit standing and worthiness based on international standard with Moody’s/ KMV engine/methodology.

The President’s Social Service Award (PSSA) 2004Novena was a nominee in the Corporate Category.

SIAS Investors Choice Awards 2004 – Singapore Corporate Governance AwardNovena was nominated amongst the SESDAQ companies for good corporate governance practices.

SRA Awards 2004 – Best New Entrant of the YearA subsidiary of Novena Group, Natural Living was awarded The Best New Entrant of the Year. SRA Awards seek to raise standards, profi le and image of the retail industry by promoting innovation, creativity and excellence, so as to constantly add new and exciting dimensions to retail and take the industry to new heights.

2004 Arts Supporter AwardNovena was conferred the Arts Supporter Award for having

Achievements

SINGAPORE

PROMISINGBRAND AWARD

18

19

contributed towards promoting cultural and artistic activities in Singapore.

BSEN ISO 9001:2000 Certifi edA subsidiary of Novena Group, The White Collection Pte Ltd received ISO 9001:2000 certifi cation.

2004 Excellent Service Award38 of our staff received the Excellent Service Award given out by SPRING Singapore comprising 5 Star winners, 12 Gold winners and 21 Silver winners.

2004 Singapore Promising Brand AwardNovena received the Singapore Promising Brand Award for the second consecutive year. SPBA is established to recognise SMEs who have shown outstanding performance in the communication of their brands. The key objectives are to enhance the awareness of the importance of branding among local SMEs and in turn stimulate the growth of Singapore’s brands and enterprises both locally and regionally.

2004 Retail Asia-Pacifi c Top 500This is the region’s fi rst-ever ranking of the top 500 retail companies in 14 markets. Novena Group has been ranked among the top 500 retail companies in the Asia-Pacifi c region based on sales turnover.

2005

2005 Most Reliance AwardSuzhou Novena was awarded one of the most reliable and trustworthy organization by Suzhou Consumer Association which refl ected the strong value of Novena of being creative, sincere and care for the products and services we provide to our value customers.

Environmental-Friendly Product AwardAn award was presented to Suzhou Novena by Suzhou Quality

Control Association for achieving the environment-friendly standard on the bedroom series that they had manufactured.

National Top 10 Quality Enterprise Award & National Top 10 Quality Products Award 2005The National Top 10 Award – Year 2005 organized by Chinese Industry, Commerce, Economy, Trade Science & Technology Development Association. The objectives is to recognize and appreciate the outstanding contributions and achievements made by enterprises towards overall economy and social development, improvement in corporate effi ciency and productivity, innovative products and services, quality research and development, as well as promoting global enterprising networks.

2005 Arts Supporter AwardNovena was awarded Arts Supporter Award for having contributed towards promoting the cultural and artistic activities in Singapore.

2005 Excellent Service Award38 of our staff received the Excellent Service Award organized by SPRING Singapore. These include 5 Star winners, 12 Gold winners and 21 Silver winners.

2004-2005 Superbrands SingaporeNovena received the Superbrands Award for the second consecutive year. This is an award which recognizes some of the world’s greatest brands. Novena Group is proud to be included in this prestigious list of winners which acknowledges excellence in retail sales.

2006

2006 Arts Supporter AwardNovena Holdings Limited together with its subsidiaries, Beaute Spring Pte Ltd and Chuan Seng Leong Pte Ltd, were awarded the Arts Supporter Award

for contributions towards the promotion of cultural and artistic activities in Singapore.

2006 Excellent Service Award35 of our staff received the Excellent Service Award, given out by SPRING Singapore. These include 9 Star Award winners, 11 Gold Award winners & 15 Silver Award winners.

Singapore Service Class (S-Class)Castilla Design Pte Ltd was one of 76 organisations to receive the Singapore Service Class Certifi cation from SPRING Singapore. The certifi cation was determined by the organisation’s performance in the Service Scorecard for Business Excellence.

People Developer StandardNovena Holdings Limited was among the list of 552 Organisations to be certifi ed as People Developer in Singapore by SPRING Singapore. People Developer is a quality standard that gives recognition to organisations that invest in their people and having a comprehensive system for developing their staff.

2006 Superbrands SingaporeNovena received the superbrands Award for the third consecutive year. This is an award, which recognizes some of the world’s greatest brands. Novena Group is proud to be included in this prestigious list of winners, which acknowledges excellence in retail sales.

10th Golden Furniture Award (New Millennium Award)Novena Furnishing Centre Pte Ltd, a subsidiary of Novena Group, was awarded the Golden Furniture Award. This award was created in Europe to distinguish companies with distinguished quality of their products and services.

The Golden Europe Award For Quality and Commercial PrestigeNovena Furnishing Centre Pte Ltd, a subsidiary of Novena

Group, was awarded due to its exceptional brand image, distinguished service quality and capacity of innovation.

2007

2007 Excellent Service Award18 of our staff from Beaute Spring Pte Ltd & BSP Global Pte Ltd received the Excellent Service Award given out by SPRING Singapore. These include 2 Star Awards winners, 5 Gold Awards winners & 11 Silver Award winners.

May Day Model Workers Award 2007Beaute Spring Pte Ltd has a retail staff who was conferred with this award. Organized by National Trade Union Congress (NTUC) to give recognition to outstanding workers from all categories (e.g. different sectors, age groups, nationalities, etc.) who have excellent performance, conduct and attitudes, which bring recognition to their employers.

Reliability & Environment-Friendly AwardSuzhou Novena achieved 3 Star rating for Reliability & Environment-Friendly Award by Suzhou Quality Control Association & Suzhou Furniture Association.

2008

2008 Arts Supporter AwardNovena Holdings was awarded the Arts Supporter Award for contributions towards the promotion of cultural and artistic activities in Singapore.

Singapore 1000 Company 2008Novena Holdings was given the Singapore 1000 Company Achievement Award.

2008 Excellent Service Award15 of our staffs received the Excellent Service Award given out by SPRING Singapore. These include 1 Star Award winner, 5 Gold Award winners & 9 Silver Award winners.

19

21 Corporate Governance30 Directors’ Report35 Statement by Directors36 Independent Auditors’ Report38 Consolidated Income Statement39 Balance Sheets41 Statement of Changes in Equity

44 Consolidated Cash Flow Statement46 Notes to the Financial Statements99 Statistics of Shareholdings101 Statistics of Warrantholdings102 Notice of AGM Proxy Form

Financial Contents

21

Corporate Governance

The Board of Directors (the “Board”) of Novena Holdings Limited and its subsidiaries (the “Group”) is committed to maintaining high standards of corporate governance and transparency in line with the spirit of the Code of Corporate Governance 2005 (the “Code”) to protect the interest of shareholders. This report outlines the Company’s corporate governance processes and structures with specific reference to the Code.

BOARD OF DIRECTORS

PRINCIPLE 1: BOARD’S CONDUCT OF ITS AFFAIRS

The principal functions of the Board are to:

1. Approve the corporate direction and strategy of the Company and monitoring the performance of the management;2. Approve the nomination of directors and appointment of key managerial personnel;3. Approve annual budgets, major funding proposals and investment proposals; 4. Review the internal controls, risk management, financial performance and reporting compliance; and5. Assume responsibility for corporate governance.

To facilitate effective management, certain functions have been delegated to various Board Committees, each of which has its own written terms of reference.

The Board has delegated day-to-day operations to management while reserving certain key matters for its approval. Key functions include approving the consolidated financial statements for the group, conflict of interest checks for directors, disposal of assets, strategic planning and material acquisitions, share issuances, dividends and matters which require Board approval as specified under the Company’s interested person transaction policy.

The Board conducts regular scheduled meetings. Ad-hoc meetings are convened when circumstances require. The Company’s Articles of Association allow a Board meeting to be conducted by way of a tele-conference. The attendance of the directors at meetings of the Board and Board Committees, as well as the frequency of such meetings, is disclosed in this Report.

The Company has an on-going budget for all directors to receive relevant training. Board members are encouraged to attend seminars and receive training in connection with their duties as directors in areas such as accounting and legal knowledge, particularly on latest developments to relevant laws, regulations and accounting standards.

22

DIRECTORS’ ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS FY2008

Novena Board Audit Committee Nominating Committee

Remuneration Committee

Name

No. of Meetings

Held

No. of Meetings Attended

No. of Meetings

Held

No. of Meetings Attended

No. of Meetings

Held

No. of Meetings Attended

No. of Meetings

Held

No. of Meetings Attended

Toh Soon Huat 4 4 NA NA NA NA NA NA

Chong Hon Kuan Ivan 4 4 4 4 2 2 2 2

Tay Beng Chuan 4 4 4 4 2 2 2 2

Wong Meng Yeng 4 4 4 4 2 2 2 2

Lien Kait Long*1 4 2 NA NA NA NA NA NA

Li Ling Xiu**2 4 1 NA NA NA NA NA NA

Chow Hock Meng***3 4 1 NA NA NA NA NA NA

Notes:

*1. Mr Lien Kait Long was appointed as a Non-Executive Director on 26 May 2008.** 2. Ms Li Ling Xiu was appointed as a Non-Executive Director on 29 April 2008.***3. Mr Chow Hock Meng was appointed as Alternate Director, to Ms Li Ling Xiu on 31 July 2008

PRINCIPLE 2 : BOARD COMPOSITION AND BALANCE

The Board comprises three Independent Directors, two Non-Executive Directors, one Alternate Director and one Executive Director. The independence of each Director is reviewed annually by the Nominating Committee (“NC”). The NC adopts the Code’s definition of what constitutes an independent director in its review. The NC is of the view that the Independent Directors are independent, no individual or small group of individuals dominate the Board’s decision-making process and the current composition of the Board possesses adequate competencies to meet the Company’s objectives.

The Board is of the opinion that the current board size of seven directors, one of whom is an Alternate Director is appropriate, taking into account the nature and scope of the Company’s operations. The Board composition reflects the broad range of experience, skills and knowledge for the effective stewardship of the Group.

Key information regarding the directors is provided in “Board of Directors” section of this Annual Report.

Corporate Governance

23

PRINCIPLE 3 : ROLE OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER (“CEO”)

The Board is of the opinion that it is in the best interest of the Group to adopt a single leadership structure whereby the Acting Chairman and Chief Executive Officer is the same person, so as to ensure that the decision-making process would not be unnecessary hindered. The presence of a strong independent element and the participation of the Independent Directors ensure that the Acting Chairman and the Chief Executive Officers does not have unfettered powers of decision.

The Group’s Acting Chairman and CEO, Mr Toh Soon Huat, plays an instrumental role in developing the business of the Group and provides the Group with strong leadership and vision. He is responsible for day-to-day running of the Group as well as the exercise of control over the timeliness of information flow between the Board and management. As the Acting Chairman, he also ensures that Board meetings are held regularly and the Board is updated on the Group’s affairs, oversees the preparation of the agenda for Board meetings and ensures the Group’s compliance with the Code.

All major decisions made by the Acting Chairman and CEO are reviewed by the Audit Committee. The Nominating Committee reviews his performance and appointment to the Board and the Remuneration Committee reviews his remuneration package periodically. Both the Nominating Committee and Remuneration Committee comprise a majority of Independent Directors of the Company. As such, the Board believes that there are adequate safeguards in place against an uneven concentration of power and authority in a single individual.

PRINCIPLE 6 : ACCESS TO INFORMATION

In order to ensure that the Board is able to fulfill its responsibilities, management provides the Board with a management report containing complete, adequate and timely information prior to the Board meetings as well as a report of the group’s activities on a regular basis.

The Company has approved an agreed procedure for Directors to take independent professional advice at the Company’s expense of up to a maximum of S$25,000. Before incurring professional fees, the Director concerned must consult two other Directors, one of whom must be independent. No such advice was sought by any director during FY2008.

The Company secretary attends Board meetings and meetings of the Board Committees of the Company and ensure that Board procedures are followed and that applicable rules and regulations are complied with. The Minutes of all Board meetings are circulated to the Board.

Please refer to the “Corporate Information” section of the annual report for the composition of the Company’s Board of Directors and Board committees.

Corporate Governance

24

BOARD COMMITTEES

NOMINATING COMMITTEE (NC)

PRINCIPLE 4 : BOARD MEMBERSHIP

The NC comprises three Directors, all of them, including the Chairman are Independent Directors. The principal functions are to:

1. Establish procedures for and making recommendations to the Board on all board appointments;2. Determine orientation programs for new Directors, and recommending opportunities for the continuing training of the

Directors;3. Review and make recommendations to the Board for the re-nomination of Directors, having regard to the individual

director’s contribution and performance;4. Assess annually whether or not a Director is independent;5. Review the size and composition of the Board with the objective of achieving a balanced Board in terms of the mix of

experience and expertise;6. Recommend to the Board the performance criteria and appraisal process to be used for the evaluation of individual

Directors as well as the effectiveness of the Board as a whole, which criteria and process shall be subject to Board approval; and

7. Review the appointment of relatives of directors and/or substantial shareholders to managerial positions.

The Articles of Association of the Company currently require one-third of the directors to retire and subject themselves to re-election by the shareholders in every Annual General Meeting. In addition, all directors of the Company shall retire from office at least once every three years.

PRINCIPLE 5 : BOARD PERFORMANCE

The NC evaluates the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.

In evaluating the Board’s performance, the NC considers a set of quantitative and qualitative performance criteria such as return on investment, return on equity, profitability on capital employed, the success of the strategic and long-term objectives and the effectiveness of the Board in monitoring management’s performance against the targets set by the Board.

The NC, in considering the re-appointment of any Director, evaluates the performance of the director. On an annual basis, the Chairman will assess each Director’s contribution to the Board, and discuss the results with the Chairman of the NC. The criteria adopted in assessing the contribution of each individual Director include attendance at the Board and Committee meetings, intensity of participation at meetings and special contributions.

Corporate Governance

25

AUDIT COMMITTEE (AC)

PRINCIPLE 11 : AUDIT COMMITTEE

The Audit Committee (AC) comprises three members; all of them including the Chairman are independent Directors. The profile of the AC comprises professionals and businessman with financial, management and legal background. The Board is of the view that the members of the AC have sufficient financial management expertise and experience to discharge the AC’s function.

The AC, which has written terms of reference, performs the following delegated functions:

1. Review the audit plans of the internal and external auditors of the Company and ensures the adequacy of the Company’s system of accounting controls and the co-operation given by the Company’s management to the external and internal auditors;

2. Review the interim and annual financial statements and the auditors’ report of the Company before their submission to the Board of Directors;

3. Review with the management and the internal auditor the adequacy of the Company’s internal controls in respect of management, business and services systems and practices;

4. Review legal and regulatory matters that may have a material impact on the financial statements, related compliance policies and programs and any reports received from regulators;

5. Review the cost effectiveness and the independence and objectivity of the external auditors;6. Review the nature and extent of non-audit services provided by the external auditors;7. Review the assistance given by the Company’s officers to the auditors;8. Nominate the external auditors; and9. Review interested person transactions in accordance with the requirements of the listing rules of the Singapore

Exchange.

The AC has the express power to conduct or authorize investigations into any matter within its terms of reference. Minutes of the AC meetings are regularly submitted to the Board for its information and review.

The AC, having reviewed all non-audit services provided by the external auditors to the Group, is satisfied that the nature and extent of such services would not affect the independence of the external auditors. The AC also conducts a review of interested person transactions and a review to ensure that there are no improper activities of the Company (if any).

The AC meets with the external and internal auditors, without the presence of the Company’s management, at least once a year.

The Company has put in place a whistle-blowing framework, endorsed by the AC, where employees of the Company may, in confidence, raise concerns about possible corporate improprieties in matters of financial reporting or other matters. To ensure independent investigation of such matters and for appropriate follow up action, all whistle-blowing reports are to be sent to Mr Wong Meng Yeng, Mr Tay Beng Chuan and Mr Ivan Chong. Details of Whistle-Blowing policy and arrangements have been made available to all employees.

Corporate Governance

26

PRINCIPLE 12 : INTERNAL CONTROLS

The Board believes that, in the absence of any evidence to the contrary, the system of internal control maintained by the Company’s management provides reasonable assurance against material financial misstatements or loss, and includes the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation, regulation and best practice, and the identification and management of business risks. The Board notes that no system of internal control can provide absolute assurance against the occurrence of material errors, poor judgments in decision-making, human error, fraud or other irregularities.

PRINCIPLE 13 : INTERNAL AUDITS (IA)

The Board recognizes that it is responsible for maintaining a system of internal control processes to safeguard shareholders’ investments and the Group’s business and assets. The internal audit function of the Group has been outsourced to a professional service firm. The internal auditor reports directly to the AC on audit matters. The AC reviews the internal audit report on a regular basis to ensure the adequacy of the internal audit function. The AC also reviews and approves the annual IA plans.

REMUNERATION COMMITTEE (RC)

PRINCIPLE 7 : PROCEDURES FOR DEVELOPING REMUNERATION POLICIESPRINCIPLE 8 : LEVEL AND MIX OF REMUNERATIONPRINCIPLE 9 : DISCLOSURE ON REMUNERATION

The Remuneration Committee comprises three Directors, all of them including the Chairman are Independent Directors. The principal duties and responsibilities are to:

a. Recommend to the Board an appropriate framework for remuneration of the Board and senior management to ensure that it is competitive and sufficient to attract, retain and motivate personnel of the required quality;

b. Determine the policy for establishing the remuneration packages for executive directors and the CEO (or equivalent) and review the service contracts of such employees;

c. Review the performance of key senior managers to enable the committee to determine their annual remuneration, bonus rewards, etc.;

d. Ensure accountability and transparency in the Company’s policies and procedures for determining the remuneration of its Directors and senior management; and

e. Review all matters concerning the remuneration of non-executive directors to ensure that the remuneration is commensurate with the contribution and responsibilities of the directors.

Corporate Governance

27

The NC, together with RC reviews the CEO’s performance targets (including quantitative financial figures such as ROE and revenue growth) for each financial year.

Directors’ fees are set in accordance with a remuneration framework. All the Independent Directors and Non-Executive Directors are paid director’s fees, subject to approval at the AGM. The Acting Chairman does not receive director’s fees.

A breakdown, showing the level and mix of each individual director’s remuneration payable for FY2008 is as follows:

DIRECTORS’ REMUNERATION

Name Fee* Salary Bonus Allowance

Between $250,001 - $500,000

Toh Soon Huat - 78.7% 6. 6% 14.7%

Up to $250,000

Chong Hon Kuan Ivan** 100% - - -

Tay Beng Chuan** 100% - - -

Wong Meng Yeng** 100% - - -

Lien Kait Long*** 60% - - -

Li Ling Xiu*** 67% - - -

Manohar P. Sabnani # - 76.7% - 23.3%

* these fees are subject to approval by the shareholders at the AGM for FY 2008. ** Independent Directors have no service contracts and their terms are specified in the Articles. The CEO has a three-year

service contract that expires on 31 August 2009. *** The director fees for both the Non-Executive Directors are pro-rated according to their appointment date for the

year.# Mr Manohar P.Sabnani resigned from the Board of Directors on 31 May 2008.

Corporate Governance

28

Disclosure of the top five executives’ remuneration (executives who are not on the Board of Directors) in bands of $250,000 is as below:

Gross remuneration less than $250,000:

1. Lee Lai Chuan - Executive Director (CSL)2. Chan Lay May Kathy - Managing Director (Beauty Division)3. Serine Yeo Ngen Huay - Group Financial Controller4. Ang Siong Lim - Assistant General Manager (CSL)5. Chong Siew Lan Sheila - Group Human Resource Manager

Key information regarding the above executives is provided in the “Key Management” section of this annual report.

Share Option Committee

The Share Option Committee comprises Directors, who are Executive and Independent Directors.

The Share Option Committee administers The Novena Holdings Limited Share Option Scheme (“NSOS”) established on 9 December 2000, in accordance with the rules as approved by shareholders. Non-Executive and Independent Directors have not been granted share options under NSOS since establishment.

In FY 2008, no options were granted.

PRINCIPLE 10 : ACCOUNTABILITY AND AUDIT PRINCIPLE 14 : COMMUNICATION WITH SHAREHOLDERS PRINCIPLE 15 : GREATER SHAREHOLDER PARTICIPATION

In presenting the annual financial statements and announcements to shareholders, it is the aim of the Board to provide the shareholders with a detailed analysis, explanation and assessment of the Group’s financial position and prospects. The management provides the Board with management accounts of the Group’s performance, position and prospects on a regular basis.

The Company will comply with The Listing Manual of the Singapore Exchange Securities Trading Limited on the disclosure requirements of its financial results. Results will be published through the SGXNET, news releases and the Company’s website. All information on the Company’s new initiatives is first disseminated via SGXNET. Results and annual reports are announced or issued within the mandatory period and are available on the Company’s website.

Corporate Governance

29

The Board is mindful of the obligation to provide timely and fair disclosure of material information in accordance with the Corporate Disclosure Policy of the Singapore Exchange.

All shareholders of the Company receive the annual report and notice of AGM, which notice is also published in either the Straits Times or Business Times and made available on the website. At AGM, shareholders are given the opportunity to express their views and ask directors or management questions regarding the Company.

The Board also welcomes the view of shareholders on matters affecting the Company, whether at shareholders’ meetings or on an ad hoc basis.

DEALINGS IN SECURITIES

In accordance with the SGX-ST Best Practices Guideline, the Company has adopted an internal code on dealing in the Company’s shares. The internal code prohibits any dealing in the Company’s shares during the period commencing one month before the announcement of the Company’s results and ending on the date of the announcement of the results.

In addition, Directors and key executives are expected to observe insider trading laws at all times even when dealing in securities within the permitted trading period. They are discouraged from dealing in the Company’s shares on short-term considerations.

RISK MANAGEMENT

The Group regularly reviews and improves its business and operational activities to take into account the risk management perspective. The Group seeks to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks.

MATERIAL CONTRACTS There were no material contracts entered into by the Company and its subsidiaries involving the interests of its CEO, Directors or controlling shareholders.

SPONSOR

No fees relating to non-sponsorship activities or services were paid to the Company’s sponsor for the financial year ended 31 December 2008

Corporate Governance

30

The directors are pleased to present their report to the members together with the audited consolidated financial statements of Novena Holdings Limited (the “Company”) and its subsidiaries (collectively, the “Group”) and the balance sheet and statement of changes in equity of the Company for the financial year ended 31 December 2008.

1. Directors

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

Toh Soon Huat (Acting Chairman and Chief Executive Officer) Chong Hon Kuan Ivan Tay Beng Chuan Wong Meng Yeng Li Ling Xiu Lien Kait Long Chow Hock Meng

2. Arrangements to enable directors to acquire shares, debentures and warrants

Except as disclosed below, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares, debentures or warrants of the Company or any other body corporate.

Directors’ Report

31

Directors’ Report

3. Directors’ interests in shares and warrants

The following directors, who held office at the end of the financial year, had, accordingly to the register of directors’ shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares and warrants of the Company and related corporations (other than wholly-owned subsidiaries) as stated below :

Direct interest Deemed interestAt 1

January2008

At 31 December

2008

At 21January

2009

At 1January

2008

At 31 December

2008

At 21January

2009

Ordinary shares of the Company

Toh Soon Huat 6,690,990 56,436,735 56,436,735 87,417,234 75,917,234 75,917,234Chong Hon Kuan Ivan 1,625,524 1,625,524 1,625,524 – 862,762 862,762

Warrants to subscribe for ordinary shares of the company

Toh Soon Huat 3,295,495 – – 43,214,617 8,264,367 8,264,367Chong Hon Kuan Ivan 812,762 – – – – –

By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Toh Soon Huat is deemed to have an interest in all of

the subsidiaries of Novena Holdings Limited.

Except as disclosed in this report, no other director who held office at the end of the financial year had an interest in shares, share options, warrants or debentures of the Company or of related corporations, either at the beginning of the financial year, or date of appointment if later, or the end of the financial year and on 21 January 2009.

4. Directors’ contractual benefits

Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a Company in which the director has a substantial financial interest.

32

5. Share options

Neither at the end of nor at any time during the financial year were :

(a) options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries; and

(b) shares issued by virtue of any exercise of options to take up unissued shares of the Company or its subsidiaries.

6. Warrants

At the end of the financial year, details of the outstanding warrants are as follow :

Date of issue

Warrants outstanding at 1.1.2008

Warrants issued

Warrants exercised

Warrants expired

Warrants outstanding at 31.12.2008

Date of expiration

16.11.2007 141,957,609 – (117,563,297) – 24,394,312 16.11.2010 Each warrant entitles the warrant holder to subscribe for one new ordinary share in the Company at the exercise price

of $0.08 per share. The warrants do not entitle the holders of the warrants, by virtue of such holdings, to any rights to participate in any share issue of any other company. During the financial year, the Company issued 117,563,297 shares pursuant to the exercise of warrants as disclosed above.

7. Audit Committee

The Audit Committee (“AC”) carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50.

The AC comprises three Board members, of which all of them are independent directors. The profile of the AC members comprises professionals and businessman with financial, management and legal background. The Board is of the view that the members of the AC have sufficient financial management expertise and experience to discharge the AC’s function.

Directors’ Report

33

7. Audit Committee (Cont’d)

The AC, which has written terms of reference, performs the following delegated functions:

(a) review the audit plans of the internal and external auditors of the Company and ensures the adequacy of the Company’s system of accounting controls and the co-operation given by the Company’s management to the external and internal auditors;

(b) review the interim and annual financial statements and the auditors’ report of the Company before their submission to the Board of directors;

(c) review with the management and the internal auditor the adequacy of the Company’s internal controls in respect of management, business and services systems and practices;

(d) review legal and regulatory matters that may have a material impact on the financial statements, related compliance policies and programs and any reports received from regulators;

(e) review the cost effectiveness and the independence and objectivity of the external auditors;

(f) review the nature and extent of non-audit services provided by the external auditors;

(g) review the assistance given by the Company’s officers to the auditors;

(h) nominate the external auditor; and

(i) review interested person transactions in accordance with the requirements of the Singapore Exchange Securities Trading Limited (SGX-ST)’s Listing Manual.

The AC has the express power to conduct or authorize investigations into any matter within its terms of reference. Minutes of the AC meetings are regularly submitted to the Board for its information and review.

The AC, having reviewed all non-audit services provided by the external auditors to the group, is satisfied that the nature and extent of such services would not affect the independence of the external auditors. The AC also conducts a review of interested person transactions and a review to ensure that there are no improper activities of the Company (if any). The AC meets with the external and internal auditors, without the presence of the Company’s management, at least once a year.

Directors’ Report

34

8. Auditors

Ernst & Young LLP have expressed their willingness to accept reappointment as auditors.

On behalf of the board of directors,

Toh Soon HuatDirector

Lien Kait LongDirector

Singapore20 March 2009

Directors’ Report

35

We, Toh Soon Huat and Lien Kait Long, being two of the directors of Novena Holdings Limited, do hereby state that, in the opinion of the directors,

(a) the accompanying balance sheets, consolidated income statement, statements of changes in equity, and consolidated cash flow statement together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008, and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the board of directors,

Toh Soon HuatDirector

Lien Kait LongDirector

Singapore20 March 2009

Statement by Directors

36

We have audited the accompanying financial statements of Novena Holdings Limited (the “Company”) and its subsidiaries (collective, the “Group”), which comprise the balance sheets of the Group and the Company as at 31 December 2008, the income statement and cash flow statement of the Group and the statements of changes in equity of the Group and the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

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 comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independent Auditors’ ReportTo the members of Novena Holdings Limited

37

Opinion

In our opinion,

(i) the consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date; and

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

Ernst & Young LLPPublic Accountants and Certified Public Accountants Singapore20 March 2009

Independent Auditors’ ReportTo the members of Novena Holdings Limited

38

Note 2008 2007 $ $Continuing operations Revenue 4 37,761,287 54,270,511 Cost of sales (30,083,677) (32,401,088)Gross profit 7,677,610 21,869,423 Other items of income Other income 6(a) 1,290,738 43,056,092 Interest income – fixed deposits 275,626 360,513 Land compensation 6(e) 5,162,698 – Other items of expenses Distribution and selling expenses (2,285,861) (2,789,940)Administrative expenses (8,554,640) (9,651,880)Other operating expenses 6(b) (764,199) (1,571,012)Other non-operating expenses 6(c) (47,806,038) (2,619,418) Finance expenses 8 (155,477) (401,174)Share of results of associate (29,595) 18,908 (Loss)/profit before tax 6(d) (45,189,138) 48,271,512 Income tax expense 9 (817,263) (2,170,144)(Loss)/profit after tax from continuing operations (46,006,401) 46,101,368

Discontinued operations

Loss after tax for the year from discontinued operations – (506,448)(Loss)/profit for the year (46,006,401) 45,594,920 Attributable to: Equity holders of the Company (47,065,206) 45,693,290 Minority interests 1,058,805 (98,370) (46,006,401) 45,594,920 (Loss)/earnings per share (cents) From continuing operations 10 - Basic (12.26) 16.80 - Diluted (12.26) 15.82 From discontinued operations 10 - Basic – (0.18)- Diluted – (0.17)

Consolidated Income StatementFor the year ended 31 December 2008

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

39

Group CompanyNote 2008 2007 2008 2007

$ $ $ $Non-current assets Property, plant and equipment 11 3,154,243 4,504,807 198,942 254,461Land occupancy rights 12 – 498,127 – – Investments in subsidiaries 13 – – 5,125,806 10,746,455Investment in associate 14 – 29,595 – – Quoted equity investments 15 14,190,918 26,264,832 14,190,918 26,264,832Due from a subsidiary (non-trade) 16 – – 2,360,000 2,360,000

17,345,161 31,297,361 21,875,666 39,625,748Current assets Inventories 17 5,335,666 5,914,834 – – Trade receivables 18 2,949,960 4,078,221 – 43,028Other receivables, deposits and prepayments 19 1,520,198 2,210,345 460,681 700,782Due from subsidiaries (non-trade) 20 – – 881,420 1,230,938Quoted equity investments 15 509,411 3,616,323 509,411 820,820Fixed deposits 21 12,110,084 21,500,100 1,151,070 9,242,046Cash and bank balances 31 1,843,085 3,072,586 434,327 988,814

24,268,404 40,392,409 3,436,909 13,026,428Current liabilities Trade payables 22 2,446,577 3,198,484 – – Bills payable – 580,032 – – Other payables and accruals 23 1,190,298 1,208,244 217,406 281,663Tax payable 1,790,497 1,025,484 886,471 821,185Deferred rental 24 199,714 199,714 – – Lease obligations 25 57,605 69,602 – – Term loans 26 224,004 224,004 – – Unearned revenue 23 681,994 734,947 – – Due to director of a subsidiary (non-trade) 20 120,000 200,000 – – Due to subsidiaries (non-trade) 20 – – 4,044,936 4,405,223Bank overdrafts 27 20,046 1,436,257 – –

6,730,735 8,876,768 5,148,813 5,508,071Net current assets/(liabilities) 17,537,669 31,515,641 (1,711,904) 7,518,357

Balance SheetsAs at 31 December 2008

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

40

Group CompanyNote 2008 2007 2008 2007

$ $ $ $Non-current liabilities Deferred tax liability 9 65,679 46,483 21,919 21,919Deferred rental 24 832,143 1,031,857 – – Lease obligations 25 118,093 199,981 – – Term loans 26 858,662 1,082,662 – –

1,874,577 2,360,983 21,919 21,919

Net assets 33,008,253 60,452,019 20,141,843 47,122,186

Equity attributable to equity holders of the CompanyShare capital 28 44,615,340 35,210,275 44,615,340 35,210,275Reserves (13,709,855) 24,266,680 (24,473,497) 11,911,911

30,905,485 59,476,955 20,141,843 47,122,186Minority interests 2,102,768 975,064 – –

Total equity 33,008,253 60,452,019 20,141,843 47,122,186

Balance SheetsAs at 31 December 2008

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

41

Attributable to equity holders of the CompanyMinorityinterests

Total equity

2008Group

Share capital

(Note 28)Accumulated

profits

Other reserves

(Note 29)Total

reserves$ $ $ $ $ $

At 1 January 2008 35,210,275 43,114,020 (18,847,340) 24,266,680 975,064 60,452,019Net change in fair value adjustment reserve (Note 29 (b)) – – 19,382,749 19,382,749 – 19,382,749Net effect of exchange differences (Note 29(a)) – – 210,947 210,947 68,899 279,846Net income recognised directly in equity – – 19,593,696 19,593,696 68,899 19,662,595Net (loss)/profit for the year – (47,065,206) – (47,065,206) 1,058,805 (46,006,401)Total recognised income and expenses for the year – (47,065,206) 19,593,696 (27,471,510) 1,127,704 (26,343,806)Warrants exercised 9,405,065 – – – – 9,405,065Dividends on ordinary shares (Note 30) – (10,505,025) – (10,505,025) – (10,505,025)

At 31 December 2008 44,615,340 (14,456,211) 746,356 (13,709,855) 2,102,768 33,008,253

Statement of Changes in EquityFor the year ended 31 December 2008

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

42

Attributable to equity holders of the CompanyMinorityinterests

Total equity

2007Group

Share capital

(Note 28)Accumulated

profits

Other reserves

(Note 29)Total

reserves$ $ $ $ $ $

At 1 January 2007 17,764,108 4,865,594 2,350,571 7,216,165 1,111,571 26,091,844Net change in fair value adjustment reserve (Note 29(b)) – – (21,229,073) (21,229,073) – (21,229,073)Net effect of exchange differences (Note 29(a)) – – 31,162 31,162 (38,137) (6,975)Net income recognised directly in equity – – (21,197,911) (21,197,911) (38,137) (21,236,048)Net profit/(loss) for the year – 45,693,290 – 45,693,290 (98,370) 45,594,920Total recognised income and expenses for the year – 45,693,290 (21,197,911) 24,495,379 (136,507) 24,358,872Issuance of ordinary shares for quoted equity investment 2,609,676 – – – – 2,609,676Issuance of ordinary shares for cash 8,100,000 – – – – 8,100,000Issuance of shares for rights cum warrants issue (Note 28) 6,228,771 (6,228,771) – (6,228,771) – – Warrants exercised 507,720 – – – – 507,720Dividends on ordinary shares (Note 30) – (1,216,093) – (1,216,093) – (1,216,093)At 31 December 2007 35,210,275 43,114,020 (18,847,340) 24,266,680 975,064 60,452,019

Statement of Changes in EquityFor the year ended 31 December 2008

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

43

Attributable to equity holders of the Company Total equity

2008Company

Share capital

(Note 28)Accumulated

profits

Other reserves

(Note 29)Total

reserves$ $ $ $ $

At 1 January 2008 35,210,275 31,365,660 (19,453,749) 11,911,911 47,122,186Net change in fair value adjustment reserve (Note 29 (b)) – – 19,382,749 19,382,749 19,382,749Loss for the year – (45,263,132) – (45,263,132) (45,263,132)Total recognised income and expenses for the year – (45,263,132) 19,382,749 (25,880,383) (25,880,383)Dividends on ordinary shares (Note 30) – (10,505,025) – (10,505,025) (10,505,025)Warrants exercised 9,405,065 – – – 9,405,065

At 31 December 2008 44,615,340 (24,402,497) (71,000) (24,473,497) 20,141,843

Attributable to equity holders of the Company Total equity

2007Company

Share capital

(Note 28)Accumulated

profits

Other reserves

(Note 29)Total

reserves$ $ $ $ $

At 1 January 2007 17,764,108 1,726,425 1,775,324 3,501,749 21,265,857Net change in fair value adjustment reserve (Note 29 (b)) – – (21,229,073) (21,229,073) (21,229,073)Profit for the year – 37,084,099 – 37,084,099 37,084,099Total recognised income and expenses for the year – 37,084,099 (21,229,073) 15,855,026 15,855,026Issuance of ordinary shares for quoted equity investment 2,609,676 – – – 2,609,676Issuance of ordinary shares for cash 8,100,000 – – – 8,100,000Issuance of shares for rights cum warrants issue (Note 28) 6,228,771 (6,228,771) – (6,228,771) – Dividends on ordinary shares (Note 30) – (1,216,093) – (1,216,093) (1,216,093)Warrants exercised 507,720 – – – 507,720

At 31 December 2007 35,210,275 31,365,660 (19,453,749) 11,911,911 47,122,186

Statement of Changes in EquityFor the year ended 31 December 2008

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

44

Note 2008 2007 $ $Cash flows from operating activities (Loss)/profit before taxation from continuing operations (45,189,138) 48,271,512 Loss before taxation from discontinued operations – (506,448) (45,189,138) 47,765,064 Adjustments for: Share of results of associate 29,595 (18,908) Gain on disposal of subsidiaries 6(a) – (24,995,976) Depreciation of property, plant and equipment 6(b) 568,752 721,133 Gain on disposal of plant and equipment (net) (8,134) (15,039,956) Gain on disposal of land occupancy rights (5,162,698) – Fair value changes on derivative financial instrument 6(a) – (107,350) Amortisation of land occupancy rights 6(b) – 2,811 Impairment of goodwill 6(c) – 1,758,113 Fair value loss on quoted equity investments 6(c) 1,736,093 861,305 Impairment loss on quoted equity investments 6(c) 44,922,404 – Impairment loss on property, plant and equipment 6(c) 453,000 – (Write back)/impairment of doubtful debt 6(b) (17,000) 38,147 Bad debts (recovered)/written off (9,558) 61,536 Amortisation of deferred rental 24 (199,714) (166,429) Stock written off 6,941 205,145 Interest expense 131,091 393,181 Interest income (275,626) (360,513) Translation difference (19,890) 38,966 Operating (loss)/profit before working capital changes (3,033,882) 11,156,269Decrease/(increase) in: Inventories 572,227 361,099 Trade receivables 1,154,819 45,552 Other receivables, deposits and prepayments 690,146 (2,115,093)Increase/(decrease) in: Trade payables (751,907) 1,979,732 Unearned revenue (52,953) – Bills payable (580,032) (2,014,366) Other payables and accruals (17,946) 479,238 Due to directors of a subsidiary (non-trade) (80,000) (200,000)Cash generated from operations (2,099,528) 9,692,431

Consolidated Cash Flow StatementFor the year ended 31 December 2008

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

45

Note 2008 2007 $ $

Interest paid (131,091) (393,181)Interest received 274,653 360,513 Income taxes paid (33,055) (1,933,226)Net cash (used in)/generated from operating activities (1,989,021) 7,726,537

Cash flows from investing activities Purchase of property, plant and equipment A (135,264) (533,768)Proceeds from disposal of property, plant and equipment 772,921 25,044,200 Proceeds from disposal of land occupancy rights 5,660,825 – Purchase of quoted equity investments (net) (12,094,922) (9,607,556)Liquidation of a subsidiary – 239,204 Discontinued operations – 2,776,086 Cash generated (used in)/generated from investing activities (5,796,440) 17,918,166

Cash flows from financing activities Repayment of term loans (net) (224,000) (7,595,215)Proceeds for issuance of ordinary shares – 8,100,000 Proceeds from warrants exercised 9,405,065 507,720 Payment of lease obligations (93,885) (315,050)Payment of dividends (10,505,025) (1,216,093)Fixed deposits (secured) 753,990 (1,557,543)Cash used in financing activities (663,855) (2,076,181)

Net (decrease)/increase in cash and cash equivalents (8,449,316) 23,568,522 Cash and cash equivalents at beginning of year 19,931,379 (3,637,143)Cash and cash equivalents at end of year 31 11,482,063 19,931,379 Note A

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of $135,264 (2007: $704,706) of which $Nil (2007: $170,938) was acquired by means of finance lease. Cash payments of $135,264 (2007: $533,768) were made to purchase property, plant and equipment.

Consolidated Cash Flow StatementFor the year ended 31 December 2008

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

46

1. Corporate information

The Company is a limited liability Company domiciled and incorporated in Singapore and is listed on the Singapore Exchange Securities Trading Limited (SGX-ST).

The address of the Company’s registered office and principal place of business is 521 Bukit Batok Street 23, Level 3, Singapore 659544.

The principal activities of the Company are the provision of management and other services to related companies and investment holding. The principal activities of the subsidiaries are as disclosed in Note 13.

2. Summary of significant accounting policies

2.1 Basis of preparation

The consolidated financial statements of the Group and the balance sheet and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in Singapore Dollars (SGD or $).

The accounting policies have been consistently applied by the Group and the Company and are consistent with those used in the previous financial year, except for the change in accounting policies discussed below.

2.2 Change in accounting policies

On 1 January 2008, the Group and the Company adopted interpretation of FRS (“INT FRS”) that are mandatory for application in the current financial year.

References Description INT FRS 109 : Reassessment of Embedded Derivatives

The adoption of the above INT FRS did not have any significant impact to the Group and the Company’s accounting policies.

Notes to the Financial Statements31 December 2008

47

2. Summary of significant accounting policies (cont’d) 2.3 Future changes in accounting policies

The Group and the Company have not adopted the following FRS and INT FRS that have been issued but not yet effective:

Effective date for annual periodsbeginning on

or after

FRS 1 : - Presentation of Financial Statements – Revised Presentation- Presentation of Financial Statements – Puttable Financial Instruments

and Obligations Arising on Liquidation

1 January 2009

FRS 23 : Borrowing Costs 1 January 2009

FRS 32 : Financial Instruments: Presentation – Amendments relating to Puttable Financial Instruments and Obligations Arising on Liquidation

1 January 2009

FRS 39 : Financial Instruments: Recognition and Measurement – Amendments relating to eligible hedged items

1 July 2009

FRS 101 and FRS 27 : Amendments to FRS 101 and FRS 27 – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

1 January 2009

FRS 102 : Share-based Payments – Amendments relating to vesting conditions and cancellations

1 January 2009

INT FRS 101 : Changes in Existing Decommissioning, Restoration and Similar Liabilities

1 January 2009

INT FRS 112 : Service Concession Arrangements 1 January 2009

INT FRS 116 : Hedges of a Net Investment in a Foreign Operation 1 October 2008

INT FRS 117 : Distributions of Non-cash Assets to Owners 1 July 2009

Notes to the Financial Statements31 December 2008

48

2. Summary of significant accounting policies (cont’d)

2.3 Future changes in accounting policies (cont’d)

The directors expect that the adoption of the above pronouncements will have no material impact to the financial statements in the period of initial application, except for FRS 1 and FRS 108 as indicated below.

FRS 1 Presentation of Financial Statements – Revised presentation

The revised FRS 1 requires owner and non-owner changes in equity to be presented separately. The statement of changes in equity will include only details of transactions with owners, with all non-owner changes in equity presented as a single line. In addition, the revised standard introduces the statement of comprehensive income. It presents all items of income and expenses recognised in profit or loss, together with all other items of recognised income and expense, either in one single statement, or in two linked statements. The Company is currently evaluating the format to adopt.

FRS 108 Operating Segments

FRS 108 requires entities to disclose segment information based on the information reviewed by the entity’s chief operating decision maker. The impact of this standard on the other segment disclosures is still to be determined. As this is a disclosure standard, it will have no impact on the financial position and results of the Group when implemented in 2009.

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the balance sheet. Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in the income statement on the date of acquisition.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Notes to the Financial Statements31 December 2008

49

2. Summary of significant accounting policies (cont’d)

2.5 Transactions with minority interests

Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from parent shareholders’ equity. Transactions with minority interests are accounted for using the entity concept method, whereby, transactions with minority interests are accounted for as transactions with equity holders. On acquisition of minority interests, the difference between the consideration and book value of the share of the net assets acquired is reflected as being a transaction between owners and recognised directly in equity. Gain or loss on disposal to minority interests is recognised directly in equity.

2.6 Functional and foreign currency

(i) Functional currency The management has determined the currency of the primary economic environment in which the Company

operates i.e. functional currency, to be SGD. Sales prices and major costs of providing goods and services including major operating expenses are primarily influenced by fluctuations in SGD.

(ii) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the balance sheet date are recognised in the income statement except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign subsidiaries, which are recognised initially in equity as foreign currency translation reserve in the consolidated balance sheet and recognised in the consolidated income statement on disposal of the subsidiary.

The assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the balance sheet date and their income statements are translated at the weighted average exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity as foreign currency translation reserve. On disposal of a foreign operation, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.

Notes to the Financial Statements31 December 2008

50

2. Summary of significant accounting policies (cont’d)

2.7 Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and

equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the estimated

useful life of the asset as follows:

Leasehold buildings and factory – 20 to 67 yearsComputers and office equipment – 3 to 6 yearsFurniture and fittings – 3 to 6 yearsMotor vehicles – 6 yearsShowroom renovation – 3 to 8 yearsAir-conditioners – 8 yearsMachinery – 8 years

Assets under construction are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the income statement in the year the asset is derecognised.

Notes to the Financial Statements31 December 2008

51

2. Summary of significant accounting policies (cont’d)

2.8 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount.

Impairment losses are recognised in the income statement except for assets that are previously revalued where the revaluation was taken to equity. In this case the impairment is also recognised in equity up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss be recognised previously. Such reversal is recognised in the income statement unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

2.9 Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to

obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less any impairment losses.

Notes to the Financial Statements31 December 2008

52

2. Summary of significant accounting policies (cont’d)

2.10 Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. This generally coincides with the Group having 20% or more of the voting power, or has representation on the board of directors. The associate is equity accounted for from the date the Group obtains significant influence until the Group ceases to have significant influence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investment in associate is measured in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The financial statements of the associate are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies into line with those of the Group.

2.11 Land occupancy rights

Land occupancy rights are stated at cost less accumulated amortisation.

Land occupancy rights are amortised using the straight-line method to write off the cost over the lease term of 50 years.

2.12 Financial assets

Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that has been recognised directly in equity is recognised in the income statement.

Notes to the Financial Statements31 December 2008

53

2. Summary of significant accounting policies (cont’d)

2.12 Financial assets (cont’d)

(a) Financial assets at fair value through profit or loss

Financial assets held for trading are classified as financial assets at fair value through profit or loss. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial assets are recognised in the income statement. Net gains or net losses on financial assets at fair value through profit or loss includes unrealised fair value changes in quoted equity investment.

(b) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, and through the amortisation process.

(c) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are not classified in any of the other categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised directly in the fair value adjustment reserve in equity, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in the income statement. The cumulative gain or loss previously recognised in equity is recognised in the income statement when the financial asset is derecognised.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Notes to the Financial Statements31 December 2008

54

2. Summary of significant accounting policies (cont’d)

2.13 Impairment of financial assets The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of

financial assets is impaired.

(a) Assets carried at amortised cost If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred,

the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in the income statement.

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the income statement.

(b) Assets carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

(c) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

Notes to the Financial Statements31 December 2008

55

2. Summary of significant accounting policies (cont’d)

2.13 Impairment of financial assets (cont’d)

(c) Available-for-sale financial assets (cont’d)

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is transferred from equity to the income statement. Reversals of impairment loss in respect of equity instruments are not recognised in the income statement. Reversals of impairment losses on debt instruments are reversed through the income statement, if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in the income statement.

2.14 Cash and cash equivalents

Cash and cash equivalents comprise of fixed deposits, cash and bank balances and bank overdrafts, which are subject to an insignificant risk of changes in value. Bank overdrafts form an integral part of the Group’s cash management.

2.15 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present locations and conditions are accounted for as follows:

- Raw materials: purchase costs determined on a first-in first-out basis;- Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing

overheads based on normal operating capacity. These costs are assigned on a first-in first-out basis for wholesale businesses and on a weighted average basis for retail businesses.

Allowance is made for deteriorated, damaged, obsolete and slow moving inventories.

2.16 Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Notes to the Financial Statements31 December 2008

56

2. Summary of significant accounting policies (cont’d)

2.17 Financial liabilities

Financial liabilities are recognised on the balance sheet when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.

Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transaction costs.

Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest method, except for derivatives, which are measured at fair value.

A financial liability is derecognised when the obligation under the liability is extinguished. For financial liabilities other than derivatives, gains and losses are recognised in the income statement when the liabilities are derecognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are recognised in the income statement. Net gains or losses on derivatives include exchange differences.

2.18 Deferred rental

Deferred rental relates to the difference between the selling price and the fair value of the property under a sale and leaseback transaction. This is amortised on a straight line basis over the term of the lease.

2.19 Borrowing costs

Borrowing costs are recognised in the income statement as incurred except to the extent that they are capitalised. Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are ready for their intended use or sale.

2.20 Employee benefits

(a) Defined contribution plan

As required by law, the Singapore companies in the Group make contributions to the state pension scheme, the Central Provident Fund (“CPF”). CPF contributions are recognised as compensation expense in the same period as the employment that gives rise to the contributions.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. The estimated liability for leave is recognised for services rendered by employees up to the balance sheet date.

Notes to the Financial Statements31 December 2008

57

2. Summary of significant accounting policies (cont’d)

2.20 Employee benefits (cont’d)

(c) Pension scheme

The subsidiary in the People’s Republic of China contributes to defined contribution pension schemes. Contributions are charged to the income statement as they become payable in accordance with the rules of the scheme.

2.21 Leases

(a) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the income statement. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

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

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.22(f).

Notes to the Financial Statements31 December 2008

58

2. Summary of significant accounting policies (cont’d)

2.22 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(a) Sale of goods

Sales are recognised (net of goods and services tax and discounts) when goods have been delivered and accepted by the customer.

(b) Rendering of services

Service income is recognised when services are rendered.

Unearned revenue relates to service packages entered into with the customer to the extent that services have not been rendered and income has not been recognised.

(c) Management fee

Management fee income is recognised when management services are rendered.

(d) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

(e) Interest income

Interest income is recognised using the effective interest method.

(f) Rental income

Rental income on the sublet of a leased property is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to leases are recognised as a reduction of rental income over the lease term on a straight-line basis.

Notes to the Financial Statements31 December 2008

59

2. Summary of significant accounting policies (cont’d) 2.23 Income tax

(a) Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be

recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the balance sheet date.

Current taxes are recognised in the income statement except that tax relating to items recognised directly in equity is recognised directly in equity.

(b) Deferred tax Deferred income tax is provided using the liability method on temporary differences at the balance sheet date

between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets and liabilities are recognised for all temporary differences, except:

– Where the deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction affects neither the accounting profit nor taxable profit or loss;

– In respect of temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled by the Group and it is probable that the temporary differences will not reverse in the foreseeable future; and

– In respect of deductible temporary differences and carry-forward of unused tax credits and unused tax losses, if it is not probable that taxable profit will be available against which the deductible temporary differences and carry-forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

Deferred taxes are recognised in the income statement except that deferred tax relating to items recognised directly in equity is recognised directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Notes to the Financial Statements31 December 2008

60

2. Summary of significant accounting policies (cont’d)

2.23 Income tax (cont’d)

(c) Sales tax

Revenues, expenses and assets are recognised net of the amount of sales tax except:

in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

2.24 Segments

A business segment is a distinguishable component of the Group that is engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of the Group that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.

Segment information is presented in respect of the Group’s business and geographical segments.

2.25 Share capital and share issue expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital.

Notes to the Financial Statements31 December 2008

61

3. Significant accounting judgements and estimates

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

(a) Judgements made in applying accounting policies In the process of applying the Group’s accounting policies, management has made the following judgements, apart

from those involving estimations, which has the most significant effect on the amounts recognised in the financial statements:

(i) Income taxes

The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s tax payables and deferred tax liabilities at 31 December 2008 was $1,790,497 (2007: $1,025,484) and $65,679 (2007: $46,483) respectively.

(ii) Finance lease - as lessee

The Group has entered into finance leases for its motor vehicles. The Group has determined, based on an evaluation of the terms and conditions of the arrangements that the risks and rewards incidental to ownership of the leased items have been transferred to the Group and so accounts for the contracts as finance leases.

(b) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(i) Useful lives of property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these property, plant and equipment to be within 3 to 67 years. The carrying amount of the Group’s property, plant and equipment at 31 December 2008 was $3,154,243 (2007: $4,504,807). Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

Notes to the Financial Statements31 December 2008

62

3. Significant accounting judgements and estimates (cont’d)

(b) Key sources of estimation uncertainty (cont’d)

(ii) Impairment of non-financial assets

The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Goodwill and other indefinite life intangibles are tested for impairment annually and at other times when such indicators exist. Other non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable.

When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

(iii) Impairment of loans and receivables

The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivable at the balance sheet date is disclosed in Note 35 to the financial statements.

4. Revenue Group 2008 2007 $ $

Sales of goods 37,270,901 41,217,389Service income 267,722 410,480Consultancy and management fee 12,000 663,338Dividend income 210,664 11,979,304

37,761,287 54,270,511

Notes to the Financial Statements31 December 2008

63

5. Personnel expenses Group 2008 2007 $ $

Wages and salaries 3,511,764 3,332,916Pension contributions 335,317 402,761Other personnel expenses 799,577 927,585

4,646,658 4,663,262

These include the amount shown as directors’ and executive officers’ remuneration and fee in Note 6(d).

6. (Loss)/profit from operations

This is determined after charging/crediting the following: Group 2008 2007 $ $

(a) Other income:

Gain on disposal of subsidiaries – 24,995,976Gain on disposal of property, plant and equipment 8,134 15,420,320Realised gain on disposal of quoted equity investment 17,160 1,847,158Gain on liquidation of a subsidiary – 45,876Rental income 1,078,005 385,176Write back of allowance for doubtful debts 17,000 – Display incentive 89,553 89,852Fair value gain on derivative financial instrument – 107,350Others 80,886 164,384 1,290,738 43,056,092

(b) Other operating expenses:

Amortisation of land use rights – 2,811Depreciation of property, plant and equipment 568,752 721,133Loss on disposal of plant and equipment – 380,364Bad debts written off 7,442 61,536Impairment of doubtful debt – 38,147Closure of outlets 71,799 119,312Others 116,206 247,709 764,199 1,571,012

Notes to the Financial Statements31 December 2008

64

6. (Loss)/profit from operations (cont’d) Group 2008 2007 $ $

(c) Other non-operating expenses:

Impairment loss of property 453,000 – Unrealised fair value loss on quoted equity investments 1,736,093 861,305Realised fair value loss on quoted equity investments 694,541 – Impairment of goodwill – 1,758,113Impairment loss on quoted equity investments 44,922,404 – 47,806,038 2,619,418

(d) Other expenses

Non-audit fees paid to auditors – 108,414Directors’ remuneration - directors of the Company 607,608 673,108- directors of the subsidiaries 131,978 115,681Directors’ fees 125,000 109,667Executive officers’ remuneration 315,589 368,158Operating lease expenses 3,381,677 3,613,291

(e) Land compensation

Land compensation 5,162,698 –

This relates to amounts received by a subsidiary for the disposal of its land occupancy rights (Note 12).

7. Directors’ remuneration

Number of directors of the Company in remuneration bands

2008 2007

$500,000 and above 1 1$250,000 to $499,000 – –0 to $250,000 6 4

7 5

Notes to the Financial Statements31 December 2008

65

8. Finance expenses Group 2008 2007 $ $

Interest expense - bank overdrafts 39,729 178,611- bank term loans 37,256 69,021- lease obligations 12,787 11,467- brokerage 41,319 134,082Others 24,386 7,993 155,477 401,174

9. Income tax expense Group 2008 2007 $ $

Current tax - current year 924,267 2,074,029- (over)/under provision in respect of prior year (126,200) 9,046Deferred tax - current year – 26,116- under provision in respect of prior year 19,196 65,012- effect of reduction in tax rate – (4,059) 817,263 2,170,144

The reconciliation of the tax expense and the product of accounting (loss)/profit multiplied by the applicable corporate tax rate for the years ended 31 December 2008 and 2007 was as follows:

Accounting (loss)/profit (45,189,138) 48,271,512 Tax at the statutory rate applicable to profits in the countries where the Group operates (7,805,438) 8,688,872Non-deductible expenses/charges 10,353,283 1,193,780Income not subject to tax (1,294,510) (8,124,037)Effect of reduction in tax rate – (4,059)Utilisation of previously unrecognised tax benefit (237,569) – Deferred tax asset not recognised 14,277 382,455Effect of partial tax exemption (108,126) (40,664)(Over)/under provision in respect of prior year (107,004) 74,058Others 2,350 (261) 817,263 2,170,144

Notes to the Financial Statements31 December 2008

66

9. Income tax expense (cont’d)

The Group has unutilised tax losses and capital allowances of approximately $79,000 (2007: $1,438,000) available for offset against future taxable profits, subject to the agreement of the tax authorities and compliance with relevant provisions of the tax legislation of the respective countries in which the subsidiaries operate. The potential deferred tax assets arising from these unutilised tax losses have not been recognised in the financial statements in accordance with the Group’s accounting policy in Note 2.

Group

Deferred taxation at 31 December relates to the following:

Consolidated balance sheet Consolidated income statement2008 2007 2008 2007

$ $ $ $

Deferred tax assetDifferences in depreciation – – – (11,248)Unutilised tax losses – – – (75,821)Total deferred tax asset – –

Deferred tax liabilityDifferences in depreciation 65,679 46,483 – – Provisions – – 19,196 – Total deferred tax liability 65,679 46,483

Deferred income tax 19,196 (87,069)

10. Earnings per share

Basic earnings per share amounts are calculated by dividing (loss)/profit for the year from continuing operations attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share amounts are calculated by dividing (loss)/profit for the year from continuing operations attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the existing warrants of the Company into ordinary shares.

Notes to the Financial Statements31 December 2008

67

10. Earnings per share (cont’d)

The following tables reflect the profit and loss and share data used in the computation of basic and diluted earnings per share for the years ended 31 December.

Group 2008 2007 $ $

Net (loss)/profit attributable to shareholders from (a) continuing operations (47,065,206) 46,199,738(b) discontinued operations – (506,448)

(47,065,206) 45,693,290

Number of Shares 2008 2007

Weighted average number of ordinary shares for the calculation of basic earnings per share 383,872,665 274,985,280

Adjusted weighted average number of ordinary shares for the calculation of diluted earnings per share 394,632,896 292,097,978

Notes to the Financial Statements31 December 2008

68

11. Property, plant and equipment

Leasehold buildings Factory

Computers and office equipment

Furniture and fittings

Motor vehicles

Showroom renovation

Air conditioners Machinery

Construction in progress Total

Group $ $ $ $ $ $ $ $ $ $CostAt 1.1.2007 21,321,194 6,099,766 1,363,218 2,927,564 2,179,927 3,452,396 278,525 2,672,692 – 40,295,282 Additions 15,600 – 131,167 116,991 170,938 96,022 56,648 26,596 90,744 704,706 Disposals (7,103,475) – (183,187) (532,096) (139,959) (203,106) (5,600) (560,315) – (8,727,738)Attributable to

discontinued operations (10,223,502) (6,099,766) (353,675) (2,195,695) (1,217,050) (2,113,567) (153,068) (16,000) – (22,372,323)

Translation difference – – – – – – – 3,760 (478) 3,282

At 31.12.2007 and 1.1.2008 4,009,817 – 957,523 316,764 993,856 1,231,745 176,505 2,126,733 90,266 9,903,209

Additions – – 66,081 9,668 – 43,148 4,197 12,170 – 135,264Disposals (1,165,495) – (23,181) (8,672) (135,005) (86,820) (12,928) (63,644) (93,024) (1,588,769)Translation

difference 34,277 – – 719 7,486 – – 60,401 2,758 105,641 Written off – – – (24,468) – – – (1,537,183) – (1,561,651)At 31.12.2008 2,878,599 – 1,000,423 294,011 866,337 1,188,073 167,774 598,477 – 6,993,694 Accumulated

depreciation and impairment loss

At 1.1.2007 5,033,344 2,614,185 1,037,730 2,351,076 1,631,023 2,724,555 251,641 2,371,555 – 18,015,109 Charge for the year 118,287 – 117,706 63,944 131,207 188,929 18,238 82,822 – 721,133 Disposals (72,280) – (177,908) (326,405) (104,215) (100,162) (1,867) (353,081) – (1,135,918)Attributable to

discontinued operations (4,348,646) (2,614,185) (298,143) (1,852,536) (1,051,789) (1,874,517) (150,777) (14,060) – (12,204,653)

Translation difference (257) – – 1,535 (54) – – 1,507 – 2,731

At 31.12.2007 and 1.1.2008 730,448 – 679,385 237,614 606,172 938,805 117,235 2,088,743 – 5,398,402

Charge for the year 42,964 – 136,188 78,735 113,534 150,562 18,986 27,783 – 568,752 Disposals (564,452) – (15,176) (5,320) (88,146) (49,870) (5,995) (440,505) – (1,169,464)Translation

difference 16,600 – – 41 7,059 – – 61,382 – 85,082 Written off – – – (24,468) (11,016) – – (1,460,837) – (1,496,321)Impairment loss 453,000 – – – – – – – – 453,000At 31.12.2008 678,560 – 800,397 286,602 627,603 1,039,497 130,226 276,566 – 3,839,451 Net book valueAt 31.12.2008 2,200,039 – 200,026 7,409 238,734 148,576 37,548 321,911 – 3,154,243

At 31.12.2007 3,279,369 – 278,138 79,150 387,684 292,940 59,270 37,990 90,266 4,504,807

Notes to the Financial Statements31 December 2008

69

11. Property, plant and equipment (Cont’d)

Computers and office Furniture Air equipment and fittings conditioners Total $ $ $ $Company Cost At 1.1.2007 67,791 – – 67,791Written off (67,791) – – (67,791)Additions 82,493 133,176 56,648 272,317

At 31.12.2007 and 1.1.2008 82,493 133,176 56,648 272,317Written off (1,808) – – (1,808)

At 31.12.2008 80,685 133,176 56,648 270,509

Accumulated depreciation At 1.1.2007 67,791 – – 67,791Written off (67,791) – – (67,791)Charge for the year 8,016 6,625 3,215 17,856

At 31.12.2007 and 1.1.2008 8,016 6,625 3,215 17,856Written off (602) – – (602)Charge for the year 27,196 19,024 8,093 54,313

At 31.12.2008 34,610 25,649 11,308 71,567

Net book value At 31.12.2008 46,076 107,527 45,340 198,942

At 31.12.2007 74,477 126,551 53,433 254,461

Assets held under finance leases

The carrying amount of motor vehicles held under finance leases as at 31 December 2008 was $202,823 (2007: $351,202).

Leased assets are pledged as security for the related finance lease liabilities.

Notes to the Financial Statements31 December 2008

70

11. Property, plant and equipment (Cont’d)

Assets pledged as security

In addition to assets held under finance leases, the Group’s leasehold building with a carrying amount of $2,200,039 (2007: $2,696,004) is subject to a first charge for term loans and bank overdraft as disclosed in Note 26 and Note 27.

Impairment of assets

During the financial year, a subsidiary of the Group within the beauty segment, Shine @ Spring Pte Ltd carried out a valuation of its property. An impairment loss of $453,000 (2007: $Nil), representing the write down of the property was recognised in the financial year ended 31 December 2008.

12. Land occupancy rights Group 2008 2007 $ $

Cost At beginning of year 498,127 685,473Translation difference – 14Disposal (498,127) –

– 685,487Less: Accumulated amortisation – (187,360)

At end of year – 498,127

Movements in accumulated amortisation during the financial year:

At beginning of year 187,360 184,549(Written off)/amortisation during the year (187,360) 2,811

At end of year – 187,360

A subsidiary had land use rights over two plots of state-owned land in the People’s Republic of China (“PRC”) where the subsidiary’s manufacturing and storage facilities reside. The land used rights were disposed during the current year when they were acquired by the PRC government authorities.

Notes to the Financial Statements31 December 2008

71

13. Investment in subsidiaries Group 2008 2007 $ $

(a) Subsidiaries comprise: Unquoted equity shares, at cost At beginning of the year 12,715,432 13,458,335 Disposal during the year – (5,700,000) Liquidation during the year – (678,600) Addition during the year – 1

12,715,432 7,079,736 Capital contribution during the year – 5,635,696

12,715,432 12,715,432 Impairment losses (7,589,626) (1,968,977)

Carrying amount of investments 5,125,806 10,746,455

Movement in impairment loss: Balance at beginning of year 1,968,977 1,806,450 Impairment during the year 5,620,649 868,077 Attributable to discontinued operations – (100,000) Attributable to liquidated subsidiary – (605,550)

Balance at end of year 7,589,626 1,968,977

Notes to the Financial Statements31 December 2008

72

13. Investment in subsidiaries (cont’d)

(b) The Company and the Group had the following subsidiaries as at 31 December:

Name Country of

incorporation Principal activitiesProportion (%) of ownership interest

2008 2007Held by the Company

Novena Investment Pte Ltd* Singapore Investment holding 100 100

Novena Strategic Investments Pte Ltd* Singapore Investment holding 100 100

Shine @ Spring Pte Ltd (formerly known as Beaute Spring Pte Ltd)*

Singapore Retailing of beauty and personal care products

100 100

Fasta International Pte Ltd * Singapore Retailing of beauty and personal care products

100 100

Chuan Seng Leong Pte Ltd * Singapore Distributing and wholesaling of household, beauty and personalcare products

80 80

Held by subsidiaries

Suzhou Novena Furniture Co. Ltd **

People’s Republic of

China

Manufacture and retail of office, household and custom-made furniture

75 75

B.S.P. Global Pte Ltd * Singapore Provision of beauty and personal care services and sales of beauty and personal care products

100 100

Niclas International Pte Ltd * Singapore Retailer, importer and distributor of beauty and personal care products

100 100

Notes to the Financial Statements31 December 2008

73

13. Investment in subsidiaries (cont’d)

* Audited by Ernst & Young LLP, Singapore. ** Audited by Suzhou Kaicheng Certified Public Accountants, PRC.

Subsidiaries not audited by Ernst & Young LLP, Singapore, are not significant as defined under Listing Rule 718 of the Singapore Exchange Listing Manual.

14. Investment in associate Group 2008 2007 $ $

(a) Investment in associate comprise: Unquoted equity shares, at cost 237,250 237,250 Share of reserves (237,250) (207,655)

Carrying amount – 29,595

(b) Details of the associate company at the end of the financial year are as follows:

Name Country of

incorporation Principal activitiesProportion (%) of ownership interest

2008 2007

Shenzhen Calo Enersave Furniture Co. Ltd *

People’sRepublic of

China

Manufacture and retail of office, household and custom-made furniture

26 26

* Audited by Yuehua Certified Public Accountants Co. Ltd,Shenzhen, PRC. The associate company is not significant as defined under Listing Rule 718 of the Singapore Exchange Listing Manual.

Notes to the Financial Statements31 December 2008

74

14. Investment in associate (cont’d)

The summarised financial information of the associate, not adjusted for the proportion of ownership interest held by the Group, is as follows:

Group 2008 2007 $ $

Assets and liabilities: Total assets 2,457,277 1,870,425

Total liabilities 2,103,809 1,362,875

Results Revenue 1,342,315 2,526,446

(Loss)/profit for the year (182,800) 72,723

15. Quoted equity investments Group and Company 2008 2007 $ $

Non-current

Available-for-sale financial assets 14,190,918 26,264,832

Group Company 2008 2007 2008 2007 $ $ $ $Current Financial assets at fair value through profit and loss 509,411 3,616,323 509,411 820,820

Notes to the Financial Statements31 December 2008

75

15. Quoted equity investments (Cont’d)

Impairment loss (available-for-sale financial assets)

During the financial year, the Group recognised in the income statement for the year ended 31 December 2008 a total amount of impairment loss of $44,922,404 (2007: $Nil) pertaining to quoted equity investments to record the write-down in the carrying value of these quoted equity investments. This amount includes an amount of $19,588,749 relating to fair value adjustment that was recorded in fair value adjustment reserve in equity in prior year.

16. Due from a subsidiary (non-trade)

The balance is stated at cost and has no fixed repayment terms. It is unsecured, non-interest bearing and is intended as quasi-equity.

17. Inventories Group 2008 2007 $ $

Balance sheet: Raw materials 151,923 172,816Work-in-progress 7,028 54,332Finished goods 5,176,715 5,687,686

5,335,666 5,914,834

Income statement: Inventories recognised as an expense Inclusive of the following debit: - inventories written-down 6,941 205,145

The reversal of write-down of inventories was made when the related inventories were sold below their carrying

amounts.

Notes to the Financial Statements31 December 2008

76

18. Trade receivables Group Company 2008 2007 2008 2007 $ $ $ $

Trade receivables 2,971,107 4,116,368 – 43,028

Allowance for doubtful debts (21,147) (38,147) – –

2,949,960 4,078,221 – 43,028

Trade receivables are non-interest bearing and are generally on 30 to 90 days’ terms. They are recognised at their

original invoice amounts which represents their fair values on initial recognition.

As at 31 December 2008, RMB 1,144,376 (2007: RMB 2,980,000) equivalent to approximately $242,608 (2007: $601,960) is included in trade receivables for the Group.

Receivables that are past due but not impaired

The Group and Company have trade receivables amounting to $486,626 (2007: $758,811) and $Nil (2007: $Nil) respectively, that are past due at the balance sheet date but not impaired. These receivables are unsecured and the analysis of their aging at the balance sheet date is as follows:

Group Company 2008 2007 2008 2007 $ $ $ $

Trade receivables past due: Less than 30 days 347,597 406,909 – –

30 to 60 days 80,593 96,582 – –

61-90 days 35,415 240,603 – –

More than 90 days 23,021 41,717 – –

486,626 758,811 – –

Notes to the Financial Statements31 December 2008

77

18. Trade receivables (Cont’d)

Receivables that are impaired

The Group’s trade receivables that are impaired at the balance sheet date and the movement of the allowance accounts used to record the impairment are as follows:

Group Collectively impaired Individually impaired 2008 2007 2008 2007 $ $ $ $

Trade receivables – nominal amounts – – 21,147 38,147

Less: Allowance for impairment – – (21,147) (38,147)

– – – –

Movement in allowance accounts:

At 1 January – 113,640 38,147 –

(Write-back)/charge for the year – – (17,000) 38,147

Attributable to discontinued operations – (113,640) – –

At 31 December – – 21,147 38,147

Trade receivables that are individually determined to be impaired at the balance sheet date relate to debtors that are in

significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

19. Other receivables, deposits and prepayments Group Company 2008 2007 2008 2007 $ $ $ $

Deposits 830,210 1,183,409 20,000 20,000

Other receivables 578,719 948,953 396,714 676,532

Prepayments 111,269 77,983 43,967 4,250

1,520,198 2,210,345 460,681 700,782

Notes to the Financial Statements31 December 2008

78

20. Due from/(to) subsidiaries (non-trade) Due to director of a subsidiary (non-trade)

Except as disclosed below, these balances are unsecured, interest-free and are repayable on demand.

Due from subsidiary (non-trade)

An amount of $400,000 (2007: $400,000) due from a subsidiary is unsecured, bears interest at 3% per annum (2007: 3%).

21. Fixed deposits Group Company 2008 2007 2008 2007 $ $ $ $ (Note 39) Secured 2,451,060 3,205,050 – –

Unsecured 9,659,024 18,295,050 1,151,070 9,242,046

12,110,084 21,500,100 1,151,070 9,242,046

Secured fixed deposits have been pledged with banks to secure performance guarantees, bank loans, bills payable and

bank overdrafts granted by the banks. Fixed deposits are made for varying periods of between 7 days to 3 months, depending on the immediate cash

requirements of the Group, and earn interests at the respective short-term deposit rates, ranging from 0.23% to 3.15% (2007: 0.95% to 3.90%) per annum.

22. Trade payables

Trade payables are non-interest bearing and are normally settled on 30- 90 day terms. As at 31 December 2008, RMB 1,199,960 (2007: RMB 2,038,000) equivalent to approximately $254,392 (2007: $411,676) are included in trade payables for the Group.

Notes to the Financial Statements31 December 2008

79

23. Other payables and accruals, and unearned revenue Group Company 2008 2007 2008 2007 $ $ $ $

Accrued operating expenses 645,398 806,182 207,642 275,428

Customers’ deposits 2,308 22,208 – –

Other payables 213,242 94,830 9,764 6,235

Rental deposits received 329,350 285,024 – –

1,190,298 1,208,244 217,406 281,663

Unearned revenue of $681,994 (2007: $734,947) relates to service packages entered into with customers to the extent

that services have not been rendered and revenue has not been recognised.

24. Deferred rental Group 2008 2007 $ $

Cost At 1 January 1,398,000 – Additions – 1,398,000

At 31 December 1,398,000 1,398,000

Accumulated Amortization At 1 January (166,429) – Amortisation during the year (199,714) (166,429)

At 31 December (366,143) (166,429)

Net Book Value Current 199,714 199,714Non-current 832,143 1,031,857

At 31 December 1,031,857 1,231,571

Notes to the Financial Statements31 December 2008

80

24. Deferred rental (Cont’d)

In prior year, a subsidiary in the Group entered into an agreement for sale and leaseback of a property. Deferred rental relates to the difference between the selling price and the fair value of the property. This difference is amortised over the lease term of the property of 7 years on a straight line basis.

25. Lease obligations Group Minimum Present lease value of payments Interest payments $ $ $2008 1 year to 5 years 101,699 (18,580) 83,119Later than 5 years 44,774 (9,800) 34,974

146,473 (28,380) 118,093Not later than 1 year 68,124 (10,519) 57,605

214,597 (38,899) 175,698

2007 1 year to 5 years 184,740 (29,757) 154,983Later than 5 years 57,598 (12,600) 44,998

242,338 (42,357) 199,981Not later than 1 year 82,605 (13,003) 69,602

324,943 (55,360) 269,583

Obligations under finance lease are secured by a charge over the leased asset (Note 11).

Lease terms range from 3 to 7 years with options to purchase at the end of the lease term. Lease terms do not contain restrictions concerning dividends, additional debt or further leasing. The average discount rate implicit in the Company’s and Group’s lease obligations are 3.3% to 6.5% (2007: 3.3% to 6.5%) per annum respectively.

Notes to the Financial Statements31 December 2008

81

26. Term loans Group Company 2008 2007 2008 2007 $ $ $ $

Term loans – secured

Due within 1 year 224,004 224,004 – –

Due after 1 year 858,662 1,082,662 – –

1,082,666 1,306,666 – –

The SGD secured term loan bears interest at 3.08% (2007 : 2.30%) per annum, repayable in 120 equal monthly

instalments commencing October 2003. The loan is secured by a first legal mortgage on the subsidiary’s building and a corporate guarantee from a subsidiary.

27. Bank overdrafts

Bank overdrafts are secured by a first legal mortgage on a leasehold building, pledge of fixed deposits and a corporate guarantee from the holding company. Bank overdrafts bear interest of 3.7% to 5.5% (2007 : 3.7% to 5.5%) per annum.

28. Share capital Group and Company 2008 2007 2008 2007 No. of shares No. of shares $ $Issued and fully paid At 1 January 302,954,700 110,993,254 35,210,275 17,764,108

Issue of new shares

- Issuance of ordinary shares for

quoted equity investment – 10,310,849 – 2,609,676

- Issuance of ordinary shares for cash – 27,000,000 – 8,100,000

- Rights cum warrants issue – 148,304,103 – 6,228,771

- Exercise of warrants 117,563,297 6,346,494 9,405,065 507,720

At 31 December 420,517,997 302,954,700 44,615,340 35,210,275

Notes to the Financial Statements31 December 2008

82

28. Share capital (cont’d)

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction.

In 2007, the Company issued 148,304,103 rights shares with 148,304,103 detachable warrants from the reinvestment of a special interim dividend (Note 30) by equity holders. The gross proceeds of $6,228,771 were credited to share capital.

During the financial year, the Company issued 117,563,297 (2007: 6,346,494) shares at $0.08 (2007: $0.08) each upon the exercise of warrants.

Each warrant carries the right to subscribe for one new share in the Company at an exercise price of $0.08 for each new share.

As at the end of the financial year, there were 24,394,312 (2007: 141,957,609) warrants outstanding of which no further warrants (2007: 1,428,500 warrants) were exercised for issuance of new shares as of 20 March 2009.

29. Other reserves Group Company 2008 2007 2008 2007 $ $ $ $

Foreign currency translation reserve 817,356 606,409 – –

Fair value adjustment reserve (206,000) (19,588,749) (206,000) (19,588,749)

Share options reserve 135,000 135,000 135,000 135,000

Closing balance at 31 December 746,356 (18,847,340) (71,000) (19,453,749)

Notes to the Financial Statements31 December 2008

83

29. Other reserves (Cont’d)

(a) Foreign currency translation reserve

The foreign currency translation reserve relates to exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

Group Company 2008 2007 2008 2007 $ $ $ $

At 1 January 606,409 575,247 – –

Net effect of exchange differences 210,947 31,162 – –

At 31 December 817,356 606,409 – –

(b) Fair value adjustment reserve

Fair value adjustment reserve records the cumulative fair value changes of available-for-sale financial assets until they are derecognised or impaired.

Group Company 2008 2007 2008 2007 $ $ $ $

At 1 January (19,588,749) 1,640,324 (19,588,749) 1,640,324

Net loss on fair value changes during the year (25,539,656) (21,229,073) (25,539,656) (21,229,073)

Transfer of impairment loss on quoted equity

investments to income statement 44,922,405 – 44,922,405 –

At 31 December (206,000) (19,588,749) (206,000) (19,588,749)

(c) Share options reserve

At 1 January and 31 December 135,000 135,000 135,000 135,000

Notes to the Financial Statements31 December 2008

84

30. Dividends Group and Company 2008 2007 $ $

Declared and paid during the year Dividends on ordinary shares - Interim dividend for 2008: Nil cents (2007: 5.1 cents) (2007: 18%) – Note 28 – 6,228,771- Final exempt (one-tier) dividend for 2007: 2.5 cent per share (2006: 1.0 cent per share less tax of 18%) 10,505,025 1,216,093

10,505,025 7,444,864

Proposed but not recognised as a liability as at 31 December Dividends on ordinary shares, subject to shareholders’ approval at the AGM : - Special exempt (one-tier) dividend for 2008: Nil (2007: 2.0 cents per share) – 6,059,094- Final exempt (one-tier) dividend for 2008: Nil (2007: 0.5 cent per share) – 1,514,774

– 7,573,868

31. Cash and cash equivalents Group 2008 2007 $ $

Cash and bank balances 1,843,085 3,072,586Fixed deposits (unsecured) – Note 21 9,659,024 18,295,050Bank overdrafts (20,046) (1,436,257)

Cash and cash equivalents 11,482,063 19,931,379

Bank overdrafts are included in the determination of cash and cash equivalents because they form an integral part of the Group’s cash management.

Notes to the Financial Statements31 December 2008

85

32. Related party information

(a) Sale and purchase of goods and services

In addition to the related party information disclosed elsewhere in the financial statements, significant transactions with related parties on terms agreed between the parties, were as follows:

Group Company 2008 2007 2008 2007 $ $ $ $

Income Management service income from a company related to a director 12,000 15,000 12,000 15,000

Interest income received from a subsidiary – – 12,000 2,000

Expense Rental of office premise from a subsidiary – – 48,000 15,000

Company related to a director

One of the directors of the Company holds 50% (2007: 50%) equity interest in Premium Capital Pte Ltd (PCPL). During the financial year, the Company provided management services to PCPL. No balance with PCPL was outstanding at the balance sheet date (2007: Nil).

Notes to the Financial Statements31 December 2008

86

32. Related party information (Cont’d)

(b) Compensation of key management personnel Group 2008 2007 $ $

Short-term employee benefits 1,133,253 1,212,768Central Provident Fund contributions 46,922 53,846

Total compensation paid to key management personnel 1,180,175 1,266,614

Comprise amounts paid to : - Directors of the Company 732,608 782,775- Other key management personnel 447,567 483,839

1,180,175 1,266,614

The remuneration of key management personnel are determined by the remuneration committee having regard to

the performance of individuals and market trends.

Directors’ interests in an employee share option plan

No options were granted during the year ended 31 December 2008.

Directors’ interests in warrants

During the financial year, the directors exercised 4,108,257 (2007: Nil) warrants at an exercise price of $0.08 for issuance of new shares.

Notes to the Financial Statements31 December 2008

87

33. Commitments

(a) Operating lease commitments – as lessee

The Group has entered into commercial leases for a building (used for office premise and showrooms) and retail outlets. These leases have an average tenure of between 1 to 7 years with options for renewal. The Group is not restricted from subleasing the property and retail outlets to third parties.

Future minimum lease payments payable under non-cancellable operating leases as at 31 December are as follows:

Group 2008 2007 $ $

- Not later than 1 year 3,841,074 3,368,000- 1 year through 5 years 11,101,680 12,334,000- Later than 5 years 363,899 2,056,000

15,306,653 17,758,000

(b) Operating lease commitments – as lessor

The Group has entered into commercial leases on a lease property. These non-cancellable leases have remaining non-cancellable lease terms of 1 to 3 years.

Future minimum rental receivables under non-cancellable operating leases as at 31 December are as follows:

Group 2008 2007 $ $

- Not later than 1 year 1,354,227 1,307,000- 1 year through 5 years 1,359,679 3,139,000- later than 5 years – 636,000

2,713,906 5,082,000

Notes to the Financial Statements31 December 2008

88

34. Fair value of financial instruments

The fair value of financial assets and liabilities by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value are as follows :

Group Carrying Carrying amount Fair value amount Fair value $ $ $ $Financial liabilities Obligation under finance leases (175,698) (186,410) (269,583) (286,019)

Determination of fair value

Quoted equity investments (Note 15)

Fair value is determined directly by reference to their published market bid price at the balance sheet date.

Due from a subsidiary (non-current, non-trade) (Note 16)

The balance is stated at cost. It is long term, interest-free and given to subsidiaries as quasi-equity. The fair value is not determinable since it has no fixed repayment terms.

Cash and bank balances (Note 31) and other current financial assets and liabilities

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are repriced to market interest rates on or near the balance sheet date.

Notes to the Financial Statements31 December 2008

89

35. Classification of financial assets and liabilities Group Company 2008 2007 2008 2007 $ $ $ $Fair value through profit or loss

Assets Quoted equity investments 509,411 3,616,323 509,411 820,820

Loans and receivables

Due from subsidiaries (non-trade) – – 2,360,000 2,360,000

Trade receivables 2,949,960 4,078,221 – 43,028

Deposits 830,210 1,183,409 20,000 20,000

Other receivables 578,719 948,953 396,714 676,532

Due from subsidiaries (non-trade) – – 881,420 1,230,938

Fixed deposits 12,110,084 21,500,100 1,151,070 9,242,046

Cash and cash balances 1,843,085 3,072,586 434,327 988,814

18,312,058 30,783,269 5,243,531 14,561,358

Financial liabilities at amortised cost

Trade payables 2,446,577 3,198,484 – –

Bills payable – 580,032 – –

Other payables 542,592 379,854 9,764 6,235

Accrued operating expenses 309,182 421,166 5,000 5,979

Lease obligations 175,698 269,583 – –

Term loans 1,082,666 1,306,666 – –

Due to a director of a subsidiary (non-trade) 120,000 200,000 – –

Due to subsidiary (non-trade) – – 4,044,936 4,405,223

Bank overdrafts 20,046 1,436,257 – –

4,696,761 7,792,042 4,059,700 4,417,437

Available-for-sale financial assets

Quoted equity investments 14,190,918 26,264,832 14,190,918 26,264,832

Notes to the Financial Statements31 December 2008

90

36. Financial risk management objectives and policies

The Group and the Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk. The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Board of Directors. The Audit Committee provides independent oversight to the effectiveness of the risk management process.

The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including quoted equity investments and cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval of the Operations Manager.

Exposure to credit risk

At the balance sheet date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the balance sheets.

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Group. Cash and cash equivalents are placed with reputable financial institutions.

Notes to the Financial Statements31 December 2008

91

36. Financial risk management objectives and policies (Cont’d)

(a) Credit risk (cont’d)

Financial assets that are either past due or impaired (cont’d)

Information regarding financial assets that are either past due or impaired are disclosed in Note 18 (Trade receivables) and Note 15 (quoted equity investments).

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade receivables on an on-going basis. The credit risk concentration profile of the Group’s trade at the balance sheet date is as follows:

2008 2007 $ % of total $ % of total

Group

By country:

Singapore 2,707,352 92% 3,488,131 86%

People’s Republic of China 242,608 8% 590,090 14%

2,949,960 100% 4,078,221 100%

By industry sectors:

Furniture 242,608 8% 590,090 14%

Beauty 2,707,352 92% 3,445,103 85%

Others – – 43,028 1%

2,949,960 100% 4,078,221 100%

The Group and the Company have no significant concentration of credit risk.

Notes to the Financial Statements31 December 2008

92

36. Financial risk management objectives and policies (Cont’d)

(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

The Group’s and the Company’s liquidity risk management policy is that to maintain sufficient liquid financial assets and stand-by credit facilities with their different bankers. At the balance sheet date, approximately 21% (2007: 17%) of the Group’s term loans (Note 26) will mature in less than one year based on the carrying amount reflected in the financial statements.

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities at the balance sheet date based on contractual undiscounted payments.

2008 20071 year or less 1 to 5 years Total

1 year or less 1 to 5 years Total

Group $ $ $ $ $ $

Trade payables 2,446,577 – 2,446,577 3,198,484 – 3,198,484Bills payable – – – 580,032 – 580,032Other payables 542,592 – 542,592 379,854 – 379,854Lease obligations 57,605 118,093 175,698 69,602 199,981 269,583Term loans 224,004 858,662 1,082,666 224,004 1,082,662 1,306,666Due to a director of a subsidiary (non-trade) 120,000 – 120,000 200,000 – 200,000

3,390,778 976,755 4,367,533 4,651,976 1,282,643 5,934,619Company

Other payables 9,764 – 9,764 6,235 – 6,235Due to subsidiary (non-trade) 4,044,936 – 4,044,936 4,405,223 – 4,405,223

4,054,700 – 4,054,700 4,411,458 – 4,411,458

Notes to the Financial Statements31 December 2008

93

36. Financial risk management objectives and policies (Cont’d)

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings and interest-bearing loans given to a subsidiary, respectively.

Sensitivity analysis for interest rate risk

At the balance sheet date, if SGD interest rates had been 75 (2007: 75) basis points lower/higher with all other variables held constant, the Group’s (loss)/profit net of tax would have been $8,000 (2007: $25,000) lower/higher, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings.

(d) Foreign currency risk

The Group has transactional currency exposures arising from purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily SGD and Renminbi (RMB). The foreign currencies in which these transactions are denominated are mainly U.S Dollars (USD).

The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes. At the balance sheet date, such foreign currency balances (mainly in RMB) is $6,055,000 (2007: $84,000).

It is not the Group’s policy to enter into derivative forward foreign exchange contracts for hedging and speculative purposes.

The Group is also exposed to currency translation risk arising from its net investments in foreign operations, namely the People’s Republic of China (“PRC”). The Group’s net investments in PRC are not hedged as currency positions RMB are considered to be long-term in nature.

Notes to the Financial Statements31 December 2008

94

36. Financial risk management objectives and policies (Cont’d)

(d) Foreign currency risk (Cont’d)

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity to a reasonably possible change in the RMB exchange rates (against SGD), with all other variables held constant.

2008 2007 $ $ Loss net Profit net of tax of tax

RMB - strengthened 10% (2007: 10%) (575,000) 60,000 - weakened 10% (2007: 10%) 575,000 (60,000)

(e) Market price risk

Market price risk is the risk that the fair value or future cash flows of the Group’s and Company’s financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates). The Group is exposed to equity price risk arising from its investment in quoted equity investments. These investments are quoted on the SGX-ST in Singapore and the Hang Seng Index in Hong Kong and are classified as held for trading or available-for-sale financial assets.

The Group’s objective is to manage investment returns and equity price risk using a mix of investment grade

shares with steady dividend yield and non-investment grade shares with higher volatility as determined by the Board of Directors. All investments are approved by the Board of Directors.

Sensitivity analysis for equity price risk

At the balance sheet date, if the STI had been 2% (2007: 2%) higher/lower with all other variables held constant, the Group’s loss net of tax would have been $10,000 (2007: $76,000) lower/higher, arising as a result of higher/lower fair value gains on held for trading investments in equity instruments, and the Group’s other reserve in equity would have been $284,000 (2007: $917,000) higher/lower, arising as a result of an increase/decrease in the fair value of equity instruments classified as available-for-sale.

Notes to the Financial Statements31 December 2008

95

37. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2008 and 31 December 2007. The Group is not subject to any externally imposed capital requirements.

The Group monitors capital using a gearing ratio, which is total debt divided by total capital plus total debt. The Group’s policy is to keep the gearing ratio less than 60%. The Group includes within total debt, loans and borrowings, trade and other payables and other liabilities. Capital includes equity attributable to the equity holders of the parent including fair value adjustment reserve.

Group 2008 2007 $ $

Total debt (Note 36 (b)) 4,367,533 5,934,619

Equity attributable to the equity holders of the parent 30,905,485 59,476,955Add/(less): - Fair value adjustment reserve (Note 29(b)) 206,000 19,588,749

Total capital 31,111,485 79,065,704

Capital and total debt 35,479,018 85,000,323

Gearing ratio 12% 7%

Notes to the Financial Statements31 December 2008

96

38. Group segmental information

The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences in the products and services produced. Secondary information is reported geographically. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

(a) Analysis by Business Segments

The Group has two operating divisions, namely, the Beauty Division and the Furniture Division.

Other operations comprise of the corporate division. This includes dividend income, income from trading of quoted equity investments and management fee.

Inter-segment pricing is on an arm’s length basis.

BeautyDivision

FurnitureDivision Others Elimination Total

$ $ $ $ $2008

Revenue

External sales 35,525,798 1,965,978 269,511 – 37,761,287Inter-segment sales 2,606,225 – 4,502,153 (7,108,378) – Total sales 37,761,287

Loss from operations (1,336,391) 4,585,624 (49,975,515) 1,446,590 (45,279,692)Finance expenses (155,477)Finance income 275,626Share of associate results (29,595)Loss before tax (45,189,138)Tax (817,263)Loss for the year (46,006,401)

Assets 14,046,699 3,918,036 31,026,589 (7,377,759) 41,613,565Liabilities (7,277,052) (1,230,053) (7,475,967) 7,377,760 (8,605,312)Capital expenditure 133,244 2,020 – – 135,264Depreciation and impairment loss 935,719 31,719 54,314 – 1,021,752

Notes to the Financial Statements31 December 2008

97

38. Group segmental information (Cont’d)

(a) Analysis by Business Segments (Cont’d)

BeautyDivision

FurnitureDivision Others Elimination Total

$ $ $ $ $2007

Turnover

External sales 37,599,737 3,366,592 13,304,182 – 54,270,511Inter-segment sales 3,372,787 – 286,670 (3,659,457) – Total sales 54,270,511

(Loss)/profit from operations (1,652,808) 594,122 38,394,093 (4,618,142) 32,717,265Gain on disposal of property, plant and equipment 15,576,000 – – – 15,576,000 Finance expenses (240,493) (5,776) (154,905) – (401,174)Interest income 212,003 109,000 41,510 (2,000) 360,513Share of associate results – – 18,908 – 18,908Profit before tax 48,271,512Tax (2,170,144)Net profit for the year from continuing operations 46,101,368Net loss for the year from discontinued operations (506,448)Profit for the year 45,594,920

Assets 31,494,881 2,261,598 60,543,645 (22,610,354) 71,689,770Liabilities (12,601,357) (522,204) (7,992,667) 9,878,477 (11,237,751)Capital expenditure 341,645 90,744 272,317 – 704,706Depreciation and amortisation 585,354 117,924 20,667 – 723,945

Notes to the Financial Statements31 December 2008

98

38. Group segmental information (Cont’d)

(b) Analysis by Geographical segments

Turnover is based on the location of customers. Assets and capital expenditures are based on the location of those assets.

2008 2007

Turnover Assets

Capitalexpen-diture Turnover Assets

Capitalexpen-diture

$ $ $ $ $ $

Singapore 35,795,309 37,695,529 133,244 50,328,472 69,428,171 613,962People's Republic of China 1,965,978 3,918,036 2,020 2,835,290 2,261,599 90,744Taiwan – – – 531,302 – – Others – – – 575,447 – –

37,761,287 41,613,565 135,264 54,270,511 71,689,770 704,706

39. Comparative figures

The following comparative figures for the Group have been reclassified to be consistent with current year’s classification:

2007 As As previously reclassified reported $ $

Fixed deposits - secured 3,205,050 9,750,774 - unsecured 18,295,050 11,749,326

The reclassifications were made so as to better reflect the nature of the balances.

40. Authorisation of financial statements

The financial statements for the year ended 31 December 2008 were authorised for issue in accordance with a resolution of the directors on 20 March 2009.

Notes to the Financial Statements31 December 2008

99

STATISTICS OF SHAREHOLDINGSAs at 16 March 2009

Number of Shares 420,517,997Class of Equity Shares OrdinaryVoting Rights On show of hands : one vote for each member On a poll : one vote for each ordinary share

ANALYSIS OF SHAREHOLDINGS Range of Shareholdings No. of Shareholders % No. of Shares %

1 - 999 62 6.66 21,923 0.011,000 - 10,000 298 32.01 1,742,973 0.4110,001 - 1,000,000 548 58.86 34,843,716 8.291,000,001 and above 23 2.47 383,909,385 91.29

931 100 420,517,997 100

Based on information provided to the Company as at 16 March 2009, approximately 24.45 % of the issued ordinary shares of the Company is held by the public, and therefore, Rule 723 of the Listing Manual is complied with.

TOP 20 SHAREHOLDERS LIST AS AT 16 MARCH 2009

Name No. of shares held %

Oei Hong Leong Foundation Pte Ltd 111,932,547 26.62Toh Soon Huat 56,436,735 13.42UOB Kay Hian Pte Ltd 47,703,000 11.34Mayban Nominees (S) Pte Ltd 25,673,000 6.11Singapore Nominees Pte Ltd 23,286,000 5.54SBS Nominees Pte Ltd 19,250,000 4.58Chua Swee Wah 15,564,616 3.70Kim Eng Securities Pte. Ltd. 14,707,259 3.50Teo Ngian Heng 12,485,000 2.97Lee Kek Choo 11,652,984 2.77Corporate Bridge Limited 10,516,000 2.50United Overseas Bank Nominees Pte Ltd 8,534,750 2.03Hong Leong Finance Nominees Pte Ltd 6,183,000 1.47Citibank Nominees Singapore Pte Ltd 5,742,611 1.37Chan Lay May 3,032,000 0.72Phillip Securities Pte Ltd 1,703,947 0.41Chong Hon Kuan Ivan 1,625,524 0.39DBS Nominees Pte Ltd 1,495,762 0.36Ng Chze Keong Richard 1,423,000 0.34Chua Geok Lin 1,406,750 0.33 380,354,485 90.47

100

SUBSTANTIAL SHAREHOLDERS AS AT 16 MARCH 2009as recorded in the Register of Substantial Shareholders

Number of Number of shares in which shares registered substantial in the name shareholder is of substantial deemed to have Name of Substantial Shareholder shareholder an interest Total %

Toh Soon Huat (1) 56,436,735 75,917,234 132,353,969 31.47

Lee Kek Choo (2) 11,652,984 120,700,985 132,353,969 31.47

Oei Hong Leong Foundation Pte Ltd 111,932,547 0 111,932,547 26.62

Sure World Capital Limited 42,558,000 0 42,558,000 10.12

Xpress Group Limited (3) 0 53,074,000 53,074,000 12.62

Ong Soon Liong @ Ong Soon Chong (4) 0 23,286,000 23,286,000 5.54

Notes:

(1) Toh Soon Huat is deemed to have an interest in the shares held by his spouse Lee Kek Choo. In addition, Toh Soon Huat’s deemed interest of 59,388,500 shares arises from (other than shares held by Lee Kek Choo) 19,250,000 shares, 7,500,000 shares, 8,354,500 shares, 18,773,000 shares, 4,500,000 shares and 1,011,000 shares held by Singapura Building Society Limited, United Overseas Bank Nominees (Private) Limited, Kim Eng Securities Pte Ltd, Mayban Nominees Pte Ltd, UOB Kay Hian Pte Ltd and Hong Leong Finance Nominees Pte Ltd as his nominees, respectively.

(2) Lee Kek Choo is deemed to have an interest in the shares held by Toh Soon Huat. Lee Kek Choo’s deemed interest

arises from (other than shares held by Toh Soon Huat) 4,875,750 shares held by Hong Leong Finance Nominees Pte Ltd as her nominee.

(3) Xpress Group Limited (“XGL”) is the holding company of Sure World Capital Limited (“SWC”). XGL has a controlling interest in SingXpress Ltd (“SXL”) which, in turn, is the holding company of Corporate Bridge Limited (“CBL”). CBL holds 10,516,000 shares in Novena Holdings Limited. XGL is deemed interested in the 53,074,000 shares held by SWC and CBL.

(4) The deemed interest of Ong Soon Liong @ Ong Soon Chong arises from shares held by Singapore Nominees Pte. Ltd.

Statistics of SHAREHOLDingSAs at 16 March 2009

101

DISTRIBUTION OF WARRANTHOLDINGS

Range of Warrantholdings No. of Warrantholders % No. of Warrants %

1 - 999 35 11.08 23,777 0.101,000 - 10,000 139 43.99 804,714 3.3010,001 - 1,000,000 140 44.30 7,519,146 30.821,000,001 and above 2 0.63 16,046,675 65.78

316 100.00 24,394,312 100.00

TOP 20 WARRANTHOLDERS LIST AS AT 16 MARCH 2009 Name No. of warrants held %

Lee Kek Choo 8,264,367 33.88Chua Swee Wah 7,782,308 31.90Ng Ser Miang 525,000 2.15Tay Chin Beng 370,000 1.52Phillip Securities Pte Ltd 360,151 1.48Soh Sey Hua @ Soh Tai Ping 341,000 1.40Benny Tay Yew Lim 302,000 1.24United Overseas Bank Nominees Pte Ltd 235,000 0.96Tay Theng Kwang 220,000 0.90Kwan Seik Cheong 215,750 0.88Herman Halim 192,000 0.79Koh Cheoh Liang Vincent 178,000 0.73Chua Bak Hoh 165,000 0.68Thie Daniel or Aidawati Muliani 140,000 0.57OCBC Securities Private Ltd 129,415 0.53Tan Suan Kui 120,000 0.49Long Foo Tong 116,000 0.48Ong Quee Lan 110,000 0.45Lim Kean Ngan 107,500 0.44Seah Hock Boon 107,500 0.44 19,980,991 81.91

Statistics OF WARRANTHOLDINGSAs at 16 March 2009

102

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at 521 Bukit Batok Street 23, Level 3, Singapore 659544 on Monday, 27 April 2009 at 2:30 p.m. to transact the following businesses:

ORDINARY BUSINESS:

1. To receive and consider the Directors’ Report and Audited Accounts for the financial year ended 31 December 2008 and the Auditors’ Report thereon. Resolution 1

2. To re-elect Mr Toh Soon Huat, who is retiring by rotation in accordance with Article 104 of the Company’s Articles of

Association, as Director of the Company. Resolution 2 3. To re-elect Ms Li Ling Xiu, who is retiring by rotation in accordance with Article 108 of the Company’s Articles of

Association, as Director of the Company. Resolution 3

4. To re-elect Mr Lien Kait Long, who is retiring by rotation in accordance with Article 108 of the Company’s Articles of Association, as Director of the Company. Resolution 4

5. To approve the Directors’ fees of S$125,000 for the financial year ended 31 December 2008. (2007: S$109,667) Resolution 5 6. To re-appoint Messrs Ernst & Young LLP as Auditors and to authorise the Directors to fix their remuneration. Resolution 6

SPECIAL BUSINESS :

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

7. That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Tay Beng Chuan be re-appointed as a Director of

the Company to hold office until the next Annual General Meeting.

[Mr Tay Beng Chuan, will, upon re-appointment as a Director of the Company, remain as member of the Audit Committee. Mr Tay Beng Chuan is considered independent for the purposes of Rule 704(7) of Section B of the Singapore Exchange Securities Trading Limited (“SGX-ST”) Listing Manual (the “Catalist Rules”).] Resolution 7

103

8. Ordinary Resolution: Authority to allot and issue shares in the capital of the Company Resolution 8

That pursuant to Section 161 of the Companies Act, Cap. 50. and Rule 806 of the Singapore Exchange Securities Trading Limited (“SGX-ST”) Listing Manual Section B: Rules of Catalist (the “Catalist Rules”), authority be and is hereby given to the Directors of the Company to allot and issue shares and convertible securities in the capital of the Company (whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit provided that:-

(a) the aggregate number of shares and convertible securities to be issued pursuant to this Resolution does not exceed one hundred per cent (100%) of the total number of issued shares excluding treasury shares of the Company (as calculated in accordance with sub-paragraph (b) below), of which the aggregate number of shares and convertible securities to be issued other than on a pro rata basis to existing shareholders of the Company does not exceed fifty per cent (50%) of the total number of issued shares excluding treasury shares of the Company (as calculated in accordance with sub-paragraph (b) below);

(b) (subject to such manner of calculations as may be prescribed by the SGX-ST), for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (a) above, the percentage of the total number of issued shares excluding treasury shares shall be based on the total number of issued shares excluding treasury shares of the Company at the time this Resolution is passed after adjusting for:-

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

(ii) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time of the passing of the resolution approving the mandate, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the Catalist Rules; and

(iii) any subsequent bonus issue, consolidation or sub-division of shares

(c) unless revoked or varied by the Company in general meeting, the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.

[See Explanatory Note (i)].

NOTICE OF ANNUAL GENERAL MEETING

104

9. Ordinary Resolution: Authority to issue shares other than on a pro-rata basis pursuant to the aforesaid share issue mandate at discounts not exceeding twenty per centum (20%) of the weighted average price for trades done on the SGX-ST Resolution 9

That subject to and pursuant to the aforesaid share issue mandate being obtained, the Directors of the Company be hereby authorised and empowered to issue shares other than on a pro-rata basis at a discount not exceeding twenty per centum (20%) to the weighted average price for trades done on the SGX-ST for the full market day on which the placement or subscription agreement in relation to such shares is executed (or if not available for a full market day, the weighted average price must be based on the trades done on the preceding market day up to the time the placement or subscription agreement is executed), provided that :-

(a) in exercising the authority conferred by this Resolution, the Company complies with the provisions of the Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST); and

(b) unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier. [See Explanatory Note (ii)]

10. Ordinary Resolution: Authority to offer and grant options and to allot and issue shares under The Novena Holdings Limited Share Option Scheme Resolution 10

“That authority be and is hereby given to the directors of the Company to offer and grant options in accordance with the provisions of the The Novena Holdings Limited Share Option Scheme (the “Scheme”) and to allot and issue from time to time such number of shares in the Company as may be required to be issued pursuant to the exercise of the options under the Scheme, provided that the aggregate number of shares to be issued pursuant to the Scheme shall not exceed 15% of the issued shares in the capital of the Company from time to time.” [See Explanatory Note (iii)].

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

NOTICE OF ANNUAL GENERAL MEETING

105

Explanatory Notes:

(i) The proposed Resolution 8, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual General Meeting, to allot and issue shares and convertible securities in the Company. The number of shares and convertible securities, which the Directors may allot and issue under this Resolution shall not exceed 100% of the total number of issued shares excluding treasury shares of the Company at the time of passing this Resolution. For allotment and issue of shares and convertible securities other than on a pro-rata basis to all shareholders of the Company, the aggregate number of shares and convertible securities to be allotted and issued shall not exceed 50% of the total number of issued shares excluding treasury shares of the Company. This authority will, unless previously revoked or varied at a general meeting, expire at the next Annual General Meeting.

(ii) The proposed Resolution 9 above is pursuant to measures implemented by the SGX-ST as stated in a press release entitled “SGX introduces further measures to facilitate fund raising” dated 19 February 2009 and which became effective on 20 February 2009. Under the measures implemented by the SGX-ST, issuers will be allowed to undertake non pro-rata placements of new shares priced at discounts of up to 20% to the weighted average price for trades done on the SGX-ST for a full market day on which the placement or subscription agreement in relation to such shares is executed, subject to the conditions that (a) shareholders’ approval be obtained in a separate resolution (the “Resolution”) at a general meeting to issue new shares on a non pro-rata basis at discount exceeding 10% but not more than 20%; and (b) that the resolution seeking a general mandate from shareholders for issuance of new shares on a non pro-rata basis is not conditional upon the Resolution.

It should be noted that under the Listing Manual of the SGX-ST, shareholders’ approval is not required for placements of new shares, on a non pro-rata basis pursuant to a general mandate, at a discount of up to 10% to the weighted average price for trades done on the SGX-ST for a full market day on which the placement or subscription agreement in relation to such shares is executed.

(iii) The proposed Resolution 10, if passed, will empower the Directors of the Company to offer and grant options under The Novena Holdings Limited Share Option Scheme (the “Scheme”) and to allot and issue shares up to 15% of the Company’s issued shares pursuant to the exercise of the options.

BY ORDER OF THE BOARD

Low Mei Mei MaureenCompany SecretarySingapore9 April 2009

NOTICE OF ANNUAL GENERAL MEETING

106

Proxies :

1. A member of the Company is entitled to attend and vote at the above Meeting and may appoint not more than two proxies to attend and vote instead of him.

2. Where a member appoints two proxies, he shall specify the proportion of this shareholding to be represented by each proxy in the instrument appointing the proxies. A proxy need not be a member of the Company.

3. If the member is a corporation, the instrument appointing the proxy must be under seal of the hand of an officer or attorney duly authorised.

4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 521 Bukit Batok Street 23, Level 3, Singapore 659544 not less than 48 hours before the time appointed for holding the above Meeting.

NOTICE OF ANNUAL GENERAL MEETING

Novena Holdings LimitedRegistration No. 199307300M

PROXY FORM

IMPORTANT

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

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

I/We of being a member/members of Novena Holdings Limited (the “Company”) hereby appoint

Name Address NRIC/Passport Number

Proportion of Shareholdings (%)

and/or (delete as appropriate)

Name Address NRIC/Passport Number

Proportion of Shareholdings (%)

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll at the Annual General Meeting of the Company to be held at 521 Bukit Batok Street 23, Level 3, Singapore 659544 on Monday, 27 April 2009 at 2:30 p.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.)

No. Resolutions For Against

ORDINARY BUSINESS

1 To receive and consider Directors and Auditors’ Reports and Audited Accounts

2 To re-elect Director – Mr Toh Soon Huat

3 To re-elect Director – Ms Li Ling Xiu

4 To re-elect Director – Mr Lien Kait Long

5 To approve the Directors’ fees of S$125,000 for the financial year ended 31 December 2008

6 To re-appoint Auditors and to authorise the Directors to fix their remuneration

SPECIAL BUSINESS

7 To re-appoint Mr Tay Beng Chuan pursuant to Section 153(6) of the Companies Act, Chapter 50

8 To authorise Directors to allot and issue shares in the capital of the company

9 To authorise Directors to issue shares other than on pro-rata basis at discounts not exceeding 20%

10 To authorise Directors to offer and grant options and to issue shares under The Novena Holdings Limited Share Option Scheme

Dated this day of 2009

Total number of Shares held

Signature(s) of member(s) or common sealIMPORTANT: PLEASE READ NOTES OVERLEAF

NOTES :

1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

3. Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each proxy.

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

5. A corporation which is a member of the Company may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with its Articles of Association and Section 179 of the Companies Act, Chapter 50.

6. The instrument appointing a proxy or proxies, together with the power of attorney or other authority (if any) under which it is signed, or notarially certified copy thereof, must be deposited at the registered office of the Company at 521 Bukit Batok Street 23, Level 3, Singapore 659544 not less than 48 hours before the time set for the Annual General Meeting.

7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if such members are not shown to have shares entered against their names in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting as certified by The Central Depository (Pte) Limited to the Company.