forging ahead - investor.teho.com.sg · ecg and its wholly-owned subsidiaries are principally...

Forging AheadANNUAL REPORT 2014

Headquarters in Singapore Subsidiaries in Rotterdam (The Netherlands), North Carolina (USA) and Shanghai (China)

Overseas logistics points in Houston (USA) and Sharjah (UAE).

North Carolina (USA)

Rotterdam (The Netherlands)

Houston (USA)

Singapore

Sharjah (UAE) Shanghai (China)

This annual report has been prepared by the Company and its contents have been reviewed by the Company’s Sponsor, SAC Capital Private Limited for compliance with the relevant rules

This annual report has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this annual report, including the correctness of any of the statements or opinions made, or reports contained in this annual report. The contact person for the Sponsor is Ms Alicia Kwan (Tel: (65) 6221 5590) at 1 Robinson Road #21-02 AIA Tower, Singapore 048542.

Chairman’s Statement 2

Corporate Information 4

Board of Directors 5

Group Management Structure 7

8

Management Team 10

12

Financial Highlights 14

Business Review 15

Financial Contents 17

Contents

Dear valued shareholders,

On behalf of the Board of Directors (“Board”) of TEHO International Inc Ltd. (“TEHO” or the “Group”), it is my pleasure to present to you the annual report for the

FY2014

TEHO despite a very competitive landscape in the Marine and Offshore Oil & Gas industries. The Group posted a second consecutive year of record revenue,

came mainly from the Group’s newly acquired and incorporated companies, TEHO Water and TEHO EuROPE respectively, justifying the Group’s expansion strategy. The Group also saw a positive maiden contribution from its new Property Development segment, a result of the TIEC Holdings acquisition

Holdings marks an encouraging start in the Group’s

and TEHO Engineering also contributed to the record revenue growth.

mainly from TEHO Engineering incurring higher sub-contracting costs to meet customers’ requirements

lower than those of the other subsidiaries. TEHO Water, on the other hand, enjoyed an improved margin

The Group’s total operating expenses increased by

headcount and salaries arising from the full-year operational impact of TEHO Water and TEHO EuROPE, (ii) an increase in traveling expenses and participation in trade exhibitions to build up the TEHO brand, and (iii) an increase in outward freight and handling charges.

record and another watershed in TEHO’s progress.

A NEW PATH, A LEAP FORWARD

Oil & Gas industry through the acquisition of TEHO

in the sector by acquiring TEHO Water, and also entrenched our operations in Europe by incorporating TEHO EuROPE.

These initiatives followed a long term strategy to broaden our markets and range of products and services, and expand sales through cross-selling to an enlarged customer base.

at an extraordinary general meeting (“EGM”) to diversify into Property Development. The acquisition of TIEC Holdings reduces the Group’s reliance on the Marine and Offshore Oil & Gas industries for revenue and earnings. TIEC Holdings owned property development

D

OInp

FY

TEMapo

camincEuRstraconseg

Hol

andreve

maincontcont

Chairman’s Statement

2

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

The Group has also incorporated TEHO Development to pursue overseas and other property-related opportunities. TEHO recently entered into a non-binding memorandum of understanding with independent and unrelated third parties for a proposed establishment of a company in Cambodia, to engage in the principal business of real estate development and investment in Cambodia. TEHO Development recently entered into a non-binding letter of intent to acquire the entire issued and paid-up share capital of ECG Property Services Pte. Ltd. (“ECG”). ECG and its wholly-owned subsidiaries are principally engaged in the businesses of real estate, consultancy, management, real estate agencies, valuation services and real estate activities such as business and management consultancy services. In this regard, the Board will convene an extraordinary general meeting (“EGM”) in due course to seek shareholders’ approval to, inter alia, expand the geographical coverage and scope of the Group’s property business as well as acquire the entire issued and paid-up share capital of ECG.

different markets, together with the judicious nurturing and expansion of our existing businesses, will lead TEHO into the next wave of growth.

REAPING THE REWARDS

share to reward our valued shareholders for their faith in the Group. This

A WARM WELCOME

a Non-Executive, Independent Director, replacing Mr. Khoo Ming

management consulting. The Group looks forward to tapping her knowledge and experience on corporate governance practices and business strategies, to ensure that decisions continue to be made in the best interests of our valued shareholders.

APPRECIATIONI would like to extend my gratitude to Mr. Khoo Ming Hon, who had retired

Hwa, who will not be seeking re-election at the forthcoming AGM. Both Ming Hon and Terrance had served as very insightful members of the Board and

in their future endeavors.

On behalf of the Board, I express my utmost appreciation to the management and staff of the Group, for their dedication and diligence without which we would not have accomplished so much.

To my fellow directors, a very resounding thank you for guiding the Group – your knowledge and good sense have been invaluable as we work together to continue to forge new paths to growth.

Lastly, I thank our valued shareholders, business associates, suppliers and

in TEHO. Without you, we would have no success story to tell.

I look forward to seeing all of you at the forthcoming AGM.

LIM SEE HOEExecutive Chairman and CEO

3

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

Board of DirectorsMr Lim See Hoe

Ms Lim Siew Cheng Executive Director

Mr Kwah Thiam Hock Lead Independent DirectorMr Terrance Tan Kong Hwa*Independent Director

Independent Director

Audit CommitteeMr Kwah Thiam Hock ChairmanMr Terrance Tan Kong Hwa*

Remuneration Committee

ChairmanMr Kwah Thiam HockMr Terrance Tan Kong Hwa*

Nominating CommitteeMr Terrance Tan Kong Hwa*Chairman

Mr Kwah Thiam Hock

Company SecretariesMr Phua Sian Chin, FCA (Singapore)Ms Wee Woon Hong, LLB (Hons)

Share Registrar

Boardroom Corporate & Advisory Services Pte Ltd

SponsorSAC Capital Private Limited1 Robinson Road#21-02 AIA TowerSingapore 048542

AuditorsRSM Chio Lim LLP**8 Wilkie Road

Singapore 228095Partner-in-charge: Ms See Ling Ling, Helen, FCA (Singapore)Effective from the reporting

of Business

One Commonwealth, Singapore 149544Tel : (65) 6744 8777Fax : (65) 6744 8788Email : [email protected] : www.teho.com.sg

* Mr Terrance Tan Kong Hwa will be retiring as director at the forthcoming annual general meeting and will not be seeking re-election.

** RSM Chio Lim LLP will not be seeking re-appointment at the forthcoming annual general meeting.

lection.

Corporate Information

4

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

LIM SIEW CHENG is our Executive Director and COO and is currently responsible for our Group’s sales administration, operations and strategic planning. She joined TEHO in 1986 as a Director where she was in charge of operations and has extensive experience in managing the operations of supplying rigging and mooring equipment and services. Prior to joining TEHO, she was working as a Sales Executive in Teck Hoe & Company (Private) Limited, where she was in charge of sales and general administration duties from 1978 to 1985. Lim Siew Cheng

LIM SEE HOE is our Executive Chairman and CEO and is currently responsible for the overall corporate and strategic development, business direction, expansion plan and management of our Group. He joined TEHO in 1994 as a Marketing Manager where he was in charge of our Group’s sales and marketing functions. In 2000, he became TEHO’s Managing Director and was responsible for TEHO’s entire operations. Prior to joining TEHO, he worked as a Senior Parts Executive with Mitsubishi Caterpillar Forklift Asia Pte Ltd, Singapore, a company dealing

management of customer’s relationship in relation to the products sold by the company. Lim See Hoe graduated with a Bachelor of Engineering (Mechanical) degree from the Nanyang

Board of Directors

5

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

KWAH THIAM HOCK was appointed to be our Lead Independent Director on 5 May 2009 and is the Chairman of the Audit Committee. In addition, he serves as an Independent Director of Select Group Limited, Excelpoint Technology Ltd, IFS Capital Limited, and Wilmar International Limited, companies listed on the Singapore Exchange Securities Trading Limited. He joined ECICS Holdings Ltd in 1976 as Assistant General Manager and was subsequently promoted to be the President and CEO in

performance. Kwah Thiam Hock graduated from the University of Singapore (now known as National University of Singapore)

TERRANCE TAN KONG HWA was appointed to be our Independent Director on 5 May 2009 and is the Chairman of the Nominating Committee. He is currently a Partner/Director of Providence Capital Management Pte. Ltd., a private equity fund

and private equity / venture capital industries. Mr Tan obtained a degree in Bachelor of Science (Estate Management) (Honours) from the National University of Singapore in 1989.

JOANNE KHOO SU NEERemuneration Committee. She is currently a Director of Bowmen Capital Private Limited, a company that provides business and management consultancy services and an Independent Director of Kitchen Culture Holdings Ltd. She has more than 17

Ltd and Hong Leong Finance Limited. From 2000 to 2004, she was with Stone Forest Consulting Pte Ltd where she was involved in providing consultancy services to companies seeking public listings in Singapore. From 1997 to 2000, she was with

as the audit and business advisory services department. She graduated with a Bachelor of Business in Accountancy from Royal

in 1999 and a Chartered Accountant under the Malaysian Institute of Accountants in 2000.

Board of Directors

6

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

Group Management Structure

Board of Directors

Lim See HoeExecutive Chairman and CEO

Lim Siew ChengExecutive Director

and COO

Lim See HengProjects Director

Philip Tan Chiun WeiManaging Director of TEHO ENGINEERING

Lim Siew Choo

Director

Alvin Chee SiongManaging Director of

TEHO WATER

Dato’ Eric ChengManaging Director of

TIEC and TEHO

Soare Siew LianCEO of USA Operations

Jan-Kees NoordhoekManaging Director of

TEHO EuROPE

Phua Sian Chin CFO

7

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

LIM SEE HENG is our Projects Director and is currently responsible for project work, which normally involves open tendering of projects and complex tenders such as restricted, competitive or negotiated tendering. Lim See Heng joined TEHO in 1986 as the Managing Director where he was responsible for sales, operations, tenders and business development. He relinquished his post as a Managing Director in 2000 to concentrate on his current portfolio. Prior to joining TEHO, he was the Managing Director of Teck Hoe & Company (Private) Limited

LIM SIEW CHOO is our General Administration Director and is currently responsible for day-to-day operations, statutory matters, recruitment and staff welfare of our Group. She joined TEHO in 1987 as a Manager responsible for

and management reporting, treasury operations, internal audit, developing

budgeting. Lim Siew Choo graduated with a Bachelor degree in Management

Executive Officers

8

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

PHUA SIAN CHIN is our CFO. He joined our Group in August 2008 and is responsible for the

an Independent Director of Oxley Holdings Ltd. Prior to joining our Group, he was, for over 8 years, the CFO of a holding company listed on the Hong Kong Stock Exchange. For over 10 years, he had worked

Phua Sian Chin graduated with a Bachelor of Accountancy degree from the University of Singapore (now known as National University of Singapore) in 1975. He is currently a Fellow of the Institute of Singapore Chartered Accountants, a Fellow of the CPA Australia, a Fellow of the Association of

SOARE SIEW LIAN is our CEO of USA Operations. She joined TEHO in August 2008 and is currently responsible for liaising and servicing our existing customers and securing new customers in the western hemisphere, market research, and outsourcing and purchasing of products for our Group. Prior to joining TEHO, she operated her own business through TEHO (USA), LLC, a company incorporated in USA to

as Forecast Manager with Sara Lee Corporation’s apparel division (now known as Hanesbrands Inc.), where she was tasked to integrate new businesses into existing forecasting and planning systems, and to provide sales forecast and analysis. From 1991 to 1995, she worked as Special Projects Manager at Catalina Lighting, Inc., a manufacturer and distributor of lighting products in Florida, USA, where she was responsible for new product development. She was subsequently promoted to Inventory Manager in 1995, to oversee inventory replenishment and purchasing. Soare Siew Lian graduated with a degree in Bachelor of Business Administration from the National University of Singapore in 1981 and obtained a Master of International Management degree from the American Graduate School of International Management (now known as Thunderbird School of Global Management), USA in 1984.

9

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

TEHO INTERNATIONAL

PHUA CHENG BOON, our Financial Controller, is responsible for the

where he was also involved in clients’ IPO and RTO exercises on the

Singapore and Malaysia stock exchanges. He is a Fellow of the Association

Chartered Accountants. He joined the Group in December 2010.

TEHO ROPES

ANTHONY TAN, our Group Business Development Manager, joined the

Group in December 1998. Anthony is responsible for identifying business

opportunities and strengthening relationships with the customers of the

Group and leads the Group’s business development teams. Before joining

the Group, he was a sales executive for institutional chemicals and industrial

chemicals.

CHUA LAY MUI is our Operations Manager. She joined the Group in 1986

provides a critical supporting role to the business development team.

JAMIE CHOO, our Business Development Manager of the marine

industry, joined the Group in 2002. She monitors the market intelligence

within the industry and leads the business development team in aligning

Business Studies (Hons) from Loughborough University (UK) in 2010.

TAN WEE LEE, JASON is our Quality and Technical Manager. After

graduating with a Bachelor in Engineering (Mechanical) (Hons) from Nanyang

year. He is responsible for driving quality assurance programmes to deliver

product specialists to provide design solutions across a broad spectrum

of applications, he is also crucial in initiating internal quality process

improvements.

TEHO SHANGHAI

ANTHONY TOK is our Manager of TEHO (Shanghai) Co., Ltd, responsible

for expanding the business in the China market. Anthony joined the

Group in September 2009. He graduated from the National University of

Singapore, majoring in Mechanical Engineering in 2005 and has been based

in Shanghai for four years.

TEHO OFFSHORE

BLONDE GUY PROSPER is our Business Development Manager for the

offshore industry. He joined the Group in April 2012. Prior to joining the

manufacturer in Europe where he set up a worldwide network of distributors.

He has gained over a decade of extensive knowledge and experience in the

marketing of ropes and other equipment to the offshore industry.

Management Team

10

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

TEHO ENGINEERING

PHILIP TAN CHIUN WEI is our Managing Director of TEHO Engineering Pte

Ltd. He graduated from the University of Aberdeen (UK) in 1994 with a degree

in Bachelor of Engineering (Hons). Philip has over 18 years of experience in the

marine and offshore industry. He started as an Electrical Engineer and took on

roles with increasing responsibility in sales and marketing before being appointed

General Manager and Company Director of Finessco Systems Pte Ltd in 2006.

Finessco Systems was acquired by the Group in May 2012 and renamed as TEHO

Engineering Pte Ltd.

TEHO EuROPE

JAN-KEES NOORDHOEK, our Managing Director of TEHO EuROPE B.V., has

been in the rope business for more than 18 years. He rose from Product Manager

to Commercial Director at Lankhorst Ropes Offshore Division, and most lately,

served as a Managing Director of Oliveira Holland. Actively involved in Eurocord

aspects of synthetic rope production, marketing and application, especially of the

newer high performance rope.

TEHO WATER

ALVIN CHEE SIONG is our Managing Director of TEHO Water & Envirotec Pte

Ltd. He graduated from the Technological University of Malaysia in 2002 with a

degree in Bachelor of Engineering (Hons) major in Chemical Engineering. Alvin

developing their own reverse osmosis water maker for the past 10 years. Today,

STS Reverse Osmosis is one of the prominent brands in Southeast Asia renowned

for its quality and after-sales service. With his inception into the Group, TEHO’s

water related product line will be further enhanced.

ee

ee

ee

nn

d

66.

OO

TEHO DEVELOPMENT

DATO’ ERIC CHENG is our Managing Director of TEHO Development Pte Ltd

and TIEC Holdings Pte Ltd. Dato’ Eric Cheng has been involved in the real estate

development industry in Singapore for about 10 years and is the group chief

of the real estate industry and business acumen, Dato’ Eric Cheng’s seminars

have been heard in different parts of Asia including Singapore, Malaysia, and

Taiwan. He is also frequently sought for his insights by various media channels

and publications.

11

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

With a strong focus on customer requirement, keen interest in keeping abreast with market and product development, and high emphasis on staff empowerment and development, TEHO Group has grown from a small local rigging and mooring company in 1986 to become an international multi-faceted solutions provider, mainly for the Marine and Offshore O&G industries. In May

development through the acquisition of TIEC Holdings Pte Ltd.

after a restructuring exercise to streamline and rationalise our structure, under our holding company TEHO International Inc Ltd. TEHO Group of companies now includes TEHO Ropes & Supplies Pte Ltd, TEHO International (USA), LLC, TEHO (Shanghai) Co., Ltd, TEHO Offshore Pte Ltd, TEHO Engineering Pte Ltd, TEHO EuROPE B.V. and TEHO Water & Envirotec Pte Ltd which are in the business of marine and offshore supplies, as well as TIEC Holdings Pte Ltd and TEHO Development Pte Ltd which are in the business of property investment and development. We are assiduously and vigilantly looking for opportunities to expand our business segments and geographical network. We

presence amidst the challenges in the market and economic environment.

TEHO ROPES & SUPPLIES PTE LTDTEHO Ropes, incorporated in 1986, became a wholly owned subsidiary of TEHO International after a restructuring exercise in

for mooring, towing and other general applications, TEHO Ropes is renowned in the industry for having the most comprehensive inventory list. This enables quick turnaround of orders at competitive prices. To provide a more complete solution to industrial users, we offer other products and services, including:

Corporate Profile

12

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

customer base and developed close partnership with some of the leading manufacturers in their respective markets. This strategic acquisition further complements TEHO Group’s

the different needs for Marine and Offshore Oil & Gas applications.

TEHO EuROPE B.V. Incorporated in November 2012 as a wholly owned subsidiary, TEHO EuROPE, started

Kees Noordhoek, Managing Director, and Cees de Vries, Business Development Manager,

servicing the local market and also geared towards servicing other Northern European ports such as Hamburg, Bremen and Antwerp. In keeping with the corporate emphasis on quality and quick turnaround, TEHO EuROPE has an expansive inventory and in-house rigging and testing capabilities.

TEHO WATER & ENVIROTEC PTE LTD

in 1997. TEHO Water acquired its new name when it was acquired by TEHO International

in design and manufacture of its STS Reverse Osmosis Watermaker and other water

knowledge and market experience, as well as state-of-the-art technology, have facilitated us in the designing and custom building our equipment that meet customers’ exacting needs. Our STS Reverse Osmosis Watermaker has built up a good track record and holds a strong position in the market.

TIEC HOLDINGS PTE LTDTEHO DEVELOPMENT PTE LTDTIEC is a niche boutique developer in Singapore that focuses on residential properties and mixed development projects. It was incorporated in April 2010 under the ECG Group

International set up TEHO Development, a wholly owned subsidiary.

TIEC and TEHO Development are under the property investment and development arm of the Group, spearheaded by Dato’ Eric Cheng. The core business of this business segment includes activities such as property-related investments, holding of investments in property-related assets, and trading and development of property for sale. With Dato’ Eric Cheng’s vast knowledge of the real estate industry locally and regionally, the Group will be looking for further growth opportunities in this industry.

• Grade 8 and Grade 10 lifting chain and accessories• Synthetic slings and lashing systems•

hook and chain block• Other rigging kits such as Wirelock cold socketing compound, wire rope lubricant,

and rope and cable protectors• Services such as tensile testing, fabrication of sling, mechanical and hand splicing for

end termination, and rope analysis and optimization

TEHO INTERNATIONAL (USA), LLCTEHO USA was incorporated in 2008, headed by Soare Siew Lian who is the CEO. TEHO USA covers sales and marketing for the Americas, mainly to the marine industry, and also distributes the company’s products from Houston. TEHO USA also supports the Group via sourcing and logistics activities in the Western Hemisphere for customers.

TEHO (SHANGHAI) CO., LTD

activities for TEHO Group’s products and services in China.

TEHO OFFSHORE PTE LTDTEHO Offshore was incorporated as a wholly owned subsidiary in April 2012 to facilitate our sales and marketing activities into the Offshore Oil & Gas and Renewable Energy industries. With our product knowledge and Guy Blondé’s vast experience, we are now better positioned to tap into the opportunities in these industries. TEHO Offshore offers equipment and technical solutions in mooring, lifting and installation, with an important

TEHO ENGINEERING PTE LTD

headed by Philip Tan, Managing Director. TEHO Engineering’s specialty is in electrical and

& Gas industries. We have been awarded the exclusive distributorship in Asia or Southeast

acquired new product agencies for HVAC ducting system, electric duct heaters, heat

systems. Being in the industry for over 15 years, TEHO Engineering has acquired a strong

13

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

Financial Highlights

FY2012 FY2013 FY2014

Revenue

By Operating Segments

42,971

- - 5,090

42,971

By Geographical Areas

46,541

5,451 5,164 5,057

2,482 8,785

42,971

11,129 18,045 4,881

2,910 2,742

29.8 29.9 6.0 5.5 5.6 4.8 4.9 2.8 8.2 5.6

Earnings Per Ordinary Share (Cents)* 1.72 1.77 2.26

Gross Dividends Per Share (Cents) 0.80 1.00 0.80

48,907

19,497 20,178

28,729 60,107

NAV Per Ordinary Share (Cents)

*

Revenue ($’000)

EBITDA ($’000)

Gross Dividends Per Share (Cents)



Gross Dividends Per Share (Cents)

14

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

GROUP PERFORMANCE

The increased revenue from the Marine, Offshore Oil & Gas segment was largely due to the contribution by TEHO EuROPE B.V. (“TEHO EuROPE”) following its incorporation in November 2012 and TEHO Water & Envirotec Pte Ltd (“TEHO Water”) since the

TEHO Engineering Pte Ltd (“TEHO Engineering”) continued its growth, contributing to a

from TEHO Water, TEHO Engineering and TIEC. The increase in revenue from the rest of

of higher sub-contracting costs arising from additional sub-contract works performed

Business Review

result of consolidation of TEHO Water after its acquisition by the Group and following the incorporation of TEHO EuROPE, and an increase in the participation in trade exhibitions.

by the Group and following the incorporation of TEHO EuROPE.

decline in amortisation charges is mainly due to TEHO Engineering’s order books being

FINANCIAL POSITION

upward revaluation of leasehold properties and an increase in intangible assets in respect

revaluation of the leasehold properties was conducted by an independent professional valuer in May 2014 and relates to the Group’s warehouses at 1 Tuas Lane (revalued at

15

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

amortisation of intangible assets in respect of customer relationships arising from the

through the acquisition of TIEC.

was from the acquisition of TIEC. The Marine, Offshore Oil & Gas segment’s cash and

was from the acquisition of TIEC. In relation to the Marine, Offshore Oil & Gas segment, the

million in non-current portion of borrowings arising from the acquisition of TIEC, and an

year for working capital and business expansion purposes. In addition, deferred tax

the revaluation of properties. These increases were offset by repayments of non-current

Offshore Oil & Gas segment’s borrowings. The increase in trade and other payables of

the increasing demand of the same for the Company’s wholly-owned subsidiaries, TEHO Engineering, TEHO Water and TEHO EuROPE.

due to a rights issue and issuance of new shares being part of the purchase consideration

CASH FLOWS

the acquisition of TIEC. As part of the continuous growth of the Marine, Offshore Oil &

Business Review

16

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D

An

nu

al

R

ep

or

t

20

14

17

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Report of Corporate Governance 18

Directors’ Report 30

Statement by Directors 32

Independent Auditors’ Report 33

Consolidated Statement of Profit or Loss and Other Comprehensive Income 34

Statements of Financial Position 34

Statements of Changes in Equity 35

Consolidated Statement of Cash Flows 36

Notes to the Financial Statements 37

Shareholdings Statistics 84

Notice of Annual General Meeting 86

Appendix Relating to the Proposed Change of Auditors 89

Letter of Nomination from Shareholder 93

PROXY FORM

Financial Contents

18

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

The Board of Directors (the “Board”) of TEHO International Inc Ltd. (the “Company”)

is committed to maintaining a high standard of corporate governance within the

Company and its subsidiaries (the “Group”) to ensure greater transparency and to

protect the interests of the Company’s shareholders.

The Company has put in place various policies and practices that will safeguard

the interests of shareholders and enhance shareholders’ value as part of its effort

to maintain high standards of corporate governance. This report outlines the main

corporate governance practices and procedures adopted by the Company with

specific reference to the Code of Corporate Governance 2012 (the “Code”).

Statement of Compliance

The Board confirms that for the financial year ended 30 June 2014 (“FY2014”), the

Company has generally adhered to the principles and guidelines set out in the Code

save as otherwise explained below.

BOARD MATTERS

The Board’s Conduct of Affairs

Principle 1: Every company should be headed by an effective board to lead and

control the company. The board is collectively responsible for the long-term success

of the company. The board works with management to achieve this objective and

management remains accountable to the board.

The Board currently comprises two executive directors and three independent

directors, who have the right core competencies and diversity of experience to enable

them, in their collective wisdom, to contribute effectively. The independent directors

make up more than half of the Board and there is a strong independent element on the

Board.

The Board is entrusted with the responsibility for the overall management of the

business and corporate affairs of the Group. Matters which specifically require the

Board’s decision or approval are those involving:

• corporate strategy and business plans;

• investment and divestment proposals;

• funding decisions of the Group;

• nominations of directors for appointment to the Board and appointment of key

personnel;

• announcement of half-year and full-year results, the annual report and accounts;

• material acquisitions and disposal of assets;

• all matters of strategic importance; and

• corporate governance.

To assist the Board in the execution of the Board’s responsibilities, certain functions of

the Board have been delegated to the following committees:

• Audit Committee (the “AC”);

• Nominating Committee (the “NC”); and

• Remuneration Committee (the “RC”).

Each of these committees is being chaired by an independent director and operates

within clearly defined terms of reference and functional procedures which are reviewed

on a regular basis. These committees will provide further safeguards to prevent an

uneven concentration of power, authority and decision-making in a single individual.

To get a better understanding of the Group’s business, the Company adopts a policy

whereby directors are encouraged to request for further explanations, briefings or

informal discussion on the Group’s operations or business with the executive directors

and the management.

Ad hoc meetings involving the Board and Management are held regularly to review

important matters such as major acquisition and divestment and related funding

requirements. In between Board meetings, other important matters are also being

circulated and put for the Board’s approval by way of circulating resolutions in writing.

The Company’s Articles of Association provide for meetings of directors to be held by

means of telephone conference or other methods of simultaneous communication by

electronic or other means.

Report of Corporate Governance

19

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Frequency of formal Board and Board committee meetings held and attended by each

member for FY2014 are disclosed below:

Types of

Meetings

Names

of directors

Board Audit

Committee

Nominating

Committee

Remuneration

Committee

Total held for FY2014 2 2 2 2

Mr Lim See Hoe 2 2* 2* 1*

Ms Lim Siew Cheng 2 2* 2* 1*

Mr Kwah Thiam Hock 2 2 2 2

Mr Terrance Tan Kong Hwa 2 2 2 2

Mr Khoo Ming Hon ** 1 1 1 2

Ms Joanne Khoo Su Nee *** 1 1 - -

Notes:

* By invitation

** Mr Khoo Ming Hon ceased to be independent director, chairman of the RC and member of the AC and

NC of the Company on 28 October 2013.

*** Ms Joanne Khoo Su Nee was appointed as independent director, chairman of the RC and member of

the AC and NC of the Company on 10 January 2014.

All directors are expected, in the course of carrying out their duties, to act in good faith

to provide insights and objectively take decisions in the interest of the Company.

Newly appointed directors will be given briefings by management on the business activities

and strategic direction of the Group. There are also orientation program to familiarise them

with the role and responsibilities of a director of a listed company in Singapore. During

FY2014, Ms Joanne Khoo Su Nee was appointed as independent director, chairman of the

RC and member of the AC and NC of the Company on 10 January 2014.

All directors are encouraged to keep themselves updated on changes to the financial,

legal and regulatory requirements or framework and the business environment through

reading relevant literature and attending appropriate seminars and courses conducted

by bodies such as Singapore Exchange Securities Trading Limited (“SGX-ST”) and

Singapore Institute of Directors.

Board Composition and Guidance

Principle 2: There should be a strong and independent element on the board,

which is able to exercise objective judgment on corporate affairs independently, in

particular, from management and 10% shareholders. No individual or small group of

individuals should be allowed to dominate the board’s decision making.

The Board currently comprises the following directors:

Executive Directors

Mr Lim See Hoe Executive Chairman and Chief Executive Officer

(“CEO”)

Ms Lim Siew Cheng Chief Operating Officer (“COO”)

Non-Executive Directors

Mr Kwah Thiam Hock Lead Independent Director and Chairman of AC

Mr Terrance Tan Kong Hwa(1) Independent Director and Chairman of NC

Ms Joanne Khoo Su Nee Independent Director and Chairman of RC

Note:

(1) Mr Terrance Tan Kong Hwa will be retiring as director at the forthcoming Annual General Meeting

(“AGM”) and will not be seeking re-election.

The non-executive directors constructively participate in developing and setting

proposals on business strategies for the Company and review the performance of the

management.

The independence of each independent director is reviewed annually by the NC. The

NC adopts the definition in the Code as to what constitutes an independent director in

its review to ensure that the Board consists of persons who, together, will provide core

competencies necessary to meet the Company’s objectives. In this regard, the NC is of

the view that Mr Kwah Thiam Hock, Mr Terrance Tan Kong Hwa and Ms Joanne Khoo

Su Nee are independent.

In view that more than half of the Board is made up of independent directors, the NC

is satisfied that the Board has a strong independent element to ensure that objective

judgment is exercised on corporate affairs.


20

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

The Board through the NC has examined its size and composition and is of the view that

it is an appropriate size for effective decision-making, taking into account the scope and

nature of the operations of the Group. The NC is of the view that no individual or small

group of individuals dominates the Board’s decision-making process.

There is adequate relevant competence on the part of the directors, who, as a group,

carry specialist backgrounds in accounting, finance, business and management and

strategic planning.

Chairman and Chief Executive Officer

Principle 3: There should be a clear division of responsibilities between the

leadership of the board and the executives responsible for managing the company’s

business. No one individual should represent a considerable concentration of power.

There is a clear division of responsibilities between the Chairman who is also the CEO

and the other executive director who is the COO, which ensures there is a balance of

power and authority at the top of the Group. Mr Lim See Hoe, who is the Chairman

and CEO, leads the Board and is responsible for the overall corporate and strategic

development, business direction, expansion plan and management of the Group. Ms

Lim Siew Cheng, who is the executive director and COO, is responsible for the Group’s

sales administration, operations and strategic planning.

Mr Lim See Hoe in assuming the responsibility of the Chairman of the Board is

responsible for scheduling Board meetings as and when required, setting the

agenda for the Board meetings and ensuring the quality, quantity and timeliness of

the flow of information between the management, the Board and the shareholders

so as to enhance working relations among the management, executive and non-

executive directors, and to encourage constructive communication with shareholders

respectively. He is also responsible for ensuring compliance with the Company’s

guidelines on corporate governance.

As Mr Lim See Hoe and Ms Lim Siew Cheng are siblings, the Board has appointed

Mr Kwah Thiam Hock as the lead independent director to co-ordinate and lead the

independent directors to provide non-executive perspective, to avail himself to address

any shareholders’ concerns and to act as a counter-balance in the decision-making

process and contribute a balanced viewpoint to the Board. Furthermore, the Board

is of the view that with the establishment of the three Board committees, there are

adequate safeguards in place to prevent an uneven concentration of power, authority

and decision-making in a single individual.

Board Membership

Principle 4: There should be a formal and transparent process for the appointment

and re-appointment of directors to the board.

The NC comprises entirely independent directors, namely Mr Terrance Tan Kong Hwa,

Mr Kwah Thiam Hock and Ms Joanne Khoo Su Nee. The Chairman of the NC is Mr

Terrance Tan Kong Hwa. The NC is guided by written terms of reference that describe

the responsibilities of its members.

The principal functions of the NC are as follows:

(a) to review and recommend the nomination or re-nomination of the directors

having regard to the director’s contribution and performance;

(b) to determine on an annual basis whether or not a director is independent; and

(c) to assess the performance of the Board and contribution of each director to the

effectiveness of the Board.

In the event that a vacancy on the Board arises, the NC may identify suitable

candidates for appointment as new director through the business network of the

Board. The NC will assess suitable candidates for appointment to the Board based on

the requisite qualification, expertise and experience, and recommend the most suitable

candidate to the Board for appointment as director.

Under the Articles of Association of the Company, all directors are required to submit

themselves for re-nomination and re-election every three years. Directors who retire are

eligible to offer themselves for re-election.

The NC assesses and recommends to the Board whether retiring directors are suitable

for re-election. The NC, in considering the re-appointment of a director, evaluates such

director’s contributions in terms of experience, business perspective and attendance at

meetings of the Board and/or Board committees and pro-activeness of participation in

meetings. Each member of the NC shall abstain from recommending his own re-election.

Three directors, namely Mr Lim See Hoe, Mr Terrance Tan Kong Hwa and Ms Joanne

Khoo Su Nee are due for retirement at the forthcoming AGM. Mr Lim See Hoe and Mr

Terrance Tan Kong Hwa are retiring pursuant to Article 107 while Ms Joanne Khoo Su

Nee is retiring pursuant to Article 117 of the Company’s Articles of Association.


21

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Mr Terrance Tan Kong Hwa has informed the Board that in support of the Board

renewal plan, he will not be seeking re-election at the forthcoming AGM. Upon his

cessation as independent director of the Company, Mr Tan will ipso facto cease to

be Chairman of the NC and member of the AC and RC. The Company will use its

best endeavours to fill the vacancy following the retirement of Mr Tan as soon as

practicable and will make an announcement in due course.

The NC has reviewed and recommended the re-election of Mr Lim See Hoe and Ms

Joanne Khoo Su Nee. The Board has accepted the NC’s recommendations and Mr Lim

See Hoe and Ms Joanne Khoo Su Nee will be offering themselves for re-election at the

forthcoming AGM.

The NC considers that the multiple board representations held presently by some

directors do not impede their respective performance in carrying out their duties towards

the Company. As such, the Board does not propose to set the maximum number of

listed company board representations which directors may hold until such need arises.

Key information regarding the directors is set out below:

Name of

director

Date of first

appointment

Date of last

re-election

Directorships in other listed

companies

PresentPast

(Last three years)

Mr Lim See

Hoe

10 June 2008 25 October

2012

Nil Nil

Ms Lim Siew

Cheng

15 October

2008

28 October

2013

Nil Nil

Mr Kwah

Thiam Hock

5 May 2009 28 October

2013

Excelpoint

Technology Ltd

IFS Capital Limited

Select Group

Limited

Wilmar International

Limited

Nil

Mr Terrance

Tan Kong Hwa

5 May 2009 25 October

2012

Hafary Holdings

Limited

Consciencefood

Holding Limited

Ms Joanne

Khoo Su Nee

10 January

2014

Not

applicable

Kitchen Culture

Holdings Ltd.

Nil

The academic and professional qualifications and the information on shareholdings

in the Company held by each director are set out in the “Board of Directors” and

“Directors’ Report” sections of this annual report respectively.

Board Performance

Principle 5: There should be a formal annual assessment of the effectiveness of the

board as a whole and its board committees and the contribution by each director to

the effectiveness of the board.

The NC decides how the Board’s performance is to be evaluated and proposes

objective performance criteria, subject to the Board’s approval, which address how

the directors have enhanced long-term shareholders’ value. The Board has also

implemented a process to be carried out by the NC for assessing the effectiveness

of the Board as a whole and the Board committees and for assessing the contribution

by each individual director to the effectiveness of the Board. Assessment checklists

which include evaluation factors such as Board composition and structure, conduct

of meetings, corporate strategy and planning, risk management and internal control,

measuring and monitoring performance, training and recruitment, compensation,

financial reporting and communicating with shareholders, are disseminated to each

director for completion and the assessment results are discussed at the NC meeting.

Each member of the NC shall abstain from voting on any resolution in respect of the

assessment of his performance or re-nomination as director.

Access to Information

Principle 6: In order to fulfil their responsibilities, directors should be provided with

complete, adequate and timely information prior to board meetings and on an on-

going basis so as to enable them to make informed decisions to discharge their

duties and responsibilities.

The Company recognises the importance of unlimited and unhindered flow of

information for the Board to discharge its duties effectively. The management and the

executive directors furnish the Board, and where appropriate, each director regularly

with information about the Group as well as the relevant background information or

explanatory information relating to the business to be discussed at Board meetings.

The directors are also provided with the contact details of the management and

company secretaries to facilitate separate and independent access.


22

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Either one of the company secretaries attends Board and Board committee meetings.

Together with the management, the company secretaries are responsible for ensuring

that appropriate procedures are followed and that the requirements of the Companies

Act, Cap. 50, and the provisions in Section B: Rules of Catalist of the SGX-ST Listing

Manual (“Catalist Rules”) are complied with. Directors have separate and independent

access to the company secretaries. The appointment and the removal of the company

secretaries is a matter for the Board as a whole. Each director has the right to

seek independent legal and other professional advice, at the Company’s expense,

concerning any aspect of the Group’s operations or undertakings in order to fulfil his

duties and responsibilities as director.

REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

Principle 7: There should be a formal and transparent procedure for developing

policy on executive remuneration and for fixing the remuneration packages of

individual directors. No director should be involved in deciding his own remuneration.

The RC comprises entirely independent directors, namely Ms Joanne Khoo Su Nee,

Mr Kwah Thiam Hock and Mr Terrance Tan Kong Hwa. The Chairman of the RC is

Ms Joanne Khoo Su Nee. The RC has written terms of reference that describe the

responsibilities of its members.

The RC was formed to recommend to the Board a framework of remuneration for

the directors and key executives, and to determine specific remuneration packages

for each executive director. All aspects of remuneration, including but not limited to

directors’ fees, salaries, allowances, bonuses and other benefits-in-kind are covered

by the RC. In addition, the RC administers the TEHO Performance Share Plan (the

“TEHO PSP”).

Each member of the RC shall abstain from voting on any resolutions in respect of his

remuneration package.

The RC has the authority to seek any external professional advice, at the expense of the

Company, on matters relating to remuneration of directors as and when the need arises.

The RC will continue to review the Company’s obligations arising in the event of

termination of the executive directors and executive officers’ contracts of service, to

ensure that such contracts of service contain fair and reasonable termination clauses

which are not overly generous.

Level and Mix of Remuneration

Principle 8: The level and structure of remuneration should be aligned with the long-

term interest and risk policies of the company, and should be appropriate to attract,

retain and motivate (a) the directors to provide good stewardship of the company,

and (b) key management personnel to successfully manage the company. However,

companies should avoid paying more than is necessary for this purpose.

The Company has a remuneration policy for the CEO and COO, which comprises a

fixed component and a variable component. The fixed and variable components are in

the form of a base salary and a variable bonus respectively, which takes into account

the performance of the Company and their performances. The performance-related

elements of remuneration are designed to align the executive directors’ interest with

those of shareholders and link rewards to corporate and individual performance.

In setting remuneration packages, the Company also takes into consideration the

remuneration packages and employment conditions in comparable positions and

within the comparable industry and companies.

Mr Lim See Hoe and Ms Lim Siew Cheng being CEO and COO respectively are

remunerated based on their service agreements with the Company. These service

agreements are automatically renewed on a year-to-year basis upon expiry on

such terms and conditions as the parties may agree. The agreements provided for

termination by either party upon giving not less than six months’ notice in writing.

The independent directors do not have service agreements with the Company. They

are paid fixed directors’ fees, which are determined by the Board appropriate to the

level of their contributions, taking into account factors such as the effort and time

spent and the responsibilities of each independent director. The directors’ fees are

subject to approval by shareholders at each AGM. The independent directors do not

receive any other remuneration from the Company.


23

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

The review of the remuneration of the key executives takes into consideration the

performance and contributions of the staff to the Group and gives due regard to

the financial and business performance of the Group. The Group seeks to offer a

competitive level of remuneration to attract, motivate and retain senior management of

the required competency to run the Group successfully.

The Company has adopted a long-term employee incentive scheme known as TEHO

PSP that was approved by shareholders at the Extraordinary General Meeting held on

25 November 2011, to align itself with and embrace local trends and best practices

in employee compensation and retention. The TEHO PSP aims to promote higher

performance goals, recognise exceptional achievement and retain talents within the

Group. The TEHO PSP is administrated by the RC. Please refer to the “Directors’

Report” section of this annual report for more information of the TEHO PSP.

Disclosure on Remuneration

Principle 9: Every company should provide clear disclosure of its remuneration

policies, level and mix of remuneration, and the procedure for setting remuneration,

in the company’s annual report. It should provide disclosure in relation to

its remuneration policies to enable investors to understand the link between

remuneration paid to directors and key management personnel, and performance.

The Board supports and is keenly aware of the need for transparency. However, the

Board is of the view that full disclosure of the remuneration of directors and executive

officers, either on an individual basis or in aggregate, is not in the best interests of the

Company, having taken into consideration the sensitive nature of the matter and the

competitive business environment the Group operates in.

A breakdown, showing the level and mix of each director’s remuneration for FY2014 is

as follows:

Remuneration band and name

of director Fee(1) Salary Bonus Benefits Total

$250,000 to below $500,000 % % % % %

Mr Lim See Hoe 2.1 64.1 26.7 7.1 100

Below $250,000 % % % % %

Ms Lim Siew Cheng 3.1 73.8 18.5 4.6 100

Mr Kwah Thiam Hock 100.0 - - - 100

Mr Terrance Tan Kong Hwa 100.0 - - - 100

Mr Khoo Ming Hon(2) 100.0 - - - 100

Ms Joanne Khoo Su Nee 100.0 - - - 100

Notes:

(1) These fees are subject to the approval of the shareholders at the forthcoming AGM.

(2) Mr Khoo Ming Hon ceased to be a director of the Company with effect from 28 October 2013. A

director’s fee of S$13,333.33, subject to the approval of the shareholders at the forthcoming AGM, is

payable to him in respect of FY2014.

The Group has four executive officers comprising Ms Lim Siew Choo, General

Administration Director; Mr Lim See Heng, Projects Director; Ms Soare Siew Lian, CEO

of USA Operations; and Mr Phua Sian Chin, Chief Financial Officer. Ms Lim Siew Choo,

Mr Lim See Heng and Ms Soare Siew Lian are the siblings of the executive directors

of the Company. Ms Lim Siew Choo is also a substantial shareholder of the Company.

Key information regarding the executive officers is set out in the “Executive Officers”

section of this annual report.


24

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

A breakdown, showing the level and mix of each executive officer’s remuneration for

FY2014 is as follows:

Remuneration band and name

of executive officer

Salary Bonus Benefits Total

Below $250,000 % % % %

Ms Lim Siew Choo 68.9 24.6 6.5 100

Mr Lim See Heng 78.4 6.5 15.1 100

Ms Soare Siew Lian 80.6 - 19.4 100

Mr Phua Sian Chin 82.2 14.7 3.1 100

Save as disclosed above, no employee of the Group was an immediate family member

of the directors or the CEO whose remuneration exceeds $50,000 for FY2014.

There are no termination, retirement and post-employment benefits that may be

granted to directors, CEO and executive officers of the Group.

The RC has reviewed and approved the remuneration packages of the executive

directors and executive officers, having regard to their contributions as well as the

financial performance and commercial needs of the Group and has ensured that

the executive directors and executive officers are adequately but not excessively

remunerated.

ACCOUNTABILITY AND AUDIT

Accountability

Principle 10: The board should present a balanced and understandable assessment

of the company’s performance, position and prospects.

For the financial performance reporting via the SGXNET to SGX-ST, and the annual

report to the shareholders, the Board has a responsibility to present a balanced

and understandable assessment of the Group’s performance, financial position and

prospects to the public, including interim and other price sensitive public reports and

reports to regulators (if required).

The Board ensures that the management maintains a sound system of internal controls

to safeguard the shareholders’ investments and the Group’s assets.

The management will provide all members of the Board with management accounts of

the Group’s performance, with explanatory details on its operations. Board papers are

given prior to any Board meeting to facilitate effective discussion and decision-making.

The Board also announces the Group’s half-year results and performance review via

the SGXNET for the benefit of its shareholders.

Risk Management and Internal Controls

Principle 11: The board is responsible for the governance of risk. The board should

ensure that management maintains a sound system of risk management and internal

controls to safeguard shareholders’ interests and the company’s assets, and should

determine the nature and extent of the significant risks which the board is willing to

take in achieving its strategic objectives.

The Company does not have a Risk Management Committee. However, the executive

directors and management regularly review the Group’s business and operational

activities to identify areas of significant business risks as well as appropriate measures

to control and mitigate these risks. Management reviews significant control policies

and procedures and highlights the significant matters to the Board and the AC.

Furthermore, on AC’s recommendation, the Board had appointed the Internal Auditors

(as defined below) to conduct a Risk Management Assessment of the Group.

The Board is responsible for the overall internal control framework and is fully aware

of the need to put in place a system of internal controls within the Group to safeguard

shareholders’ interests and the Group’s assets, and to manage risks.

On 22 July 2009, the Board, under the AC’s recommendation, selected and appointed

Ernst & Young Advisory Pte. Ltd. (“Internal Auditors”) to review, recommend, carry out

subsequent follow-up review on the Group’s internal control systems, and expand

and enhance on its policies and procedures manual in the following major areas of

operations of the Group under two phases:


25

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Phase 1:

(a) Purchases, payables and payments (including purchase and safeguarding of

fixed assets)

(b) Inventory management

(c) Financial close reporting

Phase 2:

(a) Sales, receivables and collections

(b) Treasury and cash management

(c) Human resources and payroll

The first full cycle internal controls review and follow-up reviews of the major areas

of operations with direct consultations, presentations and reporting made to the AC

were completed in March 2012. On the recommendations of the AC, the Internal

Auditors continued with its second full cycle internal controls review that spanned

over the financial year ended 30 June 2013 and to continue with the third full cycle

internal controls review in FY2014. The AC had also engaged the Internal Auditors

to undertake an initial Enterprise Risk Management Review of the Group, which

commenced in October 2013, to enable the Board and management to understand the

inherent industry, financial, operational, compliance and information technology risks of

the Group.

The shareholders had at the Extraordinary General Meeting held on 6 May 2014

approved the following:

(a) diversification of core business of the Group to include property development

and property investment, which involves activities such as property-related

investments, holding of investments in property related assets, and trading in

and the development of property for sale, more particularly described in in the

circular dated 21 April 2014; and

(b) acquisition of the entire issued and paid-up share capital of TIEC Holdings Pte.

Ltd. which is in the business of real estate development.

The acquisition of TIEC Holdings Pte. Ltd. was completed on 26 May 2014.

In the audit of the Company’s financial statements for FY2014, RSM Chio Lim LLP

(“External Auditors”), the external auditors of the Company, informed the Board that

it did not notice any significant deficiency or major lapses in the internal controls that

would warrant highlighting to the management, AC and the Board.

On the recommendation of the AC, the chief financial officer takes on the additional

duties of a compliance officer and to co-ordinate and oversee the works of the

Company’s professional service providers.

The Board has received assurance from the CEO and the chief financial officer (a) that

the financial records have been properly maintained and the financial statements for

FY2014 give a true and fair view of the Group’s operations and finances; and (b) that

the Group has put in place and will continue to maintain a reasonably adequate and

effective system of risk management and internal controls.

Based on the internal controls established and maintained by the Group, work

performed by the appointed Internal Auditors and External Auditors, and reviews

performed by the management and the Board, the Board with the concurrence of the

AC is of the opinion that the risk management and internal control systems maintained

by the Group, addressing the financial, operational, compliance and information

technology risks of the Group are adequate and effective as at 30 June 2014. The

Board and the AC note that all internal control systems contain inherent limitations and

no system of internal controls can provide absolute assurance against the occurrence

of material errors, poor judgement in decision-making, human error, fraud or other

irregularities.

Audit Committee

Principle 12: The board should establish an audit committee with written terms of

reference which clearly set out its authority and duties.

The AC comprises entirely independent directors, namely Mr Kwah Thiam Hock, Mr

Terrance Tan Kong Hwa and Ms Joanne Khoo Su Nee. The Chairman of the AC is

Mr Kwah Thiam Hock. The AC has written terms of reference clearly setting out its

authority and duties.

All members of the AC have accounting and related financial management expertise.

The Board is of the view that the AC has the necessary experience and expertise

required to discharge its duties.

The AC has explicit authority to investigate any matter within its terms of reference, full

access to and co-operation by management and full discretion to invite any director

or executive officer to attend its meetings, and reasonable resources to enable it to

discharge its functions properly.


26

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

The AC shall meet periodically to perform, inter alia, the following functions:

(a) to review with the external auditors the audit plan, their evaluation of the

system of internal controls, the audit report, the management letter and the

management’s response;

(b) to review with the internal auditors the internal audit plan and their evaluation of

the adequacy of the internal controls and accounting system before submission

of the results of such review to the Board for approval prior to the incorporation

of such results in the annual report;

(c) to review the financial statements before submission to the Board for approval,

focusing in particular, on changes in accounting policies and practices, major

risk areas, significant adjustments resulting from the audit, the going concern

statement, compliance with accounting standards as well as compliance with

any stock exchange and statutory/regulatory requirements;

(d) to review the internal controls and procedures and ensure co-ordination

between the external auditors and the management, reviewing the assistance

given by the management to the auditors, and discuss problems and concerns,

if any, arising from the interim and final audits, and any matters which the

auditors may wish to discuss (in the absence of the management where

necessary);

(e) to review and discuss with external and internal auditors (if any), any suspected

fraud or irregularity, or suspected infringement of any relevant laws, rules or

regulations, which has or is likely to have a material impact on the Group’s

operating results or financial position, and the management’s response;

(f) to review the Group’s key financial risk areas (including but not limited to, the

Group’s cash management policies and cash position, collection of debts,

hedging policies and transactions, speculative trading policies and positions

and off-balance sheet items);

(g) to consider the appointment or re-appointment of the external auditors and

matters relating to resignation or dismissal of the auditors;

(h) to review transactions falling within the scope of Chapter 9 of the Catalist Rules;

(i) to review any potential conflicts of interest;

(j) to undertake such other reviews and projects as may be requested by the

Board and report to the Board its findings from time to time on matters arising

and requiring the attention of the AC; and

(k) generally to undertake such other functions and duties as may be required by

statute or the Catalist Rules, and by such amendments made thereto from time

to time.

Apart from the above functions, the AC is given the task to commission and review the

findings of investigations into matters where there is suspected fraud or irregularity,

or failure of internal controls or infringement of any Singapore law, rule or regulation,

which has or is likely to have a material impact on the Company’s operating results or

financial position.

The Company engages RSM Chio Lim LLP to audit all significant Singapore

incorporated subsidiaries for the purposes of the consolidated financial statements of

the Company and its subsidiaries. The AC is of the view that the External Auditors is

a suitable auditing firm that meets the Group’s audit obligations, size and complexity,

and having also considered the External Auditors’ professional standing, the reputation

of its audit engagement partner and the adequacy of the resources and experience of

its supervisory and auditing staff assigned for the audit. The External Auditors is also

an auditing firm registered with the Accounting and Corporate Regulatory Authority.

The Company’s other Singapore incorporated subsidiaries and foreign incorporated

subsidiaries are being audited by separate auditing firms, as disclosed in Note 17 to

the financial statements in this annual report which have been cleared by the External

Auditors. The Board and AC have reviewed and are satisfied that the appointment of

different auditors would not compromise the standard and effectiveness of the audit of

the Company. Accordingly, Rules 712 and 716 of the Catalist Rules are complied with.

The External Auditors have served as the auditors of the Company for seven

consecutive audits since the financial year ended 30 June 2008. The directors are of

the view that a change of auditors would be a good corporate governance practice

and would enable the Company to benefit from fresh perspectives and views of

another professional audit firm and further enhance the value of the audit. The External

Auditors will accordingly not be seeking re-appointment at the forthcoming AGM.


27

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

The AC has recommended the appointment of KPMG LLP as the new auditors of the

Company to the Board for approval, after taking into consideration the suitability of

KPMG LLP and the requirements of Rules 712(1) and 712(2) of the Catalist Rules. The

directors have taken into account the AC’s recommendation, including the factors

considered in the AC’s evaluation such as, amongst others, the adequacy of the

resources and experience of KPMG LLP, the audit engagement partner to be assigned

to the audit, as well as the size and complexity of the Group, and are satisfied that

KPMG LLP will be able to meet the audit requirements of the Company and that Rules

712(1) and 712(2) of the Catalist Rules are complied with. Please refer to the appendix as

set out on page 88 to 91 of this annual report for further details.

The AC had met with the External Auditors, without the presence of management to

review the adequacy of audit arrangements, with emphasis on the scope and quality of

their audit, and the independence, objectivity and observations of the External Auditors.

The Board has on the recommendation of the AC, implemented a whistle blowing

policy for the Group with the objective of providing an avenue for staff, suppliers and

customers to raise in confidence concerns about possible improprieties in matters of

financial reporting or other matters which they become aware. A copy of the whistle

blowing policy has been posted on the Company’s website for the information of its

stakeholders. There were no incidents pertaining to whistle blowing for FY2014.

It is the Company‘s practice for the External Auditors to present to the AC its audit

plan and with updates relating to any change in accounting standards impacting the

financial statements. During FY2014, the changes in accounting standards did not

have any material impact on the Group’s financial statements.

Internal Audit

Principle 13: The company should establish an effective internal audit function that

is adequately resourced and independent of the activities it audits.

As the size of the operations of the Group does not warrant the Group having an in-

house internal audit function, the Group outsourced its internal audit function to the

Internal Auditors as mentioned in Principle 11. The Internal Auditors consult and

report directly to the AC and administratively to the Board. During FY2014, the Internal

Auditors had reviewed key internal controls in the major operational areas of the

Group as detailed in the internal audit plan submitted to and approved by the AC as

mentioned in Principle 11. Findings and the Internal Auditors’ recommendations on

areas of improvement were reported to the AC and for management’s implementation

and were also made available to the External Auditors for review.

During FY2014, the AC held a conference call meeting with the Internal Auditors

without the presence of management to discuss their findings on the Company’s

observance of internal control measures that are in place.

The AC has reviewed the adequacy of the internal audit function and is satisfied that it

is adequately resourced and has appropriate standing within the Group to perform its

duties effectively.

SHAREHOLDER RIGHTS AND RESPONSIBILITIES

Shareholder Rights

Principle 14: Companies should treat all shareholders fairly and equitably, and

should recognise, protect and facilitate the exercise of shareholders’ rights, and

continually review and update such governance arrangements.

The Group’s corporate governance practices promote fair and equitable treatment of

all shareholders. To facilitate shareholders’ ownership rights, the Group ensures that

all material information is disclosed on a comprehensive, accurate and timely basis

via SGXNET. The Group recognises that the release of timely and relevant information

is central to good corporate governance and enables shareholders to make informed

decisions in respect of their investments in the Company.

All shareholders are entitled to attend the AGM and are afforded the opportunity to

participate effectively at the AGM. The Articles of Association of the Company allow a

shareholder to appoint up to two proxies to attend and vote in the shareholder’s place

at the AGM.

Communication with Shareholders

Principle 15: Companies should actively engage their shareholders and put in place

an investor relations policy to promote regular, effective and fair communication with

shareholders.

The Company is committed to maintaining and improving its level of corporate

transparency of financial results and other pertinent information. In line with the continuous

disclosure obligations of the Company pursuant to the Catalist Rules and the Companies

Act, Cap. 50, it is the Board’s policy to ensure that all shareholders are informed on a

timely basis of every significant development that has an impact on the Group.


28

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

The Company does not practise selective disclosure. Results and annual reports are

announced or issued within the mandatory period.

The Company conducts its investor relations on the following principles:

(a) Information deemed to be price-sensitive is disseminated without delay via

announcements on SGXNET;

(b) Endeavour to provide comprehensive information in financial results

announcements to help shareholders and potential investors make informed

decisions; and

(c) Operate an open policy with regard to investors’ enquiries.

The Company does not have a definite dividend policy as the form, frequency and

amount of dividends declared each year will take into consideration the Group’s

retained earnings and expected future earnings, cash flow, capital requirements and

general financing condition, as well as general business conditions and other factors

as the Board may deem appropriate. Details of dividends declared to shareholders in

respect of FY2014 are set out on page 57 of this Annual Report.

Conduct of Shareholder Meetings

Principle 16: Companies should encourage greater shareholder participation

at general meetings of shareholders, and allow shareholders the opportunity to

communicate their views on various matters affecting the company.

All shareholders will receive the Company’s annual report and notice of AGM.

Shareholders will be given the opportunity and time to voice their views and ask

directors or the management questions regarding the Company at the forthcoming

AGM.

The Company takes note that there should be separate resolutions at general meetings

on each substantially separate issue and to avoid bundling resolutions.

The Chairman of each Board committee is required to be present to address questions

at the AGM. External Auditors are also present at such meeting to assist the directors

to address shareholders’ queries, if necessary.

The Articles of Association of the Company allow any member of the Company, if he is

unable to attend the meeting, to appoint not more than two proxies to attend and vote

on his behalf at the meeting through proxy forms sent in advance.

ADDITIONAL INFORMATION

Dealing in Securities

The Company has devised and adopted policies in line with the requirements of the

Catalist Rules on dealings in the Company’s securities.

The Company and its officers are prohibited from dealing in the Company’s shares on

short-term considerations or at any time when they are in possession of unpublished

price-sensitive information. They are not allowed to deal in the Company’s shares

during the period commencing one month before the date of the announcement of the

Company’s half year and full year results, and ending on the date of the announcement

of the relevant results.

In addition, directors and key executives are expected to observe insider trading laws

at all times even when dealing in securities within the permitted trading period.

The Company issues half yearly circular to its directors and officers informing them

that they must not deal in the Company’s securities before the release of results and

at any time they are in possession of unpublished material price-sensitive information.

Interested Person Transaction

The Company has adopted an internal policy in respect of any transaction with an

interested person, which sets out the procedures for review and approval of such

transaction.

All interested person transactions will be documented and submitted periodically to

the AC for their review to ensure that such transactions are carried out on an arm’s

length basis and on normal commercial terms and are not prejudicial to the Company.

Details of the interested person transaction entered into by the Group for FY2014 as

required pursuant to Rule 1204(17) of the Catalist Rules are set out below:


29

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Name of interested person

Aggregate value of

all interested person

transactions during

FY2014 (excluding

transactions less

than $100,000 and

transactions conducted

under shareholders’

mandate pursuant to

Rule 920)

Aggregate value of

all interested person

transactions conducted

under shareholders’

mandate pursuant to

Rule 920 (excluding

transactions less than

$100,000)

FY2014 FY2013 FY2014 FY2013

Asdev Investments Pte. Ltd.

for rental of office space(1) $306,090 $235,584 - -

Note:

(1) Pursuant to the Lease Agreement dated 1 August 2013 entered into between TEHO Ropes &

Supplies Pte. Ltd. and Asdev Investments Pte. Ltd. (where Mr Lim See Hoe, a director and controlling

shareholder of the Company is the sole director and shareholder) for taking a lease in respect of the

property located at 1 Commonwealth Lane #09-23/24/25/26 One Commonwealth Singapore 149544.

The Board confirms that the above interested person transaction was entered into on

an arm’s length basis and on normal commercial terms and is not prejudicial to the

interests of the shareholders.

Audit and Non-Audit Fees

During FY2014, the aggregate amount of fees paid or payable to the External Auditors

of the Company for the audit and non-audit services amounted to $150,000 and

$9,700 respectively.

For the purposes of good governance and Rule 1204(6)(b) of the Catalist Rules, the

AC has undertaken a review of the fees and expenses payable to the External Auditors

for all non-audit services in FY2014. The non-audit services performed by the External

Auditors for FY2014 are not services prohibited by the rules and in the AC’s opinion

would not affect the objectivity and independence of the External Auditors.

Non-Sponsor Fees

With respect to Rule 1204(21) of the Catalist Rules, there was non-sponsor fee of

$45,000 paid to the Sponsor, SAC Capital Private Limited, for FY2014.

Material Contracts and Loans

Pursuant to Rule 1204(8) of the Catalist Rules, the Company confirms that except

as disclosed in the “Directors’ Report” section of this annual report and the audited

financial statements, there were no other material contracts and loans of the Company

and its subsidiaries involving the interests of the CEO or any director or controlling

shareholder, either still subsisting at the end of the financial year or if not then

subsisting, which were entered into since the end of the previous financial year.

Use of Proceeds from Rights Issue

The Company has fully utilised the net proceeds raised from the rights issue in

accordance with the intended purposes as follows:

Intended use of net

proceeds

Amount allocated

(as disclosed in the offer information

statement dated 28 February 2014)

(S$)

Amount utilised

(S$)

Repayment of bank

borrowings 2,500,000 2,500,000

Working capital 1,550,000 1,550,000

Total 4,050,000 4,050,000

Please refer to the Company’s announcements made on 28 April 2014 and 10 June 2014

in relation to the use of proceeds from the rights issue for further details.


30

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

The directors of the company are pleased to present their report together with the

audited financial statements of the company and of the group for the reporting year

ended 30 June 2014.

1. Directors at Date of Report

The directors of the company in office at the date of this report are:

Lim See Hoe

Lim Siew Cheng

Kwah Thiam Hock

Terrance Tan Kong Hwa

Joanne Khoo Su Nee (appointed on 10 January 2014)

2. Arrangements to Enable Directors to Acquire Benefits by Means of the

Acquisition of Shares and Debentures

Neither at the end of the reporting year nor at any time during the reporting

year did there subsist any arrangement whose object is to enable the directors

of the company to acquire benefits by means of the acquisition of shares or

debentures in the company or any other body corporate.

3. Directors’ Interests in Shares and Debentures

The directors of the company holding office at the end of the reporting year had

no interests in the share capital of the company and related corporations as

recorded in the register of directors’ shareholdings kept by the company under

section 164 of the Companies Act, Chapter 50 (“the Act’’) except as follows:

Name of directors in which

interests are held

At beginning of the

reporting year

At end of the

reporting year

Number of shares

Company

Lim See Hoe 39,909,659 56,497,578

Lim Siew Cheng 16,500,111 23,100,155

By virtue of section 7 of the Act, Mr Lim See Hoe is deemed to have an interest

in all the related corporations of the company.

The directors’ interests as at 21 July 2014 were the same as those at the end of

the reporting year.

4. Contractual Benefits of Directors

Since the beginning of the reporting year, no director of the company has

received or become entitled to receive a benefit which is required to be

disclosed under section 201(8) of the Act by reason of a contract made by the

company or a related corporation with the director or with a firm of which he is

a member, or with a company in which he has a substantial financial interest

except as disclosed in the financial statements.

There were certain transactions (shown in the financial statements under related

party transactions) with a corporation in which certain directors have an interest.

5. Performance Share Plan

The company’s performance share plan, TEHO Performance Share Plan (the

“PSP”), was approved and adopted by the shareholders at the company’s

Extraordinary General Meeting held on 25 November 2011. The PSP is

administered by the Remuneration Committee (“RC”) with such discretion,

powers and duties as are conferred on it by the Board of Directors.

The PSP contemplates the award of fully-paid shares in the capital of the

company to participants after certain pre-determined benchmarks have been

met. The company believes that the PSP will be more effective and rewarding

than pure cash bonuses in motivating employees to work towards pre-

determined goals of the company.

The PSP shall continue to be in force at the discretion of the RC, subject

to a maximum period of 10 years commencing from its adoption by the

shareholders and may continue beyond the stipulated period with the approval

of the shareholders by an ordinary resolution in general meeting and of any

relevant authorities which may then be required.

Directors’ Report

31

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Under the rules of the PSP and at the absolute discretion of the RC, confirmed

full-time employees of the group who are of the age of 18 years and above,

and directors of the group who have contributed or will contribute to the

success and the development of the group are eligible to participate in the

PSP. However, participation in the PSP by directors who are also controlling

shareholders and their associates are subject to the approval by independent

shareholders of the company at general meeting.

The total number of shares that may be issued or are issuable pursuant to the

granting of the awards under the PSP, when added to the aggregate number

of shares that are issued or are issuable in respect of such other share-based

incentive schemes of the company (if any), shall not exceed 15% (or such other

percentage as may be prescribed or permitted from time to time by the SGX-

ST) of the total number of issued ordinary shares of the company on the day

immediately preceding the relevant award date.

There were no awards granted under the PSP by the company or any

corporation in the group since its inception and during the reporting year.

There were no shares issued during the reporting year by virtue of the exercise

of awards to take up unissued shares of the company or any corporation in the

group.

There were no unissued shares under the PSP in the company or any

corporation in the group as at the end of the reporting year.

6. Share Options

During the reporting year, no option to take up unissued shares of the company

or any corporation in the group was granted.

During the reporting year, there were no shares of the company or any

corporation in the group issued by virtue of the exercise of an option to take up

unissued shares.

At the end of the reporting year, there were no unissued shares of the company

or any corporation in the group under option.

7. Audit Committee

The members of the audit committee at the date of this report are as follows:

Kwah Thiam Hock – Chairman of Audit Committee and Lead Independent

Director

Terrance Tan Kong Hwa – Independent Director

Joanne Khoo Su Nee – Independent Director (appointed on 10 January 2014)

The audit committee performs the functions specified by section 201B(5) of the

Act. Among other functions, it performed the following:

• Reviewed with the independent external auditors their audit plan;

• Reviewed with the independent external auditors their evaluation of the

company’s internal accounting controls relevant to their statutory audit,

and their report on the financial statements and the assistance given by

management to them;

• Reviewed with the internal auditors the scope and results of the internal

audit procedures (including those relating to financial, operational,

compliance and information technology controls and risk management)

and the assistance given by the management to the internal auditors;

• Reviewed the financial statements of the group and the company prior to

their submission to the directors of the company for adoptions; and

• Reviewed the interested person transactions (as defined in Chapter 9 of

the Singapore Exchange Securities Trading Limited’s Listing Manual).

Other functions performed by the audit committee are described in the report

of corporate governance included in the annual report. It also includes an

explanation of how independent auditors’ objectivity and independence are

safeguarded where the independent auditors provide non-audit services.

RSM Chio Lim LLP has served as the auditors of the company for seven

consecutive audits since the financial year ended 30 June 2008. The

directors are of the view that a change of auditors would be a good corporate

governance practice and would enable the company to benefit from fresh

perspectives and views of another professional audit firm and further enhance

the value of the audit. The external auditors will accordingly not be seeking re-

appointment at the forthcoming Annual General Meeting. The audit committee

has reviewed a few audit firms and recommended to the board of directors that

KPMG LLP be nominated for appointment as auditors of the company at the

forthcoming Annual General Meeting.

Directors’ Report

32

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

8. Independent Auditors

The independent auditors, RSM Chio Lim LLP, is not seeking re-appointment

at the forthcoming Annual General Meeting. The board of directors would like

to propose the appointment of KPMG LLP as the independent auditors of the

company in place of RSM Chio Lim LLP at the forthcoming Annual General

Meeting.

9. Subsequent Developments

There are no significant developments subsequent to the release of the group’s

and the company’s preliminary financial statements, as announced on 19

August 2014, which would materially affect the group’s and the company’s

operating and financial performance as of the date of this report.

On Behalf of the Board of Directors

...........................................……….... ...........................................………....

Lim See Hoe Lim Siew Cheng

Director Director

1 October 2014

In the opinion of the directors,

(a) the accompanying consolidated statement of profit or loss and other

comprehensive income, statements of financial position, statements of changes

in equity, consolidated statement of cash flows, and notes thereto are drawn

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

of the group as at 30 June 2014 and of the results and cash flows of the group

and the changes in equity of the company and of the group for the reporting

year then ended; and

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

company will be able to pay its debts as and when they fall due.

The board of directors approved and authorised these financial statements for issue.

On Behalf of the Board of Directors

...........................................……….... ...........................................………....

Lim See Hoe Lim Siew Cheng

Director Director

1 October 2014

Statement by DirectorsDirectors’ Report

33

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Independent Auditors’ Report to the Members of

TEHO INTERNATIONAL INC LTD. (Registration No: 200811433K)

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of TEHO

International Inc Ltd (the “company”) and its subsidiaries (the “group”), which comprise

the consolidated statements of financial position of the group and the statement of

financial position of the company as at 30 June 2014, and the consolidated statement

of profit or loss and other comprehensive income, statement of changes in equity

and statement of cash flows of the group, and statement of changes in equity of the

company for the reporting year then ended, and a summary of significant accounting

policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give

a true and fair view in accordance with the provisions of the Singapore Companies

Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for

devising and maintaining a system of internal accounting controls sufficient to provide

a reasonable assurance that assets are safeguarded against loss from unauthorised

use or disposition; and transactions are properly authorised and that they are recorded

as necessary to permit the preparation of true and fair statement of profit or loss and

other comprehensive income and statements of financial position and to maintain

accountability of assets.

Auditor’s Responsibility

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 comply with ethical requirements and plan

and perform the audit to obtain reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the

amounts and disclosures in the financial statements. The procedures selected

depend on the auditor’s judgment, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error. In making

those risk assessments, the auditor considers internal control relevant to the entity’s

preparation of financial statements that give a true and fair view in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose

of expressing an opinion on the effectiveness of the entity’s internal control. An audit

also includes evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the group and the statement

of financial position and statement of changes in equity of the company are properly

drawn up in accordance with the provisions of the Act and Singapore Financial

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

group and of the company as at 30 June 2014 and of the results, changes in equity

and cash flows of the group and the changes in equity of the company for the

reporting year ended on that date.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by

the company and by the subsidiaries incorporated in Singapore of which we are the

independent auditors have been properly kept in accordance with the provisions of the

Act.

RSM Chio Lim LLP

Public Accountants and

Chartered Accountants

Singapore

1 October 2014

Partner in charge of audit: See Ling Ling, Helen

Effective from year ended 30 June 2013

Independent Auditors’ Report

34

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Group

Notes 2014 2013

$ $

Revenue 5 60,383,508 42,971,401

Cost of Sales (42,338,726) (29,024,583)

Gross Profit 18,044,782 13,946,818

Other Items of Income

Interest Income 6 2,007 1,437

Other Credits 7 137,478 122,497

Other Items of Expense

Distribution Costs (1,393,131) (1,105,665)

Administrative Expenses 8 (8,169,842) (6,048,527)

Other Operating Expenses 9 (3,762,236) (2,930,576)

Finance Costs 10 (380,620) (375,390)

Other Charges 7 (1,118,528) (902,479)

Share of Profit from Equity-Accounted Associate 27,729 34,330

Profit Before Tax from Continuing Operations 3,387,639 2,742,445

Income Tax Income/(Expense) 12 4,531 (361,875)

Profit from Continuing Operations, Net of Tax 3,392,170 2,380,570

Other Comprehensive Gain/(Loss):

Items that will not be reclassified to profit or loss:

Gains on Property Revaluation, Net of Tax 25 20,823,593 –

Items that may be reclassified subsequently

to profit or loss:

Exchange Differences on Translating Foreign

Operations, Net of Tax 25 (3,508) (6,126)

Other Comprehensive Gain/(Loss) for the Year,

Net of Tax 20,820,085 (6,126)

Total Comprehensive Income 24,212,255 2,374,444

Earnings Per Share

Earnings Per Share Currency Unit Cents Cents

Basic 14 2.26 1.77

Diluted 14 2.26 1.77

Group Company

Notes 2014 2013 2014 2013

ASSETS $ $ $ $

Non-Current Assets

Property, Plant and Equipment 15 31,626,797 6,463,444 18,026 –

Intangible Assets 16 10,611,540 5,601,926 – –

Investments in Subsidiaries 17 – – 34,122,460 22,918,677

Investment in Associates 18 185,970 171,748 42,794 42,794

Total Non-Current Assets 42,424,307 12,237,118 34,183,280 22,961,471

Current Assets

Inventories 19 21,098,127 20,258,172 – –

Development Properties 20 26,393,589 – – –

Trade and Other Receivables, Current 21 16,364,624 11,271,327 6,417,454 2,273,456

Other Assets, Current 22 1,129,967 58,598 116,628 7,350

Cash and Cash Equivalents 23 15,813,623 5,081,521 168,285 3,398

Total Current Assets 80,799,930 36,669,618 6,702,367 2,284,204

Total Assets 123,224,237 48,906,736 40,885,647 25,245,675

EQUITY AND LIABILITIES

Equity

Share Capital 24 24,352,108 16,476,668 24,352,108 16,476,668

Retained Earnings 14,958,886 12,275,862 2,011,725 1,583,378

Revaluation Reserve 25 20,823,593 – – –

Foreign Currency Translation Reserve 25 (27,524) (24,016) – –

Total Equity 60,107,063 28,728,514 26,363,833 18,060,046

Non-Current Liabilities

Deferred Tax Liabilities 12 5,117,596 522,653 – –

Other Payables, Non-Current 26 – 723,000 – 723,000

Other Financial Liabilities, Non- Current 27 20,837,625 2,803,471 – –

Finance Leases, Non-Current 27 124,482 286,066 – –

Total Non-Current Liabilities 26,079,703 4,335,190 – 723,000

Current Liabilities

Income Tax Payable 692,503 585,857 – –

Trade and Other Payables, Current 28 8,183,583 2,927,226 14,521,814 6,462,629

Other Financial Liabilities, Current 27 27,999,802 12,173,297 – –

Finance Lease, Current 27 161,583 156,652 – –

Total Current Liabilities 37,037,471 15,843,032 14,521,814 6,462,629

Total Liabilities 63,117,174 20,178,222 14,521,814 7,185,629

Total Equity and Liabilities 123,224,237 48,906,736 40,885,647 25,245,675

Consolidated Statement of Profit or

Loss and Other Comprehensive IncomeYear Ended 30 June 2014

As at 30 June 2014

Statements of Financial Position

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

35

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Foreign

Currency

Total Share Retained Revaluation Translation

Equity Capital Earnings Reserve Reserve

Group $ $ $ $ $

Current Year:

Opening Balance at 1 July 2013 28,728,514 16,476,668 12,275,862 – (24,016)

Movements in Equity:

Issue of Share Capital (Note 24) 8,029,877 8,029,877 – – –

Share Issue Expenses (Note 24) (154,437) (154,437) – – –

Total Comprehensive Income for

the year 24,212,255 – 3,392,170 20,823,593 (3,508)

Dividends Paid (Note 13) (709,146) – (709,146) – –

Closing Balance at 30 June 2014 60,107,063 24,352,108 14,958,886 20,823,593 (27,524)

Previous Year:

Opening Balance at 1 July 2012 27,346,363 16,080,668 11,283,585 – (17,890)


Total Comprehensive Income for

the year 2,374,444 – 2,380,570 – (6,126)

Issue of Share Capital (Note 24) 396,000 396,000 – – –

Dividends Paid (Note 13) (1,388,293) – (1,388,293) – –

Closing Balance at 30 June 2013 28,728,514 16,476,668 12,275,862 – (24,016)

Total Share Retained

Equity Capital Earnings

Company $ $ $

Current Year:

Opening Balance at 1 July 2013 18,060,046 16,476,668 1,583,378


Total Comprehensive Income for the year 1,137,493 – 1,137,493

Issue of Share Capital (Note 24) 8,029,877 8,029,877 –

Share Issue Expenses (154,437) (154,437) –

Dividends Paid (Note 13) (709,146) – (709,146)

Closing Balance at 30 June 2014 26,363,833 24,352,108 2,011,725

Previous Year:

Opening Balance at 1 July 2012 18,310,872 16,080,668 2,230,204


Total Comprehensive Income for the year 741,467 – 741,467

Issue of Share Capital (Note 24) 396,000 396,000 –

Dividends Paid (Note 13) (1,388,293) – (1,388,293)

Closing Balance at 30 June 2013 18,060,046 16,476,668 1,583,378

Year Ended 30 June 2014

Statements of Changes in Equity


36

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Group

2014 2013

$ $

Cash Flows From Operating Activities

Profit Before Tax 3,387,639 2,742,445

Adjustments for:

Share of Profit from Equity-Accounted Associates (27,729) (34,330)

Depreciation of Property, Plant and Equipment 990,258 912,214

Fair Value Losses on Derivatives 376,525 –

Gain on Disposal of Property, Plant and Equipment – (5,314)

Interest Expense 380,620 375,390

Interest Income (2,007) (1,437)

Amortisation of Intangible Assets 588,000 852,000

Net Effect of Exchange Rate Changes in Consolidating

Foreign Entities (6,102) (6,153)

Operating Cash Flows Before Working Capital Changes 5,687,204 4,834,815

Inventories (839,955) 336,588

Development Properties 5,115,579 –

Trade and Other Receivables (4,456,876) (2,274,229)

Other Assets (820,220) 209,425

Trade and Other Payables 2,721,416 (1,350,801)

Net Cash Flows From Operations 7,407,148 1,755,798

Income Taxes Paid (355,502) (788,340)

Net Cash Flows From Operating Activities 7,051,646 967,458

Cash Flows From Investing Activities

Purchase of Property, Plant and Equipment (1,062,352) (459,163)

Proceeds from Disposal of Property, Plant and Equipment – 5,314

Dividend received from associate 13,507 –

Acquisition of Subsidiary (Net of Cash Acquired) (3,482,270) (1,604,023)

Interest Received 2,007 1,437

Net Cash Flows Used in Investing Activities (4,529,108) (2,056,435)

Group

2014 2013

$ $

Cash Flows Used In Financing Activities

Dividends Paid to Equity Shareholders (709,146) (1,388,293)

Decrease in Finance Leases (156,653) (152,025)

Cash Restricted In Use 12,000 –

Proceeds from Issuance of Ordinary Shares 4,254,877 –

Share Issue Expense (154,437) –

Increase from New Borrowings 13,000,000 3,500,000

Decrease in Other Financial Liabilities (7,590,024) (2,468,018)

Interest Paid (435,053) (375,390)

Net Cash Flows From/(Used in) Financing Activities 8,221,564 (883,726)

Net Increase/(Decrease) in Cash and Cash Equivalents 10,744,102 (1,972,703)

Cash and Cash Equivalents, Statement of Cash Flows,

Beginning Balance 5,056,521 7,029,224

Cash and Cash Equivalents, Statement of Cash Flows,

Ending Balance (Note 23) 15,800,623 5,056,521

Year Ended 30 June 2014

Consolidated Statement of Cash Flows


37

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Notes to the Financial Statements30 June 2014

1. General

The company is incorporated in Singapore with limited liability. The financial

statements are presented in Singapore dollar and they cover the company

(referred to as “parent”) and the subsidiaries.

The board of directors approved and authorised these financial statements for

issue on the date of the statement by directors.

The company is an investment holding company. It is listed on the Catalist

which is a shares market on Singapore Exchange Securities Trading Ltd.

The principal activities of the subsidiaries are described in the notes to the

financial statements below.

The registered office is: 1 Commonwealth Lane, #09-23, One Commonwealth,

Singapore 149544. The company is situated in Singapore.

2. Summary of Significant Accounting Policies

Accounting Convention

The financial statements have been prepared in accordance with the Singapore

Financial Reporting Standards (“FRS”) and the related Interpretations to FRS

(“INT FRS”) as issued by the Singapore Accounting Standards Council and

the Companies Act, Chapter 50. The financial statements are prepared on

a going concern basis under the historical cost convention except where an

FRS requires an alternative treatment (such as fair values) as disclosed where

appropriate in these financial statements. The accounting policies in FRSs need

not be applied when the effect of applying them is immaterial. The disclosures

required by FRSs need not be made if the information is immaterial. Other

comprehensive income comprises items of income and expense (including

reclassification adjustments) that are not recognised in the income statement,

as required or permitted by FRS. Reclassification adjustments are amounts

reclassified to profit or loss in the income statement in the current period that

were recognised in other comprehensive income in the current or previous

periods.

2. Summary of Significant Accounting Policies (Continued)

Basis of Presentation

The consolidated financial statements include the financial statements made

up to the end of the reporting year of the company and all of its subsidiaries.

The consolidated financial statements are the financial statements of the group

in which the assets, liabilities, equity, income, expenses and cash flows of the

parent and its subsidiaries are presented as those of a single economic entity

and are prepared using uniform accounting policies for like transactions and

other events in similar circumstances. All significant intragroup balances and

transactions, including income, expenses and cash flows are eliminated on

consolidation. The consolidated financial statements include the income and

expenses of a subsidiary from the date the entity gains control until the date

when the entity ceases to control the subsidiary. Income and expenses of the

subsidiary are based on the amounts of the assets and liabilities recognised in

the consolidated financial statements at the acquisition date.

Changes in the group’s ownership interest in a subsidiary that do not result in

the loss of control are accounted for within equity as transactions with owners

in their capacity as owners. The carrying amounts of the group’s and non-

controlling interests are adjusted to reflect the changes in their relative interests

in the subsidiary. When the group loses control of a subsidiary it derecognises

the assets and liabilities and related equity components of the former

subsidiary. Any gain or loss is recognised in profit or loss. Any investment

retained in the former subsidiary is measured at its fair value at the date when

control is lost and is subsequently accounted as available-for-sale financial

assets in accordance with FRS 39.

The company’s separate financial statements have been prepared on the same

basis, and as permitted by the Companies Act, Chapter 50, the company’s

separate statement of profit or loss and other comprehensive income is not

presented.

The equity accounting method is used for associates in the group financial

statements.

38

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Basis of Preparation of the Financial Statements

The preparation of financial statements in conformity with generally accepted

accounting principles requires the management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and

disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of revenues and expenses during the

reporting year. Actual results could differ from those estimates. The estimates

and assumptions are reviewed on an ongoing basis. Apart from those involving

estimations, management has made judgements in the process of applying the

entity’s accounting policies. The areas requiring management’s most difficult,

subjective or complex judgements, or areas where assumptions and estimates

are significant to the financial statements, are disclosed at the end of this

footnote, where applicable.

Revenue Recognition

The revenue amount is the fair value of the consideration received or receivable

from the gross inflow of economic benefits during the reporting year arising

from the course of the activities of the entity and it is shown net of any related

sales taxes and rebates. Revenue from the sale of goods is recognised when

significant risks and rewards of ownership are transferred to the buyer, there is

neither continuing managerial involvement to the degree usually associated with

ownership nor effective control over the goods sold, and the amount of revenue

and the costs incurred or to be incurred in respect of the transaction can be

measured reliably. Revenue from rendering of services that are not significant

transactions is recognised as the services are provided or when the significant

acts have been completed. Interest is recognised using the effective interest

method. Dividend from equity instruments is recognised as income when the

entity’s right to receive payment is established. Rental revenue is recognised on

a time-proportion basis that takes into account the effective yield on the asset

on a straight-line basis over the lease term.


Revenue Recognition (Continued)

For residential and mixed development properties under progressive payment

schemes in Singapore, whereby the legal terms in the sales contracts result in

the continuous transfer of work-in-progress to the purchasers, revenue and cost

are recognised using the stage of completion method. The amounts brought

into the financial statements are the results attributable to each sale contracts

signed, but only to the extent that they relate to the stage of completion as

certified by the independent architects or quantity surveyors for the individual

units sold.

For the industrial and commercial development properties, the revenue and

cost are recognised using the completion of construction method, when the

development is completed. Developments are considered completed upon the

issuance of temporary occupation permits (“TOP”).

When losses are expected on the properties, full provision is made in the

financial statements after adequate consideration has been made for estimated

costs to completion.

Employee Benefits

Contributions to a defined contribution retirement benefit plan are recorded

as an expense as they fall due. The entity’s legal or constructive obligation

is limited to the amount that it agrees to contribute to an independently

administered fund (such as the Central Provident Fund in Singapore, a

government managed defined contribution retirement benefit plan). For

employee leave entitlement the expected cost of short-term employee benefits

in the form of compensated absences is recognised in the case of accumulating

compensated absences, when the employees render service that increases

their entitlement to future compensated absences; and in the case of non-

accumulating compensated absences, when the absences occur. A liability for

bonuses is recognised where the entity is contractually obliged or where there

is constructive obligation based on past practice.

39

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Share-Based Compensation

Benefits to employees are provided in the form of share-based payment

transactions, whereby employees render services in exchange for shares or rights

over shares (‘‘equity-settled transactions’’). The fair value of the employee services

rendered is determined by reference to the fair value of the shares awarded or

rights granted, excluding the impact of any non-market vesting conditions. These

are fair valued based on the market price of the entity’s shares (or an estimated

market price, if the entity’s shares are not publicly traded). This fair value amount

is charged to profit or loss over the vesting period of the share-based payment

scheme, with the corresponding increase in equity. The value of the charge

is adjusted in profit or loss over the remainder of the vesting period to reflect

expected and actual quantities vesting, with the corresponding adjustment made in

equity. Cancellations of grants of equity instruments during the vesting period (other

than a grant cancelled by forfeiture when the vesting conditions are not satisfied)

are accounted for as an acceleration of vesting, therefore any amount unrecognised

that would otherwise have been charged is recognised immediately in profit or loss.


Income Tax

The income taxes are accounted using the asset and liability method that

requires the recognition of taxes payable or refundable for the current year

and deferred tax liabilities and assets for the future tax consequence of events

that have been recognised in the financial statements or tax returns. The

measurements of current and deferred tax liabilities and assets are based on

provisions of the enacted or substantially enacted tax laws; the effects of future

changes in tax laws or rates are not anticipated. Tax expense (tax income) is

the aggregate amount included in the determination of profit or loss for the

reporting year in respect of current tax and deferred tax. Current and deferred

income taxes are recognised as income or as an expense in profit or loss

unless the tax relates to items that are recognised in the same or a different

period outside profit or loss. For such items recognised outside profit or loss

the current tax and deferred tax are recognised (a) in other comprehensive

income if the tax is related to an item recognised in other comprehensive

income and (b) directly in equity if the tax is related to an item recognised

directly in equity. Deferred tax assets and liabilities are offset when they

relate to income taxes levied by the same income tax authority. The carrying

amount of deferred tax assets is reviewed at each end of the reporting year

and is reduced, if necessary, by the amount of any tax benefits that, based on

available evidence, are not expected to be realised. A deferred tax amount is

recognised for all temporary differences, unless the deferred tax amount arises

from the initial recognition of an asset or liability in a transaction which (i) is not

a business combination; and (ii) at the time of the transaction, affects neither

accounting profit nor taxable profit (tax loss). A deferred tax liability or asset is

recognised for all taxable temporary differences associated with investments in

subsidiaries and associates, except where the reporting entity is able to control

the timing of the reversal of the taxable temporary difference and it is probable

that the taxable temporary difference will not reverse in the foreseeable future

or for deductible temporary differences, they will not reverse in the foreseeable

future and they cannot be utilised against taxable profits.

40

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Foreign Currency Transactions

The functional currency is the Singapore dollar as it reflects the primary economic

environment in which the entity operates. Transactions in foreign currencies

are recorded in the functional currency at the rates ruling at the dates of the

transactions. At each end of the reporting year, recorded monetary balances and

balances measured at fair value that are denominated in non-functional currencies

are reported at the rates ruling at the end of the reporting year and fair value

measurement dates respectively. All realised and unrealised exchange adjustment

gains and losses are dealt with in profit or loss except when recognised in other

comprehensive income and if applicable deferred in equity such as for qualifying

cash flow hedges. The presentation is in the functional currency.

Translation of Financial Statements of Foreign Entities

Each entity in the group determines the appropriate functional currency as it

reflects the primary economic environment in which the relevant reporting

entity operates. In translating the financial statements of such an entity for

incorporation in the consolidated financial statements in the presentation

currency the assets and liabilities denominated in other currencies are

translated at end of the reporting year rates of exchange and the income

and expense items for each statement presenting profit or loss and other

comprehensive income are translated at average rates of exchange for the

reporting year. The resulting translation adjustments (if any) are recognised in

other comprehensive income and accumulated in a separate component of

equity until the disposal of that relevant entity.


Segment Reporting

The reporting entity discloses financial and descriptive information about

its consolidated reportable segments. Reportable segments are operating

segments or aggregations of operating segments that meet specified criteria.

Operating segments are components about which separate financial information

is available that is evaluated regularly by the chief operating decision maker

in deciding how to allocate resources and in assessing the performance.

Generally, financial information is reported on the same basis as is used

internally for evaluating operating segment performance and deciding how to

allocate resources to operating segments.

Borrowing Costs

Borrowing costs are interest and other costs incurred in connection with the

borrowing of funds. The interest expense is calculated using the effective

interest rate method. Borrowing costs are recognised as an expense in the

period in which they are incurred except that borrowing costs that are directly

attributable to the acquisition, construction or production of a qualifying asset

that necessarily take a substantial period of time to get ready for their intended

use or sale are capitalised as part of the cost of that asset until substantially all

the activities necessary to prepare the qualifying asset for its intended use or

sale are complete.

Government Grants

A government grant is recognised at fair value when there is reasonable

assurance that the conditions attaching to it will be complied with and that the

grant will be received. A grant in recognition of specific expenses is recognised

as income over the periods necessary to match them with the related costs

that they are intended to compensate, on a systematic basis. A grant related

to depreciable assets is allocated to income over the period in which such

assets are used in the project subsidised by the grant. A government grant

related to assets, including non-monetary grants at fair value, is presented in

the statement of financial position.

41

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Property, Plant and Equipment

Depreciation is provided on a straight-line basis to allocate the gross carrying

amounts of the assets less their residual values over their estimated useful lives

of each part of an item of these assets. The annual rates of depreciation are as

follows:

Leasehold buildings – Over the terms of lease that are 37 to 44 years

Plant and machinery – 5 to 10 years

Motor vehicles – 5 years

An asset is depreciated when it is available for use until it is derecognised even

if during that period the item is idle. Fully depreciated assets still in use are

retained in the financial statements.

Property, plant and equipment are carried at cost on initial recognition and

after initial recognition at cost less any accumulated depreciation and any

accumulated impairment losses. The gain or loss arising from the derecognition

of an item of property, plant and equipment is determined as the difference

between the net disposal proceeds, if any, and the carrying amount of the item

and is recognised in profit or loss. The residual value and the useful life of an

asset is reviewed at least at each end of the reporting year and, if expectations

differ significantly from previous estimates, the changes are accounted for as a

change in an accounting estimate, and the depreciation charge for the current

and future periods are adjusted.

Cost also includes acquisition cost, borrowing cost capitalised and any cost

directly attributable to bringing the asset or component to the location and

condition necessary for it to be capable of operating in the manner intended

by management. Subsequent costs are recognised as an asset only when it is

probable that future economic benefits associated with the item will flow to the

entity and the cost of the item can be measured reliably. All other repairs and

maintenance are charged to profit or loss when they are incurred.


Property, Plant and Equipment (Continued)

If fair value can be measured reliably, after the initial recognition as an asset

at cost, an item of property, plant and equipment (leasehold buildings) is

carried at a revalued amount, being its fair value at the date of the revaluation

less any subsequent accumulated depreciation and subsequent accumulated

impairment losses. Revaluations are made with sufficient regularity to ensure

that the carrying amount does not differ materially from that which would be

measured using fair value at the end of the reporting year and the entire class

of property, plant and equipment to which that asset belongs is revalued. When

an asset’s carrying amount is increased as a result of a revaluation, the increase

is recognised in other comprehensive income and accumulated in equity under

the heading of revaluation surplus except that the increase is recognised in

profit or loss to the extent that it reverses a revaluation decrease of the same

asset previously recognised in profit or loss. When an asset’s carrying amount

is decreased, the decrease is recognised in other comprehensive income to the

extent of any credit balance existing in the revaluation surplus in respect of that

asset. The decrease recognised in other comprehensive income reduces the

amount accumulated in equity under the heading of revaluation surplus. The

revaluation surplus included in equity is transferred directly to retained earnings

when the asset is derecognised.

However, some of the surplus is realised as the asset is used as the difference

between depreciation based on the revalued carrying amount of the asset

and depreciation based on the asset’s original cost and these transfers from

revaluation surplus to retained earnings are not made through the other

comprehensive income.

When an item of property, plant and equipment is revalued, any accumulated

depreciation at the date of the revaluation is eliminated against the gross

carrying amount of the asset and the net amount restated to the revalued

amount of the asset. Accumulated depreciation is the difference between the

gross and the net carrying amounts, irrespective of the valuation method or

type of asset revalued.

42

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Leases

Whether an arrangement is, or contains, a lease is based on the substance

of the arrangement at the inception date, that is, whether (a) fulfilment of the

arrangement is dependent on the use of a specific asset or assets (the asset);

and (b) the arrangement conveys a right to use the asset. Leases are classified

as finance leases if substantially all the risks and rewards of ownership are

transferred to the lessee. All other leases are classified as operating leases.

At the commencement of the lease term, a finance lease is recognised as an

asset and as a liability in the statement of financial position at amounts equal to

the fair value of the leased asset or, if lower, the present value of the minimum

lease payments, each determined at the inception of the lease. The discount

rate used in calculating the present value of the minimum lease payments

is the interest rate implicit in the lease, if this is practicable to determine,

the lessee’s incremental borrowing rate is used. Any initial direct costs of

the lessee are added to the amount recognised as an asset. The excess

of the lease payments over the recorded lease liability are treated as finance

charges which are allocated to each reporting year during the lease term so

as to produce a constant periodic rate of interest on the remaining balance of

the liability. Contingent rents are charged as expenses in the reporting years

in which they are incurred. The assets are depreciated as owned depreciable

assets. Leases where the lessor effectively retains substantially all the risks and

benefits of ownership of the leased assets are classified as operating leases.

For operating leases, lease payments are recognised as an expense in profit or

loss on a straight-line basis over the term of the relevant lease unless another

systematic basis is representative of the time pattern of the user’s benefit, even

if the payments are not on that basis. Lease incentives received are recognised

in profit or loss as an integral part of the total lease expense. Rental income

from operating leases is recognised in profit or loss on a straight-line basis over

the term of the relevant lease unless another systematic basis is representative

of the time pattern of the user’s benefit, even if the payments are not on that

basis. Initial direct cost incurred in negotiating and arranging an operating lease

are added to the carrying amount of the leased asset and recognised on a

straight-line basis over the lease term.


Intangible Assets

An identifiable non-monetary asset without physical substance is recognised

as an intangible asset at acquisition cost if it is probable that the expected

future economic benefits that are attributable to the asset will flow to the entity

and the cost of the asset can be measured reliably. After initial recognition, an

intangible asset with finite useful life is carried at cost less any accumulated

amortisation and any accumulated impairment losses. An intangible asset with

an indefinite useful life is not amortised. An intangible asset is regarded as

having an indefinite useful life when, based on an analysis of all of the relevant

factors, there is no foreseeable limit to the period over which the asset is

expected to generate net cash inflows for the entity.

The amortisable amount of an intangible asset with finite useful life is allocated

on a systematic basis over the best estimate of its useful life from the point at

which the asset is ready for use. The useful lives are as follows:

Customer relationship - 5 years

Orderbook - Based on actual orders for reporting years 2013

and 2014

Identifiable intangible assets acquired as part of a business combination are

initially recognised separately from goodwill if the asset’s fair value can be

measured reliably, irrespective of whether the asset had been recognised by

the acquiree before the business combination. An intangible asset is considered

identifiable only if it is separable or if it arises from contractual or other legal

rights, regardless of whether those rights are transferable or separable from the

entity or from other rights and obligations.

Subsidiaries

A subsidiary is an entity including unincorporated and special purpose entity that is

controlled by the group. Control is the power to govern the financial and operating

policies of an entity so as to obtain benefits from its activities accompanying a

shareholding of more than one half of the voting rights or the ability to appoint or

remove the majority of the members of the board of directors or to cast the majority

of votes at meetings of the board of directors. The existence and effect of potential

voting rights that are currently exercisable or convertible are considered when

assessing whether the group controls another entity.

43

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Subsidiaries (Continued)

In the company’s own separate financial statements, an investment in a

subsidiary is accounted for at cost less any allowance for impairment in value.

Impairment loss recognised in profit or loss for a subsidiary is reversed only

if there has been a change in the estimates used to determine the asset’s

recoverable amount since the last impairment loss was recognised. The

carrying value and the net book value of the investment in a subsidiary are not

necessarily indicative of the amount that would be realised in a current market.

Associates

An associate is an entity including an unincorporated entity in which the

reporting entity has a significant influence and that is neither a subsidiary nor

a joint venture of the investor. Significant influence is the power to participate

in the financial and operating policy decisions of the investee but is not control

or joint control over those policies. An investment in an associate includes

goodwill on acquisition, which is accounted for in accordance with FRS 103

Business Combinations. However the entire carrying amount of the investment

is tested under FRS 36 for impairment, by comparing its recoverable amount

(higher of value in use and fair value) with its carrying amount, whenever

application of the requirements in FRS 39 indicates that the investment may

be impaired. The carrying value and the net book value of the investment in the

associate are not necessarily indicative of the amounts that would be realised in

a current market exchange.


Associates (Continued)

In the consolidated financial statements, the accounting for investments in an

associate is on the equity method. Under the equity method the investment

is initially recognised at cost and adjusted thereafter for the post-acquisition

change in the investor’s share of the investee’s net assets. The investor’s profit

or loss includes its share of the investee’s profit or loss and the investor’s other

comprehensive income includes its share of the investee’s other comprehensive

income. Losses of an associate in excess of the reporting entity’s interest in the

relevant associate are not recognised except to the extent that the reporting

entity has an obligation. Profits and losses resulting from transactions between

the reporting entity and an associate are recognised in the financial statements

only to the extent of unrelated reporting entity’s interests in the associate.

Unrealised losses are also eliminated unless the transaction provides evidence

of an impairment of the asset transferred. Accounting policies of associates

are changed where necessary to ensure consistency with the policies adopted

by the reporting entity. The reporting entity discontinues the use of the equity

method from the date that when its investment ceases to be an associate and

accounts for the investment in accordance with FRS 39 from that date. Any

gain or loss is recognised in profit or loss. Any investment retained in the former

associate is measured at fair value at the date that it ceases to be an associate.

In the company’s separate financial statements, an investment in an associate

is accounted for at cost less any allowance for impairment in value. Impairment

loss recognised in profit or loss for an associate is reversed only if there has

been a change in the estimates used to determine the asset’s recoverable

amount since the last impairment loss was recognised. The carrying value

and the net book value of an investment in the associate are not necessarily

indicative of the amounts that would be realised in a current market exchange.

44

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Business Combinations

A business combination is transaction or other event which requires that the

assets acquired and liabilities assumed constitute a business. It is accounted

for by applying the acquisition method of accounting. The cost of a business

combination includes the fair values, at the date of exchange, of assets given,

liabilities incurred or assumed, and equity instruments issued by the acquirer,

in exchange for control of the acquiree. The acquisition-related costs are

expensed in the periods in which the costs are incurred and the services are

received except for any costs to issue debt or equity securities are recognised

in accordance with FRS 32 and FRS 39. As of the acquisition date, the acquirer

recognises, separately from goodwill, the identifiable assets acquired, the

liabilities assumed and any non-controlling interest in the acquiree measured

at acquisition-date fair values as defined in and that meet the conditions for

recognition under FRS 103. Goodwill is an asset representing the future

economic benefits arising from other assets acquired in a business combination

that are not individually identified and separately recognised. If there is

gain on bargain purchase, a reassessment is made of the identification and

measurement of the acquiree’s identifiable assets, liabilities and contingent

liabilities and the measurement of the cost of the business combination. Any

excess remaining after this reassessment is recognised immediately in profit or

loss.

Goodwill

Goodwill is recognised as of the acquisition date measured as the excess of

(a) over (b); (a) being the aggregate of: (i) the consideration transferred which

generally requires acquisition-date fair value; (ii) the amount of any non-

controlling interest in the acquiree measured in accordance with FRS 103

(measured either at fair value or as the non-controlling interest’s proportionate

share of the acquiree’s net identifiable assets); and (iii) in a business

combination achieved in stages, the acquisition-date fair value of the acquirer’s

previously held equity interest in the acquiree; and (b) being the net of the

acquisition-date amounts of the identifiable assets acquired and the liabilities

assumed measured in accordance with this FRS 103.


After initial recognition, goodwill acquired in a business combination is

measured at cost less any accumulated impairment losses. Goodwill is not

amortised. Irrespective of whether there is any indication of impairment,

goodwill (and also an intangible asset with an indefinite useful life or an

intangible asset not yet available for use) are tested for impairment, at least

annually. Goodwill impairment is not reversed in any circumstances.

For the purpose of impairment testing and since the acquisition date of the business

combination, goodwill is allocated to each cash-generating unit, or groups of cash-

generating units that are expected to benefit from the synergies of the combination,

irrespective of whether other assets or liabilities of the acquiree were assigned

to those units or groups of units. Each unit or group of units to which the goodwill

is so allocated represent the lowest level within the entity at which the goodwill is

monitored for internal management purposes and is not larger than a segment.

Impairment of Non-Financial Assets

Irrespective of whether there is any indication of impairment, an annual impairment

test is performed at the same time every year on an intangible asset with an

indefinite useful life or an intangible asset not yet available for use. The carrying

amount of other non-financial assets is reviewed at each end of the reporting year

for indications of impairment and where an asset is impaired, it is written down

through profit or loss to its estimated recoverable amount. The impairment loss is

the excess of the carrying amount over the recoverable amount and is recognised

in profit or loss unless the relevant asset is carried at a revalued amount, in which

case the impairment loss is treated as a revaluation decrease. The recoverable

amount of an asset or a cash-generating unit is the higher of its fair value less costs

of disposal and its value in use. When the fair value less costs of disposal method

is used, any available recent market transactions are taken into consideration.

When the value in use method is adopted, in assessing the value in use, the

estimated future cash flows are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money

and the risks specific to the asset. For the purposes of assessing impairment,

assets are grouped at the lowest levels for which there are separately identifiable

cash flows (cash-generating units). At each end of the reporting year non-financial

assets other than goodwill with impairment loss recognised in prior periods are

assessed for possible reversal of the impairment. An impairment loss is reversed

only to the extent that the asset’s carrying amount does not exceed the carrying

amount that would have been measured, net of depreciation or amortisation, if no

impairment loss had been recognised.

45

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Impairment of Non-Financial Assets (Continued)

However, an impairment loss on a revalued asset is recognised in other

comprehensive income and accumulated in equity under the heading of

revaluation surplus for the asset to the extent that the impairment loss does not

exceed the amount in the revaluation surplus for that same asset.

Inventories

Inventories of goods held for resale are measured at the lower of cost (first in

first out method) and net realisable value. Net realisable value is the estimated

selling price in the ordinary course of business less the estimated costs of

completion and the estimated costs necessary to make the sale. A write down

on cost is made where the cost is not recoverable or if the selling prices have

declined. Cost includes all costs of purchase, costs of conversion and other

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

In the case of manufactured inventories and work in progress, cost includes an

appropriate share of overheads based on normal operating capacity.

Development Properties

Development properties are properties being constructed or developed for sale.

The cost of properties under development comprises specifically identified

costs, including land acquisition costs, development expenditure, borrowing

costs and other related expenditure. Borrowing costs payable on loans funding

a development property are also capitalised, on a specific identification

basis, as part of the cost of the development property until the completion of

development. The cumulative impact of a revision in estimates is recorded in

the period such revisions become likely and estimable.

1. Unsold development properties – Development properties that are

unsold are carried at the lower of cost (specific identification method)

and net realisable value. Net realisable value is the estimated selling

price in the ordinary course of business less cost to complete

development and selling expenses.


Development Properties (Continued)

2. Sold development properties – Please see policy on revenue recognition

above.

The development properties in progress have operating cycles longer than

one year. The management includes in current assets amounts relating to the

development properties in progress realisable over a period in excess of one

year.

Financial Assets

Initial recognition, measurement and derecognition:

A financial asset is recognised on the statement of financial position when,

and only when, the entity becomes a party to the contractual provisions of the

instrument. The initial recognition of financial assets is at fair value normally

represented by the transaction price. The transaction price for financial asset

not classified at fair value through profit or loss includes the transaction costs

that are directly attributable to the acquisition or issue of the financial asset.

Transaction costs incurred on the acquisition or issue of financial assets

classified at fair value through profit or loss are expensed immediately. The

transactions are recorded at the trade date.

Irrespective of the legal form of the transactions performed, financial assets

are derecognised when they pass the “substance over form” based on the

derecognition test prescribed by FRS 39 relating to the transfer of risks and

rewards of ownership and the transfer of control. Financial assets and financial

liabilities are offset and the net amount is reported in the statement of financial

position if there is currently a legally enforceable right to offset the recognised

amounts and there is an intention to settle on a net basis, to realise the assets

and settle the liabilities simultaneously.

46

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Financial Assets (Continued)

Subsequent measurement:

Subsequent measurement based on the classification of the financial assets in

one of the following four categories under FRS 39 is as follows:

1. Financial assets at fair value through profit or loss: Assets are classified

in this category when they are incurred principally for the purpose

of selling or repurchasing in the near term (trading assets) or are

derivatives (except for a derivative that is a designated and effective

hedging instrument) or have been classified in this category because

the conditions are met to use the “fair value option” and it is used. All

changes in fair value relating to assets at fair value through profit or

loss are recognised directly in profit or loss. They are classified as non-

current assets unless management intends to dispose of the asset within

12 months of the end of the reporting year.

2. Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Assets that are for sale immediately or in the near term are not classified in this category. These assets are carried at amortised costs using the effective interest method (except that short-duration receivables with no stated interest rate are normally measured at original invoice amount unless the effect of imputing interest would be significant) minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility. Impairment charges are provided only when there is objective evidence that an impairment loss has been incurred as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The methodology ensures that an impairment loss is not recognised on the initial recognition of an asset. Losses expected as a result of future events, no matter how likely, are not recognised. For impairment, the carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. Typically the trade and other receivables are classified in this category.


Financial Assets (Continued)

3. Held-to-maturity financial assets: As at end of the reporting year date

there were no financial assets classified in this category.

4. Available-for-sale financial assets: As at end of the reporting year date

there were no financial assets classified in this category.

Cash and Cash Equivalents

Cash and cash equivalents include bank and cash balances, on demand

deposits and any highly liquid debt instruments purchased with an original

maturity of three months or less. For the statement of cash flows the item

includes cash and cash equivalents less cash subject to restriction and bank

overdrafts payable on demand that form an integral part of cash management.

Hedging

The entity is exposed to currency and interest rate risks. The policy is to reduce

currency and interest rate exposures through derivatives and other hedging

instruments. From time to time, there may be borrowings and foreign exchange

arrangements or interest rate swap contracts or similar instruments entered

into as hedges against changes in interest rates, cash flows or the fair value of

the financial assets and liabilities. These arrangements are not used for trading

or speculative purposes. They are carried at fair value. The gain or loss from

remeasuring these hedging or other arrangement instruments at fair value are

recognised in profit or loss. The derivatives and other hedging instruments used

are described below in the notes to the financial statements.

Derivatives

All derivatives are initially recognised and subsequently carried at fair value.

Accounting for derivatives engaged in hedging relationships is described

in the above section. Certain derivatives are entered into in order to hedge

some transactions and all the strict hedging criteria prescribed by FRS 39 are

not met. In those cases, even though the transaction has its economic and

business rationale, hedge accounting cannot be applied. As a result, changes in

the fair value of those derivatives are recognised directly in profit or loss and the

hedged item follows normal accounting policies.

47

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Financial Liabilities

Initial recognition, measurement and derecognition:

A financial liability is recognised on the statement of financial position when,

and only when, the entity becomes a party to the contractual provisions of the

instrument and it is derecognised when the obligation specified in the contract

is discharged or cancelled or expires. The initial recognition of financial liability

is at fair value normally represented by the transaction price. The transaction

price for financial liability not classified at fair value through profit or loss

includes the transaction costs that are directly attributable to the acquisition

or issue of the financial liability. Transaction costs incurred on the acquisition

or issue of financial liability classified at fair value through profit or loss are

expensed immediately. The transactions are recorded at the trade date.

Financial liabilities including bank and other borrowings are classified as current

liabilities unless there is an unconditional right to defer settlement of the liability

for at least 12 months after the end of the reporting year.

Subsequent measurement:

Subsequent measurement based on the classification of the financial liabilities

in one of the following two categories under FRS 39 is as follows:

1. Liabilities at fair value through profit or loss: Liabilities are classified

in this category when they are incurred principally for the purpose

of selling or repurchasing in the near term (trading liabilities) or are

derivatives (except for a derivative that is a designated and effective

hedging instrument) or have been classified in this category because the

conditions are met to use the “fair value option” and it is used. Financial

guarantee contracts if significant are initially recognised at fair value and

are subsequently measured at the greater of (a) the amount determined

in accordance with FRS 37 and (b) the amount initially recognised less,

where appropriate, cumulative amortisation recognised in accordance

with FRS 18. All changes in fair value relating to liabilities at fair value

through profit or loss are charged to profit or loss as incurred.


Financial Liabilities (Continued)

2. Other financial liabilities: All liabilities, which have not been classified as

in the previous category fall into this residual category. These liabilities

are carried at amortised cost using the effective interest method. Trade

and other payables and borrowings are usually classified in this category.

Items classified within current trade and other payables are not usually

re-measured, as the obligation is usually known with a high degree of

certainty and settlement is short-term.

Fair Value Measurement

Fair value is taken to be the price that would be received to sell an asset

or paid to transfer a liability in an orderly transaction between market

participants at the measurement date (that is, an exit price). It is a market-

based measurement, not an entity-specific measurement. When measuring fair

value, management uses the assumptions that market participants would use

when pricing the asset or liability under current market conditions, including

assumptions about risk. The entity’s intention to hold an asset or to settle or

otherwise fulfil a liability is not taken into account as relevant when measuring

fair value. In making the fair value measurement, management determines

the following: (a) the particular asset or liability being measured (these are

identified and disclosed in the relevant notes below); (b) for a non-financial

asset, the highest and best use of the asset and whether the asset is used

in combination with other assets or on a stand-alone basis; (c) the market in

which an orderly transaction would take place for the asset or liability; and (d)

the appropriate valuation techniques to use when measuring fair value. The

valuation techniques used maximise the use of relevant observable inputs and

minimise unobservable inputs. These inputs are consistent with the inputs a

market participant may use when pricing the asset or liability.

48

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Fair Value Measurement (Continued)

The fair value measurements and related disclosures categorise the inputs to

valuation techniques used to measure fair value by using a fair value hierarchy

of three levels. These are recurring fair value measurements unless stated

otherwise in the relevant notes to the financial statements. Level 1 inputs are

quoted prices (unadjusted) in active markets for identical assets or liabilities that

the entity can access at the measurement date. Level 2 inputs are inputs other

than quoted prices included within Level 1 that are observable for the asset or

liability, either directly or indirectly. Level 3 inputs are unobservable inputs for

the asset or liability. The level is measured on the basis of the lowest level input

that is significant to the fair value measurement in its entirety. Transfers between

levels of the fair value hierarchy are deemed to have occurred at the beginning

of the reporting year. If a financial instrument measured at fair value has a

bid price and an ask price, the price within the bid-ask spread or mid-market

pricing that is most representative of fair value in the circumstances is used to

measure fair value regardless of where the input is categorised within the fair

value hierarchy. If there is no market, or the markets available are not active, the

fair value is established by using an acceptable valuation technique.

The carrying values of current financial instruments approximate their fair values

due to the short-term maturity of these instruments and the disclosures of fair

value are not made when the carrying amount of current financial instruments

is a reasonable approximation of the fair value. The fair values of non-current

financial instruments may not be disclosed separately unless there are

significant differences at the end of the reporting year and in the event the fair

values are disclosed in the relevant notes to the financial statements.

Equity

Equity instruments are contracts that give a residual interest in the net assets

of the company. Ordinary shares are classified as equity. Equity instruments are

recognised at the amount of proceeds received net of incremental costs directly

attributable to the transaction. Dividends on equity are recognised as liabilities

when they are declared. Interim dividends are recognised when declared by the

directors.


Provisions

A liability or provision is recognised when there is a present obligation (legal

or constructive) as a result of a past event, it is probable that an outflow of

resources embodying economic benefits will be required to settle the obligation

and a reliable estimate can be made of the amount of the obligation. A

provision is made using best estimates of the amount required in settlement

and where the effect of the time value of money is material, the amount

recognised is the present value of the expenditures expected to be required

to settle the obligation using a pre-tax rate that reflects current market

assessments of the time value of money and the risks specific to the obligation.

The increase in the provision due to passage of time is recognised as interest

expense. Changes in estimates are reflected in profit or loss in the reporting

year they occur.

Critical Judgements, Assumptions and Estimation Uncertainties

The critical judgements made in the process of applying the accounting policies

that have the most significant effect on the amounts recognised in the financial

statements and the key assumptions concerning the future, and other key

sources of estimation uncertainty at the end of the reporting year, that have

a significant risk of causing a material adjustment to the carrying amounts of

assets and liabilities currently or within the next reporting year are discussed

below. These estimates and assumptions are periodically monitored to ensure

they incorporate all relevant information available at the date when financial

statements are prepared. However, this does not prevent actual figures differing

from estimates.

49

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



Critical Judgements, Assumptions and Estimation Uncertainties (Continued)

Allowance for doubtful trade accounts:

An allowance is made for doubtful trade accounts for estimated losses resulting

from the subsequent inability of the customers to make required payments.

If the financial conditions of the customers were to deteriorate, resulting

in an impairment of their ability to make payments, additional allowances

may be required in future periods. Management generally analyses trade

receivables and historical bad debts, customer concentrations, and customer

creditworthiness when evaluating the adequacy of the allowance for doubtful

trade receivables. To the extent that it is feasible impairment and uncollectibility

are determined individually for each item. In cases where that process is not

feasible, a collective evaluation of impairment is performed. At the end of

the reporting year, the trade receivables carrying amount approximates the

fair value and the carrying amounts might change materially within the next

reporting year but these changes would not arise from assumptions or other

sources of estimation uncertainty at the end of the reporting year. The carrying

amount is disclosed in the Note on trade and other receivables.

Net realisable value of inventories of goods held for resale:

A review is made periodically on inventory for excess inventory and declines

in net realisable value below cost and an allowance is recorded against the

inventory balance for any such declines. The review requires management to

consider the future demand for the products. In any case the realisable value

represents the best estimate of the recoverable amount and is based on the

acceptable evidence available at the end of the reporting year and inherently

involves estimates regarding the future expected realisable value. The usual

considerations for determining the amount of allowance or write-down include

ageing analysis, technical assessment and subsequent events. In general, such

an evaluation process requires significant judgement and materially affects

the carrying amount of inventories at the end of the reporting year. Possible

changes in these estimates could result in revisions to the stated value of the

inventories. The carrying amount of inventories at the end of the reporting year

was disclosed in the Note on inventories.


Critical Judgements, Assumptions and Estimation Uncertainties (Continued)

Recognition of revenue and expenses relating to development properties

accounted on the stage of completion method:

The stage of completion method is applied on a cumulative basis in

each accounting period to the current estimates of revenue and costs of

development property. Changes in the estimate of revenue or costs, or the

effect of a change in the estimate of the outcome of a development property

could impact the amount of revenue and expenses recognised in profit or loss

in the period in which the change is made and in subsequent periods. Such

impact could potentially be significant. Significant judgement is required in

estimating reasonable amounts of variation claims to be recognised as cost in

project budgets and in determining if the company has to make provisions for

any potential liquidated damages exposure and other losses.

Assessment of impairment of goodwill:

An assessment is made annually whether goodwill has suffered any impairment

loss. The assessment process is complex and highly judgmental and is based

on assumptions that are affected by expected future market or economic

conditions. Judgement is required in identifying the cash generating units

(“CGU”) and the use of estimates as disclosed in Note 16A. Actual outcomes

could vary from these estimates as disclosed in Note 16A.

50

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


3. Related Party Relationships and Transactions

FRS 24 defines a related party as a person or entity that is related to the

reporting entity and it includes (a) A person or a close member of that person’s

family if that person: (i) has control or joint control over the reporting entity; (ii)

has significant influence over the reporting entity; or (iii) is a member of the key

management personnel of the reporting entity or of a parent of the reporting

entity. (b) An entity is related to the reporting entity if any of the following

conditions apply: (i) The entity and the reporting entity are members of the

same group. (ii) One entity is an associate or joint venture of the other entity. (iii)

Both entities are joint ventures of the same third party. (iv) One entity is a joint

venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees

of either the reporting entity or an entity related to the reporting entity. (vi) The

entity is controlled or jointly controlled by a person identified in (a). (vii) A person

identified in (a)(i) has significant influence over the entity or is a member of the

key management personnel of the entity (or of a parent of the entity).

The ultimate controlling party is Lim See Hoe, a director of the company.

3.1 Related companies:

Related companies in these financial statements include the members of

the company’s group of companies. Associates also include those that are

associates of the parent and/or related companies.

There are transactions and arrangements between the reporting entity and

members of the group and the effects of these on the basis determined

between the parties are reflected in these financial statements. The

intercompany balances are unsecured without fixed repayment terms and

interest unless stated otherwise. For any non-current balances and financial

guarantees no interest or charge is imposed unless stated otherwise.

Intragroup transactions and balances that have been eliminated in these

consolidated financial statements are not disclosed as related party

transactions and balances below.

3. Related Party Relationships and Transactions (Continued)

3.2 Related parties other than related companies:

There are transactions and arrangements between the reporting entity and

related parties and the effects of these on the basis determined between the

parties are reflected in these financial statements. The related party balances

are unsecured without fixed repayment terms and interest unless stated

otherwise. For any non-current balances and financial guarantees no interest or

charge is imposed unless stated otherwise.

Significant related party transactions:

In addition to the transactions and balances disclosed elsewhere in the notes to

the financial statements, this item includes the following:-

Group

2014

$

2013

$

Rental expenses paid to a related party (a) 308,201 235,584

Service fees paid to a related party (b) 38,400 –

(a) The related party, is a company in which a director has a significant

controlling interest.

(b) The related party, is a company in which a key management personnel

has a significant controlling interest.

3.3 Key management compensation:

Group

2014

$

2013

$

Salaries and other short-term employee benefits 2,355,034 1,748,108

51

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



3.3 Key management compensation: (Continued)

The above amounts are included under employee benefits expense. Included in

the above amounts are the following items:

Group

2014

$

2013

$

Remuneration of directors of the company 760,096 630,250

Benefits in kind to directors of the company 26,810 29,779

Fees to directors of the company 143,333 150,000

Further information about the remuneration of individual directors is provided in

the report on corporate governance.

Key management personnel of the group are directors and those persons

having authority and responsibility for planning, directing and controlling

the activities of the company, directly or indirectly. The above amounts for

key management compensation are for all directors and key management

personnel.

3.4 Other receivables and payables to related parties:

The trade transactions, trade receivables and trade payables balances arising

from sales and purchases of goods and services are disclosed elsewhere in the

notes to the financial statements.


3.4 Other receivables and payables to related parties: (Continued)

The movements in other receivables and other payables to related parties are

as follows:

Group Related party

2014

$

2013

$

Other payables:

Balance at beginning of year – –

Increase in liabilities arising from acquisition of

subsidiary (4,519,385) –

Amounts paid out and settlement of liabilities on

behalf of the company 1,604,926 –

Balance at end of year (Note 28) (2,914,459) –

Company Subsidiaries

2014

$

2013

$

Other receivables/(payables):

Balance at beginning of year – net credit (4,133,940) (1,112,459)

Amounts paid out and settlement of liabilities on

behalf of the company (2,960,256) (3,021,481)

Balance at end of year – net credit (7,094,196) (4,133,940)

Presented in the statement of financial position as

follows:

Trade and Other Receivables, Current (Note 21) 6,398,895 2,264,680

Trade and Other Payables, Current (Note 28) (13,493,091) (6,398,620)

Balance at end of year – net credit (7,094,196) (4,133,940)

52

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



3.4 Other receivables and payables to related parties: (Continued)

Group and company Shareholder

2014

$

2013

$

Other payables:

Balance at beginning of year (723,000) –

Arising from acquisition of Teho Water & Envirotec

Pte Ltd (Note 29B) – (723,000)

Balance at end of year (723,000) (723,000)


follows:

Trade and Other Payables, Non-Current (Note 26) – (723,000)

Trade and Other Payables, Current (Note 28) (723,000) –

Balance at end of year – net credit (723,000) (723,000)

3.5 Commitments and contingencies:

As at 30 June 2014, the company has contingent liabilities of $72,553,697

(2013: $51,090,000) in respect of guarantees issued in connection with banking

facilities granted to a subsidiary.

4. Financial Information by Operating Segments

4A. Information about Reportable Segment Profit or Loss, Assets and Liabilities

Disclosure of information about operating segments, products and services, the

geographical areas, and the major customers are made as required by FRS 108

Operating Segments. This disclosure standard has no impact on the reported

results or financial position of the reporting entity.

4. Financial Information by Operating Segments (Continued)

4A. Information about Reportable Segment Profit or Loss, Assets and Liabilities

(Continued)

For management purposes the reporting entity is organised into the following

major strategic operating segments that offer different products and services: –

(1) Marine, Offshore Oil & Gas, and (2) Property Development. Such a structural

organisation is determined by the nature of risks and returns associated with

each business segment and defines the management structure as well as the

internal reporting system. It represents the basis on which the management

reports the primary segment information. They are managed separately because

each business requires different strategies.

The segments and the types of products and services are as follows:

Marine, Offshore Oil & Gas Segment – This segment sells rigging and mooring

equipment, offshore oil and gas equipment, and related marine and engineering

hardware and accessories.

Property Development Segment – This segment develops, markets and sells

real estate properties.

Inter-segment sales are measured on the basis that the entity actually used to

price the transfers. Internal transfer pricing policies of the group are as far as

practicable based on market prices. The accounting policies of the operating

segments are the same as those described in the summary of significant

accounting policies.

The management reporting system evaluates performances based on a

number of factors. However, the primary profitability measurement to evaluate

segment’s operating results comprises two major financial indicators: (1)

earnings from operations before depreciation and amortisation, interests and

income taxes (called “Recurring EBITDA”) and (2) operating result before

interests and income taxes and other unallocated items (called “ORBIT”).

The following tables illustrate the information about the reportable segment

profit or loss, assets and liabilities.

53

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



4B. Profit or Loss from Continuing Operations and Reconciliations

Marine,

Offshore

Oil & Gas

Property

Development Unallocated Group

$ $ $ $

Continuing Operations

2014

Revenue by Segment

Total revenue 55,293,401 5,090,107 – 60,383,508

Recurring EBITDA 6,140,523 233,652 (662,336) 5,711,839

Amortisation (588,000) – – (588,000)

Finance costs (380,620) – – (380,620)

Depreciation (990,258) – – (990,258)

ORBIT 4,181,645 233,652 (662,336) 3,752,961

Unallocated items (393,051)

Share of profit from equity-

accounted associate 27,729

Profit before tax from

continuing operations 3,387,639

Income tax income 4,531

Profit from continuing

operations 3,392,170


4B. Profit or Loss from Continuing Operations and Reconciliations (Continued)

Marine,

Offshore

Oil & Gas

Property


$ $ $ $

Continuing Operations

2013

Revenue by Segment

Total revenue 42,971,401 – – 42,971,401

Recurring EBITDA 5,106,252 – – 5,106,252

Amortisation (852,000) – – (852,000)

Finance costs (375,390) – – (375,390)

Depreciation (912,214) – – (912,214)

ORBIT 2,966,648 – – 2,966,648

Unallocated items (258,533)

Share of profit from equity-

accounted associate 34,330

Profit before tax from

continuing operations 2,742,445

Income tax expense (361,875)

Profit from continuing

operations 2,380,570

Unallocated items are mainly distribution, administrative and other operating

expenses which cannot be allocated to the operating segments on a reasonable

basis. The internal reporting system does not allocate assets and liabilities.

54

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



4C. Other Material Items and Reconciliations

Marine,

Offshore

Oil & Gas

Property


$ $ $ $

Expenditure for non-

current assets

2014 1,041,551 – 20,800 1,062,351

2013 459,163 – – 459,163

4D. Geographical Information

The following table provides an analysis of the revenue by geographical market,

irrespective of the origin of the goods and services:

Revenue Non-current assets

2014

$

2013

$

2014

$

2013

$

Group

Singapore 46,541,725 33,434,663 42,350,937 12,161,167

Rest of Asia 5,056,627 5,163,876 549 699

Rest of the World 8,785,156 4,372,862 72,821 75,252

Subtotal for all foreign

countries 13,841,783 9,536,738 73,370 75,951

Total continuing operations 60,383,508 42,971,401 42,424,307 12,237,118

Revenues are attributed to countries on the basis of the customer’s location.

The non-current assets are analysed by the geographical area in which the

assets are located. The non-current assets exclude any financial instruments,

deferred tax assets, post-employment benefit assets.


4E. Information About Major Customers

Group

2014

$

2013

$

Top 1 customer 5,225,088 5,781,624

Top 2 customers 9,325,088 9,932,749

Top 3 customers 12,224,226 11,063,913

5. Revenue

Group

2014

$

2013

$

Sale of goods 55,293,401 42,971,401

Revenue from development properties 5,090,107 –

60,383,508 42,971,401

6. Interest Income

Group

2014

$

2013

$

Interest income 2,007 1,437

55

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


7. Other Credits and (Other Charges)

Group

2014

$

2013

$

Allowance for impairment on trade receivables –

reversal 3,600 3,600

Bad debts written off – trade and other receivables (17,156) (29,061)

Claim compensation – (6,253)

Foreign exchange translation losses (136,847) (15,165)

Grants received 23,645 42,642

Gain on disposal of property, plant and equipment – 5,314

Amortisation of intangible assets (588,000) (852,000)

Fair value losses on derivatives (376,525) –

Rental income 9,400 24,500

Sundry income 100,833 46,441

Net (981,050) (779,982)

Group

2014

$

2013

$

Presented in profit or loss as:

Other Credits 137,478 122,497

Other Charges (1,118,528) (902,479)

Net (981,050) (779,982)

8. Administrative Expenses

The major components include the following:

Group

2014

$

2013

$

Key management personnel’s remuneration 1,708,032 1,200,535

Professional fees 478,678 395,954

Employee benefits expense 5,108,846 3,157,613

9. Other Operating Expenses

The major components include the following:

Group

2014

$

2013

$

Depreciation 990,258 912,214

Land rental 264,232 266,781

Rental expense 541,648 399,321

10. Finance Costs

Group

2014

$

2013

$

Interest expense 380,620 375,390

Interest expense included in the cost of development properties are as follows:

Group

2014

$

2013

$

Capitalisation rate 2.6% to 3.5% –

Interest expense capitalised during the reporting

year 54,433 –

Accumulated interest capitalised included in the

cost of development properties 1,192,732 –

56

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


11. Employee Benefits Expense

Group

2014

$

2013

$

Employee benefits expense 6,194,406 4,506,832

Contributions to defined contribution plans 479,139 359,122

Total employee benefits expense 6,673,545 4,865,954

Employee benefits expense is charged as administrative expenses.

12. Income Tax

12A. Components of tax (income)/expense recognised in profit or loss include:

Group

2014

$

2013

$

Current tax expense:

Current tax expense 492,343 475,225

(Over)/Under adjustments to current tax in

respect of prior periods (100,461) 34,869

Subtotal 391,882 510,094

Deferred tax income:

Deferred tax income (303,200) (167,466)

(Over)/Under adjustments to deferred tax in


Subtotal (396,413) (148,219)

Total income tax (income)/expense (4,531) 361,875

12. Income Tax (Continued)

12A. Components of tax (income)/expense recognised in profit or loss include:

(Continued)

The income tax in profit or loss varied from the amount of income tax amount

determined by applying the Singapore income tax rate of 17% (2013: 17%) to

profit before income tax as a result of the following differences:

Group

2014

$

2013

$

Profit Before Tax 3,387,639 2,742,445

Less: Share of Profit from Equity-Accounted

Associates (27,729) (34,330)

3,359,910 2,708,115

Income tax expense at the above rate 571,185 460,379

Not deductible items 135,492 44,744

(Over)/Under adjustments to current tax in


Tax exemptions (80,904) (51,850)

Deductible expenses under productivity

innovation credits (338,862) –

(Over)/Under adjustments to deferred tax in


Corporate tax rebate (91,604) –

Movements of temporary differences – (191,883)

Effect of different tax rates in different countries (6,640) 29,528

Others 476 16,841

Total income tax (income)/expense (4,531) 361,875

There are no income tax consequences of dividends to owners of the group.

57

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



12B. Deferred tax income recognised in profit or loss includes:

Group

2014

$

2013

$

Excess of net book value of intangible assets

over tax values (99,960) (191,883)

Excess of tax values over net book value of

plant and equipment (75,109) 43,664

Adjustment in relation to development properties (40,196) –

Profit recognised on development properties

based on stage of completion method 43,853 –

Unutilised enhanced capital allowance (225,001) –

Total deferred tax income recognised in profit or

loss (396,413) (148,219)

12C. Deferred tax expense recognised in other comprehensive income includes:

Group

2014

$

2013

$

Gains on property revaluation 4,265,074 –

Total tax expense recognised in other

comprehensive income 4,265,074 –


12D. Deferred tax balance in the statement of financial position:

Group

2014

$

2013

$

Deferred tax assets/(liabilities) recognised in profit

or loss:

Excess of net book value of intangible assets over

tax values (281,180) (381,140)

Excess of net book value of plant and equipment

over tax values (66,404) (141,513)

Adjustment in relation to development properties (100,488) –

Development properties based on stage of

completion method acquired (585,598) –

Profit recognised on development properties based

on stage of completion method (43,853) –

Unutilised enhanced capital allowance 225,001 –

(852,522) (522,653)

Deferred tax liabilities recognised in other

comprehensive income:

Gains on property revaluation (4,265,074) –

(4,265,074) –

Net balance (5,117,596) (522,653)


follows:

Deferred tax liabilities (5,117,596) (522,653)

(5,117,596) (522,653)

It is impracticable to estimate the amount expected to be settled or used within

one year.

The realisation of the future income tax benefits from the unutilised enhanced capital

allowances that is available for an unlimited future period subject to the conditions

imposed by law including the retention of majority shareholders as defined.

58

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


13. Dividends

Rate per share - cents

2014 2013 2014

$

2013

$

Interim tax exempt (1-tier)

dividend paid – 0.4 – 462,764

Final tax exempt (1-tier)

dividend paid 0.6 0.8 709,146 925,529

Total dividends paid in the year 0.6 1.2 709,146 1,388,293

In respect of the current year, the directors propose that a one-tier tax exempt final

dividend of 0.8 cents per share of a total of $1,523,740 to be paid to shareholders

after the annual general meeting. This dividend is subject to approval by

shareholders at the forthcoming annual general meeting and has not been included

as a liability in these financial statements. The proposed dividend for 2014 is

payable in respect of all ordinary shares in issue at the reporting date and including

the new qualifying shares issued up to the date the dividend becomes payable.

14. Earnings Per Share

The following table illustrates the numerators and denominators used to

calculate basic and diluted earnings per share of no par value:

Group

2014

$

2013

$

A. Numerators: earnings attributable to equity:

Continuing operations: attributable to equity

holders 3,392,170 2,380,570

B. Denominators: weighted average number of

equity shares

Basic 150,353,238 116,107,718

Diluted 150,353,238 116,107,718

14. Earnings Per Share (Continued)

The weighted average number of equity shares refers to shares in circulation

during the period adjusted for the effect of the issuance of rights issues shares

during the reporting year.

15. Property, Plant and Equipment

Group

Leasehold

buildings

Plant and

machinery

Motor

vehicles Total

$ $ $ $

Cost or valuation:

At 1 July 2012 8,617,230 3,169,174 618,750 12,405,154

Reclassifications – 84,500 (84,500) –

Foreign exchange

adjustments – 34 – 34

Acquisition of subsidiary 723,283 99,723 – 823,006

Additions – 459,163 – 459,163

Written off (455,000) – – (455,000)

Disposals – – (43,401) (43,401)

At 30 June 2013 8,885,513 3,812,594 490,849 13,188,956

Foreign exchange

adjustments – 2,788 – 2,788

Additions – 945,537 116,815 1,062,352

Written off – (5,032) – (5,032)

Revaluation increase 20,837,769 – – 20,837,769

At 30 June 2014 29,723,282 4,755,887 607,664 35,086,833

59

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


15. Property, Plant and Equipment (Continued)

Group

Leasehold

buildings

Plant and

machinery

Motor

vehicles Total

$ $ $ $

Accumulated depreciation:

At 1 July 2012 3,662,367 2,067,109 515,680 6,245,156

Reclassifications – 84,500 (84,500) –

Foreign exchange


Acquisition of subsidiary 23,283 43,253 – 66,536

Depreciation for the year 533,054 356,043 23,117 912,214

Written off (455,000) – – (455,000)

Disposals – – (43,401) (43,401)

At 30 June 2013 3,763,704 2,550,912 410,896 6,725,512

Foreign exchange


Depreciation for the year 530,850 424,097 35,311 990,258

Written off – (5,032) – (5,032)

Elimination of depreciation

on revaluation (4,250,897) – – (4,250,897)

At 30 June 2014 43,657 2,970,172 446,207 3,460,036

Net book value:

At 1 July 2012 4,954,863 1,102,065 103,070 6,159,998

At 30 June 2013 5,121,809 1,261,682 79,953 6,463,444

At 30 June 2014 29,679,625 1,785,715 161,457 31,626,797

The leasehold buildings are pledged as security for banking facilities (Note 27).

The depreciation expense is charged to profit or loss and included in other

operating expenses.

Fully depreciated plant and equipment still in use had an initial cost of

$2,285,593 (2013: $2,285,593).


For each revalued class of property, plant and equipment, the carrying amount

that would have been recognised had the assets been carried under the cost

model is as follows:

Group

2014

$

2013

$

Leasehold buildings:

Cost 8,885,513 8,885,513

Accumulated depreciation (4,294,555) (3,763,704)

Net book value 4,590,958 5,121,809

At the reporting date, the details of the group’s leasehold properties are as

follows:

Location Description Tenure

1 Tuas Lane,

Singapore 638610 Leasehold warehouse

30 years commencing

1 September 1992, with an option

to renew for a further 30 years

47 Tuas Avenue 9,

Singapore 639190 Leasehold warehouse

30 years commencing

1 May 1991, with an option to

renew for a further 30 years

1 Bukit Batok

Crescent #03-20

Singapore 658064

Leasehold ramp-

up factory unit for

production work

60 years commencing

13 March 1997

External and independent valuers were sourced to determine the fair values of

the group’s leasehold properties at least once every three years based on the

properties’ highest and best use. The fair values of the leasehold warehouses

were based on valuations carried out by independent valuers at the end of the

reporting year. Based on a valuation carried out by another independent valuer

at the end of the reporting year, the fair value of the group’s leasehold ramp-up

factory unit was not materially different from its carrying value. Thus, for practical

purposes, no revaluation adjustments were made in respect of the leasehold

ramp-up factory unit. Management determined that the highest and best use of

the asset is the current use and that it would provide maximum value to market

participants principally through its use in combination with other assets.

60

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



The surplus net of applicable deferred income tax on revaluation of $20,823,593

has been credited to asset revaluation reserve in other comprehensive income

(see Note 25B).

For fair value measurements categorised within Level 2 of the fair value

hierarchy, a description of the valuation techniques and the significant other

observable inputs used in the fair value measurement are as follows:

Asset: Leasehold buildings

Fair Value and Fair value hierarchy

– Level: $29,679,625. Level 2.

Valuation technique for recurring

fair value measurements:

Comparison with market evidence of recent

transaction prices for similar properties.

Significant observable inputs and

range (weighted average): Price per square foot: $263 to $268/sq ft.

Sensitivity on management’s

estimates – 10% variation from

estimate

Impact – lower by $2,967,963; higher by

$2,967,963.

Company

Plant and

equipment

$

Cost:

At 1 July 2012 and 30 June 2013 –

Additions 20,800

At 30 June 2014 20,800

Accumulated depreciation:

At 1 July 2012 and 30 June 2013 –

Depreciation for the year (2,774)

At 30 June 2014 (2,774)

Net book value:

At 1 July 2012 and 30 June 2013 –

At 30 June 2014 18,026

The depreciation expense is charged to profit or loss and included in other operating

expenses.

16. Intangible Assets

Group

2014

$

2013

$

Goodwill (Note 16A) 8,957,540 3,359,926

Other intangible assets (Note 16B) 1,654,000 2,242,000

Total 10,611,540 5,601,926

16A. Goodwill

Group

2014

$

2013

$

Cost:

Balance at beginning of the year 3,359,926 2,515,562

Arising from acquisition of subsidiary (Note 29) 5,597,614 844,364

Balance at end of the year 8,957,540 3,359,926

The goodwill arose from acquisitions of certain subsidiaries (see below). The

value of the goodwill is determined through purchase price allocation valuations

carried out by the management and independent professional valuers as

appropriate for separate acquisitions of subsidiaries.

61

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


16. Intangible Assets (Continued)

16A. Goodwill (Continued)

Goodwill is allocated to cash-generating units (“CGU”) for the purpose

of impairment testing. This CGU represents the group’s investment in the

followings subsidiaries. The goodwill is allocated to the segments as follows:

2014 2013

Group

Marine,

Offshore

Oil & Gas

Segment

Property

Development

Segment Total

Marine,

Offshore

Oil & Gas

Segment

Property

Development

Segment Total

$ $ $ $ $ $

Name of

subsidiaries:

TEHO

Engineering Pte

Ltd 2,515,562 – 2,515,562 2,515,562 – 2,515,562

TEHO Water &

Envirotec Pte

Ltd 844,364 – 844,364 844,364 – 844,364

TIEC Holdings

Pte Ltd – 5,597,614 5,597,614 – – –

3,359,926 5,597,614 8,957,540 3,359,926 – 3,359,926

The goodwill was tested for impairment at the end of the reporting year. An

impairment loss is the amount by which the carrying amount of an asset or a

CGU exceeds its recoverable amount. The recoverable amount of an asset or a

CGU is the higher of its fair value less costs of disposal or its value in use. The

recoverable amounts of CGUs have been measured based on the value in use

method as appropriate for the separate CGUs.

No impairment charges were recognised because the carrying amount of the

CGU was lower than its recoverable amount.



The value in use was measured by the management. The key assumptions

for the value in use calculations are as follows. The value in use is a recurring

fair value measurement (Level 3). The quantitative information about the value

in use measurement using significant unobservable inputs for the CGU are

consistent with those used for the measurement last performed and is analysed

as follows:

TEHO Engineering Pte Ltd

Valuation technique and unobservable inputs Range (weighted average)

Discounted cash flow method: 2014 2013

Estimated discount rates using pre-tax rates that

reflect current market assessments at the risks

specific to the CGUs. 9.8% 11%

Growth rates based on industry growth forecasts

and not exceeding the average long-term growth

rate for the relevant markets. 1.8% to 3.8% 6% to 17%

Cash flow forecasts derived from the most

recent financial budgets and plans approved by

management. 3 years 3 years

Actual outcomes could vary from these estimates. If the revised estimated

gross margin at the end of the reporting year had been 10% less favourable

than management’s estimates at the end of the reporting year, there would be

no reduction on the carrying value of goodwill. If the revised estimated pre-

tax discount rate applied to the discounted cash flows had been 10% less

favourable than management’s estimates, there would be no reduction on the

carrying value of goodwill. If the actual gross margin and the pre-tax discount

rate had been more favourable than management’s estimates, management

would not be able to reverse any impairment losses that arose on goodwill

because FRS 36 does not permit reversing an impairment loss for goodwill.

62

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14




TEHO Water & Envirotec Pte Ltd





specific to the CGUs. 9.5% 11%



rate for the relevant markets. 1.8% to 3.8% 6% to 17%



management. 5 years 5 years



than management’s estimates at the end of the reporting year, there would be

no reduction on the carrying value of goodwill. If the revised estimated pre-

tax discount rate applied to the discounted cash flows had been 10% less

favourable than management’s estimates, there would be no reduction on the

carrying value of goodwill. If the actual gross margin and the pre-tax discounted

rate had been more favourable than management’s estimates, management

would not be able to reverse any impairment losses that arose on goodwill

because FRS 36 does not permit reversing an impairment loss for goodwill.



TIEC Holdings Pte Ltd





specific to the CGUs. 14% –



rate for the relevant markets. 0% –



management. 3 years –



than management’s estimates at the end of the reporting year, there would

be a need to reduce the carrying value of goodwill by $983,259. If the revised

estimated pre-tax discount rate applied to the discounted cash flows had been

10% less favourable than management’s estimates, there would be a need to

reduce the carrying value of goodwill by $1,578,568. If the actual gross margin

and the pre-tax discount rate had been more favourable than management’s

estimates, management would not be able to reverse any impairment

losses that arose on goodwill because FRS 36 does not permit reversing an

impairment loss for goodwill.

63

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



16B. Other Intangible Assets

Customer

Relationships Orderbook Total

Group $ $ $

Fair value:

At 1 July 2012 1,715,000 638,000 2,353,000

Additions through acquisition of

subsidiary (Note 29) 890,000 67,000 957,000

At 30 June 2013 and 30 June

2014 2,605,000 705,000 3,310,000

Accumulated amortisation and

impairment:

At 1 July 2012 57,000 159,000 216,000

Amortisation for the year 373,000 479,000 852,000

At 30 June 2013 430,000 638,000 1,068,000

Amortisation for the year 521,000 67,000 588,000

At 30 June 2014 951,000 705,000 1,656,000

Net book value:

At 1 July 2012 1,658,000 479,000 2,137,000

At 30 June 2013 2,175,000 67,000 2,242,000

At 30 June 2014 1,654,000 – 1,654,000

The amortisation expense is charged to profit or loss and included in other

charges.

17. Investments in Subsidiaries

Company

2014

$

2013

$

Unquoted shares at cost:

Cost at the beginning of the year 22,918,677 19,885,977

Additions 11,203,783 3,032,700

Cost at the end of the year 34,122,460 22,918,677

Net book value of the subsidiaries 56,935,017 28,297,938

Analysis of the above amount denominated in non-functional currency:

Euro Dollar 163,700 163,700

Chinese Renminbi 314,971 165,033

United States Dollar 539,943 539,943

The listing of and information on the subsidiaries are given next.

64

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


17. Investments in Subsidiaries (Continued)

The subsidiaries that are wholly owned by the group are listed below:

Name of Subsidiaries, Country of Incorporation,

Place of Operations and Principal Activities

(and Independent Auditors)

Cost in books

of company

2014

$

2013

$

Held by the company:

TEHO Ropes & Supplies Pte. Ltd. (a) 12,781,000 12,781,000

Singapore

Supply of rigging and mooring equipment as well as

related services to customers mainly in the marine,

offshore oil and gas industries

TEHO International (USA), LLC (b) 539,943 539,943

United States of America

Trading in rigging and mooring equipment as well as



(Smith Leonard PLLC)

TEHO (Shanghai) Co., Ltd. (c) 314,971 165,033

People’s Republic of China




TEHO Offshore Pte. Ltd. (b) 1 1

Singapore

Dormant

(AccAssurance LLP)


Name of Subsidiaries, Country of Incorporation,



Cost in books

of company

2014

$

2013

$

Held by the company:

TEHO Engineering Pte. Ltd. (a) 6,400,000 6,400,000

Singapore

Supply of offshore oil and gas equipment to


TEHO EuROPE B.V. (b) 163,700 163,700

Netherlands




(INZICHT Accountants & Belastingadviseurs B.V.)

TEHO Water & Envirotec Pte. Ltd. (b) 2,869,000 2,869,000

Singapore

Supply of marine and engineering services and

trading in related marine and engineering hardware

and accessories

(AccAssurance LLP)

TIEC Holdings Pte. Ltd. (b) 11,053,844 –

Singapore

(Acquired on 26 May 2014)

Real estate development specialising in residential

properties

(NACN International PAC)

TEHO Development Pte. Ltd. (c) 1 –

Singapore

(Incorporated on 4 June 2014)

Investment holding company and real estate

developer

65

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



(a) Audited by RSM Chio Lim LLP, Singapore.

(b) Other independent auditors. Audited or reviewed by firms of accountants

other than member firms of RSM International of which RSM Chio Lim

LLP in Singapore is a member. The name is indicated above.

(c) Not audited as it is not material.

As is required by Rule 716 of the Listing Manual of the Singapore Exchange

Securities Trading Limited the audit committee and the board of directors

of the company have satisfied themselves that the appointment of the

different auditors of its subsidiaries would not compromise the standard and

effectiveness of the audit of the group.

18. Investment in Associates

Group Company

2014

$

2013

$

2014

$

2013

$

Movements in carrying value:

Balance at beginning of the year 171,748 137,418 42,794 42,794

Share of the profit or loss for the

year 27,729 34,330 – –

Dividends received (13,507) – – –

Total at end of the year 185,970 171,748 42,794 42,794

Carrying value:

Unquoted equity shares, at cost 81,761 81,761 42,794 42,794

Share of post-acquisition profits 104,209 89,987 – –

185,970 171,748 42,794 42,794

Share of net book value of

associates 183,453 171,748 127,369 129,886

Analysis of above amount denominated in

non-functional currency:

Malaysia Ringgit 56,084 41,862 – –

18. Investment in Associates (Continued)

The associates held are listed below:

Name of Associates, Country of Incorporation,



Effective Percentage

of Equity Held

2014

%

2013

%

Besteel Pte. Ltd. (a)

Singapore

Distribution of rigging and mooring equipment 25 25

STS Seanly Marine Sdn. Bhd. (a)

Malaysia

Supply of marine and engineering services and

trading in related marine and engineering

hardware and accessories 49 49

(a) Not audited as it is not material. Equity accounted based on

management accounts.

The summarised financial information of all the associates and the aggregated

amounts (and not the reporting entity’s share of those amounts) based on the

financial statements of the associates are as follows. These are not adjusted to

reflect adjustments made by the entity when using the equity method.

Group

2014

$

2013

$

Aggregate for all associates:

Revenue 1,155,457 1,373,604

Profit for the reporting year 54,314 187,611

Current assets 763,999 1,019,064

Non-current assets – 1,000

Current liabilities (134,064) (327,693)

Net assets of the associates 629,935 692,371

66

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


19. Inventories

Group

2014

$

2013

$

Goods held for resale 21,098,127 20,258,172

Inventories are stated after allowance.

Movement in above allowance:

Balance at beginning of the year (178,770) (178,770)

Balance at end of the year (178,770) (178,770)

Changes in inventories of finished goods –

increase/(decrease) 839,955 (336,588)

The amount of inventories included in

cost of sales 35,687,757 28,196,944

There are no inventories pledged as securities.

20. Development Properties

Group

2014

$

2013

$

Unsold units of development properties under

development that will be recognised on stage of

completion method

Aggregate costs incurred 3,133,903 –

Sold units of development properties under

development recognised on stage of completion

method

Aggregate costs incurred and attributable profits to

date 15,885,133 –

Less: Progress billings received and receivables (6,611,553) –

9,273,580 –

Development properties under development

recognised on completion of construction method

Aggregate costs incurred 13,986,106 –

Total development properties 26,393,589 –

Interest expense capitalised during the reporting

year as cost of development property 54,433 –

67

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


20. Development Properties (Continued)

The rate of interest capitalised during the year is 2.6% - 3.5% per annum.

Details of the development properties are as follow:

Approximate

Area (sqm)

Project Name/Location/

Description Tenure

Land

Area

Gross

Floor

Area

Percentage of

Completion at

30 June 2014

Interest

Held

by the

Group

Expected

Completion

Date

238/A/B, 240/A/B, 242/A/B

Balestier Road, Singapore

329701/2, 329704

Addition and alteration to

existing 3 units of 3–storey

conserved building and a

new 6-storey rear extension

comprising 3 shops at 1st

storey, 3 offices at 2nd and

15 apartments from 3rd to

6th storey with roof terrace,

swimming pool and car parks Freehold 4,574 11,616 87% 100% 2014

52 Elite Drive,

Singapore 559896

8 units of 3-storey strata

terrace dwelling houses with

basement, attic, roof terrace

and swimming pool each Freehold 13,390 19,697

Has not

commenced

construction 100% 2016

The development properties are pledged as securities for banking facilities

(Note 27).

21. Trade and Other Receivables

Group Company

2014

$

2013

$

2014

$

2013

$

Trade receivables:

Outside parties 16,155,561 10,797,061 – –

Less: allowance for

impairment (20,809) (7,434) – –

Subsidiaries (Note 3) – – 776 776

Subtotal 16,134,752 10,789,627 776 776

Other receivables:

Subsidiaries (Note 3) – – 6,398,895 2,264,680

Deposits to secure services 229,872 481,700 17,783 8,000

Subtotal 229,872 481,700 6,416,678 2,272,680

Total trade and other

receivables 16,364,624 11,271,327 6,417,454 2,273,456

Group Company

2014

$

2013

$

2014

$

2013

$

Movements in above

allowance:

Balance at beginning of year 7,434 11,034 – –

Used 16,975 – – –

Credited to profit or loss

included in Other Credits (3,600) (3,600) – –

Balance at end of year 20,809 7,434 – –

68

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


22. Other Assets

Group Company

2014

$

2013

$

2014

$

2013

$

Prepayments 1,129,967 58,598 116,628 7,350

23. Cash and Cash Equivalents

Group Company

2014

$

2013

$

2014

$

2013

$

Not restricted in use 11,349,360 5,056,521 168,285 3,398

Project accounts (a) 4,451,263 – – –

Cash pledged for bank

facilities (b) 13,000 25,000 – –

Cash at end of the year 15,813,623 5,081,521 168,285 3,398

The interest earning balances are not significant.

(a) The amounts in project accounts are bank balances held under Housing

Developers (Project Account) (Amendment) Rules 1997, the use of which

is subject to restrictions imposed by the aforementioned rules.

(b) This is for amount held by bankers to cover the bank guarantee issued.

23. Cash and Cash Equivalents (Continued)

23A. Cash and Cash Equivalents in Statement of Cash Flows:

Group

2014

$

2013

$

Amount as shown above 15,813,623 5,081,521

Cash pledged for bank facilities (13,000) (25,000)

Cash and cash equivalents for statement of cash

flows purposes at end of year 15,800,623 5,056,521

24. Share Capital

Number

of shares

issued

Share

capital

$

Group and Company:

Ordinary shares of no par value:

Balance at beginning of the year 1 July 2012 115,691,051 16,080,668

Issue of shares (a) 2,500,000 396,000

Balance at end of the year 30 June 2013 118,191,051 16,476,668

Issue of shares (b) (c) 72,276,420 8,029,877

Share issue expenses – (154,437)

Balance at end of the year 30 June 2014 190,467,471 24,352,108

The ordinary shares of no par value are fully paid, carry one vote each and have

no right to fixed income. The company is not subject to any externally imposed

capital requirements.

(a) On 30 April 2013, 2,500,000 ordinary shares of no par value were

issued at market price of $0.16 each and used as part of the purchase

consideration for the acquisition of TEHO Water & Envirotec Pte. Ltd.

(Note 29B).

69

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


24. Share Capital (Continued)

(b) On 26 March 2014, the company issued 47,276,420 ordinary shares

pursuant to a renounceable non-underwritten rights issue of $0.09 each,

resulting in gross proceeds of $4,254,878. The share issue expenses

totalled $154,437. The net proceeds have been used for repayment of

bank borrowings and working capital purposes. The proceeds raised

from the rights issue have been fully utilised in accordance with the

intended purposes as disclosed in the Offer Information Statement dated

28 February 2014.

(c) On 26 May 2014, 25,000,000 ordinary shares of no par value were

issued at market price of $0.15 each and used as part of the purchase

consideration for the acquisition of TIEC Holdings Pte. Ltd. (Note 29A).

All shares issued during the reporting year rank pari passu in all respects with

and carry all rights similar to previously issued shares.

Capital management:

The objectives when managing capital are: to safeguard the reporting entity’s

ability to continue as a going concern, so that it can continue to provide returns

for owners and benefits for other stakeholders, and to provide an adequate

return to owners by pricing the sales commensurately with the level of risk.

The management sets the amount of capital to meet its requirements and the

risk taken. There were no changes in the approach to capital management

during the reporting year. The management manages the capital structure and

makes adjustments to it where necessary or possible in the light of changes

in conditions and the risk characteristics of the underlying assets. In order

to maintain or adjust the capital structure, the management may adjust the

amount of dividends paid to owners, return capital to owners, issue new shares,

or sell assets to reduce debt.

The management monitors the capital on the basis of the debt-to-adjusted

capital ratio. This ratio is calculated as net debt / adjusted capital. Net debt is

calculated as total borrowings less cash and cash equivalents. Adjusted capital

comprises all components of equity (i.e. share capital, and retained earnings).

24. Share Capital (Continued)

Group

2014

$

2013

$

Net debt:

All current and non-current borrowings

including finance leases 49,123,492 15,419,486

Less: cash and cash equivalents (15,813,623) (5,081,521)

Net debt 33,309,869 10,337,965

Total Equity 60,107,063 28,728,514

Debt-to-adjusted capital ratio 55.4% 36.0%

The unfavourable change as shown by the increase in debt-to-adjusted capital

ratio for the reporting year resulted primarily from increase in bank borrowings.

There was a favourable change with improved retained earnings and recognition

of revaluation reserve resulting from gains on property revaluation.

The ordinary shares of no par value which are fully paid carry no right to fixed

income. The holders of ordinary shares are entitled to receive dividends when

declared by the company. All ordinary shares carry one vote per share without

restrictions. In order to maintain its listing on the Singapore Exchange, the

company has to have share capital with at least a free float of at least 10% of

the shares. The company met the capital requirement on its initial listing and the

rules limiting treasury share purchases, meaning it will automatically continue to

satisfy that requirement, as it did throughout the year. Management receives a

report from the registrars frequently on substantial share interests showing the

non-free float and it demonstrated continuing compliance with the 10% limit

throughout the year.

The company is a Catalist company and has appointed a sponsor to comply

with the Catalist Rules and to facilitate certain corporate actions including rights

issues, placement of shares, company warrants or other convertible securities

for cash, major transactions, transactions requiring shareholders’ approval and

schemes of arrangement.

70

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


25. Other Reserves

Group

2014

$

2013

$

Foreign currency translation reserve (Note 25A) (27,524) (24,016)

Revaluation reserve (Note 25B) 20,823,593 –

Total at the end of the year 20,796,069 (24,016)

25A. Foreign Currency Translation Reserve

Group

2014

$

2013

$

At beginning of the year 24,016 17,890

Exchange differences on translating foreign

operations 3,508 6,126

At end of the year 27,524 24,016

25B. Revaluation Reserve

Group

2014

$

2013

$

At beginning of the year – –

Gains on revaluation of properties in property, plant

and equipment (Note 15) 25,088,667 –

Deferred tax thereon (4,265,074) –

At end of the year 20,823,593 –

25. Other Reserves (Continued)

25B. Revaluation Reserve (Continued)

All the reserves classified on the face of the statement of financial position as

retained earnings represent past accumulated earnings and are distributable as

cash dividends. The other reserves are not available for cash dividends unless

realised.

The currency translation reserve accumulates all foreign exchange differences.

The revaluation of properties reserve arises from the revaluation of properties

held under property, plant and equipment. It is not distributable until it is

released to profit or loss on the disposal of the properties.

26. Other Payables, Non-Current

Group Company

2014

$

2013

$

2014

$

2013

$

Amount owing to a

shareholder (Note 29) – 723,000 – 723,000

The amount owing to a shareholder was for the acquisition of TEHO Water &

Envirotec Pte. Ltd. This amount is expected to be repaid within 12 months from

the end of the current reporting year. Accordingly, this amount was reclassified

to current liabilities during the reporting year (Note 28). It has been discounted

at 2% based on average borrowing cost of the group. The shareholder is also

one of the key management personnel of the group.

71

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


27. Other Financial Liabilities

Group

2014

$

2013

$

Non-current:

Bank loans (secured) (Note 27A) 20,837,625 2,803,471

Finance leases (Note 27B) 124,482 286,066

20,962,107 3,089,537

Current:

Bank loans (secured) (Note 27A) 21,046,829 5,379,115

Finance leases (Note 27B) 161,583 156,652

Trust receipts (secured) (Note 27C) 6,952,973 6,794,182

28,161,385 12,329,949

Total 49,123,492 15,419,486

The ranges of interest rates per annum paid were as follows:

Group

2014 2013

Trust receipts and bills payable 1.40% to 2.35% 1.40% to 2.35%

Term loans 1 and 2 1.68% to 1.98% 1.68% to 1.98%

Term loan 3 1.95% to 3.40% 1.36% to 1.95%

Term loan 4 2.50% –

Revolving credit facilities 1.90% to 2.10% 1.85% to 2.10%

Property development loans 2.60% to 3.50% –

Bank loan – 2.19%

27. Other Financial Liabilities (Continued)

27A. Bank Loans

Group

2014

$

2013

$

Term loans 1 and 2 2,255,187 3,033,047

Term loan 3 555,772 579,771

Term loan 4 9,925,570 –

Revolving credit facilities 4,500,000 4,500,000

Property development loans 24,647,925 –

Bank loan – 69,768

41,884,454 8,182,586

Due within 1 year 21,046,829 5,379,115

Due within 2 to 5 years 20,401,853 2,343,699

Due after 5 years 435,772 459,772

41,884,454 8,182,586

The agreements for certain bank loans, overdrafts and other credit facilities

require certain subsidiaries to comply with certain financial covenants which

include (a) the tangible net worth of not less than $16,000,000 at all times, (b)

the total liabilities to tangible net worth of not more than 175% at all times and

(c) total bank debts to tangible net worth of not more than 150% at all times.

72

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



27A. Bank Loans (Continued)

Group

Certain revolving

credit facility,

term loans 1, 2

and 4

- The loans are covered by corporate guarantee by the

company amounting to $30,350,000 and secured by

legal charges over the leasehold buildings of certain

subsidiaries.

Term loan 3 - The loan is secured by legal charges over the leasehold

buildings of certain subsidiaries.

Bank loan - The loan is secured by all of the subsidiary’s assets and

guaranteed by another subsidiary company.

Certain revolving

credit facilities

- The facilities are covered by corporate guarantees by the

company.

Property

development

loans

- The loans are secured by legal mortgages on the

development properties of certain subsidiaries, and sales

proceeds from these development properties.

27B. Finance Leases

Group

Minimum

payments

Finance

charges

Present

value

2014: $ $ $

Minimum lease payments payable:

Due within 1 year 168,036 (6,453) 161,583

Due within 2 to 5 years 126,068 (1,586) 124,482

At end of the year 294,104 (8,039) 286,065

Net book value of plant and equipment under finance leases 461,623


27B. Finance Leases (Continued)

Minimum

payments

Finance

charges

Present

value

2013: $ $ $

Minimum lease payments payable:

Due within 1 year 168,036 (11,384) 156,652

Due within 2 to 5 years 294,105 (8,039) 286,066

At end of the year 462,141 (19,423) 442,718

Net book value of plant and equipment under finance leases 601,717

There are leased assets under finance leases. All leases are on a fixed

repayment basis and no arrangements have been entered into for contingent

rental payments. The obligations under finance leases are secured by the

lessor’s charge over the leased assets. Other details are as follows:

2014 2013

Average lease term, in years 4 4

Average effective borrowing rate per year 3.05% 3.05%

The total for finance leases and the average effective borrowing rate per year is

disclosed above. The fair value (Level 2) is $286,065 (2013: $442,718). The fair

value of the finance leases was estimated by discounting the future cash flows

payable under the terms of the finance leases using the year-end interest rate of

3.05%.

27C. Trust Receipts

Group

The trust receipts are covered by corporate guarantees by the company

of $47,350,000 (2013: $51,090,000) and secured by legal charges over the

leasehold buildings of certain subsidiaries.

73

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


28. Trade and Other Payables

Group Company

2014

$

2013

$

2014

$

2013

$

Trade payables:

Outside parties and accrued

liabilities 3,889,479 2,045,589 – –

Structured currency liabilities

(Note 30) 376,525 – – –

Subtotal 4,266,004 2,045,589 – –

Other payables:

Outside parties 280,120 881,637 305,723 64,009

Related party (Note 3) (a) 2,914,459 – – –

Shareholder (Note 3 and 29B) 723,000 – 723,000 –

Subsidiaries (Note 3) – – 13,493,091 6,398,620

Subtotal 3,917,579 881,637 14,521,814 6,462,629

Total trade and other

payables 8,183,583 2,927,226 14,521,814 6,462,629

(a) The related party is also one of the key management personnel of the

group.

29. Acquisition of Subsidiaries

29A. TIEC Holdings Pte. Ltd.

On 26 May 2014, the Group acquired 100% of the share capital of TIEC

Holdings Pte. Ltd. It became a wholly owned subsidiary of the company (see

Note 17 for the principal activities). The transaction was accounted for by the

acquisition method of accounting.

29. Acquisition of Subsidiaries (Continued)

29A. TIEC Holdings Pte. Ltd. (Continued)

The consideration transferred is as follows:

Consideration transferred:

2014

$

Cash 7,278,844

25,000,000 shares issued at market price (Note 24) 3,775,000

Total consideration transferred 11,053,844

The net assets acquired and the related fair values are determined through a

purchase price allocation valuation carried out by the management as follows:

Pre-

acquisition

book values

under FRS

$

At fair

values

$

Cash and cash equivalents 3,796,574 3,796,574

Trade and other receivables 636,422 636,422

Other assets 251,150 251,150

Development properties 30,627,181 31,454,735

Trade and other payables (1,435,419) (1,435,419)

Other financial liabilities (28,450,683) (28,450,683)

Income tax payable (70,267) (70,267)

Deferred tax liabilities (585,598) (726,282)

Identifiable net assets acquired 4,769,360 5,456,230

74

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



29A. TIEC Holdings Pte. Ltd. (Continued)

The goodwill arising on acquisition is as follows:

At fair

values

$

Consideration transferred 11,053,844

Fair value of identifiable net assets acquired (5,456,230)

Goodwill arising on acquisition (Note 16A) 5,597,614

An analysis of the cash flows in respect of the acquisition is as follows:

Cash paid 7,278,844

Cash and cash equivalent acquired (3,796,574)

Net outflow of cash and cash equivalents on acquisition 3,482,270

The goodwill arising on the acquisition of TIEC Holdings Pte. Ltd. is attributable

to the anticipated profitability of this subsidiary. The goodwill is not deductible

for tax purpose.

The contributions from TIEC Holdings Pte. Ltd. for the period between the date

of acquisition and end of the reporting year are as follows:

From date of

acquisition

in 2014

$

For the

reporting

year 2014

$

Revenue 5,090,107 38,769,172

Profit, net of tax 390,968 3,516,384


29B. TEHO Water & Envirotec Pte. Ltd.

On 30 April 2013 the group acquired 100% of the share capital of TEHO Water

& Envirotec Pte. Ltd. It became a wholly owned subsidiary of the company (see

Note 17 for the principal activities). The transaction was accounted for by the

acquisition method of accounting.

The consideration transferred is as follows:

2013

$

Consideration transferred:

Cash 1,250,000

2,500,000 shares issued at market price (Note 24) 396,000

Amount owing to a shareholder (Notes 3 and 28) 723,000

Total consideration transferred 2,369,000

The net assets acquired and the related fair values are determined through a purchase

price allocation valuation carried out by an independent valuer as follows:

Pre–

acquisition

book value

under FRS

$

At fair

values

$

Investment in associate 23,208 38,966

Property, plant and equipment 801,569 756,470

Inventories 453,114 468,114

Trade receivables 506,095 506,095

Other assets 7,954 7,954

Cash and cash equivalents 145,977 145,977

Income tax payable (42,339) (54,904)

Trade and other payables (560,843) (560,843)

Other financial liabilities (582,620) (582,620)

Deferred tax liabilities – (157,573)

752,115 567,636

75

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



29B. TEHO Water & Envirotec Pte. Ltd. (Continued)

The goodwill arising on acquisition is as follows:

2013

$

Consideration transferred 2,369,000

Fair value of identifiable net assets acquired (567,636)

Goodwill and intangibles arising on acquisition 1,801,364

These consist of:

Goodwill (Note 16A) 844,364

Intangibles (Note 16B) 957,000

1,801,364

An analysis of the cash flows in respect of the acquisitions is as follows:

At fair values

$

Cash consideration – TEHO Water & Envirotec Pte. Ltd. 1,250,000

Cash and cash equivalents acquired (145,977)

Net outflow of cash and cash equivalents on acquisition of TEHO

Water & Envirotec Pte. Ltd. 1,104,023

Cash consideration paid on acquisition of TEHO Engineering Pte. Ltd. 500,000

Total net outflow of cash and cash equivalents included in cash

flows from investing activities 1,604,023

The goodwill arising on the acquisition of TEHO Water & Envirotec Pte. Ltd. is

attributable to the anticipated profitability of this subsidiary. The goodwill is not

deductible for tax purpose.

The intangibles arising on the acquisition of the subsidiary comprises the fair

value of customer relationship of $890,000 and the fair value of order book

outstanding at the date of acquisition of $67,000.


29B. TEHO Water & Envirotec Pte. Ltd. (Continued)

The contributions from the acquired subsidiary for the period between the date

of acquisition and the end of the reporting year were as follows:

From date of

acquisition

in 2013

$

For the

reporting

year 2013

$

Revenue 667,643 1,625,574

Profit, net of tax 49,345 139,092

30. Derivative Financial Instruments

This includes the gross amount of all notional values for contracts that have not

yet been settled or cancelled. The amount of notional value outstanding is not

necessarily a measure or indication of market risk, as the exposure of certain

contracts may be offset by that of other contracts.

Contract

notional

amount

$

Fair value

liabilities

$

Group

2014:

Structured currency instruments 19,679,625 376,525

2013:

Structured currency instruments 5,454,550 –

The purpose of these instruments is to mitigate the fluctuations of expected

purchases (forecast transactions) denominated in USD.

76

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


30. Derivatives Financial Instruments (Continued)

The fair value of the Group’s derivative financial instruments were not

considered to be significant in 2013. The fair value is regarded as a Level 2 fair

value measurement for financial instruments.

The fair value losses on derivatives are charged to profit or loss and included in

other charges (Note 7).

The fair value liabilities on the above derivatives financial instruments, which

amounted to $376,525 (2013: Nil) are included in trade payables (Note 28).

31. Financial Instruments: Information on Financial Risks

31A. Classification of Financial Assets and Liabilities

The following table summarises the carrying amount of financial assets and

liabilities recorded at the end of the reporting year by FRS 39 categories:

Group Company

2014

$

2013

$

2014

$

2013

$

Financial assets:

Cash and cash equivalents 15,813,623 5,081,521 168,285 3,398

Loans and receivables 16,364,624 11,271,327 6,417,454 2,273,456

At end of year 32,178,247 16,352,848 6,585,739 2,276,854

Financial liabilities:

Borrowings at amortised cost 49,123,492 15,419,486 – –

Trade and other payables at

amortised cost 7,807,058 3,650,226 14,521,814 7,185,629

Derivatives financial

instruments at fair value 376,525 – – –

At end of year 57,307,075 19,069,712 14,521,814 7,185,629

Further quantitative disclosures are included throughout these financial

statements.

31. Financial Instruments: Information on Financial Risks (Continued)

31B. Financial Risk Management

The main purpose for holding or issuing financial instruments is to raise

and manage the finances for the entity’s operating, investing and financing

activities. The main risks arising from the entity’s financial instruments are

credit risk, liquidity risk and market risk comprising interest rate and currency

risk exposures. The management has certain practices for the management of

financial risks. The guidelines set up the short and long term objectives and

action to be taken in order to manage the financial risks. The guidelines include

the following:

1. Minimise interest rate, currency, credit and market risks for all kinds of

transactions.

2. Maximise the use of “natural hedge”: favouring as much as possible

the natural off-setting of sales and costs and payables and receivables

denominated in the same currency and therefore put in place hedging

strategies only for the excess balance. The same strategy is pursued

with regard to interest rate risk.

3. All financial risk management activities are carried out and monitored by

senior management staff.

4. All financial risk management activities are carried out following good

market practices.

5. When appropriate consideration is given to investing in shares or similar

instruments.

6. When appropriate consideration is given to entering into derivatives or

any other similar instruments solely for hedging purposes.

77

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



With regard to derivatives, the policies include the following:

1. The management documents carefully all derivatives including the

relationship between them and the hedged items at inception and

throughout their life.

2. Ineffectiveness is recognised in profit or loss as soon as it arises.

3. Effectiveness is assessed at the inception of the hedge and at each end

of the reporting year ensuring that FRS 39 criteria are met.

4. Only financial institutions with acceptable credit ratings are used as

counterparties for derivatives.

31C. Fair Value of Financial Instruments

The analyses of financial instruments that are measured subsequent to initial

recognition at fair value, grouped into Levels 1 to 3 are disclosed in the

relevant notes to the financial statements. These include both the significant

financial instruments stated at amortised cost and at fair value in the statement

of financial position. The carrying values of current financial instruments

approximate their fair values due to the short-term maturity of these instruments

and the disclosures of fair value are not made when the carrying amount of

current financial instruments is a reasonable approximation of the fair value.

31D. Credit Risk on Financial Assets

Financial assets that are potentially subject to concentrations of credit risk and

failures by counterparties to discharge their obligations in full or in a timely

manner consist principally of cash balances with banks, cash equivalents

and receivables. The maximum exposure to credit risk is: the total of the fair

value of the financial instruments; the maximum amount the entity could have

to pay if the guarantee is called on; and the full amount of any loan payable

commitment at the end of the reporting year. Credit risk on cash balances with

banks, derivative financial instruments and other financial assets is limited

because the counter-parties are entities with acceptable credit ratings. For

credit risk on receivables an ongoing credit evaluation is performed on the

financial condition of the debtors and a loss from impairment is recognised in

profit or loss. The exposure to credit risk is controlled by setting limits on the

exposure to individual customers and these are disseminated to the relevant

persons concerned and compliance is monitored by management. There is no

significant concentration of credit risk, as the exposure is spread over a large

number of counter-parties and customers unless otherwise disclosed in the

notes to the financial statements below.

Other than the cash restricted in use, cash and cash equivalents balances as

disclosed in Note 23 represent short-term deposits with a less than 90-day

maturity.

As part of the process of setting customer credit limits, different credit terms are

used. The average credit period generally granted to trade receivable customers

is about 30 to 90 days (2013: 30 to 90 days). But some customers take a longer

period to settle the amounts.

(a) Ageing analysis of the age of trade receivable amounts (unsecured) that

are past due as at the end of reporting year but not impaired:

Group

2014

$

2013

$

Trade receivables:

91 to 120 days 858,524 1,035,753

Over 120 days 2,292,740 2,043,403

Total 3,151,264 3,079,156

78

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



31D. Credit Risk on Financial Assets (Continued)

(b) Ageing analysis as at the end of reporting year of trade receivable

amounts that are impaired:

Group

2014

$

2013

$

Trade receivables:

Over 120 days 20,809 7,434

Total 20,809 7,434

The allowance which is disclosed in the note in trade receivables is based on

individual accounts totalling $20,809 (2013: $7,434) that are determined to be

impaired at the end of the reporting year. These are not secured.

Other receivables are normally with no fixed terms and therefore there is no

maturity.

Concentration of trade receivable customers as at the end of reporting year:

Group

2014

$

2013

$

Top 1 customer 3,485,000 1,035,032

Top 2 customers 4,211,449 1,659,780

Top 3 customers 4,875,477 2,127,926


31E. Liquidity Risk

The following table analyses the non-derivative financial liabilities by remaining

contractual maturity (contractual and undiscounted cash flows):

Less than

1 year

1 – 5

years

Over 5

years Total

Group $ $ $ $

Non-derivative financial

liabilities:

2014:

Gross borrowings

commitments 21,280,351 21,457,579 577,771 43,315,701

Trade and other payables 8,183,583 – – 8,183,583

At end of the year 29,463,934 21,457,579 577,771 51,499,284

Non-derivative financial

liabilities:

2013:

Gross borrowings

commitments 12,425,033 2,872,922 615,896 15,913,851

Trade and other payables 2,927,226 723,000 – 3,650,226

At end of the year 15,352,259 3,595,922 615,896 19,564,077

79

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



31E. Liquidity Risk (Continued)

Less than

1 year

1 – 5

years Total

Company $ $ $

Non-derivative financial liabilities:

2014:

Trade and other payables 14,521,814 – 14,521,814

At end of the year 14,521,814 – 14,521,814

Non-derivative financial liabilities:

2013:

Trade and other payables 6,462,629 723,000 7,185,629

At end of the year 6,462,629 723,000 7,185,629

The undiscounted amounts on the borrowing with fixed and floating interest rates

are determined by reference to the conditions existing at the reporting date.

The following table analyses the derivative financial liabilities by remaining

contractual maturity (contractual and undiscounted cash flows):

Less than

1 year Total

Group $ $

Derivative financial liabilities:

2014:

Net settled:

Structured currency

instruments 376,525 376,525

At end of the year 376,525 376,525



The above amounts disclosed in the maturity analysis are the contractual

undiscounted cash flows and such undiscounted cash flows differ from the

amount included in the statement of financial position. When the counterparty

has a choice of when an amount is paid, the liability is included on the basis of

the earliest date on which it can be required to pay. At the end of the reporting

year no claims on the financial guarantees are expected.

The liquidity risk refers to the difficulty in meeting obligations associated with

financial liabilities that are settled by delivering cash or another financial asset.

It is expected that all the liabilities will be settled at their contractual maturity.

The average credit period taken to settle trade payables is about 30 days (2013:

30 days). The other payables are with short-term durations. The classification

of the financial assets is shown in the statement of financial position as they

may be available to meet liquidity needs and no further analysis is deemed

necessary.

Financial guarantee contracts – For financial guarantee contracts the maximum

earliest period in which the guarantee would be called is used. At the end of the

reporting year no claims on the financial guarantees are expected. The following

table shows the maturity analysis of the contingent liabilities.

Less than

1 year

$

Total

$

Company

2014:

Corporate guarantees in favour of subsidiaries 72,533,697 72,533,697

At end of the year 72,533,697 72,533,697

2013:

Corporate guarantees in favour of subsidiaries 51,090,000 51,090,000

At end of the year 51,090,000 51,090,000

80

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14




The liquidity risk is managed on the basis of expected maturity dates of the

financial liabilities. The average credit period taken to settle trade payables

is about 30 days (2013: 30 days). The other payables are with short-term

durations.

The liquidity risk refers to the difficulty in meeting obligations associated with

financial liabilities that are settled by delivering cash or another financial asset.

It is expected that all the liabilities will be paid at their contractual maturity. In

order to meet such cash commitments the operating activity is expected to

generate sufficient cash inflows.

The classification of the financial assets is shown in the statement of financial

position as they may be available to meet liquidity needs and no further analysis

is deemed necessary.

Bank facilities:

Group

2014

$

2013

$

Undrawn borrowing facilities 33,022,578 26,156,467

Unused bank guarantees 26,216,271 650,573

The undrawn borrowing facilities are available for operating activities and to

settle other commitments. Borrowing facilities are maintained to ensure funds

are available for the operations. A monthly schedule showing the maturity of

financial liabilities and unused bank facilities is provided to management to

assist them in monitoring the liquidity risk.


31F. Interest Rate Risk

The interest rate risk exposure is mainly from changes in fixed rate and floating

interest rates. The following table analyses the breakdown of the significant

financial instruments by type of interest rate:

Group

2014

$

2013

$

Financial assets:

Fixed rates 13,000 25,000

Floating rates 15,791,309 755,434

At end of year 15,804,309 780,434


Fixed rates 286,066 6,475,764

Floating rates 48,837,427 8,943,722

At end of year 49,123,493 15,419,486

The floating rate debt obligations are with interest rates that are re-set regularly

at one, three or six month intervals. The interest rates are disclosed in the

respective notes.

81

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



31F. Interest Rate Risk (Continued)

Sensitivity analysis:

Group

2014

$

2013

$

A hypothetical increase in interest rates by 50 basis

points would have an adverse effect on profit

before tax of 165,231 40,941

A hypothetical increase in interest rates by 100

basis points would have an adverse effect on

profit before tax of 330,461 81,883







The analysis has been performed separately for fixed interest rate and floating

interest rate financial instruments. The impact of a change in interest rates

on fixed interest rate financial instruments has been assessed in terms of

changing of their fair value. The impact of a change in interest rates on floating

interest rate financial instruments has been assessed in terms of changing of

their cash flows and therefore in terms of the impact on net expenses. The

hypothetical changes in basis points are not based on observable market data

(unobservable inputs).


31G. Foreign Currency Risks

Analysis of amounts denominated in non-functional currencies:

Group

United

States

Dollar Euro Others Total

At 30 June 2014: $ $ $ $

Financial assets:

Cash and cash equivalents 2,950,315 2,088,047 57,289 5,095,651

Loans and other receivables 1,459,476 864,791 16,192 2,340,459

Total financial assets 4,409,791 2,952,838 73,481 7,436,110

At 30 June 2014:


Trade and other payables 738,550 644,481 225,284 1,608,315

Total financial liabilities 738,550 644,481 225,284 1,608,315

Net financial assets/

(liabilities) at end of the year 3,671,241 2,308,357 (151,803) 5,827,795

Group

United

States


At 30 June 2013: $ $ $ $

Financial assets:

Cash and cash equivalents 859,055 479,606 66,478 1,405,139

Loans and other receivables 1,804,802 385,735 – 2,190,537

Total financial assets 2,663,857 865,341 66,478 3,595,676

82

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14



31G. Foreign Currency Risks (Continued)

Group

United

States


At 30 June 2013: $ $ $ $


Trade and other payables 830,856 486,052 255,808 1,572,716

Total financial liabilities 830,856 486,052 255,808 1,572,716

Net financial assets/

(liabilities) at end of the year 1,833,001 379,289 (189,330) 2,022,960

There is exposure to foreign currency risk as part of its normal business.

Sensitivity analysis: The effect on post-tax profit is not significant.

32. Commitments

Estimated amounts committed at the end of the reporting year for future certain

expenditure but not recognised in the financial statements are as follows:

Group

2014

$

2013

$

Development expenditure contracted for

development properties 6,675,855 –

33. Operating Lease Payment Commitments

At the end of the reporting year, the total of future minimum lease payment

commitments under non-cancellable operating leases are as follows:

Group

2014

$

2013

$

Not later than 1 year 844,279 553,032

Later than 1 year and not later than 5 years 1,624,177 1,374,754

Later than 5 years 8,822,439 934,806

Rental expense for the year 805,880 666,102

Operating lease payments are for rentals payable for certain properties. The

lease rental terms are negotiated for an average term of 3 to 30 years and

rentals are subject to an escalation clause but the amount of rent increase is

not to exceed a certain percentage.

34. Share-Based Payments

34A. Performance Share Plan

The company’s performance share plan, TEHO Performance Share Plan (the

“PSP”), was approved and adopted by the shareholders at the company’s

Extraordinary General Meeting held on 25 November 2011. The PSP is

administered by the Remuneration Committee (“RC”) with such discretion,

powers and duties as are conferred on it by the Board of Directors.

The PSP contemplates the award of fully-paid shares in the capital of the

company to participants after certain pre-determined benchmarks have been

met. The company believes that the PSP will be more effective and rewarding

than pure cash bonuses in motivating employees to work towards pre-

determined goals of the company.

83

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


34. Share-Based Payments (Continued)

34A. Performance Share Plan (Continued)

The PSP shall continue to be in force at the discretion of the RC, subject

to a maximum period of 10 years commencing from its adoption by the

shareholders and may continue beyond the stipulated period with the approval

of the shareholders by an ordinary resolution in general meeting and of any

relevant authorities which may then be required.

Under the rules of the PSP and at the absolute discretion of the RC, confirmed

full-time employees of the group who are of the age of 18 years and above,

and directors of the group who have contributed or will contribute to the

success and the development of the group are eligible to participate in the

PSP. However, participation in the PSP by the directors who are also controlling

shareholders and their associates are subject to the approval by independent

shareholders of the company.

The total number of shares that may be issued or are issuable pursuant to the

granting of the awards under the PSP, when added to the aggregate number

of shares that are issued or are issuable in respect of such other share-based

incentive schemes of the company (if any), shall not exceed 15% (or such

other percentage as may be prescribed or permitted from time to time by the

SGX-ST) of the total number of issued ordinary shares of the company on the

day immediately preceding the relevant award date.

There were no awards granted under the PSP by the company or any

corporation in the group since its inception and during the reporting year.

There were no shares issued during the reporting year by virtue of the exercise

of awards to take up unissued shares of the company or any corporation in the

group.

There were no unissued shares under the PSP in the company or any

corporation in the group as at the end of the reporting year.

35. Items in the Statement of Comprehensive Income

In addition to the charges and credits disclosed elsewhere in the notes to

financial statements, this item includes the following charges:

Group

2014

$

2013

$

Audit fees to the independent auditors of the company 142,500 95,000

Audit fees to other independent auditors 26,620 19,678

Non-audit fees to the independent auditors of the

company 9,700 9,200

Non-audit fees to other independent auditors None 1,300

36. Changes and Adoption of Financial Reporting Standards

For the current reporting year the following new or revised Singapore Financial

Reporting Standards were adopted. The new or revised standards did not

require any modification of the measurement methods or the presentation in the

financial statements.

FRS No. Title

FRS 1 Amendment to FRS 1 Presentation of Financial Statements (Annual

Improvements)

FRS 16 Amendment to FRS 16 Property, Plant and Equipment (Annual

Improvements)

FRS 19 Employee Benefits (Revised)

FRS 27 Consolidated and Separate Financial Statements (Amendments to)

FRS 32 Amendment to FRS 32 Financial Instruments: Presentation (Annual

Improvements)

FRS 107 Amendments to FRS 32 and 107 titled Offsetting Financial Assets

and Financial Liabilities

FRS 113 Fair Value Measurements

INT FRS 120 Stripping Costs in the Production Phase of a Surface Mine (*)

(*) Not relevant to the entity.

84

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14


37. Future Changes in Financial Reporting Standards

The following new or revised Singapore Financial Reporting Standards that

have been issued will be effective in future. The transfer to the new or revised

standards from the effective dates is not expected to result in material

adjustments to the financial position, results of operations, or cash flows for the

following year.

FRS No. Title

Effective date for

periods beginning

on or after

FRS 19 Employee Benefits (Revised) 1 Jan 2014

FRS 27 Separate Financial Statements (Revised) 1 Jan 2014

FRS 28 Investments in Associates and Joint Ventures

(Revised)

1 Jan 2014

FRS 36 Amendments to FRS 36: Recoverable Amount

Disclosures for Non-Financial Assets

(relating to goodwill)

1 Jan 2014

FRS 39 Amendments to FRS 39: Novation of

Derivatives and Continuation of Hedge

Accounting

1 Jan 2014

FRS 110 Consolidated Financial Statements 1 Jan 2014

FRS 111 Joint Arrangements (*) 1 Jan 2014

FRS 112 Disclosure of Interests in Other Entities 1 Jan 2014

INT FRS 121 Levies (*) 1 Jan 2014

(*) Not relevant to the entity.

Issued and fully paid capital : $26,010,672.80

Total number of issued shares : 190,467,471

Number of treasury shares : Nil

Class of shares : Ordinary Shares

Voting Rights : On show of hands – each member presents in

person or by proxy shall have one vote.

: On poll – every member presents in person or by

proxy shall have one vote for every share he holds

or represents.

SUBSTANTIAL SHAREHOLDERS

Direct Interest Deemed Interest

Number of Shares % Number of Shares %

Lim See Hoe(1) 56,497,578 29.66 - -

Lim Siew Cheng(1) 23,100,155 12.13 - -

Lim Siew Choo(1) 18,480,126 9.70 - -

Cheng Lye Meng Eric (Zheng Laiming Eric) 12,500,000 6.56 - -

Thanuja D/O Thiagarajah 12,500,000 6.56 - -

Note:

(1) Lim See Hoe, Lim Siew Cheng and Lim Siew Choo are siblings.

Shareholdings StatisticsAs At 26 September 2014

85

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

LIST OF 20 LARGEST SHAREHOLDERS

No. Name No. of Shares %

1 Lim See Hoe 56,497,578 29.66

2 Lim Siew Cheng 23,100,155 12.13

3 Lim Siew Choo 18,480,126 9.70

4 Cheng Lye Meng Eric (Zheng Laiming Eric) 12,500,000 6.56

5 Thanuja D/O Thiagarajah 12,500,000 6.56

6 Lim See Heng 9,200,140 4.83

7 Lin Yusheng 9,000,000 4.73

8 Ong Chuey Geok 9,000,000 4.73

9 Lim Siew Lian (Soare Siew Lian) 7,826,000 4.11

10 Tan Chiun Wei 4,958,471 2.60

11 Alvin Chee Siong 3,500,000 1.84

12 HSBC (Singapore) Nominees Pte Ltd 1,046,000 0.55

13 Hong Leong Finance Nominees Pte Ltd 1,040,000 0.55

14 Chan Wai Leong 893,000 0.47

15 Tan Wah Yong 700,000 0.37

16 Tan Teck Chong 661,000 0.35

17 Guy Prosper Blonde 535,000 0.28

18 Goh Leng Heng 521,000 0.27

19 Teo Han Eng 491,000 0.26

20 Lai Weng Kay 468,000 0.25

Total 172,917,470 90.80

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholdings

No. of

Shareholders %

No. of

Shares %

1 - 999 6 1.45 601 0.00

1,000 - 10,000 144 34.87 590,000 0.31

10,001 - 1,000,000 250 60.53 21,228,400 11.15

1,000,001 and above 13 3.15 168,648,470 88.54

Total 413 100.00 190,467,471 100.00

Based on the information available to the Company and to the best knowledge of the

Directors, approximately 12.41% of the issued ordinary shares of the Company were

held in the hands of the public as at 26 September 2014 and therefore, Rule 723 of the

Catalist Rules is complied with.

Shareholdings StatisticsAs At 26 September 2014

86

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

NOTICE IS HEREBY GIVEN that the Annual General Meeting (“AGM”) of TEHO

INTERNATIONAL INC LTD. (the “Company”) will be held at Novotel Singapore Clarke

Quay, Mace Room 1, Level 5, 177A River Valley Road, Singapore 179301 on Friday,

31 October 2014 at 11.00 a.m., for the following purposes:

AS ORDINARY BUSINESS:

1. To receive and adopt the Audited Accounts for the financial

year ended 30 June 2014 together with the Directors’ Report

and Independent Auditors’ Report thereon.

(Resolution 1)

2. To approve the payment of a first and final one-tier tax exempt

dividend of 0.8 cent per ordinary share for the financial year

ended 30 June 2014.

(Resolution 2)

3. To approve the payment of Directors’ fees of S$168,400 for the

financial year ended 30 June 2014 (2013: S$150,000).

(Resolution 3)

4. To approve the payment of Directors’ fees of S$180,000 for

the financial year ending 30 June 2015, to be paid quarterly in

arrears.

(Resolution 4)

5. To re-elect Mr Lim See Hoe, a Director retiring pursuant to

Article 107 of the Company’s Articles of Association.

(see explanatory note 1)

(Resolution 5)

6. To note the retirement of Mr Terrance Tan Kong Hwa, a Director

retiring pursuant to Article 107 of the Company’s Articles of

Association. Mr Tan has decided not to seek re-election and

will retire as Director at the conclusion of the forthcoming AGM.


7. To re-elect Ms Joanne Khoo Su Nee, a Director retiring

pursuant to Article 117 of the Company’s Articles of

Association.


(Resolution 6)

8. To appoint KPMG LLP as auditors of the Company in place of

the retiring auditors, RSM Chio Lim LLP, to hold office until the

conclusion of the next AGM of the Company and to authorise

the Directors to fix their remuneration.

(see explanatory note 4 and Appendix for details)

(Resolution 7)

AS SPECIAL BUSINESS:

To consider and if thought fit, to pass the following Resolution as Ordinary Resolution,

with or without any modifications:

9. Ordinary Resolution: Authority to Allot and Issue Shares

That pursuant to Section 161 of the Companies Act, Cap. 50

and Rule 806 of Section B: Rules of Catalist of the Singapore

Exchange Securities Trading Limited (“SGX-ST”) Listing Manual

(“Catalist Rules”), authority be and is hereby given to the

Directors to:

(a) (i) issue shares in the capital of the Company (the

“Shares”) whether by way of rights, bonus or

otherwise; and/or

(ii) make or grant offers, agreements or options

that might or would require Shares to be issued,

including but not limited to the creation and issue

of (as well as adjustments to) options, warrants,

debentures or other instruments convertible into

Shares (collectively, “Instruments”),

at any time and upon such terms and conditions and

for such purposes and to such persons as the Directors

may in their absolute discretion deem fit; and

(b) (notwithstanding the authority conferred by this Ordinary

Resolution may have ceased to be in force) issue Shares

in pursuance of any Instruments made or granted by the

Directors while this Ordinary Resolution was in force,

(Resolution 8)

Notice of Annual General Meeting

87

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

provided that:

(1) the aggregate number of Shares or Instruments to be

issued pursuant to this Ordinary Resolution (including

Shares to be issued in pursuance of the Instruments

made or granted pursuant to this Ordinary Resolution)

shall not exceed 100% of the total number of issued

Shares (excluding treasury shares) (as calculated in

accordance with sub-paragraph (2) below), of which

the aggregate number of Shares and Instruments to be

issued other than on a pro rata basis to shareholders

of the Company (including Shares to be issued in

pursuance of the Instruments made or granted pursuant

to this Ordinary Resolution) shall not exceed 50% of

the total number of issued Shares (excluding treasury

shares) (as calculated in accordance with sub-paragraph

(2) below);

(2) (subject to such manner of calculation as may

be prescribed by the SGX-ST) for the purpose of

determining the aggregate number of Shares that may

be issued under sub-paragraph (1) above, the total

number of issued Shares (excluding treasury shares)

shall be based on the total number of issued Shares

(excluding treasury shares) at the time of passing this

Ordinary Resolution, after adjusting for:

(a) new Shares arising from the conversion or

exercise of any convertible securities;

(b) new Shares arising from the exercise of share

options or vesting of share awards outstanding

or subsisting at the time of passing this Ordinary

Resolution, provided the options or awards were

granted in compliance with Part VIII of Chapter 8

of the Catalist Rules; and

(c) any subsequent bonus issue, consolidation or

subdivision of Shares;

(3) in exercising the authority conferred by this Ordinary

Resolution, the Directors shall comply with the

provisions of the Catalist Rules for the time being in

force (unless such compliance has been waived by the

SGX-ST) and the Articles of Association for the time

being of the Company; and

(4) unless revoked or varied by the Company in general

meeting, such authority conferred by this Ordinary

Resolution shall continue in force until the conclusion

of the next AGM of the Company or the date by which

the next AGM of the Company is required by law and

the Catalist Rules to be held, whichever is earlier.


10. To transact any other business that may be properly

transacted at an AGM.

BY ORDER OF THE BOARD

Phua Sian Chin

Wee Woon Hong

Company Secretaries

Singapore

16 October 2014


88

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Explanatory Notes:

1. Mr Lim See Hoe will, upon re-election as a Director of the Company, remain as

the Chairman of the Board of Directors of the Company.

2. Mr Terrance Tan Kong Hwa will retire as a Director of the Company at the

conclusion of the forthcoming AGM. Upon Mr Tan’s retirement, he will cease

to be the Chairman of the Nominating Committee and a member of the Audit

and Remuneration Committees of the Company. His replacement for each

Committee will be announced in due course.

3. Ms Joanne Khoo Su Nee will, upon re-election as a Director of the Company,

remain as the Chairman of the Remuneration Committee and a member of the

Audit and Nominating Committees of the Company, and will be considered

independent for the purposes of Rule 704(7) of the Catalist Rules.

4. The Ordinary Resolution 7 proposed in item 8 above is to approve the

appointment of KPMG LLP as auditors of the Company in place of the retiring

auditors, RSM Chio Lim LLP, to hold office until the conclusion of the next

AGM of the Company and to authorise the Directors to fix their remuneration.

An appendix is attached to this annual report to provide shareholders with

information relating to the proposed change of auditors to be tabled at the AGM

(“Appendix”).

(a) The outgoing auditors, RSM Chio Lim LLP, have confirmed by way of a

letter dated 1 October 2014 that they are not aware of any professional

reasons why the new auditors, KPMG LLP, should not accept

appointment as auditors of the Company;

(b) The Company confirms that there were no disagreements with the

outgoing auditors, RSM Chio Lim LLP, on accounting treatments within

the last 12 months;

(c) The Company confirms that, other than as set out in the Appendix, it is

not aware of any circumstances connected with the proposed change of

auditors that should be brought to the attention of shareholders of the

Company;

(d) The specific reason for the change of auditors is that RSM Chio Lim

LLP has served as auditors of the Company for seven consecutive

audits since the financial year ended 30 June 2008. The Directors are

of the view that a change of auditors would be a good corporate

governance practice and would enable the Company to benefit from

fresh perspectives and views of another professional audit firm and

further enhance the value of the audit. The proposed change of auditors

is neither due to the dismissal of RSM Chio Lim LLP nor RSM Chio Lim

LLP declining to continue to serve as auditors of the Company. Please

refer to the Appendix for further details; and

(e) The Company confirms that it is in compliance with Rules 712 and 715

of the Catalist Rules in relation to the appointment of KPMG LLP as

auditors of the Company.

5. The Ordinary Resolution 8 proposed in item 9 above, if passed, will empower

the Directors of the Company from the date of this AGM until the date of the

next AGM is to be held or is required by law to be held, whichever is earlier, to

allot and issue Shares and convertible securities in the capital of the Company.

The aggregate number of Shares (including Shares to be made in pursuance

of Instruments made or granted pursuant to this Ordinary Resolution) to be

allotted and issued shall not exceed 100% of the total number of issued Shares

(excluding treasury shares) at the time of passing this Ordinary Resolution. For

issue of Shares (including Shares to be made in pursuance of Instruments made

or granted pursuant to this Ordinary Resolution) other than on a pro rata basis

to all shareholders, the aggregate number of Shares (including Shares to be

made in pursuance of Instruments made or granted pursuant to this Ordinary

Resolution) to be allotted and issued shall not exceed 50% of the total number

of issued Shares (excluding treasury shares) at the time of passing this Ordinary

Resolution. This authority will, unless previously revoked or varied at a general

meeting, expire at the next AGM.


89

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Notes:

(i) A member of the Company entitled to attend and vote at this AGM may appoint

not more than two proxies to attend and vote instead of him.

(ii) Where a member appoints two proxies, he shall specify the proportion of his

shareholding to be represented by each proxy in the instrument appointing the

proxies. A proxy need not be a member of the Company.

(iii) If the member is a corporation, the instrument appointing the proxy must be

under seal or the hand of an officer or attorney duly authorised.

(iv) The instrument appointing a proxy must be deposited at the Registered

Office of the Company at 1 Commonwealth Lane #09-23 One Commonwealth

Singapore 149544, not less than 48 hours before the time appointed for holding

this AGM.

This Notice of Annual General Meeting (“Notice”) has been prepared by the

Company and its contents have been reviewed by the Company’s sponsor, SAC

Capital Private Limited (the “Sponsor”), for compliance with the relevant rules of the

Singapore Exchange Securities Trading Limited (the “SGX-ST”). The Sponsor has not

independently verified the contents of this Notice.

This Notice has not been examined or approved by the SGX-ST and the SGX-ST

assumes no responsibility for the contents of this Notice, including the correctness of

any of the statements or opinion made or reports contained in this Notice.

The contact person for the Sponsor is Ms Alicia Kwan (Tel: (65) 6221 5590) at 1

Robinson Road, #21-02 AIA Tower, Singapore 048542.

This Appendix relating to the proposed change of auditors (the “Appendix”) is

circulated to the shareholders (the “Shareholders”) of TEHO International Inc Ltd.

(the “Company” and together with its subsidiaries, the “Group”) together with the

annual report for the financial year ended 30 June 2014 of the Company (the “Annual

Report”). Its purpose is to provide Shareholders with information relating to the

proposed change of auditors from RSM Chio Lim LLP to KPMG LLP (the “Proposed

Change of Auditors”), and to seek Shareholders’ approval for the same at the annual

general meeting of the Company to be convened at Novotel Singapore Clarke Quay,

Mace Room 1, Level 5, 177A River Valley Road, Singapore 179031 on Friday, 31

October 2014 at 11.00 a.m. (the “AGM”). The notice of AGM and the Proxy Form are

enclosed in the Annual Report.

This Appendix has been prepared by the Company and its contents have been

reviewed by the Company’s sponsor, SAC Capital Private Limited (the “Sponsor”),

for compliance with the relevant rules of the Singapore Exchange Securities Trading

Limited (the “SGX-ST”). The Sponsor has not independently verified the contents of

this Appendix.

This Appendix has not been examined or approved by the SGX-ST and the SGX-ST

assumes no responsibility for the contents of this Appendix, including the correctness

of any of the statements or opinion made or reports contained in this Appendix.

The contact person for the Sponsor is Ms Alicia Kwan (Tel: (65) 6221 5590) at 1

Robinson Road, #21-02 AIA Tower, Singapore 048542.

Board of Directors

Mr Lim See Hoe (Executive Chairman and CEO)

Ms Lim Siew Cheng (Executive Director and COO)

Mr Kwah Thiam Hock (Lead Independent Director)

Mr Terrance Tan Kong Hwa (Independent Director)

Ms Joanne Khoo Su Nee (Independent Director)

16 October 2014

Registered Office

1 Commonwealth Lane

#09-23 One Commonwealth

Singapore 149544

Notice of Annual General MeetingAppendix Relating to the

Proposed Change of Auditors

90

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

To: The Shareholders of the Company

Dear Sir/Madam

1. INTRODUCTION

1.1 Reference is made to the notice of AGM as set out on page 85 to 88 of the

Annual Report of the Company dated 16 October 2014 convening the AGM to

be held on 31 October 2014.

1.2 The proposed Ordinary Resolution 7 in the notice of AGM relates to the

Proposed Change of Auditors.

1.3 The purpose of this Appendix is to provide Shareholders with information

pertaining to and the rationale for the Proposed Change of Auditors, and to

seek the relevant Shareholders’ approval in respect of the same at the AGM,

the notice of which is set out in the Annual Report.

2. RATIONALE FOR THE PROPOSED CHANGE OF AUDITORS

RSM Chio Lim LLP (“RSM”) has served as auditors of the Company for seven

consecutive audits since the financial year ended 30 June 2008. The directors

of the Company (the “Board” or “Directors”) are of the view that a change of

auditors would be a good corporate governance practice and would enable the

Company to benefit from fresh perspectives and views of another professional

audit firm and further enhance the value of the audit.

The audit committee of the Company (the “AC”) has reviewed and deliberated

on the proposals received from three audit firms, taking into consideration

factors such as the adequacy of the resources and experience of the audit firm

to be selected, the audit engagement partner to be assigned to the audit, the

firm’s other audit engagements, the size and complexity of the Company and

its subsidiaries, and the number and experience of supervisory and professional

staff to be assigned to the audit. After evaluation, the AC recommended

that KPMG LLP (“KPMG”) be selected for the proposed appointment having

considered the suitability of KPMG to meet the audit requirements of the Group

and the requirements of Rules 712(1) and 712(2) of Section B: Rules of Catalist

of the SGX-ST Listing Manual (“Catalist Rules”).

The audit services to be provided by KPMG would conform to Singapore

Standards on Auditing, which would have a scope comparable to that currently

provided by RSM.

The Directors have taken into account the AC’s recommendation, including

the factors considered in their evaluation, and are satisfied that KPMG will be

able to meet the audit requirements of the Company and that Rules 712(1) and

712(2) of the Catalist Rules have been complied with. As such, the Directors

accepted the AC’s recommendation for the appointment of KPMG in place of

RSM, subject to the approval of the Shareholders at the AGM.

In this regard, the Proposed Change of Auditors has been discussed with RSM

and RSM has given notice to the Directors of their withdrawal of consent to

act as auditors on 15 September 2014, and KPMG has given their consent to

be appointed as auditors on 2 October 2014, subject to the approval of the

Shareholders at the AGM. The withdrawal to act as auditors of RSM and

the appointment of KPMG will take effect upon and subject to obtaining the

approval of the Shareholders at the AGM.

Pursuant to Section 205 of the Companies Act, Cap. 50, a copy of the letter of

nomination from a shareholder of the Company, nominating the appointment of

KPMG as auditors of the Company in place of RSM is found on page 92 of the

Annual Report.

In accordance with the requirements of Rule 712(3) of the Catalist Rules:

(a) The outgoing auditors, RSM, have confirmed by way of a letter dated

1 October 2014 (“Professional Clearance Letter”) that they are not

aware of any professional reasons why the new auditors, KPMG, should

not accept appointment as auditors of the Company;

(b) The Company confirms that there were no disagreements with the

outgoing auditors, RSM, on accounting treatments within the last 12

months;

(c) The Company confirms that, other than as set out in this Appendix, it is

not aware of any circumstances connected with the Proposed Change of

Auditors that should be brought to the attention of Shareholders;

Appendix Relating to the Proposed Change of Auditors

91

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

(d) The specific reason for the change of auditors is that RSM has served

as auditors of the Company for seven consecutive audits since the

financial year ended 30 June 2008. The Directors are of the view that

a change of auditors would be a good corporate governance practice

and would enable the Company to benefit from fresh perspectives and

views of another professional audit firm and further enhance the value

of the audit. The Proposed Change of Auditors is neither due to the

dismissal of RSM nor RSM declining to continue to serve as auditors of

the Company; and

(e) The Company confirms that it is in compliance with Rules 712 and 715

of the Catalist Rules in relation to the appointment of KPMG as auditors

of the Company.

The Directors wish to express their appreciation for the past services rendered

by RSM.

3. REQUIREMENT PURSUANT TO RULE 715 OF THE CATALIST RULES

Subject to Shareholders’ approval of the Proposed Change of Auditors, KPMG

will become the auditors of the Company in place of RSM. KPMG will also be

the auditors for all Singapore-incorporated subsidiaries of the Company. The

following foreign-incorporated subsidiaries of the Company will continue to be

audited by suitable auditing firms as below:

Name of subsidiaries Country of incorporation Auditing firm

TEHO International

(USA), LLC

United States of America Smith Leonard PLLC

TEHO (Shanghai) Co.,

Ltd.

People’s Republic of China Ruihua Certified Public

Accountants

TEHO EuROPE B.V. The Netherlands INZICHT Accountants &

Belastingadviseurs B.V.

As at the date of this Appendix, the Company does not have any significant

associated companies.

Accordingly, Rules 712 and 715 of the Catalist Rules are complied with.

4. INFORMATION ON KPMG AND THE ENGAGEMENT PARTNER

KPMG in Singapore is part of a global network of professional services firms

providing audit, tax and advisory services. The independent member firms

of the KPMG network operate in 156 countries and have more than 155,000

professionals worldwide. Each KPMG firm is a legally distinct and separate

entity and describes itself as such. KPMG in Singapore is registered with the

Accounting and Corporate Regulatory Authority.

Mr. Lau Kam Yuen, a practising member of the Institute of Singapore Chartered

Accountants, will be the audit engagement partner assigned to the audit of the

Group. He is a partner with KPMG in Singapore and has more than 20 years of

experience in providing audit and advisory services to public listed companies,

subsidiaries of large multinational corporations and private companies.

Mr. Lau Kam Yuen will be assisted by Mr. Lim Siong Yew in the audit of the

Company. Mr. Lim, a non-practising member of the Institute of Singapore

Chartered Accountants, will be the audit engagement manager. He is a senior

manager with KPMG in Singapore with over 10 years of audit experience. His

professional experience includes providing audit and assurance services to

public companies listed on the SGX-ST, subsidiaries of multinational corporations

listed overseas and emerging Singapore companies. These entities are in various

industries – hotels, consumer products, shipping and construction.

5. APPROVAL AND RESOLUTION

Shareholders’ approval for the Proposed Change of Auditors will be sought

at the AGM. The resolution relating to the Proposed Change of Auditors is

contained in the notice of AGM as Ordinary Resolution 7.

6. AC’S RECOMMENDATION

The AC has reviewed the Proposed Change of Auditors and recommended the

change of auditors to KPMG, having satisfied itself of the suitability of KPMG to

meet the audit requirements of the Group and ensuring compliance with Rules

712 and 715 of the Catalist Rules.


92

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

7. DIRECTORS’ RECOMMENDATION

Having considered the rationale and benefit of the Proposed Change of

Auditors and the AC’s recommendation, the Directors are of the opinion that

the appointment of KPMG as auditors of the Company is in the interests of

the Company. Accordingly, the Directors recommend that Shareholders vote in

favour of Ordinary Resolution 7 relating to the Proposed Change of Auditors as

set out in the notice of AGM.

8. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept full responsibility for the

accuracy of the information given in this Appendix and confirm after making

all reasonable enquiries that, to the best of their knowledge and belief, this

Appendix constitutes full and true disclosure of all material facts about the

Proposed Change of Auditors, the Company and its subsidiaries, and the

Directors are not aware of any facts the omission of which would make any

statement in this Appendix misleading. Where information in this Appendix

has been extracted from published or otherwise publicly available sources or

obtained from a named source, the sole responsibility of the Directors has been

to ensure that such information has been accurately and correctly extracted

from those sources and/or reproduced in this Appendix in its proper form and

context.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the registered

office of the Company at 1 Commonwealth Lane #09-23 One Commonwealth

Singapore 149544 during normal business hours from the date of this Appendix

up to and including the date of the AGM:

(a) the Memorandum and Articles of Association of the Company;

(b) the Annual Report;

(c) the letter of nomination from Mr Lim See Hoe dated 10 September 2014;

(d) the notice of withdrawal of consent to act as auditors from RSM dated

15 September 2014;

(e) the letter of consent to act as auditors of the Company from KPMG

dated 2 October 2014; and

(f) the Professional Clearance Letter.

Yours faithfully

For and on behalf of the Board of Directors of

TEHO International Inc Ltd.

Lim See Hoe

Director

16 October 2014


93

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14

Letter of Nomination from Shareholder

94

TE

HO

INT

ER

NA

TIO

NA

L IN

C L

TD

An

nu

al

R

ep

or

t

20

14 This page has been intentionally left blank.

TEHO INTERNATIONAL INC LTD.(Company Registration Number 200811433K)

(Incorporated in the Republic of Singapore)

PROXY FORM

ANNUAL GENERAL MEETING

*I/We, (Name) of

(Address)

being a *member/members of TEHO INTERNATIONAL INC LTD. (the “Company”)

hereby appoint:

Name AddressNRIC/Passport

Number

Proportion of

Shareholdings (%)

and/or (delete as appropriate)

Name AddressNRIC/Passport

Number

Proportion of

Shareholdings (%)

or failing *him/her, the Chairman of the Annual General Meeting (“AGM”) of the Company

as *my/our *proxy/proxies to attend and to vote for *me/us on *my/our behalf and, if

necessary to demand a poll, at the AGM of the Company to be held at Novotel

Singapore Clarke Quay, Mace Room 1, Level 5, 177A River Valley Road, Singapore

179301 on Friday, 31 October 2014 at 11.00 a.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to

be cast for or against the Resolutions as set out in the Notice of AGM. In the absence

of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as

he/they will on any other matter arising at the AGM.)

No. Resolutions relating to: For Against

Ordinary Business:

1. Adoption of the Audited Accounts for the financial year

ended 30 June 2014 together with the Directors’ Report

and Independent Auditors’ Report thereon

2. Payment of a first and final one-tier tax exempt dividend of

0.8 cent per ordinary share for the financial year ended 30

June 2014

3. Approval of Directors’ fees amounting to S$168,400 for the

financial year ended 30 June 2014

4. Approval of Directors’ fees amounting to S$180,000 for the

financial year ending 30 June 2015, to be paid quarterly in

arrears

5. Re-election of Mr Lim See Hoe as Director

6. Re-election of Ms Joanne Khoo Su Nee as Director

7. Appointment of KPMG LLP as auditors of the Company

in place of the retiring auditors, RSM Chio Lim LLP and

authority to Directors to fix their remuneration

Special Business:

8. Ordinary Resolution: Authority to Directors to allot and

issue shares

* Delete accordingly

Dated this day of 2014 Total Number of

Shares held

Signature(s) of Shareholder(s)/or

Common Seal of Corporate Shareholder

IMPORTANT: PLEASE READ NOTES OVERLEAF

Notes:

1. Please insert the total number of shares held by you. If you have shares entered

against your name in the Depository Register (as defined in Section 130A of

the Companies Act, Cap. 50), you should insert that number of shares. If you

have shares registered in your name in the Register of Members, you should

insert that number of shares. If you have shares entered against your name

in the Depository Register and the Register of Members, you should insert

the aggregate number of shares entered against your name in the Depository

Register and registered in your name in the Register of Members. If no number

is inserted, the instrument appointing a proxy or proxies shall be deemed to

relate to all the shares held by you.

2. A member of the Company entitled to attend and vote at an AGM of the

Company is entitled to appoint not more than two proxies to attend and vote on

his behalf. A proxy need not be a member of the Company.

3. The instrument appointing a proxy or proxies must be deposited at

the Company’s registered office at 1 Commonwealth Lane #09-23 One

Commonwealth Singapore 149544, not less than 48 hours before the time

appointed for the AGM.

4. Where a member appoints more than one proxy, he shall specify the proportion

of his shareholding to be represented by each proxy. If no percentage is

specified, the first named proxy shall be deemed to represent 100% of the

shareholding and the second named proxy shall be deemed to be an alternate

to the first named.

5. The instrument appointing a proxy or proxies must be under the hand of the

appointor or his attorney duly authorised in writing. Where the instrument

appointing a proxy or proxies is executed by a corporation, it must be executed

either under its Common Seal or under the hand of its attorney or a duly

authorised officer.

6. Where an instrument appointing a proxy is signed on behalf of the appointor by

an attorney, the letter or power of attorney or a duly certified copy thereof must

(failing previous registration with the Company) be lodged with the instrument of

proxy, failing which the instrument may be treated as invalid.

7. A corporation which is a member may authorise by resolution of its directors or

other governing body such person as it thinks fit to act as its representative at

the AGM, in accordance with Section 179 of the Companies Act, Cap. 50.

8. The submission of an instrument or form appointing a proxy by a member

does not preclude him from attending and voting in person at the AGM if he so

wishes.

9. The Company shall be entitled to reject the instrument appointing a proxy or

proxies if it is incomplete, improperly completed, illegible or where the true

intentions of the appointor are not ascertainable from the instructions of the

appointor specified in the instrument appointing a proxy or proxies. In addition,

in the case of a member whose shares are entered against his name in the

Depository Register, the Company may reject any instrument of proxy lodged if

such member, being the appointor, is not shown to have shares entered against

his name in the Depository Register 48 hours before the time appointed for

holding the AGM , as certified by the Depository to the Company.

TEHO INTERNATIONAL INC LTD. 1 Commonwealth Lane #09-23 One Commonwealth, Singapore 149544

TE

HO

INT

ER

NAT

ION

AL IN

C LT

D. I A

NN

UA

L RE

PO

RT 2014

forging ahead - investor.teho.com.sg · ecg and its wholly-owned subsidiaries are principally...

Documents