CHEMICAL INDUSTRIES (FAR EAST) LIMITED

Transcription

1 CHEMICAL INDUSTRIES (FAR EAST) LIMITED REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH CONTENTS PAGE Corporate Directory 2 Chairman's Statement 3 Corporate Governance 6 Directors' Profile & Key Management Executives 10 Report of the Directors 13 Auditors' Report 18 Balance Sheet of the Company 19 Consolidated Balance Sheet 20 Profit and Loss Account of the Company 21 Consolidated Profit and Loss Account 22 Statements of Changes in Equity 23 Consolidated Cash Flow Statement 25 Notes to Financial Statements 26 Statement of Directors 50 Financial Profile 51 Shareholding Statistics 52 Notice of Annual General Meeting 54 1

2 CORPORATE DIRECTORY BOARD OF DIRECTORS Registered Office Executive Directors 3 Jalan Samulun Lim Soo Peng J.P. (Chairman & Managing Director) Singapore Eric Lim Yew Tou Tel: Cecil Lim Yew Khang Fax: Dr Lam Ying chemical.ind@cifel.com.sg NonExecutive Independent Directors Town Office Dr Chua Sui Leng Kwek Gim Song 17 Upper Circular Road #0500 Lee Suet Fern Juta Building Dr Wan Soon Bee Singapore Tel: Fax: Audit Committee jutaprop@singnet.com.sg Dr Chua Sui Leng (Chairman) Factory Dr Lam Ying Dr Wan Soon Bee 91 Sakra Avenue Kwek Gim Song (appointed 14 May ) Jurong Island Singapore Tel: Nomination Committee Fax: (formed on 14 May ) sakraplant@cifel.com.sg Lee Suet Fern (Chairman) Eric Lim Yew Tou Dr Chua Sui Leng Dr Wan Soon Bee Remuneration Committee (formed on 14 May ) Lim Soo Peng (Chairman) Kwek Gim Song Lee Suet Fern Dr Wan Soon Bee Subsidiary Companies Kimia Trading Pte. Ltd. Juta Properties Private Limited K.P. Chemicals Private Limited Chem Transport Pte Ltd Lion Heart Properties Pte Ltd JPI Investments Pte Ltd JPI Trading Pte Ltd Proctor House Ltd Principal Bankers OverseaChinese Banking Corporation Limited Secretary The Hongkong and Shanghai Banking Corporation Limited Pauline Khoo Moscow Narodny Bank Limited KBC Bank N.V. United Overseas Bank Limited DBS Bank Registrars Auditors B.A.C.S. Pte Ltd 63 Cantonment Road Deloitte & Touche Singapore Certified Public Accountants Tel: Singapore bacs@pacific.net.sg Partnerincharge: Mr Loi Chee Keong (Year of Appointment: ) 2

3 CHAIRMAN S STATEMENT It has been four and a half years since we first commenced operations at our new plant on Jurong Island and I am pleased to advise that the plant is now running at full capacity. We have embarked on our expansion plan to increase our production capacity to meet the increasing demand for our chloalkali products. Given the current economic gloom and the ongoing war to contain and reduce the fallout from the impact of the SARS threat, increased efforts have to be made to grow our revenue in the next financial year. On behalf of the Board of Directors, I am pleased to present the audited results of the Company and Group for the year ended 31 st March. The Group The Company S 000 S 000 S 000 S 000 TURNOVER 72,491 61,646 71,908 60,953 PRETAX PROFIT 4,433 2,788 5,589 3,166 CHEMICAL INDUSTRIES (FAR EAST) LIMITED Turnover for the Company increased to 71.9 million, up by 18% from the previous financial year of 60.9 million. The higher turnover was attributed to our ability to meet the increasing demand from major customers through maximizing our production capacities as well as increasing our chemical trading operations. As a consequence of the higher turnover, profit before tax increased to 5.59 million, up by 76.3% from the previous financial year of 3.17 million, through economies of scale from a larger production volume and better utilization of our resources. The Company successfully concluded a refinancing package in September with a syndicate of banks, lead managed by The Hongkong and Shanghai Banking Corporation Limited, to repay its 50 million 2.5% unsecured bonds which fell due on 23 September. The other banks in the syndicate comprise of Moscow Narodny Bank Limited, OverseaChinese Banking Corporation Limited and KBC Bank.N.V. The remaining 11,953,127 original warrants attached to the unsecured bonds and 3,271,395 additional warrants issued pursuant to the Rights Issue by the Company in 2001, expired on 20 September. JUTA PROPERTIES PRIVATE LIMITED The economic uncertainties during the year has affected the office rental market and this is reflected in the lower turnover of 586,000 for Juta Properties compared to 696,000 in the previous corresponding period. Delays in the start up of the NorthEast MRT line contributed to the lack of demand for office space in the Upper Circular Road/Carpenter Street area which is a stone s throw from the Clarke Quay MRT station. The company incurred a loss before tax of 975,000 compared to a profit of 23,441 in the previous financial year. The loss resulted from the write down of investments in an associate and foreign exchange losses. The subsidiary companies of Juta Properties, viz. JPI Investments Pte Ltd, JPI Trading Pte Ltd and Proctor House Ltd, were dormant during the financial year under review. 3

4 LION HEART PROPERTIES PTE LTD During the year Lion Heart focused on the construction of its 255,000 sq ft Lion Plaza complex which is scheduled for completion by the next financial year. It is in the final stages of signing up a major tenant for 96,000 sq ft of office space. Following this signing, the remaining retail and office space will be aggressively marketed to achieve maximum tenancy upon completion of construction. To rationalize the Group s operations and concentrate on its core activities in the chemical business, it is the intention of Lion Heart Properties to dispose Lion Plaza at the appropriate time. KIMIA TRADING PTE LTD As the production capacity of Chemical Industries (Far East) Limited plant on Jurong Island was operating at its maximum during the year, the increase in demand from customers was met by an increase in imports by this subsidiary. Turnover for this subsidiary, as such, increased by 23.4% from 13.2 million to 16.3 million for the current financial year. Profit before tax grew by 45.4% from 722,000 in the previous financial year to 1.05 million, with net margins improving from 5.5% to 6.2% in the current financial year. CHEM TRANSPORT PTE LTD In line with an increase in the chemical trading activities of the Group, turnover for this subsidiary increased by 11.8% from 1.19 million in the previous financial year to 1.33 million for the current year. Profit before tax increased by 14.5% from 48,000 to 55,000 for the current year. OVERVIEW With the introduction of NEWater into the mainstream water supply in Singapore, the Company is poised for growth as it has secured a major contract to supply chemicals used in the processing of NeWater. Coupled with the increase in offtake by a major customer since late, prospects for the Group s chemical business for the next financial year will be good, barring any unforseen events which could have a material impact on the chemical business in Singapore and the region. The Company is continuing to look at increasing its plant capacity to meet customers demand. However, this will be evaluated in the light of its impact on the profitability of the Company and enhancing shareholders value. The onset of the SARS threat and the consequent decline in business confidence is unlikely to improve the property market in the next financial year. The prospects for Juta Properties are hence not expected to improve significantly unless the start up of the NorthEast MRT line brings with it renewed interest in office space in the Upper Circular Road/Carpenter Street area. The London scene continues to suffer from the aftermath of the September 11 event in New York and has been exacerbated by the second Gulf War. Commercial rentals have declined since 2001 and there is little prospects of an upswing in the near future though we have consistently taken steps to mitigate against these negative trends. 4

5 DIVIDENDS AND DIRECTORS FEES The Board recommends payment to shareholders of a first and final gross dividend of 2.65% or 2.067% net of tax. For the Chairman and Members of the Board, I propose directors fees of 180,000. STAFF The achievement of the Company and Group in the current financial year would not have been possible if not for the dedication and hard work put in by all our staff. Revenues are up and we are on track to grow in terms of profitability. We will continue to focus on manpower training to upgrade the technical competence of our staff and provide an environment for them to achieve sustained improvements in their performance. On behalf of the Board, I thank all staff for their diligent service to the Company and Group. I would also like to express my appreciation to all customers, suppliers and shareholders for their continuing support and understanding in these difficult economic times. LIM SOO PENG CHAIRMAN 14 May 5

6 CORPORATE GOVERNANCE Besides facilitating the maintenance of integrity in the conduct of the business of the Group, application of the principles of corporate governance promotes the efficiency and effectiveness of the operations carried out by Group personnel. Adherence to good practice in corporate governance will also grow investor confidence and contribute to a smooth relationship between stakeholders and the management team. Ultimately, the aim is to achieve longterm value and enhance returns to shareholders. Code of Corporate Governance The Code of Corporate Governance incorporated in the Listing Manual of the Singapore Exchange Securities Trading Limited was promulgated in March It deals with matters concerning the Board of Directors, remuneration, accountability and audit and communication with shareholders. The Board of Directors The directors of the Company are: Lim Soo Peng J.P. Eric Lim Yew Tou Cecil Lim Yew Khang Dr Lam Ying Dr Chua Sui Leng Dr Wan Soon Bee Lee Suet Fern Kwek Gim Song Chairman and Managing Director Executive Executive Executive Independent nonexecutive Independent nonexecutive Independent nonexecutive Independent nonexecutive The Board supervises the management of the business and affairs of the Group. Apart from its statutory responsibilities, the Board approves the group s strategic plans, key operational initiatives and major investment and funding decisions. It identifies the principal risks of the Group s business and directs the implementation of appropriate systems to manage those risks; reviews the financial performance of the group and evaluates the performance of senior management personnel. These functions are carried out either directly or through Board committees such as the Audit Committee. Chairman and Chief Executive Officer The posts of Chairman and Managing Director are held by Mr Lim Soo Peng. As Managing Director he bears executive responsibility for the daytoday operations of the Group. His duties as Chairman include the scheduling of Board meetings, the fixing of the meeting agenda, the control of the quality and timeliness of data and information supplied to the Board and compliance with the Code of Governance and the Listing Rules. 6

7 Access to Information Complete and adequate information is provided to the Board prior to its meetings. Such information includes financial management reports, budgets, feasibility studies, announcement of results, disclosure information and other matters requiring the Board s decision. Separate and independent access to senior management is available to Board members. Should the directors be of the view that independent professional advice is warranted on any matter, arrangement is made for the appointment of suitable professional advisors. Attendance and Rotation of Directors During the period since the last Annual General Meeting five Board meetings were held. The attendance at the meetings is as follows: Lim Soo Peng 5 Eric Lim Yew Tou 3 Cecil Lim Yew Khang 5 Dr Lam Ying 4 Dr Chua Sui Leng 5 Dr Wan Soon Bee 5 Lee Suet Fern 4 Kwek Gim Song 3 Besides attendance at formal meetings the Directors were accessible to management personnel in less formal environment. Their profound experience and influential network underlie a contribution to the Group far exceeding that indicated by their mere attendance at formal meetings. Under the Company s Articles of Association onethird of the directors (excluding the Managing Director) shall retire from office each year. The retiring directors are eligible for reelection. In addition, any new director appointed during the year will have to retire at the annual general meeting following his appointment; he is also eligible for reelection if he so desires. In the forthcoming Annual General Meeting, Dr Chua Sui Leng and Mr Kwek Gim Song will retire from office but have offered themselves for reelection as directors. Pursuant to Section 153 of the Companies Act, Cap. 50, Mr Lim Soo Peng will retire as a director but has offered himself for reelection at the forthcoming Annual General Meeting. Nomination Committee The Nomination Committee was set up on 14 May, after the end of the financial year under review. It comprises the following members: Chairman: Members: Mrs Lee Suet Fern Mr Eric Lim Yew Tou Dr Chua Sui Leng Dr Wan Soon Bee Remuneration Committee The Remuneration Committee was also set up on 14 May, after the end of the financial year under review. It comprises the following members: Chairman: Members: Mr Lim Soo Peng Mr Kwek Gim Song Mrs Lee Suet Fern Dr Wan Soon Bee 7

8 Level and Mix of Remuneration The remuneration received by directors during the financial year is as follows: Directors Salary Bonus fee Total S500,000 and above Lim Soo Peng 35% 63% 2% 100% S250,000 to S500,000 Eric Lim Yew Tou 80% 15% 5% 100% Cecil Lim Yew Khang 80% 15% 5% 100% Dr Lam Ying 81% 14% 5% 100% Below S250,000 Dr Chua Sui Leng 100% 100% Dr Wan Soon Bee 100% 100% Lee Suet Fern 100% 100% Kwek Gim Song 100% 100% The remuneration received by directors during the previous financial year is as follows: Directors Salary Bonus fee Total S250,000 to S500,000 Lim Soo Peng 57% 31% 12% 100% Below S250,000 Eric Lim Yew Tou 84% 6% 10% 100% Cecil Lim Yew Khang 84% 5% 11% 100% Dr Lam Ying 86% 6% 8% 100% Dr Chua Sui Leng 100% 100% Dr Wan Soon Bee 100% 100% Lee Suet Fern 100% 100% Kwek Gim Song 100% 100% The remuneration band of the top five key executives (excluding executive directors) for the financial year under review and the previous financial year is below S250,000 each. All the directors receive directors fee for attending to Board matters. Except for the higher payment to the Chairman, the directors are paid equally as no additional fee is paid to those sitting on committees. Total directors fee for the financial year amounted to S180,000 ( S205,000). None of the directors benefits from any consultancy relationship with the Group, with the exception of Mrs Lee Suet Fern who is a partner in Stamford Law Corporation which deals with the Group s legal matters. During the financial year ended 31 March the fees payable to Stamford Law Corporation amounted to S52,370. None of the directors has been granted share options as the Company does not have a share option scheme. 8

9 Audit Committee The members of the Audit Committee are as follows: Dr Chua Sui Leng Chairman Dr Lam Ying Dr Wan Soon Bee Mr Kwek Gim Song (appointed 14 May ) The Audit Committee met as necessary and performed the functions specified in the Singapore Companies Act and in the Listing Manual. In performing its functions, the Audit Committee reviewed the overall scope of the external audit and the assistance given by the company s officers to the external auditors. It met with the company s external auditors to discuss the results of their examinations and their evaluation of the company s system of internal accounting controls. The Audit Committee also reviewed the financial statements of the Company and of the Group before their submission to the Board. The external auditors, Deloitte & Touche, Certified Public Accountants, were first appointed on 1 August They are also the external auditors of all the Company s subsidiaries as well as associates. The partner in charge of the audit is Mr Loi Chee Keong, the successor to Mr Chaly Mah Chee Kheong who was the audit partnerincharge for the previous five years. The Audit Committee has recommended the nomination of Deloitte & Touche, for reappointment as external auditors of the Company at the forthcoming Annual General Meeting of the Company. Interested Person Transaction During the financial year under review, a sum of 246,494 was paid by a subsidiary to a Director as interest on his loan to that subsidiary. The other shareholders of the latter company, including the parent company, were paid at the same rate of interest on their respective proportionate loans. Dealing in Securities The directors and officers of the Group are prohibited from dealing in the shares of the Company on shortterm considerations. In particular, they are barred from dealing in the shares during the period commencing one month before the announcement of the annual or interim results, as the case may be, and ending on the date of the announcement. Officers are reminded that the law on insider trading applies at all times. They are specifically cautioned when they are in possession of pricesensitive information. Communication with Shareholders Communication with shareholders is generally effected through the Company s annual report and announcements made on the MASNET and in the press. Shareholders are invited to the Company s general meetings, at which they are free to raise queries to which adequate responses are given. Separate resolutions are tabled in respect of distinct issues at such meetings. Shareholders unable to attend are entitled to appoint up to two proxies to attend on their behalf. The directors and the external auditors of the Company are present at such meetings to answer shareholders questions.. 9

10 DIRECTORS PROFILE LIM SOO PENG Chairman and Managing Director Mr Lim Soo Peng J.P., an Executive Director, is a founder member of the Company and has sat on the Board of Directors since its inception in This was in response to the invitation by the Singapore Government to effect a transition as owner of a leading commodities trading house to a manufacturer of essential chemicals in the nascent industrialisation programme of Singapore in the decade of the sixties. Concurrent with his duties as the Chairman and Managing Director of Chemical Industries Mr. Lim Soo Peng also sat on the board of a leading property development company. In the decades of the seventies and eighties, Mr. Lim Soo Peng spearheaded ventures into Thailand, Australia and Indonesia which covered specialty chemicals and industrial gases. Encouraged by the success of these ventures, at the beginning of the nineties, he led the Company to invest in China and the United Kingdom, investments which are currently ongoing. He was appointed a Justice of the Peace in 1966 and is currently a member of the Prisons Board of Visiting Justices and Board of Inspection and a member of the Drug Rehabilitation Centre Committee. In the 1960s he was an elected Member of Parliament. He also served on a number of government committees and statutory boards. For his public service contributions, Mr Lim was awarded the Public Service Medal (PBM) and the Public Service Star (BBM). Mr Lim is also the chairman of FHTK Holdings Ltd. another listed company of the SGX with extensive interests in the fruit business, stretching from China, Europe to the Americas. ERIC LIM YEW TOU Mr Eric Lim, an Executive Director, joined the Board in June 1981 and was appointed a member of the Nomination Committee in May. He graduated in 1975 from the University of Singapore (presently known as the National University of Singapore) with a Bachelor of Arts degree and obtained an Honours degree in Social Science the following year. He is an alumnus of the Harvard Business School. A graduate of the Singapore Command and Staff College, he is a Captain in the Singapore Armed Forces Reserves. He has been actively involved in various aspects of the Group s chloralkali business over the last 20 years and is currently tasked with the marketing function and developing the Group s business to ride on the new opportunities presented by the Company s new manufacturing facility on Jurong Island. Mr Eric Lim is also involved in exploring new business opportunities suitable for the continued growth of the Group. CECIL LIM YEW KHANG Mr Cecil Lim, an Executive Director, joined the Board in August He graduated in 1975 from the University of Singapore (presently known as the National University of Singapore) with a Bachelor of Arts degree and obtained an Honours degree in Social Science in In addition, he holds a Master of Science in Business Studies from the London Business School and was a key appointment holder in the Singapore Armed Forces Reserves. He started his working career in the financial investment arena prior to joining the Group in He currently oversees the finance, production and operation of the Company and has been tasked with meeting the supply needs of our chloralkali customers. Mr Cecil Lim is also actively involved with the Group s property business in London and is presently overseeing the development of Lion Plaza. 10

11 DR LAM YING Dr Lam Ying joined the Board in December 1997 and was appointed a member of the Audit Committee in March In December 1998 he became an Executive Director. He graduated with a Bachelor of Science (Hons) degree in Biochemistry from the University of Adelaide, South Australia, in 1965 and obtained his doctorate in 1969 from the same university while holding a postgraduate scholarship. His current appointment entails overseeing the development of the manufacturing management organisation and operations of the Company s chloralkali manufacturing facility on Jurong Island. Prior to joining the Group, Dr Lam served 31 years until 1990 as a key Senior Executive in the Regional Headquarters of a multinational group based in Singapore. In addition, he had served as Chairman and Executive Director for a number of group companies in the Asean countries engaged in the manufacturing and sales of glass and paper packaging products and building materials. He was also responsible for the identification and investments for the group in Asean and East Asia. From 1990 to 1998, Dr Lam was an Executive Director of Khalista Chemical (Far East) Corp. Pte Ltd, President of Khalista (Liuzho) Chemical Ltd in China and Managing Director of Isuhara Shipping International Pte Ltd. DR CHUA SUI LENG Dr Chua Sui Leng, a NonExecutive Independent Director, joined the Board in March He has been a member of the Audit Committee since his appointment as a Director and was elected Chairman of the said Committee in March He was appointed a member of the Nomination Committee in May. A medical practitioner by profession, he completed his medical degree in 1959 at the University of Malaya. After serving in the government service for a couple of years he began his practice in the private sector. LEE SUET FERN Mrs Lee Suet Fern, a NonExecutive Independent Director, joined the Board in July 2000 and was appointed Chairman of the Nomination Committee and a member of the Renumeration Committee in May. A Senior Director of Stamford Law Corporation and a practising advocate and solicitor of the Supreme Court of Singapore, she sits on the Advisory Committee of the Nanyang Technological University s School of Accountancy & Business and the Singapore National Committee for Pacific Economic Cooperation Council. Mrs Lee is also a Director of Continental Chemical Holdings, ECS Holdings, FHTK Holdings and SembCorp Logistics. Mrs Lee qualified as a barristeratlaw at Gray s Inn, London and graduated from Cambridge University with a double first in law. KWEK GIM SONG BENEDICT Mr Kwek Gim Song, a NonExecutive Independent Director, joined the Board in July 2000 and was appointed a member of the Audit Committee and Renumeration Committee in May. He is currently Chairman of Auston International Group Ltd and is also on the Board of Directors of JTC Corporation, Jurong Port Pte Ltd, SembCorp Engineers and Constructors, NTUC ChoiceHomes and FHTK Holdings. Mr Kwek graduated in 1969 with a Bachelor of Social Science (Hons) degree in Economics from the University of Singapore (presently known as the National University of Singapore) and was formerly President and Chief Executive Officer of Keppel TatLee Bank. DR WAN SOON BEE Dr Wan Soon Bee, a NonExecutive Independent Director, joined the Board in July He was appointed a member of the Audit Committee in May 2001 and a member of the Nomination as well as the Renumeration Committee in May. Dr Wan is a former Minister of State and was a Member of Parliament from December 1980 to October Along with his involvement in the Labour movement he was Deputy SecretaryGeneral of the National Trade Union Congress from August 1981 to October 1987 and Chairman of Comfort Group Ltd from July 1986 to August He was on the Board of Directors of SIA from 1981 to His varied career saw him working as the Director, Information Technology, in Straits Steamship Land Ltd, Director/General Manager of Steamers Telecommunications Pte Ltd and Director (Projects) of Neptune Orient Lines Ltd. 11

12 KEY MANAGEMENT EXECUTIVES Jimmy Liaw Mun Kong Financial Controller Mr Jimmy Liaw joined the Group in October He graduated in 1977 from the University of Singapore (presently known as the National University of Singapore) with a Bachelor of Accountancy degree. He is a Certified Public Accountant of Singapore and an Associate of the Chartered Institute of Management Accountants, United Kingdom. Mr Liaw has 26 years experience in financial management and management accounting having worked in various types of organizations ranging from international public accounting and marketing & distribution to resort management and manufacturing. Tan Pua Yong Plant Manager Mr Tan Pua Yong joined the Group in August 1988 as Assistant Plant Manager and was promoted to Plant Manager in April He graduated in 1973 from the University of Singapore (presently known as the National University of Singapore) with a Bachelor of Engineering (Hons) degree. In 1979 he obtained his Master of Science (Industrial Engineering) degree from the same university. Mr Tan is a Chartered Engineer and also a registered Professional Engineer. Prior to joining the Group Mr Tan was a Senior Engineer with the Public Utilities Board. Collin Lim Yew Tee Deputy Plant Manager Mr Collin Lim joined the Group in August 1997 as a Project Engineer and was promoted to Deputy Plant Manager in March. He graduated in 1987 with a Diploma in Electrical Engineering from Ngee Ann Polytechnic and obtained his Bachelor of Engineering (Hons) degree from the Nanyang Technological University in 1994, specializing in Electrical Engineering. Prior ot his graduate studies, Mr Lim was employed by a local contracting company from 1989 to 1991in the area of project management. Immediately after his graduation from the Nanyang Technological University, he was employed by the Ministry of Defence as an Electrical Engineer and was involved in various projects from 1994 to He was one of the key personnel involved in overseeing the construction of our new manufacturing facility on Jurong Island. Wong Moon Seng Technical Adviser to Chairman Mr Wong Moon Seng joined the Group in He graduated with a Bachelor of Science degree in Chemical Engineering from the Taiwan National University in During his tenure with the Company, he has been actively involved in the evolution of the Company s manufacturing technology from the first generation mercury cells to the current state of the art ion exchange membrane cells. He serves as the Company s technical advisor on the chloralkali operation. Previous to that he held the post of Deputy Plant Manager 12

13 REPORT OF THE DIRECTORS The directors present their report together with the audited financial statements of the company and of the group for the financial year ended 31 March. DIRECTORS The directors of the Company in office at the date of this report are: Lim Soo Peng J.P. Eric Lim Yew Tou Cecil Lim Yew Khang Dr Lam Ying Dr Chua Sui Leng Dr Wan Soon Bee Lee Suet Fern Kwek Gim Song (Chairman and Managing Director) PRINCIPAL ACTIVITIES The principal activities of the company are the manufacture and sale of chemicals. The principal activities of the subsidiaries and associates are described in Notes 15 and 16 to the financial statements respectively. There have been no significant changes in the nature of these activities during the financial year. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES There were no acquisitions or disposals of subsidiaries during the financial year. RESULTS FOR THE FINANCIAL YEAR The Company The Group Profit after income tax but before minority interests 5,947,165 4,675,675 Minority interests 58,129 Net profit attributable to the shareholders of the company 5,947,165 4,733,804 MATERIAL TRANSFERS TO/FROM RESERVES AND PROVISIONS During the financial year, there were no material transfers to or from reserves and provisions other than those disclosed in the financial statements. 13

14 ISSUE OF SHARES AND DEBENTURES During the financial year, the company and the subsidiaries in the group did not issue any shares or debentures. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares or debentures in the company or any other body corporate. DIRECTORS INTERESTS IN SHARES AND DEBENTURES The directors of the company holding office at the end of the financial year had no interests in the share capital and debentures of the company and related corporations as recorded in the register of directors shareholdings kept by the company under Section 164 of the Singapore Companies Act except as follows: Shareholdings registered in the names of directors Shareholdings in which the directors are deemed to have interests At 1st At 31st At 21st At 1st At 31st At 21st April March April April March April Number of ordinary shares of 1 each THE COMPANY Lim Soo Peng 6,447,250 6,447,250 6,447,250 24,512,500 24,512,500 24,512,500 Eric Lim Yew Tou 17,000 17,000 17,000 3,520,000 3,520,000 3,520,000 Cecil Lim Yew Khang 14,000 14,000 14,000 3,520,000 3,520,000 3,520,000 Dr Lam Ying 6,001 6,001 6,001 Dr Chua Sui Leng 176, , , , , ,000 By virtue of Section 7 of the Singapore Companies Act, Mr Lim Soo Peng is deemed to have an interest in all the shares of the subsidiaries of the company. DIVIDENDS Dividends paid since the end of the company s last financial year was a first and final dividend of 2.65 cents per ordinary share less tax at 22% totalling 1,569,791 in respect of the previous financial year and included in the previous report of the directors. The directors of the company now recommend that a first and final dividend of 2.65 cents per ordinary share less tax at 22% totalling 1,569,791 be paid for the financial year just ended. 14

15 DIRECTORS ACTIONS RELATING TO BAD AND DOUBTFUL DEBTS Before the profit and loss account and balance sheet were made out, the directors of the company took reasonable steps to ascertain that proper action had been taken in relation to the writing off and providing for bad and doubtful debts of the company and have satisfied themselves that all known bad debts if any of the company have been written off and that where necessary adequate provision has been made for doubtful debts. At the date of this report, the directors of the company are not aware of any circumstances which would render any amounts written off or provided for bad and doubtful debts for the group of companies in the consolidated financial statements inadequate to any substantial extent. DIRECTORS ACTIONS RELATING TO CURRENT ASSETS Before the profit and loss account and balance sheet were made out, the directors of the company took reasonable steps to ascertain that any current assets of the company which were unlikely to realise their book values in the ordinary course of business have been written down to their estimated realisable values or were adequately provided for. At the date of this report, the directors of the company are not aware of any circumstances which would render the values attributable to current assets in the consolidated financial statements misleading. CHARGES ON ASSETS AND EXISTENCE OF CONTINGENT LIABILITIES AFTER YEAR END DATE At the date of this report: a) there does not exist any charge on the assets of the company or any corporation in the group which has arisen since the end of the financial year which secures the liability of any other person; and b) there does not exist any contingent liability of the company or any corporation in the group which has arisen since the end of the financial year. ABILITY TO MEET OBLIGATIONS No contingent or other liability of the company or any 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 of the company, will or may substantially affect the ability of the company and of the group to meet their obligations as and when they fall due. OTHER CIRCUMSTANCES AFFECTING FINANCIAL STATEMENTS At the date of this report, the directors of the company are not aware of any circumstances not otherwise dealt with in this report or consolidated financial statements which would render any amount stated in the financial statements of the company and the consolidated financial statements misleading. 15

16 UNUSUAL ITEMS In the opinion of the directors of the company, the results of the operations of the company and of the group have not been substantially affected by any item, transaction or event of a material and unusual nature during the financial year. UNUSUAL ITEMS AFTER YEAR END DATE In the opinion of the directors of the company, 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 RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for those disclosed in the notes to the financial statements. OPTIONS TO TAKE UP UNISSUED SHARES During the financial year, no option to take up unissued shares of the company or any corporation in the group was granted. OPTIONS EXERCISED During the financial year, there were no shares of the company or any corporation in the group issued by virtue of the exercise of an option to take up unissued shares. UNISSUED SHARES UNDER OPTION At the end of the financial year, there were no unissued shares of the company or any corporation in the group under option. 16

17 AUDIT COMMITTEE The Audit Committee met as necessary and performed the functions specified in the Singapore Companies Act. In performing its functions, the Audit Committee reviewed the overall scope of the external audit and the assistance given by the company s officers to the external auditors. It met with the company s external auditors to discuss the results of their examinations and their evaluation of the company s system of internal accounting controls. The Audit Committee also reviewed the financial statements of the company and of the group for the six months ended 30 September and for the year ended 31 March as well as the auditors report for the year ended 31 March. The Audit Committee recommends to the Board of Directors, subject to the approval of shareholders, the nomination of Deloitte & Touche, Certified Public Accountants, for reappointment as external auditors at the forthcoming Annual General Meeting of the company. The members of the Audit Committee at the date of this report are as follows: Dr Chua Sui Leng Chairman Dr Lam Ying Dr Wan Soon Bee Kwek Gim Song (Appointed on 14 May ) AUDITORS The auditors, Deloitte & Touche, have expressed their willingness to accept reappointment. ON BEHALF OF THE DIRECTORS LIM SOO PENG.. DR CHUA SUI LENG Singapore 16 May 17

18 AUDITORS' REPORT TO THE MEMBERS OF CHEMICAL INDUSTRIES (FAR EAST) LIMITED. We have audited the accompanying financial statements of Chemical Industries (Far East) Limited. and the consolidated financial statements of the group for the financial year ended 31 March. These financial statements are the responsibility of the company s directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion: a) the accompanying financial statements of the company and the consolidated financial statements of the group are properly drawn up in accordance with the provisions of the Singapore Companies Act ( Act ) and Singapore Statements of Accounting Standard and so as to give a true and fair view of: i) the state of affairs of the company and of the group as at 31 March and of the results, changes in equity of the company and of the group and cash flows of the group for the financial year then ended; and ii) the other matters required by Section 201 of the Act to be dealt with in the financial statements of the company and the consolidated financial statements of the group; 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. We are satisfied that the financial statements of the subsidiaries that are consolidated with the financial statements of the company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations as required by us for those purposes. The auditors reports on the financial statements of the 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. DELOITTE & TOUCHE Certified Public Accountants Loi Chee Keong Partner Singapore 16 May 18

19 BALANCE SHEET 31st March Notes SHAREHOLDERS EQUITY AND LIABILITIES SHARE CAPITAL 5 75,945,399 75,945,399 RESERVES 1,569,791 7,899,791 RETAINED PROFITS 22,063,463 11,356,089 SHAREHOLDERS EQUITY 99,578,653 95,201,279 NONCURRENT LIABILITIES Due to subsidiaries (nontrade) 15 3,298,125 3,595,256 Deferred income tax 7 570,500 Longterm bank loans 8 58,212,266 Deferred income 9 21,228 Obligations under finance leases ,422 Total NonCurrent Liabilities 62,224,813 4,186,984 CURRENT LIABILITIES Trade creditors 4,095,033 3,812,183 Due to subsidiaries (trade) 15 1,741,442 3,366,136 Other creditors and accrued expenses 11 3,512,136 5,422,754 Shortterm bank loans 12 5,133,074 Current portion of finance lease obligations ,601 Current portion of longterm bank loans 8 5,000,000 28,646,024 Bank overdrafts 8 4,972,769 3,633,813 Unsecured bonds 13 49,297,500 Total Current Liabilities 24,723,055 94,178,410 TOTAL 186,526, ,566,673 ASSETS NONCURRENT ASSETS Property, plant and equipment 14 92,266,765 94,790,340 Subsidiaries 15 66,820,988 60,263,685 Associates 16 Longterm investments 17 6,321,172 7,280,272 Total NonCurrent Assets 165,408, ,334,297 CURRENT ASSETS Stocks 20 2,636,763 4,736,666 Trade debtors 21 9,425,043 6,980,775 Other debtors and prepayments 22 4,832,402 5,686,409 Other investments unquoted 375,000 Fixed deposits 1,028,242 Cash 4,223,388 12,425,284 Total Current Assets 21,117,596 31,232,376 TOTAL 186,526, ,566,673 See accompanying notes to financial statements. 19

20 CONSOLIDATED BALANCE SHEET 31st March Notes SHAREHOLDERS EQUITY AND LIABILITIES SHARE CAPITAL 5 75,945,399 75,945,399 RESERVES 22,801,948 28,784,998 RETAINED PROFITS 26,318,368 16,096,109 SHAREHOLDERS EQUITY 125,065, ,826,506 MINORITY INTERESTS 6 23,250,406 21,998,352 NONCURRENT LIABILITIES Deferred income tax 7 585,700 Longterm bank loans 8 334,099, ,649,719 Deferred income 9 21,228 Obligations under finance leases , ,382 Total NonCurrent Liabilities 335,056, ,390,029 CURRENT LIABILITIES Trade creditors 10,403,982 7,731,999 Other creditors and accrued expenses 11 9,333,968 10,021,926 Shortterm bank loans 12 5,133,074 2,042,958 Current portion of finance lease obligations ,412 63,713 Current portion of longterm bank loans 8 5,000,000 28,646,024 Bank overdrafts 8 4,972,769 4,040,101 Unsecured bonds 13 49,297,500 Income tax payable 5,631,795 5,109,274 Total Current Liabilities 40,860, ,953,495 TOTAL 524,232, ,168,382 ASSETS NONCURRENT ASSETS Property, plant and equipment 14 92,788,963 95,133,471 Associates 16 Longterm investments 17 9,060,322 10,019,422 Investment properties 18 21,761,581 22,111,899 Property under redevelopment ,712, ,874,497 Total NonCurrent Assets 501,322, ,139,289 CURRENT ASSETS Stocks 20 3,926,674 5,157,150 Trade debtors 21 9,425,044 6,980,775 Other debtors and prepayments 22 4,211,094 7,100,930 Other investments unquoted 375,000 Fixed deposits 1,028,242 Cash 5,346,661 13,386,996 Total Current Assets 22,909,473 34,029,093 TOTAL 524,232, ,168,382 See accompanying notes to financial statements. 20

21 PROFIT AND LOSS ACCOUNT Year Ended 31st March Notes REVENUE 23 71,908,255 60,953,338 COST OF SALES (55,561,220) (47,250,593) GROSS PROFIT 16,347,035 13,702,745 OTHER OPERATING INCOME 24 6,524,974 4,840,410 DISTRIBUTION COSTS (6,051,336) (5,136,971) ADMINISTRATIVE EXPENSES (6,808,554) (4,489,742) OTHER OPERATING EXPENSES (430,924) (401,500) PROFIT FROM OPERATIONS 9,581,195 8,514,942 FINANCE COSTS 25 (3,992,161) (5,349,346) OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS AND INCOME TAX 5,589,034 3,165,596 EXCEPTIONAL ITEMS 26 (13,925,904) PROFIT (LOSS) BEFORE INCOME TAX 27 5,589,034 (10,760,308) INCOME TAX , ,589 NET PROFIT (LOSS) FOR THE YEAR 5,947,165 (10,458,719) See accompanying notes to financial statements. 21

22 CONSOLIDATED PROFIT AND LOSS ACCOUNT Year Ended 31st March Notes REVENUE 23 72,490,733 61,646,106 COST OF SALES (53,489,196) (46,398,067) GROSS PROFIT 19,001,537 15,248,039 OTHER OPERATING INCOME 24 2,408,332 1,500,436 DISTRIBUTION COSTS (5,954,386) (5,051,379) ADMINISTRATIVE EXPENSES (7,050,553) (4,050,232) OTHER OPERATING EXPENSES (1,353,059) (1,566,692) PROFIT FROM OPERATIONS 7,051,871 6,080,172 FINANCE COSTS 25 (2,618,650) (3,291,506) OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS AND INCOME TAX 4,433,221 2,788,666 EXCEPTIONAL ITEMS 26 (13,925,904) PROFIT (LOSS) BEFORE INCOME TAX 27 4,433,221 (11,137,238) INCOME TAX , ,986 PROFIT (LOSS) AFTER INCOME TAX BUT BEFORE MINORITY INTERESTS 4,675,675 (10,999,252) MINORITY INTERESTS 58, ,790 NET PROFIT (LOSS) ATTRIBUTABLE TO THE SHAREHOLDERS OF THE COMPANY 4,733,804 (10,891,462) Basic and diluted earnings (losses) per share (cents) 30 before exceptional items after exceptional items 6.23 (19.84) See accompanying notes to financial statements. 22

23 STATEMENT OF CHANGES IN EQUITY Year Ended 31st March Other reserves Share capital Retained profits Share premium Warrant reserve Dividend reserve Total other reserves Total The Company Balance at 31 March ,846,017 30,604, ,330,000 1,504,187 7,834,974 78,285,466 Dividend paid (1,504,187) (1,504,187) (1,504,187) Issue of shares 36,099,382 (7,219,876) 28,879,506 Share issue expenses (787) (787) (787) Net loss for the year (10,458,719) (10,458,719) Proposed dividend of 2.65% less tax at 22% (1,569,791) 1,569,791 1,569,791 Balance at 31 March 75,945,399 11,356,089 6,330,000 1,569,791 7,899,791 95,201,279 Dividend paid (Note 31) (1,569,791) (1,569,791) (1,569,791) Warrant reserve written back upon maturity of unsecured bonds (Note 13) 6,330,000 (6,330,000) (6,330,000) Net profit for the year 5,947,165 5,947,165 Proposed dividend of 2.65% less tax at 22% (Note 31) (1,569,791) 1,569,791 1,569,791 Balance at 31 March 75,945,399 22,063,463 1,569,791 1,569,791 99,578,653 See accompanying notes to financial statements. 23

24 STATEMENT OF CHANGES IN EQUITY Year Ended 31st March Other reserves Share capital Retained profits Share premium Asset revaluation reserve Reserve on consolidation Currency realignment reserve Warrant reserve Dividend reserve Total other reserves Total The Group Balance at 31 March ,846,017 35,777, ,499, , ,987 6,330,000 1,504,187 28,325, ,948,307 Dividend paid (1,504,187) (1,504,187) (1,504,187) Net gain not recognised in the consolidated profit and loss account, being foreign currency translation differences 395, , ,129 Issue of shares 36,099,382 (7,219,876) 28,879,506 Share issue expenses (787) (787) (787) Net loss for the year (10,891,462) (10,891,462) Proposed dividend of 2.65% less tax at 22% (1,569,791) 1,569,791 1,569,791 Balance at 31 March 75,945,399 16,096,109 19,499, , ,116 6,330,000 1,569,791 28,784, ,826,506 Dividend paid (Note 31) (1,569,791) (1,569,791) (1,569,791) Warrant reserve written back upon maturity of unsecured bonds (Note 13) 6,330,000 (6,330,000) (6,330,000) Transfer 728,246 (728,246) (728,246) Net gain not recognised in the consolidated profit and loss account, being foreign currency translation differences 1,075,196 1,075,196 1,075,196 Net profit for the year 4,733,804 4,733,804 Proposed dividend of 2.65% less tax at 22% (Note 31) (1,569,791) 1,569,791 1,569,791 Balance at 31 March 75,945,399 26,318,368 19,499,845 1,732,312 1,569,791 22,801, ,065,715 See accompanying notes to financial statements 24

25 CONSOLIDATED CASH FLOW STATEMENT Year Ended 31st March Cash flows from operating activities: Profit before income tax 4,433,221 2,788,666 Adjustments for: Amortisation of deferred income (21,228) (44,787) Amortisation of discount on bonds 702,500 1,368,500 Depreciation of property, plant and equipment 5,571,412 5,047,474 Depreciation of investment properties 350, ,101 Dividend income (205,132) (227,078) Gain on disposal of plant and equipment (70,946) Gain on disposal of longterm investments (618,900) (51,969) Gain on disposal of other investments unquoted (125,000) Interest expense 1,916,150 1,923,006 Interest income (49,305) (67,757) Impairment loss in longterm investments 400, ,000 Operating profit before working capital changes 12,283,090 11,274,156 Stocks 1,230,476 1,404,777 Trade debtors (2,444,269) 998,276 Other debtors and prepayments 2,664,949 (486,474) Property under redevelopment (100,243,262) (56,446,758) Trade creditors 2,671,983 (4,957,289) Other creditors and accrued expenses 416,233 (144,514) Cash used in operations (83,420,800) (48,357,826) Income tax refunded (paid) 111,181 (144,832) Dividend paid (1,569,791) (1,504,187) Interest paid (16,735,272) (14,178,545) Interest received 49,305 67,757 Dividend received 205, ,078 Net cash used in operating activities (101,360,245) (63,890,555) Cash flows from investing activities: Proceeds from disposal of plant and equipment 73,187 Purchase of plant and equipment (Note A) (519,490) (332,886) Constructioninprogress (2,484,402) (1,268,083) Increase in other investments unquoted (375,000) Proceeds from sale of other investments unquoted 500,000 Proceeds from sale of longterm investments 1,178,000 87,969 Net cash used in investing activities (1,252,705) (1,888,000) Cash flows from financing activities: Advances from a related party 1,000,000 Increase (Decrease) in shortterm bank loans 3,090,116 (732,209) Increase in longterm bank loans (net) 140,638,990 51,176,711 Repayment of finance lease obligations (184,845) (25,449) Repayment of unsecured bonds (50,000,000) Proceeds from rights issue 28,879,506 Net cash from financing activities 93,544,261 80,298,559 Net effect of exchange rate changes in consolidating subsidiaries (932,556) 330,832 Net (decrease) increase in cash (10,001,245) 14,850,836 Cash (Overdrawn) at beginning of year 10,375,137 (4,475,699) Cash at end of year 373,892 10,375,137 Cash at end of year include the following: Fixed deposits 1,028,242 Cash 5,346,661 13,386,996 Bank overdrafts (4,972,769) (4,040,101) 373,892 10,375,137 A. Plant and equipment During the financial year, the group acquired plant and equipment with an aggregate cost of 1,848,933 of which 1,329,443 was acquired by means of finance leases. Cash payments of 519,490 were made to purchase plant and equipment. See accompanying notes to financial statements 25