GESfrontcoverFA.ai-ok · Finally, in our journey towards becoming a more ODM-centred outﬁ t, we will close the chapter on our OEM-PC business activity. For the ﬁ nancial year

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While every effort has been taken to carry out instruction to customers satisfaction NO RESPONSIBILITY liablilty will be accepted for errors CUSTOMERS ARE THEREFORE URGED TO CHECK THOROUGHLY BEFORE AUTHORISING PRINT RUNS DALIM

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1

Chairman’s Statement 2

Board of Directors 6

Corporate Data 8

Organisation Chart 9

Operations Review 10

Financial Performance 16

Corporate Governance Statement 20

Risk Management Policies and Processes 27

Financial Statements 28

C O N T E N T S

This tangram in fl ight is an

expression of the spirit of

aspiration within GIL. As we continue

to evolve, we will continue to aspire

to soar to even greater heights

on the wings of our strategic vision.

Through agility, fl exibility and a

commitment to quality, we aim to

sustain this bright prospect for years

to come.

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This tangram in fl ight isThis tangram in fl ight is an

expression of the spirit of

aspiration within GIL.within GIL. As we continue As we continue

toto evolve, we will continue towe will continue to aspire

toto soar to evento even greater heights

on the wings of our strategic vision.on the wings of our strategic vision.

ThroughThrough agility, fl exibility andand a

commitment to quality, we aim to we aim to

sustain this bright prospect for years sustain this bright prospect for years

to come.to come.

M YC K


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2

C H A I R M A N ’ S S TAT E M E N T

Performance ReviewThree years ago, we fi rst embarked on a strategy to achieve higher revenue

contribution from our Original Design Manufacturing (ODM) activities. This

year, I am happy to report, we have once again gained important grounds

towards realising this goal. Among the year’s high points, the Group broke

new grounds in securing new ODM customers in the Japanese market. It also

expanded its product portfolio to include transactional devices and ATMs

related products.

The fruition of our strategy is also demonstrated in the record performance

attained in this fi nancial year. The Group’s total sales from its ODM and

Original Equipment Manufacturing (“OEM”) services crossed the $500-

million mark to reach $541.8m, and profi t after tax increased 38% to

$35.2m. Earnings per share increased 36% to 4.9 Singapore cents. Such

results were achieved through greater economies of scale from the Group’s

Singapore and Malaysian operations, despite the increase in operational

expenses incurred by the Group’s new operations in Shanghai.

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In the ODM segment, the Group enjoyed improvement in demand for its

existing Point of Sales (“POS”) products. The Group’s strategy of converting

its existing OEM customers to ODM met with great success, with several

existing OEM customers switching to using our ODM services. In addition,

the Group continued to launch new product models for both its existing and

new ODM customers. ODM revenue grew 43% year on year to $350.7m,

contributing 65% to the Group’s turnover.

On the OEM front, the Group continued to secure new OEM customers with

a view to converting them to ODM customers. As a result the Group’s OEM

division’s revenue grew 2% to $182.2 m, contributing 34% to the Group’s

revenue.

Finally, in our journey towards becoming a more ODM-centred outfi t, we

will close the chapter on our OEM-PC business activity. For the fi nancial year

ended 30 June 2004, the Group’s OEM-PC business contributed less than 2%

to the Group’s revenue and in the new fi nancial year, the OEM-PC division

will cease to contribute to the Group’s revenue altogether.

Operational ReviewIn March 2004, we expanded the Group’s operational presence

geographically with the establishment of a plant in Shanghai, China.

The Group’s Shanghai facility covers an area of 215,000 square-feet.

Outfi tted with state-of-the-art equipment, this facility is the Group’s largest

and most sophisticated plant to date. Currently operating three production

lines, this plant can be fi tted with up to twelve lines to meet the Group’s

future capacity requirements. Apart from handling the Group’s ODM

products – including POS systems, utility metering and industrial products

– the Shanghai facility also offers New Product Introduction (“NPI”) services

for the Group’s ODM products. In its fi rst six months of operations, the

Shanghai plant successfully launched a slew of new POS systems and utility

metering products.

The Shanghai facility also houses the Group’s only offshore Research and

Development (R&D) Centre. This will enable the Group to tap on a wider

talent pool of engineers, apart from the capability available at the Group’s

Singapore-based R&D faculty. The R&D team in Shanghai works closely with

the R&D team in Singapore to offer our customers a seamless fl ow of ODM

solutions.

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ustomers satisfaction

Y BEFORE


4

Finally, in a landmark Memorandum of Understanding (“MOU”) signed with

Intel in March 2004, the Group will enjoy access to the latest technologies

from the world’s biggest chipmaker six to nine months before the

technologies go to market. The Group will also receive from Intel technical

support and training. The MOU puts GIL in a better position to introduce

new product solutions in time with new technology launches, allowing us to

keep our customers abreast of the latest technological developments in the

market.

OutlookBarring unanticipated events, the trend in the Group’s ODM growth remains

positive with a number of new product launches being scheduled for the

fi nancial year ending 30 June 2005. The Group had also secured new

customers who will contribute to the next fi nancial year’s ODM and OEM

revenue. Among the new customers in our expanded ODM client portfolio

are companies in the industrial controllers and ATM related products

segments. Meanwhile the Group continues to secure new OEM customers in

the industrial segment.

We remain committed to a course of continual value addition for our

customers. To this end, we will invest in an Electromagnetic Compatibility

(“EMC”) and Electrostatic Discharge (“ESD”) Test Centre in our Shanghai

facility in the coming year. This investment, which will help shorten product

development lead-time, is part of our ongoing commitment towards

providing an integrated design, engineering and manufacturing solution to

all our customers.

Overall, with continuing signs of improvements in the US economy, and

barring unforeseen circumstances, the Group expects to remain profi table in

the fi nancial year ended 2005. Nevertheless the Group remains mindful of

the need to stay competitive and to control its cost of operations.

Our Heartfelt AppreciationOn behalf of the Board and management, I would like to express our

heartfelt appreciation to customers, partners and suppliers for their guidance

and steadfast support over the year. We look forward to continue building on

the synergistic relationships forged.

C H A I R M A N ’ S S TAT E M E N T ( C O N T ’ D )G

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We also thank the management and the Group’s employees for their

unstinting support and dedication in helping the Group achieve its goals and

vision over the years.

The Group would also like to express its gratitude to the Board of Directors

for their time and effort and guidance during the year. The fi nancial year

ended 30 June 2004 saw changes in the composition of the Board. Following

the successful delisting of the Company from the Australian Stock Exchange,

our two Australian Directors, Messrs Terence O’Connor and Richard Colless

stepped down and resigned as Directors of the Company. Two Singaporean

Directors, Messrs Steven Lim Kok Hoong and Low Seow Juan, replaced them.

On July 16 2004, Mr Ong Seow Yong, our independent director, stepped

down as a director of the Company. Mr Lee Boon How was appointed on 19

August 2004 to replace him.

On behalf of the Board, I would like to take this opportunity to thank Mr

O’Connor, Mr Colless and Mr Ong for their many contributions to the success

of the Group and to welcome Mr Lim, Mr Low and Mr Lee to the Board.

We are grateful to all our shareholders for their encouragement and support

through our evolution from an OEM-PC company to the ODM-driven Group

that we are today. On behalf of the Board, I would like to acknowledge our

appreciation of this support by recommending a fi nal tax-exempt dividend of

7.5% or 1.5 Singapore cents per share. This will be subject to confi rmation

by our shareholders at the forthcoming Annual General Meeting.

Goh Lik Tuan

Executive Chairman

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B OA R D O F D I R E C T O R S 1] Low Seow Juan Independent Director

2] Lee Boon How Independent Director

3] Steven Lim Kok Hoong Independent Director

4] Tan Geh Executive Director

5] Goh Lik Tuan Executive Chairman

6] Daniel Yeong Bou Wai Group Managing Director

1

32

4 5 6

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Mr Goh Lik Tuan has more than 29 years of experience in the electronics and computer industry and is the Executive Chairman and Founder of the GIL Group. He started the Group with a single company retailing in hobbyist kits 29 years ago and was instrumental in planning and developing the business strategies of the Group, having steered the Group through the major changes in its history. He oversees the strategic planning, overall marketing and fi nancial management of the GIL Group and is responsible for the strategic direction, growth and expansion of the Group.

Mr Goh was conferred the Singapore Businessman of the Year award in 2001.

Mr Daniel Yeong, the Group Managing Director, began his career in the GIL Group as its International Sales Manager in 1986 and assumed his current position in 1996. As the Managing Director of GIL, he is responsible for the strategic planning, overall marketing and fi nancial management and operations of the GIL Group. He has overseen the major restructuring of the business and operations of the Group and, together with the Chairman and the Board of Directors, is responsible for setting the future direction of the Group. Mr Yeong holds a Diploma in Mechanical Engineering, a Diploma in Sales and Marketing and an Advanced Diploma in Business Administration.

Mr Tan Geh is an Executive Director of the Group. As executive director, Mr Tan oversees the Business Development function of the GIL Group and he helps direct the Group’s strategies in Business Development covering its operations in Singapore, Malaysia, the United States and Shanghai. He founded Eltech Electronics Limited (“Eltech”), an electronics contract manufacturing company with operations in the US and Malaysia in 1984, which was subsequently acquired by the Group in 2001. Mr Tan, holds a BSc in Chemistry from the Nanyang University of Singapore and a post graduate degree in Chemical Engineering from Aston University, the United Kingdom.

Mr Steven Lim Kok Hoong is a Chartered Accountant (Australia) and also a member of the Institute of Certifi ed Public Accountants of Singapore. He joined the Board of Directors of GIL as an independent Director on 6 February 2004 and is the Chairman of the Audit committee and member of the Nominating committee. Mr Lim was a practising public accountant and prior to his retirement from the profession in July 2003 he was the Senior Partner at the public accounting fi rm of Ernst & Young, Singapore. Prior to that he was the Managing Partner of Arthur Anderson, Singapore. Presently Mr Lim is a member of the Board of Directors of SembCorp Logistics Ltd, where he sits in the Audit Committee. He is also a member of the Audit Committee of the Agency for Science, Technology and Research (A*STAR).

Mr Low Seow Juan joined GIL as an Independent Director on 6 February 2004. Mr Low is the Chairman of the Remuneration Committee and a member of the Audit and Nominating Committee. He is an Advocate & Solicitor of the Supreme Court of Singapore, specialising in the areas of corporate fi nance, banking and commercial law with particular emphasis on mergers and acquisitions.

Mr Low is presently a Consultant in the Corporate Department of Lee & Lee and concurrent with this appointment, he is also a Director and an Advisor to PrimePartners Corporate Finance Pte Ltd, a licensed boutique corporate fi nance unit. Previously, Mr Low headed the Corporate Finance Department in Drew & Napier and Harry Elias Partnership. Mr Low started his working career with the Public Works Department, Morgan Grenfell (Asia) Limited and the Economic Development Board heading the Aerospace, Medical Optical Division. Mr Low is a director of a number of public and private companies in the Asia-Pacifi c region including The Commercial & Industrial Security Corporation.

Mr Lee Boon How joined GIL as an independent Director on 19 August 2004. Mr Lee is Chairman of the Nominating Committee and member of the Audit and Remuneration Committees. He is a director of Hajadi & Associates Pte Ltd, a corporate advisory company specialising in mergers and acquisitions as well as equity and debt restructuring in the Asia Pacifi c Region. Prior to joining Hajadi & Associates Pte Ltd, Mr Lee was a Vice President at OCBC, Wearnes & Walden Management Pte Ltd, a venture capital fund management company with investments around the region. Mr Lee holds a Masters Business Administration degree from the University of Oklahoma and a Bachelor of Science degree in Engineering (Naval Architecture and Marine Engineering) from the University of Michigan.

EXECUTIVE COMMITTEE MEMBERSThe Executive Chairman, the Group Managing Director, Executive Director together with the Chief Operating Offi cer and the Chief Financial Offi cer, form the Executive Committee of the Group.

EXECUTIVE OFFICERSChief Operating Offi cer – Mr Frankie Tan oversees the operational matters of the Group. As a member of the executive committee, he helps execute the strategic plans of the Group. He has more than 15 years experience in the Electronic Manufacturing Services (“EMS”) environment, having held various key positions in general management, operations, marketing and materials management with Solectron and Natsteel Electronics, amongst others. He also has extensive experience in countries like, Hungary, China, Malaysia, Indonesia and Taiwan. Prior to joining the Group, he was Director of NCR’s Asia Pacifi c Supply Base and EMS Operations. He holds a Master in Business Administration from the Cranfi eld School of Management

Chief Financial Offi cer – Ms Sheila Ng joined GES International Limited in January 2000. As CFO, she is responsible for the Group’s fi nancial and reporting functions, including regulatory compliance matters, treasury and budgeting as well as corporate matters. As a member of the executive committee she helps execute the strategic plans set by the Board. She has extensive experience heading the fi nance department of another listed company in Singapore as well as those in the service industry. She began her career as an auditor with KMPG, before moving on to the private sector. She holds a Bachelor of Arts in Accounting from the University of Kent at Canterbury, England.

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C O R P O R AT E DAT A

GES International LimitedGES International Limited

(Incorporated in the Republic of Singapore)

BOARD OF DIRECTORSBOARD OF DIRECTORS

Goh Lik Tuan Executive ChairmanDaniel Yeong Bou Wai Managing DirectorTan Geh Executive DirectorSteven Lim Kok Hoong Independent DirectorLow Seow Juan Independent DirectorLee Boon How Independent Director

AUDIT COMMITTEEAUDIT COMMITTEE

Steven Lim Kok HoongLow Seow JuanLee Boon How

NOMINATING COMMITTEENOMINATING COMMITTEE

Lee Boon HowSteven Lim Kok HoongLow Seow Juan

REMUNERATION COMMITTEEREMUNERATION COMMITTEE

Low Seow JuanGoh Lik TuanLee Boon How

SECRETARIESSECRETARIES

Lau Wee NahTan San-Ju

REGISTERED OFFICEREGISTERED OFFICE

28 Marsiling Lane, Singapore 739152Tel: (65) 6732 9898 Fax: (65) 6368 6225E-mail: [email protected]: www.ges.com.sg

SHARE REGISTRAR & OFFICESHARE REGISTRAR & OFFICE

Lim Associates (Pte) Ltd10 Collyer Quay #19-08, Ocean Building, Singapore 049315Tel: (65) 6536 5355 Fax: (65) 6536 1360

AUDITORSAUDITORS

Ernst & Young10 Collyer Quay #21-01, Ocean Building, Singapore 049315

AUDIT PARTNER-IN-CHARGEAUDIT PARTNER-IN-CHARGE

Tan Swee HoDate of Appointment: 2003

PRINCIPAL BANKERSPRINCIPAL BANKERS

• ABN-Amro Bank N.V.• BNP PARIBAS, Singapore Branch• Citibank, N.A.• DBS Bank Ltd• Deutsche Bank AG, Singapore Branch• Malayan Banking Berhad• Oversea Chinese Banking Corporation Limited• United Overseas Bank Limited STOCK EXCHANGE LISTINGSTOCK EXCHANGE LISTING

The company’s shares are quoted on:• Singapore Exchange Securities Trading Limited

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O R G A N I S AT I O N C H A R T

GES (Singapore) Pte Ltd

100%

Shanghai GES Information Technology Co., Ltd

100%The Networking Company

Pte Ltd (Dormant)

80%

Spectrum Tech (Singapore)Pte Ltd (Dormant)

100%Digiland Taiwan Co., Ltd

(under voluntary liquidation)

100%

Evictronics EngineeringPte Ltd (Dormant)

100%

Digiland America Inc. (Dormant)

100%

GES (Hong Kong) Limited(Dormant)

80%

SME Investment Pte Ltd

97.5%

Chenzhou Digiland ElectronicsCo., Ltd (Dormant)

100%

Eltech Electronics Limited

100%

Eltech Electronics Technology (Malaysia) Sdn Bhd

100%

Eltech Electronics Inc

100%

Eltech Electronics Technology(Singapore) Pte Ltd

100%

GES International Limited

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O P E R AT I O N S R E V I E W

INTEGRATED: A Total Solution Chain of R&D and engineering Services

A distinctive asset of GIL is its ability to offer integrated ODM solutions that embrace product design, engineering, manufacture and after – sale support service.

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A distinctive asset of GIL is its ability

to offer integrated ODM solutions

that embrace product design,

engineering, manufacture and after-

sale support service. This fi nancial

year, the opening of the Group’s

Shanghai satellite R&D centre in

March 2004 signifi cantly bolstered

this key strength.

Equipped with state-of-the-art

equipment to shorten design time

to market cycle, the Research and

Development centre in Shanghai

strengthens the Group’s R&D

capability. Working in tandem with

the Singapore R&D Centre, the

Shanghai Centre actively develops

innovative business solutions for the

Group’s customers.

Plans are in the pipeline to expand

the fl edging Shanghai team in

the near future to further support

the Singapore R&D centre and to

expand the range of R&D services

offered by the Group.

Additionally, as part of the vision

to provide seamless solutions

to its customers, the Group will

invest in its fi rst Electromagnetic

Compatibility (“EMC”) and

Electrostatic Discharge (“ESD”) Test

Centre in Shanghai this year. The

Test Centre will conduct tests for

GIL’s newly developed products,

ensuring agency compliance,

technical accuracy and reliability,

and shortening the design cycle. The

Test Centre will hand GIL greater

control over the entire development

process, thus supporting GIL in its

efforts to meet customers’ stringent

quality expectations.

Together, the new R&D centre and

upcoming EMC and ESD Test Centre

will enable GIL to offer its customers

a fully integrated ODM services.

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Even while it counts many global

POS (Point of Sales) leaders among

its customers, GIL has continually

demonstrated fl exibility in its

ability to leverage on its intrinsic

knowledge of PC architecture and

data multiplexing capabilities to

create a wide range of POS-related

as well as other non-PC industrial

applications.

This year, the Group made

signifi cant headway in its push to

establish itself as an ODM provider

in the industrial and commercial

application sphere by expanding its

product portfolio to include devices

such as ATM-related products, utility

meters and industrial and robotic

controllers, on top of its traditional

portfolio of POS products.

This advancement is part of the

Group’s long-term vision to tap the

industrial and commercial markets.

Currently both markets remain fairly

untapped with most fi rms in these

sectors continuing to design and

manufacture electronic products

in-house. To companies in these

sectors, GIL is able to offer benefi ts

such as economy of scale as well

as a totally integrated design-

to-manufacture solution service

for signifi cantly shortened New

Product Introduction. As a result,

the Group continues to break new

grounds in client acquisition across

diverse segments of the industrial

segments.

The Group will continue to actively

seek out new OEM (Original

Equipment Manufacturing)

customers by offering quality built

OEM services. The Group also offers

its OEM customers extra value-add,

such as engineering services to

enhance and extend product life

cycle.

To further drive ODM growth, the

Group will continue its strategy of

converting its OEM customers into

value-add ODM business.

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The Group made signifi cant headway in its push to establish itself as an ODM provider by expanding its product portfolio to include devices such as ATM-related products, utility metering and industrial and robotic controllers products.

FLEXIBILITY: An Enlarged Product Portfolio

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VISION: The Most Advantageous Solution For Our Clients

Today GIL customers are increasingly aware of the competitive advantages offered by the Group. These include lower cost alternatives, R&D expertise (which shortens product time to market), and the engineering capabilities to enhance and extend product lifecycle.

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In March 2004, GIL took its plans

to be a leading ODM player one

step further with the opening of its

fourth and largest plant in Shanghai.

Called Shanghai GES Information

Technology Co., Ltd, this 215,000 sq

ft facility is GIL’s largest facility and

is equipped with state-of-the-art

equipment.

Strategically located in Pudong,

Shanghai, the new plant offers

GIL’s customers another choice of

manufacturing location in the world.

GIL’s geographical reach now spans

China, Malaysia, Singapore and

the United States. With this, the

Group believes it has set in place the

necessary infrastructure to drive the

Group’s future growth.

In line with the Group’s goal to

provide an ever more seamless

integrated manufacturing solutions

to its customers, its servicing

capacity and customer reach have

been further enhanced by its

multiple-locale manufacturing sites

and enhanced R&D facilities. Today

GIL customers are increasingly aware

of the competitive advantages

offered by the Group. These

include lower cost alternatives,

R&D expertise (which shortens

product time to market), and the

engineering capabilities to enhance

and extend product lifecycle.

Going forward, GIL will continue to

build on its knowledge pool as well

as invest in technology so as to help

its customers retain their lead in

their respective product segments.

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F I N A N C I A L P E R F O R M A N C E

Total Assets = Total Liabilities + Shareholders EquityTotal Assets = Total Liabilities + Shareholders Equity

The Group’s total assets increased by $55.9m during the fi nancial year ended

30 June 2004. This was mainly attributable to:

• Inventory Balances increased by $33.1m to $122.8m in anticipation of

next quarter’s demand as well as tighter lead time for certain materials.

• Trade receivable balances increased by $42.7m due to the signifi cant

increase in revenue during the fourth quarter of fi nancial year ended

2004.

However, the increase in inventory and trade receivable balances was offset

by the Group utilizing its cash resources to repay external borrowings during

the fi nancial year. As a result, cash and deposit balances declined by $23.9m.

Shareholders FundsShareholders Funds

Shareholders funds increased to $237.9m from $212.5m due to increase in

revenue reserves after deducting dividends paid during the year.

* restated by $3.5m to refl ect impact of change in accounting policy arising from the adoption of INT FRS 19

[ refer to note 2(b) to the Financial Statements on page 43 ]

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2000 2001 2002 2003* 2004

(S$m)481.5

(S$m)569.2

(S$m)358.3 (S$m)

320.9

(S$m)376.8

2000 2001 2002 2003* 2004

(S$m)222.4

(S$m)266.7

(S$m)196.5

(S$m)212.5

(S$m)237.9

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Earnings Before Interest, Tax, Depreciation & Amortisation Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA)(EBITDA)

The Group benefi ted from economies of scale from its Malaysian and

Singapore operations. Whilst, this was offset by the increase in operating

expenses from the addition of a new plant in Shanghai, China, the Group’s

EBITDA, nevertheless, grew 28% to $52.2m.

Profi t Attributable to Members of the CompanyProfi t Attributable to Members of the Company

An under provision of tax in respect of prior years by the Group’s Malaysian

operations together with higher profi t contribution from the Group’s US

operations resulted in a $2.1m increase in provision for tax. As a result, the

Group’s profi t attributable to members grew 38% to $35.2m for the year

ended 30 June 2004.

* restated by a gain in foreign exchange of $0.5m to refl ect the impact of change in accounting policy arising

from the adoption of INT FRS 19 [ refer to note 2(b) to the Financial Statements on page 43 ]

2000 2001 2002 2003 2004

(S$m)44.4

(S$m)34.6

(S$m)37.1

(S$m)40.9

(S$m)52.2

2000 2001 2002 2003* 2004

(S$m)26.7

(S$m)16.5

(S$m)17.4

(S$m)25.6

(S$m)35.2

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F I N A N C I A L P E R F O R M A N C E ( C O N T ’ D )

Net Tangible Asset (NTA)Net Tangible Asset (NTA)

The Group’s NTA increased to $225.4m from $199.1m due to increase in

revenue reserves after deducting dividends paid during the year.

* restated by $3.5m to refl ect impact of change in accounting policy arising from the adoption of INT FRS 19

[ refer to note 2(b) to the Financial Statements on page 43 ]

Return on EquityReturn on Equity

The Group increased its return on equity to 14.8 per cent this fi nancial year.

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2000 2001 2002 2003* 2004

(S$m)209.7

(S$m)252.3

(S$m)184.1

(S$m)199.1

(S$m)225.4

2000 2001 2002 2003* 2004

12.0

6.2

8.8

12.0

14.8

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Turnover by ActivitiesTurnover by Activities

The Group’s strategic move to concentrate on ODM activities helped fuel the

Group’s 43 percent growth in this division.

Although the Group has converted several of its OEM customers to its ODM

services, its OEM division, nevertheless grew 2% to $182.2m. This is the

result of the Group’s on going strategy to secure new OEM customers to

convert them into ODM customers. At the same time, the Group also strate-

gically reduced its reliance on its OEM-PC activities. As a result, the Group’s

revenue from OEM-PC activities declined by 62 percent to $8.9m.

Turnover by Geographical SegmentTurnover by Geographical Segment

Revenue generated from the Group’s Singapore operation increased by 34

percent to $359.6m. Singapore’s operation derived its revenue mainly from

ODM activities.

Revenue from its Malaysian operations, increased to $148.9m from the

$143.0m reported for the fi nancial year ended 30 June 2003.

As the US economy remained weak during the fi rst half of the fi nancial year

ended 30 June 2004, the group’s operations from its US plant declined to

$33.0m.

In its fi rst year of operations, the Group’s Shanghai plant generated revenue

of $12.4m.

FY 2004 (S$m) OEM-PC 8.9 ODM 350.7 OEM 182.2

FY 2003 (S$m) OEM-PC 23.3 ODM 245.3 OEM 178.9

FY 2004 (S$m) Singapore 359.6 Malaysia 148.9 Asia (incl China, excl S’pore & M’sia) 12.4 US 33.0

FY 2003 (S$m) Singapore 268.3 Malaysia 143.0 Asia (incl China, excl S’pore & M’sia) 0.4 US 35.9

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The GIL Group is committed to maintaining good standards of corporate governance in line with the recommendations of the Code of Corporate Governance (the “Code”) issued by the Corporate Governance Committee, and has always recognized the importance of good corporate governance to promote greater transparency and to strengthen investor’s confi dence. This statement sets out the main corporate governance practices that had been adopted by the Group, and deviations from the Code are explained.

BOARD OF DIRECTORSGIL’s Board of Directors is responsible for the overall policies of the Group and providing direction for corporate actions. It reviews and approves all corporate actions for which shareholder approval is required, and is responsible for monitoring Management’s performance.

The Company holds regular scheduled Board meetings throughout the year. Ad hoc meetings are convened when circumstances require. At present, the Articles of Association of the Company allows Directors to participate in a meeting of the Board through the use of a conference telephone or similar communications equipment.

Five scheduled Board meetings were held during the fi nancial year. The Directors’ attendance at these meetings are set out below:

No of Meetings Directors Attended Remarks

Goh Lik Tuan 5/5 Daniel Yeong Bou Wai 5/5 Tan Geh 5/5 Steven Lim Kok Hoong 3/3 Appointed 6 February 2004 Low Seow Juan 3/3 Appointed 6 February 2004 Ong Seow Yong 4/5 Resigned 16 July 2004 Richard John Colless 3/3 Resigned 29 January 2004 Terence Edward O’Connor 3/3 Resigned 29 January 2004

The Board supervises the management and corporate affairs of the Group. Apart from fulfi lling its statutory responsibilities, the Board’s principal functions includes:

• Approving the Group’s strategic plans, key operational initiatives, major investments and divestments as well as funding requirements;• Approving the budget, reviewing the performance of the business;• Approving the release of the fi nancial results of the Group to Shareholders;• Providing guidance in the overall management of the business and affairs of the group;• Overseeing the processes of risk management, fi nancial reporting and compliance; and • Approving the recommended framework of remuneration for the Board and key executives by the remuneration committee.

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All newly appointed Directors are given briefi ngs by Management on the history and business operations of the Group. The Company will, if necessary, organize briefi ng sessions or circulate memoranda for Directors to enable them to keep pace with regulatory changes, where such changes have a material bearing on the Group.

The Directors also have access to the advice and services of the company secretary, who also attends Board Meetings, and management, may, in appropriate circumstances, seek independent professional advice concerning the Company’s affairs.

The Board is supported by various sub-committees whose functions are described below. The Board is able to exercise objective judgement independently from Management and no individual or small groups of individuals dominate the decisions of the Board.

The Board is of the opinion that, given the scope and nature of the Group’s operations, the present size of the Board is appropriate in facilitating effective decision making. GIL’s Directors also bring with them a wealth of experience, extensive business networks and expertise in specialized fi elds such as accountancy, mergers and acquisitions, corporate fi nance, manufacturing, business development, technical expertise and law. The profi les of each of the Directors is provided in Pages 6 and 7 of this Annual Report. Accordingly, the current Board comprises persons who, as a group, have core competencies necessary to lead and manage the Group.

There is a distinctive separation of responsibilities between the Chairman and the Chief Executive Offi cer (“CEO”) to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision making. Mr Goh Lik Tuan is the Chairman of the Board and Mr Daniel Yeong Bou Wai is the CEO cum Managing Director of the Company.

As Chairman, Mr Goh leads Board discussions and deliberation. The Chairman of the Board also ensures that board meetings are held when necessary. He sets the meeting agenda, in consultation with the CEO, and ensures that directors are provided with complete, adequate and timely information. He also assists in ensuring compliance with the Company’s guidelines on corporate governance.

As CEO, Mr Yeong is responsible for the day to day management affairs of the Group. Mr Yeong executes the strategic plans set out by the Board and ensures that the Directors are kept updated and informed of the Group’s business through management reports.

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2004 C O R P O R AT E G O V E R N A N C E S T AT E M E N T ( C O N T ’ D )

BOARD COMMITTEESThe Board of Directors has four principal board committees namely: the Audit Committee, the Executive Committee, the Nominating Committee and the Remuneration Committee.

THE AUDIT COMMITTEEThe Audit Committee comprises Mr. Steven Lim Kok Hoong, Chairman, and two other members, Messrs Low Seow Juan and Lee Boon How.

All of the Audit Committee members are non-executive independent directors. Two members of the Audit Committee have relevant accounting and fi nancial management experience.

The Audit Committee has written terms of reference, which includes authority to investigate any matter within its terms of reference, full access to and co-operation by Management and full direction to invite any director or executive offi cer to attend its meetings, and reasonable resources to enable it to discharge its functions properly.

The Audit Committee also reviews the scope and results of the audit as well as the cost effectiveness and the independence and objectivity of the external auditors.

The Audit Committee also reviews the non-audit services provided by the external auditors to ensure that provision of such services would not affect the independence of the auditors.

Interested Party Transactions are reviewed by the Audit Committee every quarter.

The aggregate value of interested person transactions as defi ned in Chapter 9 of the Singapore Exchange’s Listing Manual for the fi nancial year ended 30 June 2004 were as follows:

Group

2004 2003

$’000 $’000

Sales to related parties 761 410Services from related parties 1,568 1,692Purchases from related parties 785 1,957Rental income from related party 198 –

The Audit Committee also reviews the effectiveness of the company’s material internal controls, including fi nancial, operational and compliance controls, and risk management with the internal auditor, who also reports to the Chairman of the Audit Committee at least annually. The Audit Committee is of opinion that the internal controls of the company are adequate.

The Audit Committee meets with the external auditors, and with the internal auditors, without the presence of the Company’s Management, at least once a year.

During the year, the Audit Committee met four times, with the full attendance of its members.

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THE EXECUTIVE COMMITTEEThe Executive Committee (the “Exco”) comprises Mr Goh Lik Tuan, Chairman, two executive directors, Messrs Daniel Yeong Bou Wai and Tan Geh and two members of Management, the Chief Operating Offi cer and the Chief Financial Offi cer.

The Exco is delegated with the authority and the responsibility of the day to day management of the company and its subsidiaries. The Exco is responsible for the implementation of the Group’s fi nancial and operational policies and conducts on-going monitoring and review of the Group’s performance and risk management on an on-going basis. It also assists the CEO and Managing Director in carrying out the strategic plans of the Group.

THE NOMINATING COMMITTEEThe Nominating Committee comprises Mr Lee Boon How, Chairman and two independent members of the Board, Messrs Steven Lim Kok Hoong and Low Seow Juan.

Under its Terms of Reference, the Nominating Committee:

• Makes recommendations to the Board on all board appointments, including the development of a set of criteria for Director’s appointment and re-appointment;• Consider the independence of a Director;• Review the Board’s performance; and• Assess the effectiveness of the Board as a whole.

Despite some of the Directors having other Board representations, the Nominating Committee is satisfi ed that these Directors are able to and have adequately carried out their duties as Directors of the Company.

Pursuant to the Articles of Association of the Company:

• One third of the Directors except the Managing Director retire from offi ce at every Annual General Meeting; and• Directors appointed during the course of the year must submit themselves for re-election at the next Annual General Meeting of the Company.

As the Managing Director is one of the founding members of the Company, the Directors do not propose to amend the Articles to require the Managing Director to retire.

The Nominating Committee has evaluated and is satisfi ed with the individual performance of each Director.

The Nominating Committee has reviewed the independence of the Board members and is of the opinion that Messrs Steven Lim Kok Hoong, Low Seow Juan and Lee Boon How are independent.

The Nominating Committee also evaluates the Board’s performance annually. The performance criteria used will include both quantitative and qualitative criteria such as returns on equity and the success of strategic and long term objectives set by the Board and the effectiveness of the Board in monitoring Management’s performances against the goals that have been set, the Company’s share price performance over a period of fi ve years against the benchmark index of the Singapore Straits Times Index.

During the year, the Nominating Committee met once, with the full attendance of its members.

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REMUNERATION COMMITTEEThe Remuneration Committee comprises Mr Low Seow Juan, Chairman, and Messrs Lee Boon How and Goh Lik Tuan, the majority of whom are non-executive independent directors.

The Remuneration Committee determines and recommends to the Board the specifi c remuneration packages and terms of employment for each of the executive directors and reviews and recommend to the Board, a framework of remuneration for senior key executives, including those employees related to the executive directors and controlling shareholders of the Group.

In setting the remuneration framework, the Remuneration Committee takes into account the performance of the Group as well as the Directors and key executives. As part of its review, the committee ensures that the remuneration packages are comparable within the industry and remuneration packages of executive Directors and controlling shareholders of the Group and employees who are related to such persons are in line with the Group’s staff remuneration guidelines and commensurate with their respective job scopes and level of responsibilities. The Remuneration Committee seeks expert advice inside and/or outside the Company whenever required.

In reviewing the recommended directors’ remuneration for the year ended 30 June 2004, the committee has adopted a framework based on guidelines recommended by the Singapore Institute of Directors, which comprises a base fee, fees for membership in Board Committees as well as fees for chairing Board Committees, taking into consideration the amount of time and effort that each Board member may be required to devote to the role and the fees paid in comparable companies.

The Remuneration Committee oversees the Executive Share Options Scheme (the “ESOS”) Committee of the Company. Chaired by the Chairman of the Remuneration Committee, the ESOS committee comprises one executive director and key executives of the Company. The ESOS committee, which has been set up since March 2001, is tasked with the administration of the ESOS.

All Directors, save for substantial shareholders, and selected employees of the Company and its subsidiary companies are eligible to participate in the ESOS. Details of the ESOS are set out in pages 29 to 32 of this Annual report.

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Details of remuneration paid to the Directors of the Company are set out below:

Company’s Directors receiving remuneration from the Group:

Number of Directors

Remuneration Band 2004 2003

$1,000,000 and above 1 1$750,000 to $999,999 1 1$500,000 to $749,999 1 1$250,000 to $499,999 0 0Below $249,999 3 3

There are no employees who are immediate family members of the Directors and substantial shareholders who earn in excess of $150,000 per year.

Instead of setting out the names of top fi ve key executives who are also not directors of the Company, the remuneration in the fi nancial year of key executives are set out below in bands of $250,000. This is to prevent solicitation of key executives by the Group’s competitors.

Remuneration Band Number of Key Executives

S$500,000 and above 1$250,000 to $499,999: 2Below $249,000: 2

During the year, the Remuneration Committee met once, with the full attendance of its members.

The Board aims to provide shareholders with a balanced and understandable assessment of the Group’s performance, position and prospects through its reports. For effective monitoring of the Group’s business and affairs, management reports are provided to the Board on a regular basis. The Group’s annual budget is also reviewed by the Board.

The Group outsourced its Internal Audit function. The Internal Audit function reports to the Chairman of the Audit Committee directly and the Group’s Chief Executive Offi cer administratively.

The Group believes that outsourcing its Internal Audit function is more effi cient and cost effective. In addition, the outsourced internal auditor is independent of the Group and its business activities. Outsourcing the internal audit function also addresses any segregation of duties concerns. It will also help ensure that the internal audit function is being carried out by appropriately trained personnel. The Internal Audit function is responsible for ensuring that risk management and internal control processes are effectively implemented and maintained.

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The Company is committed to providing easy access to timely and pertinent information about the Company and to continuously review ways to enhance our corporate reporting process. The Company also maintains a website www.ges.com.sg where the public can access information on the Group.

In general meetings, shareholders are given the opportunity to communicate their views and direct questions to directors and management regarding the Company. The Chairman of the Audit Committee and the external auditors are present at the Company’s AGM and other general meetings of shareholders, to assist the Board in addressing shareholder’s questions. With our recently formed Nominating and Remuneration Committees, the Chairman of these Committees will also be present at our AGMs to address shareholders’ concerns.

SECURITIES TRANSACTIONThe Company has adopted a code of conduct on securities dealing modeled after the Best Practices Guide issued by the SGX-ST, which refrain its directors and offi cers from dealing in the Company securities at anytime after a price sensitive development has occurred, or has been subject of a decision, until the price sensitive information has been publicly announced. In particular the directors and offi cers will not deal in the Company securities during the periods commencing one month before and up to the day after the announcements of the Company’s results.

C O R P O R AT E G O V E R N A N C E S T AT E M E N T ( C O N T ’ D )

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Pursuant to the requirements as stipulated under Rule 1207(4) (d) of Chapter 12 of the SGX-ST Listing Manual as issued by the Singapore Exchange Securities Trading Limited, the operating and fi nancial risk management policies and processes of the Group are set out as follows:

OPERATING RISKManagement of growthThe Group has strategically focused its growth on the Original Design and Manufacture (“ODM”) division and expanded into the Original Equipment Manufacturing through the acquisition of Eltech Electronics Limited (“OEM”) in 2001, with a view to converting its OEM customers into ODM customers. As a result, the Group’s operations expanded in terms of the number of employees, scope of activities, geographical markets and level of technical expertise. This has resulted in added responsibilities for the Group’s management who are responsible for overseeing the integration of the Group’s operations and the expansion of the Group’s operations into new ODM products and geographical markets.

Further, in order to meet the demand of its current and future projects, the Group will need to attract, motivate and retain a signifi cant number of highly qualifi ed professionals in a number of disciplines, and in particular for its research and development division, who have signifi cant relevant industry experiences and skill sets. Given the exacting job specifi cation, the pool of qualifi ed professionals is considerably small. As such, the Group faces keen competition for such professionals. Moreover, due to rapid growth in outsourced ODM and OEM activities, increasing competition for such professionals may also increase the Group’s labour costs. To manage and sustain its growth effectively, the Directors must continue to expand its management team by attracting more talent into the Group and to motivate and retain such professionals at a competitive cost, as well as improve its operational effi ciency and fi nancial management.

Risks associated with future acquisitionsThe Group intends to continue to pursue strategic acquisitions that will provide it with customer bases, technologies and qualifi ed professionals. Such acquisitions present risks that could potentially have an adverse effect on the Group’s operations and earnings, such as diversion of management’s attention, failure to retain key acquired personnel, assumption of liabilities, and amortisation of goodwill and intangible assets. Moreover, customer dissatisfaction with, or problems caused by, the performance of any acquired technologies could have an adverse impact on the Group’s reputation. In addition, the acquired businesses may not achieve the anticipated returns. The Group will continue to adopt a cautious approach and to exercise due diligence when considering all acquisitions. Key personnel are also expected to enter into service agreements with the Group to retain their expertise for the Group’s benefi t.

CompetitionThe Group competes internationally with many fi rms that are substantially larger and have substantially greater resources than the Group. The continued success of the Group depends on its ability to compete effectively with its competitors as well as to persuade its customers to use the Group’s ODM services instead of those developed in-house by the customers. The Group intends to further develop its niche markets in the ODM division beyond point of sales systems into industrial applications and solutions. By leveraging on its skills and knowledge acquired through years of experience in the design for manufacture business, the Group is able to offers its customers a one stop design and manufacture solution. This strategy has enabled the Group to enjoy signifi cant growth in the ODM division during the year ended 30 June 2004.

FINANCIAL RISKThe fi nancial risk management objectives and policies of the Group are set out in the Notes to the Financial Statements in Note 31 under the heading “Financial risk management objectives and policies”.

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F I N A N C I A L S TAT E M E N T S

Directors’ Report 29

Statement by Directors Pursuant to Section 201(15) 35

Auditors’ Report to the Members of GES International Limited 36

Balance Sheets as at 30 June 2004 37

Consolidated Profi t and Loss Accounts for the year ended 30 June 2004 39

Statements of Changes in Equity for the year ended 30 June 2004 40

Consolidated Statement of Cash Flows for the year ended 30 June 2004 42

Notes to the Financial Statements 30 June 2004 43

Shareholders’ Information as at 1 September 2004 77

Notice of Annual General Meeting 79

Notice of Books Closure 82

Proxy Form 83

C O N T E N T S

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04D I R E C T O R S ’ R E P O R T

(Amounts expressed in Singapore dollars unless otherwise stated)

The directors are pleased to present their report to the members together

with the audited consolidated fi nancial statements of GES International

Limited and its subsidiaries (the “Group”) as at 30 June 2004.

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

Goh Lik Tuan (Chairman)

Yeong Bou Wai (Managing Director)

Tan Geh

Steven Lim Kok Hoong (appointed on 6.2.2004)

Low Seow Juan (appointed on 6.2.2004)

Lee Boon How (appointed on 19.8.2004)

Ong Seow Yong (resigned on 16.7.2004)

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURESNeither at the end of nor at any time during the fi nancial year was the

Company a party to any arrangement whose object is to enable the directors

of the Company to acquire benefi ts by means of the acquisition of shares

or debentures of the Company or any other body corporate, other than

pursuant to the Employees’ Share Option Scheme.

SHARE OPTIONSThe GES International Limited Employees’ Share Option Scheme (“the

Scheme”) enables selected employees of the Company and its subsidiaries

including directors of the Company to subscribe for ordinary shares of $0.20

each in the capital of the Company. The size of the Scheme will not be more

than 15% of the issued share capital of the Company at any time.

The Scheme is administered by the Scheme’s Committee, consisting of a

director, who is also the Chairman of the Remuneration Committee, and

three executive employees of the Company:

(i) Low Seow Juan (Director)

(ii) Ng Won Lein

(iii) Carol Tejosukmono

(iv) Quek Pek Chuan

During the fi nancial year, offers of options were granted to the employees

pursuant to the Scheme in respect of 7,274,000 (2003 : 13,104,600)

unissued shares of $0.20 each in the Company at an offer price of $0.56 per

share as detailed below.

Other information regarding the Scheme is set out below:

(i) The exercise price of the option can be set at a discount to the market

price not exceeding 20% of the market price at the time of grant; and

(ii) The shares under option is to be exercised in whole or in part, provided

that an option may be exercised in part only in respect of 1,000 shares

or any multiple thereof on the payment of the exercise price.

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SHARE OPTIONS (CONT’D)These options do not entitle the holder to participate, by virtue of the options, in any share issue of any other corporation.

At the end of the fi nancial year, options to take up 37,338,760 unissued shares of $0.20 each in the Company were outstanding:

Exercise period Number of options to subscribe for unissued ordinary shares of $0.20 each

Balance as at

Exercise 1 July 2003/ Total Total lapsed/ Balance as at

Date of grant From To price($) later date of grant exercised cancelled 30 June 2004

4.4.2001 5.4.2003 4.4.2011 0.35 8,600,140 * 8,149,160 29,840 421,140

4.4.2001 5.4.2004 4.4.2011 0.35 3,486,120 1,226,820 72,960 2,186,340

4.4.2001 5.4.2005 4.4.2011 0.35 2,374,120 – 77,840 2,296,280

4.4.2001 5.4.2006 4.4.2011 0.35 2,374,120 – 77,840 2,296,280

16,834,500 9,375,980 258,480 7,200,040

4.4.2001 5.4.2003 4.4.2006 0.35 250,200 – – 250,200

4.4.2001 5.4.2004 4.4.2006 0.35 125,100 – – 125,100

4.4.2001 5.4.2005 4.4.2006 0.35 125,100 – – 125,100

500,400 – – 500,400

2.5.2002 3.5.2004 2.5.2012 0.39 7,051,920 3,217,880 412,000 3,422,040

2.5.2002 3.5.2005 2.5.2012 0.39 2,513,960 – 312,000 2,201,960

2.5.2002 3.5.2006 2.5.2012 0.39 2,451,960 – 312,000 2,139,960

2.5.2002 3.5.2007 2.5.2012 0.39 2,451,960 – 312,000 2,139,960

14,469,800 3,217,880 1,348,000 9,903,920

11.11.2002 12.11.2004 11.11.2012 0.28 3,292,960 – 58,800 3,234,160

11.11.2002 12.11.2005 11.11.2012 0.28 1,646,480 – 29,400 1,617,080

11.11.2002 12.11.2006 11.11.2012 0.28 1,646,480 – 29,400 1,617,080

11.11.2002 12.11.2007 11.11.2012 0.28 1,646,480 – 29,400 1,617,080

8,232,400 – 147,000 8,085,400

D I R E C T O R S ’ R E P O R T ( C O N T ’ D )(Amounts expressed in Singapore dollars unless otherwise stated)

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SHARE OPTIONS (CONT’D)


Balance as at



14.4.2003 15.4.2005 14.4.2013 0.27 1,780,000 – 10,000 1,770,000

14.4.2003 15.4.2006 14.4.2013 0.27 890,000 – 5,000 885,000

14.4.2003 15.4.2007 14.4.2013 0.27 890,000 – 5,000 885,000

14.4.2003 15.4.2008 14.4.2013 0.27 890,000 – 5,000 885,000

4,450,000 – 25,000 4,425,000

3.3.2004 4.3.2006 3.3.2014 0.56 2,909,600 – 20,000 2,889,600

3.3.2004 4.3.2007 3.3.2014 0.56 1,454,800 – 10,000 1,444,800

3.3.2004 4.3.2008 3.3.2014 0.56 1,454,800 – 10,000 1,444,800

3.3.2004 4.3.2009 3.3.2014 0.56 1,454,800 – 10,000 1,444,800

7,274,000 – 50,000 7,224,000

51,761,100 12,593,860 1,828,480 37,338,760

* Included the remaining 20% of the options granted to the directors and employees of the Digiland Group in the previous fi nancial year. As at 30 June 2004,

nil (2003 : 1,627,900) options were outstanding:


Exercise Balance as at Options lapsed/ Options Balance as at

Date of grant From To price($) 1 July 2003 cancelled exercised 30 June 2004

4.4.2001 5.4.2003 4.10.2003 0.35 1,627,900 29,400 1,598,500 –


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04 D I R E C T O R S ’ R E P O R T ( C O N T ’ D )


SHARE OPTIONS (CONT’D)Details of the option to subscribe for ordinary shares of $0.20 each in the Company granted to the directors of the Company pursuant to the scheme are as

follows:

Aggregate options

Exercise granted since Aggregate options

price for options commencement exercised since Aggregate options

Options granted options granted of Scheme to end commencement outstanding at

during fi nancial during fi nancial of fi nancial year of Scheme to end end of fi nancial

Director of the Company year under review year under review under review of fi nancial year Options lapsed year under review

Yeong Bou Wai – – 3,336,000 2,224,000 – 1,112,000

Tan Geh – – 2,500,000 – – 2,500,000

Ong Seow Yong – – 166,800 – – 166,800

Except as disclosed above, no other directors were granted options under this Scheme and no participant received 5% or more of the total number of options

available under the Scheme.

At the end of the fi nancial year, there were:

(i) no unissued shares of the Company under option except for the options granted under the Scheme as detailed above; and

(ii) no unissued shares of the subsidiaries under option except for the option granted to SME Holdings Pte Ltd to subscribe for 1,500,000 ordinary shares of

US$1 each in SME Investment Pte Ltd pursuant to a joint venture agreement between SME Investment Pte Ltd and SME Holdings Pte Ltd.

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DIRECTORS’ INTERESTS IN SHARES OR DEBENTURESThe following directors, who held offi ce at the end of the fi nancial year, had, according to the register of directors’ shareholdings required to be kept under

Section 164 of the Singapore Companies Act, Cap. 50, an interest in shares of the Company and related corporations, as stated below:

Shareholdings in which the director

Held by director is deemed to have an interest

1 July 30 June 21 July 1 July 30 June 21 July

2003 2004 2004 2003 2004 2004

GES International LimitedOrdinary shares of $0.20 each

Goh Lik Tuan 79,133,939 71,616,921 71,616,921 120,557,300 107,501,611 107,501,611

Yeong Bou Wai 7,128,778 7,925,484 7,925,484 – – –

Ong Seow Yong – – – 1,200,000 10,000 –

Options to subscribe for ordinary shares of $0.20 each

Yeong Bou Wai 3,336,000 1,112,000 1,112,000 – – –

Tan Geh 2,500,000 2,500,000 2,500,000 – –

Ong Seow Yong 166,800 166,800 lapsed – – –

By virtue of Section 7 of the Singapore Companies Act, Cap. 50, Goh Lik Tuan is deemed to have an interest in all the related companies of the Company.

No other director had an interest in any shares or debentures of the Company or related corporations either at the beginning of the fi nancial year, date of

appointment, or end of the fi nancial year or 21 July 2004.

DIRECTORS’ CONTRACTUAL BENEFITSExcept as disclosed in the fi nancial statements, since the end of the previous fi nancial year, no director of the Company has received or become entitled to receive

a benefi t by reason of a contract made by the Company or a related corporation with the director, or with a fi rm of which the director is a member, or with a

company in which the director has a substantial fi nancial interest.


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04 D I R E C T O R S ’ R E P O R T ( C O N T ’ D )


AUDIT COMMITTEEThe Audit Committee comprises three independent non-executive directors,

one of whom is also the Chairman of the Audit Committee. The members of

the Audit Committee are:

Steven Lim Kok Hoong (Chairman)

Low Seow Juan

Lee Boon How (appointed on 19.8.2004)

Ong Seow Yong (resigned on 16.7.2004)

The Audit Committee performs its functions in accordance with Section

201B(5) of the Singapore Companies Act, Cap 50 and the requirements of

the Singapore Exchange and Code of Corporate Governance Best Practices

Guides. In performing those functions, the Audit Committee reviewed the

overall scope of external audits and the assistance given by the Company’s

offi cers to the auditors.The Audit Committee met with the external auditors

to discuss the results of their audits and their evaluation of the systems

of internal accounting controls. The Audit Committee also reviewed

the fi nancial statements of the Company and the consolidated fi nancial

statements of the Group for the year ended 30 June 2004, as well as the

external auditors’ report thereon.

In addition, the Audit Committee reviewed interested person transactions

for the fi nancial year ended 30 June 2004 conducted pursuant to the

shareholders’ mandate obtained in accordance with Chapter 9 of the

Singapore Exchange’s Listing Manual to satisfy itself that the transactions are

on normal commercial terms.

The Audit Committee has recommended to the Board of directors that the

auditors, Ernst & Young, be nominated for re-appointment as auditors at the

forthcoming Annual General Meeting of the Company.

AUDITORSErnst & Young have expressed their willingness to accept re-appointment as

auditors.

On behalf of the board of directors,

Goh Lik TuanDirector

Yeong Bou WaiDirector

Singapore

30 August 2004

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We, Goh Lik Tuan and Yeong Bou Wai, being two of the directors of GES

International Limited, do hereby state that, in the opinion of the directors:

(i) the consolidated fi nancial statements of the Group and the balance

sheet and statement of changes in equity of the Company together

with the notes thereto, are drawn up so as to give a true and fair view

of the state of affairs of the Group and of the Company as at 30 June

2004, the changes in equity of the Group and the Company, the results

of the business and the cash fl ows of the Group, for the year then

ended; and

(ii) at the date of this statement there are reasonable grounds to believe

that the Company will be able to pay its debts as and when they fall

due.

S TAT E M E N T B Y D I R E C T O R S Pursuant to Section 201(15)

On behalf of the board of directors,

Goh Lik TuanDirector

Yeong Bou WaiDirector

Singapore

30 August 2004

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We have audited the accompanying fi nancial statements of GES International

Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages

37 to 76 for the year ended 30 June 2004. These fi nancial statements are the

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

opinion on these fi nancial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on

Auditing. Those Standards require that we plan and perform the audit

to obtain reasonable assurance about whether the fi nancial statements

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

basis, evidence supporting the amounts and disclosures in the fi nancial

statements. An audit also includes assessing the accounting principles used

and signifi cant estimates made by the directors, as well as evaluating the

overall fi nancial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

In our opinion,

(a) the consolidated fi nancial statements of the Group and the balance

sheet and statement of changes in equity of the Company are properly

drawn up in accordance with the provisions of the Singapore

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

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

Group and of the Company as at 30 June 2004 and the results of the

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

fl ows of the Group for the fi nancial year ended on that date; and

A U D I T O R S ’ R E P O R T T O T H E M E M B E R S O F G E S I N T E R N AT I O N A L L I M I T E D

(b) the accounting and other records required by the Act to be kept by the

Company and by those subsidiaries incorporated in Singapore of which

we are the auditors have been properly kept in accordance with the

provisions of the Act.

ERNST & YOUNGCertifi ed Public Accountants

Singapore

30 August 2004

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04B A L A N C E S H E E T S as at 30 June 2004

(Amounts expressed in Singapore dollars)

Group Company

Note 2004 2003 2004 2003

$’000 $’000 $’000 $’000

Non-current assetsProperty, plant and equipment 3 70,576 69,957 – –

Investment in subsidiaries 4 – – 133,330 56,002

Investment in associated companies 5 – 902 – –

Other investments 6 3,710 248 11 11

Goodwill 7 11,752 12,565 – –

Deferred tax assets 24 757 838 – –

Current assetsStocks 8 122,794 89,658 – –

Trade debtors 9 124,252 81,566 – –

Other debtors, deposits and prepayments 10 7,505 5,778 26 24

Other investments 6 5,049 5,049 – –

Due from subsidiaries (non-trade) 11 – – 18,287 94,440

Due from related parties (trade) – 62 – –

Fixed deposits 15,456 27,652 – –

Cash and bank balances 14,939 26,611 645 2,370

289,995 236,376 18,958 96,834

Current liabilitiesTrade creditors 90,073 39,243 8 18

Bills payable – 11,155 – –

Other creditors and accruals 12 27,974 20,916 583 639

Due to related parties (non-trade) 13 1,467 1,485 – –

Provision for taxation 3,531 1,530 53 53

Short-term bank loans 16 6,460 17,594 – 6,240

Long-term bank loans, current 14 6,573 1,330 – –

Finance lease liabilities, current 15 1,088 1,377 – –

Bank overdrafts, unsecured – 3,907 – –

137,166 98,537 644 6,950

Net current assets 152,829 137,839 18,314 89,884

–

–

24

–

94,440

–

–

18

–

–

53

6,240

–

–

–

–

–

24

–

18,287 94,440

–

–

18

–

–

53

6,240

–

–

–

– 18,287 62

11,155

20,916

3,907 3,907 3,907

–

62

289,995

11,155

20,916

3,907

137,166 3,907 3,907

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Group Company

Note 2004 2003 2004 2003

$’000 $’000 $’000 $’000

Non-current liabilitiesDeferred tax liabilities 24 207 207 – –

Long-term bank loans 14 – 7,200 – –

Finance lease liabilities 15 1,450 2,454 – –

(1,657) (9,861) – –

Net assets 237,967 212,488 151,655 145,897

EquityShare capital 17 145,319 142,800 145,319 142,800

Share premium 18 3,919 1,915 3,919 1,915

Accumulated profi ts 89,516 68,713 2,417 1,182

Translation reserve (885) (974) – –

237,869 212,454 151,655 145,897

Minority interests 98 34 – –

Equity and minority interests 237,967 212,488 151,655 145,897

The accounting policies and explanatory notes on pages 43 to 76 form an integral part of the fi nancial statements.

207

7,200

2,454

207

7,200

2,454

–

–

–

–

–

B A L A N C E S H E E T S ( C O N T ' D ) as at 30 June 2004


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Note 2004 2003

$’000 $’000

Turnover 19 541,825 447,504

Cost of sales (463,473) (383,463)

Gross profi t 78,352 64,041

Other income 20 673 1,474

Distribution and selling expenses 9,304 13,258

Administrative and other operating expenses 27,700 21,347

Operating expenses (37,004) (34,605)

Profi t from operations 21 42,021 30,910

Finance expenses, net 23 (639) (777)

Profi t before taxation 41,382 30,133

Taxation 24 (6,141) (4,087)

Profi t after taxation 35,241 26,046

Minority interests 1 (447)

Net profi t attributable to shareholders 35,242 25,599

Earnings per share 25 cents cents

Basic 4.89 3.59

Diluted 4.88 3.58


C O N S O L I DAT E D P R O F I T A N D L O S S A C C O U N T for the year ended 30 June 2004


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04 S TAT E M E N T S O F C H A N G E S I N E Q U I T Y for the year ended 30 June 2004


Share Share Accumulated Translation

Group Capital premium profi ts reserve Total

$’000 $’000 $’000 $’000 $’000

Balance at 30 June 2002

– as previously reported 142,800 1,915 52,793 (998) 196,510

– impact of change in accounting policy – – 2,472 1,806 4,278

– as restated 142,800 1,915 55,265 808 200,788

Net profi t attributable to shareholders – – 25,599 – 25,599

Dividends (Note 26) – – (12,151) – (12,151)

Translation adjustment – – – (1,782) (1,782)

Balance at 30 June 2003

– as previously reported 142,800 1,915 65,709 (2,780) 207,644


– as restated 142,800 1,915 68,713 (974) 212,454

Net profi t attributable to shareholders – – 35,242 – 35,242

Dividends (Note 26) – – (14,439) – (14,439)

Issue of ordinary shares 2,519 – – – 2,519

Premium on issuance of ordinary shares – 2,004 – – 2,004

Translation adjustment – – – 89 89

Balance at 30 June 2004 145,319 3,919 89,516 (885) 237,869





















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Share Share Accumulated

Company Capital premium profi ts Total

$’000 $’000 $’000 $’000

Balance at 30 June 2002 142,800 1,915 5,148 149,863

Net profi t attributable to shareholders – – 8,185 8,185

Dividends (Note 26) – – (12,151) (12,151)

Balance at 30 June 2003 142,800 1,915 1,182 145,897

Net profi t attributable to shareholders – – 15,674 15,674

Issue of ordinary shares 2,519 – – 2,519

Premium on issuance of ordinary shares – 2,004 – 2,004

Dividends (Note 26) – – (14,439) (14,439)

Balance at 30 June 2004 145,319 3,919 2,417 151,655


S TAT E M E N T S O F C H A N G E S I N E Q U I T Y ( C O N T ' D ) for the year ended 30 June 2004


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Note 2004 2003

$’000 $’000

Cash fl ows from operating activitiesReceipts from customers 549,741 465,004Payments to suppliers and employees (528,247) (433,141)Interest paid (989) (1,764)Income tax paid (3,571) (4,328)Interest received 422 742Net cash generated from operating activities 17,356 26,513

Cash fl ows from investing activitiesPurchase of property, plant and equipment A (10,339) (16,100)Proceeds from sale of property, plant and equipment 91 155Purchase of equity shares in other investments (2,734) – Additional investments in equity interest of subsidiaries – (13,782)Proceeds from minority shareholders 64 – Net cash used in investing activities (12,918) (29,727)

Cash fl ows from fi nancing activitiesProceeds from issue of shares 4,524 –Proceeds from borrowings 9,336 11,439Repayment of borrowings (22,427) (1,776)Payment of dividends (14,439) (12,151)Repayment of fi nance lease obligations (1,393) (1,973)

Net cash used in fi nancing activities (24,399) (4,461)

Net decrease in cash and cash equivalents (19,961) (7,675)Cash and cash equivalents at beginning of fi nancial year 50,356 58,031

Cash and cash equivalents at end of fi nancial year 27 30,395 50,356

A. Payments for property, plant and equipment During the fi nancial year, the Group acquired property, plant and equipment with an aggregate cost of approximately $10,439,000 (2003 : $18,100,000) of

which $100,000 (2003 : $2,000,000) were acquired under fi nance leases. Cash payments of approximately $10,339,000 (2003 : $16,100,000) were made

to purchase the property, plant and equipment.


C O N S O L I DAT E D S TAT E M E N T O F C A S H F L O W S for the year ended 30 June 2004


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04N O T E S T O T H E F I N A N C I A L S TAT E M E N T S 30 June 2004


1. CORPORATE INFORMATION The fi nancial statements of GES International Limited for the year ended

30 June 2004 were authorised for issue in accordance with a directors’

resolution on 30 August 2004.

GES International Limited is a limited liability company which is

incorporated in the Republic of Singapore and listed on Singapore

Exchange Securities Trading Limited. The registered offi ce of GES

International Limited is located at 28 Marsiling Lane, Singapore 739152.

The principal activities of the Company are those of investment holding

and the provision of management services. The principal activities of the

subsidiaries are disclosed in Note 4 to the fi nancial statements.

The Group operates in four countries and the Group and Company

employed 1,827 and Nil (2003 : 1,455 and Nil) employees as of 30 June

2004, respectively.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The fi nancial statements have been prepared in accordance with

Singapore Financial Reporting Standards (“FRS”) as required by

the Singapore Companies Act, Cap. 50. In previous years, the

fi nancial statements were prepared in accordance with Singapore

Statements of Accounting Standard (“SAS”). The transition

from SAS to FRS did not result in any signifi cant change in

accounting policies, except as disclosed in note 2(b).

The fi nancial statements have been prepared on a historical cost

basis except as disclosed in the accounting policies below.

Except as disclosed in Note 2(b), the accounting policies have been

consistently applied and are consistent with those used in the

previous fi nancial year.

The fi nancial statements are presented in Singapore Dollars (SGD

or $).

(b) Change in accounting policy

Prior to 1 July 2003, GES (Singapore) Pte Ltd (“GES”), a material

subsidiary of the Group, treated all transactions in currencies other

than Singapore dollars (“SGD”) as transactions in foreign

currencies and recorded these transactions in SGD at rates of

exchange approximating those ruling at the transaction dates.

On 1 July 2003, GES adopted INT FRS 19, Reporting Currency

– Measurement and Presentation of Financial Statements under

FRS 21 and FRS 29, which requires all transactions in currencies

other than the measurement currency to be treated as transactions

in foreign currencies and to be recorded, on initial recognition, in

the measurement currency using the exchange rate at the

transaction date.

GES’s measurement currency is the United States Dollar. The

change in accounting policy resulted in prior period adjustments

to accumulated profi ts as at 30 June 2003 amounting to

$3,004,000 and the consolidated profi t and loss account for the

year ended 30 June 2003 amounting to $533,000.

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04 N O T E S T O T H E F I N A N C I A L S TAT E M E N T S ( C O N T ' D ) 30 June 2004


2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

(c) Principles of consolidation

The consolidated fi nancial statements comprise the fi nancial

statements of the Company and its subsidiaries, after elimination

of all material intra-group transactions and resulting unrealised

profi ts.

The fi nancial statements of subsidiaries acquired or disposed off

during the fi nancial year are included or excluded from

consolidated fi nancial statements from the effective date of

acquisition or disposal. Acquisitions of subsidiaries are accounted

for using the purchase method of accounting.

Goodwill represents the excess of the cost of acquisition over

the fair value of net assets of a subsidiary at date of acquisition

and is amortised on a straight-line basis over 20 years that benefi ts

are expected to be received. Goodwill is stated at cost less

accumulated amortisation and any impairment loss.

The fi nancial statements of subsidiaries are prepared for the same

reporting period as the parent company, using consistent

accounting policies.

(d) Subsidiaries

A subsidiary is a company in which the Group, directly or indirectly,

holds more than 50% of the issued share capital, or controls more

than half of the voting power, or controls the composition of the

board of directors.

Investments in subsidiaries are stated in the fi nancial statements of

the Company at cost less any impairment loss.

(e) Associated companies

An associate is an entity, not being a subsidiary, in which the Group

has a long-term interest of not less than 20% nor more than 50%

of the equity and in whose fi nancial and operating policy decisions

the Group exercises signifi cant infl uence.

The Group’s investments in associates are accounted for using the

equity method. The Group’s investments in associates include

goodwill (net of accumulated amortisation) on acquisition, which is

treated in accordance with the accounting policy for goodwill stated

in (c) above.

The most recent available audited fi nancial statements of the

associated companies are used by the Group in applying the equity

method. Where the dates of the audited fi nancial statements

used are not co-terminous with those of the Group, the share of

results is arrived at from the last audited fi nancial statements

available and unaudited management fi nancial statements to the

end of the accounting period. In the Company’s separate fi nancial

statements, investments in associated companies are accounted for

at cost less any impairment loss.

(f) Property, plant and equipment

Property, plant and equipment are stated at cost or valuation less

accumulated depreciation and any impairment in value.

The cost of property, plant and equipment comprises its purchase

price and any directly attributable costs of bringing the asset to its

working condition for its intended use, any trade discounts and

rebates are deducted in arriving at the purchase price. Expenditure

incurred after the property, plant and equipment have been put

into operation, such as repairs and maintenance and overhaul costs,

is normally charged to the profi t and loss account in the period in

which the costs are incurred.

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04N O T E S T O T H E F I N A N C I A L S TAT E M E N T S ( C O N T ' D ) 30 June 2004



(f) Property, plant and equipment (cont'd)

Depreciation is provided on all property, plant and equipment at

the following rates to write off the cost/valuation on a straight line

basis over their estimated useful lives.

Leasehold land and buildings Over remaining lease terms

of 25 – 60 years

Leasehold improvements 2 – 10 years

Machinery, plant and equipment 2 – 10 years

Offi ce equipment and fi ttings 2 – 10 years

No depreciation is provided for freehold land and construction-in-

progress.

Fully depreciated property, plant and equipment are retained in

the fi nancial statements until they are no longer in use and no

further charge for depreciation is made in respect of these assets.

(g) Other investments

(i) Quoted investments

Quoted investments are stated at the lower of cost and

market value, determined on an individual basis.

(ii) Unquoted investments

Unquoted investments held for long-term purposes are stated

at cost. Provision for impairment is made when there is

a decline, other than temporary, in the value of the unquoted

investments.

(iii) Club memberships

Investments in club membership are stated at cost. Provision

for impairment is made when there is a decline, other than

temporary, in the value of the club membership.

(h) Stocks

Stocks are stated at the lower of cost and net realisable value. Cost

comprises direct materials determined on a weighted average basis

and in the case of work-in-progress and fi nished products, includes

direct labour and attributable production overheads based on

normal levels of activities.

Net realisable value represents the estimated selling price less

anticipated cost of disposal.

Provision is made for deteriorated, damaged, obsolete and slow-

moving stocks.

(i) Trade and other debtors

Trade and other debtors, which generally have 30 – 90 day terms,

are recognised and carried at original invoiced amount less an

allowance for any uncollectible amounts. An estimate for doubtful

debts is made when collection of the full amount is no longer

probable. Bad debts are written off as incurred.

Receivables from associated companies and related parties

are recognised and carried at cost less an allowance for any

uncollectible amounts.

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(j) Cash and cash equivalents

Cash and cash equivalents are defi ned as cash on hand and at

bank, demand deposits and short-term, highly liquid investments

readily convertible to known amounts of cash and subject to

insignifi cant risk of changes in values.

Cash on hand and in banks and short-term deposits which are held

to maturity are carried at cost.

For the purposes of the cash fl ows statement, cash and cash

equivalents consist of cash on hand and deposits in banks, net of

outstanding bank overdrafts which are repayable upon demand

and which form an integral part of the Group’s cash management.

(k) Related parties

A related party is defi ned as a company, not being a subsidiary or

an associated company, in which the directors of the Company

or of its subsidiaries have an equity interest or exercise signifi cant

infl uence.

(l) Impairment of assets

Property, plant and equipment, intangible assets and long-term

investments 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 profi t and loss account for items of assets carried

at cost. The recoverable amount is the higher of an asset’s net

selling price and value in use.

The net selling price is the amount obtainable from the sale of an

asset in an arm’s length transaction. Value in use is the present

value of estimated future cash fl ows 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 profi t and loss account.

(m) Trade and other creditors

Liabilities for trade and other creditors, which are normally settled

on 30 – 90 day terms, are carried at cost which is the fair value of

the consideration to be paid in the future for goods and services

received, whether or not billed to the Group.

Payables to associated companies and related parties are carried at

cost.

(n) Leases

Finance leases, which effectively transfer to the Group substantially

all the risks and benefi ts incidental to ownership of the lease item,

are capitalised at the present value of the minimum lease payments

at the inception of the lease term and disclosed as leased property,

plant and equipment. Lease payments are apportioned between

the fi nance charges and reduction of the lease liability so as to

achieve a constant rate of interest on the remaining balance of the

liability. Finance charges are charged directly to the profi t and loss

account.

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S ( C O N T ' D ) 30 June 2004


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(n) Leases (cont'd)

Leases where the lessor effectively retains substantially all the risks

and benefi ts of ownership of the leased assets are classifi ed as

operating leases. Operating lease payments are recognised as an

expense in the profi t and loss account on a straight-line basis over

the lease term.

(o) Loans and borrowings

All loans and borrowings are recognised at cost, being the fair

value of the consideration received and including transaction

charges associated with the loans and borrowings.

Borrowing costs are generally expensed as incurred. Borrowing

costs are capitalised if they are directly attributable to the

acquisition, construction or production of a qualifying asset.

Capitalisation of borrowing costs commences when the activities

to prepare the asset are in progress and the expenditures and

borrowing costs are being incurred. Borrowing costs are capitalised

until the assets are ready for their intended use. If the resulting

carrying amount of the asset exceeds its recoverable amount, an

impairment loss is recorded.

(p) Revenue recognition

The Group

(i) Revenue from sale of goods are recognised net of goods and

services tax and discounts when delivery has taken place and

transfer of risks and rewards has been completed.

(ii) Interest income is recognised on an accrual basis.

The Company

Dividend income is recognised when the shareholder’s right to

receive payment is established.

(q) Research and development cost

Research and development costs are expensed as incurred, except

for development costs which relate to the design and testing

of new or improved materials, products or processes which are

recognised as an asset to the extent that it is expected that such

assets will generate future economic benefi ts.

(r) Deferred taxation

Income tax expense is determined on the basis of tax effect

accounting, using the liability method, and is applied to all

temporary differences at the balance sheet date between the

carrying amounts of assets and liabilities and the amounts used for

tax purposes.

Deferred tax liabilities are recognised for all taxable temporary

differences associated with investments in subsidiaries, associates

and interests in joint ventures, 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.

Deferred tax assets are recognised for all deductible temporary

differences, carry-forward of unused tax assets and unused tax

losses, to the extent that it is probable that taxable profi t will be

available against which the deductible temporary differences,

carry-forward of unused tax assets and unused tax losses can be

utilised.

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(r) Deferred taxation (cont'd)

The carrying amount of a deferred tax asset is reviewed at each

balance sheet date and reduced to the extent that is no longer

probable that suffi cient taxable profi t will be available to allow the

benefi t of part or all of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that

are expected to apply to the period when the asset is realised or

the liability is settled, based on tax rates (and tax laws) that have

been enacted or substantively enacted at the balance sheet date.

(s) Foreign currency translation

Transactions in foreign currencies are recorded in the respective

measurement currencies at exchange rates approximating those

ruling at the transaction dates. Foreign currency monetary assets

and liabilities are translated into the respective measurement

currencies using the exchange rates ruling at balance sheet

date. Non-monetary assets and liabilities are measured using the

exchange rates ruling at the transaction dates or, in the case of

items carried at fair value, the exchange rates that existed when

the values were determined. All resultant exchange differences are

recognised in the profi t and loss account.

Assets and liabilities of foreign entities are translated into SGD

equivalents at exchange rates ruling at balance sheet date.

Revenues and expenses are translated at average exchange rates

for the year, which approximates the exchange rates at the dates

of the transactions. All resultant exchange differences are taken

directly to equity. On disposal of a foreign entity, accumulated

exchange differences are recognised in the profi t and loss account

as a component of the gain or loss on disposal.

(t) Employee benefi ts

Employee Share Option Scheme

The Company has in place an Employees’ Share Option Scheme

(the “Scheme”) for the granting of share options to eligible

employees of the Group to subscribe for ordinary shares in the

Company under the Scheme. When the options are exercised,

the nominal value of the shares subscribed for is credited to the

share capital account and the balance of the proceeds, net of any

transaction costs, is credited to the share premium account.

Defi ned contribution plan

The Group participates in the national pension schemes as

defi ned by the laws of the countries in which it has operations.

In particular, the Singapore companies in the group make

contributions to the Central Provident Fund scheme in Singapore,

a defi ned contribution pension scheme. Contributions to national

pension schemes are recognised as an expense in the period in

which the related service is performed.

Employee entitlements

Provision for unconsumed annual leave are recognised and are

measured as the amount unpaid at the balance sheet date at

current pay rates in respect of employees’ services up to that date.



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3. PROPERTY, PLANT AND EQUIPMENT At valuation At cost

Leasehold Leasehold Machinery Offi ce

land and Leasehold Freehold improve- plant and equipment Construction

Group buildings building land ments equipment and fi ttings in progress Total

Cost/valuation $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

As at 1.7.2003 34,414 7,556 158 4,624 51,602 18,550 11,212 128,116

Impact of change in accounting policy 7,689 – 35 196 (30) (292) (3) 7,595

Additions – 604 – 198 7,457 2,180 – 10,439

Disposals – – – – (957) (53) – (1,010)

Write-offs – – – – (3,895) (1,300) (204) (5,399)

Reclassifi cation of assets – 11,002 – – 42 (42) (11,002) –

Translation difference (307) (17) (1) (44) (469) (125) (3) (966)

As at 30.6.2004 41,796 19,145 192 4,974 53,750 18,918 – 138,775

Accumulated depreciation

As at 1.7.2003 9,224 991 – 2,436 37,051 14,063 – 63,765

Impact of change in accounting policy 2,061 – – 140 23 (235) – 1,989

Charge for the year 1,682 345 – 484 4,205 2,400 – 9,116

Disposals – – – – (876) (51) – (927)

Write-offs – – – – (3,691) (1,486) – (5,177)

Reclassifi cation of assets – – – (29) 14 15 – –

Translation difference (92) 15 – (30) (355) (105) – (567)

As at 30.6.2004 12,875 1,351 – 3,001 36,371 14,601 – 68,199

Charge for 2003 1,429 114 – 378 4,599 2,095 – 8,615

Net book value

As at 30.6.2004 28,921 17,794 192 1,973 17,379 4,317 – 70,576

As at 30.6.2003 30,818 6,565 193 2,244 14,498 4,430 11,209 69,957

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3. PROPERTY, PLANT AND EQUIPMENT (CONT’D)If the revalued leasehold land and buildings have been included in the fi nancial statements at cost less accumulated depreciation, the net book value would

have been approximately $16,963,000 (2003 : $18,083,000):

Leasehold land and buildings at valuation consist of the following:

Leasehold land and building/ Purpose/ Approximate land area

Location Valuation date (in square metres) Tenure of lease

Held by a subsidiaryNo 28 Marsiling Lane Offi ce and factory building 12,198 30 years from 1 December 1992

Singapore 739152 August 1996

(“Marsiling”)

No 14 Sungei Kadut Avenue Offi ce and factory building 6,442 37 years and 9 months from

Singapore 729650 January 1996 1 March 1981

(“Sungei Kadut”)

The Marsiling and Sungei Kadut properties are stated at valuation based on an one-off valuation carried out in 1996 on open market basis by fi rms of

professional valuers, DBS Property Services Pte Ltd and Chesterton International Property Consultants Pte Ltd respectively. There was no further revaluation of

these leasehold land and buildings since 1996.

Net book values of machinery, plant and equipment under fi nance leases were $2,978,000 (2003 : $3,874,000).

Interest capitalised under construction-in-progress amounted to $111,000 (2003 : $329,000).



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4. INVESTMENT IN SUBSIDIARIES Company

2004 2003 $’000 $’000

Unquoted equity shares, at cost 133,330 56,002

Details of subsidiaries are as follows:

Country of Effective equity

incorporation and interest held Cost of

Name Principal activities place of business by the Group investment

2004 2003 2004 2003

% % $’000 $’000

Held by the CompanyGES (Singapore) Pte Ltd Provision of manufacturing services for Original Singapore 100 100 56,000 56,000

Design and Manufacture and Original

Equipment and Manufacture products

Eltech Electronics Limited Investment holding and provision of Singapore 100 100 77,330 –

administrative and technical support services to

a subsidiary

Hollington International Limited Liquidated during the year British Virgin Islands – 100 – 2

133,330 56,002

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4. INVESTMENT IN SUBSIDIARIES (CONT'D)




2004 2003 2004 2003

% % $’000 $’000

Held by GES (Singapore) Pte LtdThe Networking Company Pte Ltd Dormant Singapore 80 80 – –

Evictronics Engineering Pte Ltd Dormant Singapore 100 100 – –

Spectrum Tech (Singapore) Pte Ltd Dormant Singapore 100 100 – –

Digiland America, Inc. 1 Dormant The United States 100 100 – –

of America

Digiland Taiwan Co., Ltd Under liquidation Taiwan, Republic 100 100 – –

of China

GES (Hong Kong) Limited 3 Dormant Hong Kong 80 80 – –

Shanghai GES Information Provision of manufacturing services for The People’s 100 100 – –

Technology Co., Ltd. 2 Original Design and Manufacture and Republic of China

Original Equipment and Manufacture

products

SME Investment Pte Ltd Investment holding Singapore 97.5 100 – –



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4. INVESTMENT IN SUBSIDIARIES (CONT'D)




2004 2003 2004 2003

% % $’000 $’000

Held by Eltech Electronics Limited Eltech Electronics Inc 2 Provision of manufacturing services to The United States 100 100 – –

electronics equipment manufacturers of America

Eltech Electronics Technology Provision of manufacturing services to Malaysia 100 100 – –

(Malaysia) Sdn Bhd 2 electronics equipment manufacturers

Held by GES (Hong Kong) LimitedChenzhou Digiland Electronics Dormant The People’s 80 80 – –

Co., Ltd. 3 Republic of China

Held by Eltech Electronics Technology (Malaysia) Sdn BhdEltech Electronics Technology Dormant Singapore 100 100 – –

(Singapore) Pte Ltd

1 Not required to be audited by laws in country of incorporation.2 Audited by member fi rms of Ernst & Young, International.3 Audited by other Certifi ed Public Accountants fi rms. These subsidiaries are not signifi cant as defi ned under Clause 718 of the SGX Listing Manual.

All other subsidiaries are audited by Ernst & Young, Singapore.

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5. INVESTMENT IN ASSOCIATED COMPANIES

Group

2004 2003

$’000 $’000

Unquoted equity shares, at cost – 902

GES Technologies Limited ceased to be considered as an associated company as the Group no longer has signifi cant infl uence in the company. Accordingly,

the carrying value of this investment has been reclassifi ed under other investment.


incorporation and interest held

Name Principal activities place of business by the Group

2004 2003

% %

Held by GES (Singapore) Pte LtdGES Technologies Limited 1 Import, export, assembly and manufacturing

of and dealing in all kinds of computers and

related computer support systems India – 32

Held by Eltech Electronics LimitedEAB Corporation Pte Ltd Liquidated during the year Singapore – 28.68

1 Audited by other Certifi ed Public Accountants fi rm. This associated company is not signifi cant as defi ned under Clause 718 of the SGX Listing Manual.



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6. OTHER INVESTMENTS

Group Company

2004 2003 2004 2003

$’000 $’000 $’000 $’000

(a) Non-current Quoted equity shares, at cost 11 11 11 11

Unquoted equity shares, at cost 4,340 885 – –

Club membership 314 224 – –

4,665 1,120 11 11

Provision for impairment in value of investments:

Unquoted equity shares in corporations (824) (824) – –

Club membership (131) (48) – –

(955) (872) – –

3,710 248 11 11

Market value of quoted equity shares 4 8 4 8

Analysis of provision for impairment in value of investments:

At beginning of fi nancial year 872 872 – –

Provision for the fi nancial year 83 – – –

At end of fi nancial year 955 872 – –

(b) Current Quoted bonds, at cost 5,057 5,057 – –

Amortisation of premium on bonds (8) (8) – –

5,049 5,049 – –

Market value of quoted bonds 5,311 5,666 – –

The weighted average effective interest rate of the quoted bonds as at balance sheet date is 4.22% (2003 : 3.3%) per annum.

5,666

(824)

(48)

5,666

(824)

(48)

–

–

–

–

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7. GOODWILL Group 2004 2003

$’000 $’000

At beginning of fi nancial year 16,645 14,644

Acquired through additional investments in subsidiaries – 2,001

16,645 16,645

Less: Accumulated amortisation (4,893) (4,080)

At end of fi nancial year 11,752 12,565

Analysis of accumulated amortisation:


Amortisation for the fi nancial year 813 824


8. STOCKS Group 2004 2003

$’000 $’000

Finished goods and components, at cost 96,854 77,443

Less: Provision for stock obsolescence (3,814) (9,443)

93,040 68,000

Work-in-progress 18,900 17,114

Goods-in-transit 10,854 514

122,794 85,628

Finished goods and components, at net realisable value – 4,030

122,794 89,658



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9. TRADE DEBTORS Group

2004 2003 $’000 $’000

Trade debtors 126,827 86,190

Less: Provision for doubtful debts (2,575) (4,624)

124,252 81,566

10. OTHER DEBTORS, DEPOSITS AND PREPAYMENTSGroup Company

2004 2003 2004 2003

$’000 $’000 $’000 $’000

Sundry debtors 6,100 4,534 – –

Sundry deposits 208 240 – –

Prepayments 1,137 944 26 24

Interest receivable 60 60 – –

7,505 5,778 26 24

11. DUE FROM SUBSIDIARIES These amounts are unsecured, interest-free and are repayable on demand.

12. OTHER CREDITORS AND ACCRUALSGroup Company

2004 2003 2004 2003

$’000 $’000 $’000 $’000

Other creditors 15,703 7,989 – –

Accrued operating expenses 12,271 12,927 583 639

27,974 20,916 583 639

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13. DUE TO RELATED PARTIES (NON-TRADE) These amounts are unsecured, interest-free and are repayable on demand.

14. LONG-TERM BANK LOANS Group

2004 2003 $’000 $’000

Term loan I repayable by eleven equal quarterly instalments of US$190,000 each and a fi nal instalment of

US$110,000 commencing 26 December 2001 – 1,855

Term loan II repayable by twelve quarterly instalments commencing on 21 March 2004 or 1 year after the fi nal

drawdown date, whichever is earlier 6,573 6,675

6,573 8,530

Less: Repayable within twelve months (6,573) (1,330)

Repayable after twelve months – 7,200

Term loan I was unsecured and interest was payable at a fi xed rate of 5.36% (2003 : 5.36%) per annum for the fi rst two years and the loan will be re-priced

at the end of the second year. The loan was fully repaid during the fi nancial year.

Term loan II is unsecured and supported by a corporate guarantee by GES (Singapore) Pte Ltd and the Company. Interest on term loan II is payable at 0.5%

(2003 : 0.5%) per annum above the prevailing lending rate for Renminbi. The Group has provided notice to repay the outstanding loan amount within the

next twelve months, and has accordingly included the entire loan amount under current liabilities.



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15. FINANCE LEASE LIABILITIESThe Group acquired certain machinery, plant and equipment through fi nance leases.

Future minimum lease payments together with the present value of the net minimum lease payments are as follows:

2004 2003

Minimum lease Present value Minimum lease Present value

payments Interest of payments payments Interest of payments

$'000 $'000 $'000 $'000 $'000 $'000

1 year to 5 years 1,566 (176) 1,390 2,618 (291) 2,327

More than 5 years 62 (2) 60 138 (11) 127

1,628 (178) 1,450 2,756 (302) 2,454

Not later than 1 year 1,193 (105) 1,088 1,513 (136) 1,377

2,821 (283) 2,538 4,269 (438) 3,831

Finance lease terms range from 2 to 7 years. Finance lease terms do not contain restrictions concerning dividends, additional debt or further hire purchase.

The effective interest rate ranges from 3.09% to 7.03% (2003 : 3.30% to 7.03%) per annum.

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16. SHORT-TERM BANK LOANS, UNSECUREDGroup Company

2004 2003 2004 2003

$’000 $’000 $’000 $’000

Unsecured term loan I – 6,033 – – Unsecured term loan II – 5,321 – – Unsecured term loan III – 6,240 – 6,240Unsecured term loan IV 6,460 – – –

6,460 17,594 – 6,240

Unsecured term loan I bore interest ranging from 1% to 1.5% (2003 : 1.0% to 1.5%) per annum above cost of fund of the lending banks.

Unsecured term loan II bore interest of between 1.25% to 1.5% (2003 : 1.25% to 1.5%) per annum above one or three months US Dollars Singapore InterBank Offered Rates or cost of fund of the lending bank.

Unsecured term loan III bore interest at 1.785% (2003 : 1.79%) per annum.

The unsecured term loans I, II and III were fully repaid during the fi nancial year.

Unsecured term loan IV bears interest of between 1.25% to 1.8% per annum above three or six months US Dollars London InterBank offered rates.

17. SHARE CAPITALGroup and Company

2004 2003

$’000 $’000

Authorised: Balance at beginning of fi nancial year 1,500,000,000 ordinary shares of $0.20 each 300,000 300,000

Issued and fully paid: Balance at beginning of fi nancial year 714,001,597 ordinary shares of $0.20 each 142,800 142,800

Issue of 12,593,860 ordinary shares of $0.20 each upon exercise of share options 2,519 –

Balance at end of fi nancial year 726,595,457 (2003 : 714,001,597) ordinary shares of $0.20 each 145,319 142,800



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17. SHARE CAPITAL (CONT’D)

Share options

The GES International Limited Employees’ Share Option Scheme (“the Scheme”) enables directors and certain classes of employees of the Company and its

subsidiaries to subscribe for ordinary shares of $0.20 each in the capital of the Company. The additional ordinary shares to be allotted and issued pursuant

to the Scheme shall not exceed 15% of the issued share capital of the Company.

Other information regarding the Scheme is set out below:

(i) The exercise price of the option can be set at a discount to the market price not exceeding 20% of the market price at the time of grant; and

(ii) The shares under option is to be exercised in whole or in part, provided that an option may be exercised in part only in respect of 1,000 shares or any

multiple thereof on the payment of the exercise price.

Information with respect to the number of options granted under the Scheme are as follows:

No. of Weighted average No. of Weighted average

options as exercise price as at options as at exercise price as at

at 30 June 2004 30 June 2004 30 June 2003 30 June 2003

’000 $ ’000 $

Outstanding at beginning of fi nancial year 44,487 0.34 35,649 0.37

Granted 7,274 0.56 13,105 0.28

Exercised (12,594) 0.36 – –

Lapsed/cancelled (1,828) 0.38 (4,267) 0.35

Outstanding at end of fi nancial year 37,339 44,487



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17. SHARE CAPITAL (CONT’D) The following table summarises information about options outstanding and exercisable as at 30 June 2004 to subscribe for ordinary shares of $0.20 each in

the Company:


Balance as at



4.4.2001 5.4.2003 4.4.2011 0.35 8,600,140 * 8,149,160 29,840 421,140

4.4.2001 5.4.2004 4.4.2011 0.35 3,486,120 1,226,820 72,960 2,186,340

4.4.2001 5.4.2005 4.4.2011 0.35 2,374,120 – 77,840 2,296,280

4.4.2001 5.4.2006 4.4.2011 0.35 2,374,120 – 77,840 2,296,280

16,834,500 9,375,980 258,480 7,200,040

4.4.2001 5.4.2003 4.4.2006 0.35 250,200 – – 250,200

4.4.2001 5.4.2004 4.4.2006 0.35 125,100 – – 125,100

4.4.2001 5.4.2005 4.4.2006 0.35 125,100 – – 125,100

500,400 – – 500,400

2.5.2002 3.5.2004 2.5.2012 0.39 7,051,920 3,217,880 412,000 3,422,040

2.5.2002 3.5.2005 2.5.2012 0.39 2,513,960 – 312,000 2,201,960

2.5.2002 3.5.2006 2.5.2012 0.39 2,451,960 – 312,000 2,139,960

2.5.2002 3.5.2007 2.5.2012 0.39 2,451,960 – 312,000 2,139,960

14,469,800 3,217,880 1,348,000 9,903,920

11.11.2002 12.11.2004 11.11.2012 0.28 3,292,960 – 58,800 3,234,160

11.11.2002 12.11.2005 11.11.2012 0.28 1,646,480 – 29,400 1,617,080

11.11.2002 12.11.2006 11.11.2012 0.28 1,646,480 – 29,400 1,617,080

11.11.2002 12.11.2007 11.11.2012 0.28 1,646,480 – 29,400 1,617,080

8,232,400 – 147,000 8,085,400



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17. SHARE CAPITAL (CONT’D)


Balance as at



14.4.2003 15.4.2005 14.4.2013 0.27 1,780,000 – 10,000 1,770,000

14.4.2003 15.4.2006 14.4.2013 0.27 890,000 – 5,000 885,000

14.4.2003 15.4.2007 14.4.2013 0.27 890,000 – 5,000 885,000

14.4.2003 15.4.2008 14.4.2013 0.27 890,000 – 5,000 885,000

4,450,000 – 25,000 4,425,000

3.3.2004 4.3.2006 3.3.2014 0.56 2,909,600 – 20,000 2,889,600

3.3.2004 4.3.2007 3.3.2014 0.56 1,454,800 – 10,000 1,444,800

3.3.2004 4.3.2008 3.3.2014 0.56 1,454,800 – 10,000 1,444,800

3.3.2004 4.3.2009 3.3.2014 0.56 1,454,800 – 10,000 1,444,800

7,274,000 – 50,000 7,224,000

51,761,100 12,593,860 1,828,480 37,338,760

* Included the remaining 20% of the options granted to the directors and employees of the Digiland Group in the previous fi nancial year. As at 30 June

2004, nil (2003 : 1,627,900) options were outstanding:


Exercise Balance as at Options lapsed/ Options Balance as at

Date of grant From To price($) 1 July 2003 cancelled exercised 30 June 2004

4.4.2001 5.4.2003 4.10.2003 0.35 1,627,900 29,400 1,598,500 –



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17. SHARE CAPITAL (CONT’D) Details of the option to subscribe for ordinary shares of $0.20 each in the Company granted to the directors of the Company pursuant to the scheme are as

follows:

Aggregate options

granted since Aggregate options

Exercise price for commencement exercised since Aggregate options

Options granted options granted of Scheme to end commencement outstanding

during fi nancial during fi nancial of fi nancial year of Scheme to end at end of fi nancial

Director of the Company year under review year under review under review of fi nancial year Options lapsed year under review

Yeong Bou Wai – – 3,336,000 2,224,000 – 1,112,000

Tan Geh – – 2,500,000 – – 2,500,000

Ong Seow Yong – – 166,800 – – 166,800

18. SHARE PREMIUM Group and Company

2004 2003 $’000 $’000


Premium on issue of 9,375,980 new ordinary shares of $0.20 each at $0.35 each upon exercise of share options 1,406 –

Premium on issue of 3,217,880 new ordinary shares of $0.20 each at $0.39 each upon exercise of share options 611 –

3,932 1,915

Less: Share issue expenses (13) –


The application of share premium amount is governed by Section 69-69F of the Companies Act, Chapter 50. The balance is not available for distribution of

dividends except in the form of shares.



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19. TURNOVERGroup

Turnover represents invoiced trading and manufacturing sales, net of discounts and returns.

Company

Turnover represents the gross dividends declared from its subsidiaries.

20. OTHER INCOME Group

2004 2003 $’000 $’000

Gain on disposal of property, plant and equipment 44 141

Prompt payment discounts 234 13

Rental income 198 –

Sundry income 197 1,320

673 1,474



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21. PROFIT FROM OPERATIONS This is determined after charging/(crediting) the following:

Group 2004 2003 $’000 $’000

Amortisation of premium on bonds 8 8

Amortisation of goodwill 813 824

Bad debts written off:

– trade debtors 28 –

– associated company – 53

Bad debts recovered – (75)

Depreciation of property, plant and equipment 9,116 8,615

Directors’ fees 290 373

Directors of the Company

– emoluments 2,945 2,438

– CPF and other provident funds 97 106

Other directors of subsidiary companies

– emoluments 630 1,132

– CPF and other provident funds 44 36

Gain on disposal of quoted bonds – (123)

Non-audit fees paid to auditors of the Company 5 60

Property, plant and equipment written-off 15 3

Provision for doubtful debts:

– trade – 1,322

– associated companies – 3,822

Provision for doubtful debts written-back (1,665) –

Provision for stock obsolescence 1,637 1,985

Provision for stock obsolescence written-back (25) –

Rental expense 1,068 1,122

Research and development expenses 7,852 968

Stocks written-down to net realisable value 2,282 7,175

Stocks written-off 791 –

Waiver of debts 13 –



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22. PERSONNEL EXPENSES Group

2004 2003 $’000 $’000

Salaries and wages * 36,540 34,880

Central Provident Fund and other provident funds * 2,322 1,846

Other related expenses 3,667 2,719

42,529 39,445

* Includes directors’ remuneration and CPF contributions of the Group of $3,716,000 (2003 : $3,712,000).

23. FINANCE (EXPENSES)/INCOME, NET Group

2004 2003 $’000 $’000

Interest expenses

– bank term loans (839) (679)

– fi nance leases (114) (176)

– bank overdraft (11) (37)

– bills payable (24) (500)

– others – (371)

Foreign exchange gain, net 86 472

Bank charges (159) (228)

Interest income

– quoted bonds 213 263

– fi xed deposits 178 342

– others 31 137

(639) (777)



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24. TAXATION Group

2004 2003 $’000 $’000

Current taxation

– Singapore 294 146

– Foreign 4,754 1,966

– Underprovision in respect of prior year 1,005 694

Deferred taxation

– Current year 30 1,226

– Under/(over) provision in respect of prior year 38 –

Withholding taxation 20 55

6,141 4,087

A reconciliation of the statutory tax rate to the Group effective tax rate applicable to profi t before taxation was as follows:

Domestic statutory tax rate 20.0 22.0

Tax effect of:

Expenses not deductible for tax purposes 0.1 2.7

Investment allowance utilised (0.1) (0.8)

Exemption (12.1) (12.9)

Difference in tax rates of overseas subsidiary companies 3.7 3.4

Under/(over) provision in prior years 2.5 2.3

Others 0.6 0.7

Utilisation of deferred tax assets previously not recognised 0.1 –

Utilisation of tax losses previously not recognised – (3.6)

Effective tax rate 14.8 13.8



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24. TAXATION (CONT’D)

The Company

There is no tax charge in respect of the profi t for the fi nancial year as the Company received all its dividend income from its subsidiaries which is tax exempt.

The Group

GES (Singapore) Pte Ltd was granted “pioneer status” under the Economic Expansion Incentives (Relief from Income Tax) Act 1967 from 1 June 1991 to

31 May 2001. This pioneer status was further extended to 31 May 2006. Accordingly, all profi ts derived from the approved pioneer activities during the

pioneer period are tax exempt, subject to agreement by the Singapore tax authorities and compliance with certain provisions of the Economic Expansion

Incentives (Relief from Income Tax) Act 1967.

As at 30 June 2004, certain subsidiaries have unutilised tax losses of approximately $1,078,000 (2003 : $1,078,000) which are available to be carried forward

for offset against future taxable profi ts subject to agreement with the tax authorities and compliance with certain provisions of the tax legislation of the

respective countries in which the subsidiaries operate.

Group 2004 2003

$’000 $’000

Deferred tax liabilities:

Excess of net book value over tax written down value of property, plant and equipment 203 202

Others 4 5

207 207

The deferred tax assets arise as a result of:

Excess of net book value over tax written down value of property, plant and equipment (68) (500)

Sundry provisions 727 1,317

Other temporary differences 98 21

757 838



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25. EARNINGS PER SHARE

Earnings per share is calculated by dividing the net profi t attributable to shareholders of $35,242,000 (2003 : $25,599,000) by the weighted average number

of shares outstanding during the year.

The calculations of earnings per share are based on number of shares as shown below.

Number of shares 2004 2003

Weighted average number of ordinary shares in issue during the year 720,552,397 714,001,597

Effects of dilutive securities:

– share options 1,819,519 930,737

Adjusted weighted average number of shares applicable to diluted earnings per share 722,371,916 714,932,334

26. DIVIDENDSGroup and company

2004 2003 $’000 $’000

Final tax exempt dividend paid in respect of the previous fi nancial year of 5% ($0.010) per ordinary share

(2003 : 3.5% ($0.007) 7,219 5,002

Interim tax exempt dividend paid in respect of the fi nancial year of 5% ($0.010) per ordinary share

(2003 : 5% ($0.010) 7,220 7,149

14,439 12,151

Final tax exempt dividend proposed in respect of the fi nancial year of 7.5% ($0.015) per ordinary share

(2003 : 5% ($0.010) 10,899 7,140



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04

27. CASH AND CASH EQUIVALENTS Group

2004 2003 $’000 $’000

Cash and bank balances 14,939 26,611

Fixed deposits 15,456 27,652

Bank overdrafts (unsecured) – (3,907)

30,395 50,356

Fixed deposits bear interest at rates ranging from 0.80% to 1.25% (2003 : 0.2% to 1.7%) per annum with maturities within one year.

Bank overdrafts bore interest at rates ranging from 4% to 5% per annum with maturities within one year, in the last fi nancial year.

28. RELATED PARTY DISCLOSURES During the fi nancial year, the Group entered into transactions with related parties, on terms agreed between the parties, as shown below:

Group 2004 2003 $’000 $’000

Sales to related parties 761 410

Services from related parties 1,568 1,692

Purchases from related parties 785 1,957

Rental income from related party 198 –

Other related party disclosures are included in Note 13.



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29. OPERATING LEASE COMMITMENTS The Group has entered into certain operating lease agreements for offi ce and factory buildings.

As at 30 June 2004, the Group has aggregate minimum lease commitments as follows:

Group 2004 2003

$’000 $’000

Within one year 1,081 1,058

Between 1 and 5 years 4,461 4,287

After 5 years 3,293 4,529

8,835 9,874

30. FUTURE CAPITAL EXPENDITURECapital expenditure not provided for in the fi nancial statements are as follows:

Group 2004 2003

$’000 $’000

Approved and contracted for 3,290 1,204

Approved but not contracted for 15,150 11,268

18,440 12,472

31. FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

The main risks faced by the Group are foreign currency, interest rate and credit risks that arise from normal operations.

Foreign currency risk

Foreign currency risk arises from a change in foreign currency exchange rate, which may have an adverse effect on the Group. The Group operates within the

Asia Pacifi c region, and America and companies within the Group maintain their books and records in their respective measurement currencies.



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31. FINANCIAL INSTRUMENTS (CONT’D)

Foreign currency risk (cont’d)The Group is exposed to the volatility in the foreign currency cash fl ows from sales and purchases denominated in foreign currencies, primarily in the United States Dollar. The Group relies on hedging as a risk management tool.

The Group’s subsidiaries use forward foreign exchange contracts with settlement periods within one to three months to manage foreign currency exposure arising from normal trading activities. The outstanding forward exchange contracts are disclosed below.

Interest rate riskInterest rate risk is the risk that changes in interest rates will have an adverse fi nancial effect on the Group’s fi nancial conditions and/or results. The primary source of the Group’s interest rate risk is its borrowings from banks and other fi nancial institutions in Singapore.

The Group does not hedge interest rate risks. The Group ensures that it obtains borrowings at competitive interest rates under the most favourable terms and conditions.

Credit riskCredit risk is the risk that companies and other parties will be unable to meet their obligations to the Group resulting in a fi nancial loss to the Group. It is the Group’s policy to enter into transactions with a diversity of credit-worthy counterparties to mitigate any signifi cant concentration of credit risk. The Group ensures that sales of products and services are made to customers with appropriate credit history and have internal mechanisms to monitor the granting of credit and management of credit exposures. The Group has made provisions for potential losses on credits extended. The Group’s maximum exposure to credit risk in the event these counterparties fail to perform their obligations in relation to each class of recognised fi nancial asset is the carrying amounts of those assets as indicated in the balance sheet.

As at 30 June 2004, eight customers constituted 85% (2003 : 66%) of the Group’s trade debtors.

Fair value of fi nancial assets and fi nancial liabilitiesThe aggregate net fair values of fi nancial liabilities of the Group, which are not carried at fair value in the balance sheet, are presented in the following table as of 30 June 2004. Carrying amount Fair value Carrying amount Fair value

2004 2004 2003 2003

$’000 $’000 $’000 $’000

Finance lease liabilities 2,538 2,620 3,831 3,874

Non current long-term bank loans – – 8,530 8,568



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31. FINANCIAL INSTRUMENTS (CONT’D)

Fair value of fi nancial assets and fi nancial liabilities (cont’d) The carrying amounts of trade and other receivables, cash and cash equivalents and trade and other payables and short-term bank borrowings approximate their fair values due to their short-term nature. Information on the fair values of quoted investments is disclosed in Notes 6 to the fi nancial statements.

In the opinion of the directors, it is not practicable to determine the fair values of unquoted equity investments because of the lack of quoted market prices and that the assumptions used in valuation models to value these investments cannot be reasonably determined.

As at 30 June 2004, the Group had outstanding forward foreign exchange contracts as follows: Group

2004 2003

$’000 $’000

Notional amount Within one year 15,578 52,066Net fair value gain/(loss) on forward foreign exchange contracts 17 (564)

32. DIRECTORS’ REMUNERATION AND FEESNumber of directors in remuneration and fees bands are as follows: Executive Non-executive

directors directors Total

2004

$500,000 and above 3 – 3$250,000 to $499,999 – – – Below $250,000 – 3 3Total 3 3 6

2003

$500,000 and above 3 – 3$250,000 to $499,999 – – – Below $250,000 – 3 3

Total 3 3 6



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33. SEGMENT INFORMATION

(a) Geographical segments The Group operates in four principal geographical locations, namely Singapore, Malaysia, Asia (including China but excluding Singapore and Malaysia) and USA. The information presented below is based on the geographical location in which the assets are located in.

Asia (including China

excluding Singapore

Singapore Malaysia and Malaysia) USA Eliminations Group

2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

External sales 359,597 268,290 148,948 143,028 279 351 33,001 35,835 – – 541,825 447,504

Intersegment sales 8,601 136 16,314 1,550 12,091 3 – 26 (37,006 ) (1,715 ) – –

Investment income 16,500 9,000 – – – – – – (16,500 ) (9,000 ) – –

Total revenue 384,698 277,426 165,262 144,578 12,370 354 33,001 35,861 (53,506 ) (10,715 ) 541,825 447,504

Segment results 27,515 17,340 14,432 13,658 (1,736 ) (1,804 ) 1,810 1,716 – – 42,021 30,910

Unallocated corporate

expenses – –

Profi t from operations 42,021 30,910

Financial expenses, net (639 ) (777 )

Taxation (6,141 ) (4,087 )

Profi t after operations 35,241 26,046

Minority interest 1 (447 )

Profi t from ordinary activities 35,242 25,599

Segment assets 249,044 214,089 72,085 70,185 30,677 13,747 24,227 22,027 – – 376,033 320,048

Unallocated assets 757 838

Total assets 376,790 320,886

Segment liabilities 89,090 72,518 23,198 20,962 17,746 9,928 5,051 3,253 – – 135,085 106,661

Unallocated liabilities 3,738 1,737

Total liabilities 138,823 108,398

Capital expenditure 1,500 3,698 742 1,894 7,695 8,768 502 3,740 – – 10,439 18,100

Depreciation 4,859 4,738 1,815 1,678 673 568 1,769 1,631 – – 9,116 8,615

Amortisation of goodwill 701 697 – – 112 127 – – – – 813 824

Other non cash expenses 2,856 6,760 39 – 13 – 236 – – – 3,144 6,760



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33. SEGMENT INFORMATION (CONT’D)

(b) Business segments

The Group has classifi ed its business activities into the following

segments:

– Manufacturing and sales of Original Design and Manufacture products;

– Manufacturing and sales of Original Equipment and Manufacture products; and

– Manufacturing and sales of Original Equipment and Manufacture – Personal Computer products

The directors are of the opinion that, aside from turnover which can be distinguished among the three business segments, there is no reasonable basis for

the allocation of assets and capital expenditure by the three business segments.

Turnover

2004 2003

$’000 $’000

Original Design and Manufacture products 350,662 245,344

Original Equipment and Manufacture products 182,225 178,863

Original Equipment and Manufacture – Personal Computer products 8,938 23,297

541,825 447,504

34. COMPARATIVE FIGURES Certain comparatives have been reclassifi ed to conform with current year’s presentation as a result of the change in accounting policy disclosed in Note 2(b).



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04S H A R E H O L D E R S ' I N F O R M AT I O N as at 1 September 2004

Authorised share capital : S$300,000,000.00

Issued and fully paid-up capital : S$145,587,879.40

Class of shares : Ordinary share of $0.20 each

Voting rights : One vote per share

DISTRIBUTION OF SHAREHOLDINGSSize of Holdings No. of Shareholders % No. of Shares %

1 – 999 425 2.11 138,393 0.02

1,000 – 10,000 14,907 74.00 68,011,057 9.34

10,001 – 1,000,000 4,786 23.76 163,661,467 22.48

1,000,001 and above 27 0.13 496,128,480 68.16

Total 20,145 100.00 727,939,397 100.00

TWENTY LARGEST SHAREHOLDERS

No. Name No. of Shares % 1 Raffl es Nominees Pte Ltd 121,416,046 16.682 Citibank Nominees Singapore Pte Ltd 74,464,523 10.233 HSBC (Singapore) Nominees Pte Ltd 66,504,608 9.144 Merrill Lynch (Singapore) Pte Ltd 64,547,865 8.875 DBS Nominees Pte Ltd 34,162,938 4.696 Liew Kim Choo 26,354,891 3.627 Goh Lik Tuan 23,616,921 3.248 United Overseas Bank Nominees Pte Ltd 19,709,700 2.719 Oversea-Chinese Bank Nominees Pte Ltd 8,794,020 1.2110 Yeong Bou Wai 7,925,484 1.0911 ICBC (Singapore) Nominees Ltd 6,777,000 0.9312 UOB Kay Hian Pte Ltd 5,812,680 0.8013 OCBC Securities Private Ltd 5,057,420 0.6914 Phillip Securities Pte Ltd 3,601,515 0.4915 Citibank Consumer Nominees Pte Ltd 3,214,300 0.4416 DB Nominees (S) Pte Ltd 3,124,750 0.4317 DBS Vickers Securities (S) Pte Ltd 3,100,486 0.4318 Kim Eng Securities Pte. Ltd. 2,854,700 0.3919 Singapore Nominees Pte Ltd 2,852,200 0.3920 Hong Leong Finance Nominees Pte Ltd 2,427,200 0.33 Total 486,319,247 66.80

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SUBSTANTIAL SHAREHOLDERS(As recorded in the Register of Substantial Shareholders)

Direct Interest % Deemed Interest %

Goh Lik Tuan 71,616,921 9.83 107,501,611 14.76

Liew Kim Choo 82,354,891 11.31 96,763,641 13.29

Arisiag ASEAN Fund Limited 36,453,000 5.01 Nil Nil

PUBLIC FLOATRule 723 of the Listing manual of the Singapore Exchange Securities Trading Limited requires that at least 10% of the equity securities (excluding preference

shares and convertible equity securities) of a listed company in a class that is listed is at all times held by the public. The Company has complied with this

requirement. As at 1 September 2004, approximately 70.0% of its Shares listed on the Singapore Exchange Securities Trading Limited were held in the hands of

the public.

Notes:

1. Mr Goh Lik Tuan is deemed to have an interest in the shares held by Mdm Liew Kim Choo and vice versa. Mdm Liew Kim Choo is the spouse of Mr Goh Lik Tuan.

2. Both Mr Goh Lik Tuan and Mdm Liew Kim Choo are deemed to have an interest in the shares held by Andatino Investments Pte Ltd (“AIPL”) and Alxia Pte Ltd (“APL”) by virtue

of their shareholdings of more than 20% in AIPL and APL.

S H A R E H O L D E R S ' I N F O R M AT I O N ( C O N T ' D ) as at 1 September 2004

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04N O T I C E O F A N N U A L G E N E R A L M E E T I N G

NOTICE IS HEREBY GIVEN that the Seventeenth Annual General Meeting of GES International Limited (“the Company”) will be held at Casuarina Suite B, Raffl es

Hotel, 1 Beach Road, Singapore 189673 on Friday, 22 October 2004 at 3.00 p.m. for the following purposes:

AS ORDINARY BUSINESS1. To receive and adopt the Directors’ Report and the

Audited Accounts of the Company for the year

ended 30 June 2004 together with the Auditors’

Report thereon.

2. To declare a fi nal tax-exempt dividend of 1.5

Singapore cents per ordinary share for the year

ended 30 June 2004. (2003 : 1 Singapore cent)

3. To re-elect Mr Goh Lik Tuan, a Director retiring

pursuant to Article 104 of the Company’s Articles of

Association.

4. To re-elect the following Directors retiring pursuant

to Article 108 of the Company’s Articles of

Association:

Mr Lim Kok Hoong (Retiring under Article 108)

Mr Low Seow Juan (Retiring under Article 108)

Mr Lee Boon How (Retiring under Article 108)

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

Mr Lim Kok Hoong, Mr Low Seow Juan and

Mr Lee Boon How will, upon re-election as Directors

of the Company, remain as members of the Audit

Committee and will be considered independent

for the purposes of Rule 704(8) of Listing Manual

of the Singapore Exchange Securities Trading

Limited.

5. To approve the payment of Directors’ fees of

S$290,000 for the year ended 30 June 2004.

(2003 : S$290,000)

6. To re-appoint Ernst & Young as the Company’s

Auditors and to authorise the Directors to fi x their

remuneration.

7. To transact any other ordinary business which may

properly be transacted at an Annual General

Meeting.

(Resolution 7)

(Resolution 8)

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04 N O T I C E O F A N N U A L G E N E R A L M E E T I N G ( C O N T ' D )

8. Authority to allot and issue shares up to 50 per centum (50%) of issued share capital

That pursuant to Section 161 of the Companies

Act, Cap. 50 and Rule 806(2) of the Listing Manual

of the Singapore Exchange Securities Trading

Limited, the Directors be empowered to allot

and issue shares in the capital of the Company at

any time and upon such terms and conditions and

for such purposes as the Directors may, in their

absolute discretion, deem fi t provided that the

aggregate number of shares to be allotted and

issued pursuant to this Resolution shall not exceed

fi fty per centum (50%) of the issued share

capital of the Company at the time of the passing

of this Resolution, of which the aggregate number

of shares to be issued other than on a pro rata basis

to all shareholders of the Company shall not exceed

twenty per centum (20%) of the issued capital

of the Company and that such authority shall, unless

revoked or varied by the Company in general

meeting, continue in force until the conclusion

of the Company’s next Annual General Meeting or

the date by which the next Annual General Meeting

of the Company is required by law to be held,

whichever is earlier. [See Explanatory Note (i)] (Resolution 9)

9. Authority to allot and issue shares under the GES International Limited Employees’ Share Option Scheme

That pursuant to Section 161 of the Companies

Act, Cap. 50, the Directors be authorised and

empowered to allot and issue shares in the capital

of the Company to all the holders of options

granted by the Company, whether granted during

the subsistence of this authority or otherwise,

under the GES International Limited Employees’

Share Option Scheme (“the Scheme”) upon the

exercise of such options and in accordance with the

terms and conditions of the Scheme, provided

always that the aggregate number of additional

ordinary shares to be allotted and issued pursuant

to the Scheme shall not exceed fi fteen per centum

(15%) of the issued share capital of the Company

from time to time and such authority shall, unless

revoked or varied by the Company in general

meeting, continue in force until the conclusion of

the next Annual General Meeting or the expiration

of the period within which the next Annual General

Meeting is required by law to be held, whichever is

earlier. [See Explanatory Note (ii)]

By Order of the Board

Lau Wee Nah/Tan San-JuCompany Secretaries

Singapore, 22 September 2004

(Resolution 10)

AS SPECIAL BUSINESSTo consider and if thought fi t, to pass the following resolutions as Ordinary Resolutions, with or without any modifi cations:

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04N O T I C E O F A N N U A L G E N E R A L M E E T I N G ( C O N T ' D )

Explanatory Notes:

(i) The Ordinary Resolution 9 proposed in item 8 above, if passed, will

empower the Directors from the date of the above Meeting until the

date of the next Annual General Meeting, or the date by which the

next Annual General Meeting is required by law to be held or when

varied or revoked by the Company in general meeting, whichever is the

earlier, to allot and issue shares in the Company. The number of shares

that the Directors may allot and issue under this Resolution would not

exceed fi fty per centum (50%) of the issued capital of the Company at

the time of the passing of this Resolution. For issue of shares other than

on a pro rata basis to all shareholders, the aggregate number of shares

to be issued shall not exceed twenty per centum (20%) of the issued

capital of the Company.

The percentage of issued capital is based on the Company’s issued share

capital at the time this Resolution is passed after adjusting for (a) new

shares arising from the exercise of employee share options on issue at

the time this Resolution is passed and (b) any subsequent consolidation

or subdivision of shares.

(ii) The Ordinary Resolution 10 proposed in item 9 above, if passed, will

empower the Directors of the Company, from the date of the above

Meeting until the next Annual General Meeting, or the date by which

the next Annual General Meeting is required by law to be held or

when varied or revoked by the Company in general meeting, whichever

is the earlier, to allot and issue shares in the Company of up to a

number not exceeding in total fi fteen per centum (15%) of the issued

share capital of the Company from time to time pursuant to the exercise

of the options under the Scheme.

Notes:

1. A Member entitled to attend and vote at the Annual General Meeting (the

“Meeting”) is entitled to appoint a proxy to attend and vote in his/her stead.

A proxy need not be a Member of the Company.

2. If the appointer is a corporation, the instrument appointing the proxy must be

executed under seal or the hand of its duly appointed offi cer or attorney.

3. The instrument appointing a proxy must be deposited at the Registered Offi ce of

the Company at 28 Marsiling Lane, Singapore 739152 not less than 48 hours

before the time fi xed for holding the Meeting.

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04 N O T I C E O F B O O K S C L O S U R E

NOTICE IS ALSO HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed from 2nd to 3rd November 2004 (both

dates inclusive) for the purpose of determining shareholders’ entitlements to the dividend which will be proposed at the Seventeenth Annual General Meeting of

the Company to be held on 22 October 2004.

Duly completed registrable transfers in respect of the shares in the Company received by the Company’s Share Registrar in Singapore, LIM ASSOCIATES (PTE) LTD

at 10 Collyer Quay #19-08, Ocean Building, Singapore 049315 up to the close of business at 5.00 p.m. on 1st November 2004, will be registered to determine

shareholders’ entitlements to the proposed dividend.

Subject to the approval of the shareholders at the Seventeenth Annual General Meeting, the proposed fi nal tax-exempt dividend will be paid on 22 November

2004. In respect of shares in securities accounts with The Central Depository (Pte) Limited (“CDP”), the said dividend will be paid by the Company to CDP which

will in turn distribute the dividend entitlements to holders of shares in accordance with its practice.

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04GES International Limited

(Incorporated In The Republic of Singapore)

P R O X Y F O R M(Please read notes overleaf before completing this Form)

I/We,

of

being a member/members of GES INTERNATIONAL LIMITED (the “Company”), hereby appoint

of

or failing him/her,

of

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Seventeenth Annual General Meeting (the

“Meeting”) of the Company to be held on Friday, 22 October 2004 at 3.00 p.m. and at any adjournment thereof. The proxy is to vote on the business before the

meeting as indicated below. If no specifi c direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion, as he/she will on any other

matter arising at the Meeting:

No. Resolutions relating to: For Against

1 Directors’ Report and Accounts for the year ended 30 June 2004

2 Payment of proposed fi nal tax-exempt dividend

3 Re-election of Mr Goh Lik Tuan as a Director

4 Re-election of Mr Lim Kok Hoong as a Director

5 Re-election of Mr Low Seow Juan as a Director

6 Re-election of Mr Lee Boon How as a Director

7 Approval of Directors’ fees amounting to S$290,000

8 Re-appointment of Ernst & Young as Auditors

9 Authority to allot and issue new shares

10 Authority to allot and issue shares under the GES International Limited Employees’ Share Option Scheme

(Please indicate with a cross [X] in the space provided whether you wish your vote

to be cast for or against the Resolutions as set out in the Notice of the Meeting.)

Dated this day of 2004

Signature of Shareholder(s)

or, Common Seal of Corporate Shareholder

IMPORTANT1. For investors who have used their CPF monies to buy GES International Limited shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely for information only.

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

Total number of Shares in: No. of Shares

(a) CDP Register

(b) Register of Members

No. Resolutions relating to: For Against











No. Resolutions relating to: For Against No. Resolutions relating to: For Against












(a) CDP Register

(b) Register of Members


✄✄

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Notes:

1. Please insert the total number of GES International Limited shares (“Shares”)

held by you. If you have Shares entered against your name in the Depository

Register (as defi ned in Section 130A of the Companies Act, Chapter 50 of

Singapore), you should insert that number of Shares. If you have Shares

registered in your name in the Register of Members, you should insert that

number of Shares. If you have Shares entered against your name in the

Depository Register and Shares registered in your name in the Register of

Members, you should insert the aggregate number of Shares entered against

your name in the Depository Register and registered in your name in the Register

of Members. If no number is inserted, the instrument appointing a proxy or

proxies shall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the

Company is entitled to appoint one or two proxies to attend and vote instead of

him/her. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid

unless he/she specifi es the proportion of his/her shareholding (expressed as a

percentage of the whole) to be represented by each proxy. If no such proportion

or number is specifi ed, the fi rst named proxy may be treated as representing

100% of the shareholding and any second named proxy as an alternate to the

fi rst named.

4. The instrument appointing a proxy or proxies must be deposited at the registered

offi ce of the Company at 28 Marsiling Lane, Singapore 739152 not less than 48

hours before the time appointed for the Annual General Meeting.

5. This proxy form must be signed by the appointer personally or by his attorney

duly authorised in writing. Where the instrument appointing a proxy or proxies is

executed by a corporation, it must be executed either under its seal or under the

hand of an offi cer or attorney duly authorised.

6. A corporation which is a member may authorise by resolution of its directors

or other governing body such person as it thinks fi t to act as its representative

at the Meeting, in accordance with Section 179 of the Companies Act, Chapter

50 of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if

it is incomplete, improperly completed or illegible or where the true intentions of the

appointor are not ascertainable from the instructions of the appointor specifi ed in the

instrument appointing a proxy or proxies. In addition, in the case of members whose

Shares are entered in the Depository Register, the Company may reject any instrument

appointing a proxy or proxies lodged if such member, being the appointor, is not

shown to have Shares entered against his name in the Depository Register as at 48

hours before the time appointed for holding the Meeting, as certifi ed by The Central

Depository (Pte) Limited to the Company.

mers satisfaction

FORE

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M YC K

While every effort has been taken to carry out instruction to customers satisfaction NO RESPONSIBILITY liablilty will be accepted for errors CUSTOMERS ARE THEREFORE URGED TO CHECK THOROUGHLY BEFORE AUTHORISING PRINT RUNS

1 2 3 4 5 6 7 8 9 10 OK CC MOD: CN1129DTP-G2CN185645 DL-MAC9 15.09.04 150#

CLC1

GESfullfinancial.indd_OKp29-85 85GESfullfinancial.indd_OKp29-85 85 22/09/2004 17:49:5922/09/2004 17:49:59



11 2 3 4 5 6 7 8 9 10 OK LSF CC



M YC K


11 2 3 4 5 6 7 8 9 10 OK LSF CC


Documents

GESfrontcoverFA.ai-ok · Finally, in our journey towards becoming a more ODM-centred outﬁ t, we will close the chapter on our OEM-PC business activity. For the ﬁ nancial year