transpac industrial holdings limited

A N N U A L R E P O R T 2 0 0 2

TRANSPAC INDUSTRIALHOLDINGS LIMITED

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CONTENTS

Corporate Information ....................................................................................................................... 1

Chairman’s Statement ........................................................................................................... ............. 2

Financial Review by the Investment Manager .................................................................................. 3

Top Fifteen Investments ................................................................................................................... 5

Corporate Governance Report .......................................................................................................... 8

Directors’ Report ............................................................................................................................... 13

Statement by Directors ...................................................................................................................... 18

Auditors’ Report ............................................................................................................................... . 19

Income Statement ............................................................................................................... ................ 21

Balance Sheet .................................................................................................................. ................... 22

Statement of Changes in Equity ........................................................................................................ 23

Cash Flow Statement ......................................................................................................................... 24

Notes to the Financial Statements ..................................................................................................... 25

Consolidated Financial Statements of Foodstar Holdings Pte Ltd

and Its Subsidiaries ............................................................................................................................ 40

Shareholding Statistics ........................................................................................................ ............... 69

Notice of Ninth Annual General Meeting ......................................................................................... 71

Proxy Form


Transpac Industrial Holdings Limited and Its Subsidiaries

1

Corporate

Information

Board of Directors

Lock Sai Hung (Chairman)

Cheng Wai Keung

Ng Ser Miang

Leong Ka Cheong Christopher

Andrew Jonathan Lebus

Liong Tong Kap

Company Secretaries

Tham Shook Han, FCIS

Madelyn Kwang Yeit Lam, ACIS

Investment Manager

Transpac Capital Pte Ltd

6 Shenton Way #20-09

DBS Building Tower Two

Singapore 068809

Audit Committee

Cheng Wai Keung (Chairman)

Ng Ser Miang

Liong Tong Kap

Nominating and Remuneration Committees

Lock Sai Hung

Cheng Wai Keung

Ng Ser Miang



Liong Tong Kap

Registrars and Share Transfer Office

Lim Associates (Pte) Ltd

10 Collyer Quay #19-08

Ocean Building

Singapore 049315

Banker

The Development Bank of Singapore Ltd

Shenton Way Branch

6 Shenton Way

Singapore 068809

Auditors

PricewaterhouseCoopers

Certified Public Accountants

8 Cross Street #17-00

PWC Building

Singapore 048424

Partner in charge of audit:

Chua Kim Chiu

(with effect from financial year ended 31 Dec

2002)

Registered Office



Singapore 068809

Tel : 65 - 6224 1211

Fax : 65 - 6225 5538



2

Chairman’s

Statement

Against the backdrop of a weak global economic environment, the value of investments both private and

public have been adversely affected by depressed markets and scarce liquidity. The Company continues

to look for opportunities to divest or in some instances to build value within its existing portfolio with

a view to enhancing value for future divestment and is encouraged by the potential of some of its

investments in China —although this will take time.

The Company is a venture capital investment company providing capital to private companies, and its

income is primarily derived from the results of the realization and/or revaluation of investments. For the

financial year ended 31 December 2002, the Company recorded an operating loss after tax of S$1.1

million compared to an operating profit after tax of S$0.9 million for the previous year. The decline in

results was primarily related to a net change in the provision for diminution in value offset by an overall

gain in divestment of certain investments. These items are further explained in the Investment Manager’s

Report.

Dividend

The Board has proposed an exempt one-tier ordinary dividend of S$0.04 per share amounting to S$1.6

million for the year ended 31 December 2002. The Board has also proposed a special exempt one-tier

dividend of S$0.08 per share amounting to S$3.2 million for the year ended 31 December 2002. The

proposed ordinary and special dividends are subject to the approval of shareholders at the forthcoming

annual general meeting.

Under the new one-tier corporate taxation system effective 1 January 2003, the Company enjoys

greater flexibility in the payment of dividends. Accordingly, the Board has adopted a policy of distributing

special dividends as the Company’s profits from divestments permit.

Forward Looking Projections

The Board of Directors has noted that forecasting profitability for the Company, whose income derives

mainly from the realization and movements in the valuation of investments, is subject to volatility. The

valuation of investments is dependent on the economic environment, the portfolio companies’ performance

and the state of the equity markets. Accordingly, the Board and the Investment Manager have not

provided any specific forward looking guidance but have commented on the investment industry in

general as well as several general aspects of the Company’s portfolio.

Net Asset Value

The net asset value of the Company as at 31 December 2002 was S$3.14 per share, a decrease of 2 %

from that at 31 December 2001.

Lock Sai Hung

Chairman

26 March 2003



3

Financial Review by the

Investment Manager

1. Financial Performance

In the financial year 2002, the Company made one follow-on investment and several partial

divestments. At the end of the 2002, the Company’s investment portfolio had a carrying value

S$109.92 million compared to a cost of S$178.48 million and included 28 companies. Transpac

Capital Pte Ltd, the Investment Manager of the Company, believes the provision for diminution

in value reflected herein is sufficient.

Given the significant difficulties in the trade and industrial environment throughout the world, the

overall outlook for the investment industry is difficult. The equity markets continue to be depressed

with exits difficult to find. The listed securities markets are especially weak resulting in thin

trading opportunities and limiting exit opportunities for all investment managers. However, the

Investment Manager of the Company believes that a number of the investments in China will bring

significant value to the Company as they mature over the next several years.

The Company recorded a net loss after tax of S$1.1 million for the financial year ended 31

December 2002. The loss resulted primarily from a S$3.6 million provision for diminution in

value of a biotech investment. Due to a poor capital market environment, the biotech firm failed

to achieve an intended IPO and went through a private financing round at a low valuation. In line

with the Company’s valuation policy, the investment was written down to the valuation of the

new round, notwithstanding that the business continues to meet its targets and the investment

may well generate profits for the Company in the long run. The Company committed to a follow-

on investment of S$3.2 million along with the new investors. This commitment was partially

disbursed in 2002 with a balance of S$2.1 million to be funded in 2003. There were no other new

investments or follow-on investments for the financial year end 31 December 2002.

The Company substantially completed a divestment of an unquoted investment generating S$5.7

million in investment gains that was offset by a loss of S$1.3 million on the divestment of shares

in three quoted investments.

During the year Foodstar Holdings Pte Ltd (“Foodstar”), an investment with operations in China,

went through a restructuring to focus only on branded seasoning products, which the Investment

Manager believes will enhance the value of the business. Accordingly, Foodstar incurred a

restructuring charge of S$11.9 million and a loss of S$6.3 million from the discontinued non-

seasonings businesses, resulting in Foodstar suffering a net loss after tax of S$15.8 million. If this

loss were consolidated into the accounts of the Company, the Company’s loss for the financial

year ended 31 December 2002 would increase by S$8.6 million after taking into account minority

interest and consolidation adjustment. Notwithstanding the restructure charge and the losses on

discontinued operations, the Company’s share of Foodstar’s net asset value stands at S$36.1

million compared to the Company’s investment cost of S$36.9 million. Although there is a slight

shortfall in the share of net assets against cost as a result of the restructuring, the Investment

Manager believes that there has been no permanent impairment in the value of the Foodstar

Group. The Investment Manager believes that Foodstar will eventually provide value to the

Company. Despite poor market sentiments and harsh business environment, the Investment

Manager will persevere in its efforts to create exit opportunities for its investments and believe

that many of the companies in the portfolio especially in China have made significant progress and

will eventually provide substantial additional value to the Company which will flow through to

shareholders over time.

2. Risk Management

Operation Risk

The investments made by the Company are primarily in private companies, which are generally

illiquid in nature. In addition to general business risks in any investment, such investments can be

adversely affected by political instability as well as exchange controls, changes in taxation laws,

foreign investment policies and other restrictions and controls which may be imposed by the

relevant authorities of the countries in which investments are made.



4

At 31 December 2002, the Company’s investment portfolio comprised 28 investments of which

14 are located in China/Hong Kong; 3 in Indonesia; 2 in Malaysia; 2 in Singapore; 4 in Taiwan; 2

in USA and 1 in Thailand. In considering these investments, the Investment Manager has balanced

the reward potential against risk exposure. The geographical spread, the industrial diversity, the

stages of corporate development and the funds invested in each of these investments conformed to

the investment restrictions set out in the Prospectus and as amended by the Board of Directors.

Compliance with these restrictions is exercised by the Investment Manager, reviewed and verified

by the Company’s auditors, and reported to the Directors semi-annually.

Foreign Exchange Risk

The Company makes long-term investments and treats foreign exchange risks as part of the overall

risks to be considered in its investment decisions. The Company does not use any derivative

financial instruments to hedge these exposures.

Interest Rate Risk

The Company’s income and operating cash flows are generated from divestments proceeds and are

substantially independent of changes in market interest rates. The Company’s cash balances are

placed with financial institutions with recognised credit standing. The Company manages its

interest rate risk related to interest earned on available cash by placing cash balances in instruments

with varying maturities and interest rate terms. Preservation of capital is the primary investment

consideration.

Credit Risk

The Company has no significant concentrations of credit risk.

Liquidity Risk

The Company maintains sufficient cash to meet its operating needs.

Yours sincerely

Transpac Capital Pte Ltd


President

26 March 2003



5

Top Fifteen Investments

15 Largest Investments as at 31 December 2002

Share of Net Assets

Underlying (at book value) Realised/

Earnings Attributable Unrealised

Directors’ % of For The To Surpluses/

Company Sector Cost Valuation Shareholding Year Investments (Provisions)

S$ S$ S$ S$ S$

Foodstar Holdings Pte Ltd Food 36,912,410 36,912,410 63.50 (8,567,428) #1 36,125,043 #1 0

Sesame Seed Group Limited Financial 19,964,927 ^ 19,964,927 50.00 (541,768) #2 19,340,417 #2 0

Services

Eastern Multimedia Co. Ltd Consumer 15,439,842 15,439,842 4.32 (2,546,994) #2 20,823,205 #2 0

Services

Chian Lin Electronics Co. Ltd Electronics 4,835,724 4,835,724 2.61 8,072 #2 2,065,286 #2 0

Components

Dahe Holding Pte Ltd Industrial 15,440,129 ^ 4,410,648 40.19 (434,204) #4 15,101,380 #4 (11,029,481) *1

Products

Hsu Fu Chi Holdings Ltd Food 3,517,704 3,517,704 7.07 2,160,026 #2 9,903,648 #2 0

Sino Automotive Parts Ltd Industrial 3,500,863 3,500,863 45.31 1,242,008 #2 6,093,507 #2 0

Products

Neo-Neon Holdings Ltd Industrial 3,398,139 3,398,139 16.11 4,761,503 #2 21,041,063 #2 0

Services

Hang Fung Gold Technology Consumer 3,925,910 3,359,752 *2 3.46 282,760 #3 4,428,332 #3 (566,158) *1

Limited Products

Ethypharm (HK) Ltd Healthcare 3,033,576 3,033,576 17.97 (106,403) #2 668,744 #2 0

Lee Chi International Holding Industrial 4,477,246 2,686,189 7.07 93,180 #4 4,099,304 #4 (1,791,057) *1

Ltd Components

Oculex Pharmaceuticals, Inc Healthcare 6,518,312 ^ 2,420,307 1.50 (399,592) #2 671,980 #2 (4,098,005) *1

Yangtze Cement Holdings Materials/ 6,973,418 1,743,355 6.63 (673) #4 7,068,496 #4 (5,230,063) *1

Pte Ltd Chemicals

Ikon Technologies Corporation Information 1,979,587 1,086,790 6.83 (101,649) #1 579,899 #1 (892,797) *1

Services

Atop Holdings Pte Ltd Consumer 2,474,856 1,033,675 9.20 (267,803) #2 1,698,091 #2 (1,441,181) *1

Products

Total 132,392,643 107,343,901 @

^ : Including Loans/Convertible Loans which is included in the value of net assets attributable to investments.

@ : Directors’ Valuation exclude a general provision for diminution in value of investments of S$1,721,568 as at 31 December 2002.

*1 : A Provision for Diminution in Value of Investment was made and this was charged to the income statement in the prior and current years.

*2 : Valuation of Quoted Equity Investment based on market value as at 31 December 2002.

#1 : Based on audited accounts for the year ended 31 December 2002.

#2 : Based on management accounts for the year ended 31 December 2002.

#3 : Based on audited accounts for the last financial year ended 31 March 2002.

#4 : Based on draft audited accounts for the year ended 31 December 2002.



6

Notes:

(i) For the financial year ended 31 December 2002, no dividends were received from the above-mentioned companies.

(ii) For Unquoted Investments, there were no extraordinary items related to the investments for the financial year ended 31 December 2002. During the year, an

addition provision was made for diminution in value of unquoted investments of S$3,656,808 and a write-back of provision on disposal of investment of

S$59,153.

(iii) For Quoted Equity Investments, there were no extraordinary items related to the investments for the financial year ended 31 December 2002.

Quoted Equity Investments listed on approved stock exchange were stated at market value as at 31 December 2002.

A revaluation gain of S$634,069 on quoted investments was written back to the Income Statement to offset the previous decrease recognised in the Income

Statement.

(iv) During the year, the Company realised a Profit on Disposal of Quoted Investments of S$109,412 from the divestment of LifeTec Group Limited and Loss on

Disposal of Quoted Investments of S$1,470,189 from the divestment of PT Bukaka Teknik Utama (S$1,089,584) and MeltroniX, Inc (S$380,605). The Company

also realised a Profit on Disposal of Unquoted Investments of S$5,713,330 from the divestment of Colburn Holdings Pte Ltd.



7

Distribution of Investments by Country and Industry

as at 31 December 2002

Total At * Valuation

S$ ‘000 China / Indonesia Malaysia Singapore Taiwan Thailand USA Total At Directors’ as %

Hong Kong Cost Valuation of NTA

Agriculture 10,693 10,693 – –

Consumer Products 6,401 6,401 4,393 3.50

Consumer Services 4,775 899 15,440 21,114 15,440 12.30

Electronics Components 4,836 4,836 4,836 3.85

Financial Services 19,965 2,000 21,965 21,965 17.50

Food 40,430 40,430 40,430 32.21

Healthcare 3,185 9 2,866 6,519 12,579 6,651 5.30

Industrial Components 4,477 5,700 10,177 2,686 2.14

Industrial Products 32,947 1,277 34,224 8,515 6.78

Industrial Services 6,001 1,110 7,111 3,897 3.11

Information Services 1,980 1,980 1,087 0.87

Materials/Chemicals 6,973 6,973 1,743 1.39

At Cost 115,902 16,578 2,176 2,009 26,733 2,866 12,219 178,483 111,643 88.95

At Directors’ Valuation 81,423 30 603 2,631 24,049 487 2,420 111,643

Valuation as % of NTA 64.88 0.02 0.48 2.10 19.16 0.38 1.93 88.95

* Excludes the general provision for diminution in value of investments of S$1.722 million as at 31 December 2002



8

Corporate Governance Report

Transpac Industrial Holdings Limited (“TIH” or “the Company”) is committed to maintaining a high

standard of corporate governance within the Company, which establishes and maintains an ethical

environment in the Company. The Company and its Investment Manager, Transpac Capital Pte Ltd

(the “Manager” or “Investment Manager”), believe that good corporate governance enhance the interests

of shareholders. This report describes the corporate governance processes and activities with specific

references made to the Code of Corporate Governance guidelines.

The management and operations of the Company have since its inception been delegated to its Investment

Manager via a 10 year Management Agreement. The Company has no executive or employees of its

own.

Board of Directors

The Manager provides detail financial and analytical reports along with any recommendations on matters

to be determined by the Board prior to the Board meetings.

The Board, which has met at least twice a year since inception and will meet at least four times a year

beginning in 2003, supervises the Manager of the Company. The Board meets to consider and decide on

the following Company matters:

� Review the Manager’s report on the performance of the Company’s investments and reviews

and approves the valuation of such investments by the Manager;

� Approval of quarterly results announcements;

� Approval of the annual report and accounts;

� Declaration of interim dividends and proposal of final dividends;

� Convening of shareholders’ meetings;

� Review and approve any changes to the investment policy of the Company that may be proposed

by the Manager from time to time (the Manager has sole discretion in investment/divestment

decisions in accordance with the stipulations of the Prospectus of the Company dated 12 March

1994.);

� Review the allocation of investments between the Company and other funds managed by the

Manager in accordance with the allocation policy of the Company as reflected in the Prospectus;

The Board consists of six members, three independent, two affiliated with significant shareholders and

one affiliated with the Investment Manager to which the management of the Company has been contracted

(and hence its representative is considered an executive director rather than non-executive director of the

Company). The collective experience of the directors and their objective judgement on corporate affairs

are valuable to the Company.



9

Nominating and Remuneration Committees and Remuneration Matters

As indicated above the Management of the Company has been contracted to an Investment Manager,

Transpac Capital Pte Ltd. TIH has no executive or employees of its own. Under such circumstances the

Audit Committee has recommended that the Board at large undertake the roles of the Nomination and

Remuneration Committees. The Board has agreed to such an arrangement.

Directors’ fees are paid in arrears after approval by shareholders at the Annual General Meeting. One-

third of the Directors retire at each Annual General Meeting according to length of service. All retiring

Directors shall be eligible for re-election. In 2002 and in prior years, directors’ fees were paid according

to the role undertaken. In 2003 and ongoing, it is expected that directors fees may incorporate a factor for

the number of meetings attended. The Board adheres to ethical principles of conduct that includes self-

assessment of its own performance.

In 2002 the fee schedule was:

Chairman S$30,000

Audit Committee Members S$20,000

Other Non-executive Directors S$12,000

Executive Director no compensation from the Company

TIH does not have an Employee Share Option Scheme for its Directors.

Key Information on Board Members

Details of each Director and their attendance at meetings are provided as follows:

1. The Chairman, Mr Lock Sai Hung has been on the Board since 1994 and assumed the chairmanship

of the Company in January 2002. He brings with him extensive experience in banking and

finance having spent most of his career with DBS Bank, where he was part of the Top Management

team. His career spanned the Economic Development Board, Esso (Petroleum Transport &

Services Inc) and Insurance Corporation of Singapore. He is currently a Director of Raffles

Hospital Pte Ltd, Dovechem Stolthaven Ltd (Audit & Remuneration Committees) and Neptune

Orient Lines Ltd (Audit & Remuneration Committees). Lock Sai Hung is a graduate of the

National University of Singapore with a BA (Hons) degree in Economics.

2. The Chairman of the Audit Committee, Mr Cheng Wai Keung is the Chairman and Managing

Director of the listed Wing Tai Holdings Limited. Currently he is the Chairman of Raffles

Holdings Limited and Neptune Orient Lines Ltd. Mr Cheng holds directorships in a number of

public and private companies, including GP Batteries International Ltd and Mapletree Investments

Pte Ltd. Mr Cheng graduated with a Bachelor of Science degree from Indiana University in 1971

and an MBA from the University of Chicago in 1973.

3. Mr Liong Tong Kap, an Audit Committee member, is Chief Investment Officer with NTUC

Income Insurance Cooperative Ltd. NTUC is a significant shareholder in TIH.

4. Mr Ng Ser Miang, an Audit Committee member, is Chairman of TIBS International Pte Ltd and

NTUC Choice Homes Co-operative Ltd. He is also a member of APEC Business Advisory

Council (ABAC).

5. Mr Andrew J Lebus is affiliated with Pantheon, which is a significant shareholder in TIH. Mr

Andrew Lebus has been involved with private equity over the last 17 years and is a partner with

Pantheon Ventures Limited and senior member of Pantheon’s investment team with responsibility

for international strategic development. In addition, he has special responsibility for Pantheon

International Participations PLC, the group’s flagship investment trust. Andrew, who has spent

eight years in the group’s Hong Kong office, also oversees Pantheon’s Asia activities, determining

investment strategy and overseeing selection and monitoring.



10

6. Dr Christopher Leong is the co-founder and President of Transpac Capital Pte Ltd, the Investment

Manager. The Investment Manager was founded in 1989 and is headquartered in Singapore with

offices in Beijing, Hong Kong, Shanghai and Taiwan and manages private equity funds in excess

of S$1 billion. From 1980 to 1986, Dr Leong was Managing Director of Amoy Canning

Corporation, a publicly listed company in Hong Kong in the food, paper packaging and property

development businesses. In 1973 Dr Leong found Convenience Foods in Hong Kong, which he

sold to RJR Nabisco in 1977. Dr Leong has also served as Senior Scientist at American Science

and Engineering in Cambridge, Massachusetts, 1970-71. Dr Leong received his PhD and SB and

degrees from Massachusetts Institute of Technology in 1970 and 1965 respectively and has also

studied food sciences at the Michigan State University.

Name of Director Date of Nature of Last date of Number of Number of

Appointment Appointment re-election/ Board Meetings Audit

Appointment attended in Committee

2002 Meetings

attended in

2002

Lock Sai Hung 11 August 1994 Non-Executive/ 16 May 2001 2 of 2 Not an audit

(Age: 61) Chairman/ commitee

Independent member

Christopher Leong 7 February 1994 Representing the 16 May 2002 2 of 2 2 of 2

Ka Cheong Investment Manager By invitation

(Age: 59) / Non-Independent of the Audit

Commitee

Cheng Wai Keung 17 February 1994 Chairman of Audit 16 May 2001 2 of 2 2 of 2

(Age: 53) Committee/

Non-Executive/

Independent

Ng Ser Miang 17 February 1994 Member of Audit 16 May 2002 1 of 2 2 of 2


Non-Executive/

Independent

Liong Tong Kap 12 April 2001 Member of Audit 16 May 2001 1 of 2 1 of 2


Non-Executive/

Non-Independent

Andrew Lebus 12 April 2001 Non-Executive/ 16 May 2001 2 of 2 Not an audit

(Age: 42) Non-Independent committee

member

Some of the Board members own shares in the Company or are affiliated with Companies that own

shares in the Company. This is disclosed in the Annual Report.

It should be noted that employees of the Investment Manager serve as directors on substantially all the

boards of portfolio companies as part and parcel of their duty in the monitoring of the performance of

these portfolio companies.

For example, Mr Harry Leong (director and SVP of the Investment Manager), Ms Cheryl Van Steenwyk

(director and CFO of the Investment Manager) and Mr Will Hoon (director and EVP of the Investment

Manager) serve on the Board of Foodstar Holdings Pte Ltd, a material investment of the Company.

They are not drawing any directors’ fees or receiving any remuneration from Foodstar. Mr Harry Leong

is the brother of Dr Christopher Leong (CEO of the Investment Manager and a director of the Company).

The Investment Manager reports the performance of the investments to the Board after reviews by the

Auditors and the Audit Committee of investment guideline compliance and valuation principles. Board

members are provided with financials together with the recommendation of the Investment Manager on

any changes on the valuation of TIH’s investment portfolio.

The Investment Manager prepares quarterly rather than monthly financials consistent with practices in

private equity and venture capital management. The Board of TIH together with its Investment Manager

is of the opinion that quarterly financial statements along with the Management Agreement, Prospectus,

and Articles of Association are sufficient in evaluating performance and defining responsibility that

ensures that Board procedures are followed and applicable rules and regulations are complied with.



11

Audit Committee

The Audit Committee comprises three directors, two of whom are independent and one of whom is

affiliated with a significant shareholder.

Prior to each Board meeting, the Audit Committee meets to review and consider the Manager’s reports

on investment guideline compliance and valuation prior to their presentation to the Board. Additionally,

the Audit Committee is responsible for the meeting with the Company’s auditors and reviewing its

systems of internal control. Among other things, the Audit Committee has directed that the auditors

review that the operations of the Company are in accordance with investment restrictions and investment

allocations as set out in the prospectus. The Audit Committee is also responsible for reviewing and

resolving any potential conflicts of interest between the Investment Manager and the Company.

The Audit Committee performs the following functions:

� Reviews the audit plans of the Company’s external auditors and ensures the adequacy of the

system of accounting controls and the co-operation given by the Manager to the auditors;

� Reviews the financial statements and the auditors’ report of the Company before their submission

to the Board of Directors;

� Reviews with the Manager the internal controls in respect of the Manager and the Company;

� Reviews legal and regulatory matters that may have a material impact on the financial statements,

related compliance policies and programmes and any reports received from regulators;

� Reviews the cost effectiveness and the independence and objectivity of the external auditors;

� Reviews the nature and extent of non-audit services provided by the external auditors;

� Reviews the assistance given by the Manager to the auditors;

� Nominates the external auditor; and

� Reviews interested person transactions in accordance with the requirements of the listing rules

of the Singapore Exchange.

Details of Audit Committee members and their attendance at meetings are provided on pages 9 and 10.

The Audit Committee having reviewed all non-audit services provided by PricewaterhouseCoopers, the

external auditors, are satisfied that the nature and extent of such services would not affect its independence

as the external auditors.



12

Internal Controls and Internal Audit

The day-to-day operation has been delegated to the Investment Manager in accordance with the

Prospectus of the Company and a related 10 year Management Agreement, and this has been disclosed

in the Company’s Annual Reports. The Investment Manager operates under a set of investment

strategy, criteria and guidelines stipulated in the Prospectus of the Company and whose changes are

subject to the approval of TIH’s Board of Directors. At the request of the Audit Committee, compliance

with these rules are checked semi-annually by the external auditors of TIH.

To avoid any potential conflict of interest, the external auditor of the Company is different from the

external auditor of the Investment Manager.

The Board believes that the system of internal control maintained by the Manager that was in place

throughout the financial year and up to the date of this report provides:

� Reasonable assurance against material financial misstatements;

� Maintenance of proper accounting records;

� Compliance with appropriate legislation, regulation and best practices; and

� Identification and containment of business risk.

The Investment Manager has adopted Internal Control Procedures (“ICP”) that are well documented and

updated regularly. The Investment Manager’s ICP include among other things, procedures for investments

and divestments, management of portfolio companies, compliance with financial, administration and

legal controls. The Board notes that no system of internal control can provide absolute assurance against

the occurrence of material errors, poor judgement in decision-making, human error, losses, fraud or other

irregularities. Accordingly, the Board and the Investment Manager have agreed that TIH does not need

to establish internal audit.

Shareholder Communication

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.

The Board welcomes the views of shareholders on matters affecting the Company, whether at the

shareholders’ meetings or on an ad hoc basis.

Securities Transactions

In 1998, following the introduction of the Best Practices Guide by the Singapore Exchange Limited, the

Company adopted a Policy on Share Dealings including guidance on transactions in the Company’s

shares. The policy is applicable to Directors, the Investment Manager, and any key employees of the

Company and sets out the implications of insider trading and the recommendations of the Best Practices

Guide.



13

Directors’ Report

he directors present their report to the members together with the audited financial statements

of the Company and the separate consolidated financial statements of its subsidiaries for the

financial year ended 31 December 2002.

Directors

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

Lock Sai Hung (Chairman)

Cheng Wai Keung

Ng Ser Miang



Liong Tong Kap

Principal activities

The principal activity of the Company is to invest for capital appreciation in equity securities of

growing private companies located in Asia including principally China/Hong Kong SAR, Taiwan,

Singapore, Malaysia, Thailand and Indonesia.

The principal activities of its legal subsidiary, Foodstar Holdings Pte Ltd (“Foodstar”), and its

subsidiaries (“Foodstar Group”), are those of investment holding, manufacture, sale and distribution

of food products.

There have been no significant changes in the nature of these activities during the financial year.

Results for the financial year

Results for the financial year for the Company and Foodstar Group which is 63.5% owned by the

Company are as follows:

The Foodstar

Company Group

$ $

Loss after tax before minority interests (1,086,568) (15,832,489)

Minority interests – 2,340,477

Net loss attributable to shareholders (1,086,568) (13,492,012)

Consolidated financial statements incorporating the financial statements of Foodstar Group have not

been prepared, in accordance with the Company’s accounting policy [see Note 2(b) to the financial

statements].

Consolidated loss after tax and minority interests of Transpac Industrial Holdings Limited would be

increased by approximately $8,567,428 for the financial year ended 31 December 2002 if consolidated

financial statements (incorporating the financial statements of Foodstar Group and after effecting

adjustments relating to intercompany balances) are prepared.

T



14

Material transfers to or from reserves and provisions

Details of material movements in reserves during the financial year are set out in the Statement of

Changes in Equity and notes to the financial statements.

Material movements in provisions during the financial year are set out in the notes to the financial

statements.

Acquisition and disposal of subsidiaries

During the financial year, the following subsidiary of Foodstar Group was incorporated.

Country of Company’s

incorporation effective equity Cost of

Name of company and business interest held investment Principal activities

Foodstar (China) China 63.5% RMB37,221,600 Investment holding

Investments

Company Limited

For information, the average exchange rates during the year ended 31 December 2002 were S$1 =

HK$4.37 and S$1 = RMB4.64.

There were no other acquisitions or disposals of interests in subsidiaries during the financial year.

Issue of shares and debentures

During the financial year:

(a) Foodstar Holdings Pte Ltd increased its authorised ordinary share capital from $28 million to

$45 million by the creation of 17 million new ordinary shares of par value of $1 each.

(b) Foodstar Holdings Pte Ltd increased its issued ordinary share capital from $25,405,441 to

$40,933,164 by converting shareholders’ loans into 15,527,723 ordinary shares of $1 each

issued as fully paid at a premium of $0.8247 per share for the purpose of enlarging its capital

base. The newly issued shares rank pari passu in all respects with the previously issued

shares.

(c) Foodstar (China) Investments Company Limited was incorporated with an initial paid-up

capital of RMB37,221,600 for the purpose of providing initial working capital.

There were no other issues of shares or debentures by any corporation in the Group during the

financial year.



15

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the financial year was the Company a party to any

arrangement whose object is to enable the directors of the Company to acquire benefits by means of

the acquisition of shares and debentures of the Company or any other body corporate.

Directors’ interests in shares or debentures

The interests of the directors holding office at the end of the financial year in the ordinary shares of

the Company according to the register of directors’ shareholdings were as follows:

Holdings in which

Holdings registered director is deemed

in name of director to have an interest

Name of directors in Description At At At At

which interest held of shares 1.1.2002 31.12.2002 1.1.2002 31.12.2002

Cheng Wai Keung Ordinary shares 1,000 27,000 – –

of $0.50 each

Leong Ka Cheong Ordinary shares 163,001 163,002 – –

Christopher of $0.50 each

Ng Ser Miang Ordinary shares – – 150,000 –

of $0.50 each

There was no change in any of the above-mentioned interests between 31 December 2002 and 21

January 2003.

None of the directors of the Company at the end of the financial year had any interest in the shares or

debentures of any related corporation.

Dividends

Dividends paid, declared and proposed since the end of the Company’s preceding financial year are as

follows:

$

A final tax exempt dividend of 4 cents per share was paid on 12 June

2002 in respect of the financial year ended 31 December 2001 1,600,000

In respect of financial year ended 31 December 2002, the directors propose:

- a first and final exempt one-tier dividend of 4 cents per share; and 1,600,000

- a final special exempt one-tier dividend of 8 cents per share 3,200,000

Bad and doubtful debts

Before the financial statements of the Company were made out, the directors took reasonable steps

to ascertain the action taken in relation to the writing off of bad debts and providing for doubtful

debts of the Company, and have satisfied themselves that all known bad debts of the Company have

been written off and that adequate provision has been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances which would render any

amounts written off for bad debts or provided for doubtful debts in the Group inadequate to any

substantial extent.



16

Current assets

Before the financial statements of the Company were made out, the directors took reasonable steps

to ascertain that any current assets which were unlikely to realise their book values in the ordinary

course of business have been written down to their estimated realisable values or that adequate

provision has been made for the diminution in value of such current assets.

At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with

in this report, which would render the values attributed to current assets in the consolidated financial

statements misleading.

Charges on assets and contingent liabilities

At the date of this report, no charges have arisen since the end of the financial year on the assets of

the Company or any corporation in the Group which secure the liability of any other person, nor

have any contingent liability arisen since the end of the financial year in the Company or any other

corporation in the Group.

Ability to meet obligations

No contingent or other liability of the Company or any other corporation in the Group has become

enforceable or is likely to become enforceable within the period of twelve months after the end of the

financial year which, in the opinion of the directors, will or may substantially affect the ability of the

Company and the Group to meet its obligations as and when they fall due.

Other circumstances affecting the financial statements

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with

in this report or the consolidated financial statements which would render any amount stated in the

financial statements of the Company and the consolidated financial statements misleading.

Unusual items

In the opinion of the directors, the results of the operations of the Company and of the Group during

the financial year have not been substantially affected by any item, transaction or event of a material

and unusual nature, except for the exceptional loss of the Foodstar Group disclosed in Note 4 to the

financial statements of Foodstar Group.

Unusual items after the financial year

In the opinion of the directors, no item, transaction or event of a material and unusual nature has

arisen in the interval between the end of the financial year and the date of this report which would

affect substantially the results of the operations of the Company and of the Group for the financial

year in which this report is made.

Directors’ contractual benefits

Since the end of the previous financial year, no director 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 he is a member, or with a company in which he has a substantial financial

interest.



17

Share options

No options were granted during the financial year to subscribe for unissued shares of the Company or

its subsidiaries.

15,527,723 shares were issued by the Company’s subsidiary, Foodstar Holdings Pte Ltd, during the

financial year by virtue of the exercise of options granted to shareholders at a current subscription

price of $1.8247 by the conversion of their loans to the Company at 1 January 2002 amounting to

$28,333,899. No other shares were issued during the financial year by virtue of the exercise of

options to take up unissued shares of the Company or its subsidiaries.

There were no unissued shares of the Company or its subsidiaries under option at the end of the

financial year.

Audit Committee

The Audit Committee (“Committee”) as at the date of this report is composed of three members, all

of whom are non-executive directors. The members of the Committee are:

Cheng Wai Keung (Chairman)

Ng Ser Miang

Liong Tong Kap

The Committee carried out its functions in accordance with section 210B(5) of the Singapore

Companies Act. In performing those functions, the Committee reviewed:

(a) the audit plan of the Company’s auditors and their evaluation of the system of internal

accounting controls arising from their audit examination;

(b) the scope and results of external audit procedures;

(c) the guidelines for corporate governance as set forth by the Singapore Exchange Limited; and

(d) the financial statements of the Company for the year ended 31 December 2002 before their

submission to the board of directors and the auditors’ report on those financial statements.

The Committee has nominated PricewaterhouseCoopers for re-appointment as auditors of the

Company at the forthcoming Annual General Meeting.

Auditors

The auditors, PricewaterhouseCoopers have expressed their willingness to accept re-appointment.

On behalf of the directors

LOCK SAI HUNG LEONG KA CHEONG CHRISTOPHER

Chairman Director

26 March 2003



18

Statement

by Directors

In the opinion of the directors, the financial statements set out on pages 21 to 68 give a true and fair

view of the state of affairs of the Company and of the Group at 31 December 2002 and of the results

of the business, and changes in equity, of the Company and of the Group and the cash flows of the

Company and the Group for the financial year then ended, and 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.

In the opinion of the directors,

(a) it is preferable in the interests of the shareholders that the consolidated accounts (as defined

in section 209A of the Singapore Companies Act) be prepared other than as one set of

consolidated financial statements. As the principal activity of the Company is to invest

primarily in equity securities with the objective of realising substantial capital gain through

disposal of the investments, and the investment in Foodstar Holdings Pte Ltd and its

subsidiaries (“Foodstar Group”) is held with the same objective, we are of the view that

consolidated financial statements including Foodstar Group would not be meaningful to the

shareholders of the Company; and

(b) the consolidated financial statements so prepared are not significantly affected by

transactions and balances between the Company and its subsidiary companies except to the

extent stated in Note 12 to the financial statements.

On behalf of the directors

LOCK SAI HUNG LEONG KA CHEONG CHRISTOPHER

Chairman Director

26 March 2003



19

Auditors’ Report

We have audited the financial statements of Transpac Industrial Holdings Limited (“TIH”) for the

year ended 31 December 2002 as set out on pages 21 to 38 and the separate consolidated financial

statements of the Company’s legal subsidiary, Foodstar Holdings Pte Ltd and its subsidiaries for the

financial year ended 31 December 2002, as attached from pages 40 to 68. These financial statements

are the responsibility of the Company’s directors. Our responsibility is to express an opinion on

these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require

that we plan and perform the audit to obtain reasonable assurance whether the financial statements

are free of material misstatement. An audit includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by the directors, as well as evaluating the

overall financial statement presentation. We believe that our audit provides a reasonable basis for our

opinion.

In our opinion,

(a) the accompanying financial statements are properly drawn up in accordance with the

provisions of the Singapore Companies Act (the “Act”) and Singapore Statements of

Accounting Standard and so as to give a true and fair view of:

(i) the state of affairs of the Company and of the companies in the Group as at 31

December 2002 and of the results and cash flows of the Company and of the

companies in the Group for the year ended on that date; and

(ii) the other matters required by section 201 of the Act to be dealt with in the financial

statements and in the consolidated financial statements; and

(b) the accounting and other records, and the registers 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.

Without qualifying our opinion, we draw attention to Note 2(b) to the Company’s financial

statements. The Company’s presentation of consolidated accounts (as defined in section 209A of the

Act) by attaching the separate consolidated financial statements of its subsidiaries is not in

accordance with Statement of Accounting Standard No. 26 which requires the preparation of one set

of consolidated financial statements for the Company and its subsidiaries. As the principal activity

of the Company is to invest primarily in equity securities with the objective of realising substantial

capital gain through disposal of the investments, and the investment in Foodstar Holdings Pte Ltd

and its subsidiaries is held with the same objective, we are of the view that consolidation as one set of

financial statements would not be meaningful and accordingly, we concur with the Company’s

presentation of consolidated accounts.



20

We have considered the financial statements and auditors’ reports of all subsidiaries of which we have

not acted as auditors, being financial statements included (whether separately or consolidated with

other financial statements) in the consolidated financial statements. The names of these subsidiaries

are stated in Note 12 to the Company’s financial statements.

We are satisfied that the consolidated financial statements of the subsidiaries attached to the financial

statements of the Company are in form and content appropriate and proper for the purposes of the

preparation of the consolidated accounts (as defined in section 209A of the Act), and we have

received satisfactory information and explanations as required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any

qualification and in respect of subsidiaries incorporated in Singapore did not include any comment

made under section 207(3) of the Act.

PricewaterhouseCoopers

Certified Public Accountants

Singapore

26 March 2003



21

Income Statement

INCOME STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2002

Note 2002 2001

$ $

Proceeds from sale of investments

- Quoted equity investments 1,157,530 638,503

- Unquoted equity investments 5,774,555 1,353,078

6,932,085 1,991,581

Cost of investments sold

- Quoted equity investments 2,518,307 1,888,643

- Unquoted equity investments 61,225 1,406,696

2,579,532 3,295,339

Profit/(loss) on sale

- Quoted equity investments (1,360,777) (1,250,140)

- Unquoted equity investments 5,713,330 (53,618)

4,352,553 (1,303,758)

Net change in revaluation and provision

for diminution in value 3 (2,963,586) 4,172,295

Interest income 4 189,819 1,174,472

Dividends from unquoted equity investments 629,483 181,806

Operating expenses 5 (3,295,493) (3,313,392)

(Loss)/profit before tax (1,087,224) 911,423

Tax 7(a) 656 –

Net (loss)/profit (1,086,568) 911,423

(Loss)/earnings per share (cents) 8 (2.72) 2.28

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

Auditors’ Report – Pages 19 and 20.



22

Balance Sheet

BALANCE SHEET AS AT 31 DECEMBER 2002

Note 2002 2001

$ $

Current assets

Bank balances 281,537 367,515

Fixed deposits with banks and other

financial institutions 9 15,903,252 13,608,909

Receivables and prepayments 10 396,323 410,280

16,581,112 14,386,704

Non-current assets

Investments 11 109,921,192 114,890,880

Total assets 126,502,304 129,277,584

Current liabilities

Trade and other payables 14 751,125 763,837

Provision for taxation 7(b) 243,169 243,169

994,294 1,007,006

Non-current liability

Deferred taxation 15 – 76,000

Total liabilities 994,294 1,083,006

Net assets 125,508,010 128,194,578

Shareholders’ equity

Share capital 16 20,000,001 20,000,001

Retained profits 13,682,904 16,369,472

33,682,905 36,369,473

Capital reserve 91,825,105 91,825,105

125,508,010 128,194,578

Net tangible asset backing per share 22 3.14 3.20





23

Statement of

Changes in Equity

STATEMENT OF CHANGES IN EQUITY


Retained

profits/

Share (accumulated Capital

Note capital losses) reserve Total

$ $ $ $

2002

Balance at 1 January 2002 20,000,001 16,369,472 91,825,105 128,194,578

Net loss and total recognised

losses for the year – (1,086,568) – (1,086,568)

Dividends for 2001 17 – (1,600,000) – (1,600,000)

Balance at 31 December 2002 20,000,001 13,682,904 91,825,105 125,508,010

2001

Balance at 1 January 2001

- as previously reported 20,000,001 15,458,049 91,825,105 127,283,155

- effect of adopting SAS10 (2000) – 1,200,000 – 1,200,000

- as restated 20,000,001 16,658,049 91,825,105 128,483,155

Net profit and total recognised

gains for the year – 911,423 – 911,423

Dividends for 2000 17 – (1,200,000) – (1,200,000)

Balance at 31 December 2001 20,000,001 16,369,472 91,825,105 128,194,578





24

Cash Flow Statement

CASH FLOW STATEMENT


2002 2001

$ $

Cash flows from operating activities

(Loss) / profit before tax (1,087,224) 911,423

Adjustments for:

Revaluation surplus on quoted investments (634,069) (1,172,295)

Provision/(write-back) for diminution in value of

unquoted investments 3,597,655 (3,000,000)

Operating profit/(loss) before operating assets and liabilities 1,876,362 (3,260,872)

Net changes in operating assets and liabilities:

Net decrease in long term investments at cost 2,006,102 3,372,861

Decrease in receivables 13,957 67,418

(Decrease)/increase in payables (12,712) 10,607

Cash generated from operations 3,883,709 190,014

Tax (paid)/refund (75,344) 847

Net cash provided by operating activities 3,808,365 190,861

Cash outflow from financing activity

Dividends paid (1,600,000) (1,200,000)

Net change in cash and cash equivalents 2,208,365 (1,009,139)

Cash and cash equivalents at beginning of year 13,976,424 14,985,563

Cash and cash equivalents at end of year 16,184,789 13,976,424

Cash and cash equivalents

Cash and cash equivalents consist of balances

with banks as follows:

Bank balances 281,537 367,515

Fixed deposits with banks and other financial institutions 15,903,252 13,608,909

16,184,789 13,976,424





25

Notes to the Financial Statements

NOTES TO THE FINANCIAL STATEMENTS


These notes form an integral part of and should be read in conjunction with the accompanying

financial statements.

1. General

The Company is incorporated and domiciled in Singapore and is listed on the Singapore

Exchange. The registered address of the Company is as follows: 6 Shenton Way #20-09, DBS

Building Tower 2, Singapore 068809.

The directors or shareholders holding at least 10% of the voting rights may petition for the

Company to be liquidated if it fails to distribute the equivalent of $200 million in gross cash

dividends, bonus shares or distribution in specie over a 12 year period from the date of

incorporation, 7 February 1994. As at 31 December 2002, the Company has distributed

$10,800,000.

The principal activity of the Company is to invest in equity or equity related instruments in

private companies in Asia to achieve capital appreciation.

2. Significant accounting policies

(a) Basis of preparation

The financial statements have been prepared in accordance with Singapore Statements

of Accounting Standard.

The financial statements have been prepared under the historical cost basis except for

the measurement at fair value of certain investments.

The financial statements are expressed in Singapore Dollars.

In 2002, the Company adopted SAS 12 (2001) Income Taxes.

(b) Basis of consolidation

The Company’s 63.5% equity investment in Foodstar Holding Pte Ltd (“Foodstar”)

and its subsidiary companies (“Foodstar Group”) has not been consolidated since the

directors are of the view that the investment in Foodstar Group was made with the

same objective as any other investment of the Company, namely realisation of capital

appreciation through disposal, and hence consolidation is not meaningful for

shareholders.

To comply with Singapore Companies Act, the Group’s consolidated accounts (as

defined in section 209A of the Companies Act) are presented by attaching the

separate consolidated financial statements of Foodstar Group to the financial

statements of the Company.

The consolidated accounts so prepared are not significantly affected by transactions

and balances between the Company and its subsidiaries, other than as disclosed in

Note 12.

(c) Investment in subsidiaries

Investment in subsidiaries is stated in the financial statements of the Company at cost

and a provision is made for any diminution in value that is other than temporary.

Loans convertible to ordinary shares are included in cost of investment.



26

(d) Investments

(i) Unquoted investments (including convertible loans) are stated at cost.

Unquoted investments of 20% to 50% of the equity of the investee companies

are not deemed to be associated companies because the Company does not

participate in or exercise significant influence over the commercial and financial

decisions of the investee companies. Provision is made where the directors are

of the view that there has been a diminution in value that is other than

temporary. Any appreciation in value (including foreign exchange gains on

convertible loans) is generally not recognised until it is realised.

(ii) Quoted investments that are listed on approved stock exchanges are stated at

market value at the balance sheet date.

(iii) An investment for which a market quotation is readily available, but which is

restricted as to sale or transfer, is valued as provided in (ii) above less a

discount as determined by the Investment Manager (Note 18). In determining

the amount of such discount, the Investment Manager gives consideration to

the nature and term of such restrictions and the relative volatility of the

market price of the investment concerned.

(iv) On a portfolio basis, a net increase in carrying values of quoted investments

arising from revaluation is credited to the Investment Revaluation Reserve

except that a net increase that offsets a previous decrease recognised in the

income statement is credited to the income statement. A net decrease is

charged to the income statement except that a net decrease that offsets a

previous increase recognised in the Investment Revaluation Reserve is charged

against the Investment Revaluation Reserve.

(v) From time to time, the directors may determine that provisions be held for

risks which are known to exist within the investment portfolio but which

cannot be attributable to specific investments. This is included in provision

for diminution in value of investments.

(vi) On disposal of investments, both quoted and unquoted, all profits and losses

(computed on the basis of the difference between the weighted average cost

and selling price) are taken to the income statement.

(e) Operating revenue and revenue recognition

Operating revenue consists of gross dividend income, gross interest income on fixed

deposits, other short term financial instruments, profit or loss on disposal of

investments.

Dividend income is recognised on the date it is declared payable by the investee

company. Interest income except for interest income on convertible loans is

recognised on an accrual basis. Interest income on convertible loans is recognised when

received.

(f) Foreign currencies

Amounts payable and receivable denominated in foreign currencies are translated into

Singapore dollars at exchange rates prevailing at the balance sheet date. Transactions

in foreign currencies during the year are converted into Singapore dollars at the

exchange rates prevailing at transaction dates. All exchange differences are taken to the

income statement.

(g) Taxation

The Company has been granted tax exemption for a period of 10 years commencing

20 June 1994 for:

(a) gain arising from divestment of shares acquired prior to listing of its investee

companies



27

(b) dividend income from foreign investee companies

(c) interest income from convertible loan stock in foreign investee companies.

Current tax is provided based on the tax payable on the non-exempt income for the

year that is chargeable to tax.

The Company adopted SAS 12 (2001) with effect from 1 January 2002. This change

has no impact on opening retained earnings of the Company.

Deferred tax is provided in full using the liability method on temporary differences

arising between the tax bases of assets and liabilities and their carrying amounts in the

financial statements. Deferred tax assets are recognised to the extent that it is

probable that future taxable profit will be available against which temporary

differences can be utilised.

Tax rates enacted or substantively enacted by the balance sheet date are used to

determine deferred income tax.

(h) Financial risk management

Financial risk factors

The Company is exposed to a variety of financial risks, primarily in equity market

prices and changes in foreign currency exchange rates in relation to its investment

portfolio and to a lesser extent, interest rates on the deposits placed with financial

institutions.

The Company has written investment restrictions (as disclosed in the prospectus for

the initial public offering of the Company) that seek to diversify its investment risk

(including currency risks) and contain these exposures to an acceptable level.

Compliance to these restrictions are reviewed on an ongoing basis by the Investment

Manager and reported to the directors semi-annually. The Company does not use any

derivative financial instruments to hedge these exposures.

(i) Foreign exchange risk

The Company has significant investments in companies throughout Asia. As

mentioned above, the Company manages this risk through its written

investment restrictions and ongoing monitoring by the Investment Manager.

(ii) Interest rate risk

The Company’s income and operating cash flows are substantially

independent of changes in market interest rates and has no significant interest-

bearing assets.

(iii) Credit risk

The Company has no significant concentrations of credit risk. The Company

ensures that cash are placed with financial institutions of recognised credit

standing.

(iv) Liquidity risk

The Company maintains sufficient cash to meet its operating needs.

(i) Comparatives

Where necessary, comparative figures have been adjusted to conform with changes in

the current presentation. Where applicable, the comparatives have been adjusted or

extended to take into account the requirements of the revised SAS 12 which the

Company implemented in 2002.



28

3. Net change in revaluation and provision for diminution in value

2002 2001

$ $

Revaluation deficit on quoted investments

written back (Note 13) 634,069 1,172,295

Provision for diminution in value of unquoted

investments (charged)/written back (Note 13) (3,656,808) 3,000,000

Provision for diminution in value of unquoted

investments written back on disposal (Note 13) 59,153 –

(2,963,586) 4,172,295

4. Interest income

2002 2001

$ $

Interest income from:

- Unquoted investments 123,718 965,961

- Fixed deposits 66,101 203,576

- Other – 4,935

189,819 1,174,472

5. Operating expenses

2002 2001

$ $

Auditors’ remuneration

- Audit fees* 61,415 67,369

- Other fees 19,601 29,139

Directors’ fees (Note 6) 100,658 70,849

Investment management fees 1,633,677 1,680,281

Investment monitoring fees 1,423,203 1,429,043

Foreign exchange gain (37,413) (92,430)

Other 94,352 129,141

3,295,493 3,313,392

* In addition to the above, the auditors’ remuneration for Foodstar Group is as follows:

2002 2001

$ $

- Auditors of the Company (42,781) 52,110

- Other auditors 202,217 229,129

The Company has no staff costs as its operations are fully managed by its Investment

Manager (Note 18).



29

6. Directors’ fees

Fees paid or payable to each of the seven non-executive directors of the Company fall within

the $0 - $50,000 range. No fee is paid or payable to the executive director.

7. Tax

(a) Tax expense

2002 2001

$ $

Tax expense on profit for the financial year:

Current income tax

- Withholding tax paid on foreign dividends 75,344 –

Overprovision in preceding financial years

- Deferred tax (76,000) –

(656) –

The Company is an approved venture company for venture capital investment activity

granted under Section 13H of the Singapore Income Tax Act, Cap 134 for a period of 10 years

commencing 20 June 1994. During the tax relief period, all gains arising from the divestment

of shares acquired before the public listing of its investee companies, foreign-sourced dividend

and interest income from convertible loan stock in foreign investee companies shall be tax-

exempt. All other income of the Company shall be subject to Singapore income tax.

This tax incentive is subject to certain conditions which have to be complied with during the

tax relief period.

The tax expense on profit differs from the amount that would arise using the Singapore

standard rate of income tax due to the following:

2002 2001

$ $

Profit before tax (1,087,224) 911,423

Tax calculated at a tax rate of 22% (2001: 24.5%) (239,189) 223,299

Exempt income (626,104) –

Income not subject to tax – (1,068,814)

Expenses not deductible for tax purposes 787,148 4,244

Deferred tax assets not recognised 78,145 841,271

– –

(b) Movement in provision for current tax

2002 2001

$ $

Provision for tax at beginning of the financial year 243,169 242,322

Income tax refunded – 847

Balance at the end of the financial year 243,169 243,169



30

8. Loss per share

Loss per share is calculated based on the loss of $1,086,568 (2001: profit after tax of

$911,423) and the number of ordinary shares in issue of 40,000,002 (2001: 40,000,002).

No diluted earnings per share is calculated as the Company does not have any warrants, share

options or any other contracts that may result in the issuance of ordinary shares in the

Company, outstanding at the end of the financial year.

9. Fixed deposits with banks and other financial institutions

2002 2001

The weighted average effective interest rate at the

balance sheet date was as follows:

Fixed deposits 0.4% 1.5%

Included in fixed deposits with banks and other financial institutions is an amount of

$294,343 placed with a bank in the name of the Investment Manager acting as the trustee.

This amount is pledged as security with the bank for the issue of standby letter of credit on

behalf of the Company.

10. Receivables and prepayments

2002 2001

$ $

Interest receivable 4,290 4,862

Prepayments for investment management fees 392,033 405,418

396,323 410,280



31

11. Investments

Investments are held for purposes of capital appreciation and are in:

(a) quoted equity;

(b) unquoted equity and convertible debt; and

(c) equity and convertible debt of an unconsolidated subsidiary.

Quoted

equity Unquoted Investment in

Investments Investments Subsidiary Total

$ $ $ $

2002

Cost

– equity 5,666,028 94,404,909 36,912,410 136,983,347

– non-equity – 41,499,202 – 41,499,202

5,666,028 135,904,111 36,912,410 178,482,549

Unrealised revaluation loss

(Note 13(a)) (2,196,963) – – (2,196,963)

Provision for diminution in

value (Note 13(b)) – (66,364,394) – (66,364,394)

Net book value 3,469,065 69,539,717 36,912,410 109,921,192

Market value 3,469,065

Fair value 69,539,717 36,912,410

2001

Cost

– equity 8,171,578 90,352,127 18,920,384 117,444,089

– non-equity – 45,052,536 17,992,026 63,044,562

8,171,578 135,404,663 36,912,410 180,488,651

Unrealised revaluation loss

(Note 13(a)) (2,831,032) – – (2,831,032)


value (Noted 13(b)) – (62,766,739) – (62,766,739)

Net book value 5,340,546 72,637,924 36,912,410 114,890,880

Market value 5,340,546

Fair value 79,078,000 36,912,410



32

12. Interests in subsidiaries

The Company holds a 63.5% equity interest in Foodstar Holdings Pte Ltd (“Foodstar”) and

this is legally a subsidiary under the Companies Act. In accordance with the Company’s

accounting policy, this investment is stated at cost, including equity and loans convertible to

equity.

2002 2001

$ $

Unquoted equity shares at cost 36,912,410 18,920,384

Convertible loans – 17,992,026

36,912,410 36,912,410

Had consolidation been performed and taking into account consolidation adjustments, loss

after tax and loss after tax and minority interest for the financial year ended 31 December

2002 would be increased by approximately $15,832,489 (2001: profit increased by

$2,937,000) and $8,567,428 (2001: profit increased by $2,701,000) respectively and the net

assets attributable to the shareholders of the Company as at 31 December 2002 would have

been decreased by approximately $787,367 (2001: increased by $10,516,000).

Significant subsidiaries held by Foodstar as at 31 December 2002 are:

Foodstar’s

Country of effective equity

incorporation interest @@

Subsidiary companies Principal activities and business 2002 2001

% %

China Food Processing Dormant Hong Kong – 54.68

Group Ltd### SAR, China

China Food Processing Investment British Virgin 54.68 54.68

Holdings Co. Ltd** holding Islands

China Food Processing Investment British Virgin – 54.68

International Co Ltd## holding Islands

China Food Processing Investment holding Hong Kong – 54.68

(PRC) Ltd### SAR, China

Dalian FTZ Yue Hua Trading of specialty China – 100.00

International Trade fats

Co. Ltd###

Dunston Assets Investment holding British Virgin 100.00 100.00

Limited*** Islands

East West International Trading of frozen Hong Kong – 60.00

Limited### food products SAR, China

Fairlink Investment Investment holding Hong Kong 54.68 54.68

Limited** SAR, China

FMA Development Co Dormant British 100.00 100.00

Ltd## Virgin Islands



33

Foodstar’s




% %

Foodstar (China) Investment China 100.00 –

Investments holding

Company Limited**

Foodstar Management Providing management Hong Kong 100.00 100.00

Company Limited* services to group SAR, China

companies

Foodstar Trading Providing management British Virgin 100.00 100.00

Company Limited*** services to group Islands

companies

Foodstar Trading Trading of food Hong Kong 100.00 100.00

(Hong Kong) products SAR, China

Company Limited*

Guangzhou Foodstar Providing marketing China 100.00 100.00

Marketing Services services and investment

Co Ltd** holding

G & K Holdings Ltd** Investment holding Hong Kong 100.00 100.00

SAR, China

Kaiping Guanghe Manufacture and sale China 100.00 100.00

Fermented Bean of fermented bean

Curd Co. Ltd* curd

Kaiping Jiashili Dried Manufacture and sale China 100.00 100.00

Fruit and Nuts Co. of dried fruit and nuts

Ltd*@

Kaiping Weixida Manufacture and sale China 100.00 100.00

Seasoning Co. Ltd* of seasonings

Nanjing Jilun Seasoning Manufacture and sale China 100.00 100.00

Product Co. Ltd* of seasonings

Shanghai Xinjing Manufacture and sale China 32.81 32.81

Western-Style Food of processed food

Co. Ltd**@

Silver Eagle Foods & Trading of food Hong Kong 70.00 70.00

Trading Company products SAR, China

Limited**@

Silver Eagle Foods Process and sale of China 70.00 70.00

(Shenzhen) Company agricultural products

Limited**@



34

Foodstar’s




% %

Silver Eagle Frozen Manufacture and sale China 70.00 70.00

Foods Factory of food products

Limited**@

Top Network Limited*** Investment holding British Virgin 60.00 60.00

Islands

Welton Source (HK) Dormant Hong Kong 54.68 54.68


Welton Source Investment holding Hong Kong – 54.68

International Limited### SAR, China

Yue Hua Trading Dormant British Virgin 100.00 100.00

Limited## Islands

Guizhou Feng La Zhi Manufacture and sale China 80.00 80.00

Food Product Company of chilli related

Limited** products

* Audited by other members of the worldwide PricewaterhouseCoopers organisation.

** Audited by firms other than the auditors of the Company. None of these subsidiaries are significant as

defined under Clause 718 of the Listing Manual.

*** Not required to be audited under the legislation of the respective country of incorporation.

## Company de-registered in 2002.

### Company liquidated in 2002.

@ Company commenced cessation of business in 2002.

@@ The Company’s effective interest is 63.5% of Foodstar’s interest.

13. Provision for diminution in value of investments

(a) Quoted investments

In accordance with the Company’s accounting policy set out in Note 2(d)(iv), a net

increase in carrying values of quoted investments arising from revaluation is credited

to the Investment Revaluation Reserve, except that a net increase that offsets a

previous decrease recognised in the income statement is credited to the income

statement.

2002 2001

$ $

Balance at 1 January 2,831,032 4,003,327

Revaluation deficit on quoted investments

written back (Note 3) (634,069) (1,172,295)

Balance at 31 December (Note 11) 2,196,963 2,831,032



35

(b) Unquoted investments

The cost of investments is written off against provisions when the investments are

deemed to be of insignificant value. Provisions are released when the investments are

disposed of. Appreciation of value in unquoted investments above cost of the

investments are not taken up in the financial statements.

2002 2001

$ $

Balance at 1 January 62,766,739 65,766,739

Write-back of provision on disposal of investment

(Note 3) (59,153) –

Write-back of prior year provision (Note 3) – (3,000,000)

Additional provision for the year (Note 3) 3,656,808 –

Net movement for the year 3,597,655 (3,000,000)

Balance at 31 December (Note 11) 66,364,394 62,766,739

14. Trade and other payables

2002 2001

$ $

Monitoring fees payable 348,223 352,763

Directors fees payable 100,658 70,849

Other creditors 243,498 246,601

Accruals for operating expenses 58,746 93,624

751,125 763,837

15. Deferred Tax

Deferred tax liabilities

Provisions

2002 2001

$ $

At beginning of financial year 76,000 76,000

Tax credit to income statement (Note 7(a)) (76,000) –

At end of financial year – 76,000

Deferred tax assets are recognised for tax loss carried forward to the extent that realisation of

the related tax benefits through future taxable profits is probable. The Company has

unrecognised tax losses of approximately $11 million (2001: $9 million) which can be carried

forward and used to offset against future taxable income subject to meeting certain statutory

requirements.



36

16. Share Capital

2002 2001

$ $

Authorised

1,000,000,000 ordinary shares of $0.50 each 500,000,000 500,000,000

Issued and fully paid

40,000,002 ordinary shares of $0.50 each 20,000,001 20,000,001

17. Dividends

2002 2001

$ $

Ordinary dividends paid or proposed

Final tax exempt dividend of 4 cents per share paid

for the financial year ended 31 December 2001 1,600,000 –

Final tax exempt dividend of 3 cents per share

paid for financial year ended 31 December 2000 – 1,200,000

1,600,000 1,200,000

The Directors have proposed a first and final exempt one-tier dividend for 2002 of 4 cents per

share amounting to a total of $1,600,000. In addition, the directors propose a final special

exempt one-tier dividend of 8 cents per share amounting to a total of $3,200,000. These

financial statements do not reflect this dividend payable, which will be accounted for in the

shareholders’ equity as an appropriation of retained earnings in the year ending 31 December

2003.

18. Agreements

The Company entered into a Management Agreement on 12 March 1994 with Transpac

Capital Pte Ltd (“TCPL”) a company incorporated in Singapore, appointing TCPL as the

Manager. Leong Ka Cheong Christopher is also a director of TCPL. Under the terms of this

agreement, TCPL will have the sole responsibility and full discretionary authority to identify

investment opportunities and to manage the acquisition, holding and sale of the investments

under its management.

The Management Agreement will initially be effective for a period of ten years, and will

continue in effect thereafter for successive periods of five years unless terminated by the

Company or TCPL giving 30 days’ written notice.

The fees payable to TCPL in respect of investment advisory and other services are:

Management fee

Annual fee of 1.25% of the net asset value of the Company as at 30 June and 31 December of

each calendar year, payable semi-annually in advance on 1 October and 1 April of each

calendar year.

Monitoring fee

Annual fee of 1.25% of the base cost of investments made by the Company as at 30 June and

31 December of each calendar year, payable semi-annually in arrears on 1 October and 1 April

of each calendar year.



37

Performance incentive

Annual fee of 20% of the annual audited net profit after tax of the Company shall be credited

to the Performance Incentive Account.

The Investment Manager is entitled to be paid the Performance Incentive when:

(a) the credit balance in the Performance Incentive Account is in excess of $20,000,000;

and

(b) the net asset value of the Company is at least $200,000,000; and

(c) dividends are paid to shareholders.

The payment of the Performance Incentive shall be in the same form as the dividends to

shareholders.

Should the audited financial statements in any one year show a net loss after tax, an amount

equal to 20% of that loss shall be debited to the Performance Incentive Account. In the event

that there is a debit balance in the Performance Incentive Account, the Investment Manager is

not required to reimburse the Company except where the aggregate prior distributions of the

Performance Incentive exceeds the Investment Manager’s entitlement calculated upon:

(a) winding up of the Company; or

(b) termination of the investment management agreement.

19. Capital commitments

At 31 December 2002, the Company’s proposed investments in unquoted equity shares and

convertible loans were $ 6,594,144 (2001: $4,768,408).

20. Segment information

Primary segment – business

The principal activity of the Company is to invest primarily in the equity of growing private

companies located in Asia for capital appreciation. As the investee companies are engaged in

a variety of industries, it is not meaningful to segment the investments by industry sectors.

Secondary segment – geographical

The assets in each country consist principally of investments. Corresponding revenues

represent gains or losses on sale of investments, dividend income and interest income.

Unallocated assets consist of operating cash less general provision for diminution.

Unallocated revenues relates to interest income on unallocated cash.

With the exception of China, Hong Kong SAR, Taiwan and Singapore, no other individual

country contributed more than 10% of segment revenues or assets.



38

Segment revenues Segment assets

2002 2001 2002 2001

$ $ $ $

China/Hong Kong SAR 198,638 (1,084,205) 81,423,386 83,436,930

Indonesia (920,280) – 29,766 28,803

Malaysia – – 603,120 637,348

Taiwan – – 24,048,545 24,048,062

Thailand 460,179 181,806 486,986 488,201

Singapore 5,747,822 158,024 2,630,647 2,529,711

USA (380,605) 588,386 2,420,310 5,443,392

5,105,754 (155,989) 111,642,760 116,612,447

Unallocated 66,101 208,509 14,859,544 12,665,137

5,171,855 52,520 126,502,304 129,277,584

21. Fair values

Other than the fair values of investments as shown in Note 11, the carrying amounts of the

following financial assets and liabilities approximate their fair values: bank balances, fixed

deposits with banks and other financial institutions, receivables and prepayments, trade and

other payables.

22. Net tangible asset backing per share

Net tangible asset backing per share is calculated based on the net assets of $125,508,010

(2001: $128,194,578) and the number of ordinary shares in issue of 40,000,002 (2001:

40,000,002).

23. Contingent liabilities (unsecured)

As at 31 December 2002, there is a claim of RM565,978 (approximately S$260,000) plus a

penalty of an equivalent amount [total claim and penalty amounting to RM1,131,956

(approximately S$520,000)] against the Company in respect of a non-refundable deposit of

the same amount for alleged breach of contract by the Company. The Company has

disclaimed liability and is defending the action. Legal advice obtained indicates that it is

unlikely that any significant liability will arise, and no provision has been made in the

financial statements for the claim.

The directors are of the view that the above contingent liability is unlikely to have a material

adverse effect on the financial position of the Company.

24. Authorisation of financial statements

The Board of Directors of Transpac Industrial Holdings Limited authorised these financial

statements for issue on 26 March 2003.



39

The following pages 40 to 68 are the financial statements of Foodstar Holdings Pte Ltd and its

subsidiaries, which form part of the consolidated accounts (as defined in section 209A of the Singapore

Companies Act), of Transpac Industrial Holdings Limited.



40

Income Statements

INCOME STATEMENTS


The Group The Company

Note 2002 2001 2002 2001

$ $ $ $

Revenue 3 71,215,744 91,369,925 11,340,212 7,352,804

Cost of sales (50,509,842) (63,432,742) – –

Gross profit 20,705,902 27,937,183 11,340,212 7,352,804

Other operating income 32,446 330,454 – –

Distribution expenses (10,247,093) (12,097,850) – –

Administrative expenses (10,925,705) (11,416,446) (239,270) (158,478)

Other operating expenses (2,189,987) (1,460,082) (18,197,502) (15,590,746)

Exceptional loss 4 (11,881,783) – – –

Operating (loss)/profit 5 (14,506,220) 3,293,259 (7,096,560) (8,396,420)

Finance income 6 319,451 4,191,556 67,555 2,606,008

Finance costs 7 (658,537) (1,030,258) (38,756) –

(Loss)/profit before tax (14,845,306) 6,454,557 (7,067,761) (5,790,412)

Tax 9 (987,183) (1,599,183) (1,325,962) (64,891)

(Loss)/profit from ordinary

activities before minority

interest (15,832,489) 4,855,374 (8,393,723) (5,855,303)

Minority interest 33 2,340,477 836,294 – –

(Loss)/profit after tax

attributable to the members

of the Company (13,492,012) 5,691,668 (8,393,723) (5,855,303)


Foodstar Holdings Pte Ltd and Its Subsidiaries



41

Balance Sheets

BALANCE SHEETS AS AT 31 DECEMBER 2002


Note 2002 2001 2002 2001

$ $ $ $

Current assets

Cash and cash equivalents 10 26,260,340 34,381,719 200,562 5,551,677

Trade receivables 11 4,742,680 11,768,152 – –

Inventories 12 8,061,041 11,581,780 – –

Other current assets 13 3,979,127 4,450,989 795,700 1,404,181

Loan receivable 14 – – – –

43,043,188 62,182,640 996,262 6,955,858

Non-current assets

Investments in subsidiaries 15 – – 57,293,379 69,213,612

Investment in associate 16 1 1 – –

Property, plant and equipment 17 38,450,619 53,242,019 – –

Deferred expenditure 18 – 106,167 – –

Goodwill 19 146,332 173,285 – –

Trademarks 20 3,100,401 6,292,628 – –

Deferred tax assets 30 1,213,965 – – –

42,911,318 59,814,100 57,293,379 69,213,612

Total assets 85,954,506 121,996,740 58,289,641 76,169,470

Current liabilities

Trade payables 4,866,114 7,296,658 – –

Other payables 21 11,214,266 17,712,013 314,895 387,578

Payables to shareholders 23 – 28,333,899 – 28,333,899

Payable to a related party 24 179,847 192,079 – –

Provision for current tax 2,338,554 1,281,224 – –

Bank overdraft (unsecured) 10 – 260,750 – –

Other short-term loan (unsecured) 25 – 229,694 – –

Current portion of long-term

payables (unsecured) 26 419,000 754,729 – –

Finance lease liabilities 27 – 24,446 – –

Short-term bank loans (secured) 28 9,166,067 15,131,736 – –

Current portion of long-term

bank loans (secured) 28 – 36,869 – –

28,183,848 71,254,097 314,895 28,721,477

Non-current liabilities

Payable to subsidiary (non-trade) 29 – – – 5,152,427

Long-term payables (unsecured) 26 838,000 1,565,909 – –

Finance lease liabilities 27 – 17,219 – –

Long-term bank loans (secured) 28 – 336,356 – –

838,000 1,919,484 – 5,152,427

Total liabilities 29,021,848 73,173,581 314,895 33,873,904

Net assets 56,932,658 48,823,159 57,974,746 42,295,566

Share capital and reserves

Share capital 31 40,933,164 25,405,441 40,933,164 25,405,441

Share premium 17,196,615 4,390,439 17,196,615 4,390,439

Reserves 32 (1,239,948) 16,562,186 (155,033) 12,499,686

Interests of shareholders of

the Company 56,889,831 46,358,066 57,974,746 42,295,566

Minority interests 33 42,827 2,465,093 – –

56,932,658 48,823,159 57,974,746 42,295,566


Foodstar Holdings Pte Ltd and Its SubsidiariesFoodstar Holdings Pte Ltd and Its SubsidiariesFoodstar Holdings Pte Ltd and Its Subsidiaries



42

Consolidated Statement of

Changes in Equity

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Foreign Capital (Accumula-

Currency and ted Losses) /

Share Share Translation Other Retained

Note Capital Premium Reserves Reserves Earnings Total

$ $ $ $ $ $

Balance at 1 January

2002 25,405,441 4,390,439 9,085,150 (488,589) 7,965,625 46,358,066

Currency translation

differences – – (4,310,122) – – (4,310,122)

Net loss – – – – (13,492,012) (13,492,012)

Total recognised losses for

the financial year – – (4,310,122) – (13,492,012) (17,802,134)

Transfer from (accumulated

losses)/retained earnings – – – 417,690 (417,690) –

Issue of share capital 31 15,527,723 12,806,176 – – – 28,333,899

Balance at 31 December 2002 40,933,164 17,196,615 4,775,028 (70,899) (5,944,077) 56,889,831

Balance at 1 January 2001 25,405,441 4,390,439 6,318,830 (774,681) 2,560,049 37,900,078

Currency translation differences – – 2,766,320 – – 2,766,320

Net profit – – – – 5,691,668 5,691,668

Total recognised gains for the

financial year – – 2,766,320 – 5,691,668 8,457,988

Transfer from retained earnings – – – 286,092 (286,092) –

Balance at 31 December 2001 25,405,441 4,390,439 9,085,150 (488,589) 7,965,625 46,358,066

An analysis of the movements in each category within “Capital and other reserves” is presented in note

32.





43

Statement of Changes

in Equity – Company

STATEMENT OF CHANGES IN EQUITY – COMPANY


(Accumula- Foreign

ted Losses) / Currency

Share Share Retained Translation

Note Capital Premium Earnings Reserves Total

$ $ $ $ $

Balance at 1 January 2002 25,405,441 4,390,439 3,046,405 9,453,281 42,295,566

Currency translation differences – – – (4,260,996) (4,260,996)

Net loss – – (8,393,723) – (8,393,723)

Total recognised losses for

the financial year – – (8,393,723) (4,260,996) (12,654,719)

Issue of share capital 31 15,527,723 12,806,176 – – 28,333,899

Balance at 31 December 2002 40,933,164 17,196,615 (5,347,318) 5,192,285 57,974,746

Balance at 1 January 2001 25,405,441 4,390,439 8,901,708 6,482,118 45,179,706

Currency translation differences – – – 2,971,163 2,971,163

Net loss – – (5,855,303) – (5,855,303)

Total recognised gains and losses for

the financial year – – (5,855,303) 2,971,163 (2,884,140)

Balance at 31 December 2001 25,405,441 4,390,439 3,046,405 9,453,281 42,295,566





44

Consolidated Cash Flow Statement

CONSOLIDATED CASH FLOW STATEMENT


Note 2002 2001

$ $

Cash flows from operating activities

(Loss)/profit before tax (14,845,306) 6,454,557

Adjustments for:

Depreciation of property, plant and equipment 17 3,882,626 3,001,490

Provision for diminution in value of property,

plant and equipment 17 7,900,467 831,653

Loss on disposal of property, plant and equipment 5 20,546 56,908

Amortisation of goodwill, trademarks and deferred

expenditure 5 1,170,788 1,075,640

Interest expense 7 619,781 1,030,258

Interest income 6 (319,451) (801,983)

Provision for inventory write-down and doubtful

receivables 5 2,797,277 975,216

Write-off of trademarks, bad debts, inventories,

deferred expenditure and pre-operating expenditure 5 2,366,401 972,157

Write-back of provision for inventory write-down 5 (3,863) (50,110)

Operating cash flow before working capital change 3,589,266 13,545,786

Change in operating assets and liabilities

Inventories 2,125,793 1,167,787

Receivables 6,193,638 (1,506,811)

Due to related parties (12,232) (3,249,460)

Payables (8,928,291) 2,053,747

Currency translation adjustment (1,251,893) (625,795)

Cash generated from operations 1,716,281 11,385,254

Income tax paid (1,064,121) (866,141)

Net cash inflow from operating activities 652,160 10,519,113

Cash flows from investing activities

Acquisition of additional interest in subsidiaries – (12,915,498)

Payments for property, plant and equipment 17 (2,849,899) (11,265,296)

Payments for pre-operating expenditure – (7,918)

Payments for trademarks – (236,606)

Proceeds from disposal of property, plant and equipment 2,311,331 730,066

Net cash outflow from investing activities (538,568) (23,695,252)

Cash flows from financing activities

Dividend paid to minority shareholders of subsidiaries – (1,777,240)

Capital contribution from minority shareholder of

subsidiary 33 – 210,537

Repayment of bank loans (6,338,894) (119,211)

(Repayment of)/proceeds from other loans (1,293,332) 135,860

Interest received 319,451 801,983

Interest paid (619,781) (1,030,258)

Principal repayments of finance lease liabilities (41,665) (69,982)

Net cash outflow from financing activities (7,974,221) (1,848,311)

Net decrease in cash and cash equivalents held (7,860,629) (15,024,450)

Cash and cash equivalents at beginning of the financial year 34,120,969 49,145,419

Cash and cash equivalents at end of the financial year 10 26,260,340 34,120,969





45

Notes to the Financial Statements

NOTES TO THE FINANCIAL STATEMENTS


These notes form an integral part of and should be read in conjunction with the accompanying financial

statements.

1. General

The Company is domiciled and incorporated in Singapore. The address of its registered office is

as follows:



Singapore 068809

The principal activity of the Company is investment holding. The principal activities of the

subsidiaries consist of investment holding, manufacture, sale and distribution of food products.

2. Significant accounting policies

(a) Basis of preparation

The financial statements have been prepared in accordance with Singapore Statements of

Accounting Standard. The financial statements have been prepared under the historical cost

convention.

The financial statements are expressed in Singapore Dollars.

In 2002, the Company adopted SAS 12 (2001) Income Taxes.

(b) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and

all its subsidiaries made up to the end of the financial year. Subsidiaries are those entities in

which the Group has an interest of more than one half of the voting rights or otherwise has

power to exercise control over the operations. Subsidiaries are consolidated from the date

on which control is transferred to the Group and are no longer consolidated from the date

on which control ceases. All intercompany transactions, balances and unrealised gains on

transactions between group companies are eliminated; unrealised losses are also eliminated

unless cost cannot be recovered. Where necessary, accounting policies for subsidiaries have

been changed to ensure consistency with the policies adopted by the Group.

(c) Foreign currencies

The Company’s functional currency is the Hong Kong (HK) dollar. Transactions in other

currencies during the financial year are translated into HK dollars at the rates of exchange

prevailing on the transaction dates. Monetary assets and liabilities denominated in other

currencies are translated into HK dollars at the rates of exchange prevailing at the balance

sheet date. All exchange differences arising are taken to the income statement.

For inclusion in the consolidated financial statements of the Group, the assets and liabilities

of foreign subsidiaries and associates are translated into HK dollars at the rates of exchange

prevailing at the balance sheet date. The results of foreign subsidiaries and associates are

translated into HK dollars at the average rates of exchange prevailing during the financial

year. The Group’s share of exchange differences arising from the translation of foreign

subsidiaries are taken directly to the foreign currency translation reserve.




46

In addition, the following foreign exchange translation differences are taken directly to

foreign currency translation reserve in the consolidated financial statements:

(a) those relating to monetary balance such as convertible loans which in substance forms

part of the Group’s net investment in foreign subsidiaries; and

(b) those arising on any foreign-currency bank loans accounted for as an economic hedge

of the Group’s net investments in foreign subsidiaries.

For preparation of the Company’s and of the Group’s statutory financial statements, the

HK-dollar denominated financial statements are translated to Singapore dollars as follows:

(i) Balance sheet items with the exception of shareholders’ equity are translated into

Singapore dollars at the rates of exchange prevailing at the balance sheet date.

Shareholders’ equity is translated at historical rates.

(ii) Income statement items are translated into Singapore dollars at the average rates of

exchange prevailing during the financial year.

(iii) Differences arising on translation are taken directly to the foreign currency translation

reserve.

(d) Revenue recognition

Sale of goods comprises revenue earned from the sale of the Group’s products net of sales

returns, trade discounts, and applicable value-added sales or services taxes. Revenue from

the sale of goods is recognised upon shipment to customers.

Dividend income from investments is recorded gross in the income statements when the

Group’s right to receive the dividend is established.

Interest income is recognised on an accrual basis.

(e) Deferred income taxes

Deferred income tax is provided in full, using the liability method, on temporary differences

arising between the tax bases of assets and liabilities and their carrying amounts in the

financial statements.

Tax rates enacted or substantively enacted by the balance sheet date are used to determine

deferred income tax.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit

will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in

subsidiaries and associates, except where the timing of the reversal of the temporary

difference can be controlled and it is probable that the temporary difference will not reverse

in the foreseeable future.

(f) Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the

cash flow statement, cash and cash equivalents comprise cash on hand, balances and fixed

deposits with banks and bank overdrafts.

(g) Trade receivables

Trade receivables are carried at original invoice amount less an estimate made for doubtful

receivables based on a review of all outstanding amounts at the year end. Bad debts are

written off when identified.



47

(h) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a

weighted average basis. The cost of finished goods and work-in-progress comprises raw

materials, direct labour and an appropriate proportion of overhead expenditure. Net

realisable value is the estimated selling price in the ordinary course of business, less the

costs of completion and selling expenses.

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

(i) Subsidiaries and associates

Investments in subsidiaries and associates that are intended to be held for the long term are

stated in the financial statements at cost less provision. This provision is made in

recognition of a diminution in the value of the investments which is other than temporary,

determined on an individual investment basis.

A subsidiary is an entity in which the Group has an interest of more than half of the voting

rights or otherwise has power to exercise control over the operations. The Group’s

subsidiaries are shown in note 15.

An associate is an entity, not being a subsidiary, in which the Group has between 20% and

50% of the voting rights and over which the Group has significant influence, but which it

does not control. The Group’s associate is shown in note 16.

The Group’s share of results of associates is included in the consolidated income statement.

The Group’s share of post-acquisition reserves of the associates is included in the

investments in associates in the consolidated balance sheet.

Profits or losses on disposal of investments in subsidiaries and associates are taken to the

income statements.

(j) Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation

and provision for diminution in value.

When the carrying amount of an asset is greater than its estimated recoverable amount, it is

provided for immediately to its recoverable amount.

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

use.

No depreciation is provided on freehold or leasehold land with a lease term of over 50

years. Depreciation is calculated on a straight-line basis to write off the cost of other

property, plant and equipment over their expected useful lives. The estimated useful lives

are as follows:

Land-use rights 50 years (period of right to use land)

Leasehold buildings 40 years

Leasehold improvements 3 - 10 years

Plant 20 years

Machinery and equipment 3 - 14 years

Furniture and fittings 5 - 10 years

Motor vehicles 4 - 5 years

No depreciation is provided on construction-in-progress. Depreciation is provided only

when the construction is completed and the property, plant and equipment is brought into

use.



48

(k) Deferred expenditure

Deferred expenditure is stated at cost less accumulated amortisation. Amortisation is

calculated on a straight-line basis to write off the cost over its estimated useful life.

(l) Goodwill

Goodwill represents the excess of the fair value of the consideration given over the fair

value of the Group’s share of identifiable net assets of subsidiaries and associates when

acquired. Goodwill is amortised on a straight-line basis, through the consolidated income

statement, over its useful economic life up to a maximum of 10 years. Goodwill which is

assessed as having no continuing economic value is written off to the consolidated income

statement.

On the acquisition of a foreign subsidiary or associate, the goodwill arising is translated at

the rate of exchange prevailing at the date of acquisition.

The gain or loss on disposal of a subsidiary or associate includes the unamortised balance of

goodwill relating to the entity disposed of or, for pre 1 January 2001 acquisitions, the

goodwill charged to equity.

(m) Trademarks

The initial cost of acquiring trademarks is capitalised for amortisation in equal instalments

over their estimated useful lives of 10 years.

(n) Provisions

Provisions are recognised when the Group has a legal or constructive obligation as a result

of past events that it is probable an outflow of resources will be required to settle the

obligation, and a reliable estimate of the amount can be made.

(o) Employee benefits

Leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. An

accrual is made for the estimated liability for annual leave as a result of services rendered by

employees up to the balance sheet date.

Post employment benefits

The Group, apart from legally required social security schemes, operates defined

contribution plans. The Group’s obligation is limited to the amount it contributes to the

funds. The expenses are disclosed under staff costs (note 8).

(p) Comparatives

Where necessary, comparative figures have been adjusted to conform with changes in

current presentation. Where applicable, comparative figures have been adjusted or extended

to take into account the requirements of the revised SAS 12 which the Group implemented

in 2002.



49

3. Revenue


2002 2001 2002 2001

$ $ $ $

Sale of goods 71,215,744 91,369,925 – –

Dividend income – – 11,340,212 7,352,804

71,215,744 91,369,925 11,340,212 7,352,804

4. Exceptional loss

The Group

2002 2001

$ $

Provision for doubtful trade receivables (note 11) 21,816 –

Provision for other doubtful receivables (note 13) 127,195 –

Provision for inventory write-down (note 12) 574,968 –

Provision for diminution in value of property, plant and

equipment (note 17) 7,703,090 –

Write-off of trademarks (note 20) 1,826,732 –

Write-off of deferred expenditure (note 18) 108,502 –

Retrenchment benefits (note 8) 669,816 –

Provision for expenses relating to the cessation of activities 849,664 –

11,881,783 –

The exceptional loss is due to the cessation of activities of certain subsidiaries during the financial

year.



50

5. Operating (loss)/profit


Note 2002 2001 2002 2001

$ $ $ $

Operating (loss)/profit

is arrived at after:

Charging:

Amortisation of goodwill 19 18,823 19,254 – –

Amortisation of deferred

expenditure 18 104,851 6,883 – –

Amortisation of trademarks 20 1,047,114 1,049,503 – –

Auditors’ remuneration

– Auditors of the Company (42,781) 52,110 (42,781) 52,110

– Other auditors 202,217 229,129 – –

Bad debts written off – 781,955 – –

Cost of inventories recognised

as an expense 49,074,022 50,936,963 – –

Depreciation of property,

plant and equipment

– Land-use rights 17 141,224 127,701 – –

– Leasehold building 17 631,725 380,290 – –

– Leasehold improvements 17 36,255 43,727 – –

– Plant 17 653,585 547,281 – –

– Machinery and equipment 17 1,710,982 1,176,226 – –

– Furniture and fittings 17 414,094 396,263 – –

– Motor vehicles 17 294,761 330,002 – –

Directors’ remuneration 89,245 89,814 – –

Loss on disposal of property,

plant and equipment 20,546 56,908 – –

Provision for doubtful trade

receivables 11 1,220,747 826,736 – –

Provision for other doubtful

receivables 13 127,195 – – –

Provision for inventory

write-down 12 1,449,335 148,480 – –

Provision for investments in

subsidiaries 15 – – 18,197,502 15,590,746


value of property, plant

and equipment 17 7,900,467 831,653 – –

Rental expense - operating

leases 557,678 522,342 – –

Write-off of trademarks 20 1,826,732 – – –

Write-off of pre-operating

expenditure – 7,918 – –

Write-off of inventories – 182,284 – –

Write-off of deferred

expenditure 18 539,669 – – –

And crediting:

Write-back of provision for

inventory write-down 12 3,863 50,110 – –



51

6. Finance income


2002 2001 2002 2001

$ $ $ $

Interest income

– Subsidiary – – 37,485 19,943

– Fixed deposits 319,451 801,983 30,070 33,495

Tax rebate from re-investment – 1,408,330 – 602,330

Net foreign exchange gain – 1,981,243 – 1,950,240

319,451 4,191,556 67,555 2,606,008

The tax rebate in the previous financial year was granted by the tax authorities in the People’s

Republic of China (“PRC”) to the Company, as a result of the re-investment of the dividend

income received by the Company from certain subsidiaries in PRC into other PRC subsidiaries.

Included in net foreign exchange gain of the Company and the Group in the previous financial

year was foreign exchange gain $1,918,226 arising from the translation of the amount payable to

shareholders (note 23) from the Singapore dollar to the Hong Kong dollar, the functional currency

of the Company.

7. Finance costs


2002 2001 2002 2001

$ $ $ $

Interest expense

– Finance leases 1,854 8,674 – –

– Bank loans 597,084 906,986 – –

– Bank overdraft – 83,288 – –

– Related party (note 24) 7,716 14,758 – –

– Others 13,127 16,552 – –

Net foreign exchange loss 38,756 – 38,756 –

658,537 1,030,258 38,756 –



52

8. Staff costs

The Group

2002 2001

$ $

Wages and salaries 10,081,656 8,790,512

Employer’s contribution to defined contribution plans 17,122 17,614

Termination benefits 759,538 371,614

10,858,316 9,179,740

Number of persons employed at the end of the financial year:

The Group

2002 2001

Full time 2,011 2,173

Part time 52 84

2,063 2,257

The Company does not have any employees on its payroll because all daily operations have been

outsourced to a related party, the investment manager of the holding corporation for an annual fee

of $28,000 (2001: $24,000).

Included in termination benefits are retrenchment benefits of $669,816 (2001: $Nil) (note 4)

arising from the cessation of activities of certain subsidiaries during the financial year.

9. Tax

Tax expense


2002 2001 2002 2001

$ $ $ $

Tax expense on results is made

up of:

Current income tax

Singapore 110 – 110 –

Foreign 2,462,557 1,610,660 1,360,406 76,368

2,462,667 1,610,660 1,360,516 76,368

Deferred tax (note 30) (1,249,217) – – –

1,213,450 1,610,660 1,360,516 76,368

Overprovision in current income

tax in preceding financial year

Singapore (34,554) (11,477) (34,554) (11,477)

Foreign (191,713) – – –

(226,267) (11,477) (34,554) (11,477)

987,183 1,599,183 1,325,962 64,891



53

The tax expense on results differs from the amount that would arise using the Singapore standard

rate of income tax due to the following:


2002 2001 2002 2001

$ $ $ $

(Loss)/profit before tax (14,845,306) 6,454,557 (7,067,761) (5,790,412)

Tax calculated at a tax rate of

22% (2001: 24.5%) (3,265,967) 1,581,366 (1,554,907) (1,418,651)

Income not subject to tax (162,800) (723,640) (14,862) (638,472)

Effect of different tax rates in

other countries 589,393 (1,081,065) (1,134,327) (1,736,546)

Expenses not deductible for

tax purposes 4,568,612 675,096 4,064,612 3,870,037

Realisation of previously

unrecognised deferred tax assets:

– Tax losses (91,540) – – –

– Other temporary difference

(note 30) (1,013,176) – – –

Deferred tax assets tax losses

for the financial year not

recognised due to uncertainty

of realisation 588,928 1,158,903 – –

1,213,450 1,610,660 1,360,516 76,368

The subsidiaries in the People’s Republic of China are entitled to tax concessions whereby the

profits of the first two financial years beginning with the first profit- making year (after deducting

any past losses) are exempted from income tax and the profits of the subsequent three financial

years are taxed at half of the normal income tax rate of 24% that is reduced from the normal

income tax rate of 27%. For the financial year ended 31 December 2002, one profitable

subsidiary was exempted from income tax and two profitable subsidiaries’ tax rate was raised to

the normal income tax rate of 27% from 12%.

10. Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and balances with banks, net of bank overdraft.

Cash and cash equivalents included in the cash flow statement comprise the following balance

sheet amounts:


2002 2001 2002 2001

$ $ $ $

Cash and bank balances 22,042,737 24,847,713 200,562 231,059

Fixed deposits with banks 4,217,603 9,534,006 – 5,320,618

26,260,340 34,381,719 200,562 5,551,677

Less: Bank overdraft – (260,750) – –

26,260,340 34,120,969 200,562 5,551,677

Cash and bank balances in certain subsidiaries of $188,124 (2001: $694,881) are restricted to

specific use.

Fixed deposits with banks in certain subsidiaries of $Nil (2001: $726,954) have been pledged for

credit facilities granted to those subsidiaries (note 28).



54

11. Trade receivables

The Group

2002 2001

$ $

Trade receivables 7,133,487 13,548,255

Less: Provision for doubtful trade receivables (2,390,807) (1,780,103)

4,742,680 11,768,152

Movements in provision for doubtful trade receivables are as follows:

The Group

2002 2001

$ $

Balance at beginning of the financial year 1,780,103 867,045

Currency translation adjustment (102,821) 86,322

Provision during the financial year (note 5) 1,220,747 826,736

Bad debts written off against provision (507,222) –

Balance at end of the financial year 2,390,807 1,780,103

Included in the provision for doubtful trade receivables made during the financial year is an

amount of $21,816 (2001: $Nil) (note 4) arising from the cessation of activities of a subsidiary

during the financial year.

12. Inventories

The Group

2002 2001

$ $

At cost

Raw materials 2,879,855 5,272,784

Finished products 3,671,736 3,076,714

Work-in-progress 3,057,518 3,385,404

9,609,109 11,734,902

Less: Provision for inventory write-down (1,548,068) (153,122)

8,061,041 11,581,780

Movements in provision for inventory write-down are as follows:

The Group

2002 2001

$ $

Balance at beginning of the financial year 153,122 48,309


Provision during the financial year (note 5) 1,449,335 148,480

Provision written back (note 5) (3,863) (50,110)

Balance at end of the financial year 1,548,068 153,122

Included in the provision for inventory write-down made during the financial year is an amount of

$574,968 (2001: $Nil) (note 4) arising from the cessation of activities of certain subsidiaries

during the financial year.



55

13. Other current assets


2002 2001 2002 2001

$ $ $ $

Other receivables 3,610,824 3,065,839 782,023 1,404,181

Less: Provision for doubtful

receivables (123,595) – – –

Other receivables, net 3,487,229 3,065,839 782,023 1,404,181

Deposits and advances to

suppliers 380,644 1,009,539 – –

Prepayments for operating

expenses 111,254 375,611 13,677 –

3,979,127 4,450,989 795,700 1,404,181

Movements in provision for doubtful receivables are as follows:

The Group

2002 2001

$ $

Balance at beginning of the financial year – –

Currency translation adjustment (3,600) –

Provision for the financial year (notes 4,5) 127,195 –

Balance at end of the financial year 123,595 –

The provision for other doubtful receivables made during the financial year of $127,195 (2001:

$Nil) (note 4) arose from the cessation of activities of a subsidiary during the financial year.

14. Loan receivable

The Group

2002 2001

$ $

Gross balance 333,563 356,250

Less: Provision for loan receivable (333,563) (356,250)

– –

Movements in provision for loan receivable are as follows:

The Group

2002 2001

$ $



Balance at end of the financial year 333,563 356,250

The loan receivable of $333,563 (HK$1,500,000) [2001: $356,250 (HK$1,500,000)] represents a

loan to a former director of a subsidiary in Hong Kong. The loan is secured by the borrower’s

unlisted shares in companies outside Hong Kong and interest-free.



56

15. Investments in subsidiaries

The Company

2002 2001

$ $

Investments in unquoted equity shares at cost 63,528,528 59,513,092

Loans to subsidiaries - interest-free 27,088,628 26,832,795

Loan to subsidiary - interest-bearing 946,269 581,875

91,563,425 86,927,762

Less: Provision for investments in subsidiaries (34,270,046) (17,714,150)

57,293,379 69,213,612

The interest-bearing loan bears interest at prime rate plus 0.5% margin per annum.

The above loans to subsidiaries are unsecured and have no fixed terms of repayment.

Movements in provision for investments in subsidiaries are as follows:

The Company

2002 2001

$ $

Balance at beginning of the financial year 17,714,150 1,528,667

Currency translation adjustment (1,641,606) 594,737

Provision during the financial year (note 5) 18,197,502 15,590,746


Details of the subsidiaries at 31 December 2002 are as follows:

Effective Cost of

Country of equity interest investment

incorporation held by the held by the Principal

Name of company and business Group Company activities

2002 2001 2002 2001

% % $ $

China Food Processing Hong Kong – 54.68 – # Dormant

Group Ltd ### SAR, China

China Food Processing BritishVirgin 54.68 54.68 # # Investment

Holdings Co. Ltd ** Islands holding

China Food Processing BritishVirgin – 54.68 – # Investment

International Co. Ltd ## Islands holding

China Food Processing Hong Kong – 54.68 – # Investment

(PRC) Ltd ### SAR, China holding

Dalian FTZ Yue Hua China – 100.00 – # Trading of

International Trade specialty fats

Co. Ltd ###

Dunston Assets BritishVirgin 100.00 100.00 2 2 Investment

Limited *** Islands holding

East West International Hong Kong – 60.00 – # Trading of

Limited ### SAR, China frozen food

products



57

Effective Cost of




2002 2001 2002 2001

% % $ $

Fairlink Investment Hong Kong 54.68 54.68 # # Investment

Limited** SAR, China holding

FMA Development BritishVirgin 100.00 100.00 4 3 Dormant

Co. Ltd ## Islands

Foodstar (China) China 100.00 – 7,805,377 – Investment

Investments Company holding

Limited**

Foodstar Management Hong Kong 100.00 100.00 # # Providing

Company Limited* SAR, China management

services to

group

companies

Foodstar Trading BritishVirgin 100.00 100.00 2 2 Providing

Company Limited*** Islands management

services to

group

companies

Foodstar Trading Hong Kong 100.00 100.00 1 1 Trading of

(Hong Kong) SAR, China food products

Company Limited *

Guangzhou Foodstar China 100.00 100.00 # # Providing

Marketing Services marketing

Co. Ltd** services and

investment

holding

G & K Holdings Hong Kong 100.00 100.00 # # Investment

Ltd ** SAR, China holding

Kaiping Guanghe China 100.00 100.00 10,086,577 10,772,603 Manufacture and

Fermented Bean Curd sale of

Co. Ltd* fermented bean

curd

Kaiping Jiashili Dried China 100.00 100.00 8,364,649 8,933,561 Manufacture and

Fruit and Nuts Co. Ltd *@ sale of dried

fruit and nuts

Kaiping Weixida Seasoning China 100.00 100.00 22,544,867 24,078,228 Manufacture and

Co. Ltd* sale of

seasonings

Nanjing Jilun Seasoning China 100.00 100.00 13,888,961 14,833,602 Manufacture and

Product Co. Ltd * sale of

seasonings

Shanghai Xinjing Western- China 32.81 32.81 # # Manufacture and

Style Food Co. Ltd**@ sale of

processed food

Silver Eagle Foods & Hong Kong 70.00 70.00 # # Trading of food

Trading Company SAR, China products

Limited**@



58

Effective Cost of




2002 2001 2002 2001

% % $ $

Silver Eagle Foods China 70.00 70.00 # # Process and sale

(Shenzhen) Company of agricultural

Limited**@ products

Silver Eagle Frozen Foods China 70.00 70.00 # # Manufacture and

Factory Limited**@ sale of food

products

Top Network BritishVirgin 60.00 60.00 # # Investment

Limited*** Islands holding

Welton Source (HK) Hong Kong 54.68 54.68 # # Dormant


Welton Source International Hong Kong – 54.68 – # Investment

Limited ### SAR, China holding

Yue Hua Trading BritishVirgin 100.00 100.00 # # Dormant

Limited ## Islands

Guizhou Feng La Zhi China 80.00 80.00 838,088 895,090 Manufacture and

Food Product Company sale of chilli

Limited** related products

63,528,528 59,513,092

# Held by subsidiaries

* Audited by other members of the worldwide PricewaterhouseCoopers organisation

** Audited by firms other than the auditors of the Company

*** Not required to be audited under the legislation of the respective country of incorporation

## Company de-registered in 2002

### Company liquidated in 2002

@ Company commenced cessation of business in 2002

As the functional currency of the Company is the Hong Kong (HK) dollar, the cost of investment

represents the Singapore dollar equivalent translated from HK dollars at the rates of exchange

prevailing at the balance sheet date.

16. Investment in associate

The Group

2002 2001

$ $

Unquoted equity shares at cost 34,854 34,854

Less: Write-off of goodwill on acquisition (34,853) (34,853)

1 1

Unquoted equity shares at cost as at 31 December 2002 represented a 25% (2001: 25%) equity

interest in GD United Products Co. Ltd., a company incorporated in China whose principal

activity is the trading of consumable products.



59

17. Property, plant and equipment

Leasehold Machinery Furniture Construc-

Land-use Leasehold improve- and and Motor tion in-

rights buildings ments Plant equipment fittings Vehicles progress Total

$ $ $ $ $ $ $ $ $

The Group

Cost

At 1 January 2002 7,969,539 20,974,406 1,313,165 11,206,408 27,530,091 2,747,164 2,486,514 514,500 74,741,787


adjustment (493,076) (1,242,223) (56,203) (793,100) (1,562,307) (185,786) (150,647) (31,092) (4,514,434)

Additions – 81,471 3,865 110,921 691,211 800,572 155,295 1,006,564 2,849,899

Disposals (26,948) (436,345) (4,541) (904,128) (7,225,734) (185,853) (411,296) (1,050,945) (10,245,790)

Transfer to deferred

expenditure (431,167) (2,767,661) (961,503) 3,729,164 11,268 (290,574) – (11,268) (721,741)

At 31 December 2002 7,018,348 16,609,648 294,783 13,349,265 19,444,529 2,885,523 2,079,866 427,759 62,109,721

Accumulated

depreciation

At 1 January 2002 (501,216) (1,801,140) (140,615) (3,470,203) (6,897,524) (1,403,736) (1,629,258) – (15,843,692)


adjustment 35,873 131,253 9,661 222,380 431,083 90,894 102,314 – 1,023,458

Disposals – 23,182 3,051 573,387 1,948,064 122,686 361,843 – 3,032,213

Depreciation charge (141,224) (631,725) (36,255) (653,585) (1,710,982) (414,094) (294,761) – (3,882,626)

Transfer to deferred

expenditure – 10,348 7,114 (17,462) – 242,085 – – 242,085

At 31 December 2002 (606,567) (2,268,082) (157,044) (3,345,483) (6,229,359) (1,362,165) (1,459,862) – (15,428,562)

Provision for

diminution in value

At 1 January 2002 – (257,468) – (417,547) (4,971,494) (9,567) – – (5,656,076)


adjustment 829 117,080 2,673 56,656 261,057 4,685 1,323 – 444,303

Provision during the

financial year (29,393) (3,568,023) (94,739) (1,375,389) (2,632,615) (153,422) (46,886) – (7,900,467)

Write-off against

provision – – – 307,040 4,565,735 8,925 – – 4,881,700

At 31 December 2002 (28,564) (3,708,411) (92,066) (1,429,240) (2,777,317) (149,379) (45,563) – (8,230,540)

Net book value

At 31 December 2002 6,383,217 10,633,155 45,673 8,574,542 10,437,853 1,373,979 574,441 427,759 38,450,619

Net book value

At 31 December 2001 7,468,323 18,915,798 1,172,550 7,318,658 15,661,073 1,333,861 857,256 514,500 53,242,019

(a) Property with net book value of $10,970,462 (2001: $22,574,255) is pledged as security

for bank borrowings (note 28).

(b) Titles to leasehold buildings with net book value of $1,199,000 (2001: $1,676,000) are still

in the process of being transferred to the name of the subsidiaries.

(c) Property rights certificate for a leasehold building with net book value of $442,000 (2001:

$472,000) has not been obtained.

(d) Included in the provision for diminution in value of property, plant and equipment made

during the financial year is an amount of $7,703,090 (2001: $Nil) (note 4) arising from the

cessation of activities of certain subsidiaries during the financial year.



60

18. Deferred expenditure

Non-refundable utilities deposits

The Group

2002 2001

$ $



Additions 62,175 –

Transfer from property, plant and equipment 479,656 –

Amortisation during the financial year (note 5) (104,851) (6,883)

Write-off during the financial year (note 5) (539,669) –

Balance at end of the financial year – 106,167

Included in the write-off of deferred expenditure during the financial year is an amount of

$108,502 (2001: $Nil) (note 4) arising from the cessation of activities of a subsidiary during the

financial year.

19. Goodwill

The Group

2002 2001

$ $

Unamortised balance at beginning of the financial year 173,285 –


Acquisition of additional interests in subsidiaries – 192,539

Amortisation during the financial year (note 5) (18,823) (19,254)

Unamortised balance at end of the financial year 146,332 173,285

Cost 182,915 192,539

Accumulated amortisation (36,583) (19,254)

146,332 173,285



61

20. Trademarks

The Group

2002 2001

$ $

Cost 10,865,426 9,816,696

Currency translation adjustment (555,301) 1,048,730

Accumulated amortisation (2,444,336) (4,572,798)

Write-off during the financial year (notes 4, 5) (4,765,388) –

Net book value 3,100,401 6,292,628

Movements in accumulated amortisation are as follows:

The Group

2002 2001

$ $



Write-off during the financial year (notes 4,5) (2,938,656) –

Amortisation during the financial year (note 5) 1,047,114 1,049,503


The write-off of trademarks during the financial year of $1,826,732 (2001: $Nil) (note 4) arose

from the cessation of activities of a subsidiary during the financial year.

Trademarks represent the licences to use certain registered brand names of processed food items

in the People’s Republic of China including Hong Kong. The costs of these trademarks were

established upon the injection of capital by the shareholders into the subsidiaries.

21. Other payables


2002 2001 2002 2001

$ $ $ $

Advances and deposits received 178,096 801,192 – –

Accruals for operating expenses 2,624,077 3,931,819 235,857 387,578

Value-added tax payable 3,547,896 9,536,773 – –

Other creditors 3,193,400 2,436,067 79,038 –

Provision for staff welfare 194,195 1,006,162 – –

Provision for retrenchment

benefits relating to cessation of

activities 650,914 – – –

Provision for expenses relating to

cessation of activities 825,688 – – –

11,214,266 17,712,013 314,895 387,578

22. Holding and ultimate holding corporation

The holding and ultimate holding corporation is Transpac Industrial Holdings Limited, a listed

company incorporated in Singapore.



62

23. Payables to shareholders

The amount due to shareholders including the holding corporation in the previous financial year

represented convertible loans which were interest-free, unsecured and repayable on demand.

These loans were converted in the financial year, at the option of the shareholders, into ordinary

shares in the capital of the Company (note 31).


2002 2001 2002 2001

$ $ $ $

Due to holding corporation – 17,992,026 – 17,992,026

Due to other shareholders – 10,341,873 – 10,341,873

– 28,333,899 – 28,333,899

24. Payable to a related party

The related party is the minority shareholder of the Group’s subsidiary.

The amount due to the related party is unsecured, bears interest at Hong Kong prime rate and is

repayable on demand.

25. Other short-term loan (unsecured)

The other short-term loan in the previous financial year was unsecured, interest-free and had

since been repaid.

26. Long-term payables (unsecured)

The Group

2002 2001

$ $

Long-term payables - interest-bearing – 531,028

Long-term payable - interest-free 1,257,000 1,789,610

Less: Amount due within 12 months (419,000) (754,729)

Amount due after 12 months 838,000 1,565,909

The interest-bearing long term payables as at 31 December 2001 included an amount of RMB1

million repayable in full on 28 February 2003 and an amount of HK$1,294,006 with no specific

repayment terms. The effective interest rate is disclosed in note 37(b).

The interest-free long-term payable includes an amount payable in relation to the purchase of

trademark by a subsidiary. The amount is repayable in five annual instalments of RMB2 million

each commencing in 2001.



63

27. Finance lease liabilities

The Group

2002 2001

$ $

Minimum lease payments due:

Within one year – 26,477

Within two to five years – 17,650

– 44,127

Finance charges allocated to future periods – (2,462)

– 41,665

Shown on the balance sheet as:

Current liabilities – 24,446

Non-current liabilities – 17,219

– 41,665

28. Short-term and long-term bank loans (secured)

The Group

2002 2001

$ $

Secured liabilities

Short-term bank loans 9,166,067 15,131,736

Long-term bank loans – 373,225

Less: Amount due within 12 months – (36,869)

Amount due after 12 months – 336,356

The bank loans of the Group are secured by the property [note 17(a)] and fixed deposits (note

10) of certain subsidiaries and the property owned by a former director of a subsidiary. The

effective interest rates of the bank loans are disclosed in note 37(b).

29. Payable to subsidiary (non-trade)

The non-trade amount due to subsidiary in the previous financial year was unsecured, interest-

free and had no fixed terms of repayments. The amount had since been repaid.



64

30. Deferred tax assets

The Group

2002 2001

$ $

Balance at beginning of the financial year – –

Credited to income statement (note 9) 1,249,217 –


Balance at end of the financial year 1,213,965 –

Deferred tax assets are recognised for tax losses carried forward to the extent that realisation of

the related tax benefits through future taxable profits is probable. The Group has unrecognised

tax losses of $5,234,000 (2001: $3,712,000) which can be carried forward and used to offset

against future taxable income subject to meeting certain statutory requirements by those

companies with unrecognised tax losses in their respective countries of incorporation. The tax

losses have no expiry date.

The movement in the Group’s deferred tax assets (prior to offsetting of balances within the same

tax jurisdiction) during the financial year is as follows:

The Group

Deferred tax assets

Accelerated

accounting

depreciation Other Total

$ $ $

Balance at beginning of the financial year – – –

Credited to income statement 236,041 1,013,176 1,249,217

Currency translation adjustment (6,661) (28,591) (35,252)

Balance at end of the financial year 229,380 984,585 1,213,965

The deferred tax asset of $984,585 (2001: $Nil) relates to temporary difference arising from the

loss on disposal of certain plant and equipment of a subsidiary in the People’s Republic of China

(“PRC”). In accordance with the provision of the tax legislation in PRC, this loss is allowed for

deduction against taxable profit of the subsidiary in future financial years.



65

31. Share capital

(a) Authorised ordinary share capital

The total authorised number of ordinary shares is 45 million shares (2001: 28 million

shares) with a par value of $1 per share (2001: $1 per share).

(b) Issued ordinary share capital

2002 2001 2002 2001

Shares Shares $ $

Balance at beginning of

the financial year 25,405,441 25,405,441 25,405,441 25,405,441

Issued during the financial

year 15,527,723 – 15,527,723 –

Balance at end of the

financial year 40,933,164 25,405,441 40,933,164 25,405,441

During the financial year, the Company issued 15,527,723 ordinary shares of $1 each at a

premium of $0.8247 per share by conversion of its shareholders’ (including the holding

corporation) loans to the Company (note 23).

32. Reserves


2002 2001 2002 2001

$ $ $ $

(a) Composition:

Capital reserve (1,372,379) (1,372,379) – –

General reserve 650,740 441,895 – –

Enterprise development

reserve 650,740 441,895 – –

Capital and other reserves (70,899) (488,589) – –

Foreign currency translation

reserves 4,775,028 9,085,150 5,192,285 9,453,281

(Accumulated losses)/

retained earnings (5,944,077) 7,965,625 (5,347,318) 3,046,405

(1,239,948) 16,562,186 (155,033) 12,499,686



66

(b) Movements in capital and other reserves:

The Group

2002 2001

$ $

Capital reserve

Balance at beginning and end of the financial year (1,372,379) (1,372,379)

General reserve


Transfer from (accumulated losses)/retained earnings 208,845 143,046


Enterprise development reserve


Transfer from (accumulated losses)/retained earnings 208,845 143,046


Capital reserve represents goodwill arising from acquisitions prior to 1 January 2001 which

had been charged in full directly to shareholders’ equity.

The general reserve and enterprise development reserve represent amounts set aside in

accordance with laws in the People’s Republic of China where certain subsidiaries operate.

Capital reserve, general reserve and enterprise development reserve are not distributable by

way of cash dividends.

33. Minority interests

The Group

2002 2001

$ $



Incorporation of new subsidiary – 210,537

Purchase of additional interests in subsidiaries – (12,998,486)

Share of loss after tax of subsidiaries (2,340,477) (836,294)

Balance at end of the financial year 42,827 2,465,093



67

34. Related party transactions

In addition to the related party information shown elsewhere in the financial statements, the

following significant transactions between the Group and related parties took place during the

financial year at terms agreed between the parties concerned:


2002 2001 2002 2001

$ $ $ $

Dividend income received

from subsidiaries – – 11,340,212 7,352,804

Interest paid to the minority

shareholders of subsidiaries 7,716 14,758 – –

Interest income from subsidiary – – 37,485 19,943

Consideration paid to minority

shareholders of subsidiaries

for the purchase of additional

interests – 12,915,498 – –

35. Operating lease commitments

Commitments in relation to non-cancellable operating leases contracted for at the reporting dates

but not recognised as liabilities, are payable as follows:

The Group

2002 2001

$ $

Within one year 492,008 327,744

Within two to five years 708,320 302,266

After five years 38,782 1,103,291

1,239,110 1,733,301

36. Financial risk management

Financial risk factors

The Group’s activities expose it to a variety of financial risks, including the effects of changes in

market prices, foreign currency exchange rates and interest rates. The Group’s overall risk

management programme focuses on the unpredictability of financial markets and seeks to

minimise potential adverse effects on the financial performance of the Group.

(i) Foreign exchange risk

The Company’s functional currency is Hong Kong dollars. It operates in the People’s

Republic of China (including Hong Kong) and Singapore through subsidiaries and associates

and with the administrative head office in Singapore. Therefore the Group is exposed to

foreign exchange risk arising from various currency exposures primarily with respect to

Singapore dollars and Renminbi.

The Company has a number of investments in foreign subsidiaries, whose net assets are

exposed to currency translation risk with respect to Renminbi.

(ii) Interest rate risk

The Group’s income and operating cash flows are substantially independent of changes in

market interest rates. The Group has no significant interest-bearing assets. The Group’s

policy is to maintain significant percentage of its borrowings in fixed rate instruments.



68

(iii) Credit risk

The Group has no significant concentrations of credit risk. The Group has policies in place

to ensure that sales of products and services are made to customers with an appropriate

credit history.

(iv) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of

funding through an adequate amount of committed credit facilities. Due to the dynamic

nature of the underlying businesses, the Group maintains flexibility in funding by keeping

committed credit lines available.

37. Fair values and effective interest rates

(a) Carrying amounts and fair values

The fair values are based on cash flows using discounted rate at the borrowing rates which

the directors expect would be available to the Group at the balance sheet date.

The carrying amounts and fair values of long-term payables and long-term bank loans are as

follows:

The Group Carrying amounts Fair values

2002 2001 2002 2001

$ $ $ $

Long-term payables 1,257,000 2,320,638 1,198,123 1,933,827

Long-term bank loans – 373,225 – 373,225

Other than the long-term payables and long-term bank loans, the carrying amounts of the

following financial assets and financial liabilities approximate their fair values: cash and cash

equivalents, trade receivables and payables, other receivables and payables, loans to

subsidiaries, amount payable to subsidiary, short-term loans and finance lease liabilities.

(b) Effective interest rates

The weighted average effective interest rates at the balance sheet date were as follows:

The Group

2002 2001

% %

Fixed deposits (note 10) 0.92 1.65

Bank overdraft (note 10) – 7.13

Short-term bank loans (note 28) 5.18 5.76

Long-term bank loans (note 28) – 6.60

Long-term payables - interest-bearing portion (note 26) – 7.13

Finance lease liabilities (note 27) – 12.00

38. Authorisation of financial statements

These financial statements were authorised for issue in accordance with a resolution of the Board

of Directors of Foodstar Holdings Pte Ltd on 19 March 2003.



69

Shareholding Statistics

Authorised Share Capital – S$500,000,000

Issued and Fully Paid Capital – S$20,000,001

Class of Shares – Ordinary shares of S$0.50 each

Voting Rights – One (1) vote per share

STATISTICS OF SHAREHOLDINGS AS AT 26 MARCH 2003

DISTRIBUTION OF SHAREHOLDINGS

No. of No. of

Size of Holdings Shareholders % Shares %

1 – 999 5 0.08 1,502 0.00

1,000 – 10,000 6,299 97.36 10,137,000 25.34

10,001 – 1,000,000 162 2.50 9,438,000 23.60

1,000,001 and above 4 0.06 20,423,500 51.06

TOTAL 6,470 100.00 40,000,002 100.00

TWENTY LARGEST SHAREHOLDERS

No. Name No. of Shares %

1. DBS Nominees Pte Ltd 10,661,000 26.65

2. Raffles Nominees Pte Ltd 6,973,000 17.43

3. Citibank Nominees Singapore Pte Ld 1,508,000 3.77

4. G K Goh Stockbrokers Pte Ltd 1,281,500 3.20

5. HSBC (Singapore) Nominees Pte Ltd 726,000 1.81

6. Intraco Limited 600,000 1.50

7. Nomura Singapore Limited 530,000 1.32

8. United Overseas Bank Nominees Pte Ltd 452,000 1.13

9. Natsteel Ltd 400,000 1.00

10. Kim Leng Tee Investments Pte Ltd 331,000 0.83

11. Stone Robert Alexander 304,000 0.76

12. OCBC Securities Private Ltd 284,000 0.71

13. DBS Vickers Securities (S) Pte Ltd 275,000 0.69

14. Tan Wai See 259,000 0.65

15. Ho Pheng Theng Jeannette 220,000 0.55

16. Lim Kim Phang 215,000 0.54

17. Prima Investment Holdings (Singapore) Pte Ltd 200,000 0.50

18. Underwater World International Pte Ltd 200,000 0.50

19. Oversea-Chinese Bank Nominees Pte Ltd 164,000 0.41

20. Chen Wei Ching Vincent 120,000 0.30

TOTAL 25,703,500 64.25

Based on the information available to the Company as at 26 March 2003, approximately 63.33% of

the issued ordinary shares of the Company are held by the public and therefore, Rule 723 of the

Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with.



70

SUBSTANTIAL SHAREHOLDERS

(As shown in the Company’s Register of Substantial Shareholders as at 26 March 2003)

No. of Shares Held

Name of Percentage

Substantial Direct (%) of

No. Shareholders Interest Shareholding

1. NTUC Income Insurance Co-operative

Limited 6,761,000 16.90

2. Pantheon Asia Fund Limited* 5,341,000 13.35 *

Pantheon Asia Fund II Limited* 377,000 0.94 *

3. Public Bank (L) Ltd 2,000,000 5.00

* Pantheon Asia Fund Limited and Pantheon Asia Fund II Limited are both managed by Pantheon

Ventures (Guernsey) Limited. Their aggregated shareholdings amount to 14.29%.

DIRECTORS’ SHAREHOLDINGS

(As shown in the Company’s Register of Directors’ Shareholdings as at 21 January 2003)

No. of Shares Shareholdings in

Registered which Director

Description in Name of is Deemed to

Name of Director of Shares Director have an Interest

Cheng Wai Keung Ordinary 27,000 –

shares of

S$0.50 each

Leong Ka Cheong Ordinary 163,002#

–

Christopher shares of

S$0.50 each

# Out of 163,002 shares held by Leong Ka Cheong Christopher, 163,000 shares and 1 share are/is

registered in the names of his respectives nominees, DBS Vickers Securities (S) Pte Ltd and Ms Cheryl

Van Steenwyk.



71

Notice of Ninth

Annual General Meeting

NOTICE IS HEREBY GIVEN that the Ninth Annual General Meeting of Transpac Industrial

Holdings Limited will be held at Moor Function Room, 4th Floor, Swissotel The Stamford and

Raffles The Plaza, 2 Stamford Road, Singapore 178882 on Wednesday, the 14th day of May 2003 at

2.30 p.m. for the following purposes :-

1. To receive the Directors’ Report and the Audited Accounts for

the financial year ended 31 December 2002, together with the

Auditors’ Report thereon.

2. To declare a first and final exempt one-tier ordinary dividend of

S$0.04 per share for the financial year ended 31 December 2002.

3. To declare a first and final special exempt one-tier dividend of

S$0.08 per share for the financial year ended 31 December 2002.

4. To re-elect Mr Andrew Jonathan Lebus as Director under Article

100.

5. To re-elect Mr Liong Tong Kap as Director under Article 100.

6. To approve the increase of Directors’ Fees from S$59,665 to

S$100,658.

7. In the event that Resolution 6 is not passed, to approve the

Directors’ Fees of S$59,665.

8. To re-appoint Messrs PricewaterhouseCoopers as auditors and

to authorise the Directors to fix their remuneration.

9. To transact any other business that may be transacted at an

Annual General Meeting.

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

(Resolution 7)

(Resolution 8)

NOTICE OF BOOK CLOSURE DATES AND DIVIDEND PAYMENT DATE

NOTICE IS ALSO HEREBY GIVEN that the Transfer Books and Register of Members of the

Company will be closed on 28 and 29 May 2003 for the purpose of determining shareholders’

entitlements to the proposed first and final exempt one-tier ordinary dividend of S$0.04 per share

and the proposed first and final special exempt one-tier dividend of S$0.08 per share in respect of the

financial year ended 31 December 2002.

Duly completed transfers received by the Company’s Share Registrars, Lim Associates (Pte) Ltd at

10 Collyer Quay #19-08, Ocean Building, Singapore 049315 up to 5.00 p.m. on 27 May 2003 will be

registered to determined the shareholders’ entitlements to the dividends.

Members whose Securities Accounts with The Central Depository (Pte) Limited are credited with

shares at 5.00 p.m. on 27 May 2003 will be entitled to the proposed final dividends.

The dividends, if approved by the shareholders at the Ninth Annual General Meeting, will be paid on

11 June 2003.

BY ORDER OF THE BOARD

Tham Shook Han

Madelyn Kwang Yeit Lam

Company Secretaries

Singapore, 25 April 2003



72

Notes:

1. A member entitled to attend and vote at this meeting is entitled to appoint not more than two

proxies to attend and vote in his stead.

2. Where a member appoints two proxies, he shall specify the proportion of his shareholding to be

represented by each proxy. If no such proportion or number is specified, the first named proxy may

be treated as representing 100 per cent of the shareholding and any second named proxy as an

alternate to the first named.

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

4. 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 meeting.

5. The instrument appointing a proxy must be deposited at the registered office of the Company, at 6

Shenton Way #20-09 DBS Building Tower Two, Singapore 068809 not less than 48 hours before the

time appointed for holding the meeting.

6. Mr Andrew Jonathan Lebus is a non-executive director of the Company.

7. Mr Liong Tong Kap is a non-executive director of the Company.

8. In respect of Resolutions 6 and 7, the Directors’ Fees both current and after the proposed increase

are set out as follows:-

Current (S$) After (S$)

Chairman 15,000 p.a. 30,000 p.a.

Audit Committee Members 12,500 p.a. 20,000 p.a.

Other Directors 7,500 p.a. 12,000 p.a.

The increase is proposed in view of the increased number of Board meetings and as guided by the

Survey by the Institute of Directors on the fees payable to non-executive Directors of other

Singapore Listed companies.



73

Proxy Form

I/We, _______________________________________________________________________________________________________

of __________________________________________________________________________________________________________

being *a member/members of TRANSPAC INDUSTRIAL HOLDINGS LIMITED (the “Company”), hereby appoint

NRIC/ Proportion of

Name Address Passport Number Shareholdings (%)

*and/or

as *my/our *proxy/proxies to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the Ninth Annual General

Meeting of the Company, to be held at Moor Function Room, 4th Floor, Swissotel The Stamford and Raffles The Plaza, 2 Stamford

Road, Singapore 178882 on Wednesday, the 14th day of May 2003, 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 Ninth 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 Ninth Annual General Meeting.)

No. Resolutions For Against

1. To receive the Directors’ Report and the Audited Accounts for the financial

year ended 31 December 2002, together with the Auditors’ Report thereon.

2. To declare a first and final exempt one-tier ordinary dividend of S$0.04 per share

for the financial year ended 31 December 2002.

3. To declare a first and final special exempt one-tier dividend of S$0.08 per

share for the financial year ended 31 December 2002.

4. To re-elect Mr Andrew Jonathan Lebus as Director under Article 100.

5. To re-elect Mr Liong Tong Kap as Director under Article 100.

6. To approve the increase of Directors’ Fees from S$59,665 to S$100,658.

7. In the event that Resolution 6 is not passed, to approved the Directors’ Fees of

S$59,665.

8 To re-appoint Messrs PricewaterhouseCoopers as auditors and to authorise the

Directors to fix their remuneration.

Dated this day of 2003.

Signature(s) of member(s)/Common Seal

�

IMPORTANT:

1. For investors who have used their CPF moneys to buy

shares in the capital of Transpac Industrial Holdings

Limited, this 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.

Total Number of

Ordinary Shares Held


Notes:-

IMPORTANT

1. A member of the Company entitled to attend and vote at the above meeting is entitled to appoint

one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the

Company.

2. Where a member appoint two proxies, he shall specify the proportion of his shareholding to be

represented by each proxy. If no such proportion or number is specified, the first named proxy may

be treated as representing 100 per cent of the shareholding and any second named proxy as an

alternate to the first named.

3. This instrument of proxy must be signed by the appointor or his/her duly authorised attorney or, if

the appointor is a body corporate, signed by a duly authorised officer or its attorney or affixed with

its common seal thereto.

4. A body corporate which is a member may also appoint by resolution of its directors or other

governing body such person as it thinks fit to act as its authorised representative in accordance with

its Articles of Association and Section 179 of the Companies Act, Chapter 50 of Singapore.

5. This instrument appointing a proxy or proxies, (together with the power of attorney (if any) under

which it is signed or a certified copy thereof), must be deposited at the registered office of the

Company at 6 Shenton Way #20-09 DBS Building Tower Two Singapore 068809, not less than 48

hours before the time fixed for holding the Annual General Meeting.

6. Please insert the total number of shares held by you. If you have shares entered against your name

on the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of

Singapore), you should insert that number of shares. If you have shares entered against your name

in the Depository Register and registered in your name in the Register of Members, you should

insert the aggregate number of shares. If no number is inserted, this instrument of proxy will be

deemed to relate to all the shares held by you.

7. The Company shall be entitled to reject this instrument of proxy 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 this instrument of proxy. In addition, in the case of

members whose shares are deposited with The Central Depository (Pte) Limited (“CDP”), the

Company may reject any instrument of proxy lodged if such member is not shown to have shares

entered against his name in the Depository Register as at 48 hours before the time appointed for

the holding of the Annual General Meeting as certified by CDP to the Company.

* Delete Accordingly


transpac industrial holdings limited

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