SP Corporation Limited - Morningstar, Inc

SP Corporation LimitedAnnual Report 2003

Brought to you by Global Reports

• Corporate Profile 01• Corporate Structure 02• Five Year Financial Summary 03• Chairman’s Statement 04• Managing Director and CEO’s Statement 05• Operations Review and Outlook 06• Corporate Directory 12• Corporate Governance, Financials and Corporate Information 13

(separate booklet)

Contents

To b e a p rof i t a b l e , g r o w t h - o r i ent e d a nd v a l u e dr i v e n

i n du s t r i a l a nd e ng i n ee r i ng se r v ices g roup

i n t h e Asi a Pa c i f i c re g io n

MISSION STATEMENT


Corporate Profile

SP Corp Ltd

MarketingServices

EngineeringServices

Manufacturing

3S Engineering (Shanghai) Co., Ltdmanufactures high precision equipment (tyre mould and related products)in China for the tyre and auto industry.

Soil & Foundation (Pte) Limitedis the market leader in geotechnical instrumentat ion and investigationworks in Singapore. I t offers quality and reliable services in advancedmonitoring systems, remote or wireless data acquisition, laboratory testingand analysis. The company also offers offshore site investigation andadvanced environmental technical analysis work.

Bored Piling (Pte.) Ltd.is the engineering and construction unit with expertise in foundation, civilengineering, infrastructure, building and plant development projects, aswell as project management. It is one of the most established foundationand civil engineering contractors serving both public and private sectorclients in Singapore. BPL has overseas off ices and projects in the Philippines,Malaysia and China.

Globaltraco International Groupfocuses on the distribution of tyres and auto products to selected countr iesin Asia and Africa. It holds exclusive distributorships for PT Gajah Tunggal’sGT Radial tyre brands, Grandtour Tire Co., Ltd’s Grandtour and Primewelltyres as well as Finland’s Nokian Tyres. The company also distributesautomotive products such as alloy wheels, lubricants, intelligent tyre pressuresensors and batteries.

SP Global International Groupis established in 2003 to handle the marketing and distribution of consumerproducts in selected markets. It distributes feminine napkins (Confidentand Softex), baby diapers (Softlove) and food products (Nissin) manufacturedby established manufacturers in China and Indonesia.

SP Resources International Pte. Ltd.carries out the trading and marketing of a broad range of products includingchemicals, oil, coal, rubber, metals and other products uti l ised bymanufacturers in the petrochemical, rubber, automotive and power industriesin Asia.

SP Machinery Groupspecialises in the trading and marketing of machinery and equipment toserve the growing tyre, tyre-related and rubber industries in the region,with particular emphasis in emerging markets such as China and India.

Engineering &Construction

Services

TyreRetreading

HighPrecision

Equipment

Trading andMarketing

Distribution

Environmental &Geotechnical

Services

Singapore Bandag Groupwas acquired in 2003 and its main activity is retreading of truck and bustyres. This activity complements Globaltraco’s tyre distribution businessand enables the Group to offer comprehensive solution in tyre managementsystems.

SP Corporation Limited 1 Annual Report 2003


Corporate Structure

SP Machninery International Pte. Ltd.

Trading &Marketing

SP Resources International Pte. Ltd. **

SP Machinery Holding Pte. Ltd.

S3 Engineering (S) Pte. Ltd. #

Distribution

Globaltraco International Pte Ltd

Globaltraco (Malaysia) Sdn. Bhd.

SP Global International Pte. Ltd.

100%

100%

100%

60%

Global Noble International Corporation51%

100%

Engineering &ConstructionService

Bored Piling (Pte.) Ltd.

100%

Trenchless Construction Pte Ltd100%

Ground Engineering Technologies Pte Ltd100%

WALLbilt Pte Ltd100%

Bimstar, Inc.35%

100%

100%

High PrecisionEquipment

BPL Philippines, Inc.40%

BPL Engineering (M) Sdn Bhd100%

BPL Engineering (HK) Limited100%

BPL (HK) Private Limited

Environmental &GeotechnicalServices

Soil & Foundation (Pte) Limited100%

100% 3S Engineeering (Shanghai) Co., Ltd #

100% Singapore Bandag (Private) LimitedTyreRetreading

100%

Performance Retreads Sdn. Bhd.100%

Creative Industrial Packaging Sdn. Bhd.

ENGINEERINGSERVICES

MANUFACTURING

MARKETINGSERVICES

OTHERS 81%

SPCorporation

Limited*

Note: * Formerly known as SPP Limited* * Formerly known as SPP Trading Pte Ltd# 3S Engineering (Shanghai) Co., Ltd is a wholly-owned subsidiary of S3 Engineering (S) Pte. Ltd. SINGAPORE

INTERNATIONAL


60%



28 ,573

8 , 4 5 56 , 3 4 6

48 ,992

100 ,00050 ,040

652 ,295109 ,672

435 ,780518 ,596

3 , 9 0 3

1 0 . 0 01 2 . 6 8

0 . 9 7

5 . 7 9

2 . 1 9

2003 2002 2001 2000 1999

GROUP PROFIT & LOSS STATEMENT ($’000)

Revenue 219,824 122,411 66,584 65,504 180,896

Profit/(loss) before income tax 2,094 (2,963) (7,213) (17,764) (8,388)Income tax 51 152 506 1,916 995Profit/(loss) after income tax 2,145 (2,811) (6,707) (15,848) (7,393)Minority interests 323 9 (73) - 26Net profit/(loss) for the financial year 2,468 (2,802) (6,780) (15,848) (7,367)

GROUP BALANCE SHEET ($’000)

Property, plant and equipment 10,587 12,644 14,522 20,033 31,357Properties held for resale - - - 24,051 24,051Other assets 70,820 53,867 39,181 23,821 29,479Total assets 81,407 66,511 53,703 67,905 84,887

Shareholders’ funds 19,077 16,785 19,887 4,077 17,848Minority interests 780 885 1,261 1,148 1,370Total borrowings 9,759 11,208 9,141 44,616 41,209Other liabilities 51,791 37,633 23,414 18,064 24,460Total liabilities and equity 81,407 66,511 53,703 67,905 84,887

FINANCIAL RATIOS

Earnings/(loss) per share (cents) 0.70 (0.80) (2.55) (8.89) (4.20)Net assets per share (cents) 5.44 4.78 5.67 2.29 10.01Return on average shareholders’ funds (%) 14 (15) (57 ) (145) (35)Return on average assets (%) 3 ( 5 ) (10 ) (21 ) ( 8 )Debt-equity ratio (%) 51 67 46 1,094 231

Five Year Financial Summary

99

67

122

220

66

181

00 01 02 03 99

( 7 )

2

( 1 6 )

00 01 02 03 99

5467

81

68

85

00 01 02 03

( 3 )

( 7 )

REVENUE ($m) NET PROFIT/(LOSS) ($m) TOTAL ASSETS ($m)


I


“The Group turned around in 2003, supported by income from new businesses in China and

improved margins from operating activities.”

The Group’s revenue grew significantly by 80% to $220 million in 2003. With this and continuing improvements inoperational efficiency, the Group achieved a turnaround with a net profit of $2.5 million as compared to losses for the lastseveral years.

The Marketing Services Division continued to be the Group’s largest revenue contributor accounting for 55% of the Grouprevenue. Its revenue increased by 73% to $122 million in 2003 driven mainly by higher sales of products linked to theautomotive, tyre and rubber industries, expanded trading in petrochemical and chemical products, as well as consumerproducts.

The Engineering Services Division increased its revenue by $42 million to $96 million with book orders carried forward from2002 and some new projects secured during the year.

The Manufacturing Division achieved revenue of $3 million in its first year of operation in 2003. The revenue was mainlyattributed to the sales of high precision equipment (tyre mould and related products) for the tyre and auto industry inChina. The division has also expanded into tyre retreading activities during the year.

To strengthen the foundation for future growth, the Group will fortify its businesses under the Marketing Services Divisionand focus on manufacturing activities relating to the tyre and automotive industry in China.

With the approval from Shareholders in May 2003, the Company changed its name to SP Corporation Limited. TheCompany also adopted a corporate logo:

During 2003, the Board fine-tuned and enhanced the policies and procedures for Corporate Governance as reflected in theCorporate Governance Report.

On 19 December 2003, Mr David Lee Kay Tuan relinquished his executive appointment. He remains as a non-executivedirector and has been appointed the Chairman of the Executive Committee.

On behalf of the Board, I would like to put on record the Company’s thanks to the Management and staff for theirdedication and contributions in turning the Group around. I would also like to express the Board’s gratitude to all ourvalued customers, business associates, suppliers and our shareholders for their continuing support.

Peter SungChairman8 March 2004

Chairman’s Statement



Managing Director andCEO’s Statement

“SP Corp will continue to innovate and adopt appropriate strategies to strengthen the foundation

for future sustainable growth and create value for its shareholders and stakeholders.”

Building from synergistic new businesses, the Group added two new business units in 2003 involved in the distribution ofconsumer products and tyre retreading. Additionally, a new subsidiary under Globaltraco was set up in Malaysia to intensifythe distribution of tyre and auto products in this key market.

In 2003, the Group achieved further growth and accomplished a turnaround with positive earnings from all its three coredivisions. The Group’s overseas revenue increased by 23% to $80 million, arising mainly from expanded marketing andmanufacturing activities. In particular sales to China increased by four fold to $32 million.

Going forward, the Marketing Services Division will continue to expand its trading activities in Asia, with particularemphasis on China, Thailand and Indonesia. It will focus on products related to tyre and rubber, petrochemical, mining andenergy industries. This division will also bolster its efforts to become a significant distributor of tyre and auto products inSingapore and ASEAN. The new consumer products distribution unit will seek to increase its market share through appropriatemarketing strategies.

Despite the modest performance of Engineering Services Division in 2003, its business environment in 2004 will remainvery tough with poor domestic construction demand. This division will take suitable actions to tackle the challenges ahead.

The Manufacturing Division plans to increase its investment in China as the demand by tyre manufacturers for its tyremould and related products is expected to remain strong. This expansion plan may see initial set-up costs to be incurred in2004. The tyre retreading unit expects the Singapore market to remain highly competitive. It will continue to take measuresto improve its revenue and reduce operating costs.

In essence, the Group will continue to fortify the growth of its businesses under Marketing Services Division that arerelated to the tyre and rubber industries, the trading of selected commodities that offer good long term prospects andexpand its manufacturing activities in China. It will also adopt appropriate measures to reduce its dependency on theEngineering Services Division.

In addition, the Group will continue to leverage on the network of its parent company, Tuan Sing Holdings Limited, and itsaffiliated companies so as to expand its business activities in Asia.

With the above strategic thrusts, the Group expects satisfactory result from the Marketing Services Division and the currentactivities of the Manufacturing Division. The Group expects to remain profitable in 2004 and will continue to review andrationalise its business structure so as to strengthen the foundation for future sustainable growth and create value for itsshareholders and stakeholders.

SP Corp Group’s management would like to express its sincere appreciation for the invaluable support provided by itsesteemed customers, suppliers, principals, bankers and business associates, as well as its parent company. It is thankful toits Board of Directors for their valued guidance and our committed staff for their dedication and efforts to improve workefficiency and productivity to attain the turnaround in 2003.

Low Kian BengManaging Director and CEO8 March 2004



01 02 03

22

70

121

Revenue by Product

Products for the automotive, tyre andrubber industries 70%

Marketing Services Division’s Revenue ($m)

Petrochemical, chemical and otherproducts 28%

Consumer products 2%

Operations Review and Outlook

Marketing ServicesThis division increased its revenue by 73% to $121 million in2003. Its revenue consists of sales of tyres, automotive products,equipment and commodities linked to tyre and rubber industries,petrochemical, chemical and consumer products.

Trading and Marketing

SP Resources International Pte Ltd (SPRi)(Formerly known as SPP Trading Pte Ltd)

SPRi recorded a 93% increase in revenue to $63 million in2003. This was mainly attributed to more than three foldsincrease in sales of petrochemical and chemical products, aswell as higher trading volume of commodities for the tyreand rubber and aquaculture industries.

SPRi continued to grow its businesses of trading in naturalrubber, rubber carbon masterbatch, steel bead wire andrubber chemicals with tyre manufacturers in Indonesia andChina. SPRi secured a term rubber sales contract for supplyof RSS1 to the largest tyre manufacturer in China andcontinued to maintain its agencies for rubber processing oilfrom Thailand and zinc oxide from Indonesia.

SPRi expanded its chemicals trading activity in 2003 especiallyfor solvents products. It entered into a sizable term supplycontract of toluene with a Thailand refinery in 2003. It alsostarted break bulk sales through tanking facilities in Indonesiaand Malaysia in order to serve local customers.

SPR is also involved in trading of feed materials such asfishmeal for the shrimp farming industry in Indonesia.

Its customer and supplier base was expanded in 2003 andSPRi would maximize this valuable network in growing itsbusinesses.

SPRi plans to further expand its trading activities in Asia, withparticular emphasis on China, Thailand and Indonesia. It willcapitalise on the groundwork that it has built to grow itsbusinesses in petroleum products, other types of rubberprocessing oils and coal with chemical and power generationplants in the region.




Marketing ServicesSP Machinery Group

This sub-group carried out its first full calendar year businessin 2003 with a revenue of $14 million as compared to $2million revenue in 2002 (5 months).

It consists of SP Machinery International Pte. Ltd. and S3Engineering (S) Pte. Ltd. and focuses on trading and marketingof machinery and equipment for the tyres, tyre-related andrubber industries. Revenue in 2003 consists of mainly tradingof tyre moulds and related products to the largest tyremanufacturer in China.

This sub-group plans to expand its specialist trading andmarketing activities in the region, with particular emphasisin growing markets, for such specialized technical products.

Distribution

Globaltraco International Group (Globaltraco)

This sub-group achieved record revenue of $43 million in2003, representing a 30% increase over revenue of $33million in 2002. The revenue growth was attributed to highersales of commercial vehicle tyres in Singapore and increasein export sales to Malaysia, Thailand and other ASEANcountries.

It consists of Globaltraco International Pte Ltd in Singaporeand its newly set-up 60% subsidiary, Globaltraco (M) Sdn.Bhd.

Globaltraco is currently the appointed distributor for selectedcountries in ASEAN and Africa for various established brands

of tyre and auto products produced by reliable and reputablemanufacturers.

The major line of products distributed by Globaltraco is theGT tyres manufactured by the largest tyre manufacturer inASEAN, namely PT. Gajah Tunggal (“GT”) in Indonesia. GT isa significant international player in the tyre industry with salesto almost 100 countries worldwide. Appointed by GT since1996, Globaltraco is distributing its full range of tyresincluding passenger car radials and the ultra high performancetyres, light commercial radial and bias tyres, truck and busbias tyres, as well as motorcycle, off-the road and industrialtyres.

Grandtour ( ) and Primewell tyres manufactured byGrandtour Group in China are the next major line of productsdistributed by Globaltraco. The Grandtour Group is currentlythe largest tyre manufacturer in China, with sizable domesticmarket share due to its renowned and proven quality.Globaltraco secured the distributorship in 2001 and withactive promotion, sales for this second major tyre line hasbeen increasing. Globaltraco also works closely with itsprincipals to develop a new range of tyres catering to thecity/urban bus and commercial truck segment.

Nokian tyres manufactured by a leading Europeanmanufacturer in Finland are the premium tyre line distributedby Globaltraco. Globaltraco was awarded the exclusive ASEANdistributorship from Nokian Tyres in 2001; which is renownedfor its high performance and winter tyres in the Nordic Region.Globaltraco was further awarded the exclusive ASEAN



distributorship for Nokian’s intelligent tyre pressure monitoringdevices called “Roadsnoops” in 2003. Globaltraco will workclosely with Nokian Tyres to promote its new “intelligent”products along with tyres and alloy wheels.

To complement its core tyre distribution business, Globaltracoalso offers other automotive products such as batteries, alloywheels and lubricants. Globaltraco is currently the distributorfor various brands of wheels including MAK wheels from Italy,AEZ and Dotz alloy wheels from Germany, Millennium alloywheels of Indonesia, as well as GT Wheels manufactured bySeyen Heavy Industries in China. It also markets Fuchslubricants from Germany in Vietnam.

With quality and up-to-date products from these establishedand cost competitive producers, Globaltraco has captured asizable share of the replacement tyre and alloy wheels marketin Singapore, Malaysia and Thailand for both the passengerand commercial vehicles segments.

Going forward, Globaltraco will continue its efforts to be asignificant player of tyre and automotive products inSingapore and the ASEAN region while striving to add valueto both its suppliers and customers. Working closely withthe tyre retreading unit of the Group, Globaltraco will exploitopportunities with established organisations and automotiveplayers to better serve their needs for tyres by offeringcomprehensive solution in tyre management systems andtechnology.

SP Global International Group (SP Global)

This sub-group recorded revenue of $2 million in its first yearof operation in 2003 for napkins and diaper products. Thissub-group consists of SP Global International Pte. Ltd. inSingapore and its 51% subsidiary Global Noble InternationalCorp. in the Philippines. It was newly established in the firstquarter of 2003 to undertake the marketing and distributionof selected consumer products in the ASEAN region.

SP Global is currently the marketing representative for PTSoftex in Indonesia for its “Softlove””brand of baby diaperand “Softex” brand of feminine napkins, for the ASEANmarkets and other selected countries. These two productsare currently available in major retailing stores andsupermarkets in Singapore since the last quarter of 2003. Italso started marketing the “Nissin” brand of cream cake andbiscuits in Singapore.

During the year, the Philippines unit launched its own“CONFIDENT” brand of sanitary napkins line imported fromits principal in China. Through active advertising andpromotional campaign, the “CONFIDENT””brand of napkinis fast becoming a household name and is readily available inmost supermarkets and retail outlets throughout the country.

SP Global expects the market condition for the fast movingconsumer products to remain highly competitive and will seekto increase its market share with appropriate marketingstrategies.


Marketing Services


Engineering and Construction Services

Bored Piling (Pte.) Ltd. and its subsidiaries (BPL Group)

Despite the declining construction demand in Singapore, BPLgroup of companies achieved $85 million revenue in 2003,representing a 85% increase over last year. This was mainlyattributed to book orders carried forward from 2002 and newprojects secured during the year.

Established in 1971, BPL Group specialises in foundationpiling, building and civil engineering works. In its more thanthirty years of operation, BPL Group has undertaken andcompleted many sizable and prestigious foundation and civilengineering projects for building and infrastructuredevelopment in Singapore. BPL is certified with ISO 9001:2000standards and presently holds the second highest A2registration grading for civil engineering work and B1 (3rdhighest) registration grading for building work with theBuilding and Construction Authority of Singapore. It also holdsthe highest L6 registration grading for foundation piling work.

Construction projects undertaken by BPL in 2003 include a$24 million piling project for the Republic Polytechnic, whichwas one of the largest single public sector piling projectsawarded in recent years. Other sizable projects includesubcontract foundation works for MRT Contract 821 and 822of the Circle Line project at $18 million and $16 millionrespectively, a $16 million civil engineering project forconstruction of second south cross taxiway bridge atSingapore Changi Airport, a $27 million joint venture buildingproject at Adam Park, a $9 million building project at SunnyPalms condominium and a $12 million civil engineering projectfor the construction of diaphragm wall for the SingaporeHistory Museum.


Revenue by Services

01 02 03

Foundation piling 63%

Building 13%

Civil engineering 12%

Soil instrumentation,soil investigation and others 12%


Engineering ServicesThis division increased its revenue by 78% to $96 million in2003. Its revenue relates to foundation piling, building, civilengineering, soil instrumentation and investigation works.

Engineering Services Division’s Revenue ($m)

4554

96



Engineering Services

Its overseas units, namely BPL Philippines Inc. and BPLEngineering (M) Sdn Bhd; recorded revenue of $2 million and$1.4 million respectively in 2003. During the year, BPL hasalso secured a project management consultancy contract inChina.

BPL Group expects the business environment to remain toughdue to flat construction demand. It will continuously examineits business strategies, further rationalize its operation andfocus on its specialty areas of work.

Environmental and Geotechnical Services

Soil & Foundation (Pte) Limited (S&F)

S&F recorded revenue of $12 million in 2003, a 46% increaseover last year.

S&F is a reputable market leader offering the latestmethodology in soil investigation works and advanceautomation & wireless remote soil instrumentation packagestailor made for applications in civil engineering andenvironmental related works.

During the year, the company secured several majorinstrumentation and monitoring projects including variouscontracts for MRT Circle Line such as contract C823, C852and C825 (automatic tunnel monitoring system), variouscontracts for the Kallang / Paya Lebar Expressway project suchas C423, C424 and C425; as well as instrumentation and

monitoring works for the construction of Terminal 3 atSingapore Changi airport.

To maintain its competitive edge, S&F constantly innovatesand invests to build up its capabilities. It continuously upgradesits core equipment and assets to improve operationalefficiency for sustainable growth.

S&F has embarked upon new innovations that use the latesttechnological networking systems to automatically acquireand analyse data and has capabilities to send alarm/warningvia SMS automatically. These include numerous systems forEnvironmental Baseline Study (EBS), Air Pollution Hazards,Gas Pumping, Water Pollution Leachate and GroundTemperature besides those systems for Tunnel and BuildingDistortions and Vibrations.

S&F will continue to capitalize on its established marketleadership position to deliver timely quality works and advancetechnical know-how to better serve its customers.




High Precision Equipment

3S Engineering (Shanghai) Co., Ltd

This company achieved revenue of $2.4 million in its firstyear of commercial operation in 2003.

It was established in Shanghai towards the end of 2002 andinvolved in the manufacturing of high precision equipmentfor used by tyre manufacturers in the final phase of theirproduction process. Its revenue in 2003 consists mainly ofsales of tyre mould and related products to the largest tyremanufacturer in China.

In view of the good growth prospect of tyre manufacturersin China, the Group plans to expand its production capacitiesso as to meet the increasing demand of such products. Theexpansion plan may see initial set-up costs to be incurred in2004.

Tyre Retreading

Singapore Bandag Group

This newly acquired tyre retreading sub-group recorded $0.7million revenue in 2003 (8 months).

It consists of Singapore Bandag (Private) Limited and its 100%subsidiary Performance Retreads Sdn Bhd in Malaysia. Itsmain activity is retreading of truck and bus tyres tocomplement Globaltraco’s tyre distribution business.

Together with Globaltraco, it will work closely with transportand logistic operators to offer total solution for their needsfor both new and retread tyres.

This business unit expects the Singapore market to remainhighly competitive. It will continue to take measures toimprove its revenue and reduce operating costs.

Revenue by Product/Services

Manufacturing Division’s Revenue ($m)

01 02 03

3

High Precision Equipment 77%

Tyre Retreading 23%


Manufacturing

This division achieved revenue of $3 million in its first year ofoperation in 2003. Its revenue consists of sales of tyre mould

and related products, as well as tyre retreading services.



SP CORPORATION LIMITEDRegistered Office9 Oxley Rise#03-02 The OxleySingapore 238697Tel : (65) 6223 7211Fax: (65) 6224 1085 (General)

(65) 6733 3835 (Legal and Corporate)

Board of Directors:Peter SungChairmanLow Kian BengManaging Director & CEOCheng Hong KokDavid Lee Kay TuanLei Huai ChinWilliam LiemOng Teck GheeTan Lye Huat

Lilian Tan Yin YenGroup Financial Controller

Chow Kin WahCompany Secretary

Share RegistrarB.A.C.S. Private Limited63 Cantonment RoadSingapore 089758Tel: (65) 6323 6200Fax: (65) 6323 6990

Indonesia Representative OfficeSuite #303, 3rd Floor, Gedung GapuramasJl. S. Parman Kav. 91Jakarta 11420Tel : (6221) 566 8232 / 566 8242Fax: (6221) 566 8231

Edi RusliChief Representative

MARKETING SERVICES

Trading and Marketing

SP Resources International Pte. Ltd.7 Harrison Road#05-00 Harrison Industrial BuildingSingapore 369650Tel : (65) 6281 7622Fax: (65) 6281 6028

Fong Seok PhoyManaging Director

SP Machinery International Pte. Ltd.S3 Engineering (S) Pte. Ltd.7 Harrison Road#05-00 Harrison Industrial BuildingSingapore 369650Tel : (65) 6281 7622Fax: (65) 6281 6028

Low Kian BengManaging Director

Distribution

Globaltraco International Pte Ltd58 Tuas Basin LinkSingapore 638774Tel : (65) 6265 3088Fax: (65) 6262 2133

Simon Hui Chee TeckGeneral ManagerFrank Lim Eng KhoonAssistant General ManagerToh Bok ChuanCommercial & Fleet Sales ManagerLim Swee HuatAssistant Manager, Whole SalesJimmy Choy Ren JyeAssistant Manager, Export Sales

Globaltraco (M) Sdn. Bhd.53 & 54 Senawang Industrial EstateSeremban, Negeri Sembilan Darul Khusus70450 SerembanMalaysiaTel : (06) 677 1711Fax: (06) 677 7876

Steven Gan Seng PoeManaging Director

SP Global International Pte. Ltd.100E Pasir Panjang Road#07-04 Century WarehouseSingapore 118521Tel : (65) 6272 6179Fax: (65) 6272 0148

Frank Lim Eng KhoonAssistant General Manager

Global Noble International Corporation2/F ILO Building, 195 G, Areneta AvenueQuezon CityMetro Manila, PhilippinesTel : (632) 714 0299Fax: (632) 714 2485

Edwin Francis OngManaging Director

ENGINEERING SERVICES

Engineering and Construction Services

Bored Piling (Pte.) Ltd.7 Harrison Road#02-00 Harrison Industrial BuildingSingapore 369650Tel : (65) 6281 7622Fax: (65) 6281 6028

I van Chew Wee KeatManaging DirectorNg Dick YoungSenior ManagerLee Hong KeowSenior ManagerLim Leong KooSenior Contract Manager

Corporate Directory

BPL Philippines, Inc.Suite 3B ILO Building195G Araneta AvenueQuezon CityMetro Manila, PhilippinesTel: (632) 716 7781Fax: (632) 714 2236

Edwin Francis OngVice President

Daniel Adea JRProject Manager

Environmental and Geotechnical Services

Soil & Foundation (Pte) Limited7 Harrison Road#02-00 Harrison Industrial BuildingSingapore 369650Tel : (65) 6281 7622Fax: (65) 6281 6028

Allen Ng Keok HengExecutive DirectorLee Hong KeowDirector – TechnicalZhang Qing HuaManager, Geotechnical InstrumentationYvonne Mak Moon ThengQuality ManagerManager, Geotechnical InvestigationDr. Win NiangManager, Special ProjectsTan Seng HockOperations ManagerZaw Win TheinManager, Sales and Marketing

MANUFACTURING

High Precision Equipment

3S Engineering (Shanghai) Co., LtdNo. 689 Xujinzhong RoadXujin Development District, Qingpu,Shanghai, The PRCTel : (8621) 6976 8305Fax: (8621) 6976 8328

Low Kian BengDirector

Tyre Retreading

Singapore Bandag (Private) Limited58 Tuas Basin LinkSingapore 638774Tel : (65) 6265 1383Fax: (65) 6262 2133

Simon Hui Chee TeckGeneral ManagerMelvin Khaw Cheah JuenAssistant Manager, Operations


This Annual Report includes a separate booklet on Corporate

Governance, Financials and Corporate Information.


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Corporate Governance,Financials and

Corporate Information

SP Corporation LimitedAnnual Report 2003


Corporate Governance Report 13

Key Management Team 26

Financial Reports� Financial Highlights 27

� Value Added Statement 28

� Productivity Ratios and Statistics 29

� Directors’ Report 30

� Statement by the Directors 33

� Auditors’ Report 34

� Balance Sheets 35

� Consolidated Profit and Loss Statement 36

� Statements of Changes in Equity 37

� Consolidated Cash Flow Statement 38

� Notes to the Financial Statements 40

SGX Listing Manual Requirement 70

Corporate Information� Shareholding Statistics 71

� Share Price Performance 73

� Notice of Annual General Meeting 74

� Letter to Shareholders 76

� Proxy Form 89

Contents

Financial CalendarFinancial year ended 31 December 2003

Announcement of half-year results 26 August 2003

Announcement of full-year results 24 February 2004

Despatch of Annual Report 31 March 2004

Annual General Meeting 23 April 2004

Financial year ending 31 December 2004

Proposed announcement of half-year results August 2004

Proposed announcement of full-year results February 2005



Corporate Governance Report

Good governance has been and remains the commitment and responsibility of the whole Board. The Board iscommitted to high standards of corporate governance and has applied the Code of Corporate Governance(“the Code”) principles as set out in the following segments; and deviations from the Code are explained.

I Board MattersII Remuneration MattersIII Accountability and AuditIV Communication with Shareholders

I BOARD MATTERS

1 The Board’s Conduct of Its Affairs

Company policy and procedures

The principal functions of the Board include

� provide stewardship and corporate governance to the Company including charting its corporate directionsand strategies;

� monitor Management performance and to secure an adequate return for shareholders; and� approve the Company’s annual business plan including the annual budget, capital expenditure and

operational plans.

At the end of each year, the Board approves the Company’s annual budget and business plan of next financialyear; and the Board may be requested to approve material transactions that arise in the course of the year aswell as those that exceed the limits of authority delegated to the CEO and EXCO (see section 2 below).Material transactions requiring Board approval include material acquisitions and disposal of assets, corporateand financial restructuring and share issuance.

In addition to the five scheduled Board meetings to approve the annual budget and periodic review of theCompany’s operations and performance, the Board also holds ad-hoc meetings to address significant issues ortransactions.

The Board is supported by three key Board committees, namely, the Nominating Committee (“NC”), theRemuneration Committee (“RC”) and the Audit Committee (“AC”). The 2003 meetings of the Board and itscommittees, as well as each Director’s attendance record are disclosed in this report.



2 Board Composition and Balance


The Company’s Board of Directors consists of eight members from different backgrounds in the private andpublic sector, whose core competencies, qualifications, skills and experience are extensive. The directorscollectively bring with them a broad range of expertise and experience in areas such as accounting, finance,strategic & operation management and industry knowledge. The NC is of the view that the current board sizeof eight is appropriate considering the needs and demands of the Company.

At least one-third of the Board is non-Executive and independent of Management and the principal shareholder.The Board comprises four non-Executive and Independent Directors, three non-Executive and non-IndependentDirectors and one Executive Director who is the CEO.

In 2003, the Board formed an Executive Committee (EXCO) comprising of the CEO and Mr David Lee Kay Tuan.The Board delegates specific authorizations to the Executive Committee in connection with the running ofthe Company.

3 Role of Chairman and Chief Executive Officer (CEO)


The Chairman and CEO functions are assumed by two different directors. The Chairman, who is non-Executiveand Independent, is responsible for the Board, while the CEO has executive responsibilities for the Group’sbusinesses and is accountable to the Board.

4 Board Membership


The NC review and recommend to the Board the appointment of new directors as well as the submission for re-nomination and re-election of directors. The other responsibilities of the NC include:

� determine, based on the Company’s internal guidelines, if a Director is able to carry out his duties in thelight of his commitments to other companies;

� determine annually whether or not a Director is independent as defined under the Code;� assess the effectiveness of the Board as a whole;� assess the contributions of each Director to the effectiveness of the Board; and� ensure that the Company has a succession plan for key Executive Directors and officers, including

appointing, training and mentoring senior management.



The NC consists of three members, the majority of whom, including the Chairman, are Independent Directorsand all are non-Executive from December 2003.

The members of the NC are:

� Mr Peter Sung, Chairman (Independent, non-Executive)� Mr Cheng Hong Kok (Independent, non-Executive)� Mr David Lee Kay Tuan (non-Independent, non-Executive)

During the year (1 January 2003 to 31 December 2003), the NC held one meeting.

The NC is of the view that four of the eight Directors are independent as defined by the Code. No individualor group of individuals dominates the decision making process of the Board.

The Company’s Articles require one-third of the Board to retire and stand for re-election at each AGM. TheCompany’s Articles provide that a newly appointed Director must submit himself for election at the AGMimmediately following his appointment. In 2003, the Company’s Articles were amended to require a directorholding the office of Managing Director to retire by rotation, as with all other Directors who are subject toperiodic retirement by rotation. Also, the Company adopted the title of Chief Executive Officer and/or Presidentin place of the Managing Director title in order to give the Company the flexibility to employ a chief executivewho may not necessary be a member of the Board.

In line with the above, the following directors will retire and seek re-election at the coming AGM:

� Mr Peter Sung� Mr Low Kian Beng� Mr David Lee Kay Tuan



Board of Directors

The Directors’ professional qualifications, other appointments, academic background and work experience aredetailed in the biographic summaries presented below.

PETER SUNGChairman (Non-Executive Director, Independent)Chairman, Remuneration CommitteeChairman, Nominating Committee

Mr Sung is the Chairman since 28 January 2002 and the Chairmanof the Nominating Committee and Remuneration Committee sinceDecember 2002. He was elected on 17 May 2002. He is concurrentlya Director of Tuan Sing Holdings Limited (listed on the SingaporeExchange). Between 1966 and 1986, he worked in Shell, Sime Darbyand Pilecon in the Corporate Planning, Marketing, Sales andPersonnel functions. He was an Advisor to the Gajah Tunggal Groupin Indonesia until 1998. He was the Chairman of Tuan Sing HoldingsLimited and SP Corporation Limited until 1994. He was Singapore’sambassador to the Philippines between 1986 and 1988. He was aMember of the Singapore Parliament from 1988 to 1996. Between1988 and 1991, he was Minister of State with attachments in theMinistries of Foreign Affairs, Home Affairs and NationalDevelopment. Mr Sung holds a Bachelor of Arts degree with a FirstClass Honors in Economics from the University of Singapore.

LOW KIAN BENGManaging Director and Chief Executive Officer (CEO)Executive Director (Non-Independent)Member, Remuneration Committee

Mr Low is the Managing Director and CEO since 23 June 2000, aMember of the Remuneration Committee since December 2002 andMember of the Executive Committee formed on 19 December 2003.He was earlier appointed as Executive Director on 10 March 2000and was elected on 17 May 2000. He is concurrently the ManagingDirector of Globaltraco International Pte Ltd. He previously workedwith Nuri Holding (S) Pte Ltd as a senior business developmentmanager. He was also assigned to take charge of Gajah TunggalGroup’s businesses in Indonesia as General Manager of its chemicaldivision, head of its synthetic rubber company and senior advisorof procurement and logistic division of its tyre company. Prior tothis, he was the Principal Planner of the Petrochemical Corporationof Singapore responsible for the overall co-ordination of thePetrochemical Complex in Jurong Island, including its second phaseexpansion project, process and operation of utilities and offsiteplants. Mr Low holds a Bachelor of Science (Engineering) degreefrom the Imperial College of Science & Technology, University ofLondon, UK, and an MBA degree from the Oklahoma City University,USA.

CHENG HONG KOKNon-Executive Director (Independent)Chairman, Audit CommitteeMember, Nominating Committee

Mr Cheng is a Non-Executive Independent Director since 24 May2001, Chairman of the Audit Committee since 16 October 2001and Member of the Nominating Committee since December 2002.He was last re-elected on 12 May 2003. He holds directorships inother Singapore listed companies namely, Gul TechnologiesSingapore Ltd, Orchard Parade Holdings Ltd and SingaporePetroleum Co Ltd. Mr Cheng held various senior positions inSingapore Petroleum Company Limited in corporate planning,finance and administration, supply and trading, and marketingand distribution from 1970 to 1980 and became the President andChief Executive Officer of the Company from 1981 to 1996. ThroughSingapore Petroleum Company Limited, he was involved in theAsean Council on Petroleum (ASCOPE) for many years. He was aBoard Member of the Singapore Economic Development Board from1987 to 1990 and a member of the Government Economic PlanningCommittee from 1989 to 1991. Mr Cheng holds a Bachelor of Science(Chemical Engineering) degree with First Class Honours from theUniversity of London and received an Advanced ExecutiveManagement Certificate from the J. L. Kellogg Graduate School ofManagement, Northwestern University in the USA. He was aSingapore State Scholar as well as an Eisenhower Fellow.

DAVID LEE KAY TUANNon-Executive Director (Non-Independent)Member, Nominating Committee

Mr Lee was the Executive Director, Legal and Administration from28 January 2002 to 19 December 2003. He relinquished hisexecutive director appointment and continues on the Board as anon-Executive Director and as a Member of the NominatingCommittee. On 19 December 2003, he was appointed as Chairmanof the Executive Committee of SP Corporation Limited. He was lastelected on 17 May 2002. He is currently the CEO of Tuan SingHoldings Limited and holds directorships in Tuan Sing HoldingsLimited and its other listed subsidiaries, Gul Technologies SingaporeLtd (listed on the Singapore Exchange) as well as Grand HotelCompany Ltd (listed on the Australia Stock Exchange), an associatedcompany of Tuan Sing Holdings Limited. He established MessrsAng & Lee, a law firm and was its managing partner between 1994and 2001. Mr Lee holds a Bachelor of Laws (Hons) degree from theNational University of Singapore.

PETER SUNG LOW KIAN BENG CHENG HONG KOK DAVID LEE KAY TUAN



LEI HUAI CHINNon-Executive Director (Non-Independent)Member, Audit Committee

Mr Lei is a Non-Executive Director and a Member of the AuditCommittee since 1 December 2002. He was last re-elected on 12May 2003. He was previously an Executive Director, Finance & CFObetween June 2000 to December 2002 and a Non–Executive Directorduring March 1999 to June 2001. He is an Executive Director,Corporate Finance & Services and CFO of Tuan Sing Holdings Limited(listed on the Singapore Exchange) since May 2000. He is also anAlternate Director to Mr David Lee Kay Tuan in Gul TechnologiesSingapore Ltd (listed on the Singapore Exchange). He previouslyworked in the following positions: as a Financial Analyst withUniroyal Chemical Corporation (USA) from 1990 to 1993. From1994 onwards, Mr Lei held various positions in the Gajah TunggalGroup of companies in Indonesia, namely, Financial Analyst, GeneralManager, Finance Director and Executive Vice President. From 1999,he has been the Finance Director of GT Asia Pacific Holdings PteLtd (Singapore). Mr Lei holds a Bachelor of Science degree fromthe London School of Economics and Political Science and an MBAdegree from the University of Southern California, USA.

WILLIAM LIEMNon-Executive Director (Non-Independent)

Mr Liem is a Non-Executive Director since 7 March 2003. He waselected on 12 May 2003. He is a Director in GT Asia Pacific HoldingsPte Ltd. He also holds directorships in other listed companiesnamely, Tuan Sing Holdings Limited and Gul Technologies SingaporeLtd (both listed on Singapore Exchange) and Australian StockExchange listed Company Grand Hotel Company Limited as analternate director. Between 1999 and 2000, he was a Non-Executivedirector of Tuan Sing Holdings Limited and SP Corporation Limited.He has held the position of Analyst with Lehman Brothers andvarious management positions in Gajah Tunggal Group and HabitatProperties Pte Ltd prior to his current position. Mr Liem holds aBachelor of Science degree (Business) from the University ofCalifornia at Berkeley and an MBA degree from the MassachusettsInstitute of Technology.

ONG TECK GHEENon-Executive Director (Independent)Member, Audit Committee

Mr Ong is a Non-Executive Director since 1 January 1999 and aMember of the Audit Committee since 1999. He was last re-electedon 17 May 2002. He is concurrently a Managing Partner of the lawfirm Ong & Lau. He is also an Independent Director of EcowiseHoldings Limited, a company listed on the Singapore Exchange-Sesdaq and is Chairman of its Nominating Committee and a memberof its Audit Committee. Between 1986 and 1998, he was ManagingPartner of the law firm, Ong Teck Ghee & Partners. Mr Ong hasbeen in private practice for 19 years engaged in all areas ofcorporate work. He is an Advocate & Solicitor of the Supreme Courtof Singapore, a Commissioner for Oaths and a Notary Public. MrOng holds a Bachelor of Laws degree from the National Universityof Singapore.

TAN LYE HUATNon-Executive Director (Independent)Member, Audit CommitteeMember, Remuneration Committee

Mr Tan is a Non-Executive Director since 1 January 1999, a Memberof the Audit Committee since 1999 and a Member of theRemuneration Committee since December 2002. He was last re-elected on 12 May 2003. He was previously the Group FinanceDirector of United Motor Works Group in Singapore between 1988and 1993. Between 1993 and 1997, he was an Individual Non-clearing member of SIMEX. He is also a Non-Executive Director ofKian Ho Bearings Limited, a company listed on the SingaporeExchange. Mr Tan is also a member of the Governing Council of theSingapore Institute of Management (SIM) and a member of theSingapore Institute of Directors’ (SID) Professional DevelopmentSub-Committee. He was a member of the Board of the YMCA ofSingapore between 1983 and 1986. Mr Tan is a Fellow of theChartered Association of Certified Accountants (FCCA), Fellow ofthe Chartered Institute of Management Accountants (FCMA) and aChartered Director of the Institute of Directors, UK (C Dir). Heundertakes training, development and consultancy work inCorporate Governance under the style of HIM Governance PrivateLimited.

LEI HUAI CHIN WILLIAM LIEM ONG TECK GHEE TAN LYE HUAT



5 Board Performance


The NC is responsible for assessing the Board’s effectiveness and ability to discharge its responsibilities inproviding stewardship, corporate governance and monitoring management performance with the objective ofenhancing long term shareholders’ value. In reviewing the Board’s effectiveness, the NC takes into accountfeedback from Board members as well as the directors’ individual skill sets and experience. The NC alsoconsiders the financial indicators included in the Code of Corporate Governance as well as achievement ofstrategic objectives.

With regard to an individual director’s performance, the Company has adopted a self appraisal systemadministered by the NC. The appraisal covers attendance at meetings, level of participation at meetings andcontribution made by Directors in light of their individual expertise.

The Board, with the assistance of the NC, strived to ensure that the directors appointed to the Board possessthe experience, knowledge and skills relevant to the Company’s businesses.

Attendance at Board and Committee Meetings

During the period from 1 January 2003 to 31 December 2003, the Board held seven meetings comprising fiveregularly scheduled meetings and two special meetings called as and when necessary on an ad-hoc basis.

Board Audit Committee Remuneration NominatingCommittee Committee

Peter Sung* 5 5 2 2 - - - - 1 1 2 2 1 1Low Kian Beng 5 5 2 2 - - - - 1 1 2 2 - -Cheng Hong Kok** 5 5 2 2 4 4 1 1 - - - - 1 1David Lee Kay Tuan(1) 5 5 2 2 - - - - - - - - 1 1Lei Huai Chin 5 0 2 0 0 0 0 0 - - - - - -William Liem (2) 4 2 2 2 - - - - - - - - - -Ong Teck Ghee 5 5 2 2 4 4 1 1 - - - - - -Tan Lye Huat 5 5 2 2 4 4 1 1 1 1 2 2 - -

* Chairman of Board of Directors, Remuneration Committee and Nominating Committee** Chairman of the Audit Committee

Notes:(1) Mr David Lee Kay Tuan became a non-Executive director on 19 December 2003.(2) Mr William Liem was appointed Director on 7 March 2003.

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6 Access to Information


New directors are given the relevant information and briefing to familarise themselves with the structure,businesses and operations of the Company. The Directors are also kept up-to-date by Management on pertinentdevelopments of corporate laws and governance.

Management endeavors to provide the Board with timely and adequate information before each Board meetingso that the Directors can better understand the issues and contribute effectively in the Board’s decisionmaking process. Where complete information on certain matters could not be supplied to the Board,Management will advise the Board of available information pending the collation of the outstanding information.Additional information will be provided if requested by any Director. The members of the Board have separateand independent access to the Company’s Management, as well as to the Company Secretary at all times.

The Board is provided with monthly report which contains key performance indicators that inform the Directorsof the Company’s on-going performance, position and prospects. The Board also reviews and approves forrelease the Company’s half-year and full-year results. When updating the Board of the Company’s performance,the Board is kept apprised (with the necessary explanation) of material variance between the projections (inthe approved budget) and the actual results.

Directors, individually or as a group, may seek independent professional advice after consultation with theChairman of the Board.

II REMUNERATION MATTERS

7 Procedures for Developing Remuneration Policies


The RC comprises three Directors, the majority of whom are non-Executive and Independent Directors. The RCis chaired by an Independent and non-Executive Director.

The members of the RC are:

� Mr Peter Sung, Chairman (Independent and non-Executive)� Mr Tan Lye Huat (Independent and non-Executive)� Mr Low Kian Beng (non-Independent and Executive)

The Chairman of the RC has practical experience in the field of executive compensation; in addition, themembers have extensive senior managerial or directorship experience. The members of the RC also haveaccess to expert advice inside and/or outside the Company whenever it is required.



During the year (1 January 2003 to 31 December 2003), the RC held three meetings comprising one scheduledmeeting and two special meetings.

In 2003, the Board with RC’s assistance, formulated and established the remuneration framework andmethodology for the Company.

The principal responsibilities of the RC are to:

� offer an independent perspective to assist the Board to review the annual remuneration framework fornon-Executive Directors and Executive Directors which the Company has in place; and

� recommend to the Board, in consultation with the Chairman of the Board, for approval of the specificremuneration packages for the CEO, each Executive Director and any relative of a Director and/orsubstantial shareholder who is employed in managerial position by the Company, if any.

No member of the RC is involved in deciding his own remuneration. The CEO has employment contract withthe Company which can be terminated by either party giving three months’ notice. None of the non-Executive Directors is on service contract with the Company.

8 Level and Mix of Remuneration


The Company’s remuneration policy and package for Executive Directors is based on individual performance,Company performance and industry benchmarking compared with companies in similar industries. They areformulated to align Directors’ interests with those of shareholders’ and link rewards to both corporate andindividual performance. Executive Directors do not receive Directors’ fees from the Company or from itssubsidiaries/associated company where they have been appointed to these Boards, since their salariescompensate for services rendered as members of these Boards. Any Director fees for services rendered by theExecutive Directors to these entities are paid to the Company.

The remuneration policy and package of Executive Directors for the year ended 2003 has been approved bythe entire Board.

The non-Executive Directors are paid pursuant to the Company’s Remuneration Framework for Directors of theBoard. Under this framework, there will be a scale of fees divided into basic retainer fees as a director, feesfor serving on board committees, fees for holding Chairmanship appointments on the Board and committeesand fees for attendance. Payment of Directors’ fees is subject to shareholders’ approval at the AGM. The RC isof the view that remuneration of non-Executive Directors is appropriate to the level of contribution, takinginto account factors such as effort and time spent, and responsibilities of the Directors. The RC and the Boardare of the view that the remuneration of the Directors is adequate but not excessive.

The Board has not included an annual remuneration report (as suggested under Guidance Note 9.5 of theCode) as the Board is of the view that the matters which are to be required to be disclosed in the annualremuneration report have been sufficiently disclosed in this Report and in the Financial Statements of theCompany.



9 Disclosure on Remuneration


A summary of each non-Executive and Executive Director’s remuneration payable for FY2003 is shown in thefollowing table:

Breakdown of Remuneration in Percentage (%) Total Remuneration inFees2) Salary3) Benefits- Variable Total compensation bands

Name of Directors Status1) in-kind Bonus4) of $250,000Peter Sung NE, Ind 100% - - - 100% < $250,000

Cheng Hong Kok NE, Ind 100% - - - 100% < $250,000

Ong Teck Ghee NE, Ind 100% - - - 100% < $250,000

Tan Lye Huat NE, Ind 100% - - - 100% < $250,000

Lei Huai Chin NE, NI 100% - - - 100% < $250,000

David Lee Kay Tuan5) NE, NI - - - - - -

William Liem6) NE, NI 100% - - - 100% < $250,000

Low Kian Beng Exec, NI - 86% 2% 12% 100% $250,000 - $499,999

Total Directors’Remuneration (%) 28% 62% 2% 8% 100%

Notes:1) Ind – Independent / NI – non-Independent / Exec – Executive / NE – non-Executive.2) Directors’ fees as a lump sum are subject to approval by shareholders at the AGM in April 2004.3) The salary amount shown is inclusive of allowances and CPF.4) The variable bonus amount shown is inclusive of CPF.5) Mr David Lee Kay Tuan became a non-Executive director on 19 December 2003.6) Mr William Liem was appointed as Director on 7 March 2003.

Remuneration of Top Executives (Other than the Company’s Executive Directors)

The Company’s staff remuneration policy is based on individual’s rank and role, his individual performance,his business unit’s performance, Company performance and industry benchmarking gathered from companiesin comparable industries.

The table below shows the ranges of gross remuneration received by the Group’s five top Executives (excludingthe Company’s Executive Directors) in the Company and in the Group’s Singapore and overseas subsidiaries,but does not include any associated companies. There is no Group employee related to a Director, whoseremuneration exceeded S$150,000 for the financial year ended 31 December 2003.



Breakdown of Remuneration Total Remunerationin Percentage (%) Compensation

Name of top 5 Salary1) Benefits- Variable Total bandsexecutives Position in-kind Bonus2) of $250,000

Ivan Chew Wee Keat Managing Directorof subsidiaries 92% - 8% 100% < $250,000

Fong Seok Phoy Managing Directorof a subsidiary 87% - 13% 100% $250,000 - $499,999

Simon Hui Chee Teck General Managerof subsidiaries 89% - 11% 100% < $250,000

Allen Ng Keok Heng Director ofsubsidiaries 92% - 8% 100% < $250,000

Lilian Tan Yin Yen Group FinancialController 89% - 11% 100% < $250,000

Total Executives’Remuneration (%) 90% - 10% 100%

1) The salary amount shown is inclusive of allowances such as fixed transport allowance and CPF.2) The variable bonus amount shown is inclusive of CPF.

III ACCOUNTABILITY AND AUDIT

10 Accountability


The Board recognizes that it is accountable to shareholders for the performance of the Group. In dischargingthis responsibility, the Board ensures the timely release of all significant information to shareholders as wellas all statutory reporting requirements. To enable the Board to discharge this function, Management providesthe Board with balanced and understandable management accounts of the Group’s performance, position andprospects on a monthly basis and whenever any significant issue arises.



11 Audit Committee


The AC consists of four Directors, all of whom are non-Executive and three of whom are Independent. Theyare:

• Mr Cheng Hong Kok, Chairman (Independent, non-Executive)• Mr Tan Lye Huat (Independent, non-Executive)• Mr Ong Teck Ghee (Independent, non-Executive)• Mr Lei Huai Chin (Non-Independent, non-Executive)

The Board is of the view that the AC members are appropriately qualified to discharge their responsibilitiesand its members have accounting and/or related financial management expertise.

During the year (1 January 2003 to 31 December 2003), the AC held 5 meetings comprising 4 scheduledmeetings and 1 special meeting.

The principal functions of the AC are to:

• assist the Board in fulfilling its responsibilities for reviewing the Company’s financial reporting process,systems of internal control and management of financial risks, the audit process, and the Company’sprocess for monitoring compliance with laws and regulations and its own code of business conduct;

• review the scope, results and cost effectiveness of the Company’s audit, as well as the independenceand objectivity of the External Auditors;

• review the effectiveness and adequacy of the internal audit function by ensuring that the internal auditfunction is adequately resourced and has appropriate standing within the Company;

• review the effectiveness of the Company’s system for monitoring compliance with laws and regulationsand the results of any Management investigation and follow-up (including disciplinary action) of anyfraudulent acts or non-compliance;

• be satisfied that all regulatory compliance matters have been considered in the preparation of thefinancial reporting/statements;

• review annually the independence of the External Auditor as well as the nature and extent of non-auditservices provided by the External Auditors to the Company to ascertain that the independence andobjectivity of the External Auditors is not prejudiced;

• develop and formalise a cost effective risk management framework for the Company; and• conduct a review of interested person transactions as well as the Company’s procedures to identify,

report and seek requisite approval for the interest person transactions.

The AC has explicit authority to investigate any matter within its terms of reference. It has full access to,and co-operation of, management and full discretion to invite any director or any member of Management toattend its meetings. At least once a year, the Company’s External Auditors (Deloitte & Touche) meet separatelywith the AC without the presence of Management.



As part of the AC’s assessment of the External Auditors’ independence, the AC conducted an annual review ofthe non-audit services provided by the External Auditor in 2003. The AC is of the view that the non-auditservices (namely, as a tax agent) provided by the External Auditors do not prejudice their objectivity andindependence.

12 Internal Controls


The Board believes in maintaining a sound system of internal controls to safeguard shareholders interests andthe Group’s assets, and to appropriately manage risks that the Group is exposed to.

The Board is of the view that the Company has in place an adequate system of internal controls to meet theneeds of the Group and its current business environment. The Board notes that the system of internalcontrols provides reasonable, but not absolute, assurance that the Group will not be adversely affected byany event that could be reasonably foreseen as it strives to achieve its business objectives.

The AC’s responsibilities in the Group’s internal controls and risk management are complemented by the workof the Internal Auditor. The Board has established a risk management framework that supports and guides theBoard of Directors, Management and staff in managing significant risks faced by the Group. The process shallcover key areas of the Company’s business activities and is carried out through a systematic and bottom-upapproach from the business units to the Group that includes identification, documentation, treatment, reportingand monitoring of risks. The AC expects the risk assessment process to be a continuing process of review toensure that the Company has an appropriate cost effective risk management framework that can operateeffectively.

13 Internal Audit


The Company’s internal audit function is outsourced to PricewaterhouseCoopers. The AC reviews annually theadequacy of the internal audit function. The Internal Auditor (“IA”) is guided by the PricewaterhouseCoopersGlobal Internal Audit Services Outsourcing Engagement Framework (“Framework”). The standards developedin the Framework are consistent with the Standards for the Professional Practice of Internal Auditing set byThe Institute of Internal Auditors.

The Company’s Internal Auditor annually reviews the effectiveness of the Company’s material internal controls,including financial, operational and compliance controls, and risk management practices.



The AC annually reviews the activities and organisational structure of the Company’s internal audit functionto ensure that no unjustified restrictions or limitations are made. The AC reviews and approves the annual IAplan in order to ensure that the internal audit function is adequate. It also oversees the implementation ofthe internal audit plan and ensures that Management provides the necessary co-operation to enable theInternal Auditor to perform its function. The IA’s primary line of reporting is to the Chairman of the AC,although the IA also reports to the CEO on administrative matters. The AC reviews the Internal Audit functionon an annual basis and at least once every year meets with the Internal Auditors without the presence ofManagement.

IV COMMUNICATION WITH SHAREHOLDERS

14 Communication with Shareholders


The Company communicates with shareholders and the investing community through announcements thatare released to the SGX-ST via MASNET. These include the half-year and full-year results, material transactions,and other developments relating to the Group requiring disclosure under the corporate disclosure policy ofthe SGX-ST.

The Company has investor relations officers who respond to investor queries, as well as ensure the fair andtimely dissemination of all of the Company’s public releases. Information (as well as latest announcements)on the Company can be accessed at the website www.tuansing.com. All shareholders of the Company are senta copy of the Annual Report and notice of the Annual General Meeting (AGM). The notice of AGM, givingnotice of all items of business to be transacted at the AGM, is also advertised in the newspapers.

At the AGM, the Company’s shareholders have the opportunity to participate effectively through open discussionsand to vote on the resolutions tabled at the AGM. At General Meetings, separate resolutions are put up forapproval on each distinct issue. Shareholders can vote either in person or through proxies.

The Chairman of the Board, as well as the Chairmen of the Audit, Nominating and Remuneration Committeeswill be present and available to address questions at general meetings. The External Auditors will also bepresent to assist the Directors in addressing any relevant queries by shareholders.

Dealings in Securities

The Company believes that it has complied with the SGX-ST Best Practices Guide. Towards this end, theCompany has adopted a policy whereby the Company’s officers are not allowed to deal in the Company’ssecurities during the period commencing one month before the announcement of the Company’s annual andhalf-year results and ending on the day of announcement of results. The Company’s officers are also to refrainfrom dealing in the Company’s securities for short-term consideration.



Key Management Team

FONG SEOK PHOYManaging Director of SP Resources International Pte LtdFong Seok Phoy joined as Managing Director of SP Resources InternationalPte Ltd in April 2001. Prior to joining SP Corp Group, he held seniorappointments in multinational companies in the petrochemical industry.He was involved in the development of petrochemical project when workingin the Prime Minister’s office of the Singapore Government in the seventies.Under the Singapore Colombo Plan Scholarship, he graduated with aBachelor of Engineering (Chemical and Materials) (Hons) from the Universityof Auckland, New Zealand in 1974.

SIMON HUI CHEE TECKGeneral Manager of Globaltraco International Pte Ltd and Singapore BandagPte LtdSimon Hui joined Globaltraco International Pte Ltd as an Assistant GeneralManager in April 2001 and was promoted to the position of General Managerin April 2002. He is also in-charged of the tyre retreading operation underSingapore Bandag Pte Ltd. Prior to joining SP Corp Group, Simon Hui hasextensive experience in the sales and marketing of tyres and alloy wheels,as well as in retail and construction industries. Simon Hui holds a Bachelorof Business (Marketing) degree from La Trobe University, Australia.

FRANK LIM ENG KHOONAssistant General Manager of Globaltraco International Pte Ltd and SP GlobalInternational Pte LtdFrank Lim joined Globaltraco International Pte Ltd in 1996 and waspromoted to the post of Assistant General Manager in January 2003responsible for the regional sales of tyre and automotive products. He isconcurrently the head of the consumer products operation under SP GlobalInternational Pte Ltd. He holds a Bachelor of Science (Hons) degree inBusiness and Management studies from the University of Bradford, UK.

IVAN CHEW WEE KEATManaging Director of Bored Piling Pte Ltd group of companiesIvan Chew was appointed Managing Director of Bored Piling Group inFebruary 2004. His career with SP Corp Group began in 1991. From 1993to 1997, Ivan Chew was the General Manager of the Indonesia operation.He was appointed Director of Bored Piling Group in 1999 and held theposition of Assistant Managing Director from September 2000. Ivan Chewgraduated from the National University of Singapore with a Bachelor ofEngineering degree in 1986.

ALLEN NG KEOK HENGDirector of Soil & Foundation Pte LtdAllen Ng joined Soil & Foundation Pte Ltd since 1980 and was appointedDirector of Soil & Foundation Pte Ltd in March 1995. He was the head ofinstrumentation department from 1982 to 1989 and has been responsiblefor the planning and project management of instrumentation and soilinvestigation projects since 1990. He was also in-charged of the ready-mixed concrete and quarry operation of Bored Piling Group in the nineties.

LILIAN TAN YIN YENGroup Financial ControllerLilian Tan joined Bored Piling Group in 1992 and was promoted to theposition of Financial Controller in 1998. She was appointed Group FinancialController of SP Corp Group in April 2002 and her key responsibilitiesinclude finance, human resource and administrative functions. A Bachelorof Accountancy graduate from the National University of Singapore in 1984,Lilian Tan is also a member of the Institute of Certified Public Accountantsof Singapore.

From left to right:Top row: Allen Ng Keok Heng, Frank Lim Eng KhoonMiddle row: Fong Seok Phoy, Ivan Chew Wee Keat, Simon Hui Chee TeckFront row: Lilian Tan Yin Yen, Low Kian Beng (Managing Director & CEO), David Lee Kay Tuan (Chairman of Executive Committee)(Information on Mr Low Kian Beng and Mr David Lee Kay Tuan are set out on page 16 of this Annual Report)



Financial Highlights

Revenue

The Group’s revenue grew significantly by 80% to $220 million. Thestrong growth was attributable to higher revenue from MarketingServices and Engineering Services Divisions as well as new revenuestream from Manufacturing Division. The Marketing Services Divisioncontinued to be the Group’s largest revenue contributor where itsrevenue increased by 73% to $122 million. The Engineering ServicesDivision increased its revenue by $42 million to $96 million and theManufacturing Division achieved revenue of $3 million in its first yearof operation.

Net Profit/(loss)

The Group achieved a turnaround result in 2003 supported by incomefrom new businesses in China and improved margins from operatingactivities. All three core divisions, namely, Marketing Services,Engineering Services and Manufacturing contributed positively toearnings in 2003.

Total Assets

The Group’s total assets increased by 21% from $67 million in 2002 to$81 million in 2003. Inventories and receivables increasedcorresponding to the Group’s higher volume of business activities duringthe year. Cash and cash equivalents had also increased arising fromcash generated from operating activities with improved margins.Property, plant and equipment had reduced with controlled capitalexpenditure, depreciation and asset impairment.

Net Profit/(Loss) ($m)

(2.8)

2.5

2002

2003

Revenue ($m)

122

220

2002 2003

Total Assets ($m)

67

81

2002 2003



Marketing Engineering Manufacturing Corporate Elimination Consolidated2003 ($’000) Services Services and others

Revenue from operations 121,393 95,594 3,135 1,166 (1,464) 219,824Less: Purchase of goods andservices 118,018 84,977 1,955 598 (1,561) 203,987

Value added from operations 3,375 10,617 1,180 568 97 15,837Other operating income 145 983 82 87 (149) 1,148Finance income 111 13 3 2 - 129

Total value added availablefor distribution 3,631 11,613 1,265 657 (52) 17,114

Distributed as follows:

To employees Salaries and other staff costs 2,291 8,743 355 754 - 12,143

To government Corporate tax 332 (352) (32) 1 - (51)

To suppliers of capital Interest to banks

and other lenders 18 184 - 2 (40) 164 Minority interests (277) (46) - - - (323)

Retained for re-investmentand future growth

Depreciation 157 2,285 201 74 (4) 2,713 Retained profits/(losses) 1,110 799 741 (174) (8) 2,468

Total value added 3,631 11,613 1,265 657 (52) 17,114

Value added from operations 2003 3,375 10,617 1,180 568 97 15,837 2002 2,788 1,690 (35) 1,668 (1,488) 4,623

Value Added Statement



Marketing Engineering Manufacturing Corporate Consolidated2003 Services Services and others

Productivity Ratios

Value added per employee ($’000) 2003 66 34 35 114 40 2002 107 5 - 417 14

Revenue per employee ($’000) 2003 2,380 309 92 233 551 2002 2,692 174 - 537 360

Value added per $ employment cost ($) 2003 1.47 1.21 3.32 0.75 1.30 2002 1.93 0.22 (35.00) 3.25 0.47

Value added per $ investmentin property, plant and equipment ($)

2003 5.05 0.47 0.45 0.26 0.56 2002 6.32 0.06 (0.04) 0.73 0.15

Statistics

Average number of employees 2003 51 309 34 5 399 2002 26 310 - 4 340

Average investment in property, plant and equipment ($’000) 2003 668 22,621 2,616 2,197 28,102 2002 441 27,298 903 2,295 30,937

Productivity Ratios and Statistics



The Directors present their report to the members together with the audited financial statements of theCompany and of the Group for the financial year ended 31 December 2003.

1 Directors

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

Mr Peter Sung ChairmanMr Low Kian Beng Managing Director & CEOMr Cheng Hong KokMr David Lee Kay TuanMr Lei Huai ChinMr William Liem (Appointed on 7 March 2003)Mr Ong Teck GheeMr Tan Lye Huat

In accordance with the Company’s Articles of Association, the following Directors retire, and beingeligible, offer themselves for re-election:

Mr Peter SungMr Low Kian BengMr David Lee Kay Tuan

2 Arrangements To Enable Directors To Acquire Shares Or Debentures

Neither at the end of nor at any time during the financial year was the Company a party to anyarrangement whose object was to enable the Directors of the Company to acquire benefits by means ofthe acquisition of shares in, or debentures of, the Company or any other body corporate.

Directors’ Report



3 Directors’ Interests In Shares And Debentures

The Directors of the Company holding office at the end of the financial year had no interests in theshare capital and debentures of the Company and related corporations as recorded in the Register ofDirectors’ Shareholdings kept by the Company under Section 164 of the Singapore Companies Act exceptas follows:

Shareholdings in which Directorsare beneficially interested

As at 1 Jan 03 As at 31 Dec 03 As at 21 Jan 04

Number of the Company’sordinary shares of $0.05 each

Mr David Lee Kay Tuan - - 281,463,197*

Number of Tuan Sing Holdings Limitedordinary shares of $0.01 each

Mr David Lee Kay Tuan - 250,000 250,000

Number of Gul Technologies Singapore Ltdordinary shares of $0.20 each

Mr Low Kian Beng 12,000 12,000 12,000

Mr David Lee Kay Tuan - - 193,431,996**

* By virtue of interest of his spouse (Ms Michelle Liem Mei Fung) in SP Corporation Limited.** By virtue of interest of his spouse (Ms Michelle Liem Mei Fung) in Gul Technologies Singapore Ltd.

4 Directors’ Contractual Benefits

Since the beginning of the financial year, no Director has received or has become entitled to receive abenefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act (otherthan as disclosed in the consolidated financial statements), by reason of a contract made by theCompany or a related corporation with the Director or with a firm of which he is a member, or with acompany in which he has a substantial financial interest, except that certain Directors have receivedremuneration from related corporations in their capacities as directors and/or executives of thoserelated corporations.

5 Share Options

During the financial year:

(a) no option to take up unissued shares of the Company or any corporation in the Group was granted;

(b) no shares of the Company or corporations in the Group were issued by virtue of the exercise of anoption to take up unissued shares; and

(c) there were no unissued shares of the Company or any corporation in the Group under option.



6 Audit Committee

The Audit Committee consists of four non-executive directors, three of whom including the Chairman ofthe Committee are independent directors. At the date of this report, the members of the Audit Committeeare:

Mr Cheng Hong Kok (Chairman)Mr Lei Huai ChinMr Ong Teck GheeMr Tan Lye Huat

The Audit Committee performed the functions specified in the Singapore Code of Corporate Governance,Singapore Companies Act and the Singapore Exchange Securities Trading Limited Listing Manual.

In relation to the financial statements of the Company and the Group for the year ended 31 December2003, the Audit Committee reviewed the audit plans and scope of the audit examination of the externalauditors of the Company. The external and internal auditors’ findings on the internal controls of thecompanies within the Group, and management’s response to these findings were also discussed with theauditors and management. The Audit Committee’s activities included a review of the financial statementsof the Company and the Group for the year ended 31 December 2003, and the report of the externalauditors thereon.

The Committee recommends to the Board of Directors the nomination of Deloitte & Touche as externalauditors at the forthcoming Annual General Meeting of the Company.

7 Auditors

Deloitte & Touche have expressed their willingness to accept re-appointment as auditors of the Company.

On behalf of the Directors

Low Kian Beng David Lee Kay TuanManaging Director & CEO Director

Singapore8 March 2004



In the opinion of the Directors,

(i) the accompanying balance sheets, consolidated profit and loss statement, consolidated cash flowstatement and statements of changes in equity together with the notes thereon are drawn up so as togive a true and fair view of the state of affairs of the Company and of the Group as at 31 December2003, the results of the Group, changes in equity of the Company and of the Group and the cash flowsof the Group for the financial year then ended; and

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

On behalf of the Directors

Low Kian Beng David Lee Kay TuanManaging Director & CEO Director


Statement By The Directors



To the Members of SP Corporation Limited (formerly known as SPP Limited)

We have audited the accompanying financial statements of SP Corporation Limited set out on pages 35 to 69for the year ended 31 December 2003. These financial statements are the responsibility of the Company’sDirectors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by the Directors, as well as evaluating the overall financial statementspresentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the consolidated financial statements of the Group and the balance sheet and statement of changes inequity of the Company are properly drawn up in accordance with the provisions of the SingaporeCompanies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards and so as to give atrue and fair view of the state of affairs of the Group and of the Company as at 31 December 2003, theresults of the Group, changes in equity of the Group and of the Company, and cash flows of the Groupfor the financial year then ended; and

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

We have considered the financial statements and auditors’ reports of all the subsidiaries of which we have notacted as auditors, being financial statements included in the consolidated financial statements. The namesof these subsidiaries are indicated in Note 32 to the financial statements.

We are satisfied that the financial statements of the subsidiaries that are consolidated with the financialstatements of the Company are in form and content appropriate and proper for the purposes of the preparationof the consolidated financial statements and we have received satisfactory information and explanations asrequired by us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification,and in respect of subsidiaries incorporated in Singapore, did not include any comment made under Section207(3) of the Act.

Deloitte & ToucheCertified Public Accountants

William Lim Choon HockPartnerAppointed on 12 May 2003


Auditors’ Report



Group CompanyNotes 2003 2002 2003 2002

$’000 $’000 $’000 $’000

Assets

Non-current assetsProperty, plant and equipment 4 10,587 12,644 89 117Investments in subsidiaries 5 - - 14,532 14,809Investment in associate 6 16 17 - -

Total non-current assets 10,603 12,661 14,621 14,926

Current assetsInventories 8 4,096 2,920 - -Trade and other receivables 9 48,206 39,725 9,350 9,963Cash and bank balances 10 18,502 11,205 52 123

Total current assets 70,804 53,850 9,402 10,086

Total assets 81,407 66,511 24,023 25,012

Equity and Liabilities

EquityShare capital 14 17,550 17,550 17,550 17,550Reserves 39,651 39,827 40,816 40,816Accumulated losses (38,124) (40,592) (42,638) (42,152)

Total equity 19,077 16,785 15,728 16,214

Minority interests 780 885 - -

Non-current liabilitiesBorrowings 15 9,634 10,895 4,186 5,120Deferred tax 17 160 202 - -

Total non-current liabilities 9,794 11,097 4,186 5,120

Current liabilitiesTrade and other payables 18 51,402 37,431 4,081 3,637Income tax payable 229 - - -Borrowings 15 125 313 28 41

Total current liabilities 51,756 37,744 4,109 3,678

Total equity and liabilities 81,407 66,511 24,023 25,012

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

Balance SheetsAs at 31 December 2003



GroupNotes 2003 2002

$’000 $’000

Revenue 19 219,824 122,411

Cost of sales (207,062) (116,896)

Gross profit 12,762 5,515

Other operating income 20 1,148 4,656

Distribution costs (3,466) (1,713)

Administrative expenses (7,144) (7,130)

Other operating expenses 21 (1,171) (4,437)

Operating profit/(loss) 2,129 (3,109)

Finance income 22 129 318

Finance costs 23 (164) (172)

Profit/(loss) before income tax and share of result of associate 2,094 (2,963)

Share of result of associate - -

Profit/(loss) before income tax 24 2,094 (2,963)

Income tax 25 51 152

Profit/(loss) after income tax 2,145 (2,811)

Minority interests 323 9

Net profit/(loss) for the financial year 2,468 (2,802)

Basic earnings/(loss) per share (cents) 26 0.70 (0.80)


Consolidated Profit And Loss StatementFor the financial year ended 31 December 2003



Share Share Translation AccumulatedCapital Premium Reserve Losses Total$’000 $’000 $’000 $’000 $’000

Group

Balance at 1 January 2002 17,550 40,816 (689) (37,790) 19,887

Translation gain arising on consolidation - - 166 - 166Translation loss arising on inter-companynon-trade monetary items - - (362) - (362)

Transfer of translation gain arising oninter-company non-trade monetary items tothe profit and loss statement - - (104) - (104)

Net loss not recognised in the profitand loss statement - - (300) - (300)

Net loss for the financial year - - - (2,802) (2,802)

Balance at 31 December 2002 17,550 40,816 (989) (40,592) 16,785

Balance at 1 January 2003 17,550 40,816 (989) (40,592) 16,785

Translation loss arising on consolidation - - (83) - (83)Translation loss arising on inter-companynon-trade monetary items - - (93) - (93)

Net loss not recognised in the profitand loss statement - - (176) - (176)

Net profit for the financial year - - - 2,468 2,468

Balance at 31 December 2003 17,550 40,816 (1,165) (38,124) 19,077

Company

Balance at 1 January 2002 17,550 40,816 - (33,478) 24,888Net loss for the financial year - - - (8,674) (8,674)

Balance at 31 December 2002 17,550 40,816 - (42,152) 16,214

Balance at 1 January 2003 17,550 40,816 - (42,152) 16,214Net loss for the financial year - - - (486) (486)

Balance at 31 December 2003 17,550 40,816 - (42,638) 15,728


Statements Of Changes In EquityFor the financial year ended 31 December 2003



Group2003 2002$’000 $’000

Cash Flows From Operating ActivitiesProfit/(loss) before income tax and share of result of associate 2,094 (2,963)Adjustments for:

Depreciation of property, plant and equipment 2,713 2,601Interest expense 164 172Interest income (129) (318)Impairment loss on property, plant and equipment 499 720Write off of property, plant and equipment - 1,240Gain on disposal of property, plant and equipment, net (157) (448)Negative goodwill recognised (78) -Gain on liquidation of an associate - (2)Gain on disposal of a subsidiary - (80)

Operating gain before working capital changes 5,106 922Inventories (1,032) (1,299)Trade and other receivables (7,836) (12,262)Restricted bank balances 607 (2,809)Trade and other payables 13,668 14,286

Cash generated from/(used in) operations 10,513 (1,162)Interest paid (164) (172)Interest received 129 318Income tax (paid)/refund, net (51) 10

Net cash generated from/(used in) operating activities 10,427 (1,006)

Cash Flows From Investing ActivitiesProceeds from disposal of property, plant and equipment 1,534 1,041Payments for acquisition of property, plant and equipment (2,445) (3,609)Net cash outflow on acquisition of subsidiaries (Note A) (324) -Proceeds from disposal of a subsidiary (Note B) - 80Proceeds from liquidation of an associate - 50Payment to minority interests due to capital reduction by a subsidiary (117) (230)

Net cash used in investing activities (1,352) (2,668)


Consolidated Cash Flow StatementFor the financial year ended 31 December 2003



Group2003 2002$’000 $’000

Cash Flows From Financing Activities(Repayment of)/proceeds from borrowings, net (1,449) 2,067Proceeds from issue of shares by subsidiaries to minority shareholders 406 -

Net cash (used in)/generated from financing activities (1,043) 2,067

Foreign currency translation adjustment (128) (100)

Net increase/(decrease) in cash and cash equivalents 7,904 (1,707)Cash and cash equivalents at beginning of financial year 8,396 10,103

Cash and cash equivalents at end of financial year (Note 10) 16,300 8,396

Group2003$’000

Note A: Acquisition of subsidiaries

Fair values of identifiable net assets of subsidiaries acquired:Property, plant and equipment 205Inventories 144Trade and other receivables 375Cash and cash equivalents 103Trade and other payables (303)Income tax payable (8)Deferred tax (11)

505Negative goodwill arising from acquisition of subsidiaries (78)

Total consideration 427Cash and cash equivalents of subsidiaries acquired (103)

Net cash outflow 324

Group2003 2002$’000 $’000

Note B: Disposal of a subsidiary

Net tangible assets disposed - -Gain on disposal of a subsidiary - 80

Net cash inflow - 80




1 General

The financial statements of SP Corporation Limited (the “Company”) and consolidated financial statementsof the Company and its subsidiaries (the “Group”) for the financial year ended 31 December 2003 wereauthorised for issue in accordance with a resolution of the Directors on 8 March 2004. The Company isdomiciled and incorporated in Singapore with its registered office at 9 Oxley Rise, #03-02 The Oxley,Singapore 238697. The Company is listed on the Singapore Exchange Securities Trading Limited.

The immediate and ultimate holding company is Tuan Sing Holdings Limited, a company incorporated inSingapore and listed on the Singapore Exchange Securities Trading Limited. Related companies inthese financial statements refer to members of the holding company’s group of companies.

During the financial year, the Company changed its name from SPP Limited to SP Corporation Limited.

The principal activity of the Company is that of an investment holding company. The principal activitiesof the subsidiaries are set out in Note 32 to the financial statements.

During the financial year, there have been no significant changes in the nature of the business activitiesexcept that the Group commenced distribution of consumer products and retreading of tyres.

2 Summary of Significant Accounting Policies

(a) Basis of Preparation

The financial statements are prepared in accordance with the historical cost convention.

The financial statements are prepared in accordance with Singapore Financial Reporting Standards(“FRS”) as required by the Singapore Companies Act. In previous years, the financial statementswere prepared in accordance with Singapore Statements of Accounting Standard (“SAS”). Thetransition from SAS to FRS did not result in any significant change in accounting policies.

The accounting policies have been consistently applied by the Group and Company and are consistentwith those used in the previous year, except for the change in accounting policy discussed in 2(c)below.

The financial statements are presented in Singapore dollars.

(b) Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principlesincludes the use of estimates made by the Directors. Actual results could differ from thoseestimates.

Notes To The Financial Statements31 December 2003



2 Summary of Significant Accounting Policies (cont’d)

(c) Consolidation

The consolidated financial statements include the financial statements of the Company and all itssubsidiaries made up to 31 December. All significant inter-company balances and transactionsand resulting unrealised profits or losses are eliminated on consolidation. These subsidiariesinclude companies in which the Group has an interest of over 50% in the issued share capital atbalance sheet date or in which the Group controls the composition of the board of directors or hasthe power to govern the financial and operating policies of the investee. The results of subsidiariesacquired or disposed during the financial year are consolidated from the respective dates ofacquisition or up to the dates of disposal.

The interest of minority shareholders is stated at the minority’s proportion of the fair value of theassets and liabilities recognised at the time of acquisition, adjusted for the appropriate share ofpost acquisition profit or loss and other reserve movements.

The financial statements of subsidiaries are prepared for the same reporting period as the parentcompany using consistent accounting policies. Where necessary, accounting policies for subsidiarieshave been changed to ensure consistency with the policies adopted by the Group.

In the Company’s financial statements, investments in subsidiaries are stated at cost less anyamounts provided for impairment in value not recoverable which are recognised in the profit andloss statement.

In translating the financial statements of a foreign entity for incorporation in the consolidatedfinancial statements, the assets and liabilities are translated at the year end exchange rates.

Prior to 1 January 2003, the profit and loss items of foreign entities are translated at the year endexchange rates for incorporation in the consolidated financial statements.

With effect from 1 January 2003, in accordance with the requirement of FRS 21 – The Effects ofChanges in Foreign Exchange Rates, the Group uses the exchange rates that approximate theactual exchange rates at the dates of the transaction for translation of the profit and loss items offoreign entities in the consolidated financial statements.

The effect of the change in accounting policy is not significant to the Group and therefore thecomparatives in the consolidated profit and loss statement have not been restated.

The resulting exchange differences arising from translating the financial statements of foreignentities are taken directly to translation reserve.

On the acquisition of foreign subsidiaries, the goodwill arising is translated at the exchange rateprevailing at the date of acquisition. And on the disposal of a foreign entity, accumulatedexchange differences are recognised in the profit and loss account as a component of the gain orloss on disposal.




(d) Investments in Associates

An associate is defined as a company, not being a subsidiary, in which the Group has a long-terminterest of not less than 20% of the equity and in whose financial and operating policy decisionsthe Group exercises significant influence.

The Group’s investments in associates are recorded at cost and adjusted to recognise the Group’sshare of net assets of the associates, using equity method.

The Group’s share of the results of associates is included in the consolidated profit and lossstatement. The Group’s share of the post-acquisition reserves of associates is included in theinvestments in associates in the consolidated balance sheet.

Where the accounting policies of associates do not conform with those of the Group, adjustmentsare made where the amounts involved are considered significant to the Group.

Dividend income from associates is recognised when shareholder’s right to receive the dividend islegally established.

(e) Joint Ventures

A joint venture is a contractual arrangement whereby a subsidiary and other party/parties undertakean economic activity which is subject to joint control. For jointly controlled entities, theproportionate consolidation accounting method is used for the joint ventures whereby the Group’sshare of each of the assets, liabilities, revenue and expenses is combined on a line-by-line basiswith similar items in the financial statements. For jointly controlled operations, the Group recognisesin its financial statements, the assets it controls, the liabilities it incurs, the expenses it incursand its share of its income that it earns from the sales of goods or services by the joint venture.

(f) Property, Plant and Equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation andimpairment loss.

The initial cost of property, plant and equipment comprises its purchase price including importduties and non-refundable purchase taxes and any directly attributable costs of bringing the assetto its working condition and location for its intended use, any trade discounts and rebates arededucted in arriving at the purchase price. Expenditure incurred after the property, plant andequipment have been put into operation, such as repairs and maintenance costs, is normallycharged to the profit and loss statement in the period in which the costs are incurred. Insituation where it can be clearly demonstrated that the expenditure has resulted in an increase inthe future economic benefits expected to be obtained from the use of an item of property, plantand equipment beyond its originally assessed standard of performance, the expenditure is capitalisedas an additional cost of property, plant and equipment.




(f) Property, Plant and Equipment (cont’d)

Depreciation of property, plant and equipment is calculated on the straight line method to writeoff the cost of the assets over their estimated useful lives as follows:

Number of years

Leasehold land, building and improvements 5 to 99Plant and equipment 1 to 15Motor vehicles 5

Fully depreciated assets are retained in the financial statements until no longer in use.

(g) Intangibles

Goodwill

Goodwill represents the excess of the cost of the acquisition over the Group’s share of the fairvalue of identifiable net assets of a subsidiary, associate or joint venture at the date of acquisition.Goodwill is amortised using the straight-line method over its useful economic life up to a maximumof 10 years.

Negative Goodwill

Negative goodwill represents the excess of the Group’s share of the fair value of net assets acquiredover the cost of acquisition. To the extent that negative goodwill relates to expectations offuture losses and expenses that can be reliably measured, but do not represent identifiable liabilities,the portion of negative goodwill is recognised in the profit and loss statement when the futurelosses and expenses are incurred. Any remaining negative goodwill, not exceeding the fair valuesof the non-monetary assets acquired is recognised in the profit and loss statement over theremaining weighted average useful lives of those assets. Negative goodwill in excess of the fairvalue of the non-monetary assets acquired is recognised in the profit and loss statement immediately.

At each balance sheet date, intangibles capitalised are assessed as to whether there is any indicationof impairment in value. If any such indication exists, it is written down to its recoverableamount.

(h) Current Assets

Current assets include items realisable over operating cycles which may be in excess of one year.

(i) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a first-in, first-out or weighted average basis or specific identification basis and includes all costs inbringing the inventories to their present location and condition.

The costs of work-in-progress and finished goods include costs of raw materials, direct labour andan appropriate proportion of overheads based on normal operating capacity.




(i) Inventories (cont’d)

Net realisable value is the estimated selling price in the ordinary course of business, less estimatedcosts to completion and the estimated costs necessary to make the sale.

Provision is made where necessary for obsolete, slow moving items and defective inventories.

(j) Construction Contracts

Contracts work-in-progress are stated at cost plus estimated profits earned to-date, less provisionfor foreseeable losses to completion. Costs include costs that relate directly to the contract,costs that are attributable to the contract activities in general and costs that are specificallychargeable to the customer. Progress billings are deducted against contracts work-in-progress.

Contract revenue and contract costs are recognised as revenue and expenses respectively, whenthe outcome of a construction contract can be estimated reliably.

Revenue arising from fixed price contracts and cost plus contracts is recognised in accordancewith the percentage of completion method. The stage of completion is measured by surveys ofwork performed.

Losses, if any, are recognised immediately when their existence is foreseen.

(k) Trade and Other Receivables

Trade receivables, which generally have 30 to 90 day terms, are recognised and carried at originalinvoice amount less an allowance for any uncollectible amounts. Trade receivables of constructionprojects include progress claim and retention money which are subject to final certification fromclients and expiration of each project defect liability period. They are recognised based oncontractual claims less an allowance for any uncollectible amounts. An estimate for doubtfuldebts is made when collection of the full amount is no longer probable. Bad debts are written offas incurred.

Receivables from related parties are recognised and carried at cost less an allowance for anyuncollectible amounts.

(l) Cash and bank balances

Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highlyliquid investments readily convertible to known amounts of cash and subject to insignificant riskof changes in value.

Cash on hand and in banks and short-term deposits which are held to maturity are carried at cost.

For the purposes of the consolidated cash flow statement, cash and cash equivalents consist ofunsecured cash on hand and deposits in banks.




(m) Share Capital

Ordinary shares are classified as equity. External costs directly attributable to the issue of newshares, other than on a business combination, are shown as a deduction, net of tax, in equity fromproceeds. Dividends on ordinary shares are recognised in shareholders’ equity in the period inwhich they are declared.

(n) Borrowings

All borrowings are recognised at cost.

(o) Leases

Finance lease

Finance leases, which effectively transfer to the group substantially all the risks and rewardsincidental to ownership of the leased item, are capitalised at amounts equal, at the inception ofthe lease, to the fair value of the leased item or, if lower, at the present value of the minimumlease payments. Lease payments are apportioned between the finance charges and reduction ofthe lease liability to achieve a constant periodic rate of interest on the remaining balance of theliability for each period. Finance charges are charged directly to the profit and loss statement.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the assetor the lease term, if there is no reasonable certainty that the Group will obtain ownership by theend of the lease term. Conversely, if there is reasonable certainty, the period of expected use isthe estimated useful life of the asset.

Operating lease

Leases where the lessor effectively does not transfer substantially all the risks and rewards ofownership of the leased item are classified as operating leases. Operating lease payments arerecognised as an expense in the profit and loss statement on a straight-line basis over the leaseterm.

(p) Income Tax

Deferred income tax is provided, using the liability method on all temporary differences at thebalance sheet date between the tax bases of assets and liabilities and their carrying amounts forfinancial reporting purposes. Deferred tax assets and liabilities are measured using the tax ratesexpected to apply to taxable income in the years in which those temporary differences are expectedto be recovered or settled, based on the tax rates enacted or substantively enacted at the balancesheet date.

Deferred tax liabilities are recognised for all taxable temporary differences associated withinvestments in subsidiaries, associates and interests in joint ventures, except where the timing ofthe reversal of the temporary difference can be controlled and it is probable that the temporarydifference will not reverse in the foreseeable future.




(p) Income Tax (cont’d)

Deferred tax assets are recognised for all deductible temporary differences, carry-forwards ofunutilised capital allowances and unused tax losses, to the extent that it is probable that taxableprofits will be available against which the deductible temporary differences, carry-forwards ofunutilised capital allowances and unused tax losses can be utilised.

At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and thecarrying amount of deferred tax assets. The Group recognises a previously unrecognised deferredtax asset to the extent that it has become probable that future taxable profit will allow thedeferred tax asset to be recovered. The Group conversely reduces the carrying amount of adeferred tax asset to the extent that it is no longer probable that sufficient taxable profit will beavailable to allow the benefit of all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the sametax authority.

Current tax and deferred tax are charged or credited directly to equity if the tax relates to itemsthat are credited or charged, in the same or a different period, directly to equity.

(q) Trade and Other Payables

Liabilities for trade and other amounts payable which are normally settled on 30 to 90 day terms,are carried at cost which is the fair value of the consideration to be paid in the future for goodsand services received, whether or not billed to the Group.

Payables to related parties are carried at cost.

(r) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a resultof past events, it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation, and a reliable estimate of the amount of the obligation can bemade.

(s) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to theGroup and the revenue can be reliably measured.

Revenue from sale of products comprises revenue earned from the sale of the products net ofreturns, trade allowances and duties and taxes paid. Revenue from sale of products is recognisedwhen significant risks and rewards of ownership are transferred to the buyer.

For revenue recognition policy relating to long-term construction contracts, please refer to theaccounting policy on Construction Contracts [Note 2(j)].




(s) Revenue Recognition (cont’d)

Revenue from the rendering of services that are of short duration is recognised when the servicesare rendered.

Rental income is recognised on an accrual basis.

Interest income is recognised on a time-proportion basis using the effective interest rate.

Dividend income is recognised when the shareholder’s right to receive the dividend is legallyestablished.

(t) Impairment of Assets

Property, plant and equipment and long-term investments are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of the asset may not berecoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, animpairment loss is recognised in the profit and loss statement for items of property, plant andequipment and long-term investments. The recoverable amount is the higher of an asset’s netselling price and value in use. The net selling price is the amount obtainable from the sale of anasset in an arm’s length transaction. Value in use is the present value of estimated future cashflows expected to arise from the continuing use of an asset and from its disposal at the end of itsuseful life. Recoverable amounts are estimated for individual assets or, if it is not possible, forthe cash-generating unit.

Reversal of an impairment loss recognised in prior years is recorded when there is an indicationthat the impairment loss recognised for an asset no longer exists or has decreased. The reversalis recorded in the profit and loss statement. However, the increased carrying amount of an assetdue to a reversal of an impairment loss is recognised to the extent it does not exceed the carryingamount that would have been determined (net of depreciation) had no impairment loss beenrecognised for that asset in prior years.

(u) Retirement Benefit Costs

Payments to defined contribution retirement plans are charged as expenses as they fall due.Payments made to state-managed retirement benefit schemes are dealt with as defined contributionplans where the Group’s obligations under the schemes are equivalent to those arising in a definedcontribution retirement benefit plan.

(v) Foreign Currency Transactions

The accounting records of companies in the Group are maintained in their respective measurementcurrencies.




(v) Foreign Currency Transactions (cont’d)

Transactions in foreign currencies are converted to the respective measurement currencies at therates of exchange ruling at the dates of the transactions. Foreign currency monetary assets andliabilities are translated to the respective measurement currencies at the rates of exchange rulingat the balance sheet date. Exchange differences arising are taken to profit and loss statementexcept where the exchange differences arising from the conversion of monetary items that, insubstance, forms part of the Group’s net investment in a foreign entity are taken directly totranslation reserve until disposal of the net investment.

(w) Borrowing Costs

Borrowing costs are recognised as expenses in the period in which they are incurred.

3 Segment Information

The Group’s operating businesses are organised and managed separately according to the nature ofproducts and services provided, with each segment representing a strategic business unit that offersdifferent products and services.

The Group is organised into core divisional activities as follows:

(a) Marketing Services Division

The marketing services division trades and markets industrial products, machinery and equipmentfor tyres, tyre-related and rubber industries and distributes tyres and auto-products.

The Group commenced distribution of consumer products during the financial year.

(b) Engineering Services Division

The engineering services division provides a range of construction services including piling andfoundation, pipe jacking, civil engineering and infrastructure works, building construction, projectmanagement consultancy works, geotechnical instrumentation and investigation and environmentalservices.

(c) Manufacturing Division

The manufacturing division manufactures high precision equipment (tyre moulds and relatedproducts).

The Group commenced retreading of tyres during the financial year.

(d) Corporate and Others

The Corporate and Others segment includes general corporate activities.



3 Segment Information (cont’d)

Primary reporting format - business segmentsCorporate

Marketing Engineering andServices Services Manufacturing others Elimination Consolidated$’000 $’000 $’000 $’000 $’000 $’000

Year ended 31 December 2003

Revenue- External customers 121,236 95,594 2,806 188 - 219,824- Inter segment 157 - 329 978 (1,464) -

Total revenue 121,393 95,594 3,135 1,166 (1,464) 219,824

ResultSegment result 1,071 573 706 (174) (47) 2,129Finance income 111 13 3 2 - 129Finance costs (164)Share of result of associate - - - - - -

Profit before income tax 2,094Income tax 51

Profit after income tax 2,145

Minority interests 323

Net profit for the financial year 2,468

AssetsSegment assets 24,962 47,208 6,712 2,016 (14) 80,884Investment in associate - 16 - - - 16Unallocated assets 507

Total assets 81,407

LiabilitiesSegment liabilities 13,959 33,597 2,949 897 - 51,402Unallocated liabilities 10,148

Total liabilities 61,550

Other informationCapital expenditure 347 1,015 1,062 21 - 2,445Depreciation 157 2,285 201 74 (4) 2,713Impairment loss ofproperty, plantand equipment - 499 - - - 499




Primary reporting format - business segmentsCorporate

Marketing Engineering andServices Services Manufacturing others Elimination Consolidated$’000 $’000 $’000 $’000 $’000 $’000

Year ended 31 December 2002

Revenue- External customers 68,190 54,064 - 157 - 122,411- Inter segment 1,789 - - 1,991 (3,780) -

Total revenue 69,979 54,064 - 2,148 (3,780) 122,411

ResultSegment result 1,333 (4,069) (36) 1,151 (1,488) (3,109)Finance income 39 279 - - - 318Finance costs (172)Share of result of associate - - - - - -

Loss before income tax (2,963)

Income tax 152

Loss after income tax (2,811)

Minority interests 9

Net loss for the financial year (2,802)

AssetsSegment assets 24,536 37,070 2,076 2,597 (21) 66,258Investment in associate - 17 - - - 17Unallocated assets 236

Total assets 66,511

LiabilitiesSegment liabilities 14,082 22,497 166 686 - 37,431Unallocated liabilities 11,410

Total liabilities 48,841

Other informationCapital expenditure 203 1,596 1,822 4 (16) 3,609Depreciation 60 2,459 - 82 - 2,601Impairment loss ofproperty, plantand equipment - 619 - 101 - 720

Property, plant andequipment written off - 1,240 - - - 1,240

Inter-segment pricing is on an arms’ length basis.

Segment assets consist of property, plant and equipment, inventories, receivables and operating cash.Segment liabilities comprise operating liabilities and exclude items such as taxation and corporateborrowings. Capital expenditure comprises additions to property, plant and equipment.




Secondary reporting format - geographical segments

Revenue is based on the country in which the customer is located. Total assets and capital expenditureare shown by the geographical areas in which the assets are located.

Revenue Total Assets Capital Expenditure2003 2002 2003 2002 2003 2002$’000 $’000 $’000 $’000 $’000 $’000

Singapore 139,762 57,528 71,676 57,299 745 1,728China & Hong Kong 31,941 7,905 5,493 2,844 1,055 1,806Malaysia 15,341 23,081 2,797 5,897 7 2Indonesia 11,186 16,063 - - - -Thailand 8,986 7,875 - - - -Philippines 3,602 2,295 1,441 471 638 73Others 9,006 7,664 - - - -

219,824 122,411 81,407 66,511 2,445 3,609

4 Property, Plant and EquipmentLeasehold

land, building Plantand and Motor

improvements equipment vehicles Total$’000 $’000 $’000 $’000

Group

Cost:Balance at beginning of financial year 2,564 24,565 1,489 28,618Translation differences (36) (188) (6) (230)Additions 44 2,047 354 2,445Disposals (30) (4,023) (272) (4,325)Acquisition of subsidiaries 24 977 81 1,082Write offs - (5) - (5)

Balance at end of financial year 2,566 23,373 1,646 27,585

Accumulated depreciation:Balance at beginning of financial year 908 14,042 1,024 15,974Translation differences (6) (103) (3) (112)Depreciation for the financial year 39 2,493 181 2,713Impairment loss - 499 - 499Disposals (12) (2,723) (213) (2,948)Acquisition of subsidiaries 5 802 70 877Write offs - (5) - (5)

Balance at end of financial year 934 15,005 1,059 16,998



4 Property, Plant and Equipment (cont’d)Leasehold

land, building Plantand and Motor

improvements equipment vehicles Total$’000 $’000 $’000 $’000

Group

Depreciation for last financial year 153 2,284 164 2,601

Net book value:Balance at beginning of financial year 1,656 10,523 465 12,644

Balance at end of financial year 1,632 8,368 587 10,587

Details of the leasehold land and building are as follows:

Tenure of land and buildingDescription/Location (Gross floor area) Last valuation

Leasehold land and building 99 years from 1971 NilLot 28 & 30, Jalan Beliong (4,682 sm)Section 15, 40000 Shah AlamSelangor, West Malaysia

Plantand Motor

equipment vehicles Total$’000 $’000 $’000

Company

Cost:Balance at beginning of financial year - 220 220Additions 21 - 21

Balance at end of financial year 21 220 241

Accumulated depreciation:Balance at beginning of financial year - 103 103Depreciation for the financial year 5 44 49


Depreciation for last financial year - 44 44

Net book value:Balance at beginning of financial year - 117 117




4 Property, Plant and Equipment (cont’d)

The impairment loss represents the write-down of certain property, plant and equipment to recoverableamount as the usage of these property, plant and equipment will be limited. The recoverable amountwas determined based on the value of the property, plant and equipment in its limited use or indicativeresale value. The impairment loss is included in the “other operating expenses” on the profit and lossstatement.

Plant and equipment with net book values of $356,000 (2002: $343,000) and $73,000(2002: $117,000) at the balance sheet date for the Group and the Company respectively are underfinance lease agreements. Certain plant and equipment of a subsidiary were held by the bank ascollateral security for bank loan granted to the subsidiary as at the end of last financial year (Note 15).

5 Investments in SubsidiariesCompany

2003 2002$’000 $’000

Unquoted equity shares, at cost 73,425 72,998Less: Provision for impairment in value (58,893) (58,189)

14,532 14,809

Further details regarding the subsidiaries are set out in Note 32.

6 Investment in AssociateGroup

2003 2002$’000 $’000

Unquoted equity shares, at cost - -Group’s share of post acquisition results 16 17

16 17

Further details regarding the associate are set out in Note 33.

7 Interests in Joint Ventures

The Group has joint ventures involved in the provision of engineering and construction services detailedas follows:

Interest heldby the Group

2003 2002% %

Jointly controlled entities:J.V. with Beng Soon Machinery Services (S) Pte Ltd 50 50J.V. with Downer Engineering (S) Pte Ltd 50 50J.V. with Hua Kok Realty (Private) Limited 51 51

Jointly controlled operations:J.O. with Asia World Co Ltd 50 -



7 Interests in Joint Ventures (cont’d)

The Group’s share of the assets, liabilities, revenue and expenses of the jointly controlled entities,which are included in the consolidated financial statements, are as follows:

Group2003 2002$’000 $’000

Non-current assets - 2Current assets 3,763 2,164Current liabilities (3,955) (1,902)

Revenue 12,868 6,108Costs and expenses (13,486) (6,195)

8 Inventories

At netAt realisable

cost value Total$’000 $’000 $’000

Group

2003

Raw materials 67 72 139Work-in-progress 263 - 263Finished goods 3,689 5 3,694

4,019 77 4,096

2002

Raw materials 36 76 112Work-in-progress 23 - 23Finished goods 2,730 55 2,785

2,789 131 2,920

The net realisable value of inventories are stated net of provision for obsolescence of $50,000(2002: $86,000).



9 Trade and Other ReceivablesGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Trade receivables (Note 11) 46,074 36,669 - -Other receivables (Note 12) 2,132 3,056 9,350 9,963

48,206 39,725 9,350 9,963

10 Cash and bank balancesGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Fixed deposits- secured 2,202 2,602 - -- unsecured 5,390 1,431 - -

7,592 4,033 - -

Cash at bank and on hand- secured - 207 - -- unsecured 10,910 6,965 52 123

10,910 7,172 52 123

Cash and bank balances 18,502 11,205 52 123

Less: Restricted bank balances (2,202) (2,809)

Cash and cash equivalents perconsolidated cash flow statement 16,300 8,396

Fixed deposits of the Group amounting to $2,202,000 (2002: $2,602,000) and cash at bank and onhand amounting to $Nil (2002: $207,000) are held by banks as collateral security for credit facilitiesgranted to certain subsidiaries.

11 Trade ReceivablesGroup

2003 2002$’000 $’000

Trade receivables- Outside parties 37,650 29,194- Related parties 5,809 6,066- Related companies 2,228 1,469Retention monies receivables 4,008 2,813Amounts due from customers for contracts work-in-progress (Note 13) 102 444

49,797 39,986Less: Provision for doubtful trade receivables (3,723) (3,317)

46,074 36,669



12 Other ReceivablesGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Sundry debtors 252 1,298 16 4Prepayments 386 426 8 2Deposits 987 265 30 25Tax recoverable 507 236 66 66Amounts receivable from:Subsidiaries - - 14,439 15,076Related companies - 663 - -Related parties - 155 - -Associates - 13 - -

2,132 3,056 14,559 15,173Less: Provision for doubtful other receivables - - (5,209) (5,210)

2,132 3,056 9,350 9,963

The amounts receivable from subsidiaries, related companies, related parties and associates are unsecured,interest free and have no fixed terms of repayment except for an amount of $1,579,000 (2002: $2,033,000)receivable from a subsidiary which bears effective interest at 2.39% (2002: 2.49%) per annum.

13 Contracts Work-In-ProgressGroup

2003 2002$’000 $’000

Contracts costs incurred 88,971 28,165Attributable profits less losses recognised 1,856 659

90,827 28,824Progress billings (91,824) (29,078)

(997) (254)

Amounts due from customers for contracts work-in-progress (Note 11) 102 444Amounts due to customers for contracts work-in-progress (Note 18) (1,099) (698)

(997) (254)



14 Share CapitalGroup and Company

2003 2002 2003 2002Shares Shares $’000 $’000

Authorised:

At beginning and end of financial yearOrdinary shares of $0.05 each 2,000,000,000 2,000,000,000 100,000 100,000

Issued and fully paid:

At beginning and end of financial yearOrdinary shares of $0.05 each 350,991,516 350,991,516 17,550 17,550

15 BorrowingsGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

(i) Non-current:Finance leases (Note 16) 135 113 - 26Amount payable to a related company 5,313 5,272 - -Amount payable to holding company 4,186 5,510 4,186 5,094

9,634 10,895 4,186 5,120

(ii) Current:Bank loan - 214 - -Finance leases (Note 16) 125 99 28 41

125 313 28 41

The amount payable to a related company is secured by the Company’s entire shareholding in a subsidiarywith consolidated net asset of $6,020,000 (2002: $5,286,000), covered by negative pledge on theassets of certain subsidiaries in favour of the lender. The amount payable to a related company bearseffective interest of 2.39% (2002: 2.49%) per annum, has no fixed terms of repayment and repaymentis not expected within the next twelve months.

The amount payable to holding company is unsecured, interest free, has no fixed terms of repaymentand repayment is not expected within the next twelve months.

The bank loan as at the end of last financial year was secured by fixed and floating charges over theplant and machinery of a subsidiary with net book value of $738,000 and a corporate guarantee by theCompany.



16 Finance LeasesGroup Company

Present value Present valueMinimum of minimum Minimum of minimum

lease payments lease payments lease payments lease payments2003 2002 2003 2002 2003 2002 2003 2002$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Within one year 138 107 125 99 29 42 28 41

After one year but not morethan five years 146 126 135 113 - 28 - 26

284 233 260 212 29 70 28 67Less: Future finance charges (24) (21) - - (1) (3) - -

260 212 260 212 28 67 28 67

All finance leases are on a fixed repayment basis. The average effective borrowing rate was 5.37%(2002: 4.54%) per annum.

17 Deferred TaxGroup

2003 2002$’000 $’000

Balance at beginning of financial year 202 174Acquisition of subsidiaries 11 -(Write back)/provision for the financial year (53) 28

Balance at end of financial year 160 202

Deferred tax at 31 December related to the following:

Deferred tax liabilitiesDifferences in depreciation 192 210

Deferred tax assetsOther deferred tax assets (32) (8)

Net deferred tax liability 160 202



18 Trade and Other PayablesGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Trade creditors- Outside parties 34,653 25,673 20 7- Related parties 8,400 6,361 - -- Related companies 22 103 - -Accrued expenses 2,601 2,343 456 293Provision for completed projects 1,599 1,459 - -Provision for cessation 315 315 - -Sundry creditors 2,713 479 65 31Amounts due to customers for contractswork-in-progress (Note 13) 1,099 698 - -

Amounts payable to subsidiaries - - 3,540 3,306

51,402 37,431 4,081 3,637

The amounts payable to subsidiaries are non-trade related, unsecured, interest free and have no fixedterms of repayment.

19 RevenueGroup

2003 2002$’000 $’000

Sale of products 124,042 68,190Revenue from construction contracts 86,630 46,134Services rendered 8,994 7,930Rental income 158 157

219,824 122,411

20 Other Operating IncomeGroup

2003 2002$’000 $’000

Construction equipment hiring income 392 464Gain on disposal of property, plant and equipment, net 157 448Bad debts recovered for trade receivables 327 309Write back of provision for doubtful trade receivables 32 2,971Write back of provision for inventory obsolescence 36 -Negative goodwill recognised 78 -Gain on disposal of a subsidiary - 80Gain on liquidation of an associate - 2Foreign currency exchange gain, net 66 -Sundry income 60 382

1,148 4,656



21 Other Operating ExpensesGroup

2003 2002$’000 $’000

Property, plant and equipment:Impairment loss 499 720Write off - 1,240

Provision for doubtful trade receivables 584 2,234Bad trade receivables written off 13 -Inventories written off 75 -Provision for obsolescence of inventories - 14Loss on liquidation of a subsidiary - 2Foreign currency exchange loss, net - 227

1,171 4,437

22 Finance IncomeGroup

2003 2002$’000 $’000

Interest income:Bank deposits 55 80Others 74 238

129 318

23 Finance CostsGroup

2003 2002$’000 $’000

Interest expense:Bank loans - 30Trust receipts 18 3Finance leases 20 10Related company 126 129

164 172



24 Profit/(Loss) Before Income Tax

The profit/(loss) before income tax is arrived at after charging the following:Group

2003 2002$’000 $’000

Remuneration paid or payable to:Directors of the Company 534 435Other Directors of subsidiaries 827 750

Auditors’ remuneration:Auditors of the Company 113 104Other auditors 21 15Prior years 3 (3)

Fees for non-audit services by:Auditors of the Company 41 23Other auditors 8 4

25 Income TaxGroup

2003 2002$’000 $’000

Income taxCurrent year – Singapore (17) (180)Current year – Overseas 21 -Overprovision in prior years (2) -

2 (180)(Write back)/provision of deferred tax (53) 28

(51) (152)

Reconciliations of the statutory income tax rate to the effective tax rates applicable to income fromoperations for the financial years ended 31 December are as follows:

Group2003 2002

Domestic statutory tax rate 22.0% (22.0%)Exempt Income (16.5%) (0.3%)Tax losses not available for set-off against future taxable income 10.5% 15.2%Expenses not deductible for tax purposes 6.9% 6.2%Income capital in nature (2.0%) (0.6%)Utilisation of losses and capital allowance previously not recognised (20.0%) (0.8%)Others (3.3%) (2.8%)

Effective tax rate (2.4%) (5.1%)



25 Income Tax (cont’d)

At 31 December 2003, the Group had unutilised tax losses and capital allowances of approximately$28,169,000 (2002: $22,853,000) and $9,735,000 (2002: $14,173,000) respectively available for offsetagainst future taxable income, subject to the conditions imposed by law in the countries of incorporationwhere the companies in the Group operate.

Future tax benefits of $8,577,000 (2002: $8,437,000) arising from such unutilised tax losses andcapital allowances have not been recognised as there is no reasonable certainty of their recovery infuture periods.

At balance sheet date, the Company has Section 44, as defined in the Singapore Income Tax Act, of$5,372,000 (2002: $5,372,000) available for declaration of dividends to shareholders in the next fouryears. This amount is subject to agreement by the Comptroller of Income tax.

26 Earnings/(Loss) Per Share

Basic earnings/(loss) per share is calculated by dividing the net profit/(loss) for the financial year afterminority interests by the weighted average number of ordinary shares in issue during the year:

Group2003 2002

Net profit/(loss) for the financial year ($’000) 2,468 (2,802)

Weighted average number of ordinary shares in issue (in ’000s) 350,992 350,992

Basic earnings/(loss) per share (cents) 0.70 (0.80)

There are no dilutive potential ordinary shares on the above basic earnings/(loss) per share.

27 Staff CostsGroup

2003 2002$’000 $’000

Wages and salaries 11,143 8,928Employer’s contribution to defined contribution plansincluding Central Provident Fund 779 732

Others 221 127

12,143 9,787

Group2003 2002

Number of employees at end of financial year 456 341



28 Related Party Transactions

For the purposes of these financial statements, parties are considered to be related to the Group if theGroup has the ability, directly or indirectly, to exercise significant influence over the parties in makingthe financial and operating decisions, or vice versa, or where the Group and the parties are subject tocommon significant influence. Related parties may be individuals or other entities.

During the financial year, these were the following significant transactions with related parties whichwere carried out in the normal course of business based on terms agreed between the parties:

Group2003 2002$’000 $’000

Sales 62,122 32,764Management fee income 45 105Interest income 69 -Interest expense (126) (129)Rental expense (289) (373)Management fees expense (200) (413)Purchases (37,287) (29,954)Consideration for acquisition of subsidiaries (427) -

29 Commitments

(a) Operating leaseGroup

2003 2002$’000 $’000

Rental expense - operating lease 1,008 1,009

The commitments in respect of non-cancellable operating leases contracted for but not recognisedas liabilities are payable as follows:

Group2003 2002$’000 $’000

Within one year 880 677After one year but not more than five years 791 678

1,671 1,355



29 Commitments (cont’d)

(b) Other commitmentsGroup

2003 2002$’000 $’000

Principal amounts of forward foreign exchange contracts withmaturities of less than twelve months 6,687 4,223

The net fair values of the Group’s forward foreign exchange contracts are disclosed in Note 31(c).

30 Contingent LiabilitiesGroup Company

2003 2002 2003 2002$’000 $’000 $’000 $’000

Corporate guarantees for performance bonds 12,292 14,236 1,895 1,370Letters of credit 1,849 3,140 - -Corporate guarantees for credit facilitiesgranted to subsidiaries - - 21,058 23,998

Corporate guarantee to a contractorin exchange for the paymentfor the full arbitration award moneys - 3,251 - 3,251

14,141 20,627 22,953 28,619

In June 2000, a damage occurred to an underground cable at a site where a wholly-owned subsidiary ofthe Group carried out land site investigation work. If liable, the subsidiary may face penalty of up to $1million. Except for repair costs, no claim has been received by the subsidiary in respect of the incident.

No provision has been made in the financial statements as the Directors are unable to determine theamount of liability, if any.

31 Financial Risk Management

(a) Financial risk management objectives and policies

The Group manages its exposure to financial risks using a variety of techniques and instruments.The Group does not hold or issue derivative financial instruments for speculative trading purposes.

The Group has established risk management policies and guidelines which set out its overall riskmanagement strategies. Such policies are reviewed annually, and periodic checks are undertakento ensure such guidelines are adhered to.



31 Financial Risk Management (cont’d)

Interest rate risk

The Group has cash and cash equivalents placed with reputable banks and financial institutions,which generate interest income for the Group. The Group’s debts include bank borrowings, financelease commitments and borrowings from a related company and holding company. The Group doesnot use derivative financial instruments to hedge its debt obligations. The Group’s policy is tomanage its interest cost using a mix of fix and variable rate debt.

Information relating to the Group’s interest rate exposure is disclosed in Note 15 - Borrowings andNote 16 - Finance Leases.

Foreign exchange risk

The Group buys and sells its products and services in several countries and, as a result, is exposedto movements in foreign currency exchange rates. The primary purpose of the Group’s foreigncurrency hedging activities is to protect against the volatility associated with foreign currencyassets and liabilities created in the normal course of business. As far as possible, the Group relieson natural hedges of matching foreign currency denominated assets and liabilities. In addition,the Group utilises forward foreign exchange contracts with maturities of less than twelve monthsto hedge against foreign exchange risk on certain financial assets and liabilities. The Group doesnot use forward foreign exchange contracts or currency options for speculative trading purposes.

Credit risk

It is the Group’s policy to enter into financial instruments with a diversity of credit-worthycounterparties. The Group manages these risks by monitoring credit-worthiness and limiting theaggregate risk to any individual counterparty. Where appropriate, the Group obtains collateralsfrom the customers. Therefore, the Group does not expect to incur material credit losses on itsfinancial instruments.

Funding risk

The Group’s ability to meet its existing and prospective funding requirements is managed bymaintaining the availability of adequate committed funding lines from high quality lenders.

(b) Credit risk exposures

The Group’s maximum exposure to credit risk in the event the counterparties fail to perform theirobligations as of the balance sheet date in relation to each class of recognised financial assets isthe carrying amount of those assets as indicated in the balance sheet.

The Group’s portfolio of financial instruments is broadly diversified along industry, product andgeographic lines, and transactions are entered into with diverse credit-worthy counterparties,thereby mitigating any material concentration of credit risk.



31 Financial Risk Management (cont’d)

(c) Fair values

Financial assets include cash and cash equivalents and trade and other receivables. Financialliabilities, which include trade and other payables and borrowings, are classified according to thesubstance of the contractual arrangements entered into.

The carrying values of cash and cash equivalents, trade receivables and payables, other receivablesand payables approximate their fair values. Information on the fair values of borrowings isincluded in Note 15 - Borrowings and Note 16 - Finance Leases.

Forward foreign exchange contracts

The fair value of forward foreign exchange contracts is estimated based on the difference betweenthe applicable forward rates prevailing at the balance sheet date and the contracted forward rates,multiplied by the notional amount and discounted to present value.

The Group’s outstanding forward foreign exchange contracts are disclosed in Note 29(b).

The net fair values of the Group’s forward foreign exchange contracts at the balance sheet dateswere:

Group2003 2002$’000 $’000

(Unfavourable)/favourable forward foreign exchange contracts, net (56) 94

32 List of Subsidiaries

Name of subsidiary,country of Cost ofincorporation/operation investment held Interest heldand name of other auditors Principal activities by the Company by the Group

2003 2002 2003 2002$’000 $’000 % %

Bored Piling (Pte.) Ltd. Foundation piling, 58,982 58,982 100 100(Singapore) civil engineering,

building construction andproject managementconsultancy works

BPL Engineering (HK) Limited Dormant (a) (a) 100 100(Hong Kong)(Horwath Hong Kong CPA Limited)



32 List of Subsidiaries (cont’d)


2003 2002 2003 2002$’000 $’000 % %

BPL Engineering (M) Foundation piling, (a) (a) 100 100Sdn Bhd civil engineering and(Malaysia) (d) building construction

BPL (HK) Private Limited Dormant (a) (a) 100 100(Hong Kong)(Horwath Hong KongCPA Limited)

BPL Philippines, Inc. Foundation and (a) (a) 61 61(Philippines) geotechnical consultants,(Diaz Murillo Dalupan) piling and civil engineering

contractors

Creative Industrial Rental of property (b) (b) 81 81Packaging Sdn. Bhd.(Malaysia)(Y.C. Chong & Co.)

Globaltraco International Distribution of tyres 3,506 3,506 100 100Pte Ltd and auto-products(Singapore)

Globaltraco (M) Sdn. Bhd. Distribution of tyres (a), (c) - 60 -(Malaysia) and auto-products(KH Goh & Co)

Global Noble International Distribution of consumer (a), (c) - 51 -Corporation (Philippines) products(SyCip Gorres Velayo & Co.)

Ground Engineering Geotechnical contractor (a) (a) 100 100Technologies Pte Ltd specialising in foundation(Singapore) and soil improvement works

Performance Retreads Retreading of tyres (a), (c) - 100 -Sdn. Bhd. (Malayisa) (d)

Singapore Bandag Retreading of tyres 427 - 100 -(Private) Limited (c)(Singapore)

Soil & Foundation Geotechnical instrumentation (a) (a) 100 100(Pte) Limited and investigation,(Singapore) laboratory testing,

environmental services andmicro-piling





2003 2002 2003 2002$’000 $’000 % %

SP Global Distribution of consumer 3,019 3,019 100 100International Pte. Ltd. products(formerly known asS.P.P. Packaging (Pte) Ltd)(Singapore)

SP Resources Trading and marketing 7,491 7,491 100 100International Pte. Ltd. of industrial products(formerly known asSPP Trading Pte Ltd)(Singapore)

SP Machinery Holding Investment holding (b) (b) 100 100Pte. Ltd.(formerly known as SPPMachinery Holding Pte. Ltd.)(Singapore)

SP Machinery Investment holding and (a) (a) 100 100International Pte. Ltd. trading and marketing(formerly known as SPP Machinery of machinery and equipmentInternational Pte. Ltd.)(Singapore)

S3 Engineering (S) Pte. Ltd. Trading and marketing (a) (a) 100 100(Singapore) of tyre moulds and

related products

Trenchless Construction Civil engineeringPte Ltd contractor specialising (a) (a) 100 100(Singapore) in sewerage and pipe

jacking works

WALLbilt Pte Ltd Civil engineering (a) (a) 100 100(Singapore) contractor and rental

of machinery

3S Engineering (Shanghai) Manufacturing of high (a) (a) 100 100Co., Ltd precision products(China) (tyre moulds and related(Horwath China Shanghai products)Limited)

73,425 72,998




(a) Held by subsidiaries.

(b) Cost of investment held by the Company amounts to less than $1,000.

(c) During the financial year, the Group:● incorporated a 60% owned subsidiary, Globaltraco (Malaysia) Sdn. Bhd., in Malaysia. The

Group’s initial contribution to its capital amounted to RM 60,000 (S$28,000); and● incorporated a 51% owned subsidiary, Global Noble International Corporation, in the

Philippines. The Group’s initial contribution to its capital amounted to Pesos 12,750,000(S$413,000); and

● acquired 100% equity interest in Singapore Bandag (Private) Limited, a company incorporatedin Singapore and its wholly-owned Malaysian subsidiary, Performance Retreads Sdn. Bhd.,for a consideration of $427,000 from the holding company. These companies became part ofthe Group with effect from May 2003 and the acquisition was accounted for using thepurchase method of accounting.

(d) Audited by overseas member firms of Deloitte Touche Tohmatsu.

33 List of Associate

Name of associate,country of Cost ofincorporation/operation investment held Interest heldand name of other auditors Principal activities by the Group by the Group

2003 2002 2003 2002$’000 $’000 % %

Bimstar, Inc. Investment holding (a) (a) 35.0 35.0(Philippines)(Diaz Murillo Dalupan)

(a) Cost of investment held by the Group amounts to less than $1,000.

34 Comparative Figures

Certain comparative figures have been reclassified to conform to current year’s presentation.



SGX Listing Manual Requirement31 December 2003

Interested Person Transactions

Interested person transactions carried out during the financial year pursuant to the Shareholders’ Mandateobtained under Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX)by the Group are as follows:

Name of interested person Aggregate value of all Aggregate value of allinterested person interested person

transactions (excluding transactions conductedtransactions less than under shareholders’ mandate

$100,000 and transactions pursuant to Rule 920conducted under shareholders’ (excluding transactionsmandate pursuant to Rule 920) less than $100,000)

2003 2002 2003 2002$’000 $’000 $’000 $’000

SalesLei Huai Chin & associates - 1,844 14,320 3,811Liem Tek Siong, Go Giok Lian & associates - - 38,962 22,058Tuan Sing Holdings Limited & associates - - 8,237 3,596

Total sales - 1,844 61,519 29,465

PurchasesLiem Tek Siong, Go Giok Lian & associates - - 9,740 9,241

Interest expenseTuan Sing Holdings Limited & associates - - 126 129

Rental expenseTuan Sing Holdings Limited & associates - - 220 367

Management fees paidTuan Sing Holdings Limited - - 200 207

Acquisition of company(Singapore Bandag Pte Ltd)

Tuan Sing Holdings Limited 427 - - -

Total interested person transactions 427 1,844 71,805 39,409



Shareholding Statisticsas at 8 March 2004

Authorised share capital : S$100,000,000.00Issued and fully paid-up capital : S$17,549,575.80Equity Security issued by the Company : Ordinary Shares of S$0.05 eachVoting Right of Ordinary Shareholders : On a show of hands: One vote

On a poll: One vote for each ordinary share

Size of shareholdings No. of shareholders % No. of shares %

1 - 999 122 2.21 54,051 0.011,000 - 10,000 4,297 77.79 19,639,803 5.6010,001 - 1,000,000 1,102 19.95 39,420,465 11.231,000,001 & ABOVE 3 0.05 291,877,197 83.16

TOTAL 5,524 100.00 350,991,516 100.00

Top Twenty Shareholders No. of Shares %As at 8 March 2004

Tuan Sing Holdings Limited 281,463,197 80.19United Overseas Bank Nominees Pte Ltd 8,620,000 2.46DBS Nominees Pte Ltd 1,794,000 0.51Oversea Chinese Bank Nominees Pte Ltd 791,750 0.23Phillip Securities Pte Ltd 719,740 0.21Citibank Nominees S’pore Pte Ltd 658,000 0.19Lee Keng Hua 593,000 0.17HSBC (Singapore) Nominees Pte Ltd 572,500 0.16Jen Shek Chuen 500,000 0.14Mayban Nominees (S) Pte Ltd 365,000 0.10Tsai Pang Hsiung 328,000 0.09Lim & Tan Securities Pte Ltd 323,000 0.09DBS Vickers Securities (S) Pte Ltd 291,000 0.08Lim Yong Seng 259,000 0.07Ang Bok Eng 234,000 0.07OCBC Securities Private Ltd 226,853 0.06Yap Siew Moy 220,000 0.06Kim Eng Securities Pte Ltd 216,500 0.06Ang Ah Lek 200,000 0.06Song Poo Hok 195,000 0.06

298,570,540 85.06



Substantial Shareholder No. of Shares %

Tuan Sing Holdings Limited 1 281,463,197 80.19

Shareholdings held in the hands of the public

Based on information available to the Company as at 8 March 2004, 17.88% of the issued ordinary shares ofthe Company is held by the public and therefore, Rule 723 of the Listing Manual issued by SGX-ST is compliedwith.

Note : 1 By virtue of (i) Nuri Holdings (S) Pte Ltd’s (“Nuri”) interest in Tuan Sing Holdings Limited (“TSH”), and (ii) their interest inNuri, Ms Michelle Liem Mei Fung and Ms Liem Mei Kim are deemed to be interested in the 281,463,197 shares of the Companyheld by TSH. Mr David Lee Kay Tuan, a Director of the Company and spouse of Ms Michelle Liem Mei Fung is deemed to beinterested in the said 281,463,197 shares.



Share Price Performance

Share Prices (cents) 1999 2000 2001 2002 2003Last Transacted 31.5 11.5 6.0 4.0 8.0High 70.0 33.0 25.0 9.0 13.0Low 13.5 8.0 4.0 3.5 3.0Average 41.8 20.5 14.5 6.3 8.0Turnover (million shares) 106.1 5.2 3.0 2.2 6.9

Per Share 1999 2000 2001 2002 2003Earnings/(loss) (cents) (4.20) (8.89) (2.55) (0.80) 0.70Net price-earnings ratio (times) (10) (2) (6) (8) 11.00Net asset backing (cents) 10.01 2.29 5.67 4.78 5.44

Turnover (million shares) Share Prices (cents)



NOTICE IS HEREBY GIVEN that the 51st Annual General Meeting of SP Corporation Limited (the “Company”)will be held at 9 Oxley Rise, 1st Storey Foyer, Podium Block, The Oxley, Singapore 238697 on Friday, 23 April2004 at 10.00 a.m. for the following purposes:

As Ordinary Business:

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

2. To approve Directors’ fees of S$151,750 (2002: S$113,750) for the financial year ended 31 December2003.

3. To re-elect the following Directors retiring pursuant to Article 94 of the Articles of Association of theCompany:

a. Mr Peter Sungb. Mr Low Kian Bengc. Mr David Lee Kay Tuan

4. To re-appoint Deloitte & Touche as Auditors and to authorise the Directors to fix their remuneration.

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

As Special Business:

To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions:

6. Authority to allot and issue share up to 10 per centum (10%) of the issued share capital

That pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be empowered to allot andissue shares in the capital of the Company at any time and upon such terms and conditions and for suchpurposes as the Directors may, in their absolute discretion, deem fit provided that the aggregatenumber of shares to be allotted and issued pursuant to this Resolution shall not exceed ten per cent(10%) of the issued share capital of the Company for the time being and that such authority shall,unless revoked or varied by the Company in general meeting, continue in force until the conclusion ofthe Company’s next Annual General Meeting or the date by which the next Annual General Meeting ofthe Company is required by law to be held, whichever is earlier.

7. Renewal of Shareholder Mandate for Interested Person Transactions

That:

a. approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual (“Chapter 9”)of the Singapore Exchange Securities Trading Limited, for the Company, its subsidiaries andassociated companies that are considered to be “entities at risk” under Chapter 9, or any of them,

Notice Of Annual General Meeting



to enter into any of the transactions falling within the types of Interested Person Transactionsdescribed in Appendix A of the Company’s letter to shareholders dated 31 March 2004 (the “Letter”),with any party who is of the classes of Interested Persons described in Appendix A of the Letter,provided that such transactions are carried out in the ordinary course of business and on normalcommercial terms and in accordance with the guidelines and review procedures for InterestedPerson Transactions as set out in the Letter (the “Shareholder Mandate”);

b. such Shareholder Mandate shall, unless revoked or varied by the Company in general meeting,continue in force until the conclusion of the next Annual General Meeting of the Company; and

c. the Directors of the Company be and are hereby authorised to complete and do all such acts andthings (including executing all such documents as may be required) as they may consider expedientor necessary or in the interests of the Company to give effect to the Shareholder Mandate and/orthis Resolution.

By Order of the Board

Chow Kin WahCompany Secretary

31 March 2004

Singapore

Notes:1. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint one or two proxies

to attend and vote on his behalf. A proxy need not be a member of the Company.

2. An instrument appointing a proxy must be deposited at the registered office of the Company at 9 Oxley Rise #03-02, The Oxley,Singapore 238697 not less than 48 hours before the time for holding the Annual General Meeting or any adjournment thereof.

3. Statement pursuant to Article 56 of the Articles of Association of the Company

(a) The effect of the Ordinary Resolution proposed in item 6 above is to allow the Directors to issue shares in the Companyup to an amount not exceeding in aggregate 10 per cent of the issued share capital of the Company for the time being;and

(b) The effect of the Ordinary Resolution proposed in item 7 above, if passed, is to renew effective up to the next AnnualGeneral Meeting (unless earlier revoked or varied by the Company in general meeting) the Shareholder Mandate for theCompany, its subsidiaries and associated companies that are considered “entities at risk” to enter in the ordinary courseof business into certain types of transactions with specified classes of the Company’s interested persons. The ShareholderMandate, previously approved by shareholders at an Extraordinary General Meeting of the Company on 12 May 2003, willbe expiring at the 51st Annual General Meeting. Particulars of the Shareholder Mandate, and the Audit Committee’sconfirmation (pursuant to Rule 920(1) of the Listing Manual) in respect of its proposed renewal, are contained in theCompany’s letter to shareholders dated 31 March 2004.



SP CORPORATION LIMITED(Incorporated in Singapore)

Registered office:9 Oxley Rise #03-02, The Oxley, Singapore 238697

To: The Shareholders of SP Corporation Limited(“Shareholders”)

Dear Sir/Madam

Renewal of the Shareholder Mandate for Interested Person Transactions

We refer to item 7 of the Notice of the 51st Annual General Meeting (“51st AGM”) of the Company, which isan Ordinary Resolution (“Resolution 7”) to be proposed at the 51st AGM for the renewal of the Company’sshareholder mandate for interested person transactions. The purpose of this letter is to provide Shareholderswith information relating to Resolution 7.

1. BackgroundAt an Extraordinary General Meeting of the Company held on 12 May 2003 (the “EGM”), Shareholdershad approved the renewal of a shareholder mandate for the purposes of Chapter 9 of the Listing Manualof the Singapore Exchange Securities Trading Limited (“SGX-ST”) to enable the Company, its subsidiariesand associated companies that are considered to be “entities at risk” within the meaning of Chapter 9of the Listing Manual, or any of them, to enter into certain types of transactions with specified classesof the Company’s interested persons, provided that such transactions are entered into in the ordinarycourse of business, are on normal commercial terms and are not prejudicial to the interests of theCompany and its minority Shareholders (the “Shareholder Mandate”).

2. Renewal of the Shareholder MandateUnder Chapter 9 of the Listing Manual, a general mandate for transactions with interested persons issubject to annual renewal. The Shareholder Mandate approved at the EGM was expressed to continue inforce until the next Annual General Meeting of the Company, being the 51st AGM, which is to be held on23 April 2004. Accordingly, it is proposed that the Shareholder Mandate be renewed at the 51st AGM, totake effect until the conclusion of the next Annual General Meeting of the Company.

The types of transactions in respect of which the Shareholder Mandate is sought to be renewed remainunchanged. Two individuals included within the classes of interested persons to whom the ShareholderMandate apply have, on 21 January 2004, ceased to be deemed controlling shareholders of the Company.They are Mr Liem Tek Siong and Mdm Go Giok Lian, the parents of Mr William Liem, a Director of theCompany. As Mr William Liem as well as companies which are considered to be his associates continueto be within the classes of interested persons to whom the Shareholder Mandate apply, the cessation ofhis parents as classes of interested persons in respect of which the Shareholder Mandate is sought to berenewed will not alter the associates of Mr William Liem which are covered by the Shareholder Mandate,that is, companies in which he and members of his immediate family (which would include his parents)together, directly or indirectly, have an interest of 30% or more.



Particulars of the Shareholder Mandate, including the rationale for, the benefits to be derived by theCompany, as well as the review procedures for determining transaction prices with the specified classesof interested persons, are set out in Appendix A of this letter.

General information on the listing rules relating to interested person transactions, including the meaningsof terms such as “associate”, “controlling shareholder” and “interested person” used in Chapter 9 of theListing Manual, is set out in Appendix B of this letter.

3. Audit Committee’s statementThe Audit Committee of the Company confirms that:

(a) the methods or procedures for determining the transaction prices under the Shareholder Mandatehave not changed since the EGM; and

(b) the methods or procedures referred to in (a) above are sufficient to ensure that the transactionswill be carried out on normal commercial terms and will not be prejudicial to the interests of theCompany and its minority Shareholders.

4. Directors’ and substantial shareholders’ interestsThe interests of the Directors and substantial shareholders of the Company in the issued share capital ofthe Company can respectively be found on page 31 and page 72 of the Company’s Annual Report 2003.

Certain Directors of the Company, namely, Messrs David Lee Kay Tuan, Lei Huai Chin and William Liemare regarded as being interested in the proposed renewal of the Shareholder Mandate, as, Mr Lei and MrLiem are each within the classes of interested persons covered by the Shareholder Mandate, and Mr Leeand Mr Lei are each a nominee of Tuan Sing Holdings Limited (the Company’s holding company) on theBoard of Directors of the Company. These Directors, and their respective associates will abstain fromvoting their respective shareholdings (if any) on Resolution 7 relating to the renewal of the ShareholderMandate at the forthcoming 51st AGM.

Tuan Sing Holdings Limited, Nuri Holdings (S) Pte Ltd, and their respective associates, being within theclasses of interested persons in relation to the proposed renewal of the Shareholder Mandate, willabstain from voting their respective shareholdings (if any) on Resolution 7 relating to the renewal ofthe Shareholder Mandate at the forthcoming 51st AGM.

5. RecommendationThe Directors who are considered independent for the purposes of the proposed renewal of the ShareholderMandate are Messrs Peter Sung, Cheng Hong Kok, Ong Teck Ghee, Tan Lye Huat and Low Kian Beng. Theyare of the opinion that the entry into of the Interested Person Transactions (as described in paragraph2 of Appendix A) between the SP Group (as described in paragraph 1 of Appendix A) and the InterestedPersons (as described in paragraph 3 of Appendix A) in the ordinary course of business will enhance theefficiency of the SP Group and is in the best interests of the Company. For the reasons set out inparagraphs 1 and 2 of Appendix A, they recommend that Shareholders vote in favour of Resolution 7 forthe renewal of the Shareholder Mandate at the forthcoming 51st AGM.



6. Responsibility statementThe Directors collectively and individually accept responsibility for the accuracy of the informationgiven in this letter and confirm, having made all reasonable enquiries, that to the best of their knowledgeand belief, the facts stated and opinions expressed in this letter are fair and accurate and that there areno material facts the omission of which would make any statement in this letter misleading.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of anyof the statements made or opinions expressed in this letter.

Shareholders who are in any doubt as to the action they should take, should consult their stockbrokersor other professional advisers immediately.

Yours faithfullySP CORPORATION LIMITED

Chow Kin WahCompany Secretary31 March 2004Singapore



Appendix A

Shareholder Mandate for Interested Person Transactions

1. Rationale for the Shareholder MandateIt is envisaged that in the normal course of their businesses, transactions between SP CorporationLimited (the “Company”), its subsidiaries and associated companies with the Company’s interestedpersons are likely to occur, and may arise from time to time or at any time.

In view of the time-sensitive nature of commercial transactions, the obtaining of a mandate fromShareholders (“Shareholder Mandate”) pursuant to Chapter 9 of the Listing Manual of the SingaporeExchange Securities Trading Limited, will enable the Company, its subsidiaries and associated companieswhich are considered to be “entities at risk” within the meaning of Chapter 9 of the Listing Manual(together, the “SP Group”) or any of them, to enter into certain types of transactions as set out inParagraph 2 below, with the Company’s interested persons set out in Paragraph 3 below (the “InterestedPersons”), provided that such transactions are entered into in the ordinary course of business of the SPGroup, are on normal commercial terms and are not prejudicial to the interests of the Company and itsminority Shareholders.

The Shareholder Mandate will provide the SP Group with added means to underpin its diversification andgrowth strategy by leveraging on the SP Group’s network and its close working relationship with InterestedPersons. In particular, it would enable the SP Group to pursue commercial transactions in the ordinarycourse of business in an expedient manner with Interested Persons, particularly in the areas of trading,marketing, distribution and manufacturing and related specialist services, that would value add andprovide new engines of growth for the SP Group.

The Shareholder Mandate is intended to enhance the SP Group’s ability to pursue business opportunitieswhich are time-sensitive in nature, and will eliminate the need for the Company to announce, or toannounce and convene separate general meetings on each occasion to seek Shareholders’ prior approvalfor, the entry by the relevant company in the SP Group into such transactions. This will substantiallyreduce the expenses associated with the convening of general meetings on an ad hoc basis, improveadministrative efficacy considerably, and allow manpower resources and time to be channelled towardsattaining other corporate objectives.

2. Nature and Scope of Interested Person TransactionsThe types of transactions with Interested Persons to be covered by the Shareholder Mandate relateprincipally to the provision or obtaining of services and products in the normal course of the SP Group’sbusinesses (“Interested Person Transactions”) but not in respect of purchase or sale of assets, undertakingsor businesses as provided under Rule 920(1) of the Listing Manual. The Interested Person Transactionsare as described below.

(a) Construction and Engineering Services Transactions

The Company’s principal subsidiaries and associated companies carry out building and constructionworks as building, engineering and foundation contractors as well as project managers. They alsoprovide specialist engineering services including but not limited to foundation piling, soil andfoundation work consultancy, geotechnical works, ground improvement works, pipe jacking anddiaphragm wall construction.



Transactions with Interested Persons under this category will consist of the following:

(i) the tender by companies in the SP Group (whether by way of public tender, invitation orotherwise) and/or the award of contracts by Interested Persons to companies in the SPGroup, or, as the case may be, the tender by Interested Persons (whether by way of publictender, invitation or otherwise) and/or the award of contracts by companies in the SP Groupto Interested Persons, whether as main contractors or as sub-contractors, for constructionand engineering services including turnkey projects for residential, commercial, industrialand engineering works or infra-structural development (including build, operate and transfer(“BOT”)) or other projects;

(ii) the provision by companies in the SP Group to, or receipt from Interested Persons of, projectmanagement, consultancy, engineering services, geo-technical soil investigation and/orinstrumentation services for residential, industrial, commercial, infrastructural or otherbuilding, construction, engineering works and/or development projects undertaken by theInterested Persons or (as the case may be) companies in the SP Group; and

(iii) the provision by the companies in the SP Group to, or receipt from Interested Persons of,industrial, commercial, infrastructural or other building, construction, engineering worksand/or development projects undertaken by Interested Persons or (as the case may be)companies in the SP Group including but not limited to treated water supply and watertreatment services, power and natural resources mining services.

As construction and engineering services constitute one of the core businesses of the SP Group,the inclusion of the above category of transactions in the Shareholder Mandate will facilitate suchtransactions by the SP Group with Interested Persons that arise in the normal course of operationsof the SP Group in a more expeditious manner.

(b) Construction and Engineering Materials and Equipment Transactions

Related to its activities in building, construction and engineering services, the SP Group may alsoengage in sourcing, purchasing, supplying and trading in building, construction and engineeringmaterials including but not limited to concrete and granite aggregates, steel bars, steel sheetpiles, timber products, wall and floor tiles, and construction equipment.

Transactions that may be carried out with Interested Persons under this category consist of thefollowing:

(i) the design, installation, supply and provision of equipment and machinery and/or building,construction and engineering materials including but not limited to paint, electric motorsand generators by companies in the SP Group to Interested Persons or vice versa; and

(ii) the purchase or sale, and/or rental of equipment and machinery and/or building, constructionand engineering materials including but not limited to paint, electric motors and generatorsby companies in the SP Group from, or to Interested Persons for on-sale or for use in theconstruction and/or engineering services activities of the SP Group or, as the case may be,the Interested Persons.

These transactions relate to the supply of materials and equipment used in the building, constructionand engineering industry. The inclusion of this category of transactions in the Shareholder Mandatewill allow the SP Group to transact with Interested Persons in an expeditious manner to meetbusiness needs for the supply and/or provision of materials and equipment.



(c) Trading and Marketing Transactions

The SP Group is engaged in the trading and marketing of various products relating to the automotive,tyre and rubber, chemical, petrochemical, mining, aquaculture, power, electronics and agricultureindustries.

Transactions coming within this category consist of the following:

(i) the marketing, sale by or purchase of, fish meal, shrimp feed and their related feedstockmaterials, shrimps and other products in the aquaculture industry;

(ii) the marketing, sale by or purchase of, the provision or receipt of, technical, operation,maintenance and engineering services for machinery, equipment and spare parts related totyre and rubber, power, petrochemical, chemical, aquaculture, agriculture, mining and otherindustries referred to in sub-paragraphs (c)(i) above and (c)(iii) to (vi) below;

(iii) the marketing, sale by or purchase of, palm oil and related products, fertilizers and othernatural produce items in the agriculture industry;

(iv) the marketing, sale by or purchase of, natural resources including but not limited to coal,metals like iron, aluminium, zinc, gold and copper and their alloys for various industriessuch as the power and cement industries, automotive manufacturing industries, chemicals,tyre and rubber industries;

(v) the marketing, sale by or purchase of, printed circuit boards, electrical and electronics partsand electrical cables and motors and other products related to the electronics and electricalindustries;

(vi) the marketing, sale by or purchase of, paint, basic and intermediate petrochemicals includingbut not limited to ethylene, monoethyleneglycol, polyester, synthetic rubber, nylon fibresand others related to the petrochemical industries;

(vii) the distribution, marketing, sale and purchase of rubber and tyre related stocks and relatedproducts (including raw materials and auxiliary products);

(viii) the sale, purchase, rental and/or leasing of rubber, tyre and tyre related retreading machineryand equipment or components and parts in respect thereof; and

(ix) the provision and/or receipt of commissions, rebates and other trade-related or marketingincentives to or by counter-parties including but not limited to dealers, distributors andprincipals.

The entry into and/or renewal of distribution, commission, agency or other marketing orrepresentation agreements with Interested Persons, and the purchase, sale, import and export ofproducts set out above will come within the ambit of this category of transactions.

(d) Distribution Transactions

The SP Group is engaged in the distribution of various consumer, automotive and related products.


(i) distribution of consumer products including but not limited to hygiene, paper and foodproducts; and

(ii) distribution of tyres and automotive related products including but not limited to alloywheels, rubber belts, batteries, electrical and pneumatic sensors.



The entry into and/or renewal of distribution, commission, agency or other marketing orrepresentation agreements with Interested Persons, and the purchase, sale, import and export ofproducts set out above, will come within the ambit of this category of transactions.

(e) Manufacturing Transactions


(i) the provision by the companies in the SP Group to, or the receipt from, Interested Personsof, tyre retreading services and logistic services related to the rubber, tyre and automotiveindustries;

(ii) the provision by the companies in the SP Group to, or the receipt from, Interested Personsof, design, technical expertise, operation, maintenance, manufacturing and purchase orsales of tyre machinery and equipment and related parts and products.

(f) Business, Management and Technical Services Transactions

It is expected that with further diversification of the activities of the SP Group, overhead costsand administrative costs may increase with the establishment of more business units. As such, thecentralisation of management and support services staff within Tuan Sing Holdings Limited (“TSH”),its subsidiaries and associated companies (together with TSH, collectively, the “TSH Group”) andbetween the SP Group and the Interested Persons will enable business services costs to be shared,avoid duplication of efforts and enhance communication within the TSH Group, the SP Group andthe Interested Persons. The latter results in savings for all operating companies within the TSHGroup, the SP Group and the Interested Persons through shared resources and economies of scale,and ensures that the services provided are of a uniform approach and consistent standard throughoutthe operating subsidiaries.

Further, it is expected that TSH (the holding company of the Company) and other InterestedPersons may provide certain corporate functions and support to the SP Group in areas includingbut not limited to finance, treasury, investment risk review and management; corporate planningand business development; management information systems; human resource management anddevelopment; information technology management and development; legal and corporate secretarialaffairs; and internal audit.

Additionally, as part of the TSH Group, the Company can benefit in treasury transactions fromcompetitive rates or quotes from TSH and third party financial institutions in an expedient manner.By transacting directly with TSH, the Company may obtain better yields through the eliminationof margins which third party intermediaries might ordinarily be expected to earn.

The SP Group may also lease premises to or from, Interested Persons for meeting various businessneeds.

Transactions covered by this category consist of the following:

(i) the provision by the companies in the SP Group to, or the receipt from, Interested Personsof, corporate, administrative and support services including but not limited to the areas ofinternal audit, corporate planning and development, treasury and fund management servicesand staff secondments;

(ii) the borrowing of funds from Interested Persons or vice versa on a short-term and medium-term basis; the placement of funds with the TSH Group on a short-term and medium-termbasis; and the entry into with Interested Persons of foreign exchange, swap, and optiontransactions for hedging purposes (collectively, “Treasury Transactions”);



(iii) the leasing or letting of office, warehouse and other business premises to or from the TSHGroup and/or other Interested Persons; and

(iv) the provision by the companies in the SP Group to, or the receipt from, Interested Personsof, subcontracting and outsourcing services, supply chain management services (includingbut not limited to packaging, transport and logistic services), sharing of logistic facilitymanagement including but not limited to rental and subletting of premises.

These transactions relate to the supply of corporate, support and administrative services,subcontracting and outsourcing services, supply chain services and premises by the TSH Groupand other Interested Persons to companies in the SP Group. The inclusion of this category oftransactions in the Shareholder Mandate will allow the SP Group to transact with the TSH Groupand other Interested Persons in an expeditious manner to meet its business needs and requirements.

3. Classes of Interested Persons with which the SP Group is transactingThe Shareholder Mandate will apply to the following classes of Interested Persons:

(a) TSH;

(b) Nuri Holdings (S) Pte Ltd;

(c) Mr Lei Huai Chin;

(d) Mr William Liem; and

(e) any company which, at the time at which the transaction is entered into, is an associate of theInterested Persons named in (a) to (d) above.

4. Review Procedures for Interested Person TransactionsPursuant to the Shareholder Mandate, the Company has formed a special review committee (the “ReviewCommittee”) to ensure that transactions with Interested Persons are undertaken on the SP Group’snormal commercial terms under the Shareholder Mandate. The Review Committee comprise seniorexecutives of the Company namely, the Managing Director, up to two executive Directors, the head ofthe relevant business units and the Financial Controller, who have been tasked by the Board of Directorsof the Company (based on the recommendation of the Audit Committee of the Company (the “AuditCommittee”) from time to time) with the review and approval of such transactions.

To ensure that the Interested Person Transactions arising from the normal course of business of the SPGroup are undertaken at arm’s length and on the SP Group’s normal commercial terms, and will not beprejudicial to the interests of the Company and its minority Shareholders, the SP Group has implementedthe following guidelines for the review and approval of Interested Person Transactions under the proposedrenewal of the Shareholder Mandate:

(a) A transaction equal to or exceeding S$100,000 in value but below S$3 million (the “FinancialThreshold”), will be reviewed and approved by any two members of the Review Committee, whoshall ensure that the Interested Person Transactions are made on arm’s length basis and on termsand conditions no more favourable than those which would be granted to an unrelated third partyin similar circumstances, and which are on the SP Group’s normal commercial terms or otherwisein accordance (where applicable) with industry norms and that they are not prejudicial to theinterests of the Company and its minority Shareholders.



(b) A transaction equal to or exceeding the Financial Threshold will be reviewed and approved by anytwo members of the Audit Committee, who shall ensure that the Interested Person Transactionsare made on arm’s length basis and on terms and conditions no more favourable than those whichwould be granted to an unrelated third party in similar circumstances, and which are on the SPGroup’s normal commercial terms or otherwise in accordance (where applicable) with industrynorms and that they are not prejudicial to the interests of the Company and its minority Shareholders.

(c) Any member of the Review Committee and the members of the Audit Committee may, as he/theydeem fit, request for additional information pertaining to the transaction under review fromindependent sources or advisers, including the obtaining of valuations from independent professionalvaluers.

(d) If a member of the Review Committee or the Audit Committee has an interest in a transaction, heshall abstain from participating in the review and approval process in relation to that transaction.If more than three members of the Review Committee are interested in the transaction, the reviewand approval process shall be undertaken by the Chairman of the Audit Committee or anothermember of the Audit Committee (who has no interest in the transaction) designated by theChairman of the Audit Committee for such purpose.

The Audit Committee will also:

(i) carry out periodic reviews (on a quarterly basis) to ascertain that the established guidelinesand procedures for Interested Person Transactions have been complied with; and

(ii) consider from time to time whether the established guidelines and procedures for transactionswith Interested Persons have become inappropriate or are unable to ensure that thetransactions will be carried out on normal commercial terms, and are not prejudicial to theinterests of the Company and its minority Shareholders.

(e) For the purpose of the above review procedures, where goods and/or services (other than TreasuryTransactions) are to be purchased or obtained by the SP Group from Interested Persons, quotationswill be obtained (wherever possible or available) from at least two other unrelated third partysuppliers for similar quantities and/or quality of the materials, equipment, machinery or servicesconcerned as a basis for comparison to determine whether the price and terms offered by theInterested Person are fair and reasonable. Where it is impractical or not possible for such quotesto be obtained, the Review Committee or the Audit Committee will ensure that the terms of supplyare fair and reasonable, in accordance with industry norms and in line with business practices ofthe relevant industry taking into consideration, factors such as but not limited to pricing, paymentterms, credit worthiness, the strategic purpose for the transaction and market conditions.

In relation to Treasury Transactions, the following guidelines shall apply:

Borrowings. The SP Group will only borrow funds from an Interested Person if the interest ratequoted by the Interested Person is not more than the lowest rate quoted by the SP Group’sprincipal bankers for loans of an equivalent amount and tenure. Quotations of rates will be procuredfrom at least two of the SP Group’s principal bankers each time that funds are proposed to beborrowed from an Interested Person.

Placements. The SP Group will only place funds with the TSH Group if the interest rate quoted bythe TSH Group is not less than the highest of the rates quoted by the SP Group’s principal bankersfor deposits of an equivalent amount and tenure. Quotations of rates will be procured from at leasttwo of the SP Group’s principal bankers each time that funds are proposed to be placed with theTSH Group.



Forex, swaps and options. The SP Group will only enter into forex, swap and option transactionswith an Interested Person if the rates quoted by the Interested Person are no less favourable tothe SP Group than those quoted by the SP Group’s principal bankers. Quotations of rates will beprocured from at least two of the SP Group’s principal bankers each time that a forex, swap oroption transaction is proposed to be entered into with an Interested Person.

In addition, the Company will monitor the Treasury Transactions entered into with InterestedPersons as follows:

(i) Where the aggregate value of funds placed with the TSH Group shall at any time exceed theconsolidated shareholders’ funds of the Company (based on its latest audited accounts),each subsequent placement of funds with the TSH Group shall require the prior approval ofthe Audit Committee.

(ii) Where the aggregate principal amount of all forex, swap and option transactions enteredinto with the same Interested Person (as such term is construed under Chapter 9 of theListing Manual) exceeds at any one time the equivalent of the consolidated shareholders’funds of the Company (based on its latest audited accounts), each subsequent forex, swapor option transaction to be entered into with the same Interested Person shall require theprior approval of the Audit Committee.

5. Interested Person Transactions RegisterThe Company maintains a register of transactions carried out with Interested Persons pursuant to theShareholder Mandate (recording the basis on which they are entered into). Further, the Company’sannual internal audit plan will incorporate a review of transactions entered into in the relevant financialyear pursuant to the Shareholder Mandate.

6. Excluded TransactionsThe Shareholder Mandate will not cover any transaction by a company in the SP Group with an InterestedPerson that is below S$100,000 in value as the threshold and aggregation requirements of Chapter 9 ofthe Listing Manual would not apply to such transactions.

Transactions with interested persons (including the Interested Persons) which do not fall within theambit of the Shareholder Mandate shall be subject to the relevant provisions of Chapter 9 of the ListingManual, or other applicable provisions of the Listing Manual and/or the Companies Act (Cap. 50), if any.

7. Validity Period of the Shareholder MandateThe Shareholder Mandate will take effect from the passing of the resolution relating thereto, and will(unless revoked or varied by the Company in general meeting) continue in force until the conclusion ofthe next annual general meeting of the Company. Approval from Shareholders will be sought for therenewal of the Shareholder Mandate at the next annual general meeting and at each subsequent annualgeneral meeting of the Company, subject to satisfactory review by the Audit Committee of its continuedapplication to the transactions with Interested Persons.

8. Disclosure in Annual ReportDisclosure will be made in the Company’s annual report of the aggregate value of transactions conductedpursuant to the Shareholder Mandate during the financial year and in the annual reports for subsequentfinancial years that the Shareholder Mandate continues in force in accordance with the requirements ofChapter 9 of the Listing Manual.



APPENDIX B

General information relating to Chapter 9 of the Listing Manual

1. Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”) dealswith transactions in which a listed company or any of its subsidiaries or associated companies (that arenot listed on the SGX-ST or an approved exchange, provided that the listed group, or the listed groupand its interested person(s) (as defined in Chapter 9), has control over the associated company)proposes to enter with a party who is an interested person of the listed company.

2. Transactions with interested persons which do not come within the ambit of a general mandate forinterested person transactions approved by shareholders of the listed company pursuant to Chapter 9 ofthe Listing Manual (including any renewal thereof) will be subject to applicable provisions of Chapter 9and/or other applicable provisions of the Listing Manual. As such, an immediate announcement and/orshareholder approval would be required in respect of transactions with interested persons if certainfinancial thresholds as set out in Chapter 9 of the Listing Manual are reached or exceeded. In particular,an immediate announcement is required where:

2.1 the value of a proposed transaction is equal to or exceeds 3% of the listed company’s latestaudited net tangible assets (“NTA”); or

2.2 the aggregate value of all transactions entered into with the same interested person during thesame financial year, is equal to or more than 3% of the listed company’s latest audited NTA. Anannouncement will have to be made immediately of the latest transaction and all future transactionsentered into with that same interested person during the same financial year,

and shareholders’ approval (in addition to an immediate announcement) is required where:

2.3 the value of a proposed transaction is equal to or exceeds 5% of the listed company’s latestaudited NTA; or

2.4 the aggregate value of all transactions entered into with the same interested person during thesame financial year, is equal to or more than 5% of the listed company’s latest audited NTA. Theaggregation will exclude any transaction that has been approved by shareholders previously, or isthe subject of aggregation with another transaction that has been approved by shareholders.

3. For the purposes of aggregation, interested person transactions below S$100,000 each are excluded.

4. For illustration purposes, based on the audited accounts of the Company and its subsidiaries (the“Group”) for the financial year ended 31 December 2003, the latest audited NTA of the Group is S$19.08million. Accordingly, in relation to the Company, for the purposes of Chapter 9 in the current financialyear, Shareholders’ approval would be required where:

(a) the transaction is of a value equal to, or more than, S$0.95 million, being 5% of the Group’s latestaudited NTA; or



(b) the transaction, when aggregated with other transactions entered into with the same interestedperson during the same financial year, is of a value equal to, or more than, S$0.95 million. Theaggregation will exclude any transaction that has been approved by Shareholders previously, or isthe subject of aggregation with another transaction that has been approved by Shareholders.

5. Chapter 9 of the Listing Manual allows for a listed company to seek a mandate from its shareholders forrecurrent transactions with interested persons of a revenue or trading nature necessary for its day-to-day operations such as the purchase and sale of supplies and materials, but not in respect of thepurchase or sale of assets, undertakings or businesses.

6. For the purposes of Chapter 9 of the Listing Manual:

6.1 an “interested person” means a director, chief executive officer or controlling shareholder of thelisted company, or an associate of such director, chief executive officer or controlling shareholder;

6.2 a “controlling shareholder” is a person who holds directly or indirectly 15% or more of the nominalamount of all voting shares in the listed company (unless otherwise excepted by SGX-ST) or in factexercises control over a company; and

6.3 an “associate” in relation to any director, chief executive officer or controlling shareholder (beingan individual) means his immediate family (i.e. spouse, children, adopted children, step-children,siblings and parents), the trustees of any trust of which he or his immediate family is a beneficiaryor, in the case of a discretionary trust, is a discretionary object, and any company in which he andhis immediate family together (directly or indirectly) have an interest of 30% or more. An “associate”in relation to a controlling shareholder (being a company) means any other company which is itssubsidiary or holding company or is a subsidiary of such holding company or one in the equity ofwhich it and/or such other company or companies taken together (directly or indirectly) have aninterest of 30% or more.



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PROXY FORMSP CORPORATION LIMITEDThe Company SecretarySP Corporation Limited9 Oxley Rise #03-02The OxleySingapore 238697

I/We (Name)

of (Address)

being a member/members of SP Corporation Limited (the “Company”), hereby appoint the Chairman of the Meeting* or:

NRIC/Passport Proportion ofName Address Number Shareholdings (%)

and/or (delete as appropriate)

as my/our proxy/proxies to attend and vote for me/us on my/our behalf and, if necessary, to demand a poll, at the 51st

Annual General Meeting of the Company to be held at 9 Oxley Rise, 1st Storey Foyer, Podium Block, The Oxley, Singapore238697 on Friday, 23 April 2004 at 10.00 a.m. and at any adjournment thereof.

*A member may appoint not more than two proxies to attend and vote at the same Meeting. If you wish to appoint someperson other than the Chairman of the Meeting to be your proxy, please delete the words “Chairman of the Meeting”.

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

Ordinary Business For Against

1. Adoption of Directors’ and Auditors’ Reports and Accounts

2. Approval of Directors’ Fees

3. (a) Re-election of Mr Peter Sung as Director

(b) Re-election of Mr Low Kian Beng as Director

(c) Re-election of Mr David Lee Kay Tuan as Director

4. Re-appointment of Auditors

5. Any other ordinary business

Special Business

6. Authority to allot and issue new shares

7. To approve the renewal of the Shareholder Mandate for Interested Person Transactions

Dated this _____ day of _____________ 2004

___________________________________Signature(s) of Member(s) or Common Seal

Important: Please read notes overleaf

IMPORTANT

1. For investors who have used their CPF monies to buy SPCorporation Limited shares, the Annual Report isforwarded to them at the request of their CPF ApprovedNominees and is sent solely FOR INFORMATION ONLY.

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

�

Number of shares held:

Register of Members

Depository Register



Important: Please read notes below

Notes:

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register(as defined in Section 130A of the Companies Act, Chapter 50), you should insert that number of Shares. If you have Sharesregistered in your name in the Register of Members, you should insert that number of Shares. If you have Shares enteredagainst your name in the Depository Register and Shares registered in your name in the Register of Members, you should insertthe aggregate number of Shares entered against your name in the Depository Register and registered in your name in theRegister of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all theShares held by you.

2. A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint one or two proxiesto attend and vote on his behalf. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his 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 office of the Company at 9 Oxley Rise #03-02,The Oxley, Singapore 238697, not less than 48 hours before the time appointed for the Annual General Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised inwriting. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under itsseal or under the hand of an officer or attorney duly authorised.

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

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed orillegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in theinstrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company mayreject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares enteredagainst his name in the Depository Register as at 48 hours before the time appointed for holding the Annual General Meeting, ascertified by The Central Depository (Pte) Limited to the Company.


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SP Corporation Limited - Morningstar, Inc