annual report 2008 - national university of...

Annual Report 2008

Contents

01 Corporate Profi le

02 Chairman’s Statement

04 Corporate Information

05 Operations Review

06 Board of Directors

08 Key Executives

09 Group Structure

10 Financial Highlights

11 Corporate Highlights

1

Annual Report 2008

Hartawan Holdings Limited (the “Company”) was established in 1998 and was

listed on the Catalist Board (formerly known as the Singapore Exchange Securities

Trading Dealing and Automated Quotation or SGX Sesdaq) on 27 January 2005.

Its property leasing and management business comprises 14 strategically located

properties in Singapore as at June 2008. The Group leases and manages various

types of properties, including a dormitory, warehouses, offi ces, retail, a hostel and a

boutique hotel.

The Group currently owns and charters out fi ve cargo vessels. It provides crew and

equipment, technical operation and ship navigation support to charterers.

Corporate Profi le

2

Chairman’s Statement

My appointment as Executive Chairman by the

Board of Directors (“Board”) of Hartawan Holdings

Limited (the “Company” and, together with its

subsidiaries, the “Group”) on 2 July 2008 came

during a challenging time for the Group.

For this fi nancial year ended 30 June 2008 (“FY2008”)

the Group’s net loss after tax increased to S$22.29

million from S$1.41 million in FY2007. The net asset

value per ordinary share of the Group as at 30 June

2008 also dropped to 7.45 cents from 10.45 cents in

FY2007.

During the year, the Company made full provision for

impairment of the receivable relating to the Shanghai

Mall project amounting to S$11.39 million and for

impairment of assets held for sale in J. L. Chancellor

Pte Ltd of S$3.81 million. Notwithstanding these

write-offs, the Company has commenced action to

enforce its legal rights in respect of the monies owed

to the Group in connection with these 2 investments

and shareholders will be kept informed of material

developments.

The decline of the Company’s ship chartering

business over the years, coupled with the signifi cant

legal and professional fees incurred by the Group

in respect inter alia, of its lawsuits in the People’s

Republic of China, had also affected the Group’s

results.

The Company has therefore, on 2 June 2008, entered

into a Conditional Deed of Settlement to settle

these lawsuits, the terms of which were approved

by shareholders at the Company’s Extraordinary

General Meeting held on 25 August 2008. With the

implementation of this settlement, the Group will

avoid prolonging litigation and further uncertainties,

including enabling the Group to save on related legal

expenses. This will free Management to focus on the

other business activities of the Group.

Time and effort can now be devoted to developing

the Group’s property leasing and management

business, including its fi rst hotel development project -

Hotel Re! @ Pearl’s Hill (“Hotel Re!”) which commenced

operations on 15 May 2008. Due to the substantial

investment cost associated with Hotel Re! and the

relatively short remaining term of its lease, Hotel Re!

has to generate a fairly high occupancy and room

rates to sustain itself. Due to the startup costs and

delay in opening, Hotel Re! showed a net loss for

FY2008.

In FY2008, the Group’s 13 leased properties were

almost fully tenanted as a result of the buoyant

commercial property market during that period. We

expect the properties’ leasing operations to remain

stable for the fi nancial year ending 30 June 2009.

Going forward, the Group will focus on expanding

its property leasing portfolio and continue with the

lease and management of properties as well as the

development of properties in Singapore and region.

Acknowledgements

On behalf of the Board, I extend a warm welcome

to Mr Chng Hee Kok who joined our Board as an

Independent Director during the fi nancial year and

was subsequently appointed as our CEO. The Board

will also like to express its appreciation to Mr John De

Payva and Mr Fong Heng Boo for their contributions

to the Company. Messrs De Payva and Fong, both

independent directors, will retire at the forthcoming

Annual General Meeting. Last but not least, the

Board will like to thank Ms Sim Poh Heok, Mr Loo Woei

Harng and Mr Tan Lim Hui for their contributions to

the Company.

I wish to thank my fellow Board members and staff

for their hard work and determination to grow with

us through these challenging times. Lastly, I express

my appreciation to all our shareholders and business

partners for their continuing support.

We hope that we will be able to close expeditiously

the chapter in relation to the Group’s ship chartering,

coal mining and Shanghai mall business. We look

forward to growing the Group’s core business.

Cynthia TanExecutive Chairman

3 October 2008

Dear Shareholders,

3

Annual Report 2008

2008 7 2 Hartawan Holdings Limited

2008 6 30 2008

2007 1,410,000

22,290,000 2008 6 30

2007 10.45 7.45

11,390,000 J. L. Chancellor Pte Ltd

3,810,000

2008 6 2

2008 8 25

2008

5 15 Hotel Re! @ Pearl’s Hill “Hotel Re! ”

Hotel Re!

Hotel Re!

Hotel Re!

Hotel Re! 2008

2008

13 2009 6

30

Chng Hee Kok

John De Payva

Fong Heng Boo De

Payva Fong

Sim

Poh Heok Loo Woei Harng Tan Lim Hui

Cynthia Tan

2008 10 3

4

Board of DirectorsTan Kwee Hiang

Executive Chairman

Chng Hee Kok

Chief Executive Offi cer

Er Kwong Wah

Independent Director

John De Payva


Fong Heng Boo


Wong Kok Hoe

Non-Executive Director

Audit CommitteeFong Heng Boo

Chairman

Er Kwong Wah

John De Payva

Remuneration CommitteeJohn De Payva

Chairman

Fong Heng Boo

Er Kwong Wah

Nominating CommitteeEr Kwong Wah

Chairman

Fong Heng Boo

Wong Kok Hoe

Corporate Information

Share RegistrarBoardroom Corporate & Advisory Services Pte. Ltd.

(formerly known as Lim Associates (Pte) Ltd)

3 Church Street #08-01

Samsung Hub, Singapore 049483

Tel: (65) 6536 5355

Fax: (65) 6536 1360

AuditorsErnst & Young LLP

Certifi ed Public Accountants

One Raffl es Quay, North Tower

Level 18, Singapore 048583

Partner in-charge: Shekaran Krishnan

(Appointed since fi nancial year ended 2006)

Company SecretariesYvonne Choo

Hazel Chia Luang Chew

Teo Soo Lin

Registered Offi ce and Business AddressI Pegu Road #01-01

Singapore 328358

Tel: (65) 6251 2511

Fax: (65) 6252 3317

Email: [email protected]

Principal BankersHL Bank

DBS Bank Ltd

United Overseas Bank Limited

Malayan Banking Berhad

Overseas Chinese Banking Corporation

Bank of China

5

Annual Report 2008

Operations Review

Ship Chartering

Name of Vessel Tonnage• m.v. Green Island 2,824• m.v. Green Spring 5,773• m.v. Green Water 1,972• m.v. Green Yang 1,972• m.v. Green Mountain 1,968

The Group’s net loss after tax increased from S$1.41 million to S$22.29 million due mainly to:

1. impairment loss of S$11.39 million on doubtful other receivable from Shanghai Fu Jie Enterprise Investment Co., Ltd.;

2. impairment loss of S$3.81 million on asset held for sale in J.L. Chancellor Pte Ltd.;

3. provision of S$0.70 million for diminution in value of asset held for sale which referred to the investment property at Jurong East. Subsequent to the balance sheet date, the property located at 135 Jurong East was disposed off for a consideration of S$4.8 million;

4. increase in payroll related expenses from S$1.58 million in FY2007 to S$2.57 million in FY2008 due largely to the increase in headcount for Hotel Re! @ Pearl’s Hill; and

5. a write-off of a motor vehicle amounting to S$0.17 million pursuant to the Conditional Deed of Settlement (“Settlement Deed”) also attributed to the increase in Group’s net loss.

Another main contributor to the Group’s net loss is the shipping operations. Loss after tax from the shipping operations increased from S$1.64 million to S$5.35 million. This was due mainly to:

1. no revenue contribution from the 2 vessels that were detained by the Courts of the People’s Republic of China (“PRC”) in connection with the legal suits and which are now in anchorage, while the Group continued to bear certain direct costs such as wages, consumables, insurance and depreciation for these 2 vessels;

2. increasing fuel prices, coupled with high repair and maintenance costs, had added additional cost pressures on the shipping operations;

3. the signifi cant legal and professional fees incurred on the lawsuits in the PRC against the ship agents; and

4. pursuant to the Settlement Deed in relation to the Proposed Settlement and Sale (all terms not otherwise defi ned shall have the same meanings ascribed to them in the circular to shareholders dated 1 August 2008), an amount of US$1.6 million was accrued for as at 30 June 2008, being the agreed quantum of the Vita Vessels Liabilities prior to 2 June 2008.

Pursuant to the Settlement Deed and the Shareholders’ approval obtained at the Extraordinary General Meeting held on 25 August 2008, the Group had completed the sale of the First Tranche Vessels, namely m.v. Green Forest, m.v. Green Pine and m.v. Green Oasis, on 28 August 2008.

Offi ces:• 5 Kadayanallur Street

• 9 Shenton Way

• 1 Pegu Road

• Lorong 6 Toa Payoh

• 32 Wallich Street

Warehouses: • 20,23,24,25 & 25A Depot Road

• 163 Pasir Panjang Road (Pasir Panjang Distripark)

• 82, 84, 86 Jalan Benaan Kapal

Property Leasing and Hospitality

* Sold off subsequent to fi nancial year ended 30 June 2008.

Dormitory and Hostel:• 421 Tagore Avenue

• 40 & 50 Carlisle Road

Others:• 1 Pasir Panjang Road

• 2 Mackenzie Road

• 135 Jurong East*

Hotel:• 175A Chin Swee Road

6

Board of Directors

Ms Tan Kwee Hiang, CynthiaExecutive Chairman

Ms Cynthia Tan was fi rst appointed as a Non-Executive Director of the Company on 7 May 2007 and was

subsequently appointed as a Non-Executive Chairman on 23 April 2008 and then as Executive Chairman of the

Company on 2 July 2008.

Before joining the Group, Ms Tan was the Director of Manhattan Resources Limited (formerly known as Links

Island Holdings Limited). She was in-charge of all human resources, administrative and fi nancial affairs.

Ms Tan graduated from Ngee Ann Polytechnic with a Diploma in Electrical and Electronics Engineering.

Mr Chng Hee KokExecutive Director / Chief Executive Offi cer

Mr Chng Hee Kok was fi rst appointed as an Independent Director of the Company on 31 December 2007 and

was subsequently appointed as an Executive Director on 23 April 2008 and then as Chief Executive Offi cer of

the Company on 2 July 2008.

Mr Chng has a wide range of experience in industrial and consumer products marketing, property development,

hospitality (including hotel and service apartment development and management), and the food and

beverage industry.

Mr Chng was a Member of Parliament from 1984 to 2001. He had served on the board of Sentosa Development

Corporation and Public Utilities Board and was a past Director of the Governing Council of the Singapore

Institute of Directors. He was formerly Executive Chairman of United Pulp and Paper Ltd and Chief Executive

Offi cer of Scotts Holdings Limited and of Yeo Hiap Seng Limited. Mr Chng currently sits on the board of directors

of a number of public listed companies which include Luxking Group Holdings Limited, Pacifi c Century Regional

Developments Ltd, People’s Food Holdings Limited and Samudera Shipping Line Ltd.

Mr Chng was awarded a Merit Scholarship by the Singapore government in 1967 and graduated with a Bachelor

of Engineering (First Class Honours) degree from the National University of Singapore in 1972. He also holds a

Master of Business Administration degree from the National University of Singapore.

Mr Er Kwong WahIndependent Director

Mr Er Kwong Wah was appointed as an Independent Director on 30 November 2004. Mr Er is the Chairman

of the Nominating Committee and serves as a member of the Audit Committee and Remuneration

Committee.

He had spent 27 years in the civil service for the Singapore Government and had served in various ministries

before his retirement.

Mr Er is currently an independent director for several public listed companies, such as Unidux Electronics

Holdings Limited, COSCO Corporation (Singapore) Limited, Firstlink Investments Corporation Limited and the

Thai Prime Fund Limited. He is also the Chairman of the Toa Payoh Central Citizens Consultative Committee

and a member of the Bishan-Toa Payoh Town Council.

Mr Er holds a fi rst class honours degree in Electrical Engineering from the University of Toronto, Canada and

a Master of Business Administration from the University of Manchester, United Kingdom.

7

Annual Report 2008

Mr John De PayvaIndependent Director

Mr John De Payva was appointed as an Independent Director on 30 November 2004. Mr John De Payva

is the Chairman of the Remuneration Committee and serves as a member of the Audit Committee. He is

an active union leader and is currently the President of the National Trades Union Congress (“NTUC”) and

a Director/Secretary-General of The Singapore Manual & Mercantile Workers’ Union. Concurrently, Mr De

Payva is also the Chairman, Executive Bureau of the International Trade Union Confederation Asia Pacifi c

(“ITUC-AP”), Vice President, General Council ICFTU-APRO and General Council Member, of International

Trade Union Confederation (“ITUC”). Presently, he is director of NTUC FairPrice and SBS Transit.

Mr De Pavya graduated with a diploma in Industrial Relations at the Singapore Institute of Labour Studies

in 1992.

Mr Fong Heng BooIndependent Director

Mr Fong Heng Boo was appointed as an Independent Director on 30 November 2004. He is the Chairman of

the Audit Committee and serves as a member of the Nominating Committee and Remuneration Committee.

Mr Fong is currently the Director (Special Duties) of Singapore Totalistor Board. He was with the Auditor-General’s

Offi ce of Singapore and left in 1993 as the Assistant Auditor-General. Presently, he is an independent director of

Colex Holdings Limited.

Mr Fong is a Fellow member of the Institute of Certifi ed Public Accountants of Singapore and holds a Bachelor

of Accountancy (Honours) degree from the University of Singapore.

Mr Wong Kok HoeNon-Executive Director

Mr Wong was appointed as a Non-Executive Director on 7 May 2007. He serves as a member of the

Nominating Committee. He is a consultant of Rajah & Tann LLP, a fi rm of advocates and solicitors. Mr Wong

has more than 18 years of experience in legal practice. Mr Wong holds a Bachelor of Laws (Honours)

degree from the National University of Singapore.

Mr Wong is also a director of the following public listed companies: CFM Holdings Limited and K Plas

Holdings Limited.

Board of Directors

8

Ms Teo Soo LinFinancial Controller

Ms Teo Soo Lin was appointed Financial Controller on 23 January 2008. Ms Teo is responsible for managing all fi nancial aspects of the Group. Before joining the Group, Ms Teo was Financial Controller of Manhattan Resources Limited (formerly known as Links Island Holdings Limited). She holds a Bachelor of Accountancy from Nanyang Technological University and is a member of the Institute of Certifi ed Public Accountants of Singapore.

Mr Tan Lim HuiProject Manager

Mr Tan Lim Hui was appointed Project Manager on 1 August 2008. Mr Tan is involved in project evaluation and development, and property management. Mr Tan has accumulated more than 20 years of business experience. He has been involved in the property leasing business since 1991.

Mr Joseph OngHotel General Manager / Hostel Manager

Mr Joseph Ong was appointed General Manager for Hotel Re! @ Pearl’s Hill (“Hotel Re”) and Hostel Manager of students’ hostel (“Hartawan Hostel”) on 1 June 2008. He is responsible for overseeing the operations and management of Hotel Re and Hartawan Hostel. Mr Ong also does project evaluation and business development of the Group. Before joining the Group, he was involved in regional projects evaluation and development during his employment with Maersk Singapore. He holds a Bachelor of Business Administration (Honours) from National University of Singapore and is currently pursuing a Masters in Hospitality Management.

Ms Yoshiari Wong Property Manager

Ms Yoshiari Wong had worked with developers, in Town Councils, as well as with Management Agency before joining the Company as Property Manager on 1 February 2008. Ms Wong has more than 15 years of experience in managing, leasing and setting up of offi ces, estate, building security and facilities management including a small scale to a very large scale property development. Ms Wong graduated from the National University of Singapore with a Bachelor of Science (Estate Management).

Mr Francis ChngCorporate Security Manager

Mr Francis Chng joined our Company on 1 October 2007. He is the Corporate Security Manager who is responsible in managing the corporate security of the Group. He also assists in the operations of Hartawan Hostel. Mr Chng has 12 years high profi le security experience of which includes Singapore Police Force, Police Security Command (VVIP Protection Unit), Singapore Post Ltd (Superintendent, Postal Security Department) and Merrill Lynch Investment Bank Ltd (APR Control Center Manager). He holds a Diploma in Mechanical Engineering from Ngee Ann Polytechnic.

Ms Margaret Nicole ChiaHuman Resource Manager

Ms Margaret Chia worked in various management positions in several multi-national corporations in Singapore before joining the Company as Human Resource Manager on 1 April 2008. She has more than 20 years of accumulated experience and in-depth knowledge of current human resource practices in the various industries in Singapore. Ms Chia is responsible in handling and managing the full spectrum of human resource matters and offi ce administration. She graduated with a Diploma in Human Resource Management from PSB Academy.

Key Executives

9

Annual Report 2008

Group Structure

*Applied for strike off on 3 October 2008

Property Leasing and Management

Whitehouse Holdings

Private Limited

Hotel Re! Pte Ltd

Central Warehouse

Service Pte Ltd.

Hartawan Property

Management Pte Ltd

Tada E-Parking (S) Pte Ltd *

Hartawan Dormitory

Management Pte Ltd

Hartawan Hostel

Management Pte Ltd

Wallich Development

Pte Ltd

Vita Hospitality Pte Ltd *

100%

100%

100%

51%

100%

100%

100%

100%

Dehai Marine Shipping

(Singapore) Pte Ltd

Green Forest Marine

Shipping Inc.

Green River Marine

Shipping Inc.

Green Pine Marine

Shipping Inc.

Green Spring Marine

Shipping Inc.

Green Mountain Marine

Shipping Pte Ltd

Vita Marine

Shipping Pte Ltd

Green Willow Marine

Shipping Pte Ltd

Green Spring Marine

Shipping Pte Ltd

100%

100%

100%

100%

100%

100%

100%

Ship Chartering

100%

100%

100%

Hartawan Holdings

10

Financial Highlights1

5.5

9

2008 2007 2006

Re

ven

ue

($

mill

ion

)

3.4

6.8

4.9

2008 2007 2006

Gro

ss P

rofi t

($m

illio

n)

(22.3

)

(1.4

)

6.6

2008 2007

2006

Ne

t Pro

fi t (

$m

illio

n)

2008

2007

2006

70.7%

51.5%

56.0%

27.3%

48.5%

44.0%

Property Leasing & Management

Ship CharteringHotel

Revenue

22

.9

21

.42%

11

Annual Report 2008

September 2007Establishment of Hotel Re! Pte Ltd

October 2007Disposal of m.v. Green Willow for US$3.03 million as part of Group’s ongoing exercise to maintain an effi cient shipping fl eet to ensure cost savings by reducing maintenance and repair costs, as well as in line with the Group’s intention to continue to divest other vessels.

October 2007Annual General MeetingExtraordinary General Meeting

November 2007Lease of property in Shanghai, People’s Republic of China

November 2007Draw-down of the S$10 million convertible loan pursuant to the Convertible Loan Agreement which is approved by the Shareholders at the Extraordinary General Meeting held on 26 October 2007.

December 2007Termination of Conditional Business Co-operation Contract and Conditional Principles of Stockholders’ Agreement in relation to proposed development of hotel in Vietnam.

December 2007Conversion of S$3.91 million of the convertible loan to 23 million fully paid new shares in the capital of the Company.

January 2008Conversion of S$6.09 million of the convertible loan to 35,823,529 fully paid new shares in the capital of the Company, thereby triggering a mandatory general offer by Mr Chong Thim Pheng, in compliance with the provisions of the Singapore Takeover Code.

June 2008Entered into Conditional Deed of Settlement between (1) Mr Jiang Haiying, (2) the Company, (3) Qingdao Dehai Shipping Co., Ltd and (4) Qingdao Dehai Marine & Engineering Co., Ltd. in relation to settlement of legal proceedings of the respective parties and proposed sale of certain vessels owned by the Group to Mr Jiang and/or his nominees.

June 2008Entered into a supplemental agreement with Shanghai Fu Jie Enterprise Investment Co., Ltd. (“Fu Jie”) for the termination of the Shanghai Municipality Housing Lease Agreement and the supplemental agreement to the same entered into between the Company and Fu Jie on 7 November 2007 for the lease by the Company of the property in Shanghai, People’s Republic of China from Fu Jie.

August 2008Extraordinary General Meeting

August 2008Full year fi nancial statement and dividend announcement for year ended 30 June 2008.

September 2008Entered into an Option Agreement to sell a property, a shophouse unit at Jurong East Street 13 for a cash consideration of S$4.8 million.

October 2008Filed a Writ of Summons in the High Court of Singapore in relation to profi t guarantee with respect to J. L. Chancellor Pte Ltd.

October 2008Issued letters of demand to both Fu Jie and to the Guarantor for the payment of the amount of RMB 10 million.

Corporate Highlights

13 Corporate Governance Report

24 Directors’ Report

27 Statement by Directors

28 Independent Auditors’ Report

29 Consolidated Income Statement

30 Balance Sheets

31 Statements of Changes in Equity

32 Consolidated Cash Flow Statement

33 Notes to the Financial Statements

79 Statistics of Shareholdings

81 Statistics of Warrantholdings

82 Notice of Annual General Meeting

Proxy Form

13

Annual Report 2008

The Board of Directors (the “Board”) and Management of Hartawan Holdings Limited (formerly known as Vita

Holdings Limited) (the “Company” and together with its subsidiaries, collectively the “Group”) are committed

to maintaining high standards of corporate governance by adopting practices in line with the 2005 Code

of Corporate Governance (the “Code”). Good corporate governance practices establish and maintain an

ethical environment and safeguards the interests of all shareholders.

This report outlines the Company’s corporate governance framework with specifi c reference to the Code which

forms part of the Continuing Obligations in the Listing Manual of the Singapore Exchange Securities Trading

Limited (“SGX-ST”).

The Company confi rms that it has adhered to the principles and guidelines as set out in the Code, where

applicable, and has specifi ed and explained areas of non-compliance.

BOARD MATTERS

Principle 1: The Board’s conduct of its affairs

The Board has established three Board Committees to assist in the execution of the Board’s responsibilities. The

committees are the Nominating Committee (“NC”), Remuneration Committee (“RC”) and Audit Committee

(“AC”) which function within clearly defi ned terms of references. The actions and effectiveness of each Board

Committee are reported to and reviewed by the Board on a regular basis.

The Board’s primary role is to protect and enhance long-term shareholders’ value. It sets the overall corporate

strategy and directions of the Group, ensures effective management leadership and proper conduct of the

Group’s businesses by supervising Management.

Besides carrying out its statutory responsibilities, the Board’s roles are:

• Approving Board policies, strategies and fi nancial objectives of the Group and monitoring the

performance of Management;

• Reviewing and approving corporate policies, strategies and fi nancial plans of the Company;

• Monitoring fi nancial performance including approval of the annual and interim fi nancial reports,

material interested person transactions;

• Overseeing and reviewing the processes for evaluating the adequacy of internal controls, risk

management, fi nancial reporting and compliance;

• Approving major funding proposals, investments, acquisitions and divestment proposals;

• Assuming responsibility for corporate governance; and

• Declaring interim dividends and proposing fi nal dividends.

Matters that require Board approval include the approval of the Group’s strategic plans, appointment of directors

and key managerial personnel, annual budgets, major investment proposals, and the review of the fi nancial

performance of the Group. The Board also approves the Company’s results announcements, declaration of

dividends, convening of shareholders’ meetings, authorisation of merger and acquisition transactions, and

authorisation of major transactions. The Board likewise reviews and approves all corporate actions for which

shareholder approval is required.

The Board holds scheduled meetings at least four times a year. When required, ad-hoc meetings are convened

or exchanges of views are held outside the formal environment of Board meetings. The Company’s Articles

of Association provide for telephonic attendance and conference via audio-visual communication at Board

meetings to facilitate Board participation.

Corporate Governance Report

14

To facilitate the effective and effi cient discharge of duties and responsibilities, the directors are provided

with extensive information on the Group’s business activities, strategic directions and policies and any new

developments via regular and timely updates. The non-executive directors are also welcome to request for

more information, briefi ngs or informal discussions on any aspect of the Group’s operations or business issues

from Management. In addition, the non-executive directors are regularly invited to visit the Group’s business

premises for a better understanding of the Group’s operations.

With the Company Secretaries’ assistance, the Board is kept apprised of its compliance obligations and responsibilities arising from regulatory changes and requirements. The Company also works closely with professional advisers to provide its directors with regular updates on the latest governance and listing policies.

The Company had considered the appropriateness of issuing letters of appointment to directors setting out their duties, obligations and terms of appointment. This is being deferred and will be reconsidered when appropriate. Where required, newly-appointed directors are briefed by Management on the business activities of the Group, its corporate governance practices and disclosure policies.

The attendance of the directors at meetings of the Board and Board Committees during the fi nancial year is presented below:

Board MeetingsAudit

CommitteeMeetings (“AC”)

Nominating Committee

Meetings (“NC”)

Remuneration Committee

Meetings (“RC”)

Name Held Attended Held Attended Held Attended Held Attended

Tan Kwee Hiang 11 9 - - - - 1 1

Chng Hee Kok1 11 8 - - - - - -

Er Kwong Wah 11 10 4 4 1 1 - -

Fong Heng Boo 11 9 4 4 1 1 1 1

John De Payva 11 4 4 2 1 0 1 1

Wong Kok Hoe 11 10 - - - - - -

Loo Woei Harng2 11 11 - - - - - -

Sim Poh Heok3 11 4 - - - - - -

Tan Lim Hui4 11 2 - - - - - -

1. Appointed on 31 December 2007.

2. Resigned on 16 September 2008.

3. Resigned on 15 March 2008.

4. Resigned on 1 December 2007.


15

Annual Report 2008

BOARD COMPOSITION AND BALANCE

Principle 2: Strong and independent element on the Board

As at the date of this report, the Board comprises the following six directors:

Executive Directors

Ms Tan Kwee Hiang (Executive Chairman) (appointed on 2 July 2008)

Mr Chng Hee Kok (Chief Executive Offi cer) (appointed on 2 July 2008)

Non-Executive Director

Mr Wong Kok Hoe

Independent Directors

Mr Er Kwong Wah (Lead Independent Director)

Mr Fong Heng Boo

Mr John De Payva

The independence of each director is reviewed annually by the NC, which confi rms that the independent

directors make up at least one-third of the Board. The NC is of the view that there is a good balance between

the executive and non-executive directors and a strong independent element on the Board.

The NC is also of the opinion that the current Board size and mix of expertise and experience of Board members

is appropriate, taking into account the core competencies of the directors which include accounting and

fi nance, business management, industry knowledge, legal, strategic planning experience and customer-based

experience. The Board, through the NC, examines on an on-going basis the size and the composition of the

Board to evaluate whether the Board is effective in carrying out its duties.

The independent and non-executive directors meet without the presence of Management, where appropriate.

They contribute to the Board process by monitoring and reviewing Management’s performance. Their views

and opinions provide alternative perspectives to the Group’s business and they bring independent judgment to

bear on business activities and transactions which may involve confl icts of interest and other complexities.

Key information regarding the directors of the Company is set out in the section “Board of Directors” on pages

6 to 7.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Principle 3: Clear division of responsibilities at the top of the Company

The Code requires the roles of Chairman and Chief Executive Offi cer (“CEO”) to be separate.

Ms Tan Kwee Hiang was appointed Executive Chairman of the Company on 2 July 2008 and is responsible

for the workings of the Board, ensuring that Board members engage Management in constructive debate on

various matters including strategic issues and business planning processes. She also exercises control over

the quality, quantity and timeliness of information fl ow between the Board and Management, ensures effective

communication with shareholders, encourages constructive relations between executive directors and non-

executive directors and promotes higher standards of corporate governance.

Mr Chng Hee Kok was appointed CEO of the Company on 2 July 2008. He is responsible for the day-to-day

operations and overall management, strategic planning and business development of the Group.


16

The Executive Chairman and the CEO have full executive responsibilities for the overall business direction and

operational decisions of the Group.

The Executive Chairman and the CEO are not related to each other. Notwithstanding, the Company had

also appointed Mr Er Kwong Wah as Lead Independent Director on 23 August 2006. The Lead Independent

Director is available to shareholders where they have concerns and contact through the normal channels of

the Chairman or CEO has failed to resolve or for which such contact is inappropriate.

BOARD MEMBERSHIP AND PERFORMANCE

Principle 4: Formal and transparent process for appointment of new directors

Principle 5: Formal assessment of the effectiveness of the Board and contributions of each director

The members of the NC comprise the following Directors, a majority of whom, including the Chairman, are

independent directors:

Er Kwong Wah (Chairman)

Fong Heng Boo

Wong Kok Hoe

The NC meets at least once a year.

Under its terms of reference, the responsibilities of the NC include:

• Making recommendations to the Board on all Board appointments, reviewing all nominations and

re-nominations having regard to directors’ contributions and performance (including attendance,

preparedness and participation);

• Assessing the effectiveness of the Board as a whole and the contributions made by each director to the

effectiveness of the Board and to determine on an annual basis, the independence of the directors;

• Determining how the Board’s performance is to be evaluated and proposing objective performance

criteria, subject to the Board’s approval; and

• Periodically reviewing the structure, size and composition of the Board to ensure relevance.

In recommending a candidate for appointment, the NC ensures that a new director possesses the necessary skills,

knowledge and experience. For re-election of directors, the NC considers the individual director’s contributions

and performance during his tenure in offi ce.

For directors who serve on multiple boards, the NC assesses whether these directors are able to adequately

carry out their duties.

The NC had evaluated the Board’s performance as a whole during the year. The assessment parameters are

broadly based on the attendance records at the meetings of the Board and the relevant Board Committees,

intensity of participation at meetings, sense of independence, quality of contributions and workload requirements.

The NC is of the view that each individual director has contributed to the effectiveness of the Board as a

whole.

The NC had confi rmed the independence of Mr Er Kwong Wah, Mr Fong Heng Boo and Mr John De Pavya.

Article 97 of the Company’s Articles of Association requires newly-appointed directors to retire at the fi rst Annual

General Meeting (“AGM”) following their appointment.

Article 91 of the Company’s Articles of Association provides for one-third of the Board to retire by rotation at every

AGM and directors to retire by rotation at least once every 3 years.


17

Annual Report 2008

Name of DirectorMembership in

Board Committees Date of fi rst appointment Date of last re-electionTan Kwee Hiang − 7 May 2007 26 October 2007

Chng Hee Kok − 31 December 2007 −

Er Kwong Wah Chairman of NC and

member of AC and RC

30 November 2004 10 October 2005

Fong Heng Boo Chairman of AC and

member of RC and NC


John De Payva Chairman of RC and

member of AC


Wong Kok Hoe Member of NC 7 May 2007 26 October 2007

At the forthcoming AGM, Mr Chng Hee Kok will retire in accordance with Article 97 of the Company’s Articles

of Association, while Mr Fong Heng Boo and Mr Er Kwong Wah are due to retire by rotation in accordance with

Article 91.

Mr Chng Hee Kok and Mr Er Kwong Wah, being eligible for re-election, had given their consent to continue in

offi ce.

Mr Fong Heng Boo had, on 30 September 2008, notifi ed the Company of his intention not to seek re-election as

a director of the Company at the forthcoming AGM. Having served a term of almost 4 years, he is retiring due

to other work commitments.

Mr John De Payva had, on 30 June 2008, notifi ed the Company of his intention to retire at the conclusion of the

forthcoming AGM, due to work commitments. Mr De Payva has served a term of almost 4 years.

The NC has recommended the re-election of Mr Chng Hee Kok and Mr Er Kwong Wah at the forthcoming AGM.

The Board has accepted the NC’s recommendation and the two retiring directors have offered themselves for

re-election at the coming AGM.

The NC has also recommended the appointment of Dr Tan Eng Liang as an independent director of the

Company. This recommendation has been accepted by the Board and the appointment of Dr Tan Eng Liang

will be tabled for shareholders’ approval at the forthcoming AGM pursuant to Section 153(6) of the Companies

Act, Cap. 50.

ACCESS TO INFORMATION

Principle 6: Board members to have complete, adequate and timely information

To assist the Board in the discharge of its duties and responsibilities, all directors are provided with complete,

adequate and timely information prior to Board meetings and have separate and independent access to

Management and the Company Secretaries. The executive directors also keep the independent non-executive

directors informed of the status of on-going initiatives by the Group. Management provides Board members

with monthly management accounts, and information on major developments and material transactions are

also circulated to directors as and when they arise.

Detailed Board papers are prepared for Board meetings and are normally circulated a week in advance of

each meeting. The Board papers include suffi cient information from Management on fi nancial, business and

corporate issues to enable the directors to be properly briefed on issues to be considered at Board meetings.


18

The Board provides shareholders with a detailed account of the Group’s fi nancial position and prospects in the

Company’s annual and half-year results.

Where a decision has to be made before a Board meeting is convened, directors’ resolution(s) in writing are

circulated in accordance with the Articles of Association of the Company and the directors are provided with

the necessary information that will allow them to make informed decisions.

All independent and non-executive directors have access to Management and are encouraged to communicate

with other employees to seek additional information if they so require. The directors are provided with the contact

details of the Group’s senior Management and Company Secretaries to facilitate access. Where necessary,

senior Management staff are invited to attend Board meetings to address queries and provide detailed insights

into specifi c areas of operations.

The Company Secretaries and/or their representative attend all Board and Board Committee meetings,

prepare the minutes of meetings and assist the Chairman in ensuring that Board procedures are followed. The

Company Secretaries’ role is to advise the Board on all governance matters, ensuring that legal and regulatory

requirements, as well as Board policies and procedures, are complied with. The Company Secretaries are also

the primary channel of communication between the Company and the SGX-ST.

The appointment and removal of the Company Secretaries is a matter for the Board as a whole.

Aside from access to the advice and services of Management and the Company Secretaries, the directors may,

where required, seek independent professional advice concerning the Company’s affairs at the Company’s

expense.

REMUNERATION MATTERS

Principle 7: Formal and transparent procedure for fi xing remuneration packages of directors

Principle 8: Remuneration of directors should be adequate but not excessive

Principle 9: Remuneration policy, level and mix of remuneration and procedure for setting remuneration

The RC comprises three members who are independent directors.

The composition of the RC is as follows:

John De Payva (Chairman)

Fong Heng Boo (Member)

Er Kwong Wah (Member) (appointed on 18 September 2008)

The RC meets at least once a year.

Under its terms of reference, the RC’s primary objectives are to:

• make recommendations to the Board on the Group’s framework of remuneration of directors and key management, taking into consideration the pay and employment conditions within the industry and in comparable companies as well as performance of the Group and the individuals;

• review the adequacy and form of compensation of the executive directors and key Management executives of the Group, to ensure that the compensation is realistically commensurated with their responsibilities and performance of the individual and the Group; and

• review the recommendations of executive directors on the fees for non-executive directors before submission to the Board for approval.


19

Annual Report 2008

The RC is empowered to seek independent professional advice as appropriate.

The RC also oversees the administration of the Hartawan Employee Share Option Scheme (formerly known as Vita Employee Share Option Scheme) (the “Share Option Scheme”) upon the terms and conditions as defi ned in the Share Option Scheme.

The RC is of the opinion that the executive directors and key executives are not excessively compensated, taking into consideration their responsibilities, skills, expertise and contributions to the Group’s performance. The executive directors’ service agreements with the Company are for a period of three years with effect from 2 July 2008 (unless otherwise terminated by either party giving not less than three months’ notice to the other).

The non-executive directors receive directors’ fees. The directors’ fees which are recommended by the Board, are subject to shareholders’ approval at the AGM.

All directors and employees are entitled to participate in the Share Option Scheme. Information on the Share Option Scheme is disclosed in the Directors’ Report on page 25. To date, no option has been granted to the directors and employees of the Group.

A breakdown showing the percentage mix of remuneration payable in the fi nancial year 30 June 2008 for each of the directors and key executive offi cers of the Company is set out below:

Name Salary Bonus Other benefi ts Fee TotalExecutive Directors in the band of S$250,001 to S$500,000Loo Woei Harng

(resigned on 16 September 2008)87% 4% 9% 0% 100%

Executive Directors in the band below S$250,000 Chng Hee Kok** 84% 0% 0% 16% 100%

Sim Poh Heok(resigned on 15 March 2008)

66% 0% 31% 3% 100%

Tan Lim Hui(resigned on 1 December 2007)

70% 0% 30% 0% 100%

Independent/Non-Executive Directors in the band below S$250,000Tan Kwee Hiang* 0% 0% 0% 100% 100%

Er Kwong Wah 0% 0% 0% 100% 100%

John De Payva 0% 0% 0% 100% 100%

Fong Heng Boo 0% 0% 0% 100% 100%

Wong Kok Hoe 0% 0% 0% 100% 100%

Top 3 executive offi cers in the band below S$250,000Teo Soo Lin 92% 8% 0% 0% 100%

Tan Lim Hui 80% 15% 5% 0% 100%

Margaret Chia 80% 7% 13% 0% 100%

Notes:* Ms Tan Kwee Hiang, who was appointed Executive Chairman on 2 July 2008, has entered into a service agreement with

the Company for an initial period of 3 years commencing July 2008.

** Mr Chng Hee Kok, who was appointed CEO on 2 July 2008, has entered into a service agreement with the Company for an initial period of 3 years commencing July 2008.


20

The executive directors’ remuneration, made up of salary, bonus and other benefi ts, is presented in Note 28 of

the notes to the fi nancial statements on page 65.

For the fi nancial year ended 30 June 2008, the Group does not have employees who are immediate family

members (as defi ned in the Listing Rules) of a director or CEO and whose remuneration exceeds $150,000.

ACCOUNTABILITY

Principle 10: Board should present a balanced and understandable assessment of the Company performance,

position and prospects

The Board is accountable to shareholders for the management of the Group. The Board updates shareholders

on the operations and fi nancial position of the Group through its half-year and full year results announcements

as well as timely announcements of other matters as prescribed by the relevant rules and regulations.

Management is accountable to the Board by providing the Board with the necessary fi nancial information for

the discharge of its duties.

AUDIT COMMITTEE

Principle 11: Establishment of Audit Committee with written terms of reference

The AC comprises three members all of whom are independent directors:

Fong Heng Boo (Chairman)

John De Payva

Er Kwong Wah

The Board is of the view that the AC members have suffi cient fi nancial management-related expertise and

experience to discharge the AC’s functions.

The AC performs the functions specifi ed by Section 201B(5) of the Companies Act, the Listing Rules and the

Code, and assists the Board in the execution of its corporate governance responsibilities within its terms of

reference.

The responsibilities of the AC include:

• to assist the Board in discharging its statutory responsibilities on fi nancial and accounting matters;

• to review the independence of external auditors annually and consider the appointment or re-appointment

of external auditors and matters relating to the resignation or removal of the auditors and approve the

remuneration and terms of engagement of the external auditors;

• to review signifi cant fi nancial reporting issues and judgments relating to fi nancial statements for each

fi nancial year, interim and annual results announcements prior to their submission to the Board for

approval;

• to review the fi nancial and operating results and accounting policies of the Group;

• to review the adequacy of the Company’s internal control (including fi nancial, operational and compliance

controls) and risk management policies and systems established by Management;

• to review the legal and regulatory matters that may have a material impact on the fi nancial statements,

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

• to review interested person transactions (as defi ned in Chapter 9 of the Listing Rules).


21

Annual Report 2008

The AC meets the Company’s external auditors without the presence of Management at least once a year to

discuss the scope of their audit, the results of their examination and evaluation of the Company’s overall fi nancial,

operational and compliance controls, and the responses from Management. The AC also met Management to

review accounting and fi nancial reporting matters so as to ensure that the Group maintains an effective control

environment.

The AC has full access to Management and is given the resources required for it to discharge its duties. It has

full authority and discretion to invite any director or executive offi cer to attend its meetings.

The AC may also examine, within its terms of reference, any matters pertaining to the Group’s affairs and monitor

the Group’s compliance with legal, regulatory and contractual obligations.

Having reviewed all non-audit services provided by the external auditors, Ernst & Young LLP (“EY”), the AC is

of the view that the provision of such services does not affect EY’s independence and objectivity, and has

recommended the re-appointment of EY as external auditors at the Company’s forthcoming AGM.

A “Whistle-blowing Programme” has been put in place to encourage and to provide a channel for staff to report

and to raise, in good faith and in confi dence, their concerns about possible improprieties in matters of fi nancial

reporting or other matters. The Policy ensures that arrangements are in place for independent investigations of

such matters and for appropriate follow up action.

INTERNAL CONTROLS AND INTERNAL AUDIT

Principle 12: Sound system of internal controls

Principle 13: Setting up independent internal audit function

The AC is fully aware of the need to put in place a system of internal controls within the Group to safeguard

the shareholders’ interests and the Group’s assets, and to manage risks. The system is intended to provide

reasonable but not absolute assurance against material misstatements or loss, and to safeguard assets

and ensure maintenance of proper accounting records, reliability of fi nancial information, compliance with

appropriate legislation, regulation and best practice, and the identifi cation and containment of business risks.

The Group regularly reviews its business and operational activities to identify areas of signifi cant business risks as

well as takes appropriate measures to manage and mitigate these risks. The Group reviews all signifi cant control

policies and procedures and highlights all signifi cant matters to the Board. The fi nancial risk management

objectives and policies are outlined in the fi nancial statements.

Risk management alone does not guarantee that business undertakings will not fail. However, by identifying

and managing risks that may arise, the Group can make more informed decisions and benefi t from a better

balance between risk and reward. This will help protect shareholders’ interest.

The internal audit function is outsourced to external audit professionals, Stone Forest Consulting Pte Ltd with

effect from fi nancial year 2006. These audit professionals report directly to the AC and provide a comprehensive

analysis of the business processes and the risks related to each process. An audit plan is also submitted to

the AC for review and approval on an annual basis. The audit professionals perform internal audit reviews

throughout the fi nancial year covering different business processes.


22

COMMUNICATION WITH SHAREHOLDERS

Principle 14: Regular, effective and fair communication with shareholders

Principle 15: Shareholder participation at General Meetings

The Board strives to ensure that clear, useful and timely information is communicated to shareholders with

regard to all material matters affecting the Group so as to maintain a high level of transparency. The Company

does not practice selective disclosure. All information on the Company is published through SGXNET. The

Company is open to meetings with investors and analysts, and in conducting such meetings, the Company is

mindful of the need to ensure fair disclosure.

Shareholders of the Company will be informed of shareholders’ meetings through notices published in the

newspapers and reports or circulars sent to all shareholders. During general meetings, separate resolutions

for each distinct issue are tabled for shareholders’ approval. The shareholders are also given ample time and

opportunities to speak and seek clarifi cation on the Group’s affairs and the directors, including the chairman

of the Board and the respective Board Committees, are present to answer shareholders’ questions. The external

auditors are also present to address any relevant queries by shareholders.

DEALING IN SECURITIES TRANSACTIONS

The Company has adopted its own internal code to govern conduct in the dealing of the securities of the

Company by its directors and Group employees. The internal code emphasises that the law on insider trading

is applicable at all times. Directors and employees with access to price-sensitive information are prohibited from

dealing in the securities of the Company during the period commencing one month before the announcement

of the Group’s half-year or annual results, as the case may be, and until one day after the date of announcement

of the relevant results.

INTERESTED PERSON TRANSACTIONS (“IPTs”)

The Company has established procedures to ensure that all transactions with interested persons are reported

in a timely manner to the AC and that the transactions are conducted on an arm’s length basis. All IPTs are

subject to review by the AC to ensure compliance with established procedures.

Currently, the Company is not required to make announcements or have a general mandate from its shareholders

relating to IPTs, as the aggregate value of these transactions are within the threshold limits set out under Chapter

9 of the Listing Manual of the SGX-ST.


23

Annual Report 2008

During the fi nancial year, IPTs entered into by the Group were as follows:

Name of interested person:

Aggregate value of all IPTs during the fi nancial

year under review

S$’000

Vita Enterprises Pte Ltd 208

Vitalink Marine Pte Ltd 52

Vita Marine & Engineering Pte Ltd 9

Vita-Tech Management & Engineering Pte Ltd 19

PCM Electrical Engineering 4

Katong Hostel Pte Ltd 15

Pearl Hill Hostel Pte Ltd 3

Ramdas & Wong 6

Rajah & Tann LLP 213

Chong Thim Pheng 10,010*

Tan Lim Hui 7

Aggregate value 10,546

* Comprising convertible loan of S$10 million to the Company pursuant to the Convertible Loan Agreement of 27 July 2007 and business consultancy fee of $10,000 per annum.

Material contracts

During the fi nancial year, there was no material contract entered into by the Company or any of its subsidiaries

involving the interests of the CEO, any director or the controlling shareholder.

RISK MANAGEMENT

The Group regularly reviews its business and operational activities to identify areas of signifi cant business risk

as well as take appropriate measures to manage and mitigate these risks. The Group reviews all signifi cant

control policies and procedures and highlights signifi cant matters to the AC and the Board. The fi nancial risk

management objectives and policies are outlined in Note 31 of the notes to the fi nancial statements.


24

Directors’ Report

The directors are pleased to present their report to the members together with the audited consolidated

fi nancial statements of Hartawan Holdings Limited (formerly known as Vita Holdings Limited) (the “Company”)

and its subsidiaries (collectively, the “Group”) and the balance sheet and statement of changes in equity of the

Company for the fi nancial year ended 30 June 2008.

Directors

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

Tan Kwee Hiang (Executive Chairman)

Chng Hee Kok (Executive Director/Chief Executive Offi cer)

Er Kwong Wah (Independent Director)

John De Payva (Independent Director)

Fong Heng Boo (Independent Director)

Wong Kok Hoe (Non-Executive Director)

Arrangements to enable directors to acquire shares and debentures

Except as disclosed herein, neither at the end of nor at any time during the fi nancial year was the Company a

party to any arrangement whose objects are, or one of whose object is, to enable the directors of the Company

to acquire benefi ts by means of the acquisition of shares or debentures of the Company or any other body

corporate.

Directors’ interests in shares and debentures

The following directors, who held offi ce at the end of the fi nancial year, had, according to the register of directors’

shareholdings required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, interests in

shares of the Company and its related corporations (other than wholly-owned subsidiaries) as stated below:

Direct interest Deemed interest

Name of directors

At the beginningof fi nancial

year

At the endof fi nancial

yearAt

21.7.2008

At thebeginningof fi nancial

year

At the endof fi nancial

yearAt

21.7.2008

The Company

Ordinary shares

Er Kwong Wah – – – 150,000 150,000 150,000

John De Payva 150,000 150,000 150,000 – – –

Fong Heng Boo 150,000 150,000 150,000 – – –

Tan Kwee Hiang – – – 85,000,000 143,823,529 143,823,529

Warrants

Er Kwong Wah – – – 45,000 45,000 45,000

Fong Heng Boo 45,000 45,000 45,000 – – –

By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Tan Kwee Hiang is deemed to have interests in

the ordinary shares of all the subsidiaries of the Company.

25

Annual Report 2008

Directors’ Report

Directors’ contractual benefi ts

Except as disclosed in the fi nancial statements, since the end of the previous fi nancial year, no director of the

Company has received or become entitled to receive a benefi t by reason of a contract made by the Company

or a related corporation with the director, or with a fi rm of which the director is a member, or with a company in

which the director has a substantial fi nancial interest.

Share options

Hartawan Employee Share Option Scheme (formerly known as Vita Employee Share Option Scheme)

The Hartawan Employee Share Option Scheme (the “ESOS”) was approved by the shareholders of the Company

at the Extraordinary General Meeting held on 30 November 2004. The ESOS complies with the relevant rules as

set out in Chapter 8 of the SGX-ST Listing Manual. The ESOS changed its name on 25 August 2008.

Under the rules of the ESOS, executive and non-executive directors (including independent directors) and

employees of the Group and associated companies (“Group Employees”), are eligible to participate in the

ESOS. The controlling shareholders are also eligible to participate in the ESOS.

The ESOS is administered by the Remuneration Committee which presently comprises the following directors:

John De Payva

Fong Heng Boo

Er Kwong Wah (appointed on 18 September 2008)

Tan Kwee Hiang (resigned on 18 September 2008)

The aggregate number of shares over which the Remuneration Committee may grant options on any date,

when aggregated with the number of shares issued and issuable in respect of all options granted under the

ESOS and any other share option schemes of the Company, shall not exceed 15% of the issued shares of the

Company on the date preceding the date of the relevant grant.

The options that are granted under the ESOS may have exercise prices that are set at a price (the “Market

Price”) equal to the average of the last dealt prices for the shares on the Offi cial List of the SGX Sesdaq for the

5 consecutive market days immediately preceding the relevant date of grant of the relevant option or at a

discount to the Market Price (subject to a maximum discount of 20% of the Market Price).

Options which are exercisable at the Market Price may be exercised after the fi rst anniversary of the date of

the grant of the option while options exercisable at a discount to the Market Price may be exercised after the

second anniversary of the date of grant of that option.

Options granted under the ESOS will have a life span of 5 years. Under no circumstances shall the exercise price

be less than the nominal value of a share.

The ESOS shall continue in operation for a maximum duration of 10 years and may be continued for any

further period thereafter with the approval of the shareholders of the Company by ordinary resolution in general

meeting and of any relevant authorities which may then be required.

From the commencement of the ESOS to 30 June 2008, no options have been granted under the ESOS to any

eligible participants.

26

Audit Committee

The Audit Committee performed the functions specifi ed in the Singapore Companies Act. The functions

performed are detailed in the Corporate Governance Report as set out in the Annual Report of the Company.

Auditors

Ernst & Young LLP have expressed their willingness to accept re-appointment as auditors.

On behalf of the Board of Directors:

Tan Kwee Hiang

Director

Chng Hee Kok

Director

Singapore

3 October 2008

Directors’ Report

27

Annual Report 2008

Statement by Directors

We, Tan Kwee Hiang and Chng Hee Kok, being two of the directors of Hartawan Holdings Limited, do hereby state

that, in the opinion of the directors:

(a) the accompanying balance sheets, consolidated income statement, statements of changes in equity and

consolidated cash fl ow statement together with the notes thereto are drawn up so as to give a true and

fair view of the state of affairs of the Company and of the Group as at 30 June 2008, and the results of the

business, changes in equity and cash fl ows of the Group and the changes in equity of the Company for

the fi nancial year ended 30 June 2008; and

(b) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay

its debts as and when they fall due.

On behalf of the Board of Directors:

Tan Kwee Hiang

Director

Chng Hee Kok

Director

Singapore

3 October 2008

28

Independent Auditors’ Report

We have audited the accompanying fi nancial statements of Hartawan Holdings Limited (the “Company”) and

its subsidiaries (the “Group”) set out on pages 29 to 78, which comprise the balance sheets of the Group and

the Company as at 30 June 2008, the statements of changes in equity of the Group and the Company, and the

income statement and cash fl ow statement of the Group for the year then ended, and a summary of signifi cant

accounting policies and other explanatory notes.

Management’s responsibility for the fi nancial statements

Management is responsible for the preparation and fair presentation of these fi nancial statements in accordance

with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting

Standards. This responsibility includes devising and maintaining a system of internal accounting controls

suffi cient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use

or disposition; and transactions are properly authorised and that they are recorded as necessary to permit

the preparation of true and fair profi t and loss account and balance sheet and to maintain accountability of

assets; selecting and applying appropriate accounting policies; and making accounting estimates that are

reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted

our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with

ethical requirements and plan and perform the audit to obtain reasonable assurance whether the fi nancial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

fi nancial statements. The procedures selected depend on the auditor’s judgement, including the assessment

of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those

risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation

of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances, but

not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion,

(i) the consolidated fi nancial statements of the Group, and the balance sheet and statement of changes in

equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore

Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of

the Company as at 30 June 2008 and the results, changes in equity and cash fl ows of the Group and the

changes in equity of the Company for the year ended on that date; and

(ii) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries

incorporated in Singapore of which we are the auditors have been properly kept in accordance with the

provisions of the Act.

Ernst & Young LLP

Public Accountants and Certifi ed Public Accountants

Singapore

3 October 2008

29

Annual Report 2008

Consolidated Income Statement for the fi nancial year ended 30 June 2008

Note 2008 2007 $ $

CONTINUING OPERATIONSRevenue 4 11,335,508 11,031,502

Cost of sales 5 (6,729,405) (6,827,975)

Gross profi t 4,606,103 4,203,527

Other income 6 653,482 919,413

Administrative expenses (2,832,679) (2,235,338)

Other operating expenses (19,211,754) (2,439,787)

(Loss)/profi t from operations (16,784,848) 447,815

Finance costs 7 (127,303) (122,886)

(Loss)/profi t before tax from continuing operations 8 (16,912,151) 324,929

Income tax expense 10 (28,376) (95,013)

(Loss)/profi t from continuing operations, net of tax (16,940,527) 229,916

DISCONTINUED OPERATION

Loss from discontinued operation, net of tax 11 (5,345,325) (1,635,585)

Loss net of tax (22,285,852) (1,405,669)

Attributable to equity holders of the parent (22,285,852) (1,405,669)

Earnings per share from continuing operations attributable to equity holders of the parent (cents per share)

Basic 12(a) (4.64) 0.09

Diluted 12(a) (4.41) 0.08

Loss per share from discontinued operation attributable to equity holders of the parent (cents per share)

Basic 12(b) (1.46) (0.62)

Diluted 12(b) (1.39) (0.58)

The accompanying accounting policies and explanatory notes form an integral part of the fi nancial

statements.

30

Group Company Note 2008 2007 2008 2007 $ $ $ $ (Restated) Non-current assets Property, plant and equipment 13 18,268,533 27,633,016 42,041 294,386

Intangible assets 14 106,417 121,092 – –

Investments in subsidiaries 15 – – 15,123,877 15,631,776

Investment property 16 – 5,500,000 – –

Deferred tax assets 10(c) 7,490 – – –

Other receivables, deposits and prepayments 18 237,264 – – –

18,619,704 33,254,108 15,165,918 15,926,162

Current assetsInventories 55,065 – – –

Trade receivables 17 1,155,408 583,956 – –

Other receivables, deposits and prepayments 18 1,752,362 1,818,681 21,481 16,420

Amounts due from subsidiaries 19 – – 21,754,915 5,398,692

Assets held for sale 22 24,294,244 6,671,613 – 3,812,216

Fixed deposits 21 337,558 3,060,458 – 2,502,266

Cash and bank balances 21 5,759,561 1,874,600 1,212,826 183,630

33,354,198 14,009,308 22,989,222 11,913,224

Current liabilities Trade payables 23 4,446,165 1,373,844 468,020 282,128

Other payables, accruals and provision 24 5,671,577 4,321,095 451,856 222,655

Liabilities directly associated

with assets held for sale 22 954,499 886,271 – –

Amounts due to subsidiaries 19 – – 1,865,405 1,517,725

Loan from a substantial shareholder 20 1,500,000 – – –

Interest-bearing loans and borrowings 25 6,114,569 2,862,479 3,000,000 –

Provision for taxation 236,203 282,536 159,009 55,326

18,923,013 9,726,225 5,944,290 2,077,834

Net current assets 14,431,185 4,283,083 17,044,932 9,835,390

Non-current liabilities

Interest-bearing loans and borrowings 25 (2,440,704) (5,927,054) – –

Other payables, accruals and provision 24 (392,658) (100,000) – –

Deferred tax liabilities 10(c) (95,618) (158,219) (780) –

(2,928,980) (6,185,273) (780) –

Net assets 30,121,909 31,351,918 32,210,070 25,761,552

Equity attributable to equity holders of the parentShare capital 26 46,568,786 23,984,510 46,568,786 23,984,510

Warrants reserve 27 1,431,340 1,450,103 1,431,340 1,450,103

Retained earnings (14,175,375) 8,110,477 (15,790,056) 326,939

Foreign currency translation reserve 27 (3,702,842) (2,193,172) – –

Total shareholders’ equity 30,121,909 31,351,918 32,210,070 25,761,552


statements.

Balance Sheets as at 30 June 2008

31

Annual Report 2008

Statements of Changes in Equity for the fi nancial year ended 30 June 2008

Attributable to equity holders of the parent Foreign currency Total Share Warrants Retained translation shareholders’Group Note capital reserve earnings reserve equity $ $ $ $ $

Balance at 1 July 2006 20,307,396 2,123,857 9,516,146 (1,410,880) 30,536,519

Foreign currency translation

adjustment 27(b) – – – (782,292) (782,292)

Loss for the year – – (1,405,669) – (1,405,669)

Total recognised expense for the year – – (1,405,669) (782,292) (2,187,961)

Issuance of ordinary shares

on conversion of warrants 3,677,114 (673,754) – – 3,003,360

Balance at 30 June 2007 23,984,510 1,450,103 8,110,477 (2,193,172) 31,351,918

Foreign currency translation

adjustment 27(b) – – – (1,509,670) (1,509,670)

Loss for the year – – (22,285,852) – (22,285,852)

Total recognised expense for the year – – (22,285,852) (1,509,670) (23,795,522)

Issuance of ordinary shares 23,000,000 (18,763) – – 22,981,237

Expenses relating to issuance

of ordinary shares (518,128) – – – (518,128)


on conversion warrants 102,404 – – – 102,404

Balance at 30 June 2008 46,568,786 1,431,340 (14,175,375) (3,702,842) 30,121,909

Total Share Warrants Retained shareholders’Company Note capital reserve earnings equity $ $ $ $

Balance at 1 July 2006 20,307,396 2,123,857 1,145,992 23,577,245

Loss for the year – – (819,053) (819,053)

Total income recognised for the year – – (819,053) (819,053)

Issue of ordinary shares on conversion

of warrants 3,677,114 (673,754) – 3,003,360

Balance at 30 June 2007 23,984,510 1,450,103 326,939 25,761,552

Loss for the year – – (16,116,995) (16,116,995)

Total expense recognised for the year – – (16,116,995) (16,116,995)

Issuance of ordinary shares 23,000,000 (18,763) – 22,981,237

Expenses relating to issuance of ordinary shares (518,128) – – (518,128)

Issuance of ordinary shares on conversion

of warrants 102,404 – – 102,404

46,568,786 1,431,340 (15,790,056) 32,210,070


statements.

32

Note 2008 2007 $ $ (Restated) Cash fl ows from operating activities (Loss)/profi t before tax from continuing operations (16,912,151) 324,929Loss before tax from discontinued operation 11 (5,302,535) (1,635,207) Loss before tax, total (22,214,686) (1,310,278)Adjustments for: Depreciation of property, plant and equipment 13 2,513,343 2,368,106 (Gain)/loss on disposal of property, plant and equipment (712,450) 2,896 Amortisation of intangible assets 14 106,920 103,793 Gain on disposal of asset held for sale 6 (312,425) – Bad debts written off 8 34,028 – Bad debts written back 6 – (2,620) Impairment loss on doubtful trade receivables 86,976 3,724 Impairment loss on doubtful other receivables 8 11,394,886 793,864 Impairment loss on assets held for sale 8 4,512,216 – Net fair value gains on investment property 16 – (658,390) Interest expense 441,060 746,371 Interest income (171,151) (123,870) Foreign currency translation adjustment 769,406 345,274

Operating cash fl ows before working capital changes (3,551,877) 2,268,870Increase in inventories (55,065) – (Increase)/decrease in trade receivables (668,381) 14,084(Increase)/decrease in other receivables, deposits and prepayments (9,315,544) 1,219,809Increase in trade payables 3,077,550 860,172Increase in other payables and accruals 1,456,099 879,228 Cash fl ows from operations (9,057,218) 5,242,163Interest paid (441,060) (746,371)Interest received 171,151 123,870Income tax paid (187,590) (196,173) Net cash fl ows (used in)/generated from operating activities (9,514,717) 4,423,489 Cash fl ows from investing activitiesPurchase of property, plant and equipment 13 (17,435,691) (2,336,554)Purchase of intangible assets 14 (92,245) – Purchase of asset held for sale – (6,579,205)Proceeds from disposal of property, plant and equipment 4,373,461 – Net cash fl ows used in investing activities (13,154,475) (8,915,759)

Cash fl ows from fi nancing activitiesProceeds from bank loans 3,000,000 3,290,000Repayment of bank loans (3,234,260) (2,660,449)Loan from a substantial shareholder 1,500,000 – Proceeds from issuance of ordinary shares 22,565,513 3,003,360Repayment of fi nance lease obligations – (2,629)Decrease in amounts due to related parties – (418,610)

Net cash fl ows generated from fi nancing activities 23,831,253 3,211,672

Net increase/(decrease) in cash and cash equivalents 1,162,061 (1,280,598)Cash and cash equivalents at beginning of year 21 4,935,058 6,215,656

Cash and cash equivalents at end of year 21 6,097,119 4,935,058

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

Consolidated Cash Flow Statement for the fi nancial year ended 30 June 2008

33

Annual Report 2008

Notes to the Financial Statements 30 June 2008

1. Corporate information

Hartawan Holdings Limited (formerly known as Vita Holdings Limited) (the “Company”) is a limited liability

company incorporated in Singapore and is listed on Catalist Board (formerly known as Singapore Exchange

Securities Trading Dealing and Automated Quotation System or SGX Sesdaq).

The Company changed its name to Hartawan Holdings Limited on 28 August 2008.

The registered offi ce and principal place of business of the Company is located at 1 Pegu Road #01-01,

Singapore 328358.

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

disclosed in Note 15 to the fi nancial statements.

2. Summary of signifi cant accounting policies

2.1 Basis of preparation

The consolidated fi nancial statements of the Group and the balance sheet and statement of changes in equity

of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

The fi nancial statements have been prepared on the historical cost basis except as disclosed in the

accounting policies below.

The fi nancial statements are presented in Singapore dollars (SGD or $).

2.2 Changes in accounting policies

On 1 July 2007, the Group has adopted all the new and revised FRS and INT FRS that are mandatory

for fi nancial years beginning on or after 1 January 2007. The adoption of these FRS and INT FRS has no

signifi cant impact to the Company.

The Group has adopted the following accounting policy that is applicable to the Group, with effect from

1 July 2007.

Capitalisation of lease costs as leasehold improvement

For conversion projects where the use of the building is changed from the original condition and converted

into new use, and substantial leasehold improvements costs are incurred, the lease costs that are incurred

during the construction period are capitalised.

The impact of the new accounting policy on prior years is not material.

34


2. Summary of signifi cant accounting policies (cont’d)

2.3 Future changes in accounting policies

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

not yet effective:

Reference Description

Effective for annualperiods beginning

on or after

FRS 1 Presentation of Financial Statements - Revised

Presentation

1 January 2009

FRS 23 Amendment to FRS 23, Borrowing Costs 1 January 2009

FRS 32 Financial Instruments: Presentation – Amendments

to FRS 32 and FRS 1 regarding puttable fi nancial

instruments and obligations arising on liquidation

1 January 2009

FRS 102 Share-based Payments – Amendments relating to

vesting conditions and cancellations

1 January 2009

FRS 108 Operating Segments 1 January 2009

INT FRS 112 Service Concession Arrangements 1 January 2008

INT FRS 113 Customer Loyalty Programmes 1 July 2008

INT FRS 114 FRS 19 - The Limit on a Defi ned Benefi t Asset,

Minimum Funding Requirement and their

Interaction

1 January 2008

The directors expect that the adoption of the above pronouncements will have no material impact to the

fi nancial statements in the period of initial application, except for FRS 1, FRS 23, FRS 102 and FRS 108 as

indicated below.

FRS 1 Presentation of Financial Statements – Revised presentation

The revised FRS 1 – Presentation of Financial Statements requires the separation of owner and non-owner

changes in equity. The statement of changes in equity will include only details of transactions with owners,

with all non-owner changes in equity presented as a single line. In addition, the Standard introduces

the statement of comprehensive income: it presents all items of income and expense, either in one

single statement, or in two linked statements. The Group is still evaluating whether it will have one or two

statements. The Group will apply the revised FRS 1 from annual period beginning 1 July 2009.

FRS 23 Amendment to FRS 23, Borrowing Costs

FRS 23 Borrowing costs has been revised to require capitalisation of borrowing costs when such costs relate

to a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to

get ready for its intended use or sale. In accordance with the transitional requirements in the Standard,

the Group will adopt this as a prospective change. Accordingly, borrowing costs will be capitalised on

qualifying assets with a commencement date after 1 July 2009. No changes will be made for borrowing

costs incurred to this date that have been expensed.

FRS 108 Operating Segments

FRS 108 requires entities to disclose segment information based on the information reviewed by the entity’s

chief operating decision maker. The impact of this standard on the other segment disclosures is still to be

determined. As this is a disclosure standard, it will have no impact on the fi nancial position or fi nancial

performance of the Group when implemented in the year ending 30 June 2010.

35

Annual Report 2008



2.4 Basis of consolidation

The consolidated fi nancial statements comprise the fi nancial statements of the Company and its subsidiaries

as at the balance sheet date. The fi nancial statements of the subsidiaries used in the preparation of the

consolidated fi nancial statements are prepared for the same reporting date as the Company. Consistent

accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group

transactions are eliminated in full.

Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifi able assets

acquired and liabilities and contingent liabilities assumed in a business combination are measured

initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously

held interests are treated as a revaluation and recognised in equity. Any excess of the cost of business

combination over the Group’s share in the net fair value of the acquired subsidiary’s identifi able assets,

liabilities and contingent liabilities is recorded as goodwill on the balance sheet. Any excess of the Group’s

share in the net fair value of the acquired subsidiary’s identifi able assets, liabilities and contingent liabilities

over the cost of business combination is recognised as income in the income statement on the date of

acquisition.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains

control, and continue to be consolidated until the date that such control ceases.

2.5 Transactions with minority interests

Minority interests represent the portion of profi t or loss and net assets in subsidiaries not held by the

Group and are presented separately in the consolidated income statement and within equity in the

consolidated balance sheet, separately from parent shareholders’ equity. Transactions with minority

interests are accounted for using the entity concept method, whereby, transactions with minority interests

are accounted for as transactions with equity holders. On acquisition of minority interests, the difference

between the consideration and book value of the share of the net assets acquired is refl ected as being a

transaction between owners and recognised directly in equity. Gain or loss on disposal to minority interests

is recognised directly in equity.

2.6 Foreign currency

Transactions in foreign currencies are measured in the respective functional currencies of the Company

and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates

approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign

currencies are translated at the closing rate of exchange ruling at the balance sheet date. Non-monetary

items that are measured in terms of historical cost in a foreign currency are translated using the exchange

rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign

currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the

balance sheet date are recognised in the income statement except for exchange differences arising on

monetary items that form part of the Group’s net investment in foreign subsidiaries, which are recognised

initially in a separate component of equity as foreign currency translation reserve in the consolidated

balance sheet and recognised in the consolidated income statement on disposal of the subsidiaries.

The assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at

the balance sheet date and their income statements are translated at the weighted average exchange

rates for the year. The exchange differences arising on the translation are taken directly to a separate

component of equity as foreign currency translation reserve. On disposal of a foreign operation, the

deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised

in the income statement.

36


2.7 Property, plant and equipment

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

plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefi ts

associated with the item will fl ow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment are measured at cost or valuation less

accumulated depreciation and any accumulated impairment losses.

The initial cost of property, plant and equipment comprises its purchase price and any directly attributable

costs of bringing the asset to its working condition and location for its intended use.

Dismantlement, removal or restoration cost are included as part of the cost of property, plant and equipment

if the obligation for dismantlement, removal or restoration is incurred as a consequence of acquiring or

using the asset.

Upon acquisition of a vessel, the components of the vessel which are required to be replaced at the

next drydocking are identifi ed. The cost of these components is depreciated over the period to the next

estimated drydocking date. Costs incurred on subsequent drydocking of vessels are capitalised and

depreciated over the period to the next drydocking date. When signifi cant drydocking costs recur prior to

the expiry of the depreciation period, the remaining costs of the previous drydocking are written off in the

month of the subsequent drydocking.

Expenditure incurred after the property, plant and equipment have been put into operation, such as

repairs and maintenance and overhaul costs, are normally charged to the income statement in the period

in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures

have resulted in an increase in the future economic benefi ts expected to be obtained from the use of

an item of property, plant and equipment beyond its originally assessed standard of performance, the

expenditure are capitalised as an additional cost of property, plant and equipment.

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

the estimated useful life of the assets as follows:

Electrical and offi ce equipment – 3 to 10 years

Furniture and fi ttings – 10 years

Electrical installations – 6 years

Renovations – 6 years

Computers – 3 years

Vessels – 5 to 20 years

Motor vehicles – 9.6 years

Leasehold improvement – 7.5 years to 9 years

No depreciation is provided for vessels under construction as these assets are not available for use. Fully

depreciated assets are retained in the fi nancial statements until they are no longer in use and no further

charge for depreciation is made in respect of these assets.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes

in circumstances indicate that the carrying value may not be recoverable.

The residual values, useful life and depreciation method are reviewed at each fi nancial year-end to ensure

that the amount, method and period of depreciation are consistent with previous estimates and the

expected pattern of consumption of the future economic benefi ts embodied in the items of property,

plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic

benefi ts are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is

included in the income statement in the year the asset is derecognised.


37

Annual Report 2008


2.8 Investment properties

Investment properties are properties held either to earn rental income or for capital appreciation or both.

Investment properties are initially recorded at cost, including transaction costs. The carrying amount

includes the cost of replacing part of an existing investment property at the time that cost is incurred if

the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property.

Subsequent to initial recognition, investment properties are measured at fair value, which refl ects market

conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment

properties are included in the income statement in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment

property is permanently withdrawn from use and no future economic benefi t is expected from its disposal.

Any gains or losses on the retirement or disposal of an investment property are recognised in the income

statement in the year of retirement or disposal.

Transfers are made to or from investment property only when there is a change in use. For a transfer from

investment property to owner occupied property, the deemed cost for subsequent accounting is the fair

value at the date of change in use. For a transfer from owner occupied property to investment property,

the property is accounted for in accordance with the accounting policy for property, plant and equipment

set out in Note 2.7 up to the date of change in use.

2.9 Intangible assets

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired

in a business combination is their fair values as at the date of acquisition. Following initial recognition,

intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment

losses. The useful lives of intangible assets are assessed to be fi nite.

Intangible assets with fi nite useful lives are amortised on a straight-line basis over the estimated economic

useful lives and assessed for impairment whenever there is an indication that the intangible asset may be

impaired. The amortisation period and the amortisation method for an intangible asset with a fi nite useful

life are reviewed at least at each fi nancial year-end. The amortisation expense on intangible assets with

fi nite lives is recognised in the income statement through the ‘depreciation and amortisation expenses’

line item.

(a) Lease contract

The lease contract arose on acquisition of Wallich Development Pte Ltd. It is amortised from the date

of acquisition on a straight-line basis over the period of the expected lease term of 43 months.

(b) Computer software

The computer software was acquired for hotel operations. It is amortised on a straight-line basis over

its estimated useful life of 5 years.


38


2.10 Impairment of non-fi nancial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired.

If any such indication exists, or when annual impairment assessment for an asset is required, the Group

makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to

sell and its value in use and is determined for an individual asset, unless the asset does not generate cash

infl ows that are largely independent of those from other assets. In assessing value in use, the estimated

future cash fl ows expected to be generated by the asset are discounted to their present value using a pre-

tax discount rate that refl ects current market assessments of the time value of money and the risks specifi c

to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written

down to its recoverable amount.

Impairment losses of continuing operations are recognised in the income statement as ‘impairment

losses’ or treated as a revaluation decrease for assets carried at revalued amount to the extent that the

impairment loss does not exceed the amount held in the asset revaluation reserve for that same asset.

An assessment is made at each reporting date as to whether there is any indication that previously

recognised impairment losses may no longer exist or may have decreased. If such indication exists, the

recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been

a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss

was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount.

That increase cannot exceed the carrying amount that would have been determined, net of depreciation,

had no impairment loss be recognised previously. Reversal of an impairment loss is recognised in the

income statement unless the asset is measured at revalued amount, in which case the reversal in excess of

impairment loss previously recognised through the income statement is treated as a revaluation increase.

After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised

carrying amount, less any residual value, on a systematic basis over its remaining useful life.

2.11 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the fi nancial and operating policies

so as to obtain benefi ts from its activities.

In the Company’s separate fi nancial statements, investments in subsidiaries are accounted for at cost less

impairment losses.

2.12 Financial assets

Financial assets are recognised on the balance sheet when, and only when, the Group becomes a party

to the contractual provisions of the fi nancial instrument.

When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial

assets not at fair value through profi t or loss, directly attributable transaction costs.

A fi nancial asset is derecognised where the contractual right to receive cash fl ows from the asset has

expired. On derecognition of a fi nancial asset in its entirety, the difference between the carrying amount

and the sum of the consideration received and any cumulative gain or loss that has been recognised

directly in equity is recognised in the income statement.


39

Annual Report 2008



2.12 Financial assets (cont’d)

All regular way purchases and sales of fi nancial assets are recognised or derecognised on the trade date

i.e. the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are

purchases or sales of fi nancial assets that require delivery of assets within the period generally established

by regulation or convention in the marketplace concerned.

(a) Financial assets at fair value through profi t or loss

Financial assets at fair value through profi t or loss are fi nancial assets classifi ed as held for trading.

Financial assets classifi ed as held for trading are derivatives (including separated embedded

derivatives) or are acquired principally for the purpose of selling or repurchasing it in the near term.

Subsequent to initial recognition, fi nancial assets at fair value through profi t or loss are measured at

fair value. Any gains or losses arising from changes in fair value of the fi nancial assets are recognised

in the income statement. Net gains or net losses on fi nancial assets at fair value through profi t or loss

include exchange differences, interest and dividend income.

(b) Loans and receivables

Financial assets with fi xed or determinable payments that are not quoted in an active market are

classifi ed as loans and receivables. Subsequent to initial recognition, loans and receivables are

measured at amortised cost using the effective interest method. Gains and losses are recognised in

the income statement when the loans and receivables are derecognised or impaired, and through

the amortisation process.

(c) Held-to-maturity investments

Financial assets with fi xed or determinable payments and fi xed maturity are classifi ed as held-to-

maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using

the effective interest method. Gains and losses are recognised in the income statement when the

held-to-maturity investments are derecognised or impaired, and through the amortisation process.

(d) Available-for-sale fi nancial assets

Available-for-sale fi nancial assets are fi nancial assets that are not classifi ed in any of the other

categories. After initial recognition, available-for-sale fi nancial assets are measured at fair value. Any

gains or losses from changes in fair value of the fi nancial asset are recognised directly in the fair value

adjustment reserve in equity, except that impairment losses, foreign exchange gains and losses and

interest calculated using the effective interest method are recognised in the income statement. The

cumulative gain or loss previously recognised in equity is recognised in the income statement when

the fi nancial asset is derecognised.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost

less impairment loss.

40



2.13 Impairment of fi nancial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a fi nancial

asset is impaired.

(a) Assets carried at amortised cost

If there is objective evidence that an impairment loss on fi nancial assets carried at amortised cost

has been incurred, the amount of the loss is measured as the difference between the asset’s carrying

amount and the present value of estimated future cash fl ows discounted at the fi nancial asset’s

original effective interest rate. The carrying amount of the asset is reduced through the use of an

allowance account. The impairment loss is recognised in the income statement.

When the asset becomes uncollectible, the carrying amount of impaired fi nancial assets is reduced

directly or if an amount was charged to the allowance account, the amounts charged to the

allowance account are written off against the carrying value of the fi nancial asset.

To determine whether there is objective evidence that an impairment loss on fi nancial assets has

been incurred, the Group considers factors such as the probability of insolvency or signifi cant fi nancial

diffi culties of the debtor and default or signifi cant delay in payments.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can

be related objectively to an event occurring after the impairment was recognised, the previously

recognised impairment loss is reversed to the extent that the carrying amount of the asset does not

exceed its amortised cost at the reversal date. The amount of reversal is recognised in the income

statement.

(b) Assets carried at cost

If there is objective evidence (such as signifi cant adverse changes in the business environment

where the issuer operates, probability of insolvency or signifi cant fi nancial diffi culties of the issuer) that

an impairment loss on fi nancial assets carried at cost has been incurred, the amount of the loss is

measured as the difference between the asset’s carrying amount and the present value of estimated

future cash fl ows discounted at the current market rate of return for a similar fi nancial asset. Such

impairment losses are not reversed in subsequent periods.

(c) Available-for-sale fi nancial assets

Signifi cant or prolonged decline in fair value below cost, signifi cant fi nancial diffi culties of the issuer or

obligor, and the disappearance of an active trading market are considerations to determine whether

there is objective evidence that investment securities classifi ed as available-for-sale fi nancial assets

are impaired.

If an available-for-sale fi nancial asset is impaired, an amount comprising the difference between its

cost (net of any principal payment and amortisation) and its current fair value, less any impairment

loss previously recognised in the income statement, is transferred from equity to the income

statement. Reversals of impairment losses in respect of equity instruments are not recognised in the

income statement. Reversals of impairment losses on debt instruments are recognised in the income

statement if the increase in fair value of the debt instrument can be objectively related to an event

occurring after the impairment loss was recognised in the income statement.

41

Annual Report 2008



2.14 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits, and short-term, highly liquid

investments that are readily convertible to known amounts of cash and which are subject to an insignifi cant

risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash

management.

2.15 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises the direct materials

and other costs incurred in bringing the inventories to their present location and condition.

2.16 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) where, as a

result of a past event, it is probable that an outfl ow of resources embodying economic benefi ts will be

required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. If it

is no longer probable that an outfl ow of economic resources will be required to settle the obligation, the

provision is reversed. If the effect of the time value of money is material, provisions are discounted using

a current pre tax rate that refl ects, where appropriate, the risks specifi c to the liability. When discounting is

used, the increase in the provision due to the passage of time is recognised as a fi nance cost.

2.17 Financial liabilities

Financial liabilities are recognised on the balance sheet when, and only when, the Group becomes a

party to the contractual provisions of the fi nancial instrument.

Financial liabilities are recognised initially at fair value, plus, in the case of fi nancial liabilities other than

derivatives, directly attributable transaction costs.

Subsequent to initial recognition, all fi nancial liabilities are measured at amortised cost using the effective

interest method, except for derivatives, which are measured at fair value.

A fi nancial liability is derecognised when the obligation under the liability is extinguished. For fi nancial

liabilities other than derivatives, gains and losses are recognised in the income statement when the

liabilities are derecognised or impaired, and through the amortisation process. Any gains or losses arising

from changes in fair value of derivatives are recognised in the income statement. Net gains or losses on

derivatives include exchange differences.

2.18 Financial guarantees

A fi nancial guarantee contract is a contract that requires the issuer to make specifi ed payments to

reimburse the holder for a loss it incurs because a specifi ed debtor fails to make payment when due.

The Company has issued corporate guarantees to banks for bank borrowings of its subsidiaries. These

guarantees are fi nancial guarantee contracts as they require the Company to reimburse the banks if the

subsidiaries fail to make principal or interest payments when due in accordance with the terms of their

borrowings.

Financial guarantee contracts are initially recognised at their fair values plus transaction costs.

Financial guarantee contracts are subsequently amortised to the income statement over the period of

the subsidiaries’ borrowings, unless the Company has incurred an obligation to reimburse the bank for an

amount higher than the unamortised amount.

In this case, the fi nancial guarantee contracts shall be carried at the expected amount payable to the bank.

42



2.19 Segments reporting

A business segment is a distinguishable component of the Group that is engaged in providing products

or services that are subject to risk and returns that are different from those of other business segments.

A geographical segment is a distinguishable component of the Group that is engaged in providing

products or services within a particular economic environment and that is subject to risk and returns that

are different from those of components operating in other economic environment.

2.20 Share capital and share issue expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs

directly attributable to the issuance of ordinary shares are deducted against share capital.

2.21 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose

existence will be confi rmed only by the occurrence or non-occurrence of uncertain future event(s) not

wholly within the control of the Group.

Contingent liabilities and assets are not recognised on the balance sheet of the Group.

2.22 Borrowing costs

Borrowing costs are recognised in the income statement as incurred except to the extent that they are

capitalised. Borrowing costs are capitalised if they are directly attributable to the acquisition, construction

or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities to

prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are

incurred. Borrowing costs are capitalised until the assets are ready for their intended use or sale.

2.23 Employee benefi ts

(a) Defi ned contribution plans

The Group participates in the national pension schemes as defi ned by the laws of the countries in

which it has operations. In particular, the Singapore companies in the Group make contributions to the

Central Provident Fund scheme in Singapore, a defi ned contribution pension scheme. Contributions

to national pension schemes are recognised as an expense in the period in which the related service

is performed.

(b) Employee leave entitlement

Employee entitlements to annual leave are recognised as a liability when they accrue to the

employees. The estimated liability for leave is recognised for services rendered by employees up to

balance sheet date.

43

Annual Report 2008



2.24 Leases

(a) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to

ownership of the leased item, are capitalised at the inception of the lease at the fair value of the

leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs

are also added to the amount capitalised. Lease payments are apportioned between the fi nance

charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining

balance of the liability. Finance charges are charged to the income statement. Contingent rents, if

any, are charged as expenses in the periods in which they are incurred.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset

and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the

end of the lease term.

Operating lease payments are recognised as an expense in the income statement on a straight-line

basis over the lease term. The aggregate benefi t of incentives provided by the lessor is recognised as

a reduction of rental expense over the lease term on a straight-line basis.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are

classifi ed as operating leases. Initial direct costs incurred in negotiating an operating lease are

added to the carrying amount of the leased asset and recognised over the lease term on the same

bases as rental income.

2.25 Discontinued operation

A component of the Group is classifi ed as a “discontinued operation” when the criteria to be classifi ed

as held for sale have been met or it has been disposed of and such a component represents a separate

major line of business or geographical area of operations or is part of a single co-ordinated major line of

business or geographical area of operations. A component is deemed to be held for sale if its carrying

amounts will be recovered principally through a sale transaction rather than through continuing use.

Upon classifi cation as held for sale, non-current assets and disposal groups are not depreciated and are

measured at the lower of carrying amount and fair value less costs to sell. Any differences are recognised

in the income statement.

Prior period comparative are re-presented so that the disclosures relate to all operations that have been

discontinued by the balance sheet date of the current fi nancial year.

44



2.26 Revenue

Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and

the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or

receivable. The following specifi c recognition criteria must also be met before revenue is recognised:

(a) Income from ship chartering

Income from time charter is recognised over the period of the time charter agreement on a straight-

line accrual basis. Income from voyage charter is recognised when a voyage is completed based

on the complete discharge of cargoes at the last port of call.

(b) Income from property leasing

Income from property leasing and utility charges received are recognised over the lease term on

ongoing leases on a straight-line accrual basis. The aggregate cost of incentives provided to lessees

is recognised as a reduction of rental income over the lease term on a straight-line basis.

(c) Income from services

Income from services are recognised when the services are rendered.

(d) Interest income

Interest income is recognised on a time proportion basis (taking into account the effective yield on

the asset).

(e) Dividend income

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

2.27 Income taxes

(a) Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount

expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used

to compute the amount are those that are enacted or substantively enacted by the balance sheet

date.

Current taxes are recognised in the income statement except that tax relating to items recognised

directly in equity is recognised directly in equity.

(b) Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the balance

sheet date between the tax bases of assets and liabilities and their carrying amounts for fi nancial

reporting purposes.

45

Annual Report 2008



2.27 Income taxes (cont’d)

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

• Where the deferred tax arises from the initial recognition of an asset or liability in a transaction that is

not a business combination and, at the time of the transaction, affects neither the accounting profi t

nor taxable profi t or loss; and

• In respect of taxable temporary differences associated with investments in subsidiaries, where the

timing of the reversal of the temporary differences can be controlled by the Group and it is probable

that the temporary differences will not reverse in the foreseeable future; and

• In respect of deductible temporary differences and carry-forward of unused tax credits and unused tax

losses, if it is not probable that taxable profi t will be available against which the deductible temporary

differences and the carry-forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to

the extent that it is no longer probable that suffi cient taxable profi t will be available to allow all or part of

the deferred income tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each

balance sheet date and are recognised to the extent that it has become probable that future taxable

profi t will allow the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year

when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted

or substantively enacted at the balance sheet date.

Deferred taxes are recognised in the income statement except that deferred tax relating to items recognised

directly in equity is recognised directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current

tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the

same taxation authority.

(c) Sales tax

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

• Where the sales tax incurred on a purchase of assets or services is not recoverable from the

taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of

the asset or as part of the expense item as applicable; and

• Receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part

of receivables or payables in the balance sheet.

46


3. Signifi cant accounting estimates and judgements

The preparation of the Group’s fi nancial statements requires management to make judgements, estimates

and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the

disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions

and estimates could result in outcomes that could require a material adjustment to the carrying amount

of the asset or liability affected in the future.

3.1 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance

sheet date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets

and liabilities within the next fi nancial year are discussed below.

(a) Impairment of intangible assets

The Group determines whether intangible assets are impaired at least on an annual basis. This

requires an estimation of the value in use of the cash-generating units to which the intangible assets

are allocated. Estimating the value in use requires the Group to make an estimate of the expected

future cash fl ows from the cash-generating unit and also to select a suitable discount rate in order to

calculate the present value of those cash fl ows. The carrying amount of the Group’s intangible asset

at 30 June 2008 was $106,417 (2007: $121,092). More details are given in Note 14.

(b) Useful lives of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight-line basis over their estimated

economic useful lives. In the case of vessels, the costs are depreciated on a straight-line basis to

reduce the cost to their estimated residual values over their useful lives. Management estimates

the useful lives of these property, plant and equipment to be within 3 to 20 years. Changes in the

expected level of usage and technological developments could impact the economic useful lives

and the residual values of these assets, therefore future depreciation charges could be revised. The

carrying amount of the Group’s property, plant and equipment at 30 June 2008 was $18,268,533

(2007: $27,633,016). The carrying amount of the Group’s plant and equipment at the balance sheet

date is disclosed in Note 13 to the fi nancial statements.

(c) Income taxes

Signifi cant judgement is involved in determining the group-wide provision for income taxes. There are

certain transactions and computations for which the ultimate tax determination is uncertain during

the ordinary course of business. The Group recognises liabilities for expected tax issues based on

estimates of whether additional taxes will be due. Where the fi nal tax outcome of these matters is

different from the amounts that were initially recognised, such differences will impact the income tax

and deferred tax provisions in the period in which such determination is made. The carrying amount

of the Group’s provision for taxation, deferred tax liabilities and deferred tax assets as at 30 June 2008

was $236,203 (2007: $282,536), $95,618 (2007: $158,219) and $7,490 (2007: $Nil) respectively.

(d) Impairment of loans and receivables

The Group assesses at each balance sheet date whether there is any objective evidence that a

fi nancial asset is impaired. To determine whether there is objective evidence of impairment, the

Group considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the

debtor and default or signifi cant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash fl ows are

estimated based on historical loss experience for assets with similar credit risk characteristics. The

carrying amount of the Group’s loans and receivable at the balance sheet date is disclosed in Note

17 to the fi nancial statement.

47

Annual Report 2008


3. Signifi cant accounting estimates and judgements (cont’d)

3.2 Judgements made in applying accounting policies

In the process of applying the Group’s accounting policies, management has made the following

judgements that have the most signifi cant effect on the amounts recognised in the fi nancial statements.

(a) Revenue recognition

Income from time charter is recognised over the period of the time charter agreement on a straight-

line accrual basis. Income from voyage charter is recognised when a voyage is completed based

on the complete discharge of cargoes at the last port of call.

Income from property leasing and utility charges received are recognised over the lease term on

ongoing leases on a straight-line accrual basis. The aggregate cost of incentives provided to lessees

is recognised as a reduction of rental income over the lease term on a straight-line basis.

(b) Operating lease commitments – As lessor

The Group has entered into charter party leases on its fl eet of vessels. The Group has determined

that it retains all signifi cant risks and rewards of ownership of these vessels which are leased out on

operating lease.

The Group has entered into commercial property leases on its investment property portfolio. The

Group has determined that it retains all the signifi cant risks and rewards of ownership of the property

which is leased out on an operating lease.

4. Revenue

Group 2008 2007 $ $

Rental and room income 10,271,396 9,805,711

Utilities income 854,776 785,885

Catering income – 204,230

Management fee income 8,000 48,000

Conservancy charges 190,396 181,653

Others 10,940 6,023

11,335,508 11,031,502

5. Cost of sales

Group 2008 2007 $ $

Hotel cost of sales 120,836 –

Operating lease expenses 6,608,569 6,827,975

6,729,405 6,827,975

48


6. Other income

Group 2008 2007 $ $

Bad debts written back – 2,620

Gain on disposal of property, plant and equipment – 37

Gain on disposal of asset held for sale 312,425 –

Insurance claims – 22,509

Interest income 130,928 51,586

Interest income on fair value adjustment – 6,349

Net gain on fair value adjustment on investment property – 658,390

Laundry services 52,250 43,382

Miscellaneous 157,879 134,540

653,482 919,413

7. Finance costs

Group 2008 2007 $ $

Interest expenses on:

Bank overdraft 61 –

Hire purchase – 119

Term loans 126,755 116,905

Fair value adjustment 487 5,862

127,303 122,886

8. (Loss)/profi t before tax from continuing operations

The following items have been included in arriving at (loss)/profi t before tax from continuing operations:

Group 2008 2007 $ $

Loss on disposal of property, plant and equipment 183,518 –

Write off of property, plant and equipment 168,216 –

Non-audit fees paid to auditors of the Company 45,000 51,371

Depreciation of property, plant and equipment 892,548 807,106

Amortisation of intangible assets 106,920 103,793

Net foreign exchange loss 426,122 48,338

Employee benefi t expense (Note 9) 2,568,373 1,583,693

Bad debts written off 34,028 –

Impairment loss on doubtful trade receivables 86,976 3,724

Impairment loss on doubtful other receivables 11,394,886 793,864

Impairment loss on assets held for sale 4,512,216 –

49

Annual Report 2008


9. Employee benefi t expense

Group 2008 2007 $ $

Salaries and bonuses 2,278,272 1,483,474Central Provident Fund contributions 200,101 100,219Ex-gratia payment to former directors 90,000 – 2,568,373 1,583,693

The above note includes directors’ and key executives’ remuneration as disclosed in Note 28 (b).

10. Income tax expense

(a) Major components of income tax expense

The major components of income tax expense for the fi nancial years ended 30 June 2008 and 2007 are:

Group 2008 2007 $ $

Income statement Current income tax - continuing operations: - current income taxation 156,252 140,910- (over)/under provision in respect of previous years (57,785) 9,000 98,467 149,910 Deferred income tax - continuing operations 10(c): - (over)/under provision in respect of previous years (188,602) – - origination and reversal of temporary differences 118,511 (54,897) (70,091) (54,897)

Income tax attributable to continuing operations 28,376 95,013Income tax attributable to discontinued operation (Note 11) 42,790 378 Income tax expense recognised in income statement 71,166 95,391

(b) Relationship between tax expense and accounting profi t

The reconciliation between the tax expense and the product of accounting profi t multiplied by the applicable corporate tax rate for the fi nancial years ended 30 June 2008 and 2007 is as follows:

Group 2008 2007 $ $

(Loss)/profi t before tax from continuing operations (16,912,151) 324,929Loss before tax from discontinued operation (Note 11) (5,302,535) (1,635,207) Accounting loss before tax (22,214,686) (1,310,278)

Taxation calculated at Singapore statutory income tax rate of 18% (2007: 18%) (3,998,643) (235,851)Adjustments: Expenses not deductible for tax purposes 3,880,896 216,977 Effect of reduction in tax rates – (21,215) Tax exemption and rebates (94,590) (272,959) Deferred tax assets not recognised 487,134 398,074 Others 215 985 (Over)/under provision in respect of prior fi nancial years - Income tax (15,244) 9,380 - Deferred tax (188,602) – Income tax expense recognised in income statement 71,166 95,391

The above reconciliation is prepared by aggregating separate reconciliation for each jurisdiction.

50


10. Income tax expense (cont’d)

(c) Deferred income tax

Group Company Balance sheet Income statement Balance sheet 2008 2007 2008 2007 2008 2007 $ $ $ $ $ $

Deferred tax liabilities Differences in depreciation (85,625) (118,266) (32,641) (96,013) (780) –

Rent-free incentives (9,993) (39,953) (29,960) 39,953 – –

(95,618) (158,219) (62,601) (56,060) (780) –

Deferred tax assets

Provisions – – 1,163 – –

Revaluation to fair value of

investment property 7,490 – (7,490) – – –

7,490 – (7,490) 1,163 – –

(70,091) (54,897)

The Group has unutilised tax losses of $3,767,897 (2007: $1,061,597) that are available for offset against

future taxable profi ts of the companies in which the losses arose for which no deferred tax asset is recognised

due to uncertainty of its recoverability. The use of these tax losses is subject to the agreement of the tax

authorities and compliance with certain provisions of the tax legislation.

11. Discontinued operation

As part of the terms and conditions of Conditional Deed of Settlement as mentioned in Note 30, the Group

is to dispose its vessels. The disposal of vessels would allow the Company to focus its resources on the

business of property owning, leasing and management, hotel management and hospitality services as

publicly announced by the Company on 4 June 2008.

Income statement disclosures

The results of ship chartering business for the years ended 30 June are as follows:

Group 2008 2007 $ $

Revenue 4,256,696 10,397,996

Cost of sales (5,440,428) (7,770,844)

Gross (loss)/profi t (1,183,732) 2,627,152

Other income 1,112,648 273,640



Loss from discontinued operation (4,988,778) (1,011,722)

Finance costs (313,757) (623,485)

Loss before tax from discontinued operation (5,302,535) (1,635,207)

Income tax expense (42,790) (378)

Loss from discontinued operation, net of tax (5,345,325) (1,635,585)

49

Annual Report 2008


9. Employee benefi t expense

Group 2008 2007 $ $

Salaries and bonuses 2,278,272 1,483,474Central Provident Fund contributions 200,101 100,219Ex-gratia payment to former directors 90,000 – 2,568,373 1,583,693

The above note includes directors’ and key executives’ remuneration as disclosed in Note 28 (b).

10. Income tax expense

(a) Major components of income tax expense

The major components of income tax expense for the fi nancial years ended 30 June 2008 and 2007 are:

Group 2008 2007 $ $

Income statement Current income tax - continuing operations: - current income taxation 156,252 140,910- (over)/under provision in respect of previous years (57,785) 9,000 98,467 149,910 Deferred income tax - continuing operations 10(c): - (over)/under provision in respect of previous years (188,602) – - origination and reversal of temporary differences 118,511 (54,897) (70,091) (54,897)

Income tax attributable to continuing operations 28,376 95,013Income tax attributable to discontinued operation (Note 11) 42,790 378 Income tax expense recognised in income statement 71,166 95,391

(b) Relationship between tax expense and accounting profi t

The reconciliation between the tax expense and the product of accounting profi t multiplied by the applicable corporate tax rate for the fi nancial years ended 30 June 2008 and 2007 is as follows:

Group 2008 2007 $ $

(Loss)/profi t before tax from continuing operations (16,912,151) 324,929Loss before tax from discontinued operation (Note 11) (5,302,535) (1,635,207) Accounting loss before tax (22,214,686) (1,310,278)

Taxation calculated at Singapore statutory income tax rate of 18% (2007: 18%) (3,998,643) (235,851)Adjustments: Expenses not deductible for tax purposes 3,880,896 216,977 Effect of reduction in tax rates – (21,215) Tax exemption and rebates (94,590) (272,959) Deferred tax assets not recognised 487,134 398,074 Others 215 985 (Over)/under provision in respect of prior fi nancial years - Income tax (15,244) 9,380 - Deferred tax (188,602) – Income tax expense recognised in income statement 71,166 95,391

The above reconciliation is prepared by aggregating separate reconciliation for each jurisdiction.

50


10. Income tax expense (cont’d)

(c) Deferred income tax

Group Company Balance sheet Income statement Balance sheet 2008 2007 2008 2007 2008 2007 $ $ $ $ $ $

Deferred tax liabilities Differences in depreciation (85,625) (118,266) (32,641) (96,013) (780) –

Rent-free incentives (9,993) (39,953) (29,960) 39,953 – –

(95,618) (158,219) (62,601) (56,060) (780) –

Deferred tax assets

Provisions – – 1,163 – –

Revaluation to fair value of

investment property 7,490 – (7,490) – – –

7,490 – (7,490) 1,163 – –

(70,091) (54,897)

The Group has unutilised tax losses of $3,767,897 (2007: $1,061,597) that are available for offset against

future taxable profi ts of the companies in which the losses arose for which no deferred tax asset is recognised

due to uncertainty of its recoverability. The use of these tax losses is subject to the agreement of the tax

authorities and compliance with certain provisions of the tax legislation.

11. Discontinued operation

As part of the terms and conditions of Conditional Deed of Settlement as mentioned in Note 30, the Group

is to dispose its vessels. The disposal of vessels would allow the Company to focus its resources on the

business of property owning, leasing and management, hotel management and hospitality services as

publicly announced by the Company on 4 June 2008.

Income statement disclosures

The results of ship chartering business for the years ended 30 June are as follows:

Group 2008 2007 $ $

Revenue 4,256,696 10,397,996

Cost of sales (5,440,428) (7,770,844)

Gross (loss)/profi t (1,183,732) 2,627,152

Other income 1,112,648 273,640



Loss from discontinued operation (4,988,778) (1,011,722)

Finance costs (313,757) (623,485)

Loss before tax from discontinued operation (5,302,535) (1,635,207)

Income tax expense (42,790) (378)

Loss from discontinued operation, net of tax (5,345,325) (1,635,585)

51

Annual Report 2008


11. Discontinued operation (cont’d)

Cash fl ow statement disclosures

The cash fl ows attributable to ship chartering business are as follows: Group 2008 2007 $ $

Operating (2,197,417) (2,693,582)Investing 4,332,145 (1,786,411)Financing (1,978,984) (1,280,984) Net cash infl ows/(outfl ows) 155,744 (5,760,977)

12. Earnings per share

(a) Continuing operations

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

Diluted earnings per share amounts are calculated by dividing profi t/(loss) for the year from continuing operations attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the fi nancial year plus the weighted average of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

The following refl ects the income statement and share data used in the computation of basic and diluted earnings per share computations for the fi nancial years ended 30 June:

Group 2008 2007 $ $

Loss net of tax attributable to ordinary equity holders of the Company (22,285,852) (1,405,669)Less: Loss from discontinued operation,

net of tax, attributable to ordinary equity holders of the Company (5,345,325) (1,635,585)

(Loss)/profi t from continuing operations, net of tax, attributable to ordinary equity holders of the Company used in the computation of basic and diluted earnings per share (16,940,527) 229,916

Group No of shares No of shares $ $ ‘000 ‘000

Weighted average number of ordinary shares for basic earnings and loss per share computation 364,973 263,904Effects of dilution - warrants 19,591 19,847

Weighted average number of ordinary shares for diluted earnings and loss per share computation 384,564 283,751

(b) Discontinued operation

The basic and diluted loss per share from discontinued operation are calculated by dividing the “loss from discontinued operation, net of tax attributable to ordinary equity holders of the Company” by the “Weighted average number of ordinary shares for basic earnings computation” and “Weighted average number of ordinary shares adjusted by the effect of dilution” respectively. These profi t and loss and share data are presented above in caption (a) of this note.

52


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)–

–

–

–

(2

3,1

92

,32

0)

At

30 J

un

e 2

008

1,1

05

,17

01

,08

6,3

52

1,1

38

,91

81

5,4

16

,26

81

44

,88

6–

–

3

1,5

00

1,9

25

,56

18

80

,55

72

1,7

29

,21

2

Ac

cum

ula

ted

dep

rec

iatio

nA

t 1 J

uly

2006

36

4,7

71

29

6,4

70

48

1,7

58

1,3

69

,34

16

0,2

30

2,3

47

,88

4–

1

6,0

00

–

–

4,9

36

,45

4

Ch

arg

e fo

r th

e y

ea

r1

26

,16

48

1,0

20

12

2,1

13

44

1,8

60

18

,09

91

,55

1,6

42

–

27

,20

8–

–

2

,36

8,1

06

Dis

po

sals

(2,0

07

)–

(1

50

)–

(1

1,1

97

)(4

1,9

55

)–

–

–

–

(5

5,3

09

)

Exc

ha

ng

e d

iffe

ren

ce

s(3

99)

–

–

–

(151)

(89,0

97)

–

–

–

–

(89,6

47)

At

30 J

un

e 2

007 /

1 J

uly

2007

48

8,5

29

37

7,4

90

60

3,7

21

1,8

11

,20

16

6,9

81

3,7

68

,47

4–

4

3,2

08

–

–

7,1

59

,60

4

Ch

arg

e fo

r th

e y

ea

r1

26

,09

18

2,5

12

66

,84

05

64

,96

91

9,5

68

1,6

12

,95

9–

2

5,5

00

–

14

,90

42

,51

3,3

43

Dis

po

sals

(6,0

55

)(4

,45

6)

–

–

(2,9

29

)(3

17

,25

6)

–

–

–

–

(33

0,6

96

)

Write

-off

(20

5,9

66

)(8

0,9

37

)(8

0,9

86

)(3

66

,50

1)

–

–

–

(62

,00

0)

–

–

(79

6,3

90

)

Exc

ha

ng

e d

iffe

ren

ce

s(1

,885)

–

–

–

–

(430,7

22)

–

–

–

–

(432,6

07)

Att

rib

uta

ble

to

d

isc

on

tin

ue

d o

pe

ratio

n(1

9,1

20

)–

–

–

–

(4

,63

3,4

55

)–

–

–

–

(4

,65

2,5

75

)

At

30 J

un

e 2

008

38

1,5

94

37

4,6

09

58

9,5

75

2,0

09

,66

98

3,6

20

–

–

6,7

08

–

14

,90

43

,46

0,6

79

Net

bo

ok

valu

eA

t 30 J

un

e 2

007

33

1,3

48

29

7,5

36

11

0,5

04

46

2,2

71

18

,28

72

5,8

28

,11

4–

2

18

,50

83

66

,44

8–

2

7,6

33

,01

6

At

30 J

un

e 2

008

72

3,5

76

71

1,7

43

54

9,3

43

13

,40

6,5

99

61

,26

6–

–

2

4,7

92

1,9

25

,56

18

65

,65

31

8,2

68

,53

3

Thre

e v

ess

els

with

a to

tal n

et

bo

ok

valu

e o

f $

8,7

38,4

97 (

2007: $

10,4

92,9

39)

ha

ve b

ee

n p

led

ge

d a

s se

cu

ritie

s fo

r th

e te

rm lo

an

s a

s st

ate

d in

No

te 2

5.

The

Gro

up

’s re

no

vatio

ns

inc

lud

e p

rovi

sio

n fo

r re

inst

ate

me

nt

co

sts

of $313,0

00 (

2007:$

120,0

00).

53

Annual Report 2008


13. Property, plant and equipment (cont’d)

Electrical Furniture and offi ce and Reno- Motor equipment fi ttings vations Computers vehicles Total $ $ $ $ $ $

Company Cost

At 1 July 2006 9,012 13,411 169,870 42,471 230,216 464,980

Additions 872 – – 11,908 – 12,780

Disposals (750) – – (3,754) – (4,504)

At 30 June 2007/1 July 2007 9,134 13,411 169,870 50,625 230,216 473,256

Additions 570 495 – 21,524 – 22,589

Write-off – – (158,250) – (230,216) (388,466)

Disposals (290) – – (2,390) – (2,680)

At 30 June 2008 9,414 13,906 11,620 69,759 – 104,699

Accumulated depreciation

At 1 July 2006 2,087 1,079 28,311 23,461 16,000 70,938

Charge for the year 3,284 1,341 70,456 13,112 24,000 112,193

Disposals (507) – – (3,754) – (4,261)

At 30 June 2007/1 July 2007 4,864 2,420 98,767 32,819 40,000 178,870

Charge for the year 2,977 1,349 65,293 13,557 22,000 105,176

Write-off – – (158,250) – (62,000) (220,250)

Disposals (209) – – (929) – (1,138)

At 30 June 2008 7,632 3,769 5,810 45,447 – 62,658

Net book value

At 30 June 2007 4,270 10,991 71,103 17,806 190,216 294,386

At 30 June 2008 1,782 10,137 5,810 24,312 – 42,041

54


14. Intangible assets

Lease Computer contract software Total $ $ $

Group Cost At 1 July 2006/30 June 2007/1 July 2007 371,926 – 371,926

Addition – 92,245 92,245

At 30 June 2008 371,926 92,245 464,171

Accumulated amortisation and Impairment At 1 July 2006 147,041 – 147,041

Amortisation 103,793 – 103,793

At 30 June 2007/1 July 2007 250,834 – 250,834

Amortisation 103,793 3,127 106,920

At 30 June 2008 354,627 3,127 357,754

Net carrying amount At 30 June 2007 121,092 – 121,092

At 30 June 2008 17,299 89,118 106,417

Lease contract

Intangible asset arising from the acquisition of Wallich Development Pte Ltd (“Wallich”) on 7 February 2005

refers to the fair value of a lease contract held by Wallich. The lease contract is capitalised at fair value,

assessed as having a fi nite life as at 7 February 2005 and is amortised using a straight-line basis over a

period of the expected lease term of 43 months.

The remaining average amortisation period for the lease contract is 2 months (2007: 14 months).

Computer software

The computer software is amortised on a straight-line basis over its estimated useful life of 5 years.

The remaining average amortisation period for the computer software is 56 months.

55

Annual Report 2008


15. Investments in subsidiaries

Company 2008 2007 $ $

Shares, at cost 16,151,480 16,151,480

Incorporation of a new subsidiary 1 –

Dividends received out of pre-acquisition profi ts of a subsidiary (519,704) (519,704)

Impairment losses (507,900) –

15,123,877 15,631,776

Country of Proportion (%) incorporation Principal of ownershipName (place of business) activities interest 2008 2007 % %Held by the Company

Whitehouse Holdings Singapore

Private Limited * (Singapore) Property leasing 100 100

Central Warehouse Service Singapore

Pte Ltd * (Singapore) Property leasing 100 100

Hartawan Property

Management Pte Ltd *

(formerly known as

Vita Property Management Singapore

Pte Ltd) (Singapore) Property leasing 100 100

Hartawan Dormitory


(formerly known as

Vita Dormitory Management Singapore

Pte Ltd) (Singapore) Property leasing 100 100

Hartawan Hostel


(formerly known as

Vita Hostel Management Singapore

Pte Ltd (Singapore) Property leasing 100 100

Wallich Development Singapore

Pte Ltd * (Singapore) Property leasing 100 100

Dehai Marine Shipping Singapore

(Singapore) Pte Ltd * (People’s Republic of China) Ship chartering 100 100

Green Forest Marine Panama

Shipping Inc. * (People’s Republic of China) Ship chartering 100 100

Vita Hospitality Pte Ltd * Singapore

(Singapore) Hospitality services 100 –

56

15. Investments in subsidiaries (cont’d)

Country of Proportion (%) incorporation Principal of ownershipName (place of business) activities interest 2008 2007 % %Green River Marine Panama


Green Pine Marine Panama


Green Spring Marine Panama


Green Mountain Marine Singapore

Shipping Pte Ltd * (People’s Republic of China) Ship chartering 100 100

Vita Marine Shipping Singapore

Pte Ltd * (People’s Republic of China) Ship chartering 100 100

Green Willow Marine Singapore


Green Spring Marine Singapore


Held through Hartawan Property Management Pte Ltd

Tada E-Parking (S) Pte Ltd Singapore Carpark management

(Singapore) and operation services 51 51

Held through Whitehouse Holdings Private Limited

Hotel Re! Pte Ltd * Singapore

(Singapore) Hotel operators 100 –

* Audited by Ernst & Young LLP Singapore.

On 2 August 2007, the Company incorporated a wholly-owned subsidiary, Vita Hospitality Pte Ltd in

Singapore with an issued and paid up capital of $1.

On 14 September 2007, the wholly-owned subsidiary of the Company, Whitehouse Holdings Private Limited,

incorporated a wholly-owned subsidiary, Hotel Re! Pte Ltd in Singapore with an issued and paid up capital

of $100,000.


57

Annual Report 2008

16. Investment property

Group 2008 2007 $ $

At 1 July 2007/2006 5,500,000 4,841,610

Reclassifi cation to asset held for sale (Note 22) (5,500,000) –

Gains from fair value adjustment recognised in the

income statement – 658,390

At 30 June – 5,500,000

In prior year, investment property was stated at fair value, which was determined based on valuation at the

balance sheet date. Valuation was performed by OrangeTee.com Pte Ltd close to prior year end, having

an appropriate recognised professional qualifi cation and recent experience in the location and category

of the property being valued. The valuation was arrived at by reference to market evidence of transaction

prices for similar properties.

The property rental income earned by the Group for the year ended 30 June 2008 from its investment

property, which is leased out under operating leases, amounted to $366,000 (2007: $366,000). Direct

operating expenses (including repairs and maintenance) arising on the rental-earning investment property

amounted to $6,984 (2007: $7,333).

During the year, the Group re-classifi ed the property from investment property to asset held for sale

subsequent to the Group’s intention to dispose the property.

The investment property held by the Company as at 30 June is as follows:

Name of property Description Tenure of land Fair value 2008 2007 $ $ 135 Jurong East Street 13 A HDB shop unit 91 years lease

#01-315 Singapore 600135 located on the 1st from 1 April

storey of a 4-storey 1993 (76 years

HDB commercial block remaining) – 5,500,000

The property has been pledged to the bank since 27 July 2006.


58

17. Trade receivables

Trade receivables are non-interest bearing and are generally on 14 to 60 days’ terms. They are recognised

at their original invoice amounts which represent their fair values on initial recognition.

Receivables that are past due but not impaired

The Group has trade receivables amounting to $399,946 (2007: $187,979) that are past due at the balance

sheet date but not impaired. These receivables are unsecured and the analysis of their aging at the

balance sheet date is as follows:

Group 2008 2007 $ $

Trade receivables past due:

Lesser than 30 days 154,427 121,684

30 to 60 days 54,564 50,998

More than 60 days 190,955 15,297

399,946 187,979

Receivables that are impaired

The Group’s trade receivables that are impaired at the balance sheet date and the movement of the

allowance accounts used to record the impairment are as follows:

Group 2008 2007 $ $

Movement in allowance accounts:

At beginning of the year 33,724 35,518

Charge for the year 86,976 3,724

Written off (32,093) (5,518)

At end of the year 88,607 33,724

Included in trade receivables for the Group are amounts due from related parties of $Nil (2007: $44,502).

Amounts due from related parties were trade related, unsecured, interest-free and repayable on demand.

These amounts are to be settled in cash and offset between the related parties.


59

Annual Report 2008

18. Other receivables, deposits and prepayments

Group Company 2008 2007 2008 2007 $ $ $ $

Current Deposits 586,522 639,116 – –

Prepayments 189,578 135,342 21,481 16,163

Other receivables 899,130 1,030,279 – 257

Rent-free incentives 56,924 13,944 – –

Deferred interest expenses 20,208 – – –

1,752,362 1,818,681 21,481 16,420

Non-current Deposits 213,912 – – –


237,264 – – –

Total Deposits 800,434 639,116 – –

Prepayments 189,578 135,342 21,481 16,163

Other receivables 899,130 1,030,279 – 257

Rent free incentives 56,924 13,944 – –


1,989,626 1,818,681 21,481 16,420

Deposits

Deposits amounting to $175,998 (2007: $218,394) bear interest ranging from 0.425% to 1.65% (2007: 0.40%

to 1.82%) per annum and have been pledged as security (rental bonds) for various properties under

lease.

Prepayments and other receivables

These are non-interest bearing and have an average term of 12 months.

Included in the Group’s other receivables is the proceeds from disposal of one vessel of USD650,000 (2007:

USD650,000) which is held by the Qingdao Maritime Court as security for one of the legal suits.

Included in the Group’s and Company’s other receivables is a receivable of $11,394,886 (equivalent to

RMB58 million (2007: Nil) from a third party of which full impairment was provided as at year end. The

impairment arose from directors’ assessment of the uncertainty of recovery from this third party. Subsequent

to year end, the Company has instructed its legal counsel to commence legal actions against a third

party and its guarantor for the defaulted payment as disclosed in Note 34.

Rent-free incentives

Rent-free incentives refer to non-cash incentives provided by the Group to the tenants for entering into

operating leases for its various properties. The incentives are amortised to the income statement on a

straight-line basis over the lease term.


60

19. Amounts due from/(to) subsidiaries

The amounts due from/(to) subsidiaries are non-trade related, unsecured, interest-free and repayable

upon demand.

20. Loan from a substantial shareholder

The loan from a substantial shareholder is non-trade related, unsecured, interest-free and repayable upon

demand.

21. Cash and cash equivalents

Group Company 2008 2007 2008 2007 $ $ $ $

Fixed deposits 337,558 3,060,458 – 2,502,266

Cash and bank balances 5,759,561 1,874,600 1,212,826 183,630

6,097,119 4,935,058 1,212,826 2,685,896

Cash and cash equivalents are denominated in the following currencies:

Singapore Dollar 5,559,780 4,503,823 1,210,102 2,670,544

United States Dollar 537,339 431,235 2,724 15,352

6,097,119 4,935,058 1,212,826 2,685,896

The fi xed deposits bear interest ranging from 0.825% to 1.40% per annum (2007: 1.88% to 5.22%) and are

made for varying periods of between 7 days and 1 year depending on the immediate cash requirements

of the Group.

Cash and bank balances earn interest at fl oating rates based on daily bank deposit rates ranging from

0.07% to 0.17% (2007: 0.15% to 0.17%) per annum.

The exposure of cash and cash equivalents to interest rate risks is disclosed in Note 31.

22. Assets held for sale and liabilities directly associated with assets held for sale

Vessels and other equipments

As part of the terms and conditions of the Conditional Deed of Settlement as mentioned in Note 30, the

Group is to dispose its vessels.

Investments

During the year, the Group disposed its investment in Shandong Tada Vita Parking Co. Ltd for a cash

consideration of $1,973,126 equivalent to US$1.5 million.

As at year end, the Group has intention to dispose its investment in J.L. Chancellor Pte Ltd with carrying

value of nil.


61

Annual Report 2008


22. Assets held for sale and liabilities directly associated with assets held for sale (cont’d)

Investment property

As at year end, the Group has intention to dispose its investment property.

Group Company 2008 2007 2008 2007 $ $ $ $

Assets held for sale

(i) Vessels and other equipments 18,539,745 – – –

(ii) Investments

Cost 6,739,841 6,671,613 3,812,216 3,812,216

Disposal (1,973,126) – – –

Less: Impairment (3,812,216) – (3,812,216) –

954,499 6,671,613 – –

(iii) Investment property

Cost 5,500,000 – – –

Less: Impairment (700,000) – – –

4,800,000 – – –

Total 24,294,244 6,671,613 – 3,812,216

Liabilities directly

associated with

assets held for sale

(i) Investments* 954,499 886,271 – –

* This amount relates to liabilities of J.L. Chancellor Pte Ltd. It includes amount owing by J.L.Chancellor

Pte Ltd to the Company of $401,490 (2007: $401,657) and other shareholders of $444,294 (2007:

$454,217).

Three vessels and the investment property have been pledged as security for term loans, as disclosed

in Note 13 and Note 16.

23. Trade payables

Trade payables are non-interest bearing and are normally settled on 30-90 day terms.

62


24. Other payables, accruals and provision

Group Company 2008 2007 2008 2007 $ $ $ $ (restated)

CurrentOther payables 577,507 540,986 3,159 –

Rental deposits received 2,094,521 1,729,921 – –

Deferred income 205,994 293,715 – –

Accruals 2,343,723 1,517,329 448,697 222,655

Provision for reinstatement costs 43,000 20,000


Deferred interest income 10,113 – – –

5,671,577 4,321,095 451,856 222,655

Non-current Provision for reinstatement costs 270,000 100,000 – –

Rental deposits received 103,624 – – –


392,658 100,000 – –

Total Other payables 577,507 540,986 3,159 –

Rental deposits received 2,198,145 1,729,921 – –

Deferred income 205,994 293,715 – –

Accruals 2,343,723 1,517,329 448,697 222,655

Provision for reinstatement costs 313,000 120,000 – –



6,064,235 4,421,095 451,856 222,655

Other payables and accruals

These liabilities are non-interest bearing and have an average payment term of 12 months. Other payables

include deferred gain of US$337,000 (2007: US$337,000) from the disposal of one vessel.

Rental deposits received

Rental deposits received refer to the security deposits placed by the tenants with the Group for entering

into operating leases for the Group’s leased properties. These properties have lease terms of 1 to 3 years.

Deferred income

Deferred income refers to charter income received in advance of the commencement of charter. This is

non-interest bearing and have an average term of 2 weeks. Deferred income is recognised in the income

statement when the services are rendered.

Rent-free incentives

Rent-free incentives refer to non-cash incentives provided by the landlords to the Company for entering

into operating leases for its properties. The incentives are amortised to the income statement on a straight-

line basis over the lease term.

Provision for reinstatement costs

Provision for reinstatement costs refers to the estimated cost of reinstating the leased premises.

63

Annual Report 2008


25. Interest-bearing loans and borrowings

Effective Group Company Note interest rate Maturity 2008 2007 2008 2007 $ $ $ $ (Restated)

Current:

Term loan 1 (secured) (a) 7.380% 2009 1,349,837 1,087,540 – –

Term loan 2 (secured) (a) 7.380% 2009 607,931 630,557 – –

Term loan 3 (secured) (b) 7.795% 2011 1,048,501 505,593 – –

Term loan 4 (secured) (c) 5.750% 2021 108,300 638,789 – –

Term loan 5 (unsecured) (d) 1.830% 2009 3,000,000 – 3,000,000 –

6,114,569 2,862,479 3,000,000 –

Non-current:

Term loan 1 (secured) (a) 7.380% 2009 – 1,178,168 – –

Term loan 2 (secured) (a) 7.380% 2009 – 683,104 – –

Term loan 3 (secured) (b) 7.795% 2011 – 1,516,779 – –

Term loan 4 (secured) (c) 5.750% 2021 2,440,704 2,549,003 – –

2,440,704 5,927,054 – –

8,555,273 8,789,533 3,000,000 –

Term loans comprise:

(a) Term loans of US$1,435,861 (2007: US$2,336,250) is repayable in 48 instalments commencing July

2005. The loans bear interest at 3% above SIBOR USD for 1 month period per annum which is also the

effective interest rate on the principal amounts outstanding. The loans are fully repayable on 11 July

2009 and are secured by legal mortgages over 2 vessels of the Group (Note 13).

(b) Term loan of US$768,989 (2007: US$1,320,000) is repayable in 60 instalments commencing July 2006.

The loan bears interest at 2.375% above the fi nancial institution’s USD cost of funds for 1 month period

per annum which is also the effective interest rate. The loan is fully repayable on 27 June 2011 and is

secured by a legal mortgage over a vessel of the Group (Note 13).

(c) Term loan of S$2,549,004 (2007: S$3,187,792) is repayable in 180 instalments commencing September

2006. The loan bears interest at 4.250% per annum for the fi rst and second year and 0.75% above

the prevailing enterprise fi nancing rate per annum for subsequent years which is also the effective

interest rate. The loan is fully repayable on 1 August 2021 and is secured by a legal mortgage over a

property of the Group (Note 16).

(d) Term loan of S$3,000,000 (2007: Nil) is repayable upon demand. The loan bears interest at 1.830% per

annum. A substantial shareholder and executive chairman have acted as the security party.

64


26. Share capital

Group and Company 2008 2007 No. of No. of Shares $ shares $

Issued and fully paid:

At beginning of year 288,028,000 23,984,510 263,000,000 20,307,396

Issuance of ordinary shares, net 110,823,529 22,481,872 – –


on conversion of warrants 697,000 102,404 25,028,000 3,677,114

At end of year 399,548,529 46,568,786 * 288,028,000 23,984,510 *

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

During the year, the Company increased its share capital by way of:

(a) issuance of 52,000,000 ordinary shares at an issue price of $0.25 per share. The net proceeds of approximately S$12.6 million had been used primarily to fund the re-development of Hotel Re! and partly for working capital and the Shanghai Mall project.

(b) issuance of 58,823,529 ordinary shares upon conversion of convertible loan from a substantial shareholder at conversion price of $0.17 per share.

*This amount differs from the Accounting and Corporate Regulatory Authority’s record due to a difference arising from payment of S$0.03 for each warrant received less related expenses.

27. Reserves

(a) Warrants reserve

On 28 November 2005, the Company issued 78,900,000 warrants at an issue price of $0.03 per warrant. Each warrant carries the right to subscribe for one ordinary share at the issue price of $0.12 each in the capital of the Company. The expiry date is on 27 November 2008.

The warrants reserve comprises the proceeds from the warrants issued, net of warrant issue expense. As and when the warrants are exercised, the net proceeds relating to the warrants exercised will be transferred to share capital.

As of 30 June 2008, 53,175,000 (2007: 53,872,000) warrants are outstanding.

(b) Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the fi nancial statements of foreign operations whose functional currencies are different from that of the Group’s functional currency.

Group 2008 2007 $ $

At 1 July 2007/2006 2,193,172 1,410,880

Net effect of exchange differences arising

from translation of fi nancial statements

of foreign operations 1,509,670 782,292

At 30 June 3,702,842 2,193,172

65

Annual Report 2008


28. Signifi cant related party transactions

(a) Sales and purchase of goods and services

In addition to the related party information disclosed elsewhere in the fi nancial statements, the following signifi cant transactions between the Group and related parties took place at terms agreed between the parties during the fi nancial year.

Group 2008 2007 $ $

Consultancy fees paid to a substantial shareholder 10,000 –

Rental, utilities, catering income, share of

marketing expense and sale of vehicle parking

licence and forfeiture of rental deposit (226,415) (516,894)

Gain from disposal of property, plant and

equipment to related parties (1,464) –

Management fee income received from related parties (8,000) (48,000)

Cleaning and maintenance services provided by a related party 65,958 208,923

Miscellaneous 10,361 (640)

Legal and professional services provided by a related party 236,215 17,971

(b) Compensation of key management personnel

Group 2008 2007 $ $

Short term employee benefi ts 974,832 918,475

Central Provident Fund contributions 49,607 34,403

Directors’ Fees 156,733 92,400

Ex-gratia payment to former directors 90,000 –

Total compensation paid to key management personnel 1,271,172 1,045,278

Comprise amount paid to:

Directors of the Company 903,242 765,404

Other key management personnel 367,930 279,874

1,271,172 1,045,278

29. Commitments

(a) Capital expenditure commitments

The Group has purchased commitments for property, plant and equipment incidental to the ordinary course of business. Such commitments amounted to $Nil as at 30 June 2008 (2007: $11.8 million). In aggregate, these commitments are not at prices in excess of their market values.

66


29. Commitments (cont’d)

(b) Operating lease commitments

Group as lessee

The Group has entered into commercial property leases for the purposes of sub-letting them as

part of the property leasing business. These non-cancellable leases have remaining lease terms of

between 1 and 3 years.

Future minimum lease payments under non-cancellable operating leases as at 30 June are as follows:

Group Company 2008 2007 2008 2007 $ $ $ $

Within one year 6,713,067 5,688,900 – –

After one year but not

more than fi ve years 5,051,412 3,426,280 – –

11,764,479 9,115,180 – –

Group as lessor

The Group has entered into ship charter party and commercial property leases on its owned vessels

and owned and leased properties respectively. These non-cancellable agreements have remaining

lease terms of up to 3 years.

Future minimum charter and rental income receivable under non-cancellable charter party/

operating leases as at 30 June are as follows:

Group Company 2008 2007 2008 2007 $ $ $ $

Within one year 7,943,051 11,672,424 – –

After one year but not

more than fi ve years 5,018,963 2,996,899 – –

12,962,014 14,669,323 – –

30. Contingencies

Contingent liabilities

In prior year, Qingdao Dehai Shipping Co., Ltd fi led 7 suits against various ship chartering subsidiaries of the

Company relating to vessel management fees (“Qingdao Dehai PRC Suits”). The Company and its ship

chartering subsidiaries fi led a claim against a former director, Jiang Hai Ying (“JHY”) for alleged breaches

of directors’ duties, trust and his terms of employment. The Company and its ship chartering subsidiaries

also fi led 8 suits against Qingdao Dehai Marine & Engineering Co., Ltd and Qingdao Dehai Shipping

Co., Ltd (“Qingdao Dehai Companies”) for, inter alia, alleged breaches of certain vessel management

agreements (collectively, the “Global Suits”).

67

Annual Report 2008


30. Contingencies (cont’d)

Contingent liabilities (cont’d)

On 2 June 2008, the Company had entered into the Conditional Deed of Settlement (“Settlement Deed”)

with JHY and Qingdao Dehai Companies to fully settle all and any differences, disputes, claims of the

respective parties in the Global Suits.

The following are the principal terms of the Settlement Deed:

(i) That JHY and/or his nominee(s) (the “Purchaser”) shall purchase from the Group the fi rst tranche

vessels comprising 3 vessels. In addition, the Purchaser is granted the option to purchase any or all

the second tranche vessels comprising 4 vessels within 3 months after the date of the Shareholders’

approval is obtained.

The Group has an eighth vessel, which is not part of the fi rst and second tranche vessels, but is

included in the settlement in relation to the mutual release of suits and complaints.

(ii) The Group shall make a payment of US$2 million (“Settlement Amount”) to Qingdao Dehai Companies

and/or their nominee(s) in full and fi nal settlement of the Qingdao Dehai PRC Suits, which amount is

to be paid within 3 days after the shareholders’ approval is obtained.

(iii) An agreed sum of US$1.6 million (“Agreed Sum”) being the agreed quantum of outstanding payables,

including but not limited to various expenses incurred in relation to each of the fi rst and second

tranche vessels (“Vessels”), prior to 2 June 2008. This amount is to be paid within 3 days after the

shareholders’ approval is obtained.

(iv) The payment for the fi rst tranche vessels is to be settled after setting off the fi rst tranche purchase

consideration against the Settlement Amount and the Agreed Sum.

(v) All charter fees payable to the Group in respect of the Vessels for the period from 1 April 2008 to the

completion of the sale and purchase of fi rst tranche vessels shall be paid directly by the charterers

to Qingdao Dehai Companies and the Group shall not have any claim. Qingdao Dehai Companies

shall be responsible for all expenses in relation to the Vessels for the aforesaid period.

(vi) Both parties shall withdraw all actions or proceedings against each other and will not pursue any

further actions against each other.

(vii) On the Company obtaining shareholders’ approval, Qingdao Dehai Companies shall apply to the

courts of the People’s Republic of China for the release of the 2 detained vessels.

The shareholders’ approval was obtained on 25 August 2008. On 28 August 2008, the sale and purchase

of fi rst tranche vessels was completed with the settlement of fi rst tranche purchase consideration

setting off against the Settlement Amount and Agreed Sum.

68


31. Financial risk management objectives and policies

The Group’s and Company’s principal fi nancial instruments comprise bank loans and overdraft and cash

and short term deposits. The main purpose of these fi nancial instruments is to raise fi nance for the Group’s

operations.

The Group and Company have other various fi nancial assets and liabilities such as trade and other

receivables and payables, which arise directly from its operations.

The Group operates within clearly defi ned guidelines that are approved by the Board. The Group does not

trade in derivative fi nancial instruments.

The Group and Company are exposed to fi nancial risks arising from their operations and the use of

fi nancial instruments.

The key fi nancial risks include interest rate risk, market risk, liquidity risk, foreign exchange risk and credit risk.

The Group’s and Company’s risk management approach seeks to minimise the potential material adverse

effects from these risk exposures whilst ensuring that adequate fi nancial resources are available for the

development of the Group’s and Company’s businesses. The management manages and monitors these

exposures and ensures appropriate measures are implemented on a timely and effective manner. The

Board reviews and agrees on policies for managing each of these risks.

The following sections provide details regarding the Group’s and Company’s exposure to the abovementioned

fi nancial risks and the objectives, policies and processes for the management of these risks.

(a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash fl ows of the Group’s and Company’s

fi nancial instruments will fl uctuate because of changes in market interest rates. The Group’s and

Company’s exposure to interest rate risk arises primarily from their loans and borrowings.

The Group and Company have cash balances placed with reputable banks and fi nancial institutions,

which generate interest income for the Group. The Group and Company manage its interest rate risks

by placing such balances on varying maturities and interest rate terms.

The Group and Company obtain additional fi nancing through bank borrowings and leasing

arrangements. The Group and Company seek to obtain the most favourable interest rates available

without increasing its foreign currency exposure.

The following table sets out the carrying amount, by maturity, of the Group’s and Company’s fi nancial

instruments as at 30 June 2008 and 2007 that are exposed to interest rate risk:

69

Annual Report 2008


31. Financial risk management objectives and policies (cont’d)

(a) Interest rate risk (cont’d)

Within 1-2 2-3 3-4 4-5 More than 1 year years years years years 5 years Total $ $ $ $ $ $ $

2008 Assets/(liabilities) Group Floating rate Cash and bank balances 5,759,561 – – – – – 5,759,561Bank borrowings (6,114,569) (114,375) (121,128) (128,105) (136,012) (1,941,084) (8,555,273)

Fixed rate Fixed deposits 337,558 – – – – – 337,558

CompanyFloating rateCash and bank balances 1,212,826 – – – – – 1,212,826Bank borrowings (3,000,000) – – – – – (3,000,000)

2007 Assets/(liabilities) Group Floating rate Cash and bank balances 1,874,600 – – – – – 1,874,600Fixed deposits 2,502,266 – – – – – 2,502,266Bank borrowings (2,862,479) (2,606,717) (922,332) (779,157) (273,564) (1,345,284) (8,789,533)

Fixed rate Fixed deposits 311,658 – 246,534 – – – 558,192

Company Floating rate Cash and bank balances 183,630 – – – – – 183,630Fixed deposits 2,502,266 – – – – – 2,502,266

Sensitivity analysis for interest rate risk

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the Group’s fl oating rate loans and borrowings, with all other variables held constant and the impact on the Group’s profi t before tax.

Effect on profi t before tax Increase/ decrease in basis points 2008 2007 $ $

Group - Singapore dollar + 50 (14,312) (12,977)- United States dollar + 50 (9,464) (13,568) - Singapore dollar - 50 14,250 12,930- United States dollar - 50 9,464 13,568

70


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71

Annual Report 2008



(c) Foreign currency risk

During the ordinary course of business, the Group engages in foreign currency (mainly in United

States dollars) denominated transactions. As a result, the Group is exposed to movement in foreign

currency exchange rates.

The Group does not use derivative fi nancial instruments to hedge against the volatility associated

with foreign currency transactions, and other fi nancial assets and liabilities created in the ordinary

course of business.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity to a reasonably possible change in the USD and

Renminbi exchange rates (against SGD), with all other variables held constant, of the Group’s profi t

net of tax and equity.

Group Profi t net of tax 2008 2007 $ $

USD- strengthened 5% (2007: 5%) 155,919 228,510

- weakened 5% (2007: 5%) (155,919) (228,510)

Renminbi- strengthened 5% (2007: 5%) (2,890,466) –

- weakened 5% (2007: 5%) 2,890,466 –

(d) Credit risk

Credit risk arising from the inability of a counterparty to meet the terms of the Group’s fi nancial

instrument contracts is generally limited to the amounts, if any, by which the counterparty’s obligations

exceed the obligations of the Group. Credit risk is minimised and monitored through strictly limiting

the Group’s association to customers with high credit worthiness. Trade receivables are monitored on

an ongoing basis and doubtful debts are provided based on expected collectibility.

The Group does not have signifi cant exposure to any individual customer or counterparty nor does it

have any major concentration of credit risk related to any fi nancial instruments except a receivable

due from a third party amounting to S$11,394,886 (2007: Nil) which has been fully impaired as at

year end.

Credit risk, or the risk of counterparties defaulting, is managed through the application of credit

approvals, credit limits and debt monitoring procedures. Where appropriate, the Company or its

subsidiaries obtain guarantees from the customer or arrange netting agreements. Cash terms,

advance payments, and letters of credit are required for customers of lower credit standing.

The extent of the Group’s credit exposure is represented by the aggregate carrying amount of cash

and cash equivalents, trade debtors and other debtors.

72



(d) Credit risk (cont’d)

Exposure to credit risk

At the balance sheet date, the Group’s and the Company’s maximum exposure to credit risk is

represented by the carrying amount of each class of fi nancial assets recognised in the balance

sheets, including derivatives with positive fair values.

Information regarding credit enhancements for trade and other receivables is disclosed in Notes 17

and 18.

Credit risk concentration profi le

The Group determines concentrations of credit risk by monitoring the country and industry sector

profi le of its trade and other receivables on an on-going basis. The credit risk concentration profi le of

the Group’s trade at the balance sheet date is as follows:

Group 2008 2007 $ % of total $ % of total

By country:

Singapore 987,898 48 607,727 38

People’s Republic of China 1,066,640 52 1,006,508 62

2,054,538 100 1,614,235 100

By industry sectors:

Property 692,603 34 607,727 38

Shipping 1,066,640 52 1,006,508 62

Others 295,295 14 – –

2,054,538 100 1,614,235 100

Financial assets that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with

good payment record with the Group. Cash and cash equivalents are placed with or entered into

with reputable fi nancial institutions or companies with high credit ratings and no history of default.

Financial assets that are either past due or impaired

Information regarding fi nancial assets that are either past due or impaired is disclosed in Note 17

(Trade receivables) and Note 18 (Other receivables).

73

Annual Report 2008



(d) Credit risk (cont’d)

Fair values

The fair value of a fi nancial instrument is the amount at which the instrument could be exchanged

or settled between knowledgeable and willing parties in an arm’s length transaction, other than in a

forced or liquidation sale.

Financial instruments whose carrying amount approximate fair value

Management has determined that the carrying amounts of cash and short term deposits, current

trade and other receivables, current trade and other payables, short-term borrowings and lease

obligations, and loans and borrowings based on their notional amounts, reasonably approximate

their fair values because these are mostly short term in nature or are repriced frequently.

(e) Market price risk

Market price risk is the risk that the fair value or future cash fl ows of the Group’s fi nancial instruments

will fl uctuate because of changes in market prices (other than interest or exchange rates). The

Group does not have any exposure to equity price risk.

32. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit

rating and healthy capital ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic

conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to

shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives,

policies or processes during the years ended 30 June 2008 and 30 June 2007.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt.

The Group includes within net debt, loans and borrowings, trade and other payables and accruals, less

cash and cash equivalents. Capital includes equity attributable to the equity holders of the parent less

the fair value adjustment reserve.

Group 2008 2007 $ $

Loans and borrowings 10,055,273 8,789,533

Trade and other payables and accruals 10,197,400 5,674,939

Less: Cash and cash equivalents (6,097,119) (4,935,058)

Net debt 14,155,554 9,529,414

Equity attributable to the equity holders of the parent 30,121,909 31,351,918

Total capital 30,121,909 31,351,918

Capital and net debt 44,277,463 40,881,332

Gearing ratio 32% 23%

74

33. Segment information

Reporting format

The primary segment reporting format is determined to be business segments as the Group’s risks and rates

of return are affected predominantly by differences in the products and services produced. Secondary

information is reported geographically. The operating businesses are organised and managed separately

according to the nature of the products and services provided, with each segment representing a strategic

business unit that offers different products and serves different markets.

Business segments

The shipping segment provides ship chartering services on both time and voyage charter.

The property leasing segment is involved in the leasing of warehouse, dormitory, offi ce and other spaces

leased or owned by the Group.

The hotel segment relates to hotel management.

Geographical segments

The Group’s geographical segments are based on the location of the Group’s assets. Sales to external

customers disclosed in geographical segments are based on the geographical location of its customers

as follows:

– Singapore

– The People’s Republic of China

Allocation basis and transfer pricing

Segment results, assets and liabilities include items directly attributable to a segment as well as those that

can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, income tax

and deferred tax assets and liabilities, loans and borrowings and related expenses.

Transfer prices between business segments are set on an arm’s length basis in a manner similar to

transactions with third parties. Segment revenue, expenses and results include transfers between business

segments. These transfers are eliminated on consolidation.


75

Annual Report 2008


33. Segment information (cont’d)

Primary reporting segment – business segments

Continuing operations Discontinued operationPropertyleasing Hotel Total Shipping Total

$ $ $ $ $

2008

Revenue and expenses

Segment revenue

Sales to external customers 11,029,511 305,997 11,335,508 4,256,696 15,592,204

Segment results (221,248) (1,356,498) (1,577,746) (4,988,778) (6,566,524)

Unallocated expenses (15,207,102) – (15,207,102)

Loss from operations (16,784,848) (4,988,778) (21,773,626)

Interest expense (127,303) (313,757) (441,060)

Loss before taxation (16,912,151) (5,302,535) (22,214,686)

Taxation (28,376) (42,790) (71,166)

Net loss (16,940,527) (5,345,325) (22,285,852)

Assets and liabilities

Segment assets 13,250,349 17,398,166 30,648,515 20,363,398 51,011,913

Unallocated assets 961,989 – 961,989

Total assets 31,610,504 20,363,398 51,973,902

Segment liabilities 11,857,764 2,545,995 14,403,760 6,161,913 20,565,673

Unallocated liabilities 1,286,320 – 1,286,320

Total liabilities 15,690,080 6,161,913 21,851,993

Other segment information:

Capital expenditure

- Tangible assets 2,594,425 14,802,495 17,396,920 38,771 17,435,691

- Intangible assets – 92,245 92,245 – 92,245

Depreciation 550,651 341,897 892,548 1,620,795 2,513,343

Amortisation of intangible

assets 103,793 3,127 106,920 – 106,920

76



Primary reporting segment – business segments

Continuing operations Discontinued operationPropertyleasing Hotel Total Shipping Total

$ $ $ $ $

2007

Revenue and expenses

Segment revenue

Sales to external customers 11,031,502 – 11,031,502 10,397,996 21,429,498

Segment results 1,241,679 – 1,241,679 (1,011,722) 229,957

Unallocated expenses (793,864) – (793,864)

Loss from operations 447,815 (1,011,722) (563,907)

Interest expense (122,886) (623,485) (746,371)

Loss before taxation 324,929 (1,635,207) (1,310,278)

Taxation (95,013) (378) (95,391)

Net loss 229,916 (1,635,585) (1,405,669)

Assets and liabilities

Segment assets 18,963,585 – 18,963,585 27,413,560 46,377,145

Unallocated assets 886,271 – 886,271

Total assets 19,849,856 27,413,560 47,263,416

Segment liabilities 6,558,187 – 6,558,187 8,026,285 14,584,472

Unallocated liabilities 1,327,026 – 1,327,026

Total liabilities 7,885,213 8,026,285 15,911,498

Other segment information:

Capital expenditure

- Tangible assets 550,143 – 550,143 1,786,411 2,336,554

- Intangible assets – – – – –

Depreciation 807,328 – 807,328 1,560,778 2,368,106

Amortisation of intangible assets 103,793 – 103,793 – 103,793

77

Annual Report 2008



Secondary reporting segment – geographical segments

Revenue is based on the location of customers.

Group The People’s Republic Singapore of China Total $ $ $

2008 Segment revenue

Sales to external customers 11,335,508 4,256,696 15,592,204

Less: Sales attributable to discontinued operation – (4,256,696) (4,256,696)

Revenue from continued operations 11,335,508 – 11,335,508

Other geographic information

Segment assets 30,648,515 20,363,398 51,011,913

Unallocated assets – – 961,989

51,973,902

Other segment information

Capital expenditure

- Tangible assets 17,396,920 38,771 17,435,691

- Intangible assets 92,245 – 92,245

Depreciation 892,548 1,620,795 2,513,343

Amortisation of intangible assets 106,920 – 106,920

2007 Segment revenue

Sales to external customers 11,031,502 10,397,996 21,429,498

Less: Sales attributable to discontinued operation – (10,397,996) (10,397,996)

Revenue from continued operations 11,031,502 – 11,031,501

Other geographic information

Segment assets 18,963,585 27,413,560 46,377,145

Unallocated assets – – 886,271

47,263,416

Other segment information

Capital expenditure

- Tangible assets 550,143 1,786,411 2,336,554

- Intangible assets – – –

Depreciation 807,328 1,560,778 2,368,106

Amortisation of intangible assets 103,793 – 103,793

78


34. Signifi cant events occurring after the balance sheet date

(a) On 25 August 2008, the shareholders at the Extraordinary General Meeting had approved the

proposed settlement of legal proceedings between the Group, JHY and Qingdao Dehai Companies

and the proposed sale of certain vessels and the change of the Company’s name to Hartawan

Holdings Limited.

(b) On 28 August 2008, the sale and purchase of fi rst tranche vessels was completed with the settlement

of fi rst tranche purchase consideration setting off against the Settlement Amount and Agreed Sum

pursuant to the Settlement Deed as disclosed in Note 30.

(c) On 3 September 2008, the Company announced that its wholly-owned subsidiary, Whitehouse

Holdings Private Limited, had entered into an Option Agreement to sell a shophouse unit at Jurong

East Street 13 for a cash consideration of S$4.8 million to Bon Investment Pte Ltd. Bon Investment Pte

Ltd is an associate company of a substantial shareholder of the Company.

(d) On 3 October 2008, the Company announced that it has instructed its legal counsel to commence

legal actions against a third party that has defaulted payment as disclosed in Note 18.

(e) On 3 October 2008, the Company as advised by its legal counsel will enforce its rights under a profi t

guarantee given by a third party in respect of its investment in J.L. Chancellor Pte Ltd.

(f) On 3 October 2008, two wholly owned subsidiaries, Vita Hospitality Pte Ltd and Tada E-Parking (S) Pte

Ltd had applied for strike off.

35. Prior year comparatives

Certain prior year comparative fi gures have been reclassifi ed to conform with current year’s presentation.

2007 2007 As previously stated Adjustments As reclassifi ed $ $ $

Balance sheet

Non-current liabilities Other payables, accruals and provision – 100,000 100,000

Interest-bearing loans and borrowings 5,813,975 113,975 5,927,054

Current liabilities Other payables, accruals and provision 4,421,095 (100,000) 4,321,095

Interest-bearing loans and borrowings 2,975,558 (113,975) 2,862,479

36. Authorisation of Financial Statements for Issue

The fi nancial statements for the fi nancial year ended 30 June 2008 were authorised for issue in accordance

with a resolution of the directors on 3 October 2008.

79

Annual Report 2008

Statistics of Shareholdings AS AT 18 SEPTEMBER 2008

Number of shares : 400,181,529

Class of shares : Ordinary share

Voting rights : One vote per share

DISTRIBUTION OF SHAREHOLDINGS

NO. OF NO. OF SIZE OF SHAREHOLDINGS SHAREHOLDERS % SHARES %

1 - 999 105 11.88 3,660 0.00

1,000 - 10,000 254 28.73 1,403,065 0.35

10,001 - 1,000,000 501 56.67 45,152,315 11.28

1,000,001 AND ABOVE 24 2.72 353,622,489 88.37

TOTAL 884 100.00 400,181,529 100.00

SUBSTANTIAL SHAREHOLDERS(As recorded in the Register of Substantial Shareholders)

Direct Interest % Deemed Interest %

Kingley Agents Limited 74,866,900 18.71 20,000,000 5.00

Sim Poh Heok 270,000 0.07 94,866,900 23.71

Tan Lim Hui - - 94,866,900 23.71

Tan Kwee Hiang - - 143,823,529 35.94

Chong Thim Pheng 143,823,529 35.94 - -

Chow Bon Tong 22,117,350 5.53 - -

Hock Lian Seng Investment Pte Ltd 29,000,000 7.25 - -

Chua Leong Hai 4,000,000 1.00 29,000,000 7.25

Note:

a) Kingley Agents Limited (“Kingley”) has a deemed interest in the 20,000,000 shares registered in the name

of SBS Nominees Pte. Ltd.

b) Sim Poh Heok and Tan Lim Hui are deemed interested in the 94,866,900 shares registered in the name of

Kingley by virtue of their interest in Kingley.

c) Tan Kwee Hiang has a deemed interest in the 143,823,529 shares registered in the name of her spouse,

Chong Thim Pheng.

d) Chua Leong Hai has a deemed interest in the 29,000,000 shares registered in the name of Hock Lian Seng

Investment Pte. Ltd.

80

TWENTY LARGEST SHAREHOLDERS NO. OF NO. NAME SHARES %

1 CHONG THIM PHENG 143,823,529 35.94

2 KINGLEY AGENTS LIMITED 74,866,900 18.71

3 HOCK LIAN SENG INVESTMENT PTE LTD 29,000,000 7.25

4 CHOW BON TONG 22,117,350 5.53

5 SBS NOMINEES PTE LTD 20,000,000 5.00

6 KIM ENG SECURITIES PTE. LTD. 6,766,060 1.69

7 LI HAO QIANG 6,315,400 1.58

8 HOU RUIQUAN 6,010,000 1.50

9 SIM POH PING 5,350,000 1.34

10 CHAN CHEONG HOY 4,071,450 1.02

11 CHUA LEONG HAI @ CHUA LEANG HAI 4,000,000 1.00

12 UOB KAY HIAN PTE LTD 3,446,000 0.86

13 HENG SEOW KHENG 3,022,000 0.76

14 EVA MEISANTI ONG 3,013,000 0.75

15 SIM POOH IEAN 2,908,450 0.73

16 SOH KIM LIAN AILIN 2,777,350 0.69

17 ONG KING SIN 2,614,000 0.65

18 TAN AH CHAI 2,365,000 0.59

19 HONG LEONG FINANCE NOMINEES PTE LTD 2,350,000 0.59

20 OCBC SECURITIES PRIVATE LTD 2,003,000 0.50

TOTAL 346,819,489 86.68

SHAREHOLDINGS HELD IN HANDS OF PUBLIC

Based on information available to the Company as at 18 September 2008, 25.04% of the issued ordinary shares of the Company is held by the public and therefore Rule 723 of the Listing Manual is complied with.

Statistics of Shareholdings AS AT 18 SEPTEMBER 2008

81

Annual Report 2008

Number of Warrants : 52,542,000

Expiry date of Warrants : 27 November 2008

No. of Warrants exercised : 26,358,000

DISTRIBUTION OF WARRANTHOLDINGS

NO. OF NO. OF SIZE OF WARRANTHOLDINGS WARRANTHOLDERS % WARRANTS %

1 - 999 11 3.86 2,558 0.00

1,000 - 10,000 142 49.82 458,644 0.87

10,001 - 1,000,000 121 42.46 16,033,404 30.52

1,000,001 AND ABOVE 11 3.86 36,047,394 68.61

TOTAL 285 100.00 52,542,000 100.00

SUBSTANTIAL WARRANTHOLDERS(As recorded in the Register of Warrantholders)

Registered in the name of Warrantholdings in which Substantial Substantial Warrantholders are Warrantholders deemed to have an interest No. of Warrants % No. of Warrants %

1. Chow Bon Tong 13,254,204 25.23 - -

2. Li Hao Qiang 6,447,920 12.27 - -

3. Ren Yan 3,125,000 5.95 - -

TWENTY LARGEST WARRANTHOLDERS NO. OF NO. NAME WARRANTS %

1 CHOW BON TONG 13,254,204 25.23

2 LI HAO QIANG 6,447,920 12.27

3 REN YAN 3,125,000 5.95

4 SIM LYE HENG 2,324,000 4.42

5 HOU RUIQUAN 2,262,000 4.31

6 SEAH SOK HONG 2,136,000 4.07

7 HENG SEOW KHENG 1,406,000 2.68

8 BONG YEW KENG (HUANG YOUQING) 1,378,000 2.62

9 TAN SOON KEE 1,300,000 2.47

10 KINGLEY AGENTS LIMITED 1,224,270 2.33

11 ONG SWEE WHATT 1,190,000 2.26

12 PHILLIP SECURITIES PTE LTD 940,714 1.79

13 CHIA TAI CHING 750,000 1.43

14 SINGAPORE NOMINEES PTE LTD 750,000 1.43

15 YEO TIN LIN 745,000 1.42

16 CHUA SUAT CHENG 700,000 1.33

17 LALWANI ASHOK BHERUMAL 600,000 1.14

18 TAN KWEE HUAT 430,000 0.82

19 LIM & TAN SECURITIES PTE LTD 418,000 0.80

20 HONG LEONG FINANCE NOMINEES PTE LTD 407,000 0.77

TOTAL 41,788,108 79.54

Statistics of Warrantholdings AS AT 18 SEPTEMBER 2008

82

Notice Of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Annual General Meeting of HARTAWAN HOLDINGS LIMITED (the “Company”)

will be held at Hotel Re! @ Pearl’s Hill, The Ballroom, Level 2, 175A Chin Swee Road, Singapore 169879 on Friday,

31 October 2008 at 2.00 pm for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended

30 June 2008 together with the Auditors’ Report thereon. (Resolution 1)

2. (a) To re-elect the following Directors retiring pursuant to the Company’s Articles of Association:

Mr Chng Hee Kok (Retiring under Article 97) (Resolution 2) Mr Er Kwong Wah (Retiring under Article 91) (Resolution 3)

Mr Er Kwong Wah will, upon re-election as a Director of the Company, remain Chairman of the

Nominating Committee and a member of the Audit and Remuneration Committees and will be

considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore

Exchange Securities Trading Limited (“SGX-ST”).

(b) To note the retirement of Mr Fong Heng Boo as a Director of the Company in accordance with Article

91 of the Company’s Articles of Association at the conclusion of this meeting.

[See Explanatory Note (i)]

(c) To note the retirement of Mr John De Payva as a Director of the Company at the conclusion of this

meeting. [See Explanatory Note (ii)]

3. To pass the following Ordinary Resolution pursuant to Section 153(6) of the Companies Act, Cap. 50:

“That pursuant to Section 153(6) of the Companies Act, Cap. 50, Dr Tan Eng Liang be appointed a Director

of the Company to hold offi ce until the next Annual General Meeting.”

[See Explanatory Note (iii)] (Resolution 4)

4. To approve the payment of Directors’ Fees of S$156,733 for the year ended 30 June 2008. (2007: S$92,400)

(Resolution 5)

5. To approve the payment of Directors’ Fees of S$95,000 for the fi nancial year ending 30 June 2009, to be

paid quarterly in arrears. [See Explanatory Note (iv)] (Resolution 6)

6. To re-appoint Ernst & Young LLP as the Company’s Auditors and to authorise the Directors to fi x their

remuneration. (Resolution 7)

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

Meeting.

83

Annual Report 2008


AS SPECIAL BUSINESS

To consider and if thought fi t, to pass the following resolutions as Ordinary Resolutions, with or without any

modifi cations:

8. Authority to allot and issue shares up to 50 per centum (50%) of the total number of issued shares

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806 of the Listing Manual of the SGX-

ST, authority be given to the Directors of the Company to issue shares (“Shares”) whether by way of rights,

bonus or otherwise, and/or make or grant offers, agreements or options (collectively, “Instruments”) that

might or would require Shares to be issued, including but not limited to the creation and issue of (as well

as adjustments to) warrants, debentures or other instruments convertible into Shares at any time and upon

such terms and conditions and to such persons as the Directors may, in their absolute discretion, deem fi t

provided that:

(a) the aggregate number of Shares (including Shares to be issued in pursuance of Instruments made

or granted pursuant to this Resolution) does not exceed fi fty per centum (50%) of the total number

of issued shares (excluding treasury shares) in the capital of the Company at the time of the passing

of this Resolution, of which the aggregate number of Shares and convertible securities to be issued

other than on a pro rata basis to all shareholders of the Company shall not exceed twenty per

centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the

Company;

(b) for the purpose of determining the aggregate number of Shares that may be issued under sub-

paragraph (a) above, the total number of issued shares (excluding treasury shares) shall be based

on the total number of issued shares (excluding treasury shares) of the Company as at the date of

the passing of this Resolution, after adjusting for:

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

(ii) new shares arising from exercising share options or vesting of Share awards outstanding or

subsisting at the time this Resolution is passed; and

(iii) any subsequent bonus issue, consolidation or subdivision of shares;

(c) And that such authority shall, unless revoked or varied by the Company in general meeting, continue

in force (i) until the conclusion of the Company’s next Annual General Meeting or the date by which

the next Annual General Meeting of the Company is required by law to be held, whichever is earlier

or (ii) in the case of shares to be issued in accordance with the terms of convertible securities issued,

made or granted pursuant to this Resolution, until the issuance of such shares in accordance with

the terms of such convertible securities. [See Explanatory Note (v)] (Resolution 8)

9. Authority to allot and issue shares under the Hartawan Employee Share Option Scheme

That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be authorised and empowered to

allot and issue shares in the capital of the Company to all the holders of options granted by the Company,

whether granted during the subsistence of this authority or otherwise, under the Hartawan Employee Share

Option Scheme (the “Scheme”) upon the exercise of such options and in accordance with the terms and

conditions of the Scheme, provided always that the aggregate number of additional ordinary shares to be

allotted and issued pursuant to the Scheme shall not exceed fi fteen per centum (15%) of the total number

of issued shares (excluding treasury shares) in the capital of the Company from time to time.

[See Explanatory Note (vi)] (Resolution 9)

By Order of the Board

Yvonne Choo

Company Secretary

Singapore, 15 October 2008

84

Explanatory Notes on Resolutions to be passed:

(i) Mr Fong Heng Boo, who retires pursuant to Article 91 of the Company’s Articles of Association, had on 30

September 2008, notifi ed the Company of his intention not to seek re-election as a Director of the Company

at the forthcoming Annual General Meeting (“AGM”). Mr Fong, who has served a term of almost 4 years, is

retiring due to other work commitments.

(ii) Mr John De Payva had, on 30 June 2008, notifi ed the Company of his intention to retire at the AGM due to

work commitments. Mr De Payva has served a term of almost 4 years.

(iii) Section 153(6) of the Companies Act, Cap. 50 provides that a person of or over the age of 70 years may be

appointed a Director by an ordinary resolution passed at an AGM.

(iv) Ordinary Resolution 6 proposed in item 5 above, is to approve the payment of Directors’ fees of S$95,000 for

the year ending 30 June 2009 on a quarterly basis, in arrears.

(v) The Ordinary Resolution 8 proposed in item 8 above, if passed, will empower the Directors from the date of

the above Meeting until the date of the next AGM, to allot and issue Shares and convertible securities in

the Company up to an amount not exceeding fi fty per centum (50%) of the total number of issued shares

(excluding treasury shares) in the capital of the Company, of which up to twenty per centum (20%) may

be issued other than on a pro rata basis.

(vi) The Ordinary Resolution 9 proposed in item 9 above, if passed, will empower the Directors of the Company,

to allot and issue shares in the Company of up to a number not exceeding in total fi fteen per centum

(15%) of the total number of issued shares (excluding treasury shares) in the capital of the Company from

time to time pursuant to the exercise of the options under the Scheme.

Notes:

1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint

a proxy to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2. If the appointor is a corporation, the instrument appointing a proxy must be executed under seal or the

hand of its duly authorised offi cer or attorney.

3. The instrument appointing a proxy must be deposited at the Registered Offi ce of the Company at 1 Pegu

Road #01-01 Singapore 328358 (48) hours before the time appointed for holding the Meeting.


HARTAWAN HOLDINGS LIMITED(Incorporated in Singapore)

(Co. Reg. No: 200300950D)

PROXY FORM(Please see notes overleaf before completing this Form)

I/We,

of

being a *member/members of Hartawan Holdings Limited (the “Company”), hereby appoint:

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

and/or (delete as appropriate)

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

or failing *him/her, the Chairman of the Meeting as *my/our *proxy/proxies to vote for *me/us on *my/our

behalf at the Annual General Meeting (the “Meeting”) of the Company to be held at Hotel Re! @ Pearl’s Hill, The

Ballroom, Level 2, 175A Chin Swee Road Singapore 169879 on Friday, 31 October 2008 at 2.00 pm and at any

adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the Resolutions proposed at the

Meeting as indicated hereunder. If no specifi c direction as to voting is given or in the event of any other matter

arising at the Meeting and at any adjournment thereof, the *proxy/proxies will vote or abstain from voting at

*his/her discretion. The authority herein includes the right to demand or to join in demanding a poll and to vote

on a poll.

(Please indicate your vote “For” or “Against” with a tick [ ] within the box provided.)No. Resolutions relating to: For Against1 Directors’ Report and Audited Accounts for the year ended 30 June 2008

2 Re-election of Mr Chng Hee Kok as a Director

3 Re-election of Mr Er Kwong Wah as a Director

4 Appointment of Dr Tan Eng Liang as a Director

5 Approval of Directors’ fees amounting to S$156,733 for FY2008

6 Approval of Directors’ fees amounting to S$95,000 for FY2009

7 Re-appointment of Ernst & Young LLP as Auditors

8 Authority to allot and issue new shares

9 Authority to allot and issue shares under the Hartawan Employee Share

Option Scheme

*Delete where inapplicable

Dated this day of 2008

Total number of Shares in: No. of Shares

(a) CDP Register

(b) Register of Members

Signature of Shareholder(s)

or, Common Seal of Corporate Shareholder

IMPORTANT:1 For investors who have used their CPF monies

to buy Hartawan Holdings Limited’s shares, this Report is forwarded to them at the request of the 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.

3 CPF investors who wish to vote should contact their CPF Approved Nominees.

Notes:

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in

the Depository Register (as defi ned in Section 130A of the Companies Act, Chapter 50 of Singapore), you

should insert that number of Shares. If you have Shares registered in your name in the Register of Members,

you should insert that number of Shares. If you have Shares entered against your name in the Depository

Register and Shares registered in your name in the Register of Members, you should insert the aggregate

number of Shares entered against your name in the Depository Register and registered in your name in

the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be

deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company 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.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifi es the

proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each

proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered offi ce of the Company

at 1 Pegu Road #01-01 Singapore 328358 not less than forty-eight (48) hours before the time appointed for

the Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney

duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation,

it must be executed either under its seal or under the hand of an offi cer or attorney duly authorised. Where

the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the

letter or power of attorney or a duly certifi ed copy thereof must be lodged with the instrument.

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

person as it thinks fi t to act as its representative at the Meeting, in accordance with Section 179 of the

Companies Act, Chapter 50 of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly

completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of

the appointor specifi ed in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered

in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the

member, being the appointor, is not shown to have Shares entered against his name in the Depository Register

as at forty-eight (48) hours before the time appointed for holding the Meeting, as certifi ed by The Central

Depository (Pte) Limited to the Company.

HARTAWAN HOLDINGS LIMITEDCo. Reg. No.: 200300950D

No. 1 Pegu Road #01-01 Singapore 328358 Tel (65) 6251 2511 • Fax (65) 6252 3317 www.hartawanholdings.com.sg

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