STRENGTHENING OUR CORE COMPETENCIES · 2013-09-19 · 12.0% to $2.2 million in FY2004. Gross profit dropped to $1.5 million, due mainly to the absence of rental income. Additionally

STRENGTHENINGOUR CORE COMPETENCIES

Annual Report 2004

1 CORPORATE PROFILE

2 CHAIRMAN’S STATEMENT

4 BOARD OF DIRECTORS

6 KEY MANAGEMENT

7 CORPORATE INFORMATION

8 OPERATIONS REVIEW

10 MAJOR PROPERTIES IN THE COURSE

OF DEVELOPMENT/SALE

11 GROUP STRUCTURE

12 FINANCIAL HIGHLIGHTS

14 RISK MANAGEMENT

15 CALENDAR OF EVENTS

Contents

With a background in construction spanning over four decades,the Hiap Hoe Group has to its credit built numerous residential and commercial properties. The Hiap Hoe Group operations are located entirely in Singapore. On 16 January 2003, Hiap Hoe Limited (formerly known as Chew Eu Hock Holdings Limited) completed the acquisition of four of Hiap Hoe Companies. They are Bukit Panjang Plaza Pte Ltd, Guan Hoe Development Pte Ltd, Siong Hoe Development Pte Ltd and Keng Hoe Development Pte Ltd. Bukit Panjang Plaza Pte Ltd is the property developer, owner and operator of shopping and entertainment/leisure complex known as Bukit Panjang Plaza (BPP) while the other three are residential property developers. The Group had in the same year disposed of BPP. Efforts are dedicated to increase the land bank by acquiring 3 land parcels at 27 Robin Road, 12 Angullia Park and Moulmein Rise. One of the development at Robin Road, Proximo is targetting to launch in the first half of 2005. Together with its existing wholly owned subsidiaries (namely Westbuild Construction Pte Ltd, Yong Hock Trading Pte Ltd), the Group will continue with the civil engineering and construction business as well as strengthen and build on the core businesses of property investment and property development.

Corporate Profile

Create lifestyle homes for the family.

Vision

Being a competitive market player in residential properties.

Mission

Hiap Hoe Annual Report 2004

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CHAIRMAN’S MESSAGE

In FY2004, the Group continued to make significant headway in its

expansion plans with its clinching of new contracts and strategic

acquisition of properties...

Following a lack-lustre economy in 2003, 2004

saw a marked improvement in the Singapore

economy, recording an average growth of 8.4%.

According to URA statistics, prices of residential

properties moved in tandem, ris ing by

approximately 0.9%.

Operating amidst the improved economic

conditions, I am pleased to report that the Group

reported an increase in revenue, 8.7% up from

$35.1 million in FY2003 to $38.2 million in

FY2004 and achieve an operating profit of

$725,000 in FY2004 compared to operating loss

of $8.4 million in FY2003.

FINANCIAL PERFORMANCE

Due to the sale of Bukit Panjang Plaza ("BPP") in

FY2003, which led to the cessation of rental

income, the Group's revenue for FY2004 was

derived mainly from the sale of our residential

development properties. While revenue derived

from our property sales increased substantially by

54.5% to $36.0 million, revenue for our

construction business declined by approximately

12.0% to $2.2 million in FY2004.

Gross profit dropped to $1.5 million, due mainly

to the absence of rental income. Additionally we

recorded a lower net profit after tax of $1.1 million

for the financial year under review, compared to

FY2003 which had recorded a one time profit on

disposal of BPP.

On a positive note, through stringent measures

and concerted rationalisation efforts, the Group

was able to achieve an impressive turnaround in

FY2004 with an operating profit of $725,000, as

compared to an operating loss of $8.4 million in

FY2003.

BUSINESS REVIEW

In FY2004, the Group continued to make

significant headway in its expansion plans with its

clinching of new contracts and strategic acquisition

of properties. These look set to contribute positively

to the Group's performance in the near future.

One of the major projects we successfully secured

was a $2.5 million contract to build the temporary

Sembawang bus interchange. Our construction

subsidiary also continues to set its sights overseas,

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actively tendering for projects in Bangladesh in

collaboration with its joint-venture partner.

In our residential property development business

segment, Moonstone Residences obtained its

Temporary Occupation Permit during the year,

and we continued to witness $36.0 million sales

for our three residential property developments.

In addition, the Group has targeted the first half

of FY2005 to launch its new project, Proximo,

located at 27 Robin Road.

We have also entered into agreements to acquire

two properties, namely 12 Angullia Park, and a

parcel of land with houses erected on it at Moulmein

Rise on an en-bloc basis. The former was completed

on 1 February 2005 while the latter is expected to

be completed by the second quarter of FY2005.

Plans are already underway to redevelop these

acquisitions for sale in due course.

DIVIDEND

No dividend has been recommended for FY2004.

However, the management will review the Group's

performance, and seek to structure a dividend

policy to thank our shareholders.

LOOKING AHEAD

I would like to extend my heartfelt appreciation

to our shareholders, customers, and business

partners for their continued trust and support. My

sincere thanks also go out to my fellow directors

and colleagues for their unwavering commitment

and invaluable contribution to the Group.

Moving forward into FY2005, we expect the market

to be highly-competitive. As such, we will continue

to stay focused on our core competencies, while

keeping attuned to market trends to ensure our

sustainability. With the able leadership of our

management team and the dedication of our people,

I believe we are strategically poised to take on new

challenges in FY2005.

TEO GUAN SENG, BBM

Chairman

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BOARD OF DIRECTORS

TEO GUAN SENG, BBM (CHAIRMAN)

Mr Teo was appointed as Director and Chairman of Hiap Hoe Limited (Hiap Hoe) on 16 January 2003 and has been the Managing Director of Hiap Hoe Holdings Pte Ltd & its Group of subsidiaries (Hiap Hoe Group) since 14 March 1983. As the founder of the Hiap Hoe Group, his expertise and experience in the construction, property and leisure industries have been instrumental to the growth and development of Hiap Hoe Group. Mr Teo is involved in chairing the board of directors' meetings and ensuring the implementation of corporate policies and strategies. He is also responsible for the financial and operational performance of the Hiap Hoe Group. Mr Teo Guan Seng is currently the Executive Chairman of SuperBowl Holdings Limited (SuperBowl). He was awarded Pingat Bakti Masyarakat in 1995 and the Bintang Bakti Masyarakat in 2000.

CHEW HENG CHING (VICE CHAIRMAN)

Mr Chew was appointed as Director on 14 August 1998. Over the last 25 years, he has held senior corporate management positions in various listed companies. He now sits on the board of several listed companies and is also a Board Member and Deputy Chairman of the Singapore International Chamber of Commerce. Mr Chew is also the Founding President of the Singapore Institute of Directors and currently Chairman of its Governing Council. He was a member of the Corporate Governance Committee and a member of the Council on Corporate Disclosure and Governance. Mr Chew is also a Member of Parliament and Deputy Speaker of the Singapore Parliament. A former Colombo-Plan Scholar, he graduated with a First Class honours degree in Industrial Engineering and a Bachelor degree in Economics, both from the University of Newcastle, Australia. He also holds an honorary doctorate degree in Engineering.He is a fellow of the Singapore Institute of Directors and CPA Australia.

TEO HO BENG (MANAGING DIRECTOR)

Mr Teo was appointed as Director and Managing Director on 16 January 2003 and has been a Director of Hiap Hoe Group since 1983. He has more than 30 years of experience in the construction and property industries and over 15 years of experience in the leisure industry. Mr Teo is responsible for the formulation of corporate strategies and policies for Hiap Hoe, and ensures that the senior management of Hiap Hoe implements policies and strategies at the operating level. He also chairs the senior management meetings to monitor the Hiap Hoe's performance, ensures prudent financial management of Hiap Hoe, as well as oversees management, budgeting and forecasting procedures. Mr Teo is currently the Managing Director of SuperBowl. He is also a member of the Singapore Institute of Directors.

TEO HO KANG, ROLAND (EXECUTIVE DIRECTOR)

Mr Teo was appointed as Director on 16 January 2003. He has been a Director of Hiap Hoe Group since 1999 and was appointed the Deputy Managing Director of SuperBowl in 1995. With more than 12 years of experience in the property and leisure industries, Mr Teo is responsible for overseeing the marketing and promotional activities of Hiap Hoe's properties and their respective operational performance. He also takes care of product development, business expansion and staff development of the employees of the Group. Mr Teo holds a Bachelor Degree in Business Administration from the American Intercontinental University, United Kingdom.

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LIM KIM SOON LEE, CINDY (EXECUTIVE DIRECTOR)

Ms Lim was appointed as Director on 16 January 2003. She has been the Financial Controller of SuperBowl since 1995. With 17 years of experience in finance, Ms Lim is responsible for overseeing finances as well as business development of SuperBowl. Ms Lim has 3 years of working experience as an auditor with Deloitte & Touche, Singapore, upon her graduation in 1988. Thereafter, she was Finance and Administration Manager and subsequently an Accountant with RTW Air Services (general sales agent for Eva Airways) and Myanmar Airways International, respectively. Ms Lim is a Certified Public Accountant and holds a Bachelor of Accountancy degree from National University of Singapore.

CHAN WAH TIONG (INDEPENDENT, NON-EXECUTIVE DIRECTOR)

Mr Chan was appointed as Director on 14 August 1998 and has been an independent Director of the Company since 1998. He started his career with Coppers & Lybrand as an Audit Assistant from 1984 to 1985. He joined Times Printers Sdn Bhd (now known as Times Printers Pte Ltd) from 1985 to 1988, where he started as an Assistant Financial Accountant and was promoted to the position of Accountant in 1987. He then joined Digital Equipment (an electronics multi-national company) as a Financial Analyst from 1988 to 1990. Since 1993, he has had many years of extensive experience as a Financial Controller in both multi-national companies and local companies, His responsibilities include overseeing all financial aspects. Mr Chan is a Certified Public Accountant with the Institute of Certified Public Accountants of Singapore. He has a Bachelor of Accountancy from the National University of Singapore.

DR WANG KAI YUEN (INDEPENDENT, NON-EXECUTIVE DIRECTOR)

Dr Wang was appointed as Director on 25 January 2002. He is a Member of Parliament for the Bukit Timah Constituency. Dr Wang is currently the Managing Director of Xerox Singapore Software Centre and the Chairman of Singapore Feedback Unit. He graduated from the National University of Singapore with a degree in Bachelor of Engineering with First Class honours in Electrical and Electronics in 1972. Dr Wang holds a Master of Science in Industrial Engineering, Masters of Science in Electrical Engineering and a PhD in Engineering from Stanford University, the United States of America. His last re-election was on 30 December 2002.

CHAN BOON HUI (INDEPENDENT, NON-EXECUTIVE DIRECTOR)

Mr Chan was appointed as Director on 4 April 2003. He has been the Managing Director of Chancery Capital Pte Ltd since January 2003. Prior to this, he had more than 10 years of investment banking experience internationally with BNP Paribas Peregrine and the Rothschilds Group based in New York and Singapore. Mr Chan graduated from Cambridge University, United Kingdom with a Master of Arts (Hons)(Law) in 1994. Mr Chan is a Chartered Financial Analyst.

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KEY MANAGEMENT

TAN ENG SIANG has been a managing director of

Westbuild Construction Pte Ltd since 1 November

2000 and is responsible for the technical and contractual

aspects of tenders and management of the Group’s

projects. Mr Tan, who has more than 20 years experience

in the construction industry, began his career in 1975

with the Sewerage Department, PWD. He joined

Christiani Nielsen Ltd as a Site Engineer for the Pulau

Seraya to Pandan Road undersea tunnel project in

1985 and had brief stints with the Societe General

D’Enterprises Construction (1986-1987) and Lau

Downie & Partners (1987-89) before joining Westbuild

Construction Pte Ltd as a Project Manager for the

Woodbridge Hospital project in 1989. He was

promoted to Project Director in 1994, Director in

1995 and Executive Director in 1997. Mr Tan holds

a Diploma in Civil Engineering from the Singapore

Polytechnic and a Bachelor of Science (Engineering)

(Honours) degree from Salford University, the United

Kingdom.

AW HUI MIEN, JENNY, assumed the position of

Financial Controller of Hiap Hoe Limited on 1 February

2003. She is a Certified Public Accountant and a

member of The Association of Chartered Certified

Accountants (“ACCA”). Following her completion of

the ACCA examinations in 1993, Ms Aw worked as

a graduate assistant with KPMG from 1994 to 1995.

She joined the Hiap Hoe Group in 1995 and her

responsibilities include overseeing the Hiap Hoe Group’s

accounts and financial administrative matters.

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CORPORATE INFORMATION

BOARD OF DIRECTORS

TEO GUAN SENG, BBM (Chairman, Non-Executive)

CHEW HENG CHING (Vice-Chairman, Chief Executive Officer)

TEO HO BENG (Managing Director)

TEO HO KANG, ROLAND (Executive)

LIM KIM SOON LEE, CINDY (Executive)

CHAN WAH TIONG (Independent, Non-Executive)

DR WANG KAI YUEN (Independent, Non-Executive)

CHAN BOON HUI (Independent, Non-Executive)

EXECUTIVE COMMITTEE

CHEW HENG CHING (Chairman)

TEO HO BENG

TEO HO KANG, ROLAND

LIM KIM SOON LEE, CINDY

AUDIT COMMITTEE

CHAN WAH TIONG (Chairman)

DR WANG KAI YUEN

CHAN BOON HUI

NOMINATING COMMITTEE

DR WANG KAI YUEN (Chairman)

CHAN WAH TIONG Appointed on 1 July 2004

CHAN BOON HUI

TEO GUAN SENG, BBM

REMUNERATION COMMITTEE

DR WANG KAI YUEN (Chairman)

CHAN WAH TIONG

CHAN BOON HUI Appointed on 1 July 2004

TEO HO BENG

EXECUTIVE SHARE OPTION COMMITTEE

CHAN BOON HUI (Chairman) Appointed on 10 June 2004

CHAN WAH TIONG Appointed on 10 June 2004

DR WANG KAI YUEN Appointed on 10 June 2004

TEO HO BENG Appointed on 10 June 2004

GROUP FINANCIAL CONTROLLER

AW HUI MIEN, JENNY

COMPANY SECRETARY

LIM SIEW FAY, SOPHIA

REGISTERED OFFICE / BUSINESS OFFICE

564A Balestier Road

Singapore 329880

Tel : 6250 2200

Fax : 6356 1554

Email : [email protected]

www.hiaphoe.com

SHARE REGISTRAR AND SHARE TRANSFER OFFICE

Lim Associates (Pte) Ltd

10 Collyer Quay

#19-08 Ocean Building

Singapore 049315

AUDITORS

ERNST & YOUNG

Certified Public Accountants

10 Collyer Quay

#21-01 Ocean Building

Singapore 049315

AUDIT PARTNER-IN-CHARGE

LOH KHUM WHAI, MAX

Appointed since financial year ended 2002

Resigned for financial year ended 2004

THAM CHEE SOON

Appointed for financial year ended 2004

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OPERATIONS REVIEW

Group will continue to closely monitor, as well as explore strategic initiatives to boost market demand for the unsold units at its existing three residential projects.

An established player in Singapore's building and construction sector, the Hiap Hoe Group is primarily engaged in the areas of property development, property investment, civil engineering and construction works, with a focus on residential property development.

Following a slowdown in the economy in FY2003, FY2004 proved to be a better year for businesses in general, with the Singapore economy reporting an average growth of 8.4%.

For the Group, residential property development was its best-performing segment in FY2004. It currently has four freehold residential development properties namely, The Vines, Moonstone Residences, Papillon and Proximo, each with its unique character to cater to the tastes of young couples and those who intend to upgrade from HDB flats.

In the eastern region of Singapore is The Vines at Lorong Sarina. It is within walking distance to Kembangan MRT station and is only minutes away from the major expressways, such as PIE and ECP.

Situated at Moonstone Lane, Moonstone Residences is strategically located, with Potong Pasir MRT station and the new Toa Payoh bus interchange just a stone's throw away. It is less than 30 minutes' drive to the Orchard Road Shopping Belt and the Central Business District, and is very near to prestigious schools and institutions.

Papillon, which is conveniently located at Jalan Rama, has Novena MRT station and shopping malls such as Novena Square and United Square all in its vicinity.

Through strategic marketing initiatives, more than 50 units were sold at these three residential

properties in FY2004, bringing the total number of units sold to over 120.

Proximo, at 27 Robin Road, is located off Bukit Timah Road. With its prime location and luxurious facilities, it will be targeted at the higher income consumer group. The Group has targeted to launch this freehold project in the first half of FY2005.

During the year, the Group has also entered into agreements to acquire two other properties, namely 12 Angullia Park, and a parcel of land with houses erected on it at Moulmein Rise, on en-bloc basis. The former was completed on 1 February 2005 while the latter is expected to be completed by the second quarter of FY2005. Plans are underway to redevelop these acquisitions for sale in due course, and the construction of these two new projects will be undertaken by the Group's construction arm.

The sluggish conditions of the construction sector in FY2003 continued into FY2004. Consequently, the Group's construction arm managed to secure only one major project, a $2.5 million contract to build the temporary Sembawang bus interchange. However, the Group continues to explore opportunities in the market, both locally and overseas. It has, in fact, been actively tendering for projects in Bangladesh in collaboration with its joint-venture partner.

FINANCIAL REVIEWOperating amidst improved economic conditions, the Group reported a 8.7% increase in turnover from $35.1 million in FY2003 to $38.2 million in FY2004. Group operating profit rose $725,000 compared to a loss of $8.4 million in previous year. Net profit after tax dropped to $1.1 million, compared to $25.8 million in FY2003, which

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included a one time gain of $47.2 million net of goodwill of approximately $12.0 million.

Of significance was the fact that the Group achieved a turnaround in its financial performance, recording an operating profit of $725,000, in contrast to an operating loss of $8.4 million in FY2003. This was due largely to a decline in distribution and selling expenses, administrative expenses, interest expenses, and write-back of provisions of foreseeable losses.

In the year under review, the Group's revenue was derived mainly from the sale of its residential development properties. Revenue from residential property sales grew substantially by 54.5% to $36.0 million. The increase in the Group's revenue was offset by decline in rental revenue of about $9.3 million. This was attributable to the sale of Bukit Panjang Plaza ("BPP") in FY2003, which consequently resulted in a cessation of income from rental.

The Group's construction arm reported a decline in revenue by approximately 12.0% to $2.2 million. More revenue had been recognised in FY2003 due to the finalisation of several of the remaining construction projects taken over from the reverse takeover of the Chew Eu Hock Group.

Corresponding to the higher sales generated from development projects, cost of sales increased.

With fewer marketing activities carried out for the development properties in FY2004, distribution and selling expenses decreased from $1.4 million to $0.8 million. Likewise, less administrative expenses were incurred, decreasing by 38.5% from

$6.5 million to $4.0 million. This arose mainly from the cessation of the BPP business, net of a one-time full and final compensation expense of $0.9 million incurred pertaining to certain alleged breach of warranties under the sales and purchase agreement.

Other income increased mainly because of write-back of provisions for foreseeable losses in the Group's residential development projects, namely the Papillon and Moonstone Residences, of which approximately $5.7 million was partially mitigated by further provisions amounting to $0.8 million for The Vines, as well as provision for contingencies of $1.0 million in respect of the contractual obligations at BPP.

A full repayment of a $40.0 million loan to a related company resulted in substantial savings in interest, and accounted for a 75.6% decrease in financial expenses to $0.9 million. Additionally, financial income for FY2004 was mainly derived from interest earned from short-term investments in commercial papers and fixed deposits, prior to the abovementioned repayment.

There was no tax for the year under review due to Group's tax relief, and the tax credit amount refers to the write-back of deferred tax.

OUTLOOKMoving into FY2005, the Group will continue to track market trends and seek new growth avenues whilst capitalising on its extensive experience in the property development and construction sector.

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MAJOR PROPERTIES IN THECOURSE OF DEVELOPMENT/SALE

Effective Approximate Completion Percentage ofApproximate Gross Group Percentage Date/Expected units sold as at

Land Area Floor Area Interest of Completion Completion 31 DecemberDescription (sq. metres) (sq. metres) Tenure (%) (%) Date 2004

THE VINES12 Lorong Sarina 2,660 4,267 Freehold 100% 100% 23 October 2003 80%Singapore 416736

PAPILLON8 Jalan Rama 2,642 7,705 Freehold 100% 100% 28 May 2003 73%Singapore 329089

MOONSTONERESIDENCES25 Moonstone Lane 2,952 8,641 Freehold 100% 100% 21 May 2004 53%Singapore 328465

PROXIMO27 Robin Road 3,015 5,814 Freehold 100% 71% First half of 2005 6%Singapore 258204

ANGULLIA PARK12 Angullia Park 1,606 4,498* Freehold 100% - - -Singapore 239972

MOULMEIN RISELot nos. 99879P, 99880W, 99881V,99882P, 99883T and99877W all of Town 1,573 4,403* Freehold 100% - - -Subdivision 29

* Permissible Gross Floor Area

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GROUP STRUCTURE

Hiap Hoe Limited

Westbuild Construction Pte. Ltd. (Formerly known as Chew

Eu Hock Construction Co Pte. Ltd.)

100%

Yong Hock Trading (S) Pte Ltd

100%

Bukit Panjang Plaza Pte Ltd

100%

CEH-Prime ExchangeCompany Pte Ltd

100%

Residential PropertiesDevelopment Companies

100%

Leong Hoe DevelopmentPte Ltd

Leng Hoe Development Pte Ltd (Formerly known as CEH

Exchange Services Pte Ltd)

Siong Hoe Development Pte Ltd

Guan Hoe DevelopmentPte Ltd

Keng Hoe Development Pte Ltd

Wah Hoe Development Pte Ltd

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FINANCIAL HIGHLIGHTS

2004 2003 2002$'000 $'000 $'000

Group Profit & Loss Account

Revenue 38,179 35,128 26,685

Profit/(Loss) from operating activities 1,390 (4,646) 7,977

Profit/(Loss) before exceptional items and taxation 725 (8,438) 4,880

Net profit for the year 1,111 25,752 3,650

Group Balance Sheet

Fixed Assets 4,770 4,893 68,713

Investment properties 10,016 9,975 -

Joint Venture - 828 -

Current Assets 82,032 104,920 101,838

Current Liabilities 38,976 28,506 107,796

Non-Current Liabilities 60 35,439 39,826

Shareholders' Funds 57,782 56,671 22,929

Per Share Data (Cents)

Earning after tax 1 0.10 2.37 0.08

Net Tangible Assets 2 5.23 5.13 148.53

Financial Ratios

Return on Average Shareholders' Funds 0.02 0.45 0.16

Debt Equity Ratio (Times) 0.59 1.01 6.16

Current Ratio (Times) 2.10 3.68 0.94

Quick Ratio (Times) 2.10 1.17 0.01

Notes :

(1) Earnings per share for FY2004 is calculated based on 1,105,758,758 ordinary shares and earnings per share for FY2003 is calculated based on 1,087,980,675 ordinary shares after taking into consideration the share consolidation which was effected on 24 May 2004.

(2) NTA is computed based on 1,105,758,758 shares for the year ended 31 December 2004 and 31 December 2003 after taking into consideration share consolidation which

was effected on 24 May 2004.

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Construction

Development Properties

Investment Properties

SEGMENT TURNOVER 2004

6%

94%



27%

7%

66%

38%

62%

2004 2003 2002

35,128

REVENUE ($’000)

PROFIT/(LOSS) BEFORE EXCEPTIONAL ITEMS AND TAXATION (’000)

38,179

26,685

2004 2003 2002

4,880

(8,438)

725

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RISK MANAGEMENT

INTEREST RATE EXPOSURE

The Group is involved largely in property based business. All the development projects are financed wholly or partially through external borrowings. As such, interest rate fluctuations have a direct impact on the performance of the Group.

Interest rates risk is mitigated through the arrangement of different credit facilities with various banks at competitive rates. Management will continue to review these facilities regularly to ensure its cost effectiveness.

DEPENDENCY ON SINGAPORE PROPERTY MARKET

The Hiap Hoe Group's projects are currently concentrated in Singapore. As such, its turnover and profits are derived mainly from property development and ownership targeting primarily Singapore based customers. The economic downturn in the past few years has a dampening effect on the residential property market. Hence, prices have remained weak.

In order to minimise such risk, the Management reviews regularly the marketing and pricing strategies for the various development projects.

TIMELY COMPLETION OF THE DEVELOPMENT PROJECTS

Timely completion of the development projects is important as any delay will hinder the handover of the sold units, which may hinder the Group from collection of the remaining sales proceeds. This will have an adverse effect on cashflow. Failure to complete the development projects on time may cause the development companies to be liable for liquidated damages.

In order to ensure all projects are completed according to target dates, Management has fully subcontracted the projects to a designated main contractor who has obligation to adhere to scheduled development as per agreement. The main contractor will be liable for the liquidated damages should there be any delay in the completion of the projects.

DEPENDENCE ON KEY PERSONNEL

The Group's performance depends substantially on the contribution and continued service of a number of key managerial staff. Failure to retain these employees, especially without appropriate replacements, could lead to the Group's operations and financial performance being adversely affected. The future success of the Group also depends on its ability to identify, attract, hire, retain and motivate other managerial and marketing personnel.

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CALENDAR OF EVENTS

28 January 2004 Completion of Acquisition of Property at 27 Robin Road

20 February 2004 Release of Full year financial statement for the year ended 31 December 2003Share Consolidation of every 5 shares into 1 share

8 March 2004 Increase in investment in subsidiary, Chew Eu Hock Construction Co. Pte Ltd

15 March 2004 Disposal of investment in Eng Tat Engineering Pte Ltd

13 April 2004 Notice of Annual General Meeting and Extraordinary General Meeting

28 April 2004 (1) Annual General Meeting(2) Extraordinary General Meeting to approve

(a) Consolidation of every 5 ordinary shares of $0.005 each into 1 ordinary share of $0.025 each

(b) Adoption of the Hiap Hoe Share Option Scheme 2004

8 June 2004 Change of Name of Subsidiary, Chew Eu Hock Construction Co. Pte Ltd to Westbuild Construction Pte. Ltd.

10 June 2004 Composition of Executive Share Option Committee

1 July 2004 Changes to the Composition of Remuneration and Nominating Committees

8 July 2004 Acceptance of Share Options by Directors

12 August 2004 Release of Half Year Financial Statement for the period ended 30 June 2004

19 August 2004 (1) Acquisition of CEH Exchange Services Pte Ltd and CEH-Prime Exchange Company Pte Limited from Yong Hock Trading (S) Pte Ltd and Westbuild Construction Pte. Ltd. respectively.

(2) Change of name of subsidiary, CEH Exchange Services Pte Ltd to Leng Hoe Development Pte. Ltd.

26 October 2004 Award of Contract ER138, Proposed Erection of New Sembawang Temporary Bus Interchange to Westbuild Construction Pte. Ltd.

16 November 2004 Proposed Acquisition of the Properties known as 12 Angullia Park #03-00, #04-00, #05-00, #06-00, #07-00, #08-00, #09-00, #10-00, #11-00 comprised in Lot number 1525K TS 24, and the adjacent vacant land comprised in Lot number 1526 TS 24 from an interested person

21 December 2004 Proposed Acquisition of Lot Numbers 99879P, 99880W, 99881V, 99882P and 99883T all of Town Subdivision 29 together with the Houses thereon and known as 16, 18, 20, 22 and 24 Moulmein Rise respectively and the backlane at Lot number 99877W also of Town Subdivision 29

17 CORPORATE GOVERNANCE

27 DIRECTORS’ REPORT

33 STATEMENT BY DIRECTORS

34 AUDITORS’ REPORT

35 BALANCE SHEETS

37 PROFIT AND LOSS ACCOUNTS

38 STATEMENTS OF CHANGES IN EQUITY

39 CONSOLIDATED STATEMENT OF CASH FLOWS

42 NOTES TO THE FINANCIAL STATEMENTS

79 STATISTICS OF SHAREHOLDINGS

81 NOTICE OF ANNUAL GENERAL MEETING

83 PROXY FORM

Contents


p17CORPORATE GOVERNANCE

The Board is committed to uphold effective procedures and policies in compliance with the Code of Corporate Governanceissued by the Singapore Exchange Securities Trading Limited (“SGX-ST”).

Board Matters

Principle 1 : The Board’s Conduct of its Affair

The Board meets regularly to approve the Company’s strategic directions, appointment of directors, business results and majorfunding and investment proposals. The Board also reviews the financial performance of the Group and supervises the managementof the business and affairs of the Group.

Newly appointed directors are provided with background information about the Group and are invited to visit the Group’soperations and facilities to have an understanding of our business operations. Directors receive updates from time to time,particularly on relevant new laws and regulation, changing commercial risks and business conditions from the Company’srelevant advisors.

The Company’s Articles of Association provide for at least one third of the Directors, other than the Managing Director, toretire from office by rotation at each Annual General Meeting. The retiring Directors shall be eligible for re-election at theAnnual General Meeting.

The attendance of the directors and the various meetings held during the financial year ended 31 December 2004 is as follows :

BOARD AUDIT REMUNERATION NOMINATING EXECUTIVECOMMITTEE COMMITTEE COMMITTEE COMMITTEE

Number Number Number Number Numberof Atten- of Atten- of Atten- of Atten- of Atten-

Name Meetings dance Meetings dance Meetings dance Meetings dance Meetings dance

Teo Guan Seng, BBM 3 1 NA NA NA NA 1 - NA 7*

Chew Heng Ching 3 3 NA 2* NA 1* NA NA 11 11

Teo Ho Beng 3 2 NA 2* 2 2 NA NA 11 11

Teo Ho Kang,Roland 3 2 NA 1* NA NA NA NA 11 11

Lim Kim Soon Lee,Cindy 3 3 NA 2* NA 1* NA NA 11 11

Chan Wah Tiong 3 3 2 2 2 2 NA NA NA NA

Dr Wang Kai Yuen 3 3 2 2 2 2 1 1 NA NA

Chan Boon Hui 3 3 2 2 NA 1* 1 1 NA NA

* By invitation

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Board Composition and Balance

Principle 2 : Strong and independent element on the Board

The Board comprises eight members, three of whom are independent. Their wealth of experience in business management,strategic planning and knowledge in accounting and finance is crucial to steer the Group in the direction of growth. TheDirectors’ academic and professional qualification are shown on pages 4 and 5.

The Board is of the opinion that the current size and composition of the Board are adequate to facilitate effective and independentdecision making.

Chairman, Chief Executive Officer and Managing Director

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

Mr Chew Heng Ching is the Chief Executive Officer (CEO) of the Company. Mr Teo Ho Beng is the Managing Director andis the son of the Chairman.

The Chairman performs the following pertaining to the board proceedings :

(a) schedule meetings that enable the Board to perform its duties responsibly while not interfering with the flow of theCompany’s operation

(b) prepare meeting agenda in consultation with CEO(c) exercise control over quality, quantity and timeliness of the flow of information between the Management and the Board ; and(d) assist in ensuring compliance with the Company’s guidelines on corporate governance.

The CEO, with the assistance of the Managing Director is responsible for the day-to-day management of the Group as well asthe exercise of control over the quality, quantity and timeliness of information flow between the Board and Management. Heplayed a pivotal role in developing the business of the Group and has also provided the Group with strong leadership and vision.

Major decisions made by the Chairman, CEO and Managing Director are reviewed by the Audit Committee. Given theseparate roles and responsibilities held by the Chairman, Chief Executive Officer and Managing Director, the Board is of theopinion that their relationship does not affect the independent and effective running of the Board. As such, the Board believesthat there are adequate safeguards in place to ensure a balance of power and authority, such that no one individual represents aconsiderable concentration of power.

Board Membership

Principle 4 : Formal and transparent process for Appointment of Directors

The Nominating Committee (“NC”) makes recommendations to the Board on all Board appointments and re-nominations.The NC is also charged with determining annually whether or not a director is independent. The NC met once during the year.The NC, having evaluated the independence of each Director, has confirmed that Mr Chan Boon Hui, Mr Chan Wah Tiongand Dr Wang Kai Yuen are independent. The NC has re-nominated the retiring Directors, Mr Chew Heng Ching and MrChan Wah Tiong for re-election at the forthcoming Annual General Meeting.

CORPORATE GOVERNANCE


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Board Performance

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

The NC has established a formal framework of assessment process to assess the effectiveness of the Board collectively andindividually, which include the participation and contribution of individual Directors to the management of the Company, atBoard and Committee Meetings.

Access to information

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

Board members are provided with management information including details as and when requested by the Board . In addition,all relevant information on material events and transactions are circulated to Directors as and when they arise. Draftannouncements will be circulated to the Board for review and approval before dissemination to the shareholders via SGXNET(formerly MASNET).

The Company Secretary prepares and forwards the Board Paper to the Company for circulation. The Directors receive theBoard paper at least 2 days before the meeting so that the Directors have ample time to review. All Board members have separateand independent access to the advice and services of the Company Secretary who is responsible to the Board for ensuring thatBoard procedures are followed and that applicable rules and regulations are complied with. The Company Secretary is presentat all Board Meetings.

Board members are aware that they, whether as a group or individually, in the furtherance of their duties, may obtain independentprofessional advice, if necessary, at the Company’s expense.

Remuneration Matters

Principle 7 : Procedures for developing Remuneration PoliciesPrinciple 8 : Level and Mix of RemunerationPrinciple 9 : Disclosure on Remuneration

The Remuneration Committee (“RC”) recommends to the Board, in consultation with the Chairman of the Board, a frameworkof remuneration for the Board and key executives, and to determine specific remuneration packages for each executive Directorand key executives of the Group.

The RC’s objective is to establish and maintain a level of remuneration that would be appropriate to attract, retain and motivatethe Directors and key executives to run the Company successfully. The RC also ensures that the remuneration policies andsystems of the Group are appropriate and meaningful measures for the purposes of evaluating the Company’s performance andthe performance of individual Directors and key executives. The Executive Directors have service agreements. The ServiceAgreements may be terminated by either the Company or the Executive Directors giving 6 months’ written notice of terminationto the other party.

Non-Executive directors are paid directors’ fees, taking into consideration individual contribution, attendance at various meetingsand responsibilities held at the Committee level. The breakdown of fees are as follows :

Chairman of Board $30,000Independent Member $12,000Chairman of Audit Committee $ 6,000Chairman of Remuneration Committee $ 3,000Chairman of Nominating Committee $ 3,000Chairman of Executive Share Option Committee $ 3,000

Such fees are subject to the approval of shareholders at the Annual General Meeting every year.


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Details of the remuneration of the Directors are as follows:

Directors’ Fees1 Salary 2 Bonus 3 Other Benefits 4

Remuneration S$ S$ S$ S$

Non-Executive DirectorsTeo Guan Seng, BBM 30,000 - - -Chan Wah Tiong 18,000 - - -Dr Wang Kai Yuen 18,000 - - -Chan Boon Hui 15,000 - - -

Executive DirectorsChew Heng Ching - 308,580 27,750 20,518Teo Ho Beng - 188,580 16,950 -Teo Ho Kang, Roland - 67,800 5,650 -Lim Kim Soon Lee, Cindy - 54,240 4,520 -

Notes :

(1) Directors’ fee is provided for the financial year ended 31 December 2004.(2) Salary includes gross salary and employer CPF Contribution.(3) Bonus is a provisional amount which comprises of salary and employer CPF Contribution.(4) Other benefits include car provided, driver provided and maintenance costs.

The range of gross remuneration received by the top 5 executives (excluding executive Directors) of the Group is as follows :

Remuneration Bands No. of executives

$500,000 & above -$250,000 to $499,999 -Below $250,000 5Total 5

The range of gross remuneration of employees who are immediate family members of a Director or the Chairman:

Remuneration Bands No. of executives

$150,000 & above -Below $150,000 1

Employees’ Stock Options Scheme

The Scheme is a share incentive plan that enables the Company to give recognition to the contributions made by full-timeEmployees (including Group Executive Directors) and Non-Executive Directors and at the same time, provides them with anopportunity to participate in the equity of the Company.

In addition, the Scheme will help to achieve the following objectives:

(i) the motivation of employees and directors to optimize their performance standards and efficiency; and(ii) the retention of key employees and directors of the Company whose contributions are important to the long-term growth

and profitability of the Group;



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(iii) to instill loyalty to, and a stronger identification by the employees with the long term prosperity of the Group;(iv) to attract potential employees with relevant skills to contribute to the Group and to create value for the Shareholders of the

Company; and(v) to align the interests of the employees with the interests of the Shareholders.

The Scheme which was approved by the shareholders on 28 April 2004, is administrated by the Executive Share OptionCommittee. The Committee administering the Scheme comprises the following directors of the Company:-

Chan Boon Hui (Chairman)Chan Wah TiongDr Wang Kai YuenTeo Ho Beng

The aggregate number of Shares in respect of which Options may be offered to a Grantee for subscription in accordance withthe Scheme shall be determined at the discretion of the Committee, who shall take into account criteria such as the rank andresponsibilities within the Group, performance, years of service/appointment and potential for future development of theGrantee and the performance of the Group.

The maximum number of Shares to be issued under the Scheme shall not exceed 15% of the issued share capital of theCompany at any time and from time to time during the existence of the Scheme. The size takes into account the issued sharecapital of the Company, the potential increase in the number of Employees and Non-Executive Directors and the grant of theOptions over the duration of the Scheme.

Controlling shareholders of the Company or Associates (i.e. Teo Ho Beng, Teo Ho Kang, Teo Poh Sim) of such ControllingShareholders participated in the Scheme as their participation and the number of Shares and terms of Options granted to themhave been approved by independent shareholders of the Company on 28 April 2004. The actual numbers and terms of theOptions to be granted to the Controlling Shareholders and their Associates shall be subject to the following :

(i) the aggregate number of Shares available to Controlling Shareholders and their Associates must not exceed 25% of theShares available under the Scheme; and

(ii) the number of Shares available to each Controlling Shareholder or each of his Associates must not exceed 10% of theShares available under the Scheme.

Options which are accepted by the Participants may be exercised during the Option period and at the relevant exercise prices.All Options granted to Employees, must be exercised before the tenth anniversary from the date of the Date of Grant or suchearlier date as may be determined by the Committee, failing which the Option shall be deemed to have expired and shall ceasedto be valid. All Options granted to Non-Executive Directors of the Group, must be exercised before the fifth anniversary fromthe date of the Date of Grant or such earlier date as may be determined by the Committee, failing which Option shall bedeemed to have expired and shall cease to be valid.

During the year, the shares options were granted to Executive Directors as well as Independent, Non-Executive Directors. TheIndependent, Non-Executive Directors provide invaluable guidance in relation to the strategic issues and development of theGroup with their wealth of experience in corporate governance and business management. Although they are not involved inthe day-to-day running of the Group, the Independent, Non-Executive Directors are frequently consulted on various matters inrelation to the business of the Group. The Company therefore regards these persons as an additional resource pool and valuestheir contributions greatly. The extension of the Scheme to Independent, Non-Executive Directors is therefore in recognitionof their services and contributions to the growth and development of the Group.

Before granting any Option to an Independent, Non-Executive Director, the Committee takes into consideration, his performanceand contributions to the success and development of the Group. In assessing the performance of these Directors, the attendanceat meetings, the membership in various committees as well as the contribution of individual directors are taken into consideration.The Independent, Non-Executive Directors are also members of the Executive Share Option Committee. However, one of theRules of the Scheme provides that no member of the Committee shall participate in any deliberation or decision in respect of


p22

Options to be granted to him or held by him. The Independent, Non-Executive Directors are granted a small number of Sharesso as to minimize the potential conflict of interest and not to compromise the independence of the Independent Non-ExecutiveDirectors.

Particulars of share options granted to directors are as follows:Aggregate

Options Aggregate Options granted Options cancelled

during the since date since date OptionsPerson to whom financial year Exercise of grant to of grant to outstandingoptions were granted under review price 31.12.2004 31.12.2004 @ 31.12.04

DirectorsChew Heng Ching 2,000,000 $0.056 2,000,000 - 2,000,000Teo Ho Beng 2,000,000 $0.056 2,000,000 - 2,000,000Teo Ho Kang, Roland 1,000,000 $0.056 1,000,000 - 1,000,000Lim Kim Soon Lee, Cindy 1,000,000 $0.056 1,000,000 - 1,000,000

Independent, Non-Executive DirectorsChan Wah Tiong 300,000 $0.056 300,000 - 300,000Dr Wang Kai Yuen 300,000 $0.056 300,000 - 300,000Chan Boon Hui 300,000 $0.056 300,000 - 300,000

Accountability and Audit

Principle 10 : Accountability of the Board and Management

The Company has adopted half-yearly results reporting. The results are published through MASNET previously and SGXNETwith effect from 1 November 2004.

The Executive Committee (EXCO) meets monthly to review the monthly performance of the Group. The Board is providedwith periodic financial reports and other relevant disclosure documents, where appropriate by Management.

Audit Committee

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

The Board is of the opinion that the members of Audit Committee (“AC”) have sufficient expertise and experience to dischargetheir duties.

The role of AC is to assist the Board of Directors in the execution of its corporate governance responsibilities within its terms ofreference and requirements.

The functions of AC include:

a) reviewing with the external auditors, the audit plan, their evaluation of the system of internal accounting controls, theiraudit report, the Management letter and Management’s responses;

b) reviewing the half-year and full year financial statements before submission to the Board for approval;



p23

c) reviewing the assistance given by Management to the external auditors;d) reviewing the scope and results of the audit and its cost effectiveness and the independence and objectivity of the external

auditors annually and the nomination of their re-appointment as auditors of the Company;e) reviewing all non-audit services provided by the external auditors so as to ensure that any provision of such services would

not affect the independence of external auditors;f ) investigating any matters within its terms of reference; andg) reviewing interested person transactions falling within the scope of the SGX-ST Listing Manual.

The AC has full access to all personnel, records and other information to enable it to properly discharge its function and has fulldiscretion to invite any Director and/or executive officer to attend its meetings. The AC has received full co-operation fromManagement and external auditors. The AC met twice during the year and most members were present during these meetings.The members had met once separately with the external auditors without the presence of Management.

Having reviewed the non-audit services rendered to the Group by the external auditors, the AC is satisfied with the independenceand objectivity of the external auditors and recommends to the Board of Directors, the nomination of the external auditors.

Internal Controls

Principle 12 : Sound system of internal controls

The Group maintains a system of internal controls for all companies within the Group. The controls are to provide reasonable,but not absolute, assurance to safeguard shareholders’ investments and the Group’s assets.

The Audit Committee and the Board of Directors will review the effectiveness of the key internal controls, including financial,operational and compliance controls, and risk management on an on-going basis.

The Board is satisfied that there are adequate internal controls in the Group.

Internal Audit

Principle 13 : Internal Audit

The Group is planning to outsource its internal audit functions to an external consultancy firm for the financial year ending 31December 2005. The AC will review and ensure that the internal auditor is independent and have the appropriate standing toperform its function effectively. The internal auditor shall plan its internal audit schedules in consultation with Managementand its plan is to be submitted to AC for approval.

The Internal Auditors shall report directly to AC.

Communication with shareholders

Principle 14 : Regular, effective and fair communication with shareholdersPrinciple 15 : Shareholder participation at AGMs

The Group strives for timeliness and transparency in its disclosures to the shareholders and the public. In addition to the regulardissemination of information through MASNET/SGXNET, the Company also responds to enquiries from investors, analysts,fund managers and the press. However, the Company does not practice selective disclosure as all price-sensitive information isreleased through MASNET/SGXNET.

The Company maintain a website to bring public awareness of the Group’s latest development and businesses. The public canfeedback to the Company via the electronic mail address or the registered address. The Company will respond to the request forannual report.


p24

The Company delivers the Annual Report to the Shareholders at least 14 days before the holding of the Annual GeneralMeeting. Notice of the Annual General Meeting is also published on the newspaper, The Business Times. The shareholders canappoint proxy to attend the meeting on their behalf in the event that they are unable to attend the Meeting.

At Annual General Meetings, shareholders are given the opportunities to express their views and to raise their queries to theBoard on matters relating to the operations of the Group. Chairman of the Audit, Nominating, Remuneration and ExecutiveShare Options Committees are to be present at the Meeting to attend to questions raised by the Shareholders.

SECURITIES TRANSACTIONS

In line with SGX Best Practices Guide on Dealings in Securities, the Company has adopted an internal compliance code whichmirrors substantially the provisions of the Best Practices Guide in the Listing Manual to provide guidance to its Directors andofficers in relation to the dealings in its securities.

The Company issues circulars to its Directors, principal officers and relevant officers who have access to unpublished materialprice-sensitive information to remind them that they are required to report on their dealings in shares of the Company. They arealso reminded of the prohibition in dealings in shares of the Company the month before the release of financial results andending on the date of the announcement of the relevant results, and if they are in possession of unpublished material pricesensitive information.

List of Directorships or Chairmanships held presently or in the last 3 years in other listed Companies :

Name of Directors Companies Date of Date ofAppointment Resignation

Teo Guan Seng, BBM SuperBowl Holdings Limited 03.05.1994 -Xpress Holdings Ltd 20.12.2002 25.11.2004

Chew Heng Ching ASJ Holdings Limited 10.01.1997 -Alantac Technology Ltd 26.8.2004Bonvests Holdings Limited 02.04.1995 -Chosen Holdings Limited 08.02.1999 -Dragon Land Limited 12.05.1999 -Huan Hsin Holdings Ltd 25.8.2004KS Tech Ltd 22.07.1999 -Lee Kim Tah Holdings Limited 29.06.1998 -LMA International N.V. 20.5.2004Spindex Industries Limited 13.10.1998 -Xpress Holdings Ltd 11.04.2003 25.11.2004

Teo Ho Beng SuperBowl Holdings Limited 03.05.1994 -Xpress Holdings Ltd 05.12.2001 25.11.2004

Teo Ho Kang, Roland SuperBowl Holdings Limited 28.09.1995 -Xpress Holdings Ltd 05.12.2001 19.02.2003

Lim Kim Soon Lee, Cindy Xpress Holdings Ltd 05.12.2001 25.11.2004



p25

Name of Directors Companies Date of Date ofAppointment Resignation

Dr Wang Kai Yuen Accord Customer Care Solutions Ltd 31.07.2000 13.05.2004Asian Micro Holdings Limited 20.08.1999 -Altus Corporation Ltd 19.05.2004Comfort DelGro Corporation Limited 18.02.2003 -COSCO Corporation (Singapore) Limited 02.05.2001 -Koon Holdings Limited 11.04.2003 -Matex International Ltd 11.07.2003 -Mayfran International Ltd 02.09.2002 -Nylect Technology Limited 20.07.2000 -PDC Corporation Ltd 22.05.2000 01.03.04Soilbuild Group Holdings Ltd 28.06.2001 -SuperBowl Holdings Limited 01.08.1994 -Xpress Holdings Ltd 08.06.1999 -

Chan Wah Tiong Koda Ltd 01.10.2001 -

Chan Boon Hui Vantage Corporation Limited 18.05.2004 -

Interested Person Transactions

Loan from Hiap Hoe Holdings Pte Ltd (“Hiap Hoe”) and GroupUnder the terms of the Supplemental Option Agreement pursuant to the Reverse Acquisition, Hiap Hoe Holdings Pte Ltd (theultimate holding company of Hiap Hoe Limited) has agreed that subject to the Completion of the Acquisition, the $35 millionin aggregate of the Hiap Hoe Existing Loans shall remain outstanding and owing by Keng Hoe Development Pte Ltd, SiongHoe Development Pte Ltd and Guan Hoe Development Pte Ltd (Development Companies). In addition to the Hiap Hoe $35million Loans, Hiap Hoe has agreed that it and/or any of its subsidiaries may extend additional loans to the DevelopmentCompanies of up to an aggregate of $5 million as and when required in order to provide further working capital for theDevelopment Companies. The interest charged for the loans ranges from 0.4375% to 4.35% for the year ended 31 December2004. During the year ended 31 December 2004, the outstanding loans were fully repaid.

Transactions with Keng Heng Construction Pte Ltd (“KHC”)KHC, a company incorporated in Singapore, is principally engaged in the construction business. Mr Teo Ho Beng, a directorof Hiap Hoe Limited and Group of Companies is also a shareholder of KHC. He has 66.7% ownership in KHC while his sister,Ms Teo Poh Hwee owns 8.3% of KHC. The remaining 25% is owned by managers of KHC who are unrelated to the Teofamily. Prior to the reverse take-over, KHC entered into contract with the Development Companies as the Main Contractor ofthe development projects in the following table. The nature and details of the transactions have been disclosed in the Circulardated 15 November 2002 prior to the reverse take-over.


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Total Contract ProgressAwarding party Date Development Sum Payment(1)

Keng Hoe DevelopmentPte Ltd 10 Nov 2000 8 Jalan Rama Rama Approx. $13.9m $ 386,162

Siong Hoe DevelopmentPte Ltd 15 Aug 2001 25 Moonstone Lane Approx. $15.7m $3,926,330

Guan Hoe DevelopmentPte Ltd 15 Aug 2001 12 Lorong Sarina Approx. $7.1m $ 377,272

Save as disclosed above, no director, chief executive officer or controlling shareholders, or associate is interested in any materialtransaction undertaken by the Hiap Hoe Limited & Group.

Pursuant to Rule 920 of the Listing Manual of the Singapore Exchange Securities Trading Limited, there was no transactionwith interested persons for the financial year under review that warrants a shareholders mandate.

Note :(1) The progress payment was made during the year from 1 January 2004 to 31 December 2004.

Transactions with Hiap Hoe Realty Pte Ltd (“HHR”)On 16 November 2004, one of the Company’s wholly-owned subsidiary, Leong Hoe Development Pte. Ltd. (“LHD”) hasentered into ten conditional sale and purchase agreements with HHR for the proposed acquisition of the strata propertiescomprised in Lot Number 1525K Town Subdivision 24; and the vacant land comprised in Lot Number 1526N Town Subdivision24, which are freehold properties for an aggregate purchase consideration of $27,000,000. The strata properties are units ofdevelopment named “Angullia Park” comprising an 11-storey residential block accommodating a total of 9 apartment units,located at 12 Angullia Park, Singapore 239972. HHR is a wholly owned subsidiary of Hiap Hoe Holdings Pte Ltd, theControlling Shareholder. The nature and details of the transactions have been disclosed in the Circular dated 5 January 2005.During the year ended 31 December 2004, the payment made to HHR was $2,700,000 being 10% of the purchase consideration.The balance of $24,300,000 was paid on 2 February 2005 upon the Completion of the Sale and Purchase of the properties.These transactions had been approved by shareholders on 20 January 2005.



p27DIRECTORS’ REPORT

The Directors are pleased to present their report to the members together with the audited financial statements of Hiap HoeLimited (the Company) and its subsidiary companies (the Group) for the financial year ended 31 December 2004.

Directors

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

Teo Guan Seng, BBM

Chew Heng ChingTeo Ho BengTeo Ho Kang, RolandLim Kim Soon Lee, CindyChan Wah TiongDr Wang Kai YuenChan Boon Hui

Arrangements to enable Directors to acquire shares and debentures

Except as described below, neither at the end of nor at any time during the financial year was the Company a party to anyarrangement whose object is to enable the Directors of the Company to acquire benefits by means of the acquisition of sharesor debentures of the Company or any other body corporate.

Directors’ interests in shares and debentures

According to the register of Directors’ shareholdings required to be kept under Section 164 of the Companies Act,

(i) the following Directors of the Company who held office at the end of the financial year had an interest in the shares of theCompany and related corporations, as stated below:

Shares in whichShares registered in Director is deemed

the name of Director to have an interestAt the beginning At the end At the beginning At the end

Name of Director of the year of the year of the year of the year

(a) The Company :

Hiap Hoe Limited(Ordinary shares of$0.025 each)

Teo Guan Seng, BBM - - 882,084,122* 882,084,122Chew Heng Ching 400,282* 400,282 - -Teo Ho Beng 400,000* 400,563 - 882,084,122

* For comparative purposes, Directors’ interests in shares have been adjusted to take into consideration of the shareconsolidation of every five ordinary shares of $0.005 each into one ordinary share of $0.025 each which was effectedon 24 May 2004.

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Directors’ interests in shares and debentures (cont’d)

Shares in whichShares registered in Director is deemed

the name of Director to have an interestAt the beginning At the end At the beginning At the end

Name of Director of the year of the year of the year of the year

(b) The immediate holdingcompany :

Hiap Hoe Holdings Pte Ltd(Ordinary shares of $1 each)

Teo Guan Seng, BBM 10,210,700 5,281,534 - -Teo Ho Beng 258,700 3,222,245 - -Teo Ho Kang, Roland 183,700 1,257,270 - -

(c) A fellow subsidiarycompany:

SuperBowl Holdings Limited(Ordinary shares of$0.15 each)

Teo Guan Seng, BBM - - 113,504,020 113,504,020Teo Ho Beng 260,000# 260,000# - 113,504,020Teo Ho Kang, Roland 150,000# 150,000# - -Lim Kim Soon Lee, Cindy 5,000 205,000 - -Dr Wang Kai Yuen 5,000 5,000 - -

# Shares held in the name of nominees.

Mr Teo Guan Seng, BBM and Mr Teo Ho Beng, by virtue of Section 7 of the Companies Act, are deemed to have interestsin shares of all the wholly-owned subsidiary companies of Hiap Hoe Limited, Hiap Hoe Holdings Pte Ltd and SuperBowlHoldings Limited.

DIRECTORS’ REPORT



Directors’ interests in shares and debentures (cont’d)

(ii) the following Directors who held office at the end of the financial year, had options to subscribe for shares in a fellowsubsidiary company, SuperBowl Holdings Limited, as stated below :

Number of unissuedordinary shares under

option held by DirectorAt the beginning At the end

of the year of the year

2001 Options

Teo Ho Beng 160,000 160,000Teo Ho Kang, Roland 120,000 120,000Lim Kim Soon Lee, Cindy 80,000 -

2002 Options

Teo Ho Beng 160,000 160,000Teo Ho Kang, Roland 120,000 120,000Lim Kim Soon Lee, Cindy 120,000 -Dr Wang Kai Yuen 80,000 80,000

Except as disclosed above, no Directors who held office at the end of the financial year had interests in shares, share options,warrants or debentures of the Company or of related corporations either at the beginning or end of the financial year.

There was no change in any of the abovementioned interests between the end of the financial year and 21 January 2005.

Directors’ contractual benefits

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive a benefit byreason of a contract made by the Company or a related corporation with the Director, or with a firm of which the Director isa member, or with a company in which the Director has a substantial financial interest.

Audit Committee

The Audit Committee performed the functions specified in the Companies Act. The functions performed are detailed in theReport on Corporate Governance.

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Share option scheme

The Scheme is a share incentive plan that enables the Company to give recognition to the contributions made by full-timeEmployees (including Group Executive Directors) and Non-Executive Directors and at the same time, provides them with anopportunity to participate in the equity of the Company. This Scheme had been approved by the shareholders on 26 April2004. Under the Scheme, the Company may grant options to confirmed employees, including Non-executive Directors whomeet the two criteria below, at the absolute discretion of the Committee:

(a) have attained the age of twenty-one years on or before the Date of Grant; and(b) not be an undischarged bankrupt and must not have entered into a composition with his/her creditors.

Persons who are Controlling Shareholders or their Associates shall, subject to meeting the above eligibility criteria, be eligible toparticipate in the Scheme if :

(i) their participation; and(ii) the actual number of Shares and terms of any Options to be granted to them

have been approved by independent shareholders of the Company in general meeting in separate resolutions for each suchperson and, in respect of each such person, in separate resolutions for each of (i) his/her participation and (ii) the actual numberof Shares and terms of any Options to be granted to him/her.

Under the option scheme, the Company can grant up to a maximum of 20% of the average of the last dealt price per share ofthe Company on the Singapore Exchange Securities Trading Limited for the period of 5 consecutive trading days immediatelyprior to the relevant offer date.

The Committee administering the Scheme comprises the following Directors of the Company:

Chan Boon Hui (Chairman)Chan Wah TiongDr Wang Kai YuenTeo Ho Beng

The options may be exercised, at any time after the first anniversary of the Date of Grant, but before the tenth anniversary whilefor non-executive Directors, it is before the fifth anniversary. At the end of the financial year, there were 10,000,000 optionsthat have been granted but not exercised, details as follows:

Balance Granted Lapsed Exercised Balanceas at during during during as at Exercise Expiry

Date of grant 01.01.04 the year the year the year 31.12.04 price Date

10 June 2004 - 10,500,000 500,000 - 10,000,000 $0.056 9 June 2014

The options do not entitle the holder to participate, by virtue of the options, in any share issues of any other corporation. Nounissued shares other than those referred to above, are under option as at the date of this report. No options were granted at adiscount during the year and no options were granted to employees of related corporations.

DIRECTORS’ REPORT



Share option scheme (cont’d)

Particulars of share options granted to Directors and their associates pursuant to the Scheme are as follows:

Aggregate Aggregateoptions options

granted since cancelled since AggregateOptions commencement commencement optionsgranted of Scheme of Scheme outstanding as

Person to whom during the Exercise to end of to end of at end ofoptions were granted financial year price financial year financial year financial year

DirectorsChew Heng Ching 2,000,000 $0.056 2,000,000 - 2,000,000Teo Ho Beng 2,000,000 $0.056 2,000,000 - 2,000,000Teo Ho Kang, Roland 1,000,000 $0.056 1,000,000 - 1,000,000Lim Kim Soon Lee, Cindy 1,000,000 $0.056 1,000,000 - 1,000,000Chan Wah Tiong 300,000 $0.056 300,000 - 300,000Dr Wang Kai Yuen 300,000 $0.056 300,000 - 300,000Chan Boon Hui 300,000 $0.056 300,000 - 300,000

Associates*Teo Poh Sim, Agnes 500,000 $0.056 500,000 - 500,000

* Associates refers to related parties of the Directors

At the end of the financial year, there were no options that have been granted to controlling shareholders of the Company andtheir associates and no employees has received 5% or more of the total number of options available under the Scheme.

No options have been exercised as at the date of this report.

Other Information Required by the Singapore Exchange Securities Trading Limited

Except as disclosed in Notes 13, 27 and 31 of the financial statements, no material contracts of the Company and its subsidiarycompanies, which involve the interests of the chief executive officer, each Director or controlling shareholder, subsisted at theend of the financial year, or have been entered into since the end of the previous financial year.

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Auditors

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

On behalf of the Board,

Chew Heng ChingDirector

Teo Ho BengDirector

Singapore15 March 2005

DIRECTORS’ REPORT


p33STATEMENT BY DIRECTORS

We, Chew Heng Ching and Teo Ho Beng, being two of the Directors of Hiap Hoe Limited, do hereby state that, in the opinionof the Directors,

(i) the accompanying balance sheets, profit and loss accounts, statements of changes in equity and consolidated cash flowstatements together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of theCompany and of the Group as at 31 December 2004 and of the results of the business and changes in equity of theCompany and Group, and cash flows of the Group for the financial year then ended; and

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

On behalf of the Board,

Chew Heng ChingDirector

Teo Ho BengDirector


p34

We have audited the financial statements of Hiap Hoe Limited (the Company) and its subsidiary companies (the Group) setout on pages 35 to 78 for the year ended 31 December 2004. These financial statements are the responsibility of the Company’sDirectors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the consolidated financial statements of the Group and the financial statements of the Company are properly drawn up inaccordance with the provisions of the Companies Act, Cap. 50 (the Act) and Singapore Financial Reporting Standards soas to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2004 and theresults and changes in equity of the Group and of the Company, and cash flows of the Group for the year ended on thatdate; and

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

ERNST & YOUNGCertified Public Accountants


AUDITORS’ REPORT


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Group CompanyNote 2004 2003 2004 2003

$ $ $ $

ASSETS LESS LIABILITIES

Non-Current Assets

Fixed assets 3 4,770,115 4,892,518 265,894 213,739Investment properties 4 10,016,240 9,975,520 - -Investments in subsidiary companies 5 - - 46,684,553 34,934,553Investment in associated company 6 - - - -Joint venture 7 - 827,909 - -

14,786,355 15,695,947 46,950,447 35,148,292

Current Assets

Cash and bank balances 1,011,028 3,512,845 24,054 25,188Fixed deposits 613,834 20,000,000 - -Other investments 8 153,273 5,903,813 - 5,000,000Trade receivables 9 4,155,658 9,371,156 - -Other receivables, deposits

and prepayments 10 3,720,483 3,385,393 43,044 153,715Due from subsidiary

companies (non-trade) 11 - - 106,656 71,163Due from related

companies (non-trade) 12 - 12,096 - -Development properties 13 71,896,001 61,987,971 - -Work-in-progress 14 481,308 746,793 - -

82,031,585 104,920,067 173,754 5,250,066

BALANCE SHEETSas at 31 December 2004

p36BALANCE SHEETS (CONT’D)as at 31 December 2004


$ $ $ $

Current Liabilities

Trade payables 541,407 267,434 45,640 -Other payables and accruals 15 4,113,950 3,668,316 568,377 689,380Due to a joint venture

(non-trade) 12 - 13,458 - -Due to subsidiary companies

(non-trade) 12 - - 15,457,655 7,818,891Due to ultimate holding

company (non-trade) 12 - 755,841 - 755,619Due to related companies

(non-trade) 16 - 5,870,489 - -Interest-bearing loans

and borrowings 17 34,201,224 16,567,251 10,004 -Provision for taxation 119,098 1,363,144 11,132 10,886

38,975,679 28,505,933 16,092,808 9,274,776

Net Current Assets/(Liabilities) 43,055,906 76,414,134 (15,919,054) (4,024,710)

Non-Current Liabilities

Due to related companies(non-trade) 16 - 35,000,000 - -

Interest bearing loansand borrowings 17 60,079 49,309 59,163 -

Deferred taxation 19 132 389,817 - -

60,211 35,439,126 59,163 -

Net Assets 57,782,050 56,670,955 30,972,230 31,123,582

EQUITY

Share capital 20 27,643,970 27,643,970 27,643,970 27,643,970Reserves 21 30,138,080 29,026,985 3,328,260 3,479,612

Total Equity 57,782,050 56,670,955 30,972,230 31,123,582

The accounting policies and explanatory notes on pages 42 through 78 form an integral part of the financial statements.


p37PROFIT AND LOSS ACCOUNTSfor the year ended 31 December 2004


$ $ $ $

Revenue 23 38,179,482 35,128,547 1,301,389 1,145,906Cost of sales (36,650,672) (22,250,658) - -

Gross profit 1,528,810 12,877,889 1,301,389 1,145,906Distribution and selling expenses (802,472) (1,377,393) - -Administrative expenses 24 (4,025,954) (6,488,674) (1,456,280) (1,542,899)Other income/(expenses) 26 4,689,587 (9,658,605) 15 (70,917,110)

Profit/(loss) from operating activities 1,389,971 (4,646,783) (154,876) (71,314,103)Financial expenses 27 (930,618) (3,809,931) (141,628) (50,364)Financial income 27 265,888 18,322 145,398 5,962

Profit/(loss) from ordinaryactivities before exceptionalitems and taxation 725,241 (8,438,392) (151,106) (71,358,505)

Exceptional items- Goodwill written off 28 - (11,977,114) - -- Gain on disposal of

Bukit Panjang Plaza - 47,170,333 - -

Profit/(loss) from ordinaryactivities before taxation 725,241 26,754,827 (151,106) (71,358,505)

Taxation 29 385,854 (1,003,283) (246) -

Net profit/(loss) for the year 1,111,095 25,751,544 (151,352) (71,358,505)

Basic and fully dilutedearnings per share (cents) 30 0.10 2.37


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$ $ $ $

Issued share capital (1) 20Balance at beginning of year 27,643,970 15,437,252 27,643,970 678,986Issue of shares - 17,927 - 26,964,984Arising from reverse acquisition - 12,188,791 - -

Balance at end of year 27,643,970 27,643,970 27,643,970 27,643,970

Capital reduction reserveBalance at beginning of year 5,773,525 - 5,773,525 5,773,525Arising from reverse acquisition - 5,773,525 - -


Share premium 22Balance at beginning of year 71,013,170 - 71,013,170 987,286Issue of shares - 233,044 - 70,025,884Arising from reverse acquisition - 70,780,126 - -


Accumulated profits/(losses)Balance at beginning of

year, as previously stated 33,243,733 6,545,177 (73,307,083) (1,948,578)Effect of adopting FRS 18 (2) - 947,012 - -

Balance at beginning ofyear, as restated 33,243,733 7,492,189 (73,307,083) (1,948,578)

Net profit/(loss) for the year 1,111,095 25,751,544 (151,352) (71,358,505)

Balance at end of year 34,354,828 33,243,733 (73,458,435) (73,307,083)

Capital reserveBalance at beginning of year (81,003,443) - - -Arising from reverse acquisition - (81,003,443) - -

Balance at end of year (81,003,443) (81,003,443) - -

Total equity 57,782,050 56,670,955 30,972,230 31,123,582

(1) The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carryone vote per share without restriction.

(2) FRS 18 (Revised) Revenue became effective for the financial statements for the year ended 31 December 2003. On adoption of thisStandard in prior year, the Group changed its revenue recognition policy from the completed contract method to the percentage ofcompletion method. The change in accounting policy resulted in an increase in accumulated profits as at 1 January 2003 by $947,012.

As disclosed in prior year’s financial statements, this has been adjusted against the opening accumulated profits of the Group as at1 January 2003 accordingly.

STATEMENTS OF CHANGES IN EQUITYfor the year ended 31 December 2004



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2004 2003$ $

Cash flows from operating activitiesProfit from ordinary activities before taxation 725,241 26,754,827Adjustments:

Depreciation of fixed assets 315,623 1,520,208Gain from waiver of debts from unsecured creditors - (295,732)Gain on disposal of Bukit Panjang Plaza - (47,170,333)Loss/(gain) on disposal of fixed assets 2,547 (93,564)Impairment loss/(write-back of impairment) in quoted investments 29,050 (39,525)(Write-back of )/provision for impairment loss on fixed assets (115,860) 559,676Interest expenses 930,618 3,809,931Provision for contingency 1,029,909 -Dividend income from quoted investments (4,142) (4,760)Interest income (265,888) (18,322)Loss on disposal of investment property - 10,000(Gain)/loss on disposal of quoted investment (3,727) 418,057(Write-back of )/provision for foreseeable losses on development properties (4,893,991) 9,367,290(Write-back of )/provision for impairment in value of investment properties (40,720) 683,065Write off of goodwill arising from reverse acquisition - 11,977,114Write-back of provision for impairment in value of other investments (227,277) -

Operating (loss)/profit before working capital changes (2,518,617) 7,477,932(Increase)/decrease in:

Development properties (4,287,755) 9,844,167Trade receivables 5,215,498 386,439Other receivables, deposits and prepayments (320,785) (2,895,967)Work-in-progress 265,485 1,592,549

Increase/(decrease) in:Trade payables 273,973 (3,809,659)Other payables and accruals (597,733) 616,133Rental deposits received - (1,266,378)

Operating (loss)/profit after working capital changes (1,969,934) 11,945,216Income tax paid (1,247,877) (1,364,622)Income tax refunded - 516,391

Net cash (used in)/generated from operating activities (3,217,811) 11,096,985

CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 31 December 2004

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2004 2003$ $

Cash flows from investing activitiesProceeds from disposal of fixed assets 59,654 195,021Proceeds from disposal of investment property - 790,000Proceeds from disposal of quoted investment 952,494 312,450Proceeds from disposal of joint venture 827,909 -Proceeds from disposal of unquoted investment 18,750,000 -Proceeds from disposal of Bukit Panjang Plaza - 126,234,990Purchase of unquoted investment (13,750,000) (5,000,000)Interest income received 251,583 18,322Purchase of fixed assets (Note C) (69,561) (390,992)Dividend income received 4,142 4,760Net cash acquired on reverse acquisition (Note B) - 574,218

Net cash generated from investing activities 7,026,221 122,738,769

Cash flows from financing activitiesRepayment of bank term loans (22,736,986) (118,858,768)Borrowings from banks 40,625,710 11,883,714(Repayment of )/proceeds from loan from related companies (40,584,909) 871,696Repayment of loans to ultimate holding company (755,841) -Repayment of hire purchase (61,795) (81,481)Decrease in restricted bank balance - 612,701Interest paid (1,949,857) (5,874,249)

Net cash used in financing activities (25,463,678) (111,446,387)

Net (decrease)/increase in cash and cash equivalents (21,655,268) 22,389,367Cash and cash equivalents at beginning of year 23,280,130 890,763

Cash and cash equivalents at end of year (Note A) 1,624,862 23,280,130

A. Cash and cash equivalents

Cash and cash equivalents included in the consolidated statement of cash flows comprise the following:

2004 2003$ $

Cash and bank balances 1,011,028 3,512,845Fixed deposits 613,834 20,000,000Less : Bank overdrafts - (232,715)

1,624,862 23,280,130

Fixed deposits bear interest at rates ranging from 0.875% to 1.22% (2003: 0.3% to 0.5%) per annum and maturity periodranges from 7 days to 1 month from the financial year end.

CONSOLIDATED STATEMENT OF CASH FLOWS (CONT’D)for the year ended 31 December 2004


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B. Net cash acquired on reverse acquisition

The effect on the Group’s cash flows arising from the reverse acquisition of the former Chew Eu Hock Group is shown inthe statement of cash flows as a single item.

The fair values of the assets and liabilities acquired are set out below :

2003$

Fixed assets 5,357,086Joint Venture 827,909Investment properties 11,458,585Trade and other receivables 1,153,680Work-in-progress 2,339,342Due from related companies 250Other investments 1,595,888Cash and bank balances 1,216,887Trade and other payables (5,292,701)Interest-bearing loans and borrowings (22,225,191)Provision for taxation (669,851)

Net identifiable liabilities (4,238,116)Goodwill on acquisition 11,977,114

Total consideration 7,738,998Less : Shares issued (7,738,998)

Cash consideration paid -Cash acquired 1,216,887

1,216,887Less : Restricted bank balances (642,669)

Net cash acquired on reverse acquisition 574,218

C. During the year, the Group acquired fixed assets with an aggregate cost of $139,561 (2003 : $390,992), of which $70,000(2003 : nil) was acquired by means of hire purchase arrangements and the balance of the payments of $69,561 (2003 :$390,992) was made in cash.

CONSOLIDATED STATEMENT OF CASH FLOWS (CONT’D)for the year ended 31 December 2004


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1. Corporate information

The financial statements of Hiap Hoe Limited for the year ended 31 December 2004 were authorised for issue in accordancewith a resolution of the Directors on 15 March 2005.

Hiap Hoe Limited is a limited liability company. Its immediate holding company is Hiap Hoe Holdings Pte Ltd. Bothcompanies are domiciled and incorporated in Singapore.

The registered office of Hiap Hoe Limited is located at 564A Balestier Road, Singapore 329880.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiary companiesare those of contractors for civil engineering, general road construction and sub-contractor works, property investment,rental of machinery and equipment and property developer.

There have been no significant changes in the nature of these activities during the financial year.

The Group and Company operate mainly in Singapore and as at 31 December 2004, the number of employees in theGroup and Company was 15 (2003: 21) and 12 (2003: 9) respectively.

Related companies in these financial statements refer to the group of companies under Hiap Hoe Holdings Pte Ltd.

2. Significant accounting policies

(a) Basis of preparation

The financial statements of the Company and of the Group have been prepared in accordance with SingaporeFinancial Reporting Standards (FRS) as required by the Companies Act.

The financial statements of the Company and the Group have been prepared on a historical cost basis, modified bythe revaluation of investment properties.

The accounting policies have been consistently applied by the Company and the Group and are consistent with thoseused in the previous financial year.

The financial statements are presented in Singapore Dollars (SGD or $).

(b) Principles of consolidation

The accounting year of the Company and all its subsidiary companies in the Group ends on 31 December.

The consolidated financial statements comprise the financial statements of the Company and its subsidiary companies,after the elimination of all material intergroup transactions and resulting unrealised profits. Unrealised losses resultingfrom intragroup transactions are also eliminated unless costs cannot be recovered.

Subsidiary companies are consolidated from the date on which control is transferred to the Group and cease to beconsolidated from the date on which control is transferred out of the Group. Acquisitions of subsidiary companiesare accounted for using the purchase method of accounting.

On 16 January 2003, the Company became the legal parent of 4 subsidiary companies of Hiap Hoe Holdings PteLtd namely Bukit Panjang Plaza Pte Ltd, Keng Hoe Development Pte Ltd, Guan Hoe Development Pte Ltd andSiong Hoe Development Pte Ltd (“Acquired Companies”) in a share-to-share transaction. Due to the relative valuesof the companies, Hiap Hoe Holdings Pte Ltd became the majority shareholder of the Company with 79.8% of theenlarged share capital. Further, the Company’s continuing operations and executive management were those of theAcquired Companies. Accordingly, the substance of the business combination is that the Acquired Companiesacquired the former Chew Eu Hock Group in a reverse acquisition.

NOTES TO THE FINANCIAL STATEMENTS31 December 2004


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2. Significant accounting policies (cont’d)

(b) Principles of consolidation (cont’d)

As a consequence of applying reverse acquisition accounting, the results for the year ended 31 December 2003comprise the results of the Acquired Companies for the year ended 31 December 2003, and those of the formerChew Eu Hock Group from 16 January 2003, the date of reverse acquisition, to 31 December 2003. As set out inNote 28 to the financial statements, goodwill amounting to $11,977,114 arose on the difference between the cost ofacquisition and the fair value of the net liabilities assumed at the reverse acquisition date. The goodwill has beenwritten off to the profit and loss account during the year ended 31 December 2003, because it does not relate tofuture economic benefits that are expected to flow to the enlarged Group.

The results of those subsidiary companies disposed of during the financial year will be excluded from the consolidatedfinancial statements from the effective date of disposal.

(c) Subsidiary companies

A subsidiary company is a company in which the Group, directly or indirectly, holds more than 50% of the issuedshare capital, or controls more than half of the voting power, or controls the composition of the board of Directors.

Investments in subsidiary companies are stated in the Company’s financial statements at cost less provision for anyimpairment in value.

The subsidiary companies are set out in Note 5 to the financial statements.

(d) Associated companies

An associated company is an entity, not being a subsidiary, in which the Group has a long-term interest of not lessthan 20% nor more than 50% of the equity and in whose financial and operating policy decisions the Groupexercises significant influence.

Investment in associated company is stated in the Company’s financial statements at cost. Provision is made for anyimpairment in value.

The Group’s share of results of the associated company is included in the consolidated profit and loss account. TheGroup’s share of the post-acquisition reserves of the associated company is included in investments in the consolidatedbalance sheet. The share of results is arrived at from the latest audited financial statements available.

The associated company is set out in Note 6 to the financial statements.

(e) Joint venture

A joint venture is a company, not being a subsidiary or associated company in which the Company exercises jointcontrol together with one or more partners.

The Group’s investments in joint venture are accounted for under the equity method. Investments in joint ventureare carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of joint venture,less any impairment loss.

The joint venture is set out in Note 7 to the financial statements.


p44


(f) Foreign currencies

Transactions arising in foreign currencies are measured in SGD and recorded at exchange rates approximating thoseruling on the transaction dates. Foreign currency monetary assets and liabilities are measured using the resultantexchange rates ruling at balance sheet date. All resultant exchange differences are recognised in the profit and lossaccount.

(g) Fixed assets

Fixed assets are stated at cost less accumulated depreciation and any impairment in value. The cost of an assetcomprises its purchase price and any directly attributable costs of bringing the asset to its working condition for itsintended use. Expenditures for additions, improvements and renewals are capitalised and expenditures for maintenanceand repairs are charged to the profit and loss account. When assets are sold or retired, their cost and accumulateddepreciation are removed from the financial statements and any gain or loss resulting from their disposal is includedin the profit and loss account.

(h) Depreciation

Depreciation is calculated on the straight-line method to write off the cost of fixed assets over their estimated usefullives. The estimated useful lives of fixed assets are as follows:

Freehold and leasehold properties 50 yearsPlant and machinery 10 yearsMotor vehicles 10 yearsFurniture, fittings and office equipment 1 - 20 yearsRenovations 5 years

Fully depreciated fixed assets are retained in the financial statements until they are no longer in use and no furthercharge for depreciation is made in respect of these assets.

The useful life and depreciation method are reviewed annually to ensure that the method and period of depreciationare consistent with the expected pattern of economic benefits from items of fixed assets.

(i) Goodwill

Goodwill represents the excess of the cost of acquisition over the fair value of identifiable net assets of a subsidiary oran associated company at the date of acquisition. Goodwill is amortised using the straight-line basis over a period of5 years that benefits are expected to be received. Goodwill is reviewed for impairment when events or changes incircumstances indicate that the carrying amount may not be recoverable. Goodwill is stated at cost less accumulatedamortisation and any impairment loss.

Goodwill arising on the reverse acquisition of the former Chew Eu Hock Group has been written off to the profit andloss account for the reasons explained above in Note 2(b) to the financial statements.

Negative goodwill

Negative goodwill arising on acquisition represents the excess of the fair value of the identifiable net assets acquiredover the cost of acquisition.



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(i) Goodwill (cont’d)

Negative goodwill (cont’d)

To the extent that negative goodwill relates to an expectation of future losses and expenses that are identified in theplan of acquisition and can be measured reliably, but which have not yet been recognised, it is recognised in thestatement of profit and loss when the future losses and expenses are recognised. Any remaining negative goodwill,but not exceeding the fair values of the non-monetary assets acquired, is recognised in the statement of profit and lossover the weighted average useful life of those assets that are depreciable or amortisable. Negative goodwill in excessof the fair values of the non-monetary assets acquired is recognised immediately in the profit and loss account.

Negative goodwill is presented in the same balance sheet classification as goodwill. With respect to associated companies,negative goodwill is included in the carrying value of the investment.

(j) Investment properties

Investment properties are investments in property that are not occupied substantially for use by or in the operationsof the Group. They are accounted for as long term investments and are carried in the balance sheet at revaluedamounts, determined annually by the Directors and supported by independent professional valuations, based ontheir existing use. An independent professional valuation is made at least once every 3 years.

The surplus on revaluation is credited directly to revaluation reserve unless it reverses a previous revaluation relatingto the same asset, which was previously recognised as an expense. In these circumstances, the increase is recognisedas income to the extent of the previous write down. Any deficit on revaluation is recognised as an expense unless itreverses a previous surplus relating to that asset, in which case it is charged against any related revaluation surplus inrespect of that same asset. Any balance remaining in the revaluation surplus in respect of an investment property, istransferred directly to accumulated profits on retirement or disposal of that property.

(k) Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand and at bank, demand deposits and short-term, highly liquidinvestments readily convertible to known amounts of cash and subject to an insignificant risk of changes in value.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents are shown net of outstandingbank overdrafts which are repayable on demand and which form an integral part of the Group’s cash management.

(l) Other investments

Quoted investments held as current assets are stated at the lower of cost and market value. Cost is determined on aweighted average basis.

(m) Trade and other receivables

Trade receivables, which generally have 30 days terms, are recognised and carried at original invoice amount lessimpairment losses on any uncollectible amounts.

Amounts due from subsidiary companies/related companies are recognised and carried at cost less impairment losseson any uncollectible amounts.


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(n) Development properties

Development properties for sale are recorded as current assets and are stated at the lower of cost and estimated netrealisable value, net of progress billings. Cost includes cost of land, development expenditure and cost of borrowingsdirectly attributable to the development of the properties. Provision is made for foreseeable losses in arriving atestimated net realisable value, if any.

Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale arein progress and borrowing costs are being incurred. Capitalisation of borrowing costs is suspended during the extendedperiods in which active development is interrupted. Capitalisation of borrowing costs ceases on issue of the TemporaryOccupation Permit. The capitalisation rate is determined by reference to the actual rate payable on borrowings fordevelopment property, weighted as applicable.

(o) Work-in-progress

Work-in-progress comprises costs of incomplete projects incurred plus recognised profits less recognised losses andprogress billings and provision for foreseeable losses. Costs include cost of materials, direct labour and direct andindirect overheads incurred in connection with the contracts.

Provision is made where applicable for any foreseeable losses on uncompleted contracts as soon as the possibility ofthe loss is ascertained. The stage of completion is determined by reference to the percentage of value of work done to-date based on surveys/certificates of work done.

(p) Trade and other payables

Liabilities for trade and other amounts payable, which are settled on 30-90 days terms, are carried at cost, which isthe fair value of the consideration to be paid in the future for goods and services received, whether or not billed to theGroup.

Amounts due to subsidiary companies are carried at cost.

(q) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) where as a result of a pastevent, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligationand a reliable estimate can be made of the amount of the obligation.

(r) Borrowings

Borrowings are recognised at cost net of transaction costs.

(s) Borrowing costs

Borrowing costs are generally expensed as incurred. Borrowing costs are capitalised if they are directly attributable tothe construction of development properties.


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(v) Impairment (cont’d)

Reversal of impairment losses

Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairmentlosses recognised for the asset no longer exist or have decreased. The reversal is recorded in income. However, theincreased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does notexceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairmentloss been recognised for that asset in prior years.

(w) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and therevenue can be reliably measured. The following specific recognition criteria must also be met before revenue isrecognised:

Project revenue

Revenue from contracts is recognised on the percentage of completion method based on the progress of the contractwork, as determined based on surveys/certifications of work done.

Sales of development properties

Revenue from sales of development properties is recognised on units sold using the percentage of completion methodbased on surveys/certifications of work done.

Operating lease rental income

Operating lease rental income is recognised on a time proportion basis.

Other income - advertising and promotion income

Advertising and promotion income is recognised on a time proportion basis.

(x) Income taxes

Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet datebetween the tax bases of assets and liabilities and the carrying amounts for financial reporting purposes. Deferred taxassets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which thosetemporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at thebalance sheet date.

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiarycompanies, associated companies and interests in joint ventures, except where the timing of the reversal of thetemporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeablefuture.



p49


(x) Income taxes (cont’d)

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

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets andunused tax losses, to the extent that it is probable that taxable profit will be available against which the deductibletemporary differences, carry-forward of unused tax assets and unused tax losses can be utilised.

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

(y) Segment reporting

A segment is a distinguishable component of the Group that is engaged in either providing products or services, or inproviding products or services within a particular economic environment, which is subject to risks and rewards thatare different from those of other segments.

Segment information is presented in respect of the Group’s business segments. The primary segment, businesssegments, is based on the Group’s management and internal reporting structure.

Inter-segment pricing, if any, is determined on an arm’s length basis.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can beallocated on a reasonable basis. Unallocated items mainly comprise interest bearing loans, borrowings and expenses,and corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected tobe used for more than one period.

Business segments

The Group comprises 3 main business segments:

- Construction : Contractors for civil engineering, building construction and road construction works, generalcontractors, trading of construction materials

- Development properties : property developer and owner.

- Investment properties : property owner and operator of retail/entertainment space and open landscaped plaza.The Group disposed of the Bukit Panjang Plaza in 2003.

Geographical segments

The Group’s operations and customers are mainly located in Singapore. As such, the Group has not presented abreakdown of segment information by geographical markets.


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3. Fixed assets

Furniture,fittings and

Freehold Leasehold Plant and Motor officeGroup properties properties machinery vehicles equipment Renovations Total

$ $ $ $ $ $ $

CostAt beginning of year 4,201,416 - 548,014 570,582 380,369 6,377 5,706,758Additions - - - 97,888 41,673 - 139,561Disposals - - (197,750) - (11,178) - (208,928)

At end of year 4,201,416 - 350,264 668,470 410,864 6,377 5,637,391

Depreciation andimpairment losses

At beginning of year 516,935 - 189,703 56,240 49,541 1,821 814,240Charge for the year 83,171 - 73,922 91,713 64,831 1,986 315,623Impairment loss

(written back)/provided (169,917) - 54,057 - - - (115,860)

Disposals - - (139,750) - (6,977) - (146,727)

At end of year 430,189 - 177,932 147,953 107,395 3,807 867,276

Charge for 2003 57,267 1,273,866 89,695 39,898 57,661 1,821 1,520,208

Carrying amountAt end of year 3,771,227 - 172,332 520,517 303,469 2,570 4,770,115

At beginning of year 3,684,481 - 358,311 514,342 330,828 4,556 4,892,518



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3. Fixed assets (cont’d)

Furniture,fittings and

Motor officeCompany vehicles equipment Total

$ $ $

CostBalance at beginning of year 222,500 7,513 230,013Additions 97,888 3,968 101,856

Balance at end of year 320,388 11,481 331,869

DepreciationBalance at beginning of year 14,833 1,441 16,274Charge during the year 46,131 3,570 49,701

Balance at end of year 60,964 5,011 65,975

Charge for 2003 14,833 1,441 16,274

Carrying amountAt end of year 259,424 6,470 265,894

At beginning of year 207,667 6,072 213,739

Included in the fixed assets of the Group are the following:

2004 2003$ $

Net book value of assets acquired under finance leases - motor vehicles 330,161 265,513

Freehold properties with a net book value of $3,771,227 (2003: $3,684,481) have been mortgaged to secure bank overdraftand loan facilities granted to a subsidiary company.

The impairment loss represents the net write-back of certain fixed assets to its recoverable amount. The recoverableamount of the fixed assets was determined by Directors’ valuation based on indicative current open market values obtainedfrom Colliers International Consultancy & Valuation (S) Pte Ltd.


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4. Investment properties

Group2004 2003

$ $

At valuation :At beginning of year 9,975,520 -Arising from reverse acquisition - 11,458,585Disposal during the year - (800,000)Write-back of/(provision for) impairment

in value of investment properties 40,720 (683,065)

Balance at end of year 10,016,240 9,975,520

Investment properties are stated at Directors’ valuation based on indicative current open market values carried out by thefollowing valuers:

Property Valuer Date of valuation Tenure

1. 51 Jalan Pemimpin #05-01, Colliers International 18 January 2005 Lease term ofMayfair Industrial Building Consultancy & 999 yearsSingapore 577206 Valuation (S) Pte Ltd (with effect from

6 July 1885)

2. 56A Kallang Colliers International 26 April 2004 FreeholdPudding Road Consultancy &Singapore 349329 Valuation (S) Pte Ltd

3. 147/A/B Tyrwhitt Road Colliers International 26 April 2004 FreeholdSingapore 207561 Consultancy &

Valuation (S) Pte Ltd

4. 41 Minbu Road Colliers International 26 April 2004 Freehold#02-00 to #08-00 Consultancy &Singapore 308179 Valuation (S) Pte Ltd

5. 34 Happy Avenue East Colliers International 18 January 2005 FreeholdSingapore 369843 Consultancy &

Valuation (S) Pte Ltd

Except for #05-01 Mayfair Industrial Building, the remaining investment properties are mortgaged to banks to securecredit facilities for the Group.



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5. Investments in subsidiary companies

Company2004 2003

$ $

Unquoted equity shares, at cost 117,601,663 105,851,663Provision for impairment in value of investments (70,917,110) (70,917,110)

46,684,553 34,934,553

Analysis of provision for impairment invalue of investments :

Balance at beginning of year 70,917,110 -Provision made during the year - 70,917,110


Details of the subsidiary companies are as follows:

Principal activities(Country of incorporation Percentage of equity

Name and place of business) held by the Group Cost of investment2004 2003 2004 2003

% % $ $

Held by the Company

Bukit Panjang Plaza Property developer, owner 100 100 * *Pte Ltd ** & operator of retail/

entertainment space &open landscape plaza(Singapore)

Guan Hoe Development Property developer and 100 100 * *Pte Ltd ** owner (Singapore)

Keng Hoe Development Property developer and 100 100 * *Pte Ltd ** owner (Singapore)

Siong Hoe Development Property developer and 100 100 * *Pte Ltd ** owner (Singapore)

33,334,551 33,334,551


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5. Investments in subsidiary companies (cont’d)



% % $ $

Held by the Company

Wah Hoe Development Property developer 100 100 1,000,000 1,000,000Pte Ltd ** and owner (Singapore)

Leong Hoe Development Property developer 100 100 1,000,000 2Pte Ltd @ and owner (Singapore)

Yong Hock Trading (S) Rental of machinery 100 100 600,000 600,000Pte Ltd *** and equipment

(Singapore)

Westbuild Construction Civil engineering, general 100 100 80,917,110 70,917,110Pte Ltd (formerly road construction andknown as Chew Eu sub-contractor worksHock Construction (Singapore)Co. Private Limited)(1) **

CEH-Prime Exchange Dormant 100 - 1 -Company PteLimited ***

Leng Hoe Development Dormant 100 - 750,001 -Pte Ltd (formerlyknown as CEHExchange ServicesPte Ltd) ***

117,601,663 105,851,663



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5. Investments in subsidiary companies (cont’d)



% % $ $

Held by subsidiarycompanies

CEH-Prime Exchange Dormant - 100 - -Company Pte Limited

Leng Hoe Development Dormant - 100 - -Pte Ltd

(1) The company was lifted from judicial management on 23 May 2003.

* Acquired for an aggregate consideration of $33,334,551.

** Audited by Ernst & Young, Singapore.

*** No audit is performed for these companies as they are exempted from appointing auditors and from audit requirements asthey have been dormant from the time of formation or since the end of the previous financial year.

@ Financial statements for this company have not been audited since its incorporation on 26 November 2003.

6. Investment in associated company

Group2004 2003

$ $

Unquoted equity shares, at cost - 92,372Share of post-acquisition reserves - (92,372)

- -


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6. Investment in associated company (cont’d)

Details of the associated company are as follows:



% % $ $

Held by subsidiarycompany

Eng Tat Engineering Civil engineering, - 31 - 92,372Pte Ltd renovation and

construction works(Singapore)

- 92,372

The associated company was disposed of at a nominal consideration of $1 on 10 March 2004.

7. Joint venture

Group2004 2003

$ $

Unquoted investment, at cost - 553,518Share of accumulated profits of joint venture - 274,391

- 827,909

Details of the joint venture are as follows:



% % $ $

CEH-Monico J/V Construction of road works - 50 - 553,518of Sylhet-Tamabil-JaflongRoad Improvement Project(Bangladesh)

- 553,518



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7. Joint venture (cont’d)

The Group’s share of the assets and liabilities of CEH-Monico J/V as at 31 December 2004 and 31 December 2003 is asfollows:

2004 2003$ $

Current assets - 864,623Current liabilities - (36,714)

Net assets - 827,909

During the year, the Group disposed of its investment in the joint venture, CEH-Monico J/V, for a consideration of$827,909.

8. Other investmentsGroup Company

2004 2003 2004 2003$ $ $ $

Unquoted investment, at cost - 5,000,000 - 5,000,000Quoted investments, at net realisable value 153,273 903,813 - -

153,273 5,903,813 - 5,000,000

Market value of quoted investments 179,081 1,190,928 - -

9. Trade receivables

Group2004 2003

$ $

Trade receivables 4,011,126 9,226,624Retention monies receivable 145,376 145,376Less provision for doubtful receivables (844) (844)

4,155,658 9,371,156


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9. Trade receivables (cont’d)

Analysis of provision for doubtful receivables:

Group2004 2003

$ $

Balance at beginning of year 844 67,315Provision made during the year - 844Write-back of provision - (67,315)

Balance at end of year 844 844

Bad trade receivables written off directly to the profit and loss account - 2,090

The write-back of provision in prior year arose due to receivables, which were provided for previously, recovered duringprior year.

10. Other receivables, deposits and prepayments

Group Company2004 2003 2004 2003

$ $ $ $

Receivable from sale of asubsidiary company 211,286 376,692 - -

Deposits 3,546,741 2,923,976 450 450Prepayments 51,798 45,277 13,819 9,367Sundry receivables 208,016 336,806 46,097 161,220

4,017,841 3,682,751 60,366 171,037Less provision for doubtful receivables (297,358) (297,358) (17,322) (17,322)

3,720,483 3,385,393 43,044 153,715

Analysis of provision for doubtful receivables :

Balance at beginning of year 297,358 - 17,322 17,322Provision made during the year - 297,358 - -

Balance at end of year 297,358 297,358 17,322 17,322



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11. Due from subsidiary companies (non-trade)

Company2004 2003

$ $

Due from subsidiary companies (non-trade) 106,656 71,163

106,656 71,163

Analysis of provision for doubtful receivables :

Balance at beginning of year - 20,139,994Amount utilised - (20,139,994)

Balance at end of year - -

Bad non-trade receivables due from subsidiarycompanies written off directly to the profitand loss account - 1,706

The amounts due from subsidiary companies are unsecured, interest-free and repayable on demand.

12. Due from related companies (non-trade)Due to a joint venture/subsidiary companies/ultimate holding company (non-trade)

The amount due to ultimate holding company was unsecured, carried interest at 2.15% to 5% per annum and was repaidduring 2004.

The remaining amounts were unsecured, interest-free and repaid during 2004.

13. Development properties

Group2004 2003

$ $

Freehold land and related costs 87,600,375 60,276,344Development costs 49,991,023 41,310,942Property tax and interest 7,589,794 6,740,902Rental income (17,216) (17,216)Attributable profit 6,893,670 2,721,912

152,057,646 111,032,884Less : Progress billings (75,688,346) (39,677,623)

Provision for foreseeable losses (4,473,299) (9,367,290)

71,896,001 61,987,971


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13. Development properties (cont’d)Group

2004 2003$ $

Analysis of provision for foreseeable losseson development properties :

Balance at beginning of year 9,367,290 -Provision made during the year - 9,367,290Provision written back during the year (4,893,991) -


Provision written back during the year is based on a valuation prepared by independent professional valuer, Knight FrankPte Ltd, in February 2005.

(i) Interest capitalised during the year at an average rate of 1.63% (2003: 2.06%) per annum based on actual borrowingcosts were paid to :

Group2004 2003

$ $

- financial institutions 448,763 708,254- related company 258,692 1,183,572

707,455 1,891,826

(ii) The development properties are pledged for bank borrowings (Notes 16 and 17).

(iii) Included in development costs are :

(a) staff cost of $21,592 (2003: $96,662) which includes CPF contributions of $2,092 (2003: $11,741); and

(b) contract costs of $18,121,740 (2003: $17,334,197) paid to a company in which a Director has a controllinginterest, at terms agreed between the related parties.

14. Work-in-progressGroup

2004 2003$ $

Contract costs incurred to date 3,896,273 746,793Recognised profits less recognised losses to date 197,810 -

4,094,083 746,793Less : progress billings (3,612,777) -

Amounts due from customers for work-in-progress 481,308 746,793



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15. Other payables and accrualsGroup Company

2004 2003 2004 2003$ $ $ $

Accrued operating expenses 2,127,711 2,411,967 357,856 416,511Retention monies due to subcontractors - 147,550 - -Deposits received 75,485 34,850 - -Rental received in advance 1,504 - - -Amount due to purchaser of

Bukit Panjang Plaza - 499,946 - -Provision for contingency 1,029,909 - - -Sundry payables 879,341 574,003 210,521 272,869

4,113,950 3,668,316 568,377 689,380

The provision for contingency is a possible outflow of economic resources which may arise from a past contractual obligation.

16. Due to related companies (non-trade)Group

2004 2003$ $

SecuredWithin one year :

Loans - 5,597,005Interest payable - 273,484

- 5,870,489More than one year, but less than five years :

Loans - 35,000,000

- 40,870,489

The amounts due to related companies were fully repaid during the year ended 31 December 2004.

Interest was charged at rates ranging from 0.04375% to 4.35% (2003: 1.7% to 5.5%) per annum.

The amounts due to related companies as at 31 December 2003 were subordinated to the Group’s bank borrowings andwere secured by :

(i) second legal mortgage over the development properties (Note 13);

(ii) second legal assignment of the balance of 15% sale and rental proceeds from the development property held by asubsidiary, Keng Hoe Development Pte Ltd;

(iii) second legal assignment of all sale proceeds from the development property held by a subsidiary, Siong HoeDevelopment Pte Ltd; and

(iv) second assignment of the sale and rental proceeds from the development property held by a subsidiary, Guan HoeDevelopment Pte Ltd.


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17. Interest-bearing loans and borrowingsGroup Company

2004 2003 2004 2003$ $ $ $

Current liabilities

Bank term loan (Note a) 34,099,087 5,000,000 - -Lease obligations (Note 18) 59,681 62,245 10,004 -Construction loan (Note b) - 7,732,739 - -Land loan (Note b) - 3,477,624 - -Bank overdrafts (Note c) - 232,715 - -Interest payable 42,456 61,928 - -

34,201,224 16,567,251 10,004 -

Non-current liabilities

Lease obligations (Note 18) 60,079 49,309 59,163 -

60,079 49,309 59,163 -

(a) Bank term loan bears interest at rates ranging from 1.76% to 2.45% (2003: 1.63% to 6.75%) per annum and isrepayable on demand.

(b) The land and construction loans bear interest at 1.72% to 2.55% (2003: 1.65% to 2.88%) per annum and arerepayable as follows :

(i) Nil (2003: $627,624) within one year after date of issue of the Temporary Occupation Permit for the developmentproperties or three years from the date of first drawdown of the loan, whichever is earlier; and

(ii) Nil (2003: $10,582,739) within six months after date of issue of the Temporary Occupation Permit for thedevelopment properties or by 30 June 2005 whichever is earlier.

(c) Bank overdrafts bear interest at 1.5% above prime lending rates (2003: 0.25% to 1.5%) per annum and is repayableon demand.

(d) The bank term loan, bank overdrafts, construction loan and land loan are secured by the following:

(i) legal mortgages on the Company’s investment properties, freehold properties;

(ii) first legal mortgage over development properties;

(iii) first legal assignment of the balance of 15% sale proceeds from the development property held by Keng HoeDevelopment Pte Ltd;

(iv) first legal assignment of all sale proceeds from the development property held by Siong Hoe Development PteLtd;

(v) first legal assignment of sales and rental proceeds from the development property held by Guan Hoe DevelopmentPte Ltd; and

(vi) corporate guarantees given by the Company.

The bank facilities agreements include covenants that require the maintenance of certain financial ratios. Non-compliance with these covenants will result in these loans and interest being repayable immediately.



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18. Lease obligations

The Group has entered into finance leases on its motor vehicles. Lease terms range from 1 to 7 years with options topurchase at end of the lease term. Lease terms do not contain restrictions concerning dividends, additional debt or furtherleasing.

Future minimum lease payments under finance lease liabilities together with the present value of the net minimum leasepayments are as follows:

Minimum Present value Minimum Present value Group payments of payments payments of payments

2004 2004 2003 2003$ $ $ $

Within 1 year 67,393 59,681 69,980 62,245After 1 year but within 5 years 69,299 60,079 55,478 49,309

Total minimum lease payments 136,692 119,760 125,458 111,554Less amounts representing

finance charges (16,932) - (13,904) -

Present value of minimumlease payments 119,760 119,760 111,554 111,554

Company

Within 1 year 11,544 10,004 - -After 1 year but within 5 years 46,176 40,016 - -More than 5 years 22,098 19,147 - -

Total minimum lease payments 79,818 69,167 - -Less amounts representing

finance charges (10,651) - - -

Present value of minimumlease payments 69,167 69,167 - -

The finance lease liabilities bear interest ranging from 2.2% to 6.8% (2003: 4.8% to 6.8%) per annum.

19. Deferred taxationGroup

2004 2003$ $

At beginning of year 389,817 447,000Additions during the year - 509,376Write-back of deferred taxation (389,685) (566,559)

At end of the year 132 389,817

The deferred taxation arose as a result of the excess of net book value over the tax written down value of fixed assets andtemporary differences in the recognition of profit for development properties.


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20. Share capitalGroup and Company2004 2003

$ $

Authorised:Balance at beginning of year

10,000,000,000 (2003: 10,000,000,000)ordinary shares of $0.005 (2003: $0.005) each 50,000,000 50,000,000

Balance at end of year2,000,000,000 (2003: 10,000,000,000)ordinary shares of $0.025 (2003: $0.005) each 50,000,000 50,000,000

Group2004 2003

$ $

Issued and fully paid:Balance at beginning of year

5,528,793,792 (2003: 15,437,252)ordinary shares of $0.005 (2003 : $1) each 27,643,970 15,437,252

Arising from reverse acquisition - 12,188,791

Issue of Nil (2003: 3,585,307) ordinary shares of $0.005 each at apremium of $0.065 per share to unsecured creditors - 17,927

Share consolidation of 5,528,793,792 (2003 : nil) ordinary shares of $0.005 each into 1,105,758,758 (2003 : nil) ordinary shares of $0.025 each - -

Balance at end of year1,105,758,758 (2003: 5,528,793,792)ordinary shares of $0.025 (2003: $0.005) each 27,643,970 27,643,970

Company2004 2003

$ $

Issued and fully paid:At beginning of year

5,528,793,792 (2003: 135,797,215)ordinary shares of $0.005 (2003: $0.005) each 27,643,970 678,986

Issue of Nil (2003: 722,252,407) ordinary shares of $0.005each at a premium of $0.065 per share to the unsecured creditorsof a subsidiary company pursuant to the scheme of arrangement - 3,611,263

Issue of Nil (2003: 187,123,557) ordinary shares of $0.005 each ata premium of $0.065 per share to Mr. Chew Eu Hock, a substantialshareholder, pursuant to the conversion of loans to the Companyby Mr. Chew Eu Hock - 935,618

Issue of Nil (2003: 4,483,620,613) ordinary shares of $0.005 each at apremium of $0.00243 per share to acquire the entire issued and paid upcapital of the four subsidiary companies of Hiap Hoe Holdings Pte Ltd - 22,418,103



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20. Share capital (cont’d)Company

2004 2003$ $

Share consolidation of 5,528,793,792 (2003 : nil)ordinary shares of $0.005 each into 1,105,758,758(2003 : nil) ordinary shares of $0.025 each - -

At end of year1,105,758,758 (2003: 5,528,793,792)ordinary shares of $0.025 (2003: $0.005) each 27,643,970 27,643,970

21. ReservesGroup Company

2004 2003 2004 2003$ $ $ $

Accumulated profits/(losses) 34,354,828 33,243,733 (73,458,435) (73,307,083)Capital reduction reserve 5,773,525 5,773,525 5,773,525 5,773,525Share premium (Note 22) 71,013,170 71,013,170 71,013,170 71,013,170Capital reserve (81,003,443) (81,003,443) - -

30,138,080 29,026,985 3,328,260 3,479,612

Made up of:Distributable 34,354,828 33,243,733 (73,458,435) (73,307,083)Non-distributable (4,216,748) (4,216,748) 76,786,695 76,786,695

30,138,080 29,026,985 3,328,260 3,479,612

The capital reduction reserve relates to the excess of reduction in capital, arising from the reduction in par value of sharesfrom $0.20 to $0.005 each, over the amount of accumulated losses as at 1 January 2002.

The capital reserve arises from the application of reverse acquisition accounting.

22. Share premiumGroup

2004 2003$ $

Balance at beginning of year 71,013,170 -

Arising from reverse acquisition - 70,780,126Issue of Nil (2003: 3,585,307) ordinary shares

of $0.005 each at a premium of $0.065 pershare to unsecured creditors - 233,044



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22. Share premium (cont’d)

Company2004 2003

$ $

Balance at beginning of year 71,013,170 987,286

Issue of Nil (2003: 722,252,407) ordinary sharesof $0.005 each at a premium of $0.065 per shareto the unsecured creditors of a subsidiarycompany pursuant to the scheme - 46,946,405

Issue of Nil (2003: 187,123,557) ordinary sharesof $0.005 each at a premium of $0.065 per shareto Mr. Chew Eu Hock, a substantial shareholder,pursuant to the conversion of loans to theCompany by Mr. Chew Eu Hock - 12,163,031

Issue of Nil (2003: 4,483,620,613) ordinary sharesof $0.005 each at a premium of $0.00243 per shareto acquire the entire issued and paid up capitalof the acquired subsidiary companies - 10,916,448


The application of the share premium account is governed by Section 69-69F of the Companies Act, Chapter 50.

23. Revenue

Group2004 2003

$ $

Revenue of the Group is analysed as follows:

Project revenue 2,168,758 2,520,837Sales of development properties 36,010,724 23,261,057Operating lease rental income- arising from development properties - 1,038,501- arising from leasehold properties - 8,308,152

38,179,482 35,128,547

Revenue of the Company represents management fees charged to subsidiary companies during the year.



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24. Administrative expenses

Administrative expenses include:

Group Company2004 2003 2004 2003

$ $ $ $

Auditors’ remuneration- current 69,166 114,184 36,000 44,166- under/(over) provision in

respect of prior year 1,431 (33,541) 8,333 17,500Non-audit fees paid to the auditors

of the Company 15,730 17,091 730 995Bad receivables written off- trade receivables - 2,090 - -- non-trade receivables

from subsidiarycompanies - - - 1,706

Compensation expense 860,000 - - -Depreciation of fixed assets 315,623 1,520,208 49,701 16,274Directors’ fees 81,000 115,500 81,000 126,000Directors’ remuneration- Directors of the Company 674,070 616,757 674,070 616,757

25. Employees’ remuneration and benefits

Group Company2004 2003 2004 2003

$ $ $ $

Wages, salaries and bonuses 1,173,222 1,117,162 941,335 895,992Central Provident Fund contributions 90,505 122,994 74,815 79,253Other staff costs 13,993 28,205 14,757 24,011

1,277,720 1,268,361 1,030,907 999,256

Staff costs include Directors’ remuneration as disclosed in Note 24.

Share options

The Company has a share incentive plan for the granting of non-transferable options to confirmed employees, includingNon-executive Directors. Options are granted for terms of 10 years to purchase the Company’s ordinary shares at not lessthan the market value of the shares at the date of grant. The options are exercisable beginning on the first anniversary ofthe date of grant.

The Company uses the intrinsic value accounting method for share awards under which there is no charge to the profitand loss account for employee stock option awards, and the dilutive effect of outstanding options is reflected as additionalshare dilution in the computation of earnings per share.


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25. Employees’ remuneration and benefits (cont’d)

Information with respect to the number of options granted under the Company’s employee option plan is as follows:

Balance Granted Lapsed Exercised Balanceas at during during during as at Exercise Expiry

Date of grant 01.01.04 the year the year the year 31.12.04 price Date

10 June 2004 - 10,500,000 500,000 - 10,000,000 $0.056 9 June 2014

26. Other income /(expenses)

Other income/(expenses) include:Group Company

2004 2003 2004 2003$ $ $ $

Advertising and promotion income - 581,432 - -Dividend income from quoted investments 4,142 4,760 - -(Loss)/gain on disposal of fixed assets (2,547) 93,564 - -Rental income 352,332 185,527 - -Other income 116,771 86,143 15 -Write-back of provision for impairment

in value of other investments 227,277 - - -Gain from waiver of debts

from unsecured creditors - 295,732 - -Gain/(loss) on disposal of quoted investment 3,727 (418,057) - -Loss on disposal of investment property - (10,000) - -(Impairment loss)/write-back of impairment

in quoted investments (29,050) 39,525 - -Provision for contingency (1,029,909) - - -Write-back of/(provision for) impairment

loss on fixed assets 115,860 (559,676) - -Provision for impairment

in value of investmentsin subsidiary companies - - - (70,917,110)

Write-back of/(provision for) foreseeablelosses on development properties 4,893,991 (9,367,290) - -

Write-back of /(provision for) impairmentin value of investment properties 40,720 (683,065) - -

Write-back of/(provision for)doubtful receivables- trade receivables - 66,471 - -- other receivables - (297,358) - -



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27. Financial expenses/(income)

Group Company2004 2003 2004 2003

$ $ $ $

Interest expense- bank term loan 126,120 2,856,982 - -- loan from related companies 790,588 460,836 - -- loan from subsidiary company - - 136,469 31,450- finance leases 7,752 10,241 129 -- bank overdrafts 1,128 462,958 - -- loan from holding company 5,030 18,914 5,030 18,914

Financial expenses 930,618 3,809,931 141,628 50,364

Interest income from- fixed deposits 22,697 12,361 1,439 5,962- unquoted investments 143,959 5,961 143,959 -- others 99,232 - - -

Financial income 265,888 18,322 145,398 5,962

28. Exceptional item - Goodwill written off

The goodwill computed under the reverse acquisition method arose from the acquisition of the Company’s share capital of1,041,587,872 ordinary shares at fair value of S$0.00743 per share less the fair value of Chew Eu Hock Group’s netliabilities acquired set out as follows:

2003$

Fixed assets 5,357,086Joint Venture 827,909Investment properties 11,458,585Trade and other receivables 1,153,680Work-in-progress 2,339,342Due from related companies 250Other investments 1,595,888Cash and bank balances 1,216,887Trade and other payables (5,292,701)Interest-bearing loans and borrowings (22,225,191)Provision for taxation (669,851)

Fair value of net liabilities acquired as of 16 January 2003 (4,238,116)Cost of acquisition 7,738,998

Goodwill on acquisition 11,977,114

The management was of the opinion that the goodwill of $11,977,114 did not relate to future economic benefits that wereexpected to flow to the enlarged Group. Accordingly, the goodwill was written off to the profit and loss account in 2003.


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29. Taxation

Major components of income tax expense for the year ended 31 December were:

Group Company2004 2003 2004 2003

$ $ $ $

Provision for the year:- current tax 245 1,181,894 246 -- deferred tax (389,506) 509,376 - -

(Over)/under provision inrespect of prior year:

- current tax 3,586 (121,428) - -- deferred tax (179) (566,559) - -

(385,854) 1,003,283 246 -

A reconciliation of the tax amount at applicable tax rate to the Group’s and Company’s taxation for the years ended 31December is as follows:

Group Company2004 2003 2004 2003

$ $ $ $

Profit/(loss) before taxation 725,241 26,754,827 (151,106) (71,358,505)

Tax at the domestic rate of 20%(2003: 22%) 145,048 5,886,062 (30,221) (15,698,871)

Tax effects of (income not chargeable)/expenses not deductible for tax purposes (1,069,970) (5,632,875) 17,210 15,645,110

Operating losses not allowedto be carried forward - 6,496 - -

Deferred tax assets not recognised 567,161 1,443,137 13,257 53,761Over provision in respect of prior year 3,407 (687,987) - -Tax exemption (31,500) (11,550) - -

Taxation (385,854) 1,003,283 246 -

A loss-transfer system of group relief (group relief system) for companies was introduced in Singapore with effect fromyear of assessment 2003. Under the group relief system, a company belonging to a group may transfer its current yearunabsorbed capital allowances, current year unabsorbed trade losses and current year unabsorbed donations (loss items) toanother company belonging to the same group, to be deducted against the assessable income of the latter company.

The Company intends to transfer trade losses of $Nil (2003: $270,165) to a subsidiary company under the group reliefsystem, subject to compliance with the relevant rules and procedures and agreement of the Inland Revenue Authority ofSingapore.



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29. Taxation (cont’d)

After the transfer of the unutilised trade losses as mentioned above, the Company has unutilised tax losses of $934,607(2003: $868,322) available for offset against future taxable income subject to the agreement of the Inland Revenue Authorityof Singapore and compliance with certain provisions of the Singapore Income Tax Act.

The Group has unabsorbed tax losses of $73,937,369 (2003: $71,101,562) available for offset against future taxableincome subject to the agreement of the Inland Revenue Authority of Singapore and compliance with certain provisions ofthe Singapore Income Tax Act. The deferred tax asset arising from these unutilised tax losses has not been recognised inthe financial statements in accordance with the accounting policy in Note 2 to the financial statements.

30. Earnings per share

Earnings per share is calculated by dividing the Group’s net profit for the year attributable to ordinary shareholders by theweighted average number of ordinary shares outstanding during the year, after taking into consideration of share consolidationwhich was effected on 24 May 2004.

For comparative purposes, earnings per share for the year ended 31 December 2003 is calculated based on 1,087,980,675ordinary shares after taking into consideration of the share consolidation which was effected on 24 May 2004.

The following are used in computations of basic and diluted earnings per share for the years ended 31 December :

Group2004 2003

$ $

Net profit attributable to ordinary shares on issueapplicable to basic and diluted earnings per ordinary share 1,111,095 25,751,544

Weighted average number of ordinary shares on issueapplicable to basic and diluted earnings per ordinary share 1,105,758,758 1,087,980,675

The average price of the ordinary share during the year ended 31 December 2004 was below the exercise price under theHiap Hoe Limited Executives’ Share Option Scheme 2004. Under FRS 33, these options are not considered to be dilutiveduring the year.


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31. Significant related party transactions

In addition to the related party information disclosed elsewhere in the financial statements, significant transactions withrelated parties, on terms agreed between the parties, are as follows:

Group Company2004 2003 2004 2003

$ $ $ $

IncomeSales of fixed assets to a related company 785 1,010 - -Cleaning/maintenance services 27,900 - - -

ExpensesPrinting and media expenses paid

to a related company - 226,287 - 27,729Project management fee 52,500 - - -Rental expense paid to a related company 18,000 9,000 18,000 9,000Supply of labour 45,834 - - -

Directors’ and executives’ remuneration - Group

Directors’ remuneration and fees totalled $674,070 (2003: $616,757) and $81,000 (2003: $115,500) respectively. Executiveofficers’ remuneration totalled $305,835 (2003: $298,202).

32. Contingent liabilities, unsecured

2004 2003$ $

(a) Performance guarantee 15,248,549 12,021,835

(b) The Company has given corporate guarantees to financial institutions amounting to $109,460,000 (2003:$109,050,000) in connection with credit facilities granted to its subsidiary companies.

(c) The Company has issued corporate guarantees to finance companies for hire purchase financing amounting toapproximately $50,593 (2003: $125,458) by its wholly-owned subsidiary companies as at 31 December 2004.

33. Commitment

2004 2003$ $

Capital expenditure in respect of developmentproperties contracted but not provided for inthe financial statements 40,444,255 5,007,373



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34. Subsequent event

On 1 February 2005, the Company completed the purchase of the freehold property known as 12 Angullia Park #03-00,#04-00, #05-00, #06-00, #07-00, #08-00, #09-00, #10-00, #11-00 comprised in lot number 1525k TS 24 and theadjacent vacant land comprised in lot number 1526N TS 24 from an interested person for purchase consideration of$27,000,000.

The offer was made by the Company as a promoter for and on behalf of a subsidiary company, Leong Hoe DevelopmentPte Ltd.

35. Financial instruments

Financial risk management objectives and policies

The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and credit risk. TheBoard of Directors reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk

The Group obtains additional financing through bank borrowings and leasing arrangements. The Group’s policy is toobtain the most favourable interest rates available without increasing its foreign currency exposure.

Surplus funds are placed with reputable banks.

Information relating to the Group’s interest rate exposure is also disclosed in the notes on the Group’s borrowings, includingleasing obligations.

Liquidity risk

Short-term funding is obtained from term loans and overdraft facilities.

Credit risk

The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

The carrying amount of trade and other receivables and amounts due from subsidiary companies/related companiesrepresent the Group’s maximum exposure to credit risk. No other financial assets carry a significant exposure to credit risk.

Fair values

The carrying amounts of cash and bank balances, fixed deposits, other investments, trade and other receivables, due from/(to) subsidiary companies/ultimate holding company, trade and other payables and current interest-bearing loans andborrowings approximate their fair value due to their short-term nature.

The fair value of the non-current interest-bearing loans and borrowings with variable interest rates approximate theircarrying amounts.


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36. Segment information

2004 Development InvestmentConstruction properties properties Others Elimination Consolidation

$ $ $ $ $ $

Revenue and expenses

Segmental revenue- External sale 2,168,758 36,010,724 - - - 38,179,482- Inter-segment sales 3,376,866 - - 1,301,389 (4,678,255) -

Segment results (75,905) 3,544,897 (1,954,966) (182,487) 58,432 1,389,971

Financial expenses (930,618)

Financial income 265,888

Profit from ordinaryactivities before taxation 725,241

Taxation 385,854

Net profit for the year 1,111,095

2003 Development InvestmentConstruction properties properties Others Elimination Consolidation

$ $ $ $ $ $

Revenue and expenses

Segmental revenue- External sale 2,520,837 23,261,057 9,346,653 - - 35,128,547- Inter-segment sales - - - 1,130,905 (1,130,905) -

Segment results (5,230,017) (7,013,552) 5,468,315 1,130,905 (1,130,905) (4,646,783)

Financial expenses (3,809,931)

Financial income 18,322

Loss before exceptionalitems and taxation (8,438,392)

Exceptional items- Goodwill written off (11,977,114)- Gain on disposal of

Bukit Panjang Plaza 47,170,333

Profit from ordinaryactivities before taxation 26,754,827

Taxation (1,003,283)

Net profit for the year 25,751,544



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36. Segment information (cont’d)

2004 Investment DevelopmentConstruction properties properties Others Elimination Consolidation

$ $ $ $ $ $

Assets and Liabilities

Segment assets 16,204,274 242,380 77,303,783 3,802,723 (735,220) 96,817,940

Total assets 96,817,940

Segment liabilities 1,857,948 1,071,364 1,057,872 668,173 - 4,655,357Unallocated liabilities 34,380,533

Total liabilities 39,035,890

Other segmentinformation

Capital expenditure 37,705 - - 101,856 - 139,561Depreciation of

fixed assets 250,912 14,970 41 49,700 - 315,623Impairment loss on

quoted investment 29,050 - - - - 29,050Write-back of provision

for foreseeable losseson developmentproperties - - (4,893,991) - - (4,893,991)

Write-back of impairmenton fixed assets (115,860) - - - - (115,860)

Write-back of impairmentin value of investmentproperties (40,720) - - - - (40,720)


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36. Segment information (cont’d)

2003 Investment DevelopmentConstruction properties properties Others Elimination Consolidation

$ $ $ $ $ $

Assets and Liabilities

Segment assets 17,866,203 20,324,131 76,505,019 5,675,950 (583,198) 119,788,105Investment in

joint venture 827,909

Total assets 120,616,014

Segment liabilities 972,285 689,011 1,543,287 744,625 - 3,949,208Unallocated liabilities 59,995,851

Total liabilities 63,945,059

Other segmentinformation

Capital expenditure 157,906 2,765 308 230,013 - 390,992Depreciation of

fixed assets 198,547 1,292,970 52 28,639 - 1,520,208Provision for foreseeable

losses on developmentproperties - - 9,367,290 - - 9,367,290

Provision forimpairment onfixed assets 559,676 - - - - 559,676

Write-back of impairmentin quoted investments (39,525) - - - - (39,525)

Provision for impairmentin value of investmentproperties 683,065 - - - - 683,065

37. Directors’ remuneration

The number of Directors of the Company whose emoluments fall within the following bands are:

Company2004 2003

$250,000 to $499,999 1 1Below $250,000 7 7

8 8



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38. Acquisition of subsidiary companies

During the year, the Company acquired the entire shareholding of the following companies:

(i) CEH Exchange Services Pte Ltd (“CEH”) for a total consideration of $1 from Yong Hock Trading (S) Pte Ltd(“YHT”);

(ii) CEH-Prime Exchange Company Pte Limited (“CEH-Prime”) for a total consideration of $1 from WestbuildConstruction Pte. Ltd. (“WBC”).

YHT and WBC are wholly-owned subsidiaries of the Company. CEH and CEH-Prime had not commenced operationssince their incorporation.

Following the above acquisition, CEH changed its name to Leng Hoe Development Pte. Ltd. with effect from 18 August2004. The principal activity of Leng Hoe is to carry on the business of a property developer and owner.

The above acquisitions do not have any impact on the Group’s financial statements.

39. Additional investments in subsidiary companies

The Company increases its investment in its wholly owed subsidiary companies:

(i) Leng Hoe Development Pte. Ltd. (“Leng Hoe”), by subscribing for an additional 750,000 ordinary shares of S$1.00each in Leng Hoe. This resulted in an increase in investment in Leng Hoe from S$1 to S$750,001.

(ii) Leong Hoe Development Pte Ltd (“Leong Hoe”), by subscribing for an additional 999,998 ordinary shares of S$1.00each in Leong Hoe. This resulted in increase in investment in Leong Hoe from S$2 to S$1,000,000.

(iii) Westbuild Construction Pte Ltd (“WBC”), by subscribing for an additional 10,000,000 ordinary shares of S$1.00each in WBC. This resulted in increase investment in WBC from $70,917,110 to $80,917,110.


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40. Major properties held for investment

Built uparea

Address Held by Title (sq. metres) Description

1. 51 Jalan Pemimpin Westbuild Construction Lease term 118 Flatted#05-01, Mayfair Pte Ltd (formerly known of 999 years factory unitIndustrial Building as Chew Eu Hock (wef 6 July 1885)Singapore 577206 Construction Co.

Pte Limited)

2. 56A Kallang Westbuild Construction Freehold 689 Single-user/Pudding Road Pte Ltd occupier 9-storeySingapore 349329 terrace units

3. 147/A/B Tyrwhitt Road Westbuild Construction Freehold 478 3 -storey Singapore 207561 Pte Ltd postwar shophouse

4. 41 Minbu Road Westbuild Construction Freehold 1225 8-storey#02-00 to #08-00 Pte Ltd residential buildingSingapore 308179

5. 34 Happy Avenue East Westbuild Construction Freehold 554 2 -storeySingapore 369843 Pte Ltd corner terrace house

41. Comparative figures

Certain comparative figures in the balance sheet and related notes to the financial statements have been reclassified toconform with current year’s presentation. Details of the reclassification are as follows:

Reclassified PreviousGroup 2003 2003

$ $

Current assets:Trade receivables 9,371,156 618,598Development properties 61,987,971 70,740,529

Current liabilities:Due to related companies (non-trade) 5,870,489 5,719,169

Non-Current liabilities:Due to related companies (non-trade) 35,000,000 35,151,320


12

12


p79STATISTICS OF SHAREHOLDINGSas at 16 March 2005

DISTRIBUTION OF SHAREHOLDINGS

NO. OFSIZE OF SHAREHOLDINGS SHAREHOLDERS % NO. OF SHARES %

1 - 999 438 11.72 161,472 0.021,000 - 10,000 1,719 46.00 7,776,341 0.7010,001 - 1,000,000 1,532 41.00 113,017,062 10.221,000,001 AND ABOVE 48 1.28 984,803,883 89.06

TOTAL 3,737 100.00 1,105,758,758 100.00

TWENTY LARGEST SHAREHOLDERS

NO. NAME NO. OF SHARES %

1 HIAP HOE HOLDINGS PTE LTD 882,084,122 79.77

2 SOON LI HENG CIVIL ENGINEERING PTE LTD 11,359,046 1.03

3 CHONG TONG CONSTRUCTION PTE LTD 6,736,614 0.61

4 HONG LEONG ASIA LTD 5,191,138 0.47

5 KIM ENG SECURITIES PTE. LTD. 3,892,690 0.35

6 LIAN BENG CONSTRUCTION (1988) PTE LTD 3,725,422 0.34

7 CHINA INSURANCE CO. (SINGAPORE) PTE LTD 3,305,143 0.30

8 PHILLIP SECURITIES PTE LTD 3,116,034 0.28

9 DBS NOMINEES PTE LTD 3,112,277 0.28

10 CHUAN SENG CO PTE LTD 2,769,149 0.25

11 WONG SWEE CHOO 2,506,333 0.23

12 CITIBANK NOMINEES SINGAPORE PTE LTD 2,289,000 0.21

13 GUAN LEONG CONSTRUCTION PTE LTD(UNDER JUDICIAL MGT) 2,257,144 0.20

14 LIM KUI TENG 2,220,000 0.20

15 UNITED OVERSEAS BANK NOMINEES PTE LTD 2,188,352 0.20

16 L. S. CONSTRUCTION PTE LTD 2,158,656 0.20

17 COSMIC INSURANCE CORPORATION LIMITED - SIF 2,126,564 0.19

18 DANNY OH BENG TECK 2,000,000 0.18

19 OH KENG LIM 2,000,000 0.18

20 RDC CONCRETE PTE LTD 1,828,997 0.17

TOTAL 946,866,681 85.64

20.15% of the Company’s shares are held in the hands of public. Accordingly, the Company has complied with Rule 723 ofthe Listing Manual of SGX-ST.

p80STATISTICS OF SHAREHOLDINGSas at 16 March 2005

SUBSTANTIAL SHAREHOLDERS AS AT 16 MARCH 2005

Name of Shareholder Direct Deemed Interest

Teo Guan Seng, BBM - 882,084,122Teo Ho Beng - 882,084,122Hiap Hoe Holdings Pte Ltd 882,084,122 -

Notes:-

Mr Teo Guan Seng, BBM and Mr Teo Ho Beng’s deemed interests are derived from their shareholdings in Hiap Hoe Holdings Pte Ltd.


p81NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Hiap Hoe Limited (“the Company”) will be held atMerlion Room, Superbowl Golf & Country Club, 6 Marina Green, Singapore 019799 on Wednesday, 27 April 2005 at 11.00a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the yearended 31 December 2004 together with the Auditors’ Report thereon.

2. To re-elect the following Directors retiring pursuant to Article 106 of the Company’s Articles ofAssociation:

Mr Chew Heng ChingMr Chan Wah Tiong

Mr Chan Wah Tiong will, upon re-election as Director of the Company, remain as Chairman ofAudit Committee and a member of the Remuneration, Nominating and Executive Share OptionCommittee and will be considered independent for the purposes of Rule 704(8) of Listing Manual ofthe Singapore Exchange Securities Trading Limited.

3. To pass the following Ordinary Resolution pursuant to Section 153(6) of the Companies Act, Cap.50:-

“That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Teo Guan Seng, BBM bere-appointed a Director of the Company to hold office until the next Annual General Meeting.”[see Explanatory Note (i)]

4. To approve the payment of Directors’ fees of $81,000 for the year ended 31 December 2004.

5. To re-appoint Messrs Ernst & Young as the Company’s Auditors and to authorise the Directors to fixtheir remuneration.

6. To transact any other ordinary business which may properly be transacted at an Annual GeneralMeeting.

AS SPECIAL BUSINESS

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

7. 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 of the Listing Manual ofthe Singapore Exchange Securities Trading Limited, the Directors be empowered to allot and issueshares and convertible securities in the capital of the Company at any time and upon such terms andconditions and for such purposes as the Directors may, in their absolute discretion, deem fit providedthat the aggregate number of shares (including shares to be issued in accordance with the terms ofconvertible securities issued, made or granted pursuant to this Resolution) to be allotted and issuedpursuant to this Resolution shall not exceed fifty per centum (50%) of the issued share capital of theCompany at the time of the passing of this Resolution, of which the aggregate number of shares andconvertible securities to be issued other than on a pro rata basis to all shareholders of the Companyshall not exceed twenty per centum (20%) of the issued share capital of the Company and that such

(Resolution 1)

(Resolution 2)(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

(Resolution 7)

p82NOTICE OF ANNUAL GENERAL MEETING

authority shall, unless revoked or varied by the Company in general meeting, continue in force (i)until the conclusion of the Company’s next Annual General Meeting or the date by which the nextAnnual General Meeting of the Company is required by law to be held, whichever is earlier or (ii) inthe case of shares to be issued in accordance with the terms of convertible securities issued, made orgranted pursuant to this Resolution, until the issuance of such shares in accordance with the terms ofsuch convertible securities.[See Explanatory Note (ii)]

8. Authority to allot and issue shares under the Hiap Hoe Employees’ Share Option Scheme 2004

That the Directors be authorised and empowered to allot and issue shares in the capital of the Company toall the holders of options granted by the Company, whether granted during the subsistence of this authorityor otherwise, under the Hiap Hoe Share Option Scheme 2004 (“the Scheme”) upon the exercise of suchoptions and in accordance with the terms and conditions of the Scheme, provided always that the aggregatenumber of additional ordinary shares to be allotted and issued pursuant to the Scheme shall not exceedfifteen per centum (15%) of the issued share capital of the Company from time to time.[See Explanatory Note (iii)]

By Order of the Board

Lim Siew Fay, SophiaCompany SecretarySingapore, 11 April 2005

Explanatory Notes:

(i) The effect of the Ordinary Resolution 4 proposed in item 3 above, is to re-appoint a director who is over70 years old.

(ii) The Ordinary Resolution 7 proposed in item 7 above, if passed, will empower the Directors from the date of thisMeeting until the date of the next Annual General Meeting, or the date by which the next Annual GeneralMeeting is required by law to be held or when varied or revoked by the Company in general meeting, whicheveris the earlier, to allot and issue shares and convertible securities in the Company. The number of shares andconvertible securities that the Directors may allot and issue under this resolution would not exceed fifty percentum (50%) of the issued capital of the Company at the time of the passing of this resolution. For issue ofshares and convertible securities other than on a pro rata basis to all shareholders, the aggregate number of sharesand convertible securities to be issued shall not exceed twenty per centum (20%) of the issued capital of theCompany.

For the purpose of this resolution, the percentage of issued capital is based on the Company’s issued capital at the timethis proposed Ordinary Resolution is passed after adjusting for new shares arising from the conversion or exercise ofconvertible securities, at the time when this proposed Ordinary Resolution is passed and any subsequent consolidationor subdivision of shares.

(iii) The Ordinary Resolution 8 proposed in item 8 above, if passed, will empower the Directors of the Company,from the date of the above Meeting until the next Annual General Meeting, to allot and issue shares in theCompany of up to a number not exceeding in total fifteen per centum (15%) of the issued share capital of theCompany 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 aproxy to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 564A BalestierRoad, Singapore 329880 not less than 48 hours before the time appointed for holding the Meeting.

(Resolution 8)


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I/We,

of

being a member/members of Hiap Hoe Limited (the “Company”), hereby appoint:

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

and/or (delete as appropriate)

Name NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

or failing him/her, the Chairman of the Meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the AnnualGeneral Meeting (the “Meeting”) of the Company to be held on Wednesday, 27 April 2005 at 11.00 a.m. and at any adjourn-ment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions proposed at the Meeting as indicatedhereunder. If no specific direction as to voting is given or in the event of any other matter arising at the Meeting and at anyadjournment thereof, the proxy/proxies will vote or abstain from voting at his/her discretion. The authority herein includes theright to demand or to join in demanding a poll and to vote on a poll.

(Please indicate your vote “For” or “Against” with a tick [✔ ] within the box provided.)

No. Resolutions relating to: For Against

1 Directors’ Report and Audited Accounts for the year ended 31 December 2004

2 Re-election of Mr Chew Heng Ching as a Director

3 Re-election of Mr Chan Wah Tiong as a Director

4 Re-election of Mr Teo Guan Seng, BBM as a Director

5 Approval of Directors’ fees amounting to $81,000

6 Re-appointment of Messrs Ernst & Young as Auditors

7 Authority to allot and issue new shares

8 Authority to allot and issue new shares new shares under the Hiap Hoe ShareOption Scheme 2004

Dated this day of 2005

Signature of Shareholder(s)or, Common Seal of Corporate Shareholder

HIAP HOE LIMITED(Company Registration No. 199400676Z)(Incorporated In The Republic of Singapore with limited liability)

PROXY FORM(Please see notes overleaf before completing this Form)

Total number of Shares in:

(a) CDP Register

(b) Register of Members

No. of Shares

IMPORTANT:1. For investors who have used their CPF monies to buy

Hiap Hoe Limited’s shares, this Report is forwarded tothem at the request of the CPF Approved Nomineesand is sent solely FOR INFORMATION ONLY.

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

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Notes :

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the DepositoryRegister (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number ofShares. 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 Registerof Members, you should insert the aggregate number of Shares entered against your name in the Depository Register andregistered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy orproxies 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 twoproxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be deemed to be in the alternative unless he/she specifiesthe proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 564ABalestier Road, Singapore 329880 not less than 48 hours before the time appointed for the Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorisedin writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed eitherunder its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy orproxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereofmust be lodged with the instrument.

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

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completedor illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifiedin the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, theCompany may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown tohave Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding theMeeting, as certified by The Central Depository (Pte) Limited to the Company.

HIAP HOEwww.hiaphoe.com

Company Registration No. 199400676Z

HIA

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Documents

STRENGTHENING OUR CORE COMPETENCIES · 2013-09-19 · 12.0% to $2.2 million in FY2004. Gross profit dropped to $1.5 million, due mainly to the absence of rental income. Additionally