to be a leading one-stop supply and service centre for...
TRANSCRIPT
KS TECH LTDNo. 4 Tuas Ave 5 Singapore 639331Tel: 65-6415 0808 Fax: 65-6898 4418Email: [email protected]: www.kstech.com.sg
TO BE A LEADING
ONE-STOP SUPPLY AND SERVICE CENTRE
FOR OIL AND GAS INDUSTRY IN ASIA
KS TECH LTD ANNUAL REPORT 2002
Corporate ProfileKS TECH LTD (“KS TECH”) was established in 1974 byExecutive Chairman Mr. Tan Kim Seng. It is a leadingsupplier of Oil & Gas equipment, hydraulic equipment,instrumentation, valves, spares and parts to the oil &gas, marine, mining and petrochemical industries inSouth East Asia and China.
KS TECH stocks and distributes more than 60,000 oil &gas related products encompassing over 120 US, Europeand other international brands which include, Varco,Cooper Cameron, Seatrax, ABB, Menck, Parker, Sandvik,Crosby, Ridgid, Dixon, Velan Valve, Alfa Laval, Moorflex,Gates Hoses, Power Team, JH Williams, and Strongwelletc.
KS TECH has an established network of more than 1600customers comprising of oil companies, internationaldrillers, fabricators, onshore and offshore drilling rigsowners, refineries, petrochemical plants and shipyards.
KS TECH has been in the oil & gas industry in China since1982 and has established distribution network fromthen, having offices in different strategic locations,which include Beijing, Shanghai, Shangdong andXinjiang. The Group has subsidiaries and representativeoffices in Vietnam, Thailand, Malaysia, and Indonesia.
KS TECH was listed on 6 August 1999 on SGX Sesdaq,and upgraded to SGX Mainboard on 11 March 2002.
TO BE A LEADING ONE-STOP SUPPLY AND SERVICE CENTREFOR OIL AND GAS INDUSTRY IN ASIA
Mission Statement
Beijing
Shandong
Shanghai
Vung Tau
Bangkok
Kuala Lumpur
Singapore (Head Office)
Jambi
Xinjiang
Regional Subsidiaries and Offices
Table of ContentsKS Tech Ltd Annual Report 2002
2 Chairman’s Statement
5 Group Structure/ Significant Events
6 Board of Directors
8 Financial Highlights
9 Corporate Governance Statement
13 Directors’ Report
19 Statement By Directors
20 Auditors’ Report
21 Income Statements
22 Balance Sheets
23 Consolidated Statement Of Changes In Equity
24 Statement Of Changes In Equity - Company
25 Consolidated Cash Flow Statement
27 Notes To The Consolidated Cash Flow Statement
29 Notes To The Financial Statements
58 Shareholders’ Statistics
59 Notice of Annual General Meeting
Proxy Form
Corporate Data
Chairman’s Statement
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Y2002 was another good year for KS TECH. We managed to improve our performance in spite of theextremely challenging period for the world economy.
Our business grew. Group turnover increased to $ 71.12 million from $54.60 million in Y2001, an increase of30%. Our performance improved. Profit after tax increased to $3.86 million from $3.25 million in Y2001, anincrease of 19%. Our asset backing was strengthened. Net tangible asset per share rose to 21.30 cent pershare from 16.64 cents per share in Y2001, an increase of 28%. We continued to add value for our shareholders.Earning per share increased to 3.57 cents per share from 3.01 cents per share in Y2001, an increase of 19%.
In Y2002 KS Seafirst Marine Services Pte Ltd, a wholly owned subsidiary, successfully merged with Sinwa ShipSupply Pte Ltd to form a new company. The new company, SINWA KS LTD, was successfully listed on SGX-Sesdaq on 28 Feb 2003. We will be able to benefit from the synergy and cost efficiency created from themerger.
DIVIDENDS
The Board of Directors proposes a higher dividend rate this year in linewith the good performance. Subject to the approval at the forthcomingAnnual General Meeting, the gross dividend payable will be 6.5% perordinary share of $0.10 each, up from 6% the previous year.
OPERATION REVIEW
The Group achieved steady growth by following the 3-pronged strategy diligently.
In particular, we improved our performance through sharing of customer base with newly acquiredsubsidiaries, enlarging our range of products & services, expanding customer base through acquisitions, andacquiring new agency lines during the year.
Oil & Gas segment remained a significant market segment of the Group, accounted for 62% of our totalturnover. The turnover in Y2002 grew to $43.9 million, an increase of $6.2 million or 17% from $37.7 millionin Y2001. The increase was mainly due to increased sales to major oil companies in China. Marine segmentaccounted for 14% of the total turnover. Its turnover in Y2002 grew to $9.8 million, an increase of $4.7million from $5.1 million. This was mainly due to the buoyant marine sector. Others segment also achieveda good growth in Y2002. Its turnover in Y2002 grew to $17.3 million, an increase of $5.4 million from $11.9million.
Geographically, China remained a significant market, accounted for 44% of the total turnover. Sales toChina for Y2002 grew to $31.2 million, an increase of $9.8 million or 46% from $21.4 million in Y2001.
STRATEGY AND DIRECTION
We are moving into the third year of the 3-pronged strategy for growth andenhancement of shareholders’ value. This strategy has shown good results overthe last 2 years and we will continue moving towards this direction:
1. (a) To grow through organic efforts by strengthening existing business,adding of new products, services, agencies & distributorship, expandingvalue-add services
(b) To strengthen our knowledge-based expertise by attracting talent toour Group.
2. To grow via mergers and acquisitions with companies which are synergistic to our business.
3. To improve operating efficiency by integration and consolidation of operations and by cost efficiency via economy of scale.
Chairman’s Statement
Tan Kim SengExecutive Chairman
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OUTLOOK FOR Y2003
Although the world economy growth is fragile, the current activitiesin the Oil and Gas Industry remain buoyant in the group’s marketsin China, Malaysia, Indonesia and Vietnam. We will put in our besteffort to grow the business.
We will continue to focus on China markets and strengthenties with China-linked companies. China is the world’s third largest oil consumer after the USand Japan. Further, Energy Information Administration (EIA) expects China to surpass Japan as theworld’s second largest oil consumer within the decade. The demand gears up the onshore and offshore production activities. In particular, we witnessed China offshore activities gaining momentumin Bohai Bay in the north, the East China Sea, the Eastern South China Sea and the Western SouthChina Sea. We also witnessed Chinese oil companies trying to get exploration and productionconcessions overseas to reduce its reliance on foreign imports. In addition, we have close proximityand a long unblemished track record with this market. Hence, we would be able to grow togetherwith the increased need for oil and gas consumption in China.
We will continue to strengthen our market position in the Oil and GasIndustry. We have benefited from serving the Oil and Gas Industry, which is anindustry with great depth and immense opportunities. Through our years ofexposure in the industry and established relationship with key players, we arewell positioned to develop new business opportunities.
We will continue to further grow KS TECH through mergers andacquisitions with companies whose businesses are synergistic with ours.Through this, we can enlarge our customer base and increase our product linesto better service our customers. Therefore, shareholders’ value can be furtherenhanced.
ACKNOWLEDGEMENT
On behalf of the Board, I like to thank our loyal shareholders for theirunwavering faith in KS TECH. We are committed to work towards our commongoal of increasing shareholders’ value. We are grateful to our local & overseascustomers who show their continuous support and trust in KS TECH. Our goodperformance is attributed to the contributions from our bankers, businessassociates, principals and suppliers.
Finally, I like to thank our fellow directors and colleagues for their hardwork,support and dedication. Their contribution is pivotal to the growth of KS TECH.
Thank you.
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Group Structure/Significant Events
Group Structure
KS Tech Ltd
Aqua TerraSupply (2001)
Co. Pte Ltd
JambiSupply Base
Pte Ltd
Scott &English
(2002) Pte Ltd
KS eVaPte Ltd
HylynxPte Ltd
Sinwa KSLimited
S&E Cumford(Thailand)
Ltd
S&E Cumford(Malaysia)Sdn Bhd
Significant Events – Y2002 / Y2003
11 Mar 2002Transferred from SGX-SESDAQ to SGX Mainboard.
May 2002
Acquired the business assets of Scott & EnglishLtd. A wholly owned subsidiary, Scott & English(2002) Pte Ltd was incorporated andcommenced operation.
June 2002
KS Tech’s subsidiary KS eVA Pte Ltd was awardedthe Approved Cyber Trader (ACT) Status by IESingapore.
July 2002
Enter into an agreement with Sinwa Ship SupplyPte Ltd to form a new company, Sinwa KS PteLtd, to acquire all the shares of Sinwa and KSSeafirst Marine Services Pte Ltd, a wholly ownedsubsidiary of KS Tech in exchange for shares.
August 2002
Enter into joint venture agreement withDynamic Processing Solutions PLC of UnitedKingdom to provide process design andengineering services to oil & gas industry.
September 2002
KS Tech enters into joint venture agreementwith PT Jambi Energi International Central ofIndonesia (JEIC). JEIC is a member of Jambigovernment BUMD. The joint venture companywill develop a logistic base in the province ofJambi, Indonesia, and to become a one-stoplogistic and supply center for the oil & gasindustry in Jambi and Indonesia.
September 2002
KS Tech’s Subsidiary’Scott & English Enters intoRegional Motor Distribution Agreement With WesternElectric, a subsidiary of Lindeteves-Jacoberg Limited,to distribute its motor in Singapore, Malaysia, Vietnamand Thailand.
September 2002
KS Tech enters into a Joint Venture Agreement withLabroy Marine Ltd and Dr. Chen Seow Phun, John, toacquire a tug and a barge to further enlarge its servicesin the oil & gas industry in China.
October 2002
KS Tech’s subsidiary Scott & English buy over ThaiCompany from Lindeteves-Jacoberg to expand itsmotor distribution business into regional countries.
February 2003
KS Tech’s associate company Sinwa KS Ltd wassuccessfully listed on SGX-SESDAQ.
April 2003
KS Tech enters into a subscription agreement with EzraHoldings Pte Ltd (“EZRA’) to take a 25% stake in EZRA.EZRA is in the business of providing offshore supportvessels and services to the oil and gas industry. Inaddition, EZRA provides marine engineering servicesfor the ship repair, conversion and rig repair markets.The strategic tie-up with EZRA is expected to allowboth KS Tech and EZRA to provide a comprehensiverange of services for its customers in Southeast Asiaand China.
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Kim SengHardware &
Oilfield SupplyPte Ltd
45%47.5%100% 26.52%
100%100%
100%100%100%
Board of Directors
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Tan Kim Seng (Executive Chairman)
Mr Tan Kim Seng is the founder and Executive Chairman of the Group. Mr Tan startedthe industrial hardware business in 1974 and subsequently expanded its range of businessto oil & gas equipment, hydraulic equipment, spares and parts and instrumentation. Hehas more than 29 years of experience in the trading business and plays an important rolein setting the Group’s business strategy and directions. Besides his business interest, MrTan is also actively involved in grass root organisations. He is currently the Patron ofHang Kah North Citizens’ Consultative Committee. He was awarded BBM for hiscontributions to community service. Mr Tan holds a Bachelor of Science (Mathematics)degree from Nanyang University.
Chew Thiam Keng (Managing Director/CEO)
Mr. Chew Thiam Keng is overall in charge of the Group’s operations, particularly in strategicplanning, corporate management and business development. Prior to joining KS TECH, MrChew was the Executive Director of another listed company (SGX-Mainboard) between1996 and 2001. Before that, Mr Chew was with The Development Bank of Singapore Limitedfor nine years working in the areas of corporate finance and retail banking. He is also adirector and audit committee member of several listed companies. He holds a MBA fromUniversity of Hull and a Bachelor degree (Honours) in Mechanical Engineering from NationalUniversity of Singapore.
Tan Fuh Gih (Executive Director)
Mr Tan Fuh Gih is in charge of the Projects Division specialising in oil & gas equipmenttrading business. He joined the Group in 1978 and was instrumental in the Group’sexpansion into the oil & gas industry in the 1980s. Mr. Tan graduated with a Bachelor ofCommerce (Honours) degree from Nanyang University and he also holds a MBA fromthe National University of Singapore.
Tan Hoo Lang (Alternate Director)
Mr. Tan Hoo Lang is Alternate Director to Mr. Tan Kim Seng. From 1999 to 28 January2002, he was the Managing Director of the Group. Mr. Tan is in charge of the Group’shydraulic equipment and instrumentation as well as spares and parts trading businesssince 1976. Under his management, the Group has grown to be one of the majordistributors of hydraulic equipment to the oil and gas, marine, shipbuilding and heavyindustries. He was also responsible for expanding the Group’s business into the activityof supplying UHP products to the semi-conductor industry. Mr. Tan graduated fromNanyang University with a Bachelor of Arts Degree.
Goh Boon Chye (Executive Director/COO)
Mr. Goh Boon Chye joined the Company in 1999 as the Chief Financial Officer. On29 November 2002, Mr. Goh was promoted to be the Chief Operating Officer. Prior tojoining KS Tech Ltd, Mr. Goh held the post of Financial Controller in Parker Hannifin PteLtd and Motorola Electronics Pte Ltd. He was also involved in financial and generalmanagement positions for companies in Singapore, Malaysia, Vietnam and Myanmar.Mr. Goh graduated from University of Singapore in 1976 with a Bachelor of AccountancyDegree and is a Certified Accountant by profession. He also holds a MBA from OklohamaCity University.
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Tan Wei Min (Alternate Director)
Mr. Tan Wei Min is Alternate Director to Mr. Tan Fuh Gih. From 1999 to 28 January 2002,he was an Executive Director of the Group. He joined the Group in 1994. Mr. Tan is incharge of the Valves Division and industrial supply trading business. Prior to this, heworked as a systems analyst between 1993 and 1994. Mr. Tan graduated from theKingston University in the United Kingdom with a Bachelor of Science (Honours) Degreein Information Technology.
Lee Beng Cheng Billy (Independent Director)
Mr Lee Beng Cheng, Billy has extensive experience in the oil & gas and marine industries,having worked in the oil refining and petrochemical sectors, offshore drilling rig, andplatform construction including drilling several oil & gas wells both onshore and offshorein Asia. He held senior position in several public-listed and private entities in thehydrocarbon industry in Singapore, Malaysia and China including Vice Chairman of thelisted Shenzhen-Chiwan Petroleun Supply Base, Chairman of Singapore OffshorePetroleum Supply Base, President of Sembawang Marine & Logistics Ltd (formerly knownas Sembawang Maritime Ltd), Managing Director of Hong Kong listed Promet PetroleumLtd. Mr Lee holds a First Class Honours degree in Mechanical Engineering and a Masterof Science (with distinction) from Leeds University, UK. He is also a member of theSingapore Institute of Management.
Wong Meng Yeng (Independent Director)
Mr Wong Meng Yeng has been an advocate and solicitor in Singapore for 18 years ofwhich the last 12 were spent as a corporate lawyer. He is currently a director of AllianceLLC, a law corporation he co-founded and an independent director of Multi-Chem Limitedand Novena Holdings Limited which are both listed on SGX. Mr. Wong holds a Bachelor ofLaws (Honours) degree from National University of Singapore in 1983.
Chew Heng Ching (Independent Director)
Mr Chew Heng Ching has extensive experience in both the public and private sectors,having held senior positions in the Ministry of Finance, the Ministry of Trade & Industry,DBS Bank, Boustead group of companies, HB Media group of companies and the TimesPublishing group. Mr Chew also sits on the board of several listed companies. He is alsothe President of the Governing Council of the Singapore Institute of Directors and isone of the Directors of the Singapore International Chamber of Commerce. Mr Chewwas first elected to the Singapore Parliament in 1984 and is currently the Deputy Speakerfor the Singapore Parliament. Mr Chew holds a Bachelor of Engineering (IndustrialEngineering) First Class Honours degree and a Bachelor of Arts (Economics) degree fromthe University of Newcastle, Australia. He was a Colombo Plan Scholar.
Board of Directors
Financial Highlights
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Financial Highlights
Turnover
Profit before tax
Profit after tax
Key Balance Sheet Indicators
Shareholders’ fund
Total assets
Total Liabilities
Performance Indicators
Earnings per share (cents/ share)
Net tangible assets (cents/ share)
Financial Ratios
Current ratio (times)
Net borrowing / Equity (times)*
2000$’000
2001$’000
2002$’000
35,081
2,334
1,581
16,560
28,374
11,814
1.46
15.33
2.18
54,600
4,076
3,253
19,405
43,439
24,033
3.01
16.64
1.80
0.11
71,121
4,977
3,862
25,168
66,595
41,427
3.57
21.30
1.88
0.40NA**
* Net borrowing / Equity = (borrowing - cash) / equity** In Y2000 cash position was higher than borrowing
Turnover By GeographicalLocations
Turnover By BusinessSegments
44%China 39%
Singapore
17%Others
62%Oil & Gas
34%Others
14%Marine
Turnover Profit Before Tax$71.1
million
$35.1million
2000 2001 2002
$54.6million
Profit After Tax
$1.58million
$3.25million
$3.86million
2000 2001 2002
$2.33million
$4.08million
$4.98million
2000 2001 2002
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CORPORATE GOVERNANCE STATEMENT
KS Tech is committed to adopting the standards of good corporate governance and taking steps towards achieving fullcompliance with the Code of Corporate Governance (“Code”).
The Company’s corporate governance practices are described with specific reference to the Code. The principles identifiedat each section refer to the principles of the Code.
BOARD OF DIRECTORS
Principle 1: Board’s Conduct of its Affairs
The Board has overall responsibility for the Corporate Governance of the Company. It sets the strategic directions of theCompany and reviews all major initiatives and decisions of the Company.
Major investments and funding decisions are approved by the Board. The Board also reviews the Company’s financialperformance and internal control procedures.
In the course of FY2002, the Board met a total of 3 times with full attendance at each and every meeting.
Principle 2: Board Composition and Balance
The Board of Directors comprises seven directors, three of whom are considered to be independent. The NominatingCommittee reviews the independence of each director annually and applies the Code’s definition of what qualifies as anindependent director in its review. Key information about the directors is detailed in the “Board of Directors” section of theannual report.
The Directors of the Company in office at the date of this report are:
Executive: Independent:Mr. Tan Kim Seng Mr. Chew Heng ChingMr. Chew Thiam Keng Mr. Wong Meng YengMr. Goh Boon Chye Mr. Lee Beng Cheng, BillyMr. Tan Fuh Gih
Alternate Directors:Mr. Tan Hoo Lang (Alternate director to Mr. Tan Kim Seng)Mr. Tan Wei Min (Alternate Director to Mr. Tan Fuh Gih)
The Board draws from a broad spectrum of competencies from the oil and gas industry, banking, legal, accounting,management and community service.
Principle 3: Chairman and CEO
The Executive Chairman and CEO of the Company are separate individuals.
As the most senior executive in the Company, the CEO bears executive responsibility for the Company’s business, whilethe Chairman bears responsibility for the workings of the Board. The Chairman and the CEO are not related.
The Chairman ensures that board meetings are held when necessary and sets the board meeting agenda in consultationwith the CEO. The Chairman reviews most board papers before they are presented to the Board and ensures that boardmembers are provided with complete, adequate and timely information. As a general rule, board papers are sent todirectors in advance in order for directors to be adequately prepared for the meeting. Management staff who can provideadditional insight into the matters to be discussed, are invited as and when necessary, to attend at the relevant timeduring the board meetings.
Principle 6: Access to Information
The Board has separate and independent access to senior management of the Company. Requests for information fromthe Board are dealt with promptly. The Board is informed of all material events and transactions as and when they occur.
The company secretary attends all board meetings and is responsible for ensuring that board procedures are followed. Itis the company secretary’s responsibility to ensure that the Company complies with the requirements of the CompaniesAct. Together with the other management staff of the Company, the company secretary is responsible for compliancewith all other rules and regulations which are applicable to the Company.
Corporate Governance Statement
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Corporate Governance Statement
BOARD COMMITTEES
Nominating Committee
Principle 4: Board Membership
Pursuant to the recommendations under the Code of Corporate Governance and in compliance thereof, a NominatingCommittee was formed on 4 September 2002. The Nominating Committee comprises three directors, a majority of whom,including the Chairman, are independent. As at the date of this Report, the Nominating Committee members are:
Mr. Wong Meng Yeng (Chairman and Independent Director)Mr. Lee Beng Cheng, Billy (Independent Director)Mr. Tan Kim Seng (Executive Director)
Duties and functions of the Nominating Committee are as follows:
a. to make recommendations to the Board on all board appointments and re-nomination having regard to the director’scontribution and performance (e.g. attendance, preparedness, participation, candour and any other salient factors).
b. to ensure that all directors should be required to submit themselves for re-nomination and re-election at regularintervals and at least every three years.
c. to determine annually whether a director is independent, bearing in mind the relationships which would deem adirector not to be independent
Every director shall, upon appointment, and subsequently on an annual basis, submit to the CompanySecretary, a return in the form set out, as to his independence. The Nominating Committee shall review thereturns and recommend to the Board as to whether the director is to be considered independent.
An independent member shall notify the Board immediately, if, as a result of a change in circumstances,he no longer meets the criteria for independence. The Nominating Committee shall review the change incircumstances and make its recommendation to the Board.
d. to decide whether a director is able to and has adequately carried out his duties as a director of the company inparticular where the director concerned has multiple board representations. Where possible, the NominatingCommittee shall formulate internal guidelines that can address the competing time commitments that are faced whendirectors serve on multiple boards.
e. to decide how the Board’s performance may be evaluated and propose objective performance criteria. Suchperformance criteria, that allow comparison with its industry peers, should be approved by the Board and addresshow the Board has enhanced long term shareholders’ value. These performance criteria should not be changed fromyear to year and where circumstances deem it necessary for any of the criteria to be changed, the onus should be onthe Board to justify such changes.
Principle 5: Board Performance
If a director is to be re-appointed, the Nominating Committee will evaluate the performance of the director. The NominatingCommittee will assess each director’s contribution to the Board. The guidelines for assessment include the attendancerecord at meetings of the Board and its committees, the level and quality of participation during the meetings and anyother special contributions.
The Board’s overall performance will be evaluated by the Nominating Committee. The criteria for assessment includedthe success of the strategies and long-term goals set by the Board, return on equity, and the level of success in trackingthe management’s performance against the goals set by the Board.
Audit Committee
Principle 11: Audit CommitteePrinciple 12: Internal ControlsPrinciple 13: Internal Audits
The Audit Committee comprises four directors, the majority of whom, including the Chairman, are independent. At thedate of this report, the Audit Committee comprises the following members:
Mr. Chew Heng Ching (Chairman and Independent Director)Mr. Lee Beng Cheng, Billy (Independent Director)Mr. Wong Meng Yeng (Independent Director)Mr. Tan Kim Seng (Executive Director)
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Corporate Governance Statement
In the course of FY2002, the Audit Committee met three times with full attendance at each and every meeting. TheAudit Committee performs the following main functions:
a. review with the external auditors the audit plan, their evaluation of the system of Group’s internal accounting controls,their audit report and the related management’s response;
b. review the half yearly and annual financial statements and related footnotes before submission to the Board forapproval, focusing in particular, on changes in accounting policies and practices adopted, major risk areas,significant adjustments resulting from the audit, the going concern statement, compliance with accounting standardsas well as compliance with any stock exchange and statutory/regulatory requirements;
c. review the internal control and procedures and ensure co-ordination between the external auditors and themanagement, review the assistance given by management to the auditors and discuss problems and concerns, ifany, arising from the interim and final audits, and any matters which the auditors may wish to discuss (in the absenceof management where necessary);
d. review and discuss with the external auditors any suspected fraud or irregularity, or suspected infringement ofany relevant laws, rules or regulations, which has or is likely to have a material impact on the Group’s operatingresults or financial position, and the management’s response;
e. consider the appointment or re-appointment of the external auditors, approval of the audit fee, and matters relatingto the resignation or dismissal of the auditors;
f. review transactions falling within the scope of the SGX-ST Listing Manual, in particular matters pertaining to,Interested Person Transactions and Acquisitions and Realisations as laid down in Chapters 9 and respectively;
g. undertake such other reviews and projects as may be requested by the Board and report to the Board its findingsfrom time to time on matters arising and requiring the attention of the Audit Committee; and
h. generally undertake such other functions and duties as may be required by statute or the SGX-ST Listing Manual,and by such amendments made thereto from time to time.
The Audit Committee has carried out a review of all interested person transactions in FY 2002.
The Group’s internal controls and systems are designed to provide reasonable assurance to the integrity and reliability ofthe financial information.
The internal auditor’s primary line of reporting is to the Chairman of the Audit Committee. Key business risks identified inthe course of the audit and alignment plans to address these risk are communicated to management accordingly andtabled for discussion at Audit Committee meetings with updates by management on the status of these action plans. TheBoard is satisfied that the existing controls are adequate.
The Audit Committee meets with the external and internal auditors, without the presence of management, at least onceannually.
The Audit Committee confirms that it has undertaken a review of all non-audit services provided by the external auditorsand is satisfied that such services would not, in the Audit Committee’s opinion, affect the independence of the externalauditors, and recommends to the Board of Directors, the nomination of the external auditors.
Remuneration Committee
Principle 7: Procedures for Developing Remuneration PoliciesPrinciple 8: Level and Mix of RemunerationPrinciple 9: Disclosure on Remuneration
Pursuant to the recommendations under the Code of Corporate Governance and in compliance thereof, a RemunerationCommittee was formed on 4 September 2002. The Remuneration Committee has three members, a majority of whom arenon-executive directors who are independent of Management and free from any business or other relationships, whichmay materially interfere with the exercise of their independent judgment. The Remuneration Committee is chaired by anindependent non-executive director. As at the date of this Report, the Remuneration Committee members are:
Mr. Chew Heng Ching (Chairman and Independent Director)Mr. Lee Beng Cheng, Billy (Independent Director)Mr. Chew Thiam Keng (Executive Director)
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Corporate Governance Statement
Duties and powers of the Remuneration Committee are as follows:
a. to recommend to the Board a framework of remuneration for the Board and key executives.
b. to determine specific remuneration packages for each executive director. The Remuneration Committee will cover allaspects of remuneration including but not limited to directors’ fees, salaries, allowances, bonus, options and benefits inkind. In setting remuneration packages, the Remuneration Committee will be aware of pay and employment conditionswithin the industry and in comparable companies. The remuneration packages should take into account the Company’srelative performance and the performance of individual directors.
c. in the case of service contracts of directors, to review and to recommend to the Board the terms of renewal of servicecontracts.
d. the Remuneration Committee’s recommendations will be made in consultation with the Chairman of the Board andsubmitted for endorsement by the entire Board. The Board will recommend the remuneration of non-executive directorsfor approval at the Annual General Meeting.
e. to retain such professional consultancy firm as the committee may deem necessary to enable it to discharge its dutieshereunder satisfactorily.
f. to consider the various disclosure requirements for directors’ remuneration, particularly those required by regulatorybodies such as the Singapore Exchange Securities Trading Limited, and ensure that there is adequate disclosure in thefinancial statements to ensure and enhance transparency between the Company and relevant interested parties.
g. to carry out such other duties as may be agreed to by the Remuneration Committee and the Board.
Directors’ Remuneration
Y2002 Y2001$500,000 and above - -$250,000 to below $499,999 1 -Below $250,000 8 7Total 9* 7 *Inclusive of 2 Alternate Directors
Executive Directors are not paid director’s fees. Non-executive directors are paid director’s fees, subject to approval at theAGM. Such fees are approved by the shareholders of the Company as a lump sum at the AGM of the Company.
COMMUNICATION WITH SHAREHOLDERS
Principle 10: Accountability and AuditPrinciple 14: Communication with ShareholdersPrinciple 15: Greater Shareholder Participation
The Company’s results are published through the MASNET and news releases. All information on the Company’s newinitiatives and material events are first disseminated via MASNET, followed usually by a news release.
The Company does not practice selective disclosure. Price sensitive information is first publicly released, either before theCompany meets with any group of analysts or simultaneously with such meetings. Results and annual reports are an-nounced or issued within the mandatory period.
All shareholders of the Company receive the annual report and notice of AGM. At AGMs, shareholders are given theopportunity to air their views and ask directors or management questions regarding the Company.
The Articles allow a member of the Company to appoint not more than two proxies to attend and vote instead of themember.
DEALINGS IN SECURITIES
The Group has procedures in place prohibiting dealings in the Company’s shares by its officers while in possession of pricesensitive information and during the period commencing one month prior to the announcement of the Company’s quarterlyand full year results. Directors and executives are also expected to observe insider trading laws at all times even whendealing in securities within permitted trading period.
CHEW HENG CHING TAN KIM SENGDirector / Chairman Audit Committee Director / Executive Chairman
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The directors present their report to the members together with the audited financial statements of the Company and of the
Group for the financial year ended 31 December 2002.
DIRECTORS
The directors of the Company at the date of this report are:
Tan Kim SengTan Fuh Gih
Tan Hoo Lang (resigned and appointed alternate director to Tan Kim Seng on 28 January 2002)
Tan Wei Min (resigned and appointed alternate director to Tan Fuh Gih on 28 January 2002)Chew Heng Ching
Chew Thiam Keng
Goh Boon Chye (appointed on 28 January 2002)Lee Beng Cheng, Billy (appointed on 15 April 2002)
Wong Meng Yeng (appointed 15 April 2002)
PRINCIPAL ACTIVITIES
The principal activities of the Company are those of trading in hydraulic products, instrumentation and equipment for the
shipbuilding, marine and oil and gas industries and commission agents and trading in hardware products and oilfield
equipment. The principal activities of its subsidiaries are set out in Note 17 to the financial statements.
Subsequent to the acquisition of Scott & English Limited (“SEL”) during the financial year by the holding company, Kim Seng
Holdings Pte Ltd, SEL transferred its power generation business together with the related assets to Scott & English (2002)Pte. Ltd., a subsidiary of the Company, which was incorporated to take over the power generation business from SEL. The
cash consideration of $850,000 was paid for the transfer of the fair value of inventories.
There have been no other significant changes in the nature of these activities during the financial year.
RESULTS FOR THE FINANCIAL YEAR
The consolidated profit after tax attributable to the members of the Company for the financial year was $3,861,980. TheCompany made a profit after tax for the financial year of $2,838,791.
MATERIAL TRANSFERS TO OR FROM RESERVES AND PROVISIONS
Details of material movements in reserves during the financial year are set out in the statements of changes in equity.
Material movements in provisions during the financial year are set out in the notes to the financial statements.
Directors’ Report
for the financial year ended 31 December 2002
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ACQUISITION AND DISPOSAL OF SUBSIDIARIES
During the financial year,
(a) the following subsidiaries were incorporated:
% of Issued share capitalName of company Principal activities interest on incorporation
KS eVA Pte Ltd Provision of e-trading and 100 2 ordinary shares of $1
e-logistics services for each at par for cash
hardware and heavy equipment
Scott & English (2002) Assembly and trading of 100 500,000 ordinary shares of
Pte. Ltd. electrical engineering goods, $1 each at par for cashelectronic appliances and
heavy equipment
S&E Cumford (M) Sdn Bhd* Marketing and trading of electronic motors 100 2 ordinary shares of RM$1
each at par for cash
* The interest in this subsidiary is held by Scott & English (2002) Pte. Ltd., a wholly owned subsidiary of the
Company.
(b) a subsidiary, Scott & English (2002) Pte. Ltd., acquired Lindeteves (Thailand) Limited for a cash consideration of
S$654,440. The net tangible assets of Lindeteves (Thailand) Limited at the date of acquisition was S$654,440.
Subsequent to the acquisition, the subsidiary changed its name to S&E Cumford (Thailand) Ltd.
(c) the Company disposed its 100% interest in KS Seafirst Marine Services Pte Ltd for a cash consideration of $1,672,000.
The attributable net tangible assets of the subsidiary was $1,120,000 at the disposal date.
There were no other acquisitions or disposals of interests in subsidiaries during the financial year.
ISSUE OF SHARES AND DEBENTURES
During the financial year,
(a) the Company increased its issued ordinary share capital from the $10,800,000 to $11,313,365 by way of issue of5,133,646 ordinary shares of $0.10 each at a premium of 36.9 cents per share, as consideration for equity shares of
$0.05 each in Sinwa KS Pte Ltd, resulting in it becoming an associated company of the Group.
(b) a subsidiary, Scott & English (2002) Pte. Ltd. increased its issued ordinary share capital from $2 to $500,000 by the
issue of 499,998 ordinary shares of $1 each to provide funds for working capital purposes.
There were no other issues of shares or debentures by any corporation in the Group during the financial year.
Directors’ Report
for the financial year ended 31 December 2002
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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 any arrangement whose objectwas to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of,
the Company or any other body corporate.
DIRECTORS’ INTERESTS IN SHARES OR DEBENTURES
(a) According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year
had any interest in the share capital of the Company and related corporations, except as follows:
Holdings registered in Holdings in which a directorname of director or nominee is deemed to have an interest
At 1.1.2002 or At 1.1.2002 ordate of date of
appointment, appointment,At 31.12.2002 if later At 31.12.2002 if later
The Company(Ordinary shares of $0.10 each)
Tan Kim Seng - - 75,100,000 66,800,000
Tan Fuh Gih - - 75,100,000 66,800,000
Tan Hoo Lang - - 75,100,000 66,800,000Tan Wei Min - - 75,100,000 66,800,000
Chew Heng Ching - 100,000 - -
Holding company, Kim Seng Holdings Pte Ltd(Ordinary shares of $1 each)
Tan Kim Seng 373,123 373,123 - - Tan Fuh Gih 342,029 342,029 - -
Tan Hoo Lang 342,029 342,029 - -
Tan Wei Min 310,935 310,935 - -
(a) Mr Tan Kim Seng, Mr Tan Fuh Gih, Mr Tan Hoo Lang and Mr Tan Wei Min, who by virtue of their deemed interest
of not less than 20% of the issued share capital of the holding company and the Company are deemed to haveinterest in all the shares of the wholly owned subsidiaries of the holding company and the Company.
(b) The directors’ interests in the share capital of the Company and of related corporations as at 21 January 2003were the same as at 31 December 2002.
Directors’ Report
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DIVIDENDS
Dividends paid, declared and proposed since the end of the Company’s preceding financial year are as follows:
$
A final dividend of 6% per share, net of tax at 22% was paid
on 17 June 2002 in respect of the financial year ended 31 December
2001 as proposed in the Directors’ Report for that financial year 505,440
The directors proposed a final dividend of 6.5% per share, net
of tax at 22%, to be paid in respect of the financial year ended31 December 2002 573,588
BAD AND DOUBTFUL DEBTS
Before the financial statements of the Company were made out, the directors took reasonable steps to ascertain the actiontaken in relation to the writing off of bad debts and providing for doubtful debts of the Company. The directors have satisfied
themselves that all known bad debts of the Company have been written off and that adequate provision has been made for
doubtful debts.
At the date of this report, the directors are not aware of any circumstances which would render any amounts written off for
bad debts or provided for doubtful debts in the Group inadequate to any substantial extent.
CURRENT ASSETS
Before the financial statements of the Company were made out, the directors took reasonable steps to ascertain that
current assets of the Company which were unlikely to realise their book values in the ordinary course of business have beenwritten down to their estimated realisable value or that adequate provision had been made for the diminution in value of
such current assets.
At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report, which
would render the values attributed to current assets in the consolidated financial statements misleading.
CHARGES ON ASSETS AND CONTINGENT LIABILITIES
At the date of this report, no charges have arisen since the end of the financial year on the assets of the Company or any
corporation in the Group which secure the liability of any other person, nor has any contingent liability arisen since the end
of the financial year in the Company or any other corporation in the Group.
Directors’ Report
for the financial year ended 31 December 2002
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ABILITY TO MEET OBLIGATIONS
No contingent or other liability of the Company or any other corporation in the Group has become enforceable or is likely tobecome enforceable within the period of twelve months after the end of the financial year which, in the opinion of the
directors, will or may substantially affect the ability of the Company and the Group to meet their obligations as and when
they fall due.
OTHER CIRCUMSTANCES AFFECTING THE FINANCIAL STATEMENTS
At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the
consolidated financial statements which would render any amount stated in the financial statements of the Company andthe consolidated financial statements misleading.
UNUSUAL ITEMS
In the opinion of the directors, the results of the operations of the Company and of the Group during the financial year havenot been substantially affected by any item, transaction or event of a material and unusual nature.
UNUSUAL ITEMS AFTER THE FINANCIAL YEAR
In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the intervalbetween the end of the financial year and the date of this report which would substantially affect the results of the operations
of the Company and of the Group for the financial year in which this report is made.
DIRECTORS’ CONTRACTUAL BENEFITS
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than as
disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the
director or with a firm of which he is a member or with a company in which he has a substantial financial interest.
SHARE OPTIONS
There were no options granted during the financial year to subscribe for unissued shares of the Company or its subsidiaries.
No shares have been issued during the financial year by virtue of the exercise of options to take up unissued shares of the
Company or its subsidiaries.
There were no unissued shares of the Company or its subsidiaries under option at the end of the financial year.
Directors’ Report
for the financial year ended 31 December 2002
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AUDIT COMMITTEE
The Audit Committee carried out its functions in accordance with Section 201B(5) of the Companies Act, including a reviewof the financial statements of the Company and of the Group for the financial year and the auditors’ report thereon. The Audit
Committee has presented a report to the Board in respect of:
(i) the co-operation given by the Company’s officers and whether the Audit Committee in the course of carrying out its
duties, was obstructed or impeded by the management;
(ii) the adequacy of the Group’s internal accounting control system;
(iii) compliance with legal and other regulatory requirements; and
(iv) any other matter which in the Audit Committee’s opinion should be brought to attention of the Board.
The Audit Committee has nominated PricewaterhouseCoopers for re-appointment as auditors of the Company at the
forthcoming Annual General Meeting.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to accept re-appointment.
On behalf of the directors
TAN KIM SENG CHEW THIAM KENG
Director Director
25 April 2003
Directors’ Report
for the financial year ended 31 December 2002
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In the opinion of the directors, the financial statements set out on pages 21 to 57 are drawn up so as to give a true and fair
view of the state of affairs of the Company and of the Group at 31 December 2002 and of the results of the business, and
changes in equity, of the Company and of the Group and the cash flows of the Group for the financial year then ended, andat the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they fall due.
On behalf of the directors
TAN KIM SENG CHEW THIAM KENG
Director Director
Statement By Directors
25 April 2003
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We have audited the financial statements of KS Tech Ltd and the consolidated financial statements of the Group for the
financial year ended 31 December 2002 set out on pages 21 to 57. These financial statements are the responsibility of the
Company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and
perform our audit to obtain reasonable assurance whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.
In our opinion,
(a) the accompanying financial statements of the Company and consolidated financial statements of the Group are
properly drawn up in accordance with the provisions of the Singapore Companies Act (“Act”) and Singapore Statementsof Accounting Standard and so as to give a true and fair view of:
(i) the state of affairs of the Company and of the Group at 31 December 2002, the results and changes in equity ofthe Company and of the Group, and the cash flows of the Group for the financial year ended on that date; and
(ii) the other matters required by section 201 of the Act to be dealt with in the financial statements of the Companyand the consolidated financial statements of the Group; and
(b) the accounting and other records, and the registers required by the Act to be kept by the Company and by thesubsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the
provisions of the Act.
We have considered the financial statements and auditors’ report of a subsidiary of which we have not acted as auditors,
being the financial statements included in the consolidated financial statements. The name of the subsidiary is stated in
note 17 to the financial statements.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements
of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidatedfinancial statements and we have received satisfactory information and explanations as required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and in respect ofthe subsidiaries incorporated in Singapore did not include any comment made under section 207(3) of the Act.
PricewaterhouseCoopers
Certified Public Accountants
Partner-Lim Seow Chiang
Singapore, 25 April 2003
Auditors’ Report
To the Members of KS Tech Ltd
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The Group The CompanyNotes 2002 2001 2002 2001
$ $ $ $
Revenue 3 71,120,873 54,599,671 39,200,582 43,060,057
Cost of sales (50,943,871) (40,120,929) (27,253,821) (31,947,473)
Gross profit 20,177,002 14,478,742 11,946,761 11,112,584
Other operating income 271,839 855,383 701,875 731,539
Distribution costs (7,931,811) (6,590,567) (5,102,501) (5,265,022)
Administrative expenses (3,682,865) (2,452,091) (1,870,223) (1,644,447)
Other operating expenses (3,944,296) (1,924,973) (2,246,048) (1,151,562)
Operating profit 4 4,889,869 4,366,494 3,429,864 3,783,092
Finance income 5 26,493 103,224 203,648 171,460
Finance costs 6 (336,542) (394,184) (306,983) (335,424)
Share of results of associated
companies 397,208 - - -
Profit before tax 4,977,028 4,075,534 3,326,529 3,619,128
Tax 9 (1,115,048) (822,823) (487,738) (741,000)
Net profit 3,861,980 3,252,711 2,838,791 2,878,128
Earnings per ordinary share (cents) 10 3.57 3.01
The accompanying notes form an integral part of these financial statements.
Auditors’ Report - Page 20.
Income Statements
for the financial year ended 31 December 2002
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The Group The CompanyNotes 2002 2001 2002 2001
$ $ $ $
Current assetsCash and cash equivalents 11 9,939,706 5,089,813 6,279,571 2,763,116Receivables 12 20,466,687 18,118,180 18,829,221 17,837,821
Inventories 13 25,198,020 14,948,766 12,779,764 10,580,281
Short-term investments 14 137,432 190,294 16,185 15,422Other current assets 15 1,871,450 1,188,945 1,127,015 1,153,440
57,613,295 39,535,998 39,031,756 32,350,080
Non-current assetsInvestment in club membership 80,000 80,000 80,000 80,000Investments in associated companies 16 4,660,686 - 4,337,753 -
Investments in subsidiaries 17 - - 5,563,943 5,263,941
Plant and equipment 18 3,169,060 2,392,585 2,293,161 1,810,779Goodwill 19 1,072,500 1,429,984 - -
8,982,246 3,902,569 12,274,857 7,154,720
Total assets 66,595,541 43,438,567 51,306,613 39,504,800
Current liabilitiesTrade and other payables 20 20,203,592 15,661,014 10,759,074 13,909,123
Provision for current tax 9 1,146,738 1,038,992 634,321 925,739Borrowings 21 9,339,095 5,206,141 7,072,009 5,147,758
30,689,425 21,906,147 18,465,404 19,982,620
Non-current liabilitiesBorrowings 21 10,628,341 2,050,341 10,628,341 2,050,341Deferred taxation 22 109,000 77,003 63,000 63,000
10,737,341 2,127,344 10,691,341 2,113,341
Total liabilities 41,426,766 24,033,491 29,156,745 22,095,961
Net assets 25,168,775 19,405,076 22,149,868 17,408,839
Share capital and reservesShare capital 23 11,313,365 10,800,000 11,313,365 10,800,000
Share premium 3,447,740 1,553,427 3,447,740 1,553,427
Foreign currency translation reserve (519) - - -Retained earnings 10,408,189 7,051,649 7,388,763 5,055,412
Interests of shareholders of theCompany 25,168,775 19,405,076 22,149,868 17,408,839
Balance Sheets
as at 31 December 2002
The accompanying notes form an integral part of these financial statements.
Auditors’ Report - Page 20.
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Foreign
Asset currency
Share revaluation translation Retained
Notes Share capital premium reserve reserve earnings Total
$ $ $ $ $ $
Balance at 1 January 2002 10,800,000 1,553,427 - - 7,051,649 19,405,076
Net losses not recognised in
income statement – currency
translation differences - - - (519) - (519)
Net profit for the financial year - - - - 3,861,980 3,861,980
Total recognised gains and
losses for the financial year - - - (519) 3,861,980 3,861,461
Dividend for 2001 24 - - - - (505,440) (505,440)
Issue of share capital 23 513,365 1,894,313 - - - 2,407,678
Balance at 31 December 2002 11,313,365 3,447,740 - (519) 10,408,189 25,168,775
Balance at 1 January 2001 10,800,000 1,553,427 128,000 - 4,078,638 16,560,065
Total recognised gains for the
financial year - Net profit for
the financial year - - - - 3,252,711 3,252,711
Transfer on disposal of
leasehold building - - (128,000) - 128,000 -
Dividend for 2000 24 - - - - (407,700) (407,700)
Balance at 31 December 2001 10,800,000 1,553,427 - - 7,051,649 19,405,076
Consolidated Statement Of Changes In Equity
for the financial year ended 31 December 2002
The accompanying notes form an integral part of these financial statements.
Auditors’ Report - Page 20.
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Asset
Share revaluation Retained
Notes Share capital premium reserve earnings Total
$ $ $ $ $
Balance at 1 January 2002 10,800,000 1,553,427 - 5,055,412 17,408,839
Total recognised gains for the
financial year - Net profit for
the financial year - - - 2,838,791 2,838,791
Dividend for 2001 24 - - - (505,440) (505,440)
Issue of share capital 23 513,365 1,894,313 - - 2,407,678
Balance at 31 December 2002 11,313,365 3,447,740 - 7,388,763 22,149,868
Balance at 1 January 2001 10,800,000 1,553,427 128,000 2,456,984 14,938,411
Total recognised gains for the
financial year - Net profit for
the financial year - - - 2,878,128 2,878,128
Transfer on disposal of leasehold building - - (128,000) 128,000 -
Dividend for 2000 24 - - - (407,700) (407,700)
Balance at 31 December 2001 10,800,000 1,553,427 - 5,055,412 17,408,839
Statement Of Changes In Equity - Company
for the financial year ended 31 December 2002
The accompanying notes form an integral part of these financial statements.
Auditors’ Report - Page 20.
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Note 2002 2001$ $
Cash flows from operating activitiesProfit before tax and share of profits of associated company 4,579,820 4,075,534
Adjustments for:Amortisation of goodwill 332,500 250,016
Depreciation 834,594 610,495
Interest income (21,790) (99,405)Interest expense 336,542 394,184
Gain on disposal of a subsidiary (109,016) -
Gain on disposal of plant and equipment (721) (615,671)Plant and equipment written-off - 91,255
Loss/(gain) on disposal of short-term investments 1,362 (12,386)
Provision for diminution in short-term investments 51,716 7,076Write-back of provision for diminution in value of short-term investments - (8,083)
Dividend income (4,703) (3,819)
Operating cash flow before working capital change 6,000,304 4,689,196
Change in operating assets and liabilities net of effects from acquisitionand disposal of subsidiaries:
Inventories (6,274,817) (2,821,245)
Receivables (3,100,857) (7,268,329)Other current assets (516,322) (642,720)
Payables 3,487,382 8,852,262
Cash (used in)/generated from operations (404,310) 2,809,164
Income tax paid (781,316) (711,870)
Net cash (outflow)/inflow from operating activities (1,185,626) 2,097,294
Cash flows from investing activitiesPayments for purchase of plant and equipment (1,694,705) (879,410)
Proceeds from disposal of plant and equipment 3,663 2,812,516Proceeds from sale of short-term investments 2,172 29,993
Payments for purchase of short-term investments (2,388) -
Dividends received 4,703 3,819Interest received 21,790 99,405
Payments for purchase of a subsidiary, net of cash acquired (2,007,223) -
Payments for purchase of associated companies (258,073) -Payments for purchase of business assets of subsidiaries, net of cash acquired (850,000) (6,207,165)
Proceeds from disposal of subsidiary, net of cash disposed (1,007,539) -
Net cash outflow from investing activities (5,787,600) (4,140,842)
Consolidated Cash Flow Statement
for the financial year ended 31 December 2002
The accompanying notes form an integral part of these financial statements.
Auditors’ Report - Page 20.
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Note 2002 2001$ $
Cash flows from financing activitiesTrust receipts 3,200,884 1,982,439
Payments to hire purchase creditors (134,849) (199,232)Term loan proceeds 10,426,300 4,000,000
Repayment of term loan (1,583,028) (999,999)
Dividend paid (505,440) (407,700)Interest paid (336,542) (379,636)
Net cash inflow from financing activities 11,067,325 3,995,872
Net increase in cash and cash equivalents held 4,094,099 1,952,324
Cash and cash equivalents at the beginning of the financial year 5,031,430 3,079,106
Cash and cash equivalents at the end of the financial year 11 9,125,529 5,031,430
Consolidated Cash Flow Statement
for the financial year ended 31 December 2002
The accompanying notes form an integral part of these financial statements.
Auditors’ Report - Page 20.
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ACQUISITION OF SUBSIDIARIES
During the financial year, a subsidiary, Scott & English (2002) Pte. Ltd. acquired 100% of the issued share capital ofLindeteves (Thailand) Limited for a cash consideration of $654,440. The acquired subsidiary contributed revenue of $214,318
and operating loss of $75,000 to the Group for the period from 1 November 2002 to 31 December 2002.
The acquired subsidiary is engaged in the distribution of electronic motors, machinery, electronic equipment and chemicals.
Details of the acquisition are as follows:
$
Fair values of assets acquiredPlant and equipment 101,946
Trade debtors 720,254
Other current assets 166,183Inventories 3,134,715
Cash 736
Bank overdraft (1,353,519)Trade and other payables (2,115,875)
Total consideration paid in cash 654,440
Less: Cash and cash equivalents in subsidiary acquired
Cash 736Bank overdraft (1,353,519)
(1,352,783)
Net outflow of cash 2,007,223
Subsequent to the acquisition of Scott & English Limited (“SEL”) during the financial year by the holding company, Kim Seng
Holdings Pte Ltd, SEL transferred its power generation business together with the related assets to Scott & English (2002)
Pte. Ltd., a subsidiary of the Company, which was incorporated to take over the power generation business from SEL. Thecash consideration of $850,000 was paid for the transfer of the fair value of inventories.
Details of the acquisition are as follows:
$
Fair values of assets acquired Inventories 850,000
Net outflow of cash 850,000
Notes To The Consolidated Cash Flow Statement
for the financial year ended 31 December 2002
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Notes To The Financial Statements
for the financial year ended 31 December 2002
DISPOSAL OF SUBSIDIARY
During the financial year, the Company disposed of its interest in its wholly owned subsidiary, KS Seafirst Marine ServicesPte Ltd, as consideration for equity shares of $0.05 each in Sinwa KS Pte Ltd, resulting in it becoming an associated
company of the Group.
The revenue and results contributed by KS Seafirst Marine Services Pte Ltd to the marine segment up to the date of
disposal and its net assets were as follows:
The Group5 months to 31 12 months 31
May 2002 December 2001$ $
Revenue 2,374,758 1,525,169
Net profit before tax 449,458 69,346
Tax (104,377) (16,268)
345,081 53,078
Net assets at31 May 2002
$
Net identifiable assets disposedPlant and equipment 277,459
Trade debtors 1,472,603
Inventories 10,278Cash 589,539
Trade and other payables (1,060,835)
Hire purchase liabilities (49,330)Provision for current tax (93,711)
Deferred taxation (26,003)
1,120,000
Gain on disposal 109,016
Goodwill written off on acquisition 24,984Exchange for equity interest in an investee company (1,672,000)
Cash proceeds (418,000)
Less: Cash in subsidiary disposed (589,539)
Net outflow of cash on disposal of subsidiary (1,007,539)
Notes To The Consolidated Cash Flow Statement
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Notes To The Financial Statements
for the financial year ended 31 December 2002
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1. GENERAL
The Company is incorporated and domiciled in Singapore and is listed on the Singapore Exchange. The address of itsregistered office is:
No. 4 Tuas Avenue 5Singapore 639331
The principal activities of the Company are those of trading in hydraulic products, instrumentation and equipment forthe shipbuilding, marine and oil and gas industries and commission agents and trading in hardware products and
oilfield equipment. The principal activities of its subsidiaries are set out in note 17 to the financial statements.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The financial statements have been prepared in accordance with Singapore Statements of Accounting Standard(“SAS”). The financial statements have been prepared under the historical cost convention, except as disclosed
in the accounting policies below.
The financial statements are expressed in Singapore dollars.
In financial year 2002, the Group adopted SAS 12 (2001) Income Taxes. There is no material impact on thefinancial statements of the Group from the adoption of the revised standard as the Group has been following the
recognition and measurement policies in the standard.
(b) Basis of consolidation
The consolidated financial statements include the financial statements of the Company and all its subsidiariesmade up to the end of the financial year. Subsidiaries are those entities in which the Group has an interest of
more than one half of the voting rights or otherwise has power to exercise control over the operations. Subsidiaries
are consolidated from the date on which control is transferred to the Group and are no longer consolidated fromthe date that control ceases. All intercompany transactions, balances and unrealised gains on transactions
between group companies are eliminated; unrealised losses are also eliminated unless cost cannot be recovered.
(c) Foreign currencies
Transactions in foreign currencies during the financial year are converted to Singapore dollars at the rates of
exchange prevailing on the transaction dates. Foreign currency monetary assets and liabilities are translatedinto Singapore dollars at the rates of exchange prevailing at the balance sheet date. Exchange differences are
taken to the income statements.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(c) Foreign currencies (cont’d)
For the purpose of consolidation of foreign subsidiaries and the equity accounting of foreign associated companies
whose operations are not integral to the Company’s operations, the balance sheets are translated into Singaporedollars at the exchange rates prevailing at the balance sheet date, and the results are translated using average
monthly exchange rates for the financial year. The exchange differences arising on translation of foreign
subsidiaries, and the Group’s share of exchange differences arising from the translation of foreign associatedcompanies, are taken directly to the foreign currency translation reserve account in the balance sheet. On
disposal, the accumulated translation differences are recognised in the consolidated income statement as part
of the gain or loss on sale.
(d) Revenue recognition
Revenue from the sale of goods is recognised upon delivery to customers, net of goods and services tax and
sales returns.
Commission income is recognised when the services have been rendered and that it is probable that the economic
benefits associated with the transaction will flow to the Group.
Revenue from the rendering of agency services is recognised when the service is provided.
Dividend income is recorded gross in the income statements in the accounting period in which a dividend isdeclared by the investee company.
Interest income is accrued on a day to day basis.
(e) Deferred income taxes
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements.
Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred income
tax.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associated
companies, except where the timing of the reversal of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable future.
(f) Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement,
cash and cash equivalents comprise fixed deposits with financial institutions, cash and bank balances net of
bank overdrafts.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(g) Trade receivables
Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based
on a review of all outstanding amounts at the year end. Bad debts are written off when identified.
(h) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average
basis. The cost of work in progress comprises raw materials, direct labour, other direct costs and related production
overheads (based on normal operating capacity). Net realisation value is the estimated selling price in theordinary course of business, less the costs of completion and selling expenses.
Provision is made, where necessary, for obsolete, slow-moving and defective inventories.
(i) Investments
Quoted and unquoted investments, including investments in subsidiaries and associated companies that are
intended to be held for the long term are stated at cost less provision. This provision is made in recognition of a
diminution in the value of investments, which is other than temporary, determined on an individual investmentbasis.
Short-term quoted investments are stated at the lower of cost and market value determined on an individualinvestment basis. Cost is determined on the weighted average method.
Profits or losses on disposals of investments are taken to the income statements.
(j) Associated companies
These are undertakings in which the Group generally has between 20% and 50% of the voting rights, and over
which the Group has significant influence, but which it does not control.
Investments in associated companies are accounted for using the equity method of accounting whereby the
Group’s share of profits less losses of associated companies is included in the consolidated income statement
and the Group’s share of net assets is included in the consolidated balance sheet. These amounts are takenfrom the most recent audited financial statements of the companies concerned, made up to dates not more than
six months prior to the end of the financial year of the Group. Where the accounting policies of associated
companies do not conform with those of the Group, adjustments are made where the amounts involved areconsidered significant to the Group.
Unrealised gains on transactions between the Group and its associated companies are eliminated to the extentof the Group’s interest in the associated companies; unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Equity accounting is discontinued when the carrying
amount of the investment in an associate company reaches zero, unless the Group has assumed obligations orguaranteed obligations in respect of the associated company.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(k) Plant and equipment and depreciation
Plant and equipment are stated at cost less accumulated depreciation.
When the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
Depreciation is calculated on a straight line basis to write off the cost or revalued amount of plant and equipment
over their expected useful lives. The estimated useful lives are as follows:
Plant and machinery 5 - 7 years
Motor vehicles 5 - 7 years
Office equipment 3 - 5 yearsRenovation, furniture and fittings 5 - 10 years
(l) Goodwill
Goodwill represents the excess of the fair value of the consideration given over the Group’s share of the fair
value of the identifiable assets when acquired. Goodwill is amortised on a straight-line basis, through theconsolidated income statement, over its useful economic life of 5 financial years. Goodwill which is assessed as
having no continuing economic value is written off to the income statement.
(m) Accounting for leases
A distinction is made between finance leases which effectively transfer from the lessor to the lessee substantiallyall the risks and benefits incidental to the ownership of the leased assets, and operating leases under which the
lessor effectively retains substantially all such risks and benefits. Assets acquired under hire purchase agreements
are treated as finance leases.
Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease
payment is allocated between the liability and finance charges so as to achieve a constant rate of return on thefinance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other
long-term payables. The interest element of the finance charge is charged to the income statement over the
lease period. Plant and equipment acquired under finance lease or hire purchase agreements are depreciatedover the useful life of the assets.
Operating lease payments are charged to the income statement on a straight line basis over the period of thelease.
When an operating lease is terminated before the lease period has expired, any payment required to be madeto the lessor by way of penalty is recognised as an expense in the period in which termination takes place.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(n) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimateof the amount of the obligation can be made.
(o) Employee benefits
Pension obligations
The Group makes contributions to defined contribution plans, as required by the authorities in the respective
countries in which it operates. The Group is not liable for any other pension obligations. The contributions are
disclosed under staff costs (note 7).
Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for
the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet
date.
(p) Impairment of assets
Plant and equipment and long-term investment are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be recoverable. Whenever the carrying
amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the income statementfor plant and equipment and long-term investment carried at cost.
The recoverable amount is the higher of an asset’s net selling price and value in use. Value in use is the presentvalue of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal
at the end of its useful life, Recoverable amounts are estimated for individual assets or, if it is not possible, for
the cash generating unit.
Reversal of an impairment loss recognised in prior years is recorded when there is an indication that the impairment
loss recognised for an asset no longer exists or has decreased. The reversal is recorded in the income statement.
(q) Share capital
Dividends on ordinary shares are recognised as an appropriation of earnings in the period in which they are
declared.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
3. REVENUEThe Group The Company
2002 2001 2002 2001$ $ $ $
Sale of goods 69,181,552 52,758,228 37,738,641 41,444,068Commission income 787,171 1,615,989 766,778 1,615,989
Shipping agency fees 456,987 225,454 - -
Rental income 695,163 - 695,163 -
71,120,873 54,599,671 39,200,582 43,060,057
4. OPERATING PROFITThe Group The Company
2002 2001 2002 2001$ $ $ $
Operating profit is arrived at after:
Charging:Amortisation of goodwill 332,500 250,016 - -
Auditors’ remuneration paid/payable to:- Auditors of the Company 111,360 105,000 75,000 75,000
- Other auditors* 15,390 - - -
Other fees paid/payable to auditorsof the Company 26,570 37,437 7,800 26,823
Directors’ fees 75,340 50,000 75,340 50,000
Directors’ remuneration 1,247,179 664,914 1,164,239 664,914Professional fees paid to a firm in which
a director of the Company is a member 18,253 - 8,253 -
Depreciation of plant and equipment- Leasehold building - 28,395 - 28,395
- Plant and machinery 237,169 100,893 201,357 93,343
- Motor vehicles 246,988 216,102 220,515 187,150- Office equipment 240,024 183,096 95,468 99,601
- Renovation, furniture and fittings 110,413 82,009 102,133 74,011
Plant and equipment written off - 91,255 - 74,300Bad trade debts written off - 3,884 - 179
Provision for doubtful trade debts 113,720 120,796 71,155 74,688
Provision for diminution in valueof short-term investments 51,716 7,076 - 7,076
Provision for slow moving inventories 116,000 225,000 - 225,000
Loss on disposal of quoted short-termequity investments 1,362 - 646 -
Net foreign exchange losses 356,923 - 222,213 -
Rental expense – operating leases 1,296,002 846,462 702,388 609,434
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Notes To The Financial Statements
for the financial year ended 31 December 2002
4. OPERATING PROFIT (CONT’D)The Group The Company
2002 2001 2002 2001$ $ $ $
And crediting:Bad trade debts recovered 8,361 4,450 8,361 182
Gain on disposal of plant and equipment 721 615,671 721 615,074
Gain on disposal of quotedshort-term equity investments - 12,386 - -
Gain on disposal of a subsidiary 109,016 - 532,158 -
Net foreign exchange gain - 83,274 - 40,994Write-back of provision for diminution in value
of short-term investments - 8,083 - -
* Includes another member of the worldwide PricewaterhouseCoopers organisation.
5. FINANCE INCOMEThe Group The Company
2002 2001 2002 2001$ $ $ $
Interest income- Fixed deposits 16,538 96,979 12,968 12,051
- Cash at bank 5,252 2,426 152 447
- Advances to a subsidiary - - 189,822 158,620Dividend income
- Quoted equity shares 4,703 3,819 706 342
26,493 103,224 203,648 171,460
6. FINANCE COSTSThe Group The Company
2002 2001 2002 2001$ $ $ $
Interest expense- Bank overdrafts 35,258 138,847 17,260 80,087
- Hire purchase 19,301 12,598 18,731 12,598
- Trust receipts 183,813 133,525 183,813 133,525- Term loan 98,170 109,214 87,179 109,214
336,542 394,184 306,983 335,424
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Notes To The Financial Statements
for the financial year ended 31 December 2002
7. STAFF COSTSThe Group The Company
2002 2001 2002 2001$ $ $ $
Wages and salaries 7,732,327 4,562,522 4,845,318 3,286,865Employer’s contribution to defined
contribution plans 1,023,243 713,356 653,130 534,919
8,755,570 5,275,878 5,498,448 3,821,784
Number of persons employed at the end of the financial year:
The Group The Company2002 2001 2002 2001
Full time 243 160 122 111
8. REMUNERATION BANDS OF DIRECTORS OF THE COMPANY
The number of directors of the Company in remuneration band as required under the Singapore Exchange Securities
Trading Limited Listing Manual is set out below:
The Company2002 2001
Executive
$250,000 - $499,999 1 -
Below $250,000 5 5
Non-executive
Below $250,000 3 2
9 7
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Notes To The Financial Statements
for the financial year ended 31 December 2002
8. REMUNERATION BANDS OF DIRECTORS OF THE COMPANY (CONT’D)
Summary of remuneration of directors of the Company for the financial year ended 31 December 2002
Remuneration bandand name of director Salary * Bonus Directors’ fees
$250,000 - $499,999Chew Thiam Keng 87% 13% -
Below $250,000Tam Kim Seng 86% 14% -Tan Hoo Lang 86% 14% -
Tan Fuh Gih 86% 14% -
Tan Wei Min 85% 15% -Goh Boon Chye 83% 17% -
Chew Heng Ching - - 100%
Lee Beng Cheng, Billy - - 100%Wong Meng Yeng - - 100%
* The salary amount shown is inclusive of allowances, contributions to Central Provident Fund and otheremoluments.
9. TAX
(a) Tax expenseThe Group The Company
2002 2001 2002 2001$ $ $ $
Income tax expense attributable
to profit is made up of:Current income tax
- Singapore 1,030,544 867,820 487,738 800,000
Deferred tax (22,000) (33,997) - (48,000)
1,008,544 833,823 487,738 752,000
Share of taxes of associated companies 74,275 - - -(Over)/under provision of tax in preceding
financial years
- Current income tax (47,771) - - -- Deferred tax 80,000 (11,000) - (11,000)
1,115,048 822,823 487,738 741,000
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Notes To The Financial Statements
for the financial year ended 31 December 2002
9. TAX (CONT’D)
The tax expense on profit differs from the amount that would arise using the Singapore standard rate of income taxdue to the following:
The Group The Company2002 2001 2002 2001
$ $ $ $
Profit before tax and share ofprofits of associated company 4,579,820 4,075,534 3,326,529 3,619,128
Tax calculated at a tax rate of 22%(2001: 24.5%) 1,007,560 998,506 731,837 886,686
Singapore statutory stepped income exemption (34,650) (41,445) (11,550) (12,863)
One-off tax rebates - (44,266) - (41,485)Income not subject to tax (29,480) (115,212) (182,859) (80,338)
Expenses not deductible for tax purposes 154,947 36,240 23,170 -
Effect of changes in tax rates (8,000) - - -Effect of different tax rates in other countries (8,973) - - -
Effect of income subject to concessionary
tax rate (72,860) - (72,860) -
1,008,544 833,823 487,738 752,000
Share of taxes of associated companies 74,275 - - -(Over)/under provision of tax in
preceding financial years
- Current income tax (47,771) - - -- Deferred tax 80,000 (11,000) - (11,000)
1,115,048 822,823 487,738 741,000
(b) Movements in provision for current tax
The Group The Company2002 2001 2002 2001
$ $ $ $
Balance at the beginning of the
financial year 1,038,992 883,042 925,739 593,148Income tax paid (781,316) (711,870) (779,156) (467,409)
Current financial year’s income tax
expense on profit 1,030,544 867,820 487,738 800,000Disposal of a subsidiary (93,711) - - -
Overprovision in preceding financial
years (47,771) - - -
Balance at the end of the financial year 1,146,738 1,038,992 634,321 925,739
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Notes To The Financial Statements
for the financial year ended 31 December 2002
10. EARNINGS PER ORDINARY SHARE
Basic earnings per share is calculated by dividing the profit after tax attributable to members of the Company by theweighted average number of ordinary shares in issue during the financial year.
The Group2002 2001
Profit after tax attributable to members of KS Tech Ltd ($) 3,861,980 3,252,711
Weighted average number of ordinary shares in issue
for calculation of basic earnings per share 108,028,130 108,000,000
Basic earnings per share 3.57 cents 3.01 cents
The weighted average number of shares for 2002 has been adjusted to reflect the increase in issued ordinary share
capital from $10,800,000 to $11,313,365 during the financial year.
Fully diluted earnings per share has not been presented as there is no dilution.
11. CASH AND CASH EQUIVALENTSThe Group The Company
2002 2001 2002 2001$ $ $ $
Cash at bank and on hand 6,510,309 1,794,713 3,587,337 1,022,835Fixed deposits with financial institutions 3,429,397 3,295,100 2,692,234 1,740,281
9,939,706 5,089,813 6,279,571 2,763,116
The fixed deposits with financial institutions mature on varying dates within 1 month (2001: 4 months) from the financial
year end. The weighted average effective interest rate of these deposits as at 31 December 2002 was 0.97% (2001:1.04%) per annum.
For the purposes of the consolidated cash flow statement, the year-end consolidated cash and cash equivalentscomprise the following:
The Group2002 2001
$ $
Cash and bank balances 6,510,309 1,794,713
Fixed deposits with financial institutions 3,429,397 3,295,100
Less : Bank overdrafts (814,177) (58,383)
9,125,529 5,031,430
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Notes To The Financial Statements
for the financial year ended 31 December 2002
12. RECEIVABLESThe Group The Company
2002 2001 2002 2001$ $ $ $
Trade debtors 21,019,106 18,457,546 11,466,191 13,161,092Less: Provision for doubtful trade debts (552,419) (490,987) (100,000) (88,568)
20,466,687 17,966,559 11,366,191 13,072,524Due by subsidiaries – non-trade - - 7,423,714 4,502,900
Due by subsidiaries – trade - - 39,316 110,776
Due by a related party – non-trade - 151,621 - 151,621
20,466,687 18,118,180 18,829,221 17,837,821
The Group The Company2002 2001 2002 2001
$ $ $ $
Movements in provision for doubtful tradedebts are as follows:
Balance at the beginning of the financial year 490,987 372,711 88,568 13,880
Provision made during the financial year 113,720 120,796 71,155 74,688Bad debts written off against provision (52,288) (2,520) (59,723) -
Balance at the end of the financial year 552,419 490,987 100,000 88,568
The non-trade amounts due by subsidiaries are unsecured and repayable on demand. The amounts are interest-free
except for a balance of $5,375,165 (2001 : $4,136,931) which bears interest at the rate of 5.75% (2001: 6.25%) perannum.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
13. INVENTORIESThe Group The Company
2002 2001 2002 2001$ $ $ $
At costFinished goods held for resale, 23,959,315 15,423,766 13,054,764 10,855,281
Work-in-progress 1,629,705 - - -
25,589,020 15,423,766 13,054,764 10,855,281
Less: Provision for slow moving inventories (391,000) (475,000) (275,000) (275,000)
25,198,020 14,948,766 12,779,764 10,580,281
Movements in provision for slow movinginventories are as follows:
Balance at the beginning of the financial year 475,000 250,000 275,000 50,000
Provision utilised during the financial year (200,000) - - -Provision made during the financial year 116,000 225,000 - 225,000
Balance at the end of the financial year 391,000 475,000 275,000 275,000
14. SHORT-TERM INVESTMENTSThe Group The Company
2002 2001 2002 2001$ $ $ $
Quoted equity shares, at cost 210,410 217,631 28,891 34,203
Less: Provision for diminution in value (72,978) (27,337) (12,706) (18,781)
137,432 190,294 16,185 15,422
Market value of quoted shares 143,339 202,997 21,415 15,422
Movements in provision for diminutionin value of short-term investmentsare as follows:
Balance at the beginning of the financial year 27,337 28,344 18,781 11,705
Provision written back during the financial year - (8,083) - -
Provision made during the financial year 51,716 7,076 - 7,076Provision utilised upon disposal (6,075) - (6,075) -
Balance at the end of the financial year 72,978 27,337 12,706 18,781
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Notes To The Financial Statements
for the financial year ended 31 December 2002
15. OTHER CURRENT ASSETSThe Group The Company
2002 2001 2002 2001$ $ $ $
Other debtors 976,396 46,437 385,405 36,231Other deposits and prepayments 846,233 277,310 692,789 252,011
Deposits for purchase of inventories 48,821 865,198 48,821 865,198
1,871,450 1,188,945 1,127,015 1,153,440
16. INVESTMENTS IN ASSOCIATED COMPANIESThe Group The Company
2002 2001 2002 2001$ $ $ $
Unquoted equity shares, at cost 4,337,753 -
Net tangible assets acquired 3,038,186 -
Goodwill on acquisition 1,299,567Group’s share of post acquisition retained
earnings 322,933
4,660,686 -
Details of associated companies are as follows:
Country ofincorporation The Group and the Company
and place EffectiveName of company Principal activities of business ownership interest At cost
2002 2001 2002 2001% % $ $
Sinwa KS Pte Ltd Marine supply and Singapore 26.52 - 4,014,003 -
logistics services
Hylynx Pte Ltd Operation of vessels Singapore 47.5 - 166,250 -
Jambi Supply Base Supply of oil and Singapore 45 - 157,500 -
Pte Ltd gas equipment,
consumables andprovision of
engineering services
4,337,753 -
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Notes To The Financial Statements
for the financial year ended 31 December 2002
17. INVESTMENTS IN SUBSIDIARIESThe Company
2002 2001$ $
Investment in unquoted equity shares, at cost 5,563,943 5,263,941
Details of the subsidiaries are:
Held by the Company:
Country ofincorporationand country Equity Cost of
Name of subsidiary Principal activities of business holding investment2002 2001 2002 2001
% % $ $
Kim Seng Dormant Singapore 100 100 3,063,941 3,063,941
Hardware &
Oilfield SupplyPte Ltd (1)
Aqua Terra Supply Trading in tools and Singapore 100 100 2,000,000 2,000,000(2001) Co. Pte Ltd (1) equipment for the
marine oil and gas
industry
KS Seafirst Marine Shipping agent Singapore - 100 - 200,000
Services Pte Ltd (2)
KS eVa Pte Ltd (1) Provision of e-trading Singapore 100 - 2 -
and e-logisticsservices
Scott & English Assembly and trading Singapore 100 - 500,000 -(2002) Pte Ltd (1) of electrical engineering
goods, electronic
appliances andheavy equipment
5,563,943 5,263,941
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Notes To The Financial Statements
for the financial year ended 31 December 2002
17. INVESTMENTS IN SUBSIDIARIES (CONT’D)
Held by subsidiaries:Country of
incorporationand country Equity Cost of
Name of subsidiary Principal activities of business holding investment2002 2001 2002 2001
% % $ $
S & E Cumford Distribution of electronic
(Thailand) Ltd. motor, machinery, Thailand 100 - 654,440 -(formerly electronic equipment
known as and chemicals
Lindeteves(Thailand)
Limited) (3)
S & E Cumford Marketing and Malaysia 100 - 1 -
(M) Sdn Bhd (4) trading of
electronicmotors
654,441 -
(1) Audited by PricewaterhouseCoopers, Singapore
(2) Disposed of during the financial year
(3) Audited by Deloitte & Touche Tohmatsu (4) Audited by another member of the worldwide PricewaterhouseCoopers organisation
18. PLANT AND EQUIPMENTRenovation,
Plant and Motor Office FurnitureMachinery Vehicles Equipment and Fittings Total
The GroupCostAt 1 January 2002 1,336,042 1,602,246 1,074,439 729,769 4,742,496
Exchange rate adjustments (416) - - - (416)Acquisition of a subsidiary 145,726 81,874 74,264 87,766 389,630
Additions 1,122,331 213,970 422,500 31,087 1,789,888
Disposals - (31,413) (909) (493) (32,815)Disposal of a subsidiary (45,500) (174,000) (47,632) (48,610) (315,742)
At 31 December 2002 2,558,183 1,692,677 1,522,662 799,519 6,573,041
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Notes To The Financial Statements
for the financial year ended 31 December 2002
18. PLANT AND EQUIPMENT (CONT’D)
Renovation,Plant and Motor Office FurnitureMachinery Vehicles Equipment and Fittings Total
The Group (cont’d)Accumulated depreciationAt 1 January 2002 1,028,199 678,917 510,880 131,915 2,349,911
Exchange rate adjustments (70) 4 8 6 (52)Acquisition of a subsidiary 94,722 70,376 53,846 68,740 287,684
Charge for the financial year 237,169 246,988 240,024 110,413 834,594
Disposals - (29,127) (746) - (29,873)Disposal of a subsidiary (5,326) (16,821) (7,876) (8,260) (38,283)
At 31 December 2002 1,354,694 950,337 796,136 302,814 3,403,981
Net book value at31 December 2002 1,203,489 742,340 726,526 496,705 3,169,060
Net book value at31 December 2001 307,843 923,329 563,559 597,854 2,392,585
The CompanyCostAt 1 January 2002 1,273,998 1,094,420 433,624 657,846 3,459,888
Additions 956,133 85,347 46,971 16,346 1,104,797
Disposals - (31,413) (909) (493) (32,815)
At 31 December 2002 2,230,131 1,148,354 479,686 673,699 4,531,870
Accumulated depreciationAt 1 January 2002 1,019,473 290,850 233,084 105,702 1,649,109
Charge for the financial year 201,357 220,515 95,468 102,133 619,473Disposals - (29,127) (746) - (29,873)
At 31 December 2002 1,220,830 482,238 327,806 207,835 2,238,709
Net book value at31 December 2002 1,009,301 666,116 151,880 465,864 2,293,161
Net book value at31 December 2001 254,525 803,570 200,540 552,144 1,810,779
At the balance sheet date, the net book value of motor vehicles under hire-purchase agreements for the Group and
the Company amounted to $427,506 (2001: $687,586).
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Notes To The Financial Statements
for the financial year ended 31 December 2002
19. GOODWILLThe Group
2002 2001$ $
Goodwill paid for the acquisition of businesses 1,680,000 1,680,000Goodwill written off (30,000) -
Less: Accumulated amortisation (577,500) (250,016)
1,072,500 1,429,984
Movements in accumulated amortisation are as follows:
Balance at the beginning of the financial year 250,016 -
Written off during the financial year (5,016) -Charge for the financial year 332,500 250,016
Balance at the end of the financial year 577,500 250,016
20. TRADE AND OTHER PAYABLESThe Group The Company
2002 2001 2002 2001$ $ $ $
Trade creditors 16,287,896 12,622,476 5,452,655 9,943,467
Due to related parties - trade 157,937 - - -Due to subsidiaries – non-trade - - 3,129,781 2,063,313
Amount payable for the purchase of quoted
equity shares in an associated company 352,323 - 352,323 -Sundry creditors 776,089 1,623,638 232,707 508,483
Accrued operating expenses 2,629,347 1,414,900 1,591,608 1,393,860
20,203,592 15,661,014 10,759,074 13,909,123
The non-trade amounts due to subsidiaries are unsecured, interest free and repayable upon demand.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
21. BORROWINGSThe Group The Company
2002 2001 2002 2001$ $ $ $
CurrentBank overdrafts 814,177 58,383 - -
Trust receipts 6,888,994 3,688,110 5,436,085 3,688,110
Hire purchase liabilities (note 25) 125,988 126,316 125,988 126,316Bank term loans 1,509,936 1,333,332 1,509,936 1,333,332
9,339,095 5,206,141 7,072,009 5,147,758Non-currentHire purchase liabilities (note 25) 295,004 383,672 295,004 383,672
Bank term loans 10,333,337 1,666,669 10,333,337 1,666,669
10,628,341 2,050,341 10,628,341 2,050,341
Total borrowings 19,967,436 7,256,482 17,700,350 7,198,099
(a) Effective interest rates
The interest rate payable on the bank term loans is calculated as 2% plus the bank SWAP rate. During the
financial year, interest rates ranged between 2.81% - 4.62% (2001: 2.95% - 4.75%) per annum.
The weighted average effective interest rates at the balance sheet date were as follows:
2002 2001% %
Bank overdrafts 7.89 5.76
Trust receipts 2.92 3.00
Hire purchase liabilities 3.18 2.96Bank term loans 2.28 2.95
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Notes To The Financial Statements
for the financial year ended 31 December 2002
21. BORROWINGS (CONT’D)
(b) Security
(i) For the purposes of the bank overdrafts and bank term loans of the Group, the Company has given a
negative pledge over all the assets of the Company.
(ii) Bank term loans comprise the following:
The Group and the Company2002 2001
$ $
Secured loans
Loan at interest rate of 4.62% (2001: Nil%) per annum,repayable in 5 instalments of $35,320, commencing
16 January 2003 176,604 -
Unsecured loans
Loan at interest rates of 2.81% - 3.04% (2001 : 2.95% - 4.75%)per annum, repayable in 11 quarterly instalments of $333,333
each commencing 4 May 2001 and a final instalment of $333,337 1,666,669 3,000,001
Loan at interest rates of 2.85% - 3.05% (2001: Nil%) per annum,
repayable in 10 quarterly instalments of $700,000 each
commencing 15 May 2004 and a final instalment of $3,000,000. 10,000,000 -
11,843,273 3,000,001
Repayments due within twelve months (included in current liabilities) (1,509,936) (1,333,332)
10,333,337 1,666,669
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Notes To The Financial Statements
for the financial year ended 31 December 2002
21. BORROWINGS (CONT’D)
(c) Carrying amounts and fair values
The fair values are based on discounted cash flows using a discount rate based upon the borrowing rate which
the directors expect would be available to the Group at the balance sheet date. The carrying amounts of currentportion of the term loan approximate their fair values.
The carrying amounts and fair values of the non-current portion of the term loan are as follows:
The Group and The CompanyCarrying amounts Fair values
2002 2001 2002 2001$ $ $ $
Non-current term loan 10,333,337 1,666,669 9,472,604 1,591,133
(d) Maturity
Maturity of non-current term loan is as follows:The Group andThe Company
2002 2001$ $
Between 1 and 2 years 1,733,337 1,333,332Between 2 and 5 years 8,600,000 333,337
10,333,337 1,666,669
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Notes To The Financial Statements
for the financial year ended 31 December 2002
22. DEFERRED INCOME TAXES
The movement in the Group’s deferred tax assets and liabilities (prior to offsetting of balances within the same taxjurisdiction) during the period is as follows:
The GroupDeferred tax liabilities/(assets)
Acceleratedtax
depreciation Provisions Others Total$ $ $ $
At 1 January 2002 156,665 (90,077) 10,415 77,003
Effect of changes in tax rates (7,859) - (141) (8,000)
Charged/(credited) to income statement 103,953 (33,000) (4,953) 66,000Disposal of subsidiary (26,003) - - (26,003)
At 31 December 2002 226,756 (123,077) 5,321 109,000
AcceleratedTax
depreciation Provisions Others Total$ $ $ $
At 1 January 2001 129,218 (18,518) 11,300 122,000
Charged/(credited) to income statement 27,447 (71,559) (885) (44,997)
At 31 December 2001 156,665 (90,077) 10,415 77,003
The CompanyDeferred tax liabilities/(assets)
Acceleratedtax
depreciation Provisions Others Total$ $ $ $
At 1 January 2002 and 31 December 2002 147,643 (90,077) 5,434 63,000
Acceleratedtax
depreciation Provisions Others Total$ $ $ $
At 1 January 2001 129,218 (18,518) 11,300 122,000
Charged/(credited) to income statement 18,425 (71,559) (5,866) (59,000)
At 31 December 2001 147,643 (90,077) 5,434 63,000
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Notes To The Financial Statements
for the financial year ended 31 December 2002
23. SHARE CAPITAL OF KS TECH LTD AND RESERVES
(a) Authorised ordinary share capital
The total authorised number of ordinary shares is 200 million shares (2001 : 200 million shares) with a par value
of $0.10 per share (2001 : $0.10 per share).
(b) Issued and fully paid ordinary share capital
2002 2001 2002 2001Shares Shares $ $
At beginning of the financial year 108,000,000 108,000,000 10,800,000 10,800,000
Issued during the financial year 5,133,646 - 513,365 -
At end of the financial year 113,133,646 108,000,000 11,313,365 10,800,000
During the financial year, the Company increased its issued ordinary share capital from the $10,800,000 to$11,313,365 by way of issue of 5,133,646 ordinary shares of $0.10 each at a premium of 36.9 cents per share,
as consideration for equity shares of $0.05 each in Sinwa KS Pte Ltd, resulting in it becoming an associated
company of the Group. The newly issued shares rank pari passu in all respects with previously issued share.
The movements in the share premium account and foreign currency translation reserve account are set out in
the statements of changes in equity.
24. DIVIDENDThe Company
2002 2001$ $
Ordinary dividends paidFinal dividend for 2001 of 6%, paid net of tax at 22%
(2001: Final dividend for 2000 of 5% paid net of tax of
24.5%) 505,440 407,700
The directors have proposed a final dividend for 2002 of 6.5% per share (2001 : 6% per share) amounting to a total
of $ 573,588 (2001 : $505,440) net of tax at 22% (2001 : 22%). These financial statements do not reflect this
dividend payable, as this will be accounted for in the shareholders’ equity as an appropriation of retained earningsin the next financial year.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
25. HIRE PURCHASE LIABILITIESThe Group and The Company
2002 2001$ $
Minimum lease payments dueNot later than 1 year 145,503 143,116
Later than 1 year but not later than 5 years 352,438 455,834
497,941 598,950
Interest allocated to future periods (76,949) (88,962)
Present value of hire purchase liabilities 420,992 509,988
Included in:Current liabilities 125,988 126,316
Non-current liabilities 295,004 383,672
420,992 509,988
26. COMMITMENTS
Commitments in relation to non-cancellable operating leases contracted for at the reporting date but not recognisedas liabilities, are payable as follows:
The Group The Company2002 2001 2002 2001
$ $ $ $
Not later than one financial year 937,166 535,739 445,782 412,884
Later than one financial year but
not later than five financial years 150,000 71,369 - 71,369
1,087,166 607,108 445,782 484,253
27. FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group’s activities expose it to a variety of financial risks, including the effects of changes in foreign currencyexchange rates and interest rates. The Group’s overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
27. FINANCIAL RISK MANAGEMENT (CONT’D)
Risk management is carried out by the finance department under policies approved by the Board of Directors. Thefinance department identifies, evaluates and hedges financial risks in close co-operation with the operating units. The
Board provides written principles for overall risk management, as well as written policies covering specific areas, such
as foreign exchange risk, interest rate risk, credit risk, and investing excess liquidity.
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures primarily with respect to United States dollars. Companies in the Group buy and sell in the same
currency that is, United States dollars, for all major contracts to hedge their exposure to foreign currency risk inthe local reporting currency.
(ii) Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in market interest rates.
The Group has no significant interest rate risk as it has sufficient funds to meet the carrying amount of theGroup’s financial liabilities. The Group places its surplus funds with reputable banks.
(iii) Credit risk
The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales
of products and services are made to customers with an appropriate credit history.
(iv) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed credit facilities and the ability to close out market positions.
Due to the dynamic nature of the underlying businesses, the Group aims at maintaining flexibility in funding bykeeping committed credit lines available.
28. FINANCIAL INSTRUMENTS
Forward foreign exchange contracts are entered into to manage exposure to fluctuations in foreign currency rate onspecific transactions.
At 31 December 2002, the settlement dates on open forward contracts ranged between 1 month and 3 months. Thelocal currency amounts to be received/(paid) and contractual exchange rates of the Company’s outstanding contracts
were:
2002$
Euros [at rates averaging Euro 1 = S$1.7143] 857,150US dollars [at rates averaging USD1= S$1.7795] (889,750)
(32,600)
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Notes To The Financial Statements
for the financial year ended 31 December 2002
28. FINANCIAL INSTRUMENTS (CONT’D)
The net fair value of the Group’s outstanding open forward contracts amounted to a gain of $33,200 (2001: Nil). Thefair value of this forward exchange contract has been calculated using rates quoted by the Group’s banker to terminate
the contracts at the balance sheet date.
29. FINANCIAL ASSETS AND LIABILITIES
The carrying amounts of the following financial assets and liabilities approximate to their fair values: cash and cash
equivalents, receivables, investments, trade and other payables and borrowings.
30. RELATED PARTY TRANSACTIONS
During the financial year, the following significant transactions took place between the Group and its related companies
on terms agreed between the parties:
The Group2002 2001
$ $
Sales of finished goods to related parties 5,871 7,241
Purchases of consumables from related parties 46,079 55,686Rental charges from a related party 630,446 764,874
Sale of quoted shares to a director - 14,657
31. IMMEDIATE AND ULTIMATE HOLDING COMPANY
The immediate holding company which is also the ultimate holding company is Kim Seng Holdings Pte Ltd, a company
incorporated in Singapore.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
32. GROUP SEGMENTAL INFORMATION
Primary reporting format - business segments
Oil and gas Marine Others Group$ $ $ $
Year ended 31 December 2002
Revenues 43,930,195 9,842,351 17,348,327 71,120,873
Segment result 3,437,640 320,176 1,023,037 4,780,853
Operating profit 4,780,853
Gain on disposal of a subsidiary 109,016Interest income 21,790
Dividend income 4,703
Interest expense (336,542)Share of results of associated companies 397,208
Profit before tax 4,977,028Tax (1,115,048)
Net profit 3,861,980
Segment assets 30,199,248 5,954,869 17,268,814 53,422,931
Investment in associated companies 4,660,686Unallocated assets 8,511,924
Consolidated total assets 66,595,541
Segment liabilities 7,473,908 2,316,767 8,830,157 18,620,832
Borrowings 19,967,436Tax liabilities 1,255,738
Unallocated liabilities 1,582,760
Consolidated total liabilities 41,426,766
Capital expenditure 1,362,030 242,019 185,839 1,789,888Depreciation 689,696 76,833 68,065 834,594
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Notes To The Financial Statements
for the financial year ended 31 December 2002
32. GROUP SEGMENTAL INFORMATION (CONT’D)
Primary reporting format - business segments
Oil and gas Marine Others Group$ $ $ $
Year ended 31 December 2001
Revenues 37,673,981 5,067,927 11,857,763 54,599,671
Segment result 3,057,370 405,434 903,690 4,366,494
Operating profit 4,366,494
Interest income 99,405Dividend income 3,819
Interest expense (394,184)
Profit before tax 4,075,534
Tax (822,823)
Net profit 3,252,711
Segment assets 23,346,656 4,219,897 8,891,132 36,457,685Unallocated assets 6,980,882
Consolidated total assets 43,438,567
Segment liabilities 10,436,791 1,455,111 2,666,828 14,558,730
Borrowings 7,256,482Tax liabilities 1,115,995
Unallocated liabilities 1,102,284
Consolidated total liabilities 24,033,491
Capital expenditure 994,922 296,012 642,804 1,933,738Depreciation 371,055 44,302 195,138 610,495
The Group is organized into three main business segments:
ˇ Oil and gas
ˇ Marineˇ Others
The business segments are the basis on which the Group reports is primary segment information.
Other operations of the Group comprise engineering, construction, manufacturing and mining segments which do not
constitute a separately reportable segment.
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Notes To The Financial Statements
for the financial year ended 31 December 2002
32. GROUP SEGMENTAL INFORMATION (CONT’D)
There are no sales or other transactions between the business segments. Segment assets consist primarily of plantand equipment, inventories, receivables and operating cash, and exclude investment in associated companies. Segment
liabilities comprise operating liabilities and exclude items such as borrowings and taxation. Capital expenditure comprises
additions to plant and equipment.
Secondary reporting format - geographical segments
The Group’s three business segments operate in three main geographical areas: Singapore, the People’s Republic of
China and other regions.
Revenue Carrying amount ofsegment assets Capital expenditure
2002 2001 2002 2001 2002 2001$ $ $ $ $ $
Singapore 27,439,128 24,191,126 50,494,500 33,940,443 767,469 1,927,546The People’s
Republic of China 31,257,469 21,420,689 5,128,081 7,033,250 7,066 1,096
Other regions 12,424,276 8,987,856 10,972,960 2,464,874 1,015,353 5,096
71,120,873 54,599,671 66,595,541 43,438,567 1,789,888 1,933,738
With the exception of Singapore and the People’s Republic of China, no other individual country contributed more
than 10% of the consolidated revenues and assets.
Revenue is based on the country in which the customer is located. Total assets and capital expenditure are shown by
the geographical area in which the assets are located.
33. EVENTS OCCURRING AFTER BALANCE SHEET DATE
On 2 April 2003, the Company entered into a subscription agreement with Ezra Holdings Pte Ltd to subscribe for 25%
of the enlarged issued and paid up capital in Ezra Holdings Pte Ltd, at a consideration of $7,820,000. Ezra Holdings
Pte Ltd and its subsidiaries are in the business of providing offshore support vessels and services to the oil and gasindustry. The consideration will be satisfied by cash payment of $1,500,000 and the issue of 14,700,000 new ordinary
shares of the Company at $0.10 each at a premium of $0.33 per share. The transaction is conditional upon the in-
principal approval of the Singapore Exchange Securities Trading Limited (“SGX-ST”) for the listing and quotation ofthe new ordinary shares of the Company on the Main Board of the SGX-ST.
34. AUTHORISATION OF FINANCIAL STATEMENTS
These financial statements were authorised for issue in accordance with a resolution of the Board of Directors of KSTech Ltd on 25 April 2003.
Auditors’ Report - Page 20.
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TOP TWENTY-ONE SHAREHOLDERS AS AT 16 APRIL 2003
% OFNAME OF SHAREHOLDER NO. OF SHARES SHARES
1 KIM SENG HOLDINGS PTE LTD 72,700,000 64.262 EVENSTAR INVESTMENT PTE LTD 5,133,646 4.54
3 KIM ENG ONG ASIA SECS PTE LTD 3,747,000 3.31
4 UNITED OVERSEAS BANK NOMINEES PTE LTD 3,411,000 3.025 OVERSEA CHINESE BANK NOMINEES PTE LTD 2,831,000 2.50
6 HSBC (SINGAPORE) NOMINEES PTE LTD 2,547,000 2.25
7 OCBC SECURITIES PRIVATE LTD 1,022,000 0.908 HENG CHIANG MENG 800,000 0.71
9 CITIBANK CONSUMER NOMINEES PTE LTD 753,000 0.66
10 SIM YONG TENG 664,000 0.5911 PHILLIP SECURITIES PTE LTD 656,000 0.58
12 DBS NOMINEES PTE LTD 646,000 0.57
13 UOB KAY HIAN PTE LTD 629,000 0.5514 PEH HUAN HENG 450,000 0.40
15 LOW MIEW LENG 386,000 0.34
16 HONG LEONG FINANCE NOMINEES PTE LTD 302,000 0.2717 WANG LEE WAH 255,000 0.22
18 F H LEE HOLDINGS PTE LTD 250,000 0.22
19 TAN CHIN KWEE 202,000 0.1820 LEE WEE NGAM 200,000 0.18
21 LEE YUEN SHIH 200,000 0.18
TOTAL: 97,784,646 86.43
DISTRIBUTION OF SHAREHOLDERS BY SIZE OF SHAREHOLDINGSAS AT 16 APRIL 2003
SIZE OF SHAREHOLDINGS NO. OF HOLDERS % OF HOLDERS NO. OF SHARES % OF SHARES
1 - 999 0 0.00 0 0.00
1,000 - 10,000 1,283 79.64 4,981,000 4.4
10,001 - 1,000,000 321 19.93 16,761,000 14.82
1,000,001 - and above 7 0.43 91,391,646 80.78
Grand Total 1,611 100.00 113,133,646 100.00
Shareholders’ Statistics
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NOTICE IS HEREBY GIVEN THAT the Fourth Annual General Meeting of the Company will be held at No. 4 Tuas Avenue
5, Singapore 639331 on 16 May 2003 at 9.00 a.m. for the purpose of transacting the following business:-
AS ORDINARY BUSINESS
1. To receive and adopt the Audited Accounts of the Company for the financial year ended 31 December 2002 together
with the Directors’ Report and the Auditors’ Report thereon. (Resolution 1)
2. To declare a First and Final Dividend of 6.5% less tax for the year ended 31 December 2002. (Resolution 2)
3. To approve Directors’ fees of $75,340 for the year ended 31 December 2002. (Resolution 3)
4. a) To re-elect Mr Tan Fuh Gih, who retires by rotation in accordance with Article 91 of the Articles of Association of
the Company. (Resolution 4)
b) To re-elect Mr Chew Heng Ching, who retires by rotation in accordance with Article 91 of the Articles of Association
of the Company. [see Explanatory Note (i)] (Resolution 5)
5. To re-appoint Messrs PricewaterhouseCoopers as Auditors and to authorise the Directors to fix their remuneration.
(Resolution 6)
SPECIAL BUSINESS
To consider and, if thought fit, to pass the following as Ordinary Resolution, with or without modifications:
6. “That, pursuant to Section 161 of the Companies Act (Cap. 50), and the listing rules of the Singapore ExchangeSecurities Trading Limited (“Listing Rules”), approval be and is hereby given to the Directors to issue shares in the
capital of the Company at any time, upon such terms and conditions and for such purposes and to such persons as
the Directors may in their absolute discretion deem fit, provided always that:-
(i) the aggregate number of shares to be issued pursuant to this Resolution does not exceed 50% of the Company’s
issued share capital;
(ii) the aggregate number of shares issued other than on a pro rata basis to existing shareholders does not exceed
20% of the Company’s issued share capital; and
(iii) for the purposes of determining the aggregate number of shares that may be issued under sub-paragraphs (i)
and (ii) above, the percentage of issued share capital shall be calculated based on the maximum potentialissued share capital of the Company as at the date of the passing of this Resolution (taking into account all
shares which have been issued arising from the conversion or exercise of any convertible securities and share
options that have been issued, pursuant to any previous shareholder approval, and which are outstanding as atthe date of the passing of this Resolution), adjusted for any subsequent consolidation or subdivision of share;
such authority to continue in force until the conclusion of the next Annual General Meeting or the expiration of theperiod within which the next Annual General Meeting of the Company is required by law to be held, whichever is
earlier, unless previously revoked or varied at a general meeting of the Company.”
[See Explanatory Note (ii)] (Resolution 7)
Notice of Annual General Meeting
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7. To transact any other ordinary business which may be properly transacted at an Annual General Meeting.
BY ORDER OF THE BOARD
Foo Soon SooLim Ka BeeCompany Secretaries
Singapore, 29 April 2003
EXPLANATORY NOTES ON BUSINESS TO BE TRANSACTED
(i) Mr Chew Heng Ching, if re-elected, will remain as Chairman of the Audit Committee and Remuneration Committeeand will be considered independent for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange
Securities Trading Limited.
(ii) The Ordinary Resolution in item no. 6 is to authorise the Directors of the Company from the date of the above Meeting
until the next Annual General Meeting to issue shares in the Company up to an amount not exceeding in aggregate 50
percent of the issued share capital of the Company of which the total number of shares issued other than on a pro-ratabasis to existing shareholders shall not exceed 20 percent of the issued share capital of the Company for such
purposes as they consider would be in the interests of the Company. Rule 806(3) of the Listing Manual of the Singapore
Exchange Securities Trading Limited currently provides for the percentage of issued share capital to be calculated onthe basis of the maximum potential share capital at the time that the resolution is passed (taking into account the
conversion or exercise of any convertible securities and employee share options on issue at the time that the resolution
is passed, which were issued pursuant to previous shareholder approval), adjusted for any subsequent consolidationor subdivision of shares. This authority will, unless revoked or varied at a general meeting, expire at the next Annual
General Meeting of the Company.
Notes:1) A member entitled to attend and vote at this meeting is entitled to appoint not more than two proxies to attend and vote
in his stead.
2) Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion
of his holding to be represented by each proxy.
3) A proxy need not be a member of the Company.
4) A corporation which is a member of the Company may authorise by resolution of its directors or other governing body,
such person as it thinks fit to act as its representative at the meeting.
5) The instrument appointing a proxy must be deposited at the registered office of the Company at No. 4 Tuas Avenue 5,
Singapore 639331 not less than 48 hours before the time appointed for holding the meeting.
Notice of Annual General Meeting
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Proxy Form
I/We _____________________________________________________________________________________ (Name)
of ______________________________________________________________________________________ (Address)being a member/members of KS Tech Ltd (the “Company”) hereby appoint:
Name Address NRIC/ Proportion ofPassport No. Shareholding (%)
(a)
And/or (delete as appropriate)
(b)
or failing *him/her, the Chairperson of the Annual General Meeting (“AGM”) of the Company as my/our proxy/proxies to votefor me/us on my/our behalf and, if necessary, to demand a poll at the AGM of the Company, to be held at No. 4 Tuas Avenue
5, Singapore 639331 on 16 May 2003 at 9.00 a.m. and at any adjournment thereof.
I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated hereunder.
If no specific directions as to voting are given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/
they will on any other matter arising at the AGM.
To be used on a show of To be used in thehands event of a poll
No. Resolutions For* Against* No. of Votes No. of Votesfor** Against**
Ordinary Business
1 To receive and adopt Directors’ Report, Auditors’
Report and Audited Accounts
2 To approve First & Final Dividend
3 To approve Directors’ fees
4 To re-elect Mr Tan Fuh Gih as a Director
5 To re-elect Mr Chew Heng Ching as a Director
6 To re-appoint Auditors and to authorise the
Directors to fix their remuneration
Special Business
7 To authorise Directors to issue shares pursuant to
Section 161 of the Companies Act, Chapter 50.
* Please indicate your vote “For” or “Against” with an “x” within the box provided.** If you wish to exercise all your votes “For” or “Against”, please indicate with an “x” within the box provided. Alternatively,
please indicate the number of votes as appropriate.
Dated this _______________ day of ____________________ 2003.
____________________________________
Signature(s) of Member(s)/Common Seal
IMPORTANT: PLEASE READ NOTES OVERLEAF
Important :1. For investors who have used their CPF monies to buy KS Tech
Ltd shares, the Annual Report is forwarded to them at therequest of their CPF Approved Nominees and is sent solelyFor Information Only.
2. This Proxy Form is not valid for use by CPF investors and shallbe ineffective for all intents and purposes if used or purportedto be used by them.
Total Number of Shares held
�� ���
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Notes:
1. A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in hisstead. A proxy need not be a member of the Company.
2. Where a member appoints more than one proxy, he should specify the proportion of his shareholding (expressed asa percentage of the whole) to be represented by each proxy and if no percentage is specified, the first named proxyshall be deemed to represent 100 per cent of the shareholding and the second named proxy shall be deemed to be analternate to the first named.
3. A member should insert the total number of shares held. If the member has shares entered against his name in theDepository Register (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), he should insert thatnumber of shares. If the member has shares registered in his name in the Register of Members of the Company, heshould insert that number of shares. If the member has shares entered against his name in the Depository Registerand registered in his/her name in the Register of Members, he should insert the aggregate number of shares. If nonumber is inserted, the instrument appointing a proxy or proxies will be deemed to relate to all shares held by themember.
4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at No. 4 TuasAvenue 5, Singapore 639331 not less than 48 hours before the time set for the Meeting.
5. The instrument appointing a proxy or proxies must be under the hand of the appointor or by his/her attorney dulyauthorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must beexecuted either under its common seal or under the hand of its attorney or a duly authorised officer.
6. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter orpower of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged withthe instrument of proxy, failing which the instrument may be treated as invalid.
7. A corporation which is a member may, in accordance with Section 179 of the Companies Act, Cap. 50 of Singapore,authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representativeat the Meeting.
8. The Company shall be entitled to reject the instrument appointing a proxy or proxies, if it is incomplete, improperlycompleted, illegible or where the true intentions of the appointor are not ascertainable from the instructions of theappointor specified on the instrument appointing a proxy or proxies. In addition, in the case of shares entered in theDepository Register, the Company may reject any instrument appointing a proxy or proxies if the member, being theappointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before thetime appointed for holding the Meeting, as certified by the Central Depository (Pte) Limited to the Company.
Corporate Data
Board of Directors
Tan Kim Seng (Executive Chairman)
Tan Hoo Lang (Alternate Director to
Tan Kim Seng)
Chew Thiam Keng (Managing Director/CEO)
Goh Boon Chye (Executive Director/COO)
Tan Fuh Gih (Executive Director)
Tan Wei Min (Alternate Director to
Tan Fuh Gih)
Chew Heng Ching (Independent Director)
Wong Meng Yeng (Independent Director)
Lee Beng Cheng, Billy (Independent Director)
Audit Committee
Chew Heng Ching (Chairman)
Tan Kim Seng
Lee Beng Cheng, Billy
Wong Meng Yeng
Nominating Committee
Wong Meng Yeng (Chairman)
Tan Kim Seng
Lee Beng Cheng, Billy
Remuneration Committee
Chew Heng Ching (Chairman)
Chew Thiam Keng
Lee Beng Cheng, Billy
Company Secretaries
Foo Soon Soo
Lim Ka Bee
Registered Office
No. 4 Tuas Avenue 5, Jurong,
Singapore 639331
Registrar and Share Transfer Office
Barbinder & Co Pte Ltd
8 Cross Street, #11-00 PWC Building,
Singapore 048424
Auditors
PricewaterhouseCoopers
Certified Public Accountants
8 Cross Street, #17-00 PWC Building,
Singapore 048424
Partner in charge: Lim Seow Chiang
Year of appointment: 1998
Principal Bankers
The Development Bank of Singapore Limited
Oversea-Chinese Banking Corporation Limited
United Overseas Bank Limited