sin soon huat limited - morningstar, inc

Sin Soon Huat Limited

Annual Report

2003

CONTENTS1 Vision and Mission

3 Chairman’s Statement

4 Corporate Information

5 Corporate Governance

12 Report of the Directors

23 Statement by Directors

24 Auditors’ Report

25 Balance Sheets

26 Income Statements

27 Statements of Changes in Equity

29 Consolidated Statement of Cash Flows

31 Notes to the Accounts

57 Statistics of Shareholdings

59 Whitewash Resolution

60 Notice of Annual General Meeting

Proxy Form

1Sin Soon Huat Limited Annual Report 2003

To be a premier global corporation thatwill delight our customers with ourquality products and excellent service.

OUR VISION

OUR MISSIONTo be a one-stop totalsolution company that willprovide quality productsand excellent service.

To Our CustomerWe value our customers and will strive toprovide the best value products and service.

To Our EmployeesWe care for our people by creating a conduciveworking environment, helping them to developto the fullest potential, and recognising themfor their contributions.

To Our SuppliersWe will strive to enhance mutual benefitsthrough close co-operation and teamwork.

OUR VALUES

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VISION&MISSION


Review of Operation

On behalf of the Board of Directors, I am pleased to report the performance of the Group for the financial yearended 31 May 2003.

The Group managed to achieve a net profit after tax of S$1.8m as compared to a loss of S$8.2m despite a reductionin turnover of S$34.75m from S$92.32m to S$57.57m.

The SARS outbreak, Iraq war and the sporadic terrorist attacks culminated in business instability in the region wherethe Group has substantial operations. As a result, turnover in Singapore, Indonesia and Malaysia had reduced by 39%compared to the previous year. The Group managed to maintain its turnover at substantially the same level in theChina market. On the brighter side, the Group had improved its gross profit from 19% to 22% on this reducedturnover.

Operating expenses had decreased substantially from S$16.63m to S$11.83m. Apart from the reduced turnover-related expenses, other cost reduction was achieved through continuing cost efficiency measures undertaken. Financecosts had also decreased by almost 50% due to better cashflow resulting from reduction in stock, accounts receivablesand proceeds from the Rights Issue.

Net profit after tax and minority interests for the year was S$1.8m as compared to the previous year of S$588,000(before charging the exceptional items).

In addition, the stock and accounts receivables were reduced by S$8.16m and S$7.22m respectively. These measurestaken above resulted in the reduction of total bank borrowings by S$21.76m from S$41.21m to S$19.45m. The financialposition of the Group in respect of the cashflow was thus improved considerably.

Dividend

The directors do not recommend any dividend to be paid for the financial year under review.

Share Capital

During the financial year, the Company raised additional capital by issuing 150,954,500 new ordinary shares of S$0.01each. The exercise was done on a basis of two (2) Rights shares with one (1) free warrant for every four (4) existingshares held in the capital of the Company. The net proceeds of S$5.56m was received during the year. In line with theRights Issue, there was a reduction in the par value of each ordinary share in the capital from S$0.10 to S$0.01.

Share Option

During the year under review, 6,500,000 ordinary shares were granted under the Sin Soon Huat Share Option Scheme(2002 : 885,000 ordinary shares were granted under the SSH Executives’ Share Option Scheme). These shares were notdue for exercise as at 31 May 2003.

Prospects

The constant threat of terrorism will continue to affect business confidence and major project investments in theregion. Given the challenging environment, the directors will continue to adopt a prudent approach in managingthe core business to strive for profitability.

Conclusion

On behalf of the Board of Directors, I would like to thank our suppliers, principals, shareholders and customers fortheir support and confidence in our Group. Most of all, I want to thank our staff for their valued contribution andcommitment.

Lee Khoon ChoyChairman

CHAIRMAN’S STATEMENT


CORPORATE INFORMATION

Board of Directors

Lee Khoon Choy B.B.U., O.D.S.M., D.U.B.C. (Chairman)Mdm Tan Bee Eng (Vice-Chairman)Lim Geok Seng (Managing Director)Lim Teck SengLim Teck GuanHeng Thye YongTan Choo HockChua Wui LikYeh Jin Sien @ Yap Jin HienMs Frances Wong Lai Yong

Company Secretary

Au Yeong Kok Chee, C.P.A.

Registered Office

19 Jurong Port RoadSingapore 619093Tel: 6265 6088Fax: 6261 2504

Share Registrar

M&C Services Private Limited138 Robinson Road #17-00The Corporate OfficeSingapore 068906

Auditors

Lo Hock Ling & Co.Certified Public Accountants101A Upper Cross Street #11-22People’s Park CentreSingapore 058358Partner-in-charge : Lo Wei ShihDate of Appointment : 31 October 2002

Audit Committee

Lee Khoon Choy (Chairman)Ms Frances Wong Lai YongYeh Jin Sien @ Yap Jin Hien

Nominating Committee

Yeh Jin Sien @ Yap Jin Hien (Chairman)Lim Teck GuanMs Frances Wong Lai Yong

Remuneration Committee

Ms Frances Wong Lai Yong (Chairman)Yeh Jin Sien @ Yap Jin HienLim Teck Guan

Principal Bankers

The Development Bank of Singapore LimitedUnited Overseas Bank Limited


CORPORATE GOVERNANCE

In April 2001, the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”) was amended torequire a listed company which holds its Annual General Meeting on or after 1 January 2003 to describe its corporategovernance practices with reference to the Code of Corporate Governance (“the Code”) in its Annual Report. SinSoon Huat Limited (“the Company” or “the Group”) is committed to and will continue to uphold high standards ofcorporate governance. This report outlines the main corporate governance practices of Sin Soon Huat Limitedduring the year.

BOARD OF DIRECTORS

Apart from its fiduciary duties under the law, the primary functions of the Board of Directors (“the Board”) include:

1. charting the overall strategy, growth and direction of the Group;2. overseeing and monitoring the performance of the management team;3. ensuring there are in place appropriate and adequate systems of internal controls and risk management policies;4. approving the annual budget, major capital expenditures and funding proposals, and investment and divestment

proposals; and5. assuming responsibilities for good corporate governance practices.

The Board approves those matters which, under the Companies Act and the SGX-ST Listing Manual, require Boardapproval.

The Board scheduled four meetings during the financial year. Ad-hoc meetings are convened whenever circumstancesrequire. Additionally, the Board delegates certain functions to the Audit Committee, Nominating Committee,Remuneration Committee and Employees Share Option Committee. For the financial year under review, theattendance of directors at meetings of the Board and Board Committees is as follows:

Employees ShareBoard Meetings Audit Committee Option Committee

No. of No. of No. of No. of No. of No. ofName Meetings Meetings Meetings Meetings Meetings Meetings

Held Attended Held Attended Held AttendedLee Khoon Choy 4 4 3 3 - -

Mdm Tan Bee Eng 4 1 - - - -

Lim Geok Seng 4 4 - - 1 1

Lim Teck Seng 4 1 - - - -

Lim Teck Guan 4 2 - - 1 1

Heng Thye Yong* 4 4 3 2 - -

Tan Choo Hock 4 4 - - - -

Chua Wui Lik 4 4 - - - -

Yeh Jin Sien @ Yap Jin Hien 4 4 3 3 - -

Ms Frances Wong Lai Yong** 4 1 3 1 - -

* resigned from Audit Committee on 27 November 2002.** appointed as director on 31 October 2002 and a member of the Audit Committee on 27 November 2002.Note: The Nominating Committee and the Remuneration Committee were formed in March 2003 and no meeting

was held during the financial year. However, since the end of the financial year to the date of this report,both Committees have met once.



BOARD COMPOSITION AND BALANCE

The Board of Directors comprises ten members, of whom three are independent non-executive directors. TheBoard reviews the independence of its directors annually based on the criterion of independence as defined in theCode.

The Board is of the opinion that the current Board size of ten directors is appropriate and effective, taking intoconsideration the nature of the Group’s operations. Collectively, the members on the Board have varied expertiseand knowledge in accounting, finance, income tax, law, business strategies and administration.

PROFILE OF DIRECTORS

Lee Khoon ChoyProfessor Lee joined the Board of Sin Soon Huat Limited in 1995 and was appointed Chairman of the Company sincethen. He was appointed as chairman of the Audit Committee. Amongst other appointments, he is also independentdirector of Koh Brothers Group Limited, Metro Holdings Limited and L & M Group Investments Limited.

From 1959 to 1984, Professor Lee held various key appointments in the Singapore Government. He held the positionsof Parliamentary Secretary to Ministry of Culture and Ministry of Education, Political Secretary to the Prime Ministerand was elected Member of Parliament for Hong Lim Constituency for years 1959 to 1968. From 1968 to 1970, he wasthe Minister of State for the Prime Minister’s Office. For years 1970 to 1978, he was the Senior Minister of State forForeign Affairs. He was also the Senior Minister for the Prime Minister’s Office from 1978 to 1984 and deputy chairmanfor the People’s Association. For the years 1984 to 1988, Professor Lee was an Ambassador Plenipotentiary to Japanand the Republic of Korea.

Professor Lee was awarded the Meritorious Service Star (Bintang Bakti Utama, B.B.U.) by President Suharto of Indonesiain 1974. In 1986, he received the Scholarly Achievement Award given by the Japan Institute of Oriental Philosophy.In 1988, Professor Lee was further awarded the Meritorious Diplomatic Service Star (O.D.M.S.) by President RohTae-Woo of Korea. In recognition of his contribution towards the establishment of Singapore, Professor Lee wasawarded the Distinguished Service Order (Darjah Utama Bakti Cemerlang, D.U.B.C.) by the Singapore Government in1990. In 1997, he received an Honorary Senior Professorship by the Chinese National Academy of Social Sciences ofthe People’s Republic of China.

Tan Bee EngMdm Tan was the co-founder of Chop Sin Soon Huat in 1942. She set up Sin Soon Huat (Pte) Limited in 1976 when thegrowth in the business necessitated the incorporation of a private limited concern. She was instrumental in expandingthe industrial hardware business to include the supply of welding products in the 1970s and helped the Companyattain an important milestone when it acquired the distributorship for Lincoln products. Mdm Tan is currently theVice-Chairman of Sin Soon Huat Limited.

Lim Geok SengMr Lim has been the Managing Director of the Company since its incorporation in 1976. He has more than forty yearsexperience in the hardware industry and has been the main driving force behind the growth and business expansionof the Group. He was also instrumental in building up the business to its present size and strength. He is also amember of the Sin Soon Huat Share Option Committee.


Lim Teck SengMr Lim has been an executive director of the Company since 1978. He is currently responsible for the development ofnew markets and products for the regional expansion plans. He has been in the industrial hardware business for overtwenty years. He is a member of the Sin Soon Huat Share Option Committee.

Lim Teck GuanMr Lim joined Sin Soon Huat (Pte) Limited in 1980 and was appointed as executive director of the Company in 1981.He spearheaded the Group’s expansion into the Asia Pacific region and also oversees the operation of the Group’swarehouse and logistic. He is a member of the Sin Soon Huat Share Option Committee, Nominating Committee andRemuneration Committee. Mr Lim earned the title “Valve Expert” from The Stockholm Valve University; a member ofthe “American Welding Society”; and holds a Diploma in “Automated Welding Positioning Equipment”.

Heng Thye YongMr Heng was appointed as executive director of the Company in 1994 and he is currently the Head of WeldingDivision of Sin Soon Huat Limited. He is an associate member of the Welding Institute in United Kingdom, a memberof the American Welding Society and a member of the Singapore Welding Society. He holds a Diploma in BusinessAdministration from the National Productivity Board, a Certificate in Education (Technical) from the Teachers’ TrainingCollege and an Advanced Craft Certificate from City and Guilds (London). He has been associated with the weldingindustry since 1976.

Tan Choo HockMr Tan was appointed as executive director of the Company in 1994 and is currently the Head of Industrial MaterialDivision of Sin Soon Huat Limited. Mr Tan is a member of the Institute of Certified Public Accountants of Singaporeand a fellow member of the Association of Chartered Certified Accountants – UK.

Chua Wui LikMr Chua was appointed as executive director of the Company in October 2001 and is currently the Head of Financeand MIS Division. He joined the Company in 1996 as Financial Controller. Mr Chua is a fellow member of the Associationof Chartered Certified Accountants – UK and had obtained an MBA from the Manchester Business School – UK. He isa member of the Institute of Certified Public Accountants of Singapore.

Yeh Jin Sien @ Yap Jin Hien Mr Yeh was appointed as an independent director of the Company in 1995. He is also the Chairman of NominatingCommittee; member of the Audit Committee and the Remuneration Committee in Sin Soon Huat Limited. Mr Yeh isa Barrister-at-Law from Middle Temple and was called to the English Bar in 1976 and the Singapore Bar in 1977.Mr Yeh is a practising lawyer and also a legal adviser to several clan associations and commercial institutions.

Frances Wong Lai YongMs Wong was appointed as independent director of the Company in October 2002 and holds the position ofChairperson of the Remuneration Committee, member of the Audit Committee and the Nominating Committee inSin Soon Huat Limited. She is practising in areas of tax consulting and compliance services, corporate secretarialservices and management consultancy. Apart from her own practice, she is a Council Member of the Institute ofCertified Public Accountants of Singapore since 1986 and a committee member of the Taxation & Levies Committeeand the Membership Committee of the Institute.



CHAIRMAN AND MANAGING DIRECTOR

Mr Lee Khoon Choy, an independent non-executive director, is the Chairman of the Board, while Mr Lim Geok Sengis the Managing Director (“MD”). The Chairman’s main responsibilities are to schedule meetings, prepare themeeting agenda in consultation with the MD, and work with the Board to ensure compliance with the Company’sguidelines on corporate governance. The MD holds executive responsibility for the day-to-day operations of theGroup. There is clear division of responsibilities between the Chairman and the MD. They each perform separatefunctions. Authority and accountability are not compromised.

The Chairman and the MD are not related to each other.

ACCESS TO INFORMATION

The Board receives complete, adequate and timely information prior to Board meetings and on an on-going basis.Budgets, forecasts and monthly internal financial statements are submitted to the Board on a regular basis forinformation. The directors have separate and independent access to the management team and the CompanySecretary at all times.

To fulfill their duties properly, the directors may, either individually or collectively, request for independentprofessional advice as and when the need arises at the expense of the Company.

BOARD COMMITTEES

In line with the recommendations of the Code, the Board has established the Nominating Committee and theRemuneration Committee to oversee and review the processes for the appointment and the remuneration ofdirectors. The Board also has in place the Audit Committee to serve as an independent and objective element ofthe Board in the review of operational and internal controls and financial information presented by managementfor distribution to shareholders and general public.

(A) NOMINATING COMMITTEE

The Nominating Committee, formed on 18 March 2003, comprises the following members:

Mr Yeh Jin Sien @ Yap Jin Hien - ChairmanMr Lim Teck GuanMs Frances Wong Lai Yong

Mr Yeh Jin Sien @ Yap Jin Hien and Ms Frances Wong Lai Yong are independent non-executive directors.

The responsibilities of the Nominating Committee, based on written terms of reference, are as follows:1. recommend to the Board on the appointment and re-appointment of directors to the Board;2. review size and composition of the Board;3. evaluate the effectiveness of the Board as a whole and the contribution by each individual director to the

effectiveness of the Board; and4. determine the independence of directors, at least annually.

As part of good corporate governance, the Articles of the Company provide that one-third of the directors aresubject to retirement by rotation at least once a year.




(B) REMUNERATION COMMITTEE

The Remuneration Committee, formed on 18 March 2003, comprises the following members:

Ms Frances Wong Lai Yong - ChairmanMr Yeh Jin Sien @ Yap Jin HienMr Lim Teck Guan

Ms Frances Wong Lai Yong and Mr Yeh Jin Sien @ Yap Jin Hien, who are knowledgeable with executivecompensation, are independent non-executive directors. The committee has access to expert advice as andwhen the need arises.

The functions of the Remuneration Committee are as follows:1. recommend to the Board a framework and review procedure for fixing the remuneration packages of the

executive directors and key executives of the Company; and2. review the appropriateness of the remuneration packages in relation to the level of contribution and

performance of each executive.

The remuneration policy adopted by the Group comprises a fixed component and a performance-related variablecomponent. The variable component depends on the performance of each company within the Group.

All executive directors have employment contracts.

Disclosure of remuneration

(a) The remuneration of the directors for the financial year ended 31 May 2003 are as follows:Other

Fees(1) Salary Bonus Benefits (2) TotalName % % % % %

Below $250,000

Lee Khoon Choy 100 - - - 100

Mdm Tan Bee Eng - 71 3 26 100

Lim Geok Seng - 80 9 11 100

Lim Teck Seng - 73 3 24 100

Lim Teck Guan - 80 9 11 100

Heng Thye Yong - 82 8 10 100

Tan Choo Hock - 81 9 10 100

Chua Wui Lik - 81 9 10 100

Yeh Jin Sien @ Yap Jin Hien 100 - - - 100

Ms Frances Wong Lai Yong 100 - - - 100

Notes:(1) Subject to shareholders’ approval as a lump sum at the Annual General Meeting to be held on 31

October 2003.(2) Exclude share options which have been disclosed in the Report of the Directors.



(b) Remuneration of top five executives who are not directors

The top five executives who are not directors of the Company fall below the remuneration band of $250,000.

(c) Remuneration of immediate family members of directors

There were no employees who are immediate family members of a director or the Managing Directorwhose remuneration exceeds $150,000 during the financial year ended 31 May 2003.

Since 1997, the Company has in place an executives share options scheme to give recognition to executivesand directors of the Company who have contributed to the success and development of the Company andthe Group. Details of the share options schemes are detailed in paragraph 18 of the Report of the Directors.

(C) AUDIT COMMITTEE

The Audit Committee comprises three members, all of whom are independent non-executive directors. TheChairman, Mr Lee Khoon Choy has extensive management experience. Ms Frances Wong Lai Yong is a qualifiedaccountant and a council member of the Institute of Certified Public Accountants of Singapore. Mr Yeh Jin Sien@ Yap Jin Hien, who is an advocate and solicitor, is a practising lawyer.

The Audit Committee performs the following main functions:1. review the financial statements of the Company and of the Group before they are submitted to the Board

for approval;2. review the audit plans of the external auditors;3. review management letters from the external auditors and response from the management;4. nominate external auditors for re-appointment;5. review the results of internal audit findings; and6. review interested person transactions.

The Audit Committee has explicit authority to investigate any matter within its terms of reference, full access toand co-operation by management and full discretion to invite any personnel to attend its meetings. The AuditCommittee also reviews the independence of the external auditors annually, before recommending them forre-appointment.

INTERNAL CONTROLS

The Group’s internal control systems are designed to ensure the reliability of financial information and to safeguardthe assets of the Group. For the financial year under review, the Audit Committee and the Board are satisfied thatthe internal controls are adequate.

INTERNAL AUDIT

The internal audit function of the Company is performed by internal audit personnel who is responsible for reviewingthe effectiveness of the Group’s operational and financial controls, and reports to the Audit Committee.


COMMUNICATION WITH SHAREHOLDERS

Besides the release of half yearly financial results, the Company ensures that timely and adequate disclosure ofinformation on material matters are made known through the Masnet, circulars to shareholders and in its annualreports.

There are separate resolutions at general meetings on each distinct issue.

At general meetings, shareholders of the Company are given the opportunity to pose questions to the directorsand management relating to the Company’s business or performance. The chairpersons of the Audit, Nominatingand Remuneration Committees, as well as the external auditors, are present to assist the directors in addressingany relevant queries raised by shareholders.

The Company’s Articles also allow a shareholder to appoint not more than two proxies to attend and vote on his/her behalf at general meetings.

SECURITIES TRANSACTIONS

The Company has issued a policy on share dealings. Directors and officers who have access to price-sensitiveinformation are advised from time to time not to deal in the Company’s shares when they are in possession ofunpublished price-sensitive information of the Group, and in particular, during the periods commencing one monthbefore the announcement of the Company’s annual and half-year results and ending on the date of announcementof the relevant results.



REPORT OF THE DIRECTORS

The directors present their report to the members together with the audited financial statements of the Company andof the Group for the financial year ended 31 May 2003.

(1) DIRECTORS

The directors holding office at the date of this report are:

Lee Khoon Choy (Chairman)Mdm Tan Bee Eng (Vice-Chairman)Lim Geok SengLim Teck SengLim Teck GuanHeng Thye YongTan Choo HockChua Wui LikYeh Jin Sien @ Yap Jin HienMs Frances Wong Lai Yong

(2) PRINCIPAL ACTIVITIES

The principal activities of the Company consist of trading and dealing in industrial materials, general hardware,welding and cutting equipment and related products, and the carrying out of assembly operations.

The principal activities of the subsidiaries are set out in note 29 of the financial statements.

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

(3) ACQUISITION AND DISPOSAL OF SUBSIDIARIES

The Company disposed of the following subsidiaries during the financial year:Attributable net

tangibleEffective assets/(liabilities)

Name of subsidiaries Consideration interests disposed at date of disposal

$ % $Sin Soon Huat Welding Products Pte Ltd 1,600 100 3,981Country Springs Pte Ltd 350 100 (18,578)

No subsidiaries were acquired during the financial year.

(4) RESULTS FOR THE FINANCIAL YEARThe Group The Company

$’000 $’000

Profit after taxation 1,475 2,904Minority interests 324 -

Net profit for the year 1,799 2,904



(5) TRANSFERS TO OR FROM RESERVES AND PROVISIONS

There were no other material transfers to or from reserves or provisions during the financial year except asdisclosed in the financial statements.

(6) ISSUE OF SHARES AND DEBENTURES

(a) Authorised Share Capital

With the sanction of the Court on 6 November 2002, the par value of the authorised and issued sharecapital of the Company was reduced from $0.10 to $0.01. As a result, the authorised share capital of$40,000,000 comprising 400,000,000 ordinary shares of $0.10 each was reduced to $4,000,000 comprising400,000,000 ordinary shares of $0.01 each. The authorised share capital was subsequently restored to$40,000,000 by the creation of an additional 3,600,000,000 ordinary shares of $0.01 each.

(b) Share Capital of the Company

The movements in the issued share capital of the Company during the financial year were as follows:

Number of Issued andOrdinary Shares Paid-Up Capital

$Issued share capital at the beginning

of the financial year 301,909,000 30,190,900

Capital reduction by reducing the par valueof each share from $0.10 to $0.01 - (27,171,810)

Issue of ordinary shares of $0.01 each at a premiumof $0.03 per share following the close of the rightsissue on 19 December 2002 150,954,500 1,509,545

Issue of ordinary shares of $0.01 eachupon the exercise of warrants 2007 719,987 7,200

Issued share capital at the end of the financial year 453,583,487 4,535,835

(c) Warrants

Pursuant to the Abridged Prospectus dated 29 November 2002, the Company issued 150,954,500 rightsshares of $0.01 each for cash with 75,477,250 detachable warrants, on the basis of 2 rights shares with 1free warrant for every 4 existing shares held in the capital of the Company, at the close of the Rights Issueon 19 December 2002. Each warrant gives the registered holder the right to subscribe for one new ordinaryshare of $0.01 each in the Company at an exercise price of $0.01 per share. The exercise period of thewarrants expires on 29 December 2007.

The number of outstanding warrants of the Company at 31 May 2003 was 74,757,263.



(d) Shares Issued By Subsidiary

During the financial year, the subsidiary company, Surya Sarana Hidup Pte Ltd, issued 998,400 ordinaryshares of $1 each at par, fully paid for cash for the purpose of providing additional working capital.

Except as disclosed above, no other shares or debentures were issued by any other corporation in theGroup during the financial year.

(7) ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

Neither during nor at the end of the financial year was the Company a party to any arrangement whose objectwas to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, ordebentures of, the Company or any other body corporate other than as disclosed in paragraph 18 of this report.

(8) DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

(a) The directors holding office at the end of the financial year and their interests in the share capital of theCompany and related corporations as recorded in the register of directors’ shareholdings were as follows:

SIN SOON HUAT LIMITEDShareholdings in

Shareholdings registered which Directors arein the name of Directors deemed to have interests

As at As at01-06-2002/ 01-06-2002/

Date of As at Date of As atAppointment 31-05-2003 Appointment 31-05-2003

Shares of Shares of Shares of Shares of$0.10 each $0.01 each** $0.10 each $0.01 each**

Lee Khoon Choy - - - -Mdm Tan Bee Eng 6,393,500 60,529,375 66,515,000 -Lim Geok Seng 6,040,500 60,389,853 66,515,000 -Lim Teck Seng 540,500 11,077,425 69,474,000 4,438,500Lim Teck Guan 3,040,500 55,889,852 66,515,000 -Heng Thye Yong 975,000 975,000 - -Tan Choo Hock *975,000 *975,000 - -Chua Wui Lik - - - -Yeh Jin Sien @ Yap Jin Hien - - - -Ms Frances Wong Lai Yong - - - -(Appointed on 31-10-2002)

* Shares held under nominees



DeemedInterests held interests of

in the name of Directors Directors

As at As at As at As at01-06-2002 31-05-2003 01-06-2002 31-05-2003

Options to subscribe for ordinary shares of $0.01 each (As at 01-06-2002: $0.10)

Under the SSH Executives’ Share Option Scheme

Heng Thye Yong 220,000 205,504# - -Tan Choo Hock 220,000 205,504# - -Chua Wui Lik 123,000 133,036# - -

Under the Sin Soon Huat Share Option Scheme

Lee Khoon Choy - 100,000 - -Heng Thye Yong - 351,000 - -Tan Choo Hock - 351,000 - -Chua Wui Lik - 351,000 - -Yeh Jin Sien @ Yap Jin Hien - 100,000 - -Ms Frances Wong Lai Yong - 100,000 - -

Warrants to subscribe for ordinary shares of $0.01 each

Mdm Tan Bee Eng - 10,921,562 - -Lim Geok Seng - 23,752,455 - -Lim Teck Seng - 1,846,237 - 739,750Lim Teck Guan - 23,002,454 - -

** As a result of the capital reduction exercise effected on 13 November 2002, the par value of eachshare was reduced from $0.10 to $0.01.

# Following the close of rights issue on 19 December 2002, adjustments were made to the number ofoutstanding options.



Shareholdings inShareholdings registered which Directors arein the name of Directors deemed to have interests

As at As at As at As at01-06-2002 31-05-2003 01-06-2002 31-05-2003

SSH e-Ventures Pte LtdOrdinary shares of $1 eachMdm Tan Bee Eng 250,000 125,000 1,640,000 820,000Lim Geok Seng 260,000 130,000 1,640,000 820,000Lim Teck Seng 100,000 50,000 1,640,000 820,000Lim Teck Guan 510,000 255,000 1,640,000 820,000Heng Thye Yong 10,000 5,000 - -Tan Choo Hock 10,000 5,000 - -

AMclick Holdings Pte LtdOrdinary shares of $0.05 eachLim Teck Guan 999,020 999,020 12,602,980 12,602,980Tan Choo Hock **20 **20 - -

** These shares are held in trust for SSH e-Ventures Pte Ltd.

(b) In addition to the directors’ interests disclosed above, by virtue of Section 7 of the Companies Act, Cap. 50,Mdm Tan Bee Eng, Messrs Lim Geok Seng, Lim Teck Seng and Lim Teck Guan are deemed to have interestsin the shares held by the Company in all its subsidiaries as at the beginning and at the end of the financialyear.

(c) Except as disclosed above, none of the other directors have any interest or are deemed to have anyinterest in the shares held by the Company in its subsidiaries as at the beginning and at the end of thefinancial year.

(d) There was no change in any of the aforementioned interests between the end of the financial year and 21June 2003.

(9) DIVIDENDS

No dividend has been paid since the end of the previous financial year.

The directors do not recommend the payment of a dividend for the year under review.

(10) BAD AND DOUBTFUL DEBTS

(a) Before the financial statements of the Company were made out, the directors took reasonable steps toascertain that action had been taken in relation to the writing off of bad debts and the making of provisionfor doubtful debts of the Company and had satisfied themselves that all known bad debts of the Companyhad been written off and that adequate provision had been made for doubtful debts.

(b) At the date of the report, the directors are not aware of any circumstances which would render theamounts written off or provided for bad and doubtful debts in the Group of companies inadequate toany substantial extent.



(11) CURRENT ASSETS

(a) Before the financial statements of the Company were made out, the directors took reasonable steps toascertain that current assets of the Company which were unlikely to realise their book values in the ordinarycourse of business were written down to their estimated realisable values or that adequate provision wasmade for diminution in value of such current assets.

(b) At the date of the report, the directors are not aware of any circumstances which would render the valuesattributed to current assets in the consolidated accounts misleading.

(12) CHARGES ON ASSETS AND CONTINGENT LIABILITIES

At the date of the report, except as disclosed in note 34 to the financial statements, no charges have arisensince the end of the financial year on the assets of the Company or any corporation in the Group which securesthe liabilities of any other person and no contingent liability of the Company or any corporation in the Grouphas arisen since the end of the financial year.

(13) ABILITY TO MEET OBLIGATIONS

No contingent or other liability of the Company or any corporation in the Group has become enforceable or islikely to become enforceable within the period of twelve months after the end of the financial year which, inthe opinion of the directors, will or may substantially affect the ability of the Company and of the Group tomeet their obligations as and when they fall due.

(14) OTHER CIRCUMSTANCES AFFECTING THE ACCOUNTS

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in thisreport or the consolidated accounts which would render any amount stated in the accounts of the Companyand the consolidated accounts misleading.

(15) UNUSUAL ITEMS

In the opinion of the directors, the results of the operations of the Company and of the Group during thefinancial year have not been substantially affected by any item, transaction or event of a material and unusualnature.

(16) UNUSUAL ITEMS AFTER THE FINANCIAL YEAR

In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in theinterval between the end of the financial year and the date of this report which would affect substantially theresults of the operations of the Company and of the Group for the financial year in which this report is made.

(17) DIRECTORS’ CONTRACTUAL BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive a benefit byreason of a contract made by the Company or a related corporation with the director or with a firm of which heis a member or with a company in which he has a substantial financial interest, except as disclosed in this reportand in the consolidated financial statements.



(18) SHARE OPTIONS

The particulars of share options of the Company are as follows:

(a) SSH Executives’ Share Option Scheme

The SSH Executives’ Share Option Scheme (the “Scheme’’) was approved by the members of the Companyat an Extraordinary General Meeting on 21 November 1997. At an Extraordinary General Meeting held on30 April 2003, the members of the Company approved certain modifications to the Scheme to permit theCompany, under certain conditions, to offer new options (“Replacement Options”) in replacement of alloutstanding options granted on or after 18 November 1998. The modifications are in line with Section77(1A) of the Companies Act, Cap. 50 introduced by the Companies (Amendment) Act 1998. SuchReplacement Options shall have a longer validity period equivalent to the aggregate of the remainingexercise period of the outstanding options and sixty months.

On 21 May 2003, Replacement Options were granted pursuant to the Scheme (as modified) in respect of2,442,252 unissued ordinary shares of $0.01 each of the Company to the holders of options granted underthe Scheme on or before 18 November 1998.

The Scheme was terminated on 22 May 2003, but the holders of the outstanding unexercised optionsunder the Scheme will continue to remain valid under the terms of the Scheme. The Scheme continues tobe administered by the Employees Share Option Committee.

At the end of the financial year, details of options granted under the Scheme on the unissued shares of$0.01 each of the Company are as follows:

Number of options

Balance at Adjustment for Balance at Exercise ExerciseDate of grant 1 June 2002 Expired rights issue* 31 May 2003 price period

$

20 April 1998 97,000 (97,000) - - - -

12 April 1999 664,000 - 54,182 718,182 0.20 12 April 2000

to 11 April 2009

18 April 2000 709,000 - 57,854 766,854 0.225 18 April 2001

to 17 April 2010

2 October 2001 885,000 - 72,216 957,216 0.10 2 October 2002

to 1 October 2011

2,355,000 (97,000) 184,252 2,442,252

* The number of outstanding options granted was adjusted following the close of the rights issue on19 December 2002.

Details of options granted under the Scheme have been disclosed in the Report of the Directors of therespective years.

During the financial year, except for the grant of Replacement Options, no new options were granted andno shares were issued by virtue of the exercise of options under the Scheme to take up unissued shares inthe Company.

Under the Scheme, no options can be granted at a discount to the subscription price.



(b) Sin Soon Huat Share Option Scheme

The Sin Soon Huat Share Option Scheme (the “Scheme 2003”) was approved by members of the Companyat an Extraordinary General Meeting on 30 April 2003. The Scheme 2003 caters for a larger pool ofparticipants to include non-executive directors of the Company and executives of associated companies.Controlling shareholders are not eligible to participate in the Scheme 2003, but associates of controllingshareholders who meet the eligibility criteria and whose participation and grant of options to them havebeen approved by independent shareholders of the Company, shall be allowed to participate in the Scheme2003.

The Scheme 2003 is administered by the Employees Share Option Committee (the “Committee”) whichconsists of directors of the Company who are not participants of the Scheme 2003, namely, Mr Lim GeokSeng, Mr Lim Teck Guan and Mr Lim Teck Seng.

An option may be exercised in whole or in part of multiples of 1,000 shares (unless the Committee otherwiseagrees) by a participant by giving the prescribed notice in writing to the Company accompanied by aremittance for the total amount payable for the shares.

The option period for an option granted at Market Price commences after the first anniversary of the dateof grant of option and expiring on the tenth anniversary of such date except that the options granted tonon-executive directors of the Company and executives of associated companies, the option period shallbe a period commencing after the first anniversary of the date of grant of option and expiring on the fifthanniversary of such date.

An option granted at a discount to the Market Price shall be exercisable after the second anniversary ofthe date of grant of option up to the tenth anniversary of such date except that the options granted at adiscount to non-executive directors of the Company and executives of associated companies, the optionshall be exercisable after the second anniversary of the date of grant of option up to the fifth anniversaryof such date.

Market Price, in respect of an option granted, shall be the average of the last dealt prices of the shares ofthe Company by reference to the daily official list or any other publication published by the SingaporeExchange Securities Trading Limited for the last three consecutive days immediately preceding the date ofgrant of that option except that in the case of an option granted to an associate of a controlling shareholder,the Market Price shall be the average of the last dealt prices of the shares of the Company for the lastthree consecutive days immediately preceding the latest practicable date prior to the printing of anycircular, letter, or notice for despatch to the members of the Company in respect to an associate’sparticipation and grant of option under the Scheme 2003.

The Committee shall have the absolute discretion to grant options at a discount of not more than 20% tothe Market Price. The subscription price for each share shall, in no event, be less than the nominal valueof the share of the Company.

There is no restriction on the eligibility of any participant to participate in any other share option or shareincentive scheme, whether or not implemented by any of the other companies within the Group or anyother company.



During the financial year, share options granted to subscribe for options of $0.01 each granted by theCompany pursuant to the Scheme 2003 are as follows:

Number Number of ordinary sharesof persons under option granted

Executive directors 3 1,053,000Non-executive directors 3 300,000Associates of controlling shareholder 3 375,000Employees 70 4,772,000

79 6,500,000

At the end of the financial year, details of options granted under the Scheme 2003 on the unissued sharesof $0.01 each of the Company are as follows:

Number of options

Balance at Exercise ExerciseDate of grant Granted Exercised Cancelled 31 May 2003 price period

$

23 May 2003 300,000 - - 300,000 0.039 23 May 2005to 22 May 2008

23 May 2003 655,000 - - 655,000 0.023 23 May 2005to 22 May 2013

23 May 2003 5,545,000 - - 5,545,000 0.039 23 May 2005to 22 May 2013

6,500,000 - - 6,500,000

All the 6,500,000 share options granted under the Scheme 2003 were granted at a discount of 20%.

During the financial year, there were no shares issued by virtue of the exercise of options under theScheme 2003 to take up unissued shares in the Company.

The details of options granted to the Directors and associates of Company’s controlling shareholder underthe Scheme and Scheme 2003 are as follows:

Aggregate Aggregate Aggregatenumber of number of number of

Number of options granted options exercised options expired Aggregateoptions since since since Number granted commencement commencement commencement of options

during the of The Scheme to of The Scheme to of The Scheme to outstanding asfinancial year 31 May 2003 31 May 2003 31 May 2003 at 31 May 2003

Under the SchemeExecutive DirectorsHeng Thye Yong - 237,952 - (32,448) 205,504Tan Choo Hock - 237,952 - (32,448) 205,504Chua Wui Lik - 133,036 - - 133,036



Aggregate Aggregate Aggregatenumber of number of number of

Number of options granted options exercised options expired Aggregateoptions since since since Number granted commencement commencement commencement of options

during the of The Scheme to of The Scheme to of The Scheme to outstanding asfinancial year 31 May 2003 31 May 2003 31 May 2003 at 31 May 2003

Under the Scheme 2003Executive DirectorsHeng Thye Yong 351,000 351,000 - - 351,000Tan Choo Hock 351,000 351,000 - - 351,000Chua Wui Lik 351,000 351,000 - - 351,000

Non-Executive DirectorsLee Khoon Choy 100,000 100,000 - - 100,000Yeh Jin Sien

@ Yap Jin Hien 100,000 100,000 - - 100,000Ms Frances Wong

Lai Yong 100,000 100,000 - - 100,000

Associates of Controlling ShareholderLim Lay Choo 150,000 150,000 - - 150,000Lim Lay Pheng 150,000 150,000 - - 150,000Lim Lay Hwee 75,000 75,000 - - 75,000

Except as disclosed above, no other Director or employee of the Company has received 5% or more of thetotal outstanding options available under the Scheme and Scheme 2003 and no options have been grantedto the controlling shareholder of the Company.

During the financial year, no options to take up unissued shares of any subsidiary company were grantedand there were no shares of any subsidiary company issued by virtue of the exercise of an option to takeup unissued shares.

Except as disclosed above, there were no unissued shares of the Company or its subsidiary companiesunder option as at the end of the financial year.

(19) MATERIAL CONTRACTS OF THE COMPANY AND ITS SUBSIDIARIES INVOLVING THE INTERESTS OFDIRECTORS OR CONTROLLING SHAREHOLDERS

No material contracts to which the Company or any subsidiary is a party which involve the interests of thedirectors or controlling shareholders subsisted at the end of the financial year or have been entered into sincethe end of the previous financial year.

(20) AUDIT COMMITTEE

The Audit Committee comprises three members who are independent non-executive directors, and they are asfollows:

Lee Khoon Choy (Chairman)Yeh Jin Sien @ Yap Jin HienMs Frances Wong Lai Yong



The Audit Committee carries out its functions in accordance with Section 201B(5) of the Companies Act, Cap. 50and performs the following:

(i) review the financial statements of the Company and of the Group before they are submitted to the Boardfor approval;

(ii) review the audit plans of the external auditors;

(iii) review management letters from the external auditors and response from the management;

(iv) nominate external auditors for re-appointment;

(v) review the results of internal audit findings; and

(vi) review interested person transactions.

It held three meetings during the financial year.

The Committee has recommended to the Board of Directors the nomination of Lo Hock Ling & Co. for re-appointment as auditors of the Company at the forthcoming Annual General Meeting.

(21) AUDITORS

The auditors, Messrs. Lo Hock Ling & Co., have expressed their willingness to accept re-appointment.

On behalf of the directors

Lim Geok SengDirector

Chua Wui LikDirector

Singapore3 October 2003


In the opinion of the directors,

(a) the financial statements set out on pages 25 to 56 are drawn up so as to give a true and fair view of the state ofaffairs of the Company and of the Group as at 31 May 2003, and of the results and changes in equity of theCompany and of the Group and the cash flows of the Group for the 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 itsdebts as and when they fall due.

On behalf of the directors

Lim Geok SengDirector

Chua Wui LikDirector

Singapore3 October 2003

STATEMENT BY DIRECTORS


AUDITORS’ REPORTTO THE MEMBERS OF SIN SOON HUAT LIMITED ( Incorporated in the Republic of Singapore )

We have audited the financial statements of the Company and consolidated financial statements of the Group setout on pages 25 to 56. These financial statements are the responsibility of the Company’s directors. Our responsibilityis 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 weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade by the directors, as well as evaluating the overall financial statements presentation. We believe that ouraudit provides a reasonable basis for our opinion.

Except for the departure from SAS 26 (2001) - Consolidated Financial Statements and Accounting for Investmentsin Subsidiaries, as explained in note 5(b) to the financial statements, in our opinion,

(a) the accompanying financial statements and consolidated financial statements are properly drawn up inaccordance with the provisions of the Companies Act, Cap. 50 and Statements of Accounting Standard and soas to give a true and fair view of:-

(i) the state of affairs of the Company and of the Group as at 31 May 2003 and of the results and changes inequity of the Company and of the Group and the cash flows of the Group for the year ended on that date; and

(ii) the other matters required by Section 201 of the Act to be dealt with in the financial statements and inthe consolidated financial statements;

(b) the accounting and other records and the registers required by the Act to be kept by the Company and by thosesubsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordancewith the provisions of the Act.

We have considered the financial statements and auditors’ reports of the subsidiaries of which we have not actedas auditors, being financial statements included in the consolidated financial statements. The subsidiary companiesaudited by other firms of auditors are indicated in note 29 to the financial statements.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financialstatements of the Company are in form and content appropriate and proper for the purposes of the preparation ofthe consolidated financial statements as defined in Section 209A of the Act, and we have received satisfactoryinformation and explanations as required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and, inrespect of subsidiaries incorporated in Singapore, did not include any comment made under Section 207(3) of theAct, except for the following reservation expressed by the auditors of the subsidiary, Weldcentre (M) Sdn. Bhd.(“Weldcentre”):

“The Group and the Company have deficits in shareholders’ equity of RM7,442,168 and RM4,519,613 at 30 November2002 as a result of losses suffered over the financial periods. The financial statements are prepared on the basis ofaccounting principles applicable to a going concern. We, however, do not express any opinion on the Group’s andthe Company’s ability to continue operations on a going concern basis as this depends largely upon the Group andthe Company receiving continued financial support from its banks, and the improvement of the future operatingresults of the Group and of the Company”.

The auditors of Weldcentre also drew attention to the matter detailed in note 17(c) to these financial statements,relating to the negotiation with the banks to restructure the bank borrowings of Weldcentre and its subsidiaries.According to the auditors, “should the outcome of the negotiations be unfavourable, adjustments may have to bemade to the carrying values of the assets of the subsidiaries to their recoverable amount, to provide for furtherliabilities which may arise and to reclassify non-current assets and long term liabilities as current assets and currentliabilities respectively.”

In connection with the above matter, we draw attention to note 32(a) to the financial statements which explainsthat Sin Soon Huat Limited is a corporate guarantor for Weldcentre in respect of these bank facilities.

These financial statements do not include any adjustments which may arise from the aforementioned uncertainities.

Singapore,3 October 2003 LO HOCK LING & CO.

CERTIFIED PUBLIC ACCOUNTANTS


BALANCE SHEETSAS AT 31 MAY 2003

Group CompanyNotes 2003 2002 2003 2002

$’000 $’000 $’000 $’000

PROPERTY, PLANT AND EQUIPMENT 4 15,168 16,685 13,899 14,928

INVESTMENTS IN SUBSIDIARY COMPANIES 5 - - 7,351 11,200

INVESTMENTS IN ASSOCIATED COMPANIES 7 279 243 - -OTHER INVESTMENTS 9 724 724 478 478GOODWILL ON CONSOLIDATION 10 788 821 - -

CURRENT ASSETSStocks 11 30,094 38,250 28,369 35,997Development properties 12 393 402 - -Trade debtors 13 16,670 23,890 8,338 14,840Other debtors 14 2,525 1,897 1,462 369Amount due from subsidiary companies 6 138 - 7,251 7,271Amount due from associated companies 8 2,868 4,882 2,370 4,376Fixed deposits with banks 15 5,907 315 5,599 -Cash and bank balances 15 1,733 6,757 750 5,595

60,328 76,393 54,139 68,448LESS: CURRENT LIABILITIES

Trade creditors 4,782 6,169 3,861 5,264Other creditors 16 1,788 2,679 1,686 2,185Amount due to banks 17 17,908 19,152 14,000 15,294Finance lease obligations 18 14 20 - -Amount due to subsidiary companies 6 - - 4,457 8,914Amount due to associated company 8 - 57 - -Provision for taxation 64 40 - -

24,556 28,117 24,004 31,657

NET CURRENT ASSETS 35,772 48,276 30,135 36,791

NON-CURRENT LIABILITIESAmount due to banks 17 (1,542) (22,055) - (20,000)Finance lease obligations 18 - (15) - -Deferred taxation 19 (377) (429) (377) (377)

(1,919) (22,499) (377) (20,377)

NET ASSETS 50,812 44,250 51,486 43,020

SHARE CAPITAL 20 4,536 30,191 4,536 30,191SHARE PREMIUM 6,066 2,021 6,066 2,021CAPITAL REDUCTION RESERVE 27,172 - 27,172 -REVENUE RESERVE 12,844 11,054 13,712 10,808FOREIGN CURRENCY TRANSLATION RESERVE 56 (287) - -

SHAREHOLDERS’ INTERESTS 50,674 42,979 51,486 43,020MINORITY INTERESTS 138 1,271 - -

50,812 44,250 51,486 43,020

The notes on pages 31 to 56 form an integral part of these accounts.


INCOME STATEMENTSFOR THE YEAR ENDED 31 MAY 2003

Group Company

Notes 2003 2002 2003 2002

$’000 $’000 $’000 $’000

Revenue 21 57,567 92,316 50,206 79,890

Cost of sales (45,120) (74,847) (38,690) (64,040)

Gross profit 12,447 17,469 11,516 15,850

Other operating income 906 1,767 6,105 1,955

13,353 19,236 17,621 17,805

Staff costs 22 (6,116) (6,854) (5,411) (5,573)Selling and distribution expenses (1,038) (3,138) (743) (2,748)Administrative and other operating expenses (4,677) (6,638) (7,253) (5,174)

(11,831) (16,630) (13,407) (13,495)

Profit from operations 1,522 2,606 4,214 4,310Finance costs (1,294) (2,369) (1,260) (1,978)Share of loss from associated company (56) (10) - -

Profit before exceptional items 23 172 227 2,954 2,332Exceptional items 24 - (8,800) - (9,462)

Profit/(loss) after exceptional items 172 (8,573) 2,954 (7,130)Taxation 25 1,303 (129) (50) -

Profit/(loss) after taxation 1,475 (8,702) 2,904 (7,130)Minority interests 324 490 - -

Net profit/(loss) for the year 1,799 (8,212) 2,904 (7,130)

Earnings/(loss) per share (cents)- Basic 26(a) 0.49 (2.72)

- Fully diluted 26(b) 0.41 (2.71)



STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MAY 2003

ForeignCapital** currency

Share Share** reduction Revenue translationcapital premium reserve reserve reserve Total

GROUP $’000 $’000 $’000 $’000 $’000 $’000

Balance at 31 May 2001 30,191 2,021 - 19,494 (284) 51,422

2001 final dividend paid - - - (228) - (228)

Currency translation adjustments - - - - (3) (3)

Net loss for the year - - - (8,212) - (8,212)

Balance at 31 May 2002 30,191 2,021 - 11,054 (287) 42,979

Reduction of par valuefrom $0.10 to $0.01 (27,172) - 27,172 - - -

Issue of 150,954,500 ordinary sharesat a premium of $0.03 per share 1,510 4,529 - - - 6,039

Issue of 719,987 ordinary shares uponthe exercise of warrants 7 - - - - 7

Share issue expenses * - (484) - (9) - (493)

Currency translation adjustments - - - - 343 343

Net profit for the year - - - 1,799 - 1,799

Balance at 31 May 2003 4,536 6,066 27,172 12,844 56 50,674

* Included in share issue expenses are professional fees amounting to $83,300 paid or payable to Lo Hock Ling &Co., the auditors of the Company, in respect of the rights issue mentioned in note 20.

** These reserves are non-distributable.



STATEMENTS OF CHANGES IN EQUITY (CONTINUED)FOR THE YEAR ENDED 31 MAY 2003

Capital**Share Share** reduction Revenuecapital premium reserve reserve Total

COMPANY $’000 $’000 $’000 $’000 $’000

Balance at 31 May 2001 30,191 2,021 - 18,166 50,378

2001 final dividend paid - - - (228) (228)

Net loss for the year - - - (7,130) (7,130)

Balance at 31 May 2002 30,191 2,021 - 10,808 43,020

Reduction of par value from $0.10 to $0.01 (27,172) - 27,172 - -

Issue of 150,954,500 ordinary shares at apremium of $0.03 per share 1,510 4,529 - - 6,039

Issue of 719,987 ordinary shares uponthe exercise of warrants 7 - - - 7

Share issue expenses * - (484) - - (484)

Net profit for the year - - - 2,904 2,904

Balance at 31 May 2003 4,536 6,066 27,172 13,712 51,486

* Included in share issue expenses are professional fees amounting to $83,300 paid or payable to Lo Hock Ling &Co., the auditors of the Company, in respect of the rights issue mentioned in note 20.

** These reserves are non-distributable.



CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 MAY 2003

2003 2002

$’000 $’000CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(loss) before taxation 172 (8,573)Adjustments for:

Share of loss from associated company 56 10Exchange difference 310 -Depreciation on property, plant and equipment 1,641 1,787Goodwill on consolidation written off 33 67Loss on disposal of subsidiary 3 -Reserve on consolidation written back - (38)Profit on disposal of property, plant and equipment (25) (236)Property, plant and equipment written off 31 10Interest income (32) (147)Interest expense 1,294 2,369

Operating profit/(loss) before working capital changes 3,483 (4,751)Decrease in debtors 7,724 11,657Decrease in stocks 8,106 5,260Decrease in development properties - 338Decrease in creditors (917) (3,654)

Cash used in operations 18,396 8,850Income tax refunded/(paid) 28 (129)

Net cash generated from operating activities 18,424 8,721

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of associated company - (158)Additional investment in associated company (100) -Net cash inflow from disposal of subsidiary (Note A) 1 -Purchase of property, plant and equipment (525) (1,652)Proceeds from disposal of property, plant and equipment 191 1,117Interest received 31 53

Net cash used in investing activities (402) (640)

CASH FLOWS FROM FINANCING ACTIVITIESNet bank repayment (20,878) (3,405)Net proceeds from issue of ordinary shares 5,553 -Payment of finance lease obligations (20) (8)Proceeds from issue of ordinary shares to minority

shareholders of subsidiary 200 -Repayment of capital to minority shareholders of subsidiary (815) -Interest paid (1,282) (1,915)Dividend paid to minority shareholders of subsidiary (200) -Dividend paid - (228)

Net cash used in financing activities (17,442) (5,556)


2003 2002

$’000 $’000

NET INCREASE IN CASH AND CASH EQUIVALENTS 580 2,525CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 6,432 3,859Effect of exchange rate changes (21) 48

CASH AND CASH EQUIVALENTS AT END OF THE YEAR (Note 15) 6,991 6,432

(A) DISPOSAL OF SUBSIDIARIES

During the financial year, the Company disposed of its interests in Sin Soon Huat Welding Products Pte Ltd andCountry Springs Pte Ltd. The disposal does not have material impact on the cash flows of the Group.


CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)FOR THE YEAR ENDED 31 MAY 2003


NOTES TO THE ACCOUNTS31 MAY 2003

The following notes form an integral part of and should be read in conjunction with the accompanying accounts.

1. CORPORATE INFORMATION

The Company is a limited company domiciled and incorporated in the Republic of Singapore. The Company’sregistered office is located at 19, Jurong Port Road, Singapore 619093.

2. SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF ACCOUNTING

The financial statements of the Company and of the Group are expressed in Singapore dollars. Except forthe departure from SAS 26 (2001) - Consolidated Financial Statements and Accounting for Investments inSubsidiaries as disclosed in note 5(b) to the financial statements, the financial statements are prepared inaccordance with the historical cost convention and comply with Statements of Accounting Standard (SAS)in Singapore.

The Group has adopted all the applicable new/revised SAS which become effective during the year. Theeffects of the adoption of certain SAS have resulted in some modifications to the financial statementspresentation as disclosed in the notes to the financial statements.

(B) BASIS OF CONSOLIDATION

The Group financial statements include the financial statements of the Company and all its subsidiaries,except as disclosed in note 5(b) to the financial statements. Details of the subsidiaries are set out in note29. All significant intercompany transactions and balances have been eliminated on consolidation.

(C) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, with the exception of freehold land, are stated at cost less accumulateddepreciation and any accumulated impairment losses. Depreciation is calculated on the straight line basisso as to write off the cost of the assets over their estimated useful lives. The annual rates of depreciationare as follows:

Freehold properties 2%Leasehold property remaining lease period of 25 yearsMotor vehicles 3 to 10 yearsPlant, machinery and other assets 3 to 10 years

Freehold land is stated at cost and is not depreciated.

Fully depreciated assets still in use are retained in the accounts.

(D) INVESTMENTS

Unquoted investments held on a long term basis, including investments in subsidiary and associatedcompanies, are stated at cost less impairment losses, if any. Impairment loss is recognised in accordancewith note 2(M) to the financial statements.



2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(E) ASSOCIATED COMPANIES

An associated company is one in which the Group has a long term equity interest of not less than 20% andnot more than 50% and where there is management participation. Details of the associated companiesare set out in note 30.

The Group’s share of the results of the associated companies is included in the consolidated incomestatement, and the attributable share of the post-acquisition results is included in the carrying value ofinvestment shown in the Group’s balance sheet.

(F) DEBTORS

All known bad debts are written off and an estimated allowance for doubtful debts is made for amountswhich may be irrecoverable.

(G) STOCKS

Stocks are stated at the lower of cost and net realisable value. An estimated allowance is made for anydeteriorated, damaged, obsolete or slow-moving stocks. Cost is determined on the weighted average basis.

Cost of work-in-progress and manufactured finished goods include production overheads.

(H) DEVELOPMENT PROPERTIES

Development properties are stated at the lower of cost and net realisable value. Cost includes cost of land,development expenditure, interest and other related expenditure incurred during the construction period.

(I) FOREIGN CURRENCY CONVERSION

(i) Foreign currency transactions are converted into Singapore dollars at the rates approximating thoseprevailing on the transaction dates. Recorded monetary balances that are denominated in foreigncurrencies as at balance sheet date are converted at the rates ruling on that date. Profit or loss onforeign currency conversion are included in the income statement.

(ii) For consolidation purposes, the assets and liabilities of the foreign subsidiaries have been translatedinto Singapore dollars at rates of exchange ruling at the balance sheet date and profit and loss itemsare translated at the average exchange rates for the year.

(J) INCOME TAX

Deferred tax is provided using the balance sheet liability method, providing for all taxable temporarydifferences between the carrying amounts of all assets and liabilities for financial reporting purposes andthe amounts used for taxation purposes.

Deferred income tax is provided on all taxable temporary differences arising on investments in subsidiarycompanies and associated companies, except where the timing of the reversal of the temporary differencecan be controlled and it is probable that the temporary difference will not reverse in the foreseeablefuture.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will beavailable against which the temporary differences or tax losses can be utilised.




(K) INCOME RECOGNITION

(i) Sale of goods

Revenue from sale of goods is recognised upon delivery of the goods and acceptance by the customer.

(ii) Interest and rental income

Interest and rental income are recognised on accrual basis.

(iii) Dividend income

Dividend income is recognised in the income statement when the shareholder’s right to receivepayment is established.

(iv) Development properties

Profit from development properties is recognised by using the percentage of completion method.The percentage of completion is determined based on the certified stage of completion. Profits arebrought into the accounts only in respect of sales agreements finalised and to the extent that suchprofits relate to the progress of the construction work. Losses are recognised as soon as they can beascertained.

(L) EMPLOYEE BENEFITS

(i) Defined contribution plans

As required by law, the companies in Singapore make contributions to the state provident fund, theCentral Provident Fund (CPF). Certain of the Group’s companies outside Singapore make contributionsto their respective countries’ pension schemes. Such contributions are recognised as compensationexpenses in the same period as the employment that gave rise to the contributions.

(ii) Equity compensation plans

The Company has in place Share Option Schemes for granting of options to directors and employeesof the Company and executives of the subsidiaries and associated companies of the rank of generalmanager and above to subscribe for shares in the Company. There is no charge to earnings when theoptions are granted. When the options are exercised, equity is increased by the amount of theproceeds received. Details of the Schemes are disclosed in paragraph 18 of the Report of the Directors.

(M) IMPAIRMENT OF ASSETS

The carrying amounts of the Group’s assets, other than stocks and debtors, are reviewed at each balancesheet date to determine whether there is any indication of impairment. If such indication exists, theasset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amountof an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s netselling price and its value in use. The value in use is the present value of estimated future cash flowsexpected to arise from the continuing use of the asset and from its disposal at the end of its useful life.




(M) IMPAIRMENT OF ASSETS (CONTINUED)

An impairment loss is charged to the income statement unless it reverses a previous revaluation in whichcase it will be charged to equity. An impairment loss is reversed if there has been a change in the estimatesused to determine the recoverable amount or when there is an indication that the impairment lossrecognised for the asset no longer exists or decreases. An impairment loss is reversed only to the extentthat the asset’s carrying amount does not exceed the carrying amount that would have been determinedif no impairment loss had been recognised.

(N) GOODWILL

Goodwill is defined as the excess of the consideration paid over the fair value of the net assets acquired asat the date of acquisition. Where the consideration is lower than the fair value of the net assets acquired,the difference is recognised as negative goodwill.

Goodwill is stated at cost less accumulated amortisation and any accumulated impairment losses.

Goodwill is amortised over its estimated useful life of not more than 20 years using the straight linemethod. Goodwill which is assessed as having no continuing economic value is written off to theconsolidated income statement. The gain or loss on disposal of a subsidiary or associated company includesthe unamortised balance of goodwill relating to the subsidiary or associated company disposed of.

To the extent that negative goodwill relates to expectations of future losses and expenses, the amountwill be taken to the income statement in the period the losses and expenses are incurred. If negativegoodwill cannot be matched to future losses, the amount is recognised as income over the remaininguseful life of the identifiable acquired depreciable assets. Where negative goodwill is in excess of the fairvalue of the identifiable non-monetary assets, the amount is recognised as income immediately.

(O) PROVISIONS

Provisions are recognised when the Group has a present legal or constructive obligation as a result of pastevents, it is probable that an outflow of resources will be required to settle the obligation, and a reliableestimate of the amount can be made.

(P) LEASES

Leases which effectively transfer to the Group substantially all the risks and benefits incidental to ownershipof the leased asset are classified as finance leases. Property, plant and equipment acquired by way offinance leases are capitalised at the lower of its fair value and the present value of the minimum leasepayments at the inception of the lease, less accumulated depreciation and any impairment losses. Leasepayments are apportioned between the finance charges and reduction of the lease liability so as to achievea constant rate of interest on the remaining balance of the liability. Finance charges are charged directlyagainst income.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of theleased asset, are classified as operating leases. Operating lease payments are recognised as an expense inthe income statement on a straight-line basis over the lease term.

(Q) DIVIDENDS

Dividends on ordinary shares are recognised as a liability in the period in which they are declared.



3. PRINCIPAL ACTIVITIES

The principal activities of the Company consist of trading and dealing in industrial materials, general hardware,welding and cutting equipment and related products, and the carrying out of assembly operations. The principalactivities of the subsidiaries are set out in note 29 to the financial statements.

4. PROPERTY, PLANT AND EQUIPMENT

(a) GroupPlant,

machineryFreehold Leasehold Motor and

properties property vehicles other assets Total

$’000 $’000 $’000 $’000 $’000Cost

Balance as at 1.6.2002 1,605 15,951 2,185 8,879 28,620Additions - 12 173 340 525Disposal/written off - - (258) (638) (896)Translation adjustments (26) - (7) (28) (61)

Balance as at 31.5.2003 1,579 15,963 2,093 8,553 28,188

Accumulated depreciationBalance as at 1.6.2002 89 3,860 1,184 6,802 11,935Depreciation charged for the year 22 504 138 977 1,641Disposal/written off - - (166) (530) (696)Impairment loss 168 - - - 168Translation adjustments (1) - (7) (20) (28)

Balance as at 31.5.2003 278 4,364 1,149 7,229 13,020

Depreciation charged for 2002 30 504 153 1,100 1,787

Net book valueBalance as at 31.5.2003 1,301 11,599 944 1,324 15,168

Balance as at 31.5.2002 1,516 12,091 1,001 2,077 16,685

Group2003 2002

$’000 $’000

Net book value of property, plant and equipmentacquired under finance leases 47 54



4. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

(b) CompanyPlant,

machineryFreehold Leasehold Motor and

properties property vehicles other assets Total

$’000 $’000 $’000 $’000 $’000CostBalance as at 1.6.2002 448 15,951 1,813 6,890 25,102Additions - 12 173 305 490Disposal/written off - - (213) (291) (504)

Balance as at 31.5.2003 448 15,963 1,773 6,904 25,088

Accumulated depreciationBalance as at 1.6.2002 63 3,860 813 5,438 10,174Depreciation charged for the year 9 504 138 709 1,360Disposal/written off - - (122) (223) (345)

Balance as at 31.5.2003 72 4,364 829 5,924 11,189

Depreciation charged for 2002 9 504 149 715 1,377

Net book valueBalance as at 31.5.2003 376 11,599 944 980 13,899

Balance as at 31.5.2002 385 12,091 1,000 1,452 14,928

(c) Details of the leasehold and freehold properties of the Group at 31 May 2003 are as follows:

ApproximateBuilt-up Area/

Location Description of Properties (Land Area) Tenure

sq. m.

19 Jurong Port Road Single-storey detached factory 19,234 / (30,303.8) 60 years leaseholdSingapore 619093 with two-storey ancillary office from 1 June 1967

Part of Lot 43432, One unit of one and a half 604 / (1,011) FreeholdMukim and District storey semi-detached factoriesof Klang, SelangorDarul Ehsan

Part of Plot A of parent A plot of industrial land improved - / (6,070.5) FreeholdLot P.T. 2 Mukim of Ijuk with a single-storey open-sidedDistrict of Kuala Lumpur, detached factory buildingState of Selangor

100/59 20th floor, Office unit 189 / - FreeholdVongvanij-B BuildingRama IX RoadHwaykwangBangkok 10310Thailand



5. INVESTMENTS IN SUBSIDIARY COMPANIES

(a) Company2003 2002

$’000 $’000

Unquoted shares, at cost (note 29) 11,597 11,618Impairment losses

Balance brought forward (418) (418)Impairment loss recognised during the year (3,828) -

Balance carried forward (4,246) (418)

7,351 11,200

The directors are of the opinion that the above net carrying value represents the recoverable amount ofthe Company’s investments in subsidiaries.

(b) Group

Pursuant to a Board Resolution passed on 25 April 2003, the directors have decided to discontinue providingfinancial support to Weldcentre (M) Sdn. Bhd. and its subsidiaries, which are no longer profitable andunlikely to continue as going concerns. Accordingly, the Company has ceased to consolidate the results ofWeldcentre (M) Sdn. Bhd. and its subsidiaries with effect from 1 December 2002. This is a departure fromSAS 26 (2001) - Consolidated Financial Statements and Accounting for Investments in Subsidiaries.

The directors are of the opinion that this accounting treatment is necessary to reflect the economic substanceof events and transactions of the Group, and present fairly the financial position, financial performanceand cash flows of the Group.

If the consolidated financial statements of Weldcentre (M) Sdn. Bhd. and its subsidiaries for the full yearended 31 May 2003 had been incorporated in the Group financial statements, the effects on the resultsand cash flows of the Sin Soon Huat Group for the year ended 31 May 2003 and the assets, liabilities andequity of the Group as at that date are as follows:

Effects

Increase / (Decrease)

$’000GROUP INCOME STATEMENTNet profit for the year (858)Earnings per share (cents) (0.23)

GROUP BALANCE SHEETShareholders’ interests (953)Total assets (743)Total liabilities 210

GROUP CASH FLOW STATEMENTNet change in cash and cash equivalents (126)



6. AMOUNT DUE FROM/TO SUBSIDIARY COMPANIESGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Amount due from subsidiary companies:Trade *138 - **5,870 5,188Non-trade - - 1,381 2,083

138 - 7,251 7,271

Amount due to subsidiary companies:Trade - - 964 732Non-trade - - 3,493 8,182

- - 4,457 8,914

* This represents amount owing by Weldcentre (M) Sdn. Bhd. which has not been eliminated as a result ofthe accounting treatment explained in note 5(b) to the financial statements.

** The amount of $1,902,630 (2002 : $3,009,579) owing by certain subsidiary companies was subject to interestcharge at 5.5% (2002 : 8% to 12%) per annum.

In the opinion of the directors, all amounts due from subsidiary companies are fully recoverable, and no allowancefor doubtful debt is required.

Further details regarding the subsidiary companies are set out in note 29.

7. INVESTMENTS IN ASSOCIATED COMPANIES(a) Group Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Unquoted shares, at cost (note 30) 1,015 915 662 662Share of post-acquisition losses (736) (672) - -Impairment losses - - (662) (662)

279 243 - -

(b) The amount of the Company’s unrecognised share of loss of these investee companies in the currentfinancial year is $174,907 (2002 : $668,469). The cumulative amount of the Company’s unrecognised shareof losses as at the balance sheet date is $3,999,841 (2002 : $3,824,934). As the Company’s share of post-acquisition losses in its associated companies, Sin-U-Thai Co. Ltd. and IWD Corporation Ltd, has exceededits cost of investment, the Company has discontinued recognition of its share of losses in these two associatedcompanies.



8. AMOUNT DUE FROM/TO ASSOCIATED COMPANIESGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Amount due from associated companies:Trade 1,402 4,355 1,020 3,062Non-trade 1,466 527 1,350 1,314

2,868 4,882 2,370 4,376

Amount due to associated company:Non-trade - 57 - -

The directors are of the opinion that the amount due from associated companies is recoverable and no allowancefor doubtful debt is necessary.

Further details regarding the associated companies are set out in note 30.

9. OTHER INVESTMENTSGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Unquoted shares, at cost 724 724 478 478

The carrying values of these unquoted shares held as long term investments approximate their fair values.

10. GOODWILL ON CONSOLIDATIONGroup

2003 2002

$’000 $’000

Goodwill on consolidation, at cost 1,166 1,166Less: Accumulated amortisation/impairment losses

Balance brought forward 345 318Amount written off/impairment losses 33 67Amount written back - (38)Translation adjustment - (2)

Balance carried forward 378 345

788 821



11. STOCKSGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Goods-in-transit - 84 - -Raw materials 51 115 - -Work-in-progress 72 58 - -Manufactured finished goods 326 1,837 - -Trading stocks 30,371 38,655 29,095 38,157

30,820 40,749 29,095 38,157

Less: Allowance for stock obsolescenceBalance brought forward 2,499 1,906 2,160 1,560Current year’s allowance - 600 - 600Allowance written back (509) - (509) -Translation adjustment - (7) - -Stocks written off (1,264) - (925) -

Balance carried forward 726 2,499 726 2,160

30,094 38,250 28,369 35,997

Stocks stated at:- cost 29,836 39,253 29,095 38,517- net realisable value 984 1,496 - -

30,820 40,749 29,095 38,157

12. DEVELOPMENT PROPERTIESGroup

2003 2002

$’000 $’000

Land for development, at cost 393 402

Details of the Group’s development property as at 31 May 2003 are as follows:-

ApproximateLocation Type of Development Land Area Tenure

sq. m.

Lot 1096, Mukim of Pengerang, Vacant land 32,400 FreeholdDistrict of Kota Tinggi, JohorDarul Takzim



13. TRADE DEBTORSGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Trade debtors 19,256 27,017 8,878 15,940

Less: Allowance for doubtful debts

Balance brought forward 3,127 2,304 1,100 600Current year’s allowance 126 881 - 500Allowance written back (577) (75) (560) -Disposal of subsidiary (53) - - -Translation adjustment (37) 17 - -

Balance carried forward 2,586 3,127 540 1,100

16,670 23,890 8,338 14,840

Trade debtors of the Group include an amount of $5,351,106 (2002 : $4,591,152) owing by a company incorporatedin Indonesia, which is also a related party (note 27). The directors are of the opinion that this debt is recoverableand no allowance for doubtful debt is necessary.

14. OTHER DEBTORSGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Non-trade debtors 552 1,115 109 247Deposits 166 179 58 80Prepayments 48 95 44 42Tax recoverable from Comptroller of Income Tax 1,251 - 1,251 -Deferred expenditure (note 16*) 508 508 - -

2,525 1,897 1,462 369

15. CASH AND CASH EQUIVALENTS

Cash and cash equivalents in the consolidated cash flow statement comprise the following balance sheet amounts:

Group

2003 2002

$’000 $’000

* Fixed deposits with banks 5,907 315Cash and bank balances 1,733 6,757Bank overdrafts (note 17) (649) (640)

6,991 6,432

* All fixed deposits mature within one year from the balance sheet date and bear interest at rates rangingfrom 0.125% to 3.20% (2002 : 3.20%) per annum.



16. OTHER CREDITORSGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Non-trade creditors 1,147 1,433 761 794Accruals 641 1,246 614 1,080* Deferred income - - 311 311

1,788 2,679 1,686 2,185

* This amount arose from the partial consideration received for the disposal of certain shares in the subsidiary,Weldcentre (M) Sdn. Bhd., in 1997. The profit or loss resulting from this share disposal will be recognisedin subsequent years when certain conditions relating to the transaction have been met.

17. AMOUNT DUE TO BANKSGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000(a) Amount repayable within one year

* Secured:Bank overdrafts 649 640 - -Bills payable 2,654 2,637 - -Bank loans 605 581 - -

3,908 3,858 - -

Unsecured:Bills payable - 844 - 844Bank loans 14,000 14,450 14,000 14,450

14,000 15,294 14,000 15,294

(i) 17,908 19,152 14,000 15,294

(b) Amount repayable after one yearbut not later than five years

Bank loans - secured * (ii) 1,542 2,055 - -- unsecured (iii) - 20,000 - 20,000

1,542 22,055 - 20,000

* These bank loans and bank facilities are secured by a proportionate corporate guarantee and a letter ofcomfort from the Company, proportionate guarantee from other individuals and corporate shareholdersof the subsidiary, Weldcentre (M) Sdn. Bhd. ("Weldcentre"), a pledge of fixed deposits and properties ofWeldcentre and a negative pledge of the present and future assets belonging to Weldcentre.

(i) Interest on short term bank borrowings is charged at rates ranging from 2.94% to 8.65% (2002 : 2.94% to8.78%) per annum.

(ii) Interest is charged at 8.4% (2002 : 8.53%) per annum.

(iii) Interest was charged on this unsecured loan at 1.8% above the interbank swap offer rate in 2002.



17. AMOUNT DUE TO BANKS (CONTINUED)

(c) Certain minority shareholders of Weldcentre had served notice on the banks that they intend to withdrawtheir portion of the proportionate guarantee in favour of the banks. Consequently, the banks hadsuspended further utilisation of the banking facilities of Weldcentre and its subsidiaries. Weldcentre andits subsidiaries are currently negotiating with the banks to restructure these bank borrowings.

18. FINANCE LEASE OBLIGATIONS - GROUP2003 2002

Present value Present valueMinimum of minimum Minimum of minimum

lease lease lease leasepayments payments payments payments

Amounts payable under finance leases $’000 $’000 $’000 $’000

Within 1 year 34 14 24 20

After 1 year but not later than 5 years - - 17 15

34 14 41 35

Less: Amounts representing interest (20) - (6) -

14 14 35 35

The effective interest rates of the above leases during the year ranged from 5.40% to 8.75% (2002: 5.40% to8.75%) per annum.

19. DEFERRED TAXATIONGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

On excess of net book value over tax writtendown value of property, plant and equipment

Balance brought forward 429 407 377 377Deferred tax provided - 22 - -Deferred tax written back (52) - - -

Balance carried forward 377 429 377 377



20. SHARE CAPITALGroup and Company

2003 2002

$’000 $’000

Authorised:4,000,000,000 ordinary shares of $0.01 each

(2002: 400,000,000 ordinary shares of $0.10 each) 40,000 40,000

Issued and fully paid:453,583,487 ordinary shares of $0.01 each(2002: 301,909,000 ordinary shares of $0.10 each) 4,536 30,191

Pursuant to the Abridged Prospectus dated 29 November 2002, the Company issued 150,954,500 rights sharesof $0.01 each for cash with 75,477,250 detachable warrants, on the basis of 2 rights shares with 1 free warrantfor every 4 existing shares held in the capital of the Company at the close of the Rights Issue on 19 December2002. Each warrant gives the registered holder the right to subscribe for one new ordinary share of $0.01 eachin the Company at an exercise price of $0.01 per share. The exercise period of the warrants expires on 29December 2007.

The number of outstanding warrants of the Company at 31 May 2003 was 74,757,263.

21. REVENUE

Revenue of the Company consists of invoiced trading sales.

Revenue of the Group consists of invoiced trading sales and services. Transactions within the Group have beenexcluded.

22. STAFF COSTSGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000Staff costs (including Executive Directors)Salaries, bonuses and other costs 5,491 6,144 4,847 4,978CPF and other defined contributions 625 710 564 595

6,116 6,854 5,411 5,573

Number of employees at 31 May 144 183 109 129



23. PROFIT BEFORE EXCEPTIONAL ITEMS

This is arrived at after charging/(crediting): -

Group Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Allowance for doubtful debts - trade 126 881 - 500Auditors’ remuneration payable to:- auditors of the Company

-current year 67 129 46 84-prior year (2) - - -

- other auditors- current year 19 23 - -- prior year - 3 - -

Other fees paid to auditors of the Company 20 38 20 38Bad debts written off:- trade 35 101 - -- non-trade 16 - 16 -- subsidiary companies - - 68 -Depreciation on property, plant and equipment 1,641 1,787 1,360 1,377Deposit written off - 2 - -Directors’ remuneration:- directors of the Company 1,149 1,192 1,149 1,148- other directors 72 176 - -Goodwill on consolidation written off 33 67 - -Impairment loss on investment in subsidiaries - - 3,828 -Interest expense:- subsidiary companies - - 224 104- others 1,294 2,369 1,036 1,874Loss in exchange 528 592 295 529Property, plant and equipment written off 31 10 2 1Allowance for doubtful debts written back - trade (577) (75) (560) -Allowance for stock obsolescence/(written back) (509) 600 (509) 600Gross dividend income from subsidiaries - - (5,142) -Interest income:- subsidiary companies - - (100) (873)- fixed deposits (11) (43) (11) (9)- others (21) (104) (20) (33)Loss/(profit) on disposal of subsidiary 3 - (2) -(Profit)/loss on disposal of property,

plant and equipment (25) (236) 20 14Reserve on consolidation written back - (38) - -



24. EXCEPTIONAL ITEMSGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Impairment loss on investment in associated companies - - - 662

Amounts due from associated companies written off:- trade - 2,859 - 2,859- non-trade - 5,941 - 5,941

- 8,800 - 8,800

- 8,800 - 9,462

25. TAXATIONGroup Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Provision for current taxation 50 93 50 -(Over)/under-provision in prior year (170) 14 - -Tax deducted at source (1,131) - - -

(1,251) 107 50 -Deferred tax (written back)/provided (52) 22 - -

(1,303) 129 50 -

Reconciliation of effective tax rate:-

Profit/(loss)before taxation 172 (8,573) 2,954 (7,130)

Tax at statutory rate of 22% 38 (1,886) 650 (1,569)

Tax effects of:-Non-deductible expenses 108 1,444 871 1,331Non-taxable income (238) (17) (238) -Deferred tax assets not recognised 193 591 - 255Realisation of deferred tax assets previously not recognised (1,224) - (1,224) -(Over)/under-provision in prior year (170) 14 - -Change in statutory tax rate - (16) - (16)Others (10) (1) (9) (1)

(1,303) 129 50 -



25. TAXATION (CONTINUED)

As at the balance sheet date, the Group and the Company have the following unutilised tax losses and capitalallowances available for set-off against future taxable income, subject to compliance with the relevant taxlegislations in the country of incorporation of the companies in the group:

Group Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

Unutilised tax losses 13,669 15,880 - 3,581Unabsorbed capital and investment allowances 707 1,873 - 1,125

The above tax losses and unabsorbed capital allowances are not recognised as deferred tax assets due to theuncertainty of future taxable profits being available against which the tax losses and capital allowances can beutilised.

26. EARNINGS/LOSS PER SHARE

(a) The basic earnings per share of the Group is calculated by dividing the profit after tax and minorityinterests by the weighted average number of shares in issue during the financial year of 365,106,703(2002 : 301,909,000).

(b) The fully diluted earnings per share of the Group is calculated by dividing the profit after tax and minorityinterests by the weighted average number of shares in issue adjusted for the effects of all dilutive potentialordinary shares. The adjusted weighted average number of shares used to compute diluted earnings pershare is derived as follows:

Number of shares

2003 2002

Weighted average number of shares used to computebasic earnings per share 365,106,703 301,909,000

Effects of dilutive securities- Share options 2,442,252 1,470,000- Warrants 74,757,263 -

Weighted average number of shares used to computediluted earnings per share 442,306,218 303,379,000



27. RELATED PARTY DISCLOSURE

Significant transactions and balances between the Group and its related parties, not otherwise disclosed in thefinancial statements, are as follows:

Group Company

2003 2002 2003 2002

$’000 $’000 $’000 $’000

(a) With its associated companiesSales 12 3,570 12 3,570Purchases 217 1,848 217 1,848Other expenses 23 - 23 -

(b) With corporations in which the directors of theGroup have substantial interests

Sales 3,359 2,552 68 11Purchases 72 115 - -Other expenses 3 - 3 -Deposit 108 108 - -Trade debtors 5,351 4,963 52 352Trade creditors - 89 - 83Other debtors - 292 - 32

(c) With a corporation in which the directorsof the Group have significant influence

Sales 593 - 540 -Other expenses 2 - 2 -Trade debtors 569 - 569 -Other debtors 16 - - -

Related party transactions were based on terms agreed between the parties concerned.

28. SEGMENT REPORTING

Segment information is presented in respect of the Group’s geographical segments, which is the Group’s primaryreporting format. In presenting information on the basis of geographical segments, segment revenue is basedon the geographical location of customers. Segment assets are based on the geographical location of theassets.

As the core business of the Group consists of trading and dealing in industrial materials and hardware products,and the other business segments are immaterial, secondary segment information by business segments havenot been shown.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that canbe allocated on a reasonable basis. Unallocated items mainly comprise interest-bearing liabilities, income taxliabilities, corporate assets, interest income, finance costs and general administrative expenses that relate tothe Group as a whole.



28. SEGMENT REPORTING (CONTINUED)

Primary reporting format – geographical segmentsPeople’s

Republic of OtherSingapore China Countries Eliminations Total

$’000 $’000 $’000 $’000 $’00031 May 2003REVENUEExternal revenue 23,638 10,158 23,771 - 57,567Inter-segment revenue 343 92 2,836 (3,271) -

Total revenue 23,981 10,250 26,607 (3,271) 57,567

RESULTSSegment results 587 578 (528) (21) 616

Other operating income 906

Profit from operations 1,522Finance costs (1,294)Share of net loss of associated company (56)Taxation 1,303

Profit from ordinary activities 1,475Exceptional items -

1,475Minority interests 324

Net profit for the year 1,799

ASSETS AND LIABILITIES

Segment assets 59,761 2,019 15,228 77,008Investments in associated companies 279

Consolidated total assets 77,287

Segment liabilities 3,901 37 2,633 6,571Unallocated liabilities 19,904

Consolidated total liabilities 26,475

Capital expenditure 490 2 33 525Depreciation 1,497 - 144 1,641Non-cash expenses other

than depreciation 815 - 126 941



28. SEGMENT REPORTING (CONTINUED)

Primary reporting format – geographical segments (continued)People’s

Republic of OtherSingapore China Countries Eliminations Total

$’000 $’000 $’000 $’000 $’000

31 May 2002REVENUEExternal revenue 34,330 10,228 47,758 - 92,316Inter-segment revenue 929 124 3,657 (4,710) -

Total revenue 35,259 10,352 51,415 (4,710) 92,316

RESULTSSegment results 480 538 (158) (21) 839

Other operating income 1,767

Profit from operations 2,606Finance costs (2,369)Share of net loss of associated company (10)Taxation (129)

Profit from ordinary activities 98Exceptional items (8,800)

(8,702)Minority interests 490

Net loss for the year (8,212)

ASSETS AND LIABILITIES

Segment assets 65,380 980 28,263 94,623Investments in associated companies 243

Consolidated total assets 94,866

Segment liabilities 2,732 64 6,109 8,905Unallocated liabilities 41,711

Consolidated total liabilities 50,616

Capital expenditure 1,494 - 158 1,652Depreciation 1,519 - 268 1,787Non-cash expenses other

than depreciation 10,545 - 1,478 12,023

Inter-segment sales are based on terms determined on a commercial basis.



29. SUBSIDIARY COMPANIES

The subsidiary companies are as follows:-Country of

Name of incorporation/ Percentage of Cost ofsubsidiary companies Principal activities place of business equity held investment

2003 2002 2003 2002

% % $’000 $’000

Shares held by the Company:-

Chuan Bee Realty Pte. Ltd. Property development Singapore 100 100 3,028 3,028

Country Springs Pte Ltd Dormant Singapore - 100 - @

* Country Springs Sdn. Bhd. Investment holding Malaysia 100 100 62 62

HW Valve & Engineering Import, export and Singapore 75 75 304 304Pte Ltd reconditioning of

valves and pumps

* Muhibbah Harta Sdn. Bhd. Providing engineering Malaysia 100 100 642 642services and distributionof welding automationand industrial equipment

Sin Soon Huat Procurement Dormant Singapore 100 100 956 956Services Pte. Ltd.

Sin Soon Huat Welding Provision of training Singapore 100 100 18 18Training and Services services in technical skills,Pte Ltd operation of a technical

training centre andtrading in consumables

Sin Soon Huat Welding Dormant Singapore - 100 - @Products Pte Ltd

Surya Sarana Hidup Pte Ltd Trading and dealing Singapore 80 80 2,399 1,600in general weldingequipment andconsumables

# Weldcentre (M) Sdn. Bhd. Trading and dealing in Malaysia 82.78 82.78 3,112 3,112industrial materials,general hardware,welding and cuttingequipment and relatedproducts

SSH e-Ventures Pte Ltd Electronic commerce Singapore 50.15 50.15 820 1,640and investment holding

** SSH (U.S.A.), Inc. Dormant U.S.A. 100 100 2 2



29. SUBSIDIARY COMPANIES (CONTINUED)Country of

Name of incorporation/ Percentage of Cost ofsubsidiary companies Principal activities place of business equity held investment

2003 2002 2003 2002

% % $’000 $’000

Shares held by the Company:- (continued)# Singmetal (M) Providing total Malaysia 70 70 3 3

Sdn. Bhd. engineering services,manufacturing anddistribution of weldingautomation andindustrial equipment,systems and industrialengineering productsand designing

* Dalian F.T.Z. Sin Soon Huat Trading and dealing in People’s Republic 100 100 251 251International Trade Co. Ltd industrial materials and of China

general hardware

11,597 11,618

Shares held by Weldcentre (M) Sdn. Bhd.:-# Weldcentre (Kuantan) Trading and dealing in Malaysia 100 100

Sdn. Bhd. industrial materials,general hardware andwelding products

# Weldomatic Industries Manufacturing and Malaysia 100 100Sdn. Bhd. dealing in welding

automation equipmentand systems and providingtechnical consultancyservices

# Weldcentre (Terengganu) Dormant Malaysia 80 80Sdn. Bhd.

# Weldcentre (Malacca) Dormant Malaysia 100 100Sdn. Bhd.

# Weldcentre CKS Sdn. Bhd. Dormant Malaysia 100 100

# Weldcentre Training and Dormant Malaysia 100 100Services Sdn. Bhd.



29. SUBSIDIARY COMPANIES (CONTINUED)Country of

Name of incorporation/ Percentage ofsubsidiary companies Principal activities place of business equity held

2003 2002

% %

Shares held by Country Springs Sdn. Bhd.:-* JT Success Sdn. Bhd. Property development Malaysia 100 100

Shares held by SSH e-Ventures Pte Ltd:-IHSquare Pte. Ltd. Provision of services Singapore 100 100

relating to IT supportand e-commerce

AMclick Holdings Pte Ltd Provision of e-commerce Singapore 57.38 57.38platform maintenanceservices

World Trend Holdings Pte Ltd Dormant Singapore 100 100

Shares held by AMclick Holdings Pte Ltd:-AMclick (S) Pte Ltd Dormant Singapore 100 100

Shares held by IHSquare Pte Ltd:-AMspeed Pte Ltd General warehousing Singapore 73.3 73.3

and services allied totransport of goods

@ Less than $1,000.# Audited by Horwath Mok & Poon.* Audited by other firms of auditors (These foreign-incorporated subsidiaries are not considered to be

significant under Rule 718 of the SGX-ST Listing Manual).** Not required to be audited by the law in its country of incorporation.

All Singapore-incorporated subsidiaries are audited by Lo Hock Ling & Co.



30. ASSOCIATED COMPANIES

The associated companies are as follows:-Country of

Name of incorporation/ Percentage of Cost ofassociated companies Principal activities place of business equity held investment

2003 2002 2003 2002

% % $’000 $’000

Shares held by the Company: -* Sin-U-Thai Co. Ltd. Trading and dealing in Thailand 49 49 522 522

industrial materials andgeneral hardware products

* IWD Corporation Ltd Trading and dealing in Thailand 49 49 140 140industrial materials andwelding products

662 662

Shares held by Weldcentre (M) Sdn. Bhd.: -# Kumpulan Edaran Logam Supplying welding Malaysia 30 30 95 95

Sdn. Bhd. products and cuttingequipment and systems

Shares held by AMspeed Pte Ltd:-* iMOS Holdings Pte Ltd Business management Singapore 30 30 258 158

and consultancy services

1,015 915

# The equity method is not applied to account for the investment in this associated company in theconsolidated accounts as the amount involved, had the equity method been applied, is considered to benot material.

* Unaudited financial statements of these associated companies have been used for the preparation of theconsolidated financial statements.

All the foreign-incorporated associated companies are not considered to be significant under Rule 718 of theSGX-ST Listing Manual.

The investment in Sin-U-Thai Co. Ltd. is partly paid up to Baht 25 per share of Baht 100 each. The Company hasa commitment in respect of uncalled capital amounting to approximately $305,891 (Baht 7,349,625).



31. FINANCIAL INSTRUMENTS

(A) FINANCIAL RISK MANAGEMENT POLICIES

The main risks arising from the Group’s financial statements are credit risk, foreign exchange risk, interestrate risk and liquidity risk. The board of directors reviews and agrees on policies for managing each ofthese risks and they are summarised below:

(i) Credit risk

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoingbasis. Credit evaluations are performed on all customers requiring credit over a certain amount.

Cash and cash equivalents are placed with financial institutions with good credit ratings.

As at the balance sheet date, there was no significant concentration of credit risk. The maximumexposure to credit risk is represented by the carrying amount of each financial asset.

(ii) Foreign exchange risk

The Group is exposed to foreign exchange risk on sales, purchases, borrowings and investments thatare denominated in foreign currencies. The currencies giving rise to this risk are primarily US dollar,Malaysian ringgit, Thai baht and Indonesian rupiah.

The Group has a number of investments in foreign subsidiaries and associated companies, whose netassets are exposed to currency translation risk. There is no formal hedging policy with respect toforeign currency. Exposure to currency risk is monitored on an ongoing basis to ensure that exposuresare mimimised.

(iii) Interest rate risk

The Group’s exposure to interest rate risk arises primarily from its fixed deposits and debt obligationswith financial institutions. The Group adopts a policy of constantly monitoring movements in interestrates to ensure that borrowings are maintained at favourable rates.

The interest rates and terms of maturity and repayments of financial assets and liabilities of theGroup are disclosed in the notes to the financial statements.

(iv) Liquidity risk

The Group actively manages its debt maturity profile, operating cash flows and the availability offunding so as to ensure that all refinancing, repayment and funding needs are met. As part of itsoverall prudent liquidity management, the Group maintains a sufficient level of cash or cashequivalents to meet its working capital requirement.

(B) FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Financial assets include receivables, cash and cash equivalents and unquoted equity investments. Financialliabilities include payables and accruals. The carrying amounts of all financial assets and liabilities of theCompany and the Group approximate their fair values.



32. CONTINGENT LIABILITIES

(a) As at the balance sheet date, the Company is a corporate guarantor for the amount of approximately$3.2 million (RM7.1 million) in respect of banking facilities granted by two banks to the subsidiary,Weldcentre (M) Sdn. Bhd..

(b) In 1995, a customer of a subsidiary company (Weldcentre CKS Sdn. Bhd.) had filed a law suit against thesubsidiary company for an amount of approximately $804,011 (RM1,769,000), alleging a breach of contract.The directors of the subsidiary company, based on legal advice, are of the opinion that the claim by thecustomer is unlikely to be substantiated.

(c) The former managing director of a subsidiary (Weldcentre) who was removed and certain former directorsof the same subsidiary who resigned as directors had filed claims against the subsidiary. The solicitorsrepresenting the said subsidiary had opined that it is unlikely that the claims would succeed.

33. COMMITMENTS

As at 31 May 2003, the following commitments have not been provided for in the financial statements:

Group and Company

2003 2002

$’000 $’000

Operating leases which expire:Within one year 732 537After one year but not later than five years 2,150 2,685After five years 9,580 9,666

12,462 12,888

34. SUBSEQUENT EVENTS

Subsequent to the balance sheet date, the Company had refinanced its bank loans. The new transferable loanfacility ("TLF") of $10 million is subject to interest at a rate of 2% per annum above the Average Swap OfferRate and shall be repayable over three years from the date of drawdown. The TLF is secured on the Company’sleasehold property and a fixed and floating charge on all other assets of the Company.

35. AUTHORISATION OF FINANCIAL STATEMENTS

The financial statements and consolidated financial statements of Sin Soon Huat Limited and its subsidiaries forthe year ended 31 May 2003 were authorised for issue in accordance with a directors' resolution dated 3 October2003.


Authorised share capital : $400,000,000Issued and fully paid-up capital : $4,538,755Class of shares : Ordinary shares of $0.01 eachVoting rights of shares On show of hands : 1 vote per shareholder On poll : 1 vote per share

FREE FLOAT

The Company is in compliance with Rule 723 of the SGX-ST Listing Manual. As at 18 September 2003, approximately48% of the shares of the Company were held by the public.

RANGE OF NO. OF NO. OFSHAREHOLDINGS SHAREHOLDERS % SHARES %

1 - 999 147 1.69 67,474 0.011,000 - 10,000 5,882 67.54 34,080,700 7.5110,001 - 1,000,000 2,661 30.55 105,242,650 23.191,000,001 AND ABOVE 19 0.22 314,484,663 69.29

8,709 100.00 453,875,487 100.00

TWENTY LARGEST SHAREHOLDERS

NO. NAME NO. OF SHARES %

1. TAN BEE ENG 60,529,375 13.342. LIM GEOK SENG 60,389,853 13.303. LIM TECK GUAN 55,889,852 12.314. UNITED OVERSEAS BANK NOMINEES PTE LTD 37,265,800 8.215. DBS NOMINEES PTE LTD 23,664,250 5.216. LIM GUAN SENG 15,869,625 3.507. LIN RONG TSYR 13,568,925 2.998. OVERSEA-CHINESE BANK NOMINEES PTE LTD 12,866,250 2.839. LIM TECK SENG 11,077,425 2.4410. WANG YOKE HUA 4,438,500 0.9811. AU YUEN CHENG 3,200,000 0.7012. LIM SWEE LING 3,034,800 0.6713. KIM ENG SECURITIES PTE LTD 2,795,000 0.6214. PHILLIP SECURITIES PTE LTD 2,001,008 0.4415. OCBC SECURITIES PRIVATE LTD 1,938,500 0.4316. LIM YAT LAI 1,910,250 0.4217. LIM LAY CHOO 1,571,500 0.3518. NG CHOR HOOI 1,400,000 0.3119. LIM LAY HWEE 1,073,750 0.2420. HENG THYE YONG 975,000 0.21

315,459,663 69.50

SUBSTANTIAL SHAREHOLDERSNO. OF SHARES HELD

NAME DIRECT INTERESTS %

TAN BEE ENG 60,529,375 13.34LIM GEOK SENG 60,389,853 13.30LIM TECK GUAN 55,889,852 12.31

STATISTICS OF SHAREHOLDINGSAS AT 18 SEPTEMBER 2003


RANGE OF NO. OF NO. OFWARRANT HOLDINGS WARRANT HOLDERS % WARRANTS %

1 - 999 85 13.20 42,182 0.061,000 - 10,000 438 68.01 1,559,250 2.0910,001 - 1,000,000 114 17.70 7,244,949 9.731,000,001 AND ABOVE 7 1.09 65,618,882 88.12

644 100.00 74,465,263 100.00

TWENTY LARGEST WARRANT HOLDERS

NO. NAME NO. OF WARRANTS %

1. LIM GEOK SENG 23,752,455 31.902. LIM TECK GUAN 23,002,454 30.893. TAN BEE ENG 10,921,562 14.674. LIM GUAN SENG 2,644,937 3.555. LIN RONG TSYR 2,261,487 3.046. LIM TECK SENG 1,846,237 2.487. UNITED OVERSEAS BANK NOMINEES PTE LTD 1,189,750 1.608. PHILLIP SECURITIES PTE LTD 865,000 1.169. WANG YOKE HUA 739,750 0.9910. OVERSEA-CHINESE BANK NOMINEES PTE LTD 568,125 0.7611. LIM SWEE LING 416,300 0.5612. DBS NOMINEES PTE LTD 373,625 0.5013. HENG JOO KHIM 305,000 0.4114. WONG HAN MING 196,000 0.2615. OCBC SECURITIES PRIVATE LTD 177,250 0.2416. AU YUEN CHENG 150,000 0.2017. LIM CHYE HUAT 150,000 0.2018. GOH KIM CHIANG 131,000 0.1819. LIM LAY CHOO 126,250 0.1720. LAU HAW PING 103,000 0.14

69,920,182 93.90

STATISTICS OF WARRANT HOLDINGSAS AT 18 SEPTEMBER 2003


The percentages of issued share capital are based on 453,875,487 issued shares of the Company as at 30 September2003 being the latest practical date prior to printing of this Annual Report.

As at 30 September 2003, the 18 Undertaking Shareholders referred to in the Abridged Prospectus dated 29 November2002 issued by the Company (comprising Tan Bee Eng, Lim Geok Seng, Lim Guan Seng, Lim Teck Guan, Lim Teck Seng,Lin Rong Tsyr, Lim Swee Ling, Lim Ya Yi, Lim Lay Hwee, Lim Lay Choo, Lim Lay Pheng, Lim Oh Ann, Chua Puay Puay,Ang Siau Hong, Chia Bin Huat, Lim Hoo Hock, Wang Yoke Hua and Foo Kok Jiam), hold an aggregate of 230,953,605shares in the capital of the Company, representing an aggregate shareholding of 50.88% of the current issued andpaid-up capital of the Company as at the date hereof. Of the 18 Undertaking Shareholders, 6 of them hold anaggregate of 532,144 and 655,000 share options under the SSH Executives’ Share Option Scheme and Sin Soon HuatShare Option Scheme respectively.

Additionally, as at 30 September 2003, the Undertaking Shareholders collectively hold 66,700,556 Warrants whichwere issued to them pursuant to the Rights Issue.

The maximum potential voting rights of the Undertaking Shareholders, assuming that they exercise their Warrants(but none of the other shareholders of the Company exercise their Warrants), will increase in the manner set outbelow:-

After exercise of Warrants*

Assumes none of the Assumes alloutstanding outstanding

Current **Share Options **Share Options areShareholdings are exercised exercised

No. of Shares held byUndertaking Shareholders 230,953,605 297,654,161 298,841,305

% of issued share capital 50.88% 57.18% 56.45%

No. of Shares held byIndependent Shareholders 222,921,882 222,921,882 230,551,990

% of issued share capital 49.12% 42.82% 43.55%

* Assumes only Undertaking Shareholders exercise their Warrants and none of the other shareholders of theCompany exercise their Warrants.

** Share Options refer to all 8,817,252 options outstanding under the SSH Executives’ Share Option Scheme andSin Soon Huat Share Option Scheme as at 30 September 2003.

A whitewash resolution (the “Whitewash Resolution”) was passed by independent shareholders at the extraordinarygeneral meeting on 31 October 2002 to waive their rights to receive a mandatory takeover offer from the UndertakingShareholders for the shares in the Company in the event that, inter alia, the Undertaking Shareholders’ exercise ofthe Warrants issued to them in conjunction with the Rights Issue result in them incurring a mandatory bid obligationpursuant to Rule 14 of the Singapore Code on Takeovers and Mergers. To rely on the Whitewash Resolution, theacquisition of new shares by the Undertaking Shareholders as a result of exercising the Warrants must be completedwithin 2 years of the date of issue of the Warrants. The Warrants were issued on 30 December 2002.

Having approved the Whitewash Resolution, shareholders have waived their right to receive a general offer fromthe Undertaking Shareholders at the highest price paid by the Undertaking Shareholders and parties acting in concertwith it for shares in the Company in the 6 month period immediately before the offer is triggered.

In addition, having approved the Whitewash Resolution, shareholders could be foregoing the opportunity to receivea general offer from another person who may be discouraged from making a general offer in view of the potentialdilution effect of the Warrants.

WHITEWASH RESOLUTION


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Twenty-Seventh Annual General Meeting of the Company will be held at theConference Room, 19 Jurong Port Road, Singapore 619093 on Friday, 31 October 2003 at 10.30 am for the followingpurposes:-

ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and Audited Accounts for the financial year ended 31 May 2003together with the Auditors’ Report thereon.

2. To approve Directors’ fees of $42,000 for the financial year ended 31 May 2003 (2002 : $37,000).

3. To re-elect the following Directors retiring pursuant to Article 91 of the Company’s Articles of Association:

(a) Mr Lim Geok Seng(b) Mr Yeh Jin Sien @ Yap Jin Hien(c) Mr Lim Teck Seng

Note: Mr Lim Geok Seng is the Managing Director of the Company.

Mr Yeh Jin Sien @ Yap Jin Hien will upon re-election continue to serve as an independent non-executiveDirector, Chairman of the Nominating Committee and member of the Audit and RemunerationCommittees.

Mr Lim Teck Seng will upon re-election continue to serve as an executive Director and member of theEmployees Share Option Committee.

4. To pass the following resolutions under Section 153(6) of the Companies Act, Cap. 50:

(a) “That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr Lee Khoon Choy be and is hereby re-appointed a Director of the Company to hold such office until the next Annual General Meeting of theCompany.”

Note: Mr Lee Khoon Choy is an independent non-executive Director and upon his re-appointment as aDirector, will remain as a Chairman of the Company’s Audit Committee.

(b) “That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mdm Tan Bee Eng be and is hereby re-appointed a Director of the Company to hold such office until the next Annual General Meeting of theCompany.”

Note: Mdm Tan Bee Eng is an executive Director, and upon her re-appointment will continue to serve asVice-Chairman of the Company.

5. To re-appoint Lo Hock Ling & Co. as auditors of the Company and to authorise the Directors to fix theirremuneration.

SPECIAL BUSINESS

To consider and, if thought fit, to pass the following ordinary resolutions:-

6. “That authority be and is hereby given to the Directors of the Company to issue shares in the capital of theCompany (whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions andfor such purposes and to such persons as the Directors may in their absolute discretion deem fit provided that:-

(i) the aggregate number of shares to be issued pursuant to this Resolution does not exceed 50 per cent. ofthe issued share capital of the Company (as calculated in accordance with sub-paragraph (ii) below), ofwhich the aggregate number of shares to be issued other than on a pro rata basis to shareholders of theCompany does not exceed 20 per cent. of the issued share capital of the Company (as calculated inaccordance with sub-paragraph (ii) below);


(ii) (subject to such manner of calculation as may be prescribed by the Singapore Exchange Securities TradingLimited) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (i) above, the percentage of issued share capital shall be based on the issued share capital ofthe Company at the time this Resolution is passed, after adjusting for:-

(a) new shares arising from the conversion or exercise of any convertible securities or share optionswhich are outstanding or subsisting at the time this Resolution is passed; and

(b) any subsequent consolidation or subdivision of shares;

(iii) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions ofthe Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force(unless such compliance has been waived by the Singapore Exchange Securities Trading Limited) and theArticles of Association for the time being of the Company; and

(iv) unless revoked or varied by the Company in general meeting, the authority conferred by this Resolutionshall continue in force until the conclusion of the next Annual General Meeting of the Company or thedate by which the next Annual General Meeting of the Company is required by law to be held, whicheveris the earlier.”

Note: This resolution, if passed, will empower the Directors to issue shares in the capital of the Companyup to an amount not exceeding in total 50 per cent. of the issued share capital of the Company,with a sub-limit of 20 per cent. for shares issued other than on a pro rata basis to shareholders. Forthe purpose of determining the aggregate number of shares that may be issued, the percentage ofissued share capital will be based on the issued share capital of the Company at the time that thisresolution is passed, after adjusting for (a) new shares arising from the conversion or exercise ofany convertible securities or share options which are outstanding or subsisting at the time that thisresolution is passed, and (b) any subsequent consolidation or subdivision of shares.

7. “That approval be and is hereby given to the Directors to allot and issue from time to time such number ofshares in the Company as may be required to be issued pursuant to the exercise of the options granted underthe SSH Executives’ Share Option Scheme (the “Scheme”) provided always that the aggregate number ofshares to be issued pursuant to the Scheme shall not exceed 5 per cent. of the total issued share capital of theCompany from time to time.”

Note: This resolution, if passed, will empower the Directors to issue shares in the capital of the Companypursuant to the exercise of options that have been granted under the SSH Executives’ Share OptionScheme (the “Scheme”) up to an amount in aggregate not exceeding 5 per cent. of the issued sharecapital of the Company from time to time. Although the Scheme was terminated on 22 May 2003,outstanding options granted prior to this date of termination remain exercisable in accordance with theterms of the Scheme.

8. “That approval be and is hereby given to the Directors to offer and grant options in accordance with theprovisions of the Sin Soon Huat Share Option Scheme (the “Scheme 2003”) and to allot and issue from time totime such number of shares in the Company as may be required to be issued pursuant to the exercise of theoptions granted under the Scheme 2003 provided always that the aggregate number of shares to be issuedpursuant to the Scheme 2003 shall not exceed 15 per cent. of the total issued share capital of the Company fromtime to time.”

Note: This resolution, if passed, will empower the Directors to grant options and issue shares in the capital ofthe Company pursuant to the exercise of options under the Sin Soon Huat Share Option Scheme (the“Scheme 2003”) up to an amount in aggregate not exceeding 15 per cent. of the issued share capital ofthe Company from time to time. The Scheme 2003 came into operation on 30 April 2003.



9. “That the Directors of the Company be and are hereby authorised pursuant to and in accordance with the SinSoon Huat Share Option Scheme (the “Scheme 2003”), to offer and grant to Mdm Lim Lay Choo (who hasabstained from voting) within one month from the date of the Annual General Meeting of the Company heldon 31 October 2003, options (which shall be Discounted Options, as defined in the Scheme 2003) to subscribefor 180,000 ordinary shares of $0.01 each in the capital of the Company (“Shares”) under the Scheme 2003 ata subscription price for each Share of $0.065, representing a discount of 20 per cent. to the average of the lastdealt prices for a Share, as determined by reference to the daily official list or any other publication publishedby the Singapore Exchange Securities Trading Limited (“SGX-ST”), for the three consecutive days during whichthe SGX-ST was opened for trading in securities immediately preceding 30 September 2003, being the latestpracticable date prior to the printing of the letter to members dated 14 October 2003, subject to any adjustmentsas may be made in accordance with the Scheme 2003, and to allot and issue Shares pursuant to the exercise ofsuch options.”

Note: This resolution, if passed, will empower the Directors to offer and grant options to Mdm Lim Lay Choo inrespect of 180,000 ordinary shares of $0.01 each in the capital of the Company at a discounted subscriptionprice of $0.065, within one month from the date of the Annual General Meeting held on 31 October 2003,and to issue such shares to her pursuant to her exercise of such options under the Sin Soon Huat ShareOption Scheme (the “Scheme 2003”). Mdm Lim Lay Choo is the sister and an associate of Mr Lim GeokSeng, the Managing Director and a Controlling Shareholder (as defined in the Scheme 2003) for the purposesof the Scheme 2003. The justification and rationale for the grant of such options to Mdm Lim Lay Choo isset out in the letter to members dated 14 October 2003, which is enclosed with this Annual Report.

10. “That the Directors of the Company be and are hereby authorised pursuant to and in accordance with the SinSoon Huat Share Option Scheme (the “Scheme 2003”), to offer and grant to Mdm Lim Lay Pheng (who hasabstained from voting) within one month from the date of the Annual General Meeting of the Company heldon 31 October 2003, options (which shall be Discounted Options, as defined in the Scheme 2003) to subscribefor 180,000 ordinary shares of $0.01 each in the capital of the Company (“Shares”) under the Scheme 2003 ata subscription price for each Share of $0.065, representing a discount of 20 per cent. to the average of the lastdealt prices for a Share, as determined by reference to the daily official list or any other publication publishedby the Singapore Exchange Securities Trading Limited (“SGX-ST”), for the three consecutive days during whichthe SGX-ST was opened for trading in securities immediately preceding 30 September 2003, being the latestpracticable date prior to the printing of the letter to members dated 14 October 2003, subject to any adjustmentsas may be made in accordance with the Scheme 2003, and to allot and issue Shares pursuant to the exercise ofsuch options.”

Note: This resolution, if passed, will empower the Directors to offer and grant options to Mdm Lim Lay Phengin respect of 180,000 ordinary shares of $0.01 each in the capital of the Company at a discountedsubscription price of $0.065, within one month from the date of the Annual General Meeting held on 31October 2003, and to issue such shares to her pursuant to her exercise of such options under the Sin SoonHuat Share Option Scheme (the “Scheme 2003”). Mdm Lim Lay Pheng is the sister and an associate of MrLim Geok Seng, the Managing Director and a Controlling Shareholder (as defined in the Scheme 2003)for the purposes of the Scheme 2003. The justification and rationale for the grant of such options toMdm Lim Lay Pheng is set out in the letter to members dated 14 October 2003, which is enclosed withthis Annual Report.

11. “That the Directors of the Company be and are hereby authorised pursuant to and in accordance with the SinSoon Huat Share Option Scheme (the “Scheme 2003”), to offer and grant to Mdm Lim Lay Hwee (who hasabstained from voting) within one month from the date of the Annual General Meeting of the Company held on31 October 2003, options (which shall be Discounted Options, as defined in the Scheme 2003) to subscribe for110,000 ordinary shares of $0.01 each in the capital of the Company (“Shares”) under the Scheme 2003 at asubscription price for each Share of $0.065, representing a discount of 20 per cent. to the average of the last dealtprices for a Share, as determined by reference to the daily official list or any other publication published by theSingapore Exchange Securities Trading Limited (“SGX-ST”), for the three consecutive days during which the SGX-ST was opened for trading in securities immediately preceding 30 September 2003, being the latest practicabledate prior to the printing of the letter to members dated 14 October 2003, subject to any adjustments as may bemade in accordance with the Scheme 2003, and to allot and issue Shares pursuant to the exercise of such options.”



Note: This resolution, if passed, will empower the Directors to offer and grant options to Mdm Lim Lay Hweein respect of 110,000 ordinary shares of $0.01 each in the capital of the Company at a discountedsubscription price of $0.065, within one month from the date of the Annual General Meeting held on 31October 2003, and to issue such shares to her pursuant to her exercise of such options under the Sin SoonHuat Share Option Scheme (the “Scheme 2003”). Mdm Lim Lay Hwee is the sister and an associate of MrLim Geok Seng, the Managing Director and a Controlling Shareholder (as defined in the Scheme 2003)for the purposes of the Scheme 2003. The justification and rationale for the grant of such options toMdm Lim Lay Hwee is set out in the letter to members dated 14 October 2003, which is enclosed with thisAnnual Report.

12. “That the Directors of the Company be and are hereby authorised pursuant to and in accordance with the SinSoon Huat Share Option Scheme (the “Scheme 2003”), to offer and grant to Mr Lim Hoo Hock (who hasabstained from voting) within one month from the date of the Annual General Meeting of the Company heldon 31 October 2003, options (which shall be Discounted Options, as defined in the Scheme 2003) to subscribefor 180,000 ordinary shares of $0.01 each in the capital of the Company (“Shares”) under the Scheme 2003 ata subscription price for each Share of $0.065, representing a discount of 20 per cent. to the average of the lastdealt prices for a Share, as determined by reference to the daily official list or any other publication publishedby the Singapore Exchange Securities Trading Limited (“SGX-ST”), for the three consecutive days during whichthe SGX-ST was opened for trading in securities immediately preceding 30 September 2003, being the latestpracticable date prior to the printing of the letter to members dated 14 October 2003, subject to any adjustmentsas may be made in accordance with the Scheme 2003, and to allot and issue Shares pursuant to the exercise ofsuch options.”

Note: This resolution, if passed, will empower the Directors to offer and grant options to Mr Lim Hoo Hock inrespect of 180,000 ordinary shares of $0.01 each in the capital of the Company at a discounted subscriptionprice of $0.065, within one month from the date of the Annual General Meeting held on 31 October2003, and to issue such shares to him pursuant to his exercise of such options under the Sin Soon HuatShare Option Scheme (the “Scheme 2003”). Mr Lim Hoo Hock is the brother-in-law of Mr Lim Geok Seng,the Managing Director and a Controlling Shareholder (as defined in the Scheme 2003) for the purposesof the Scheme 2003. The justification and rationale for the grant of such options to Mr Lim Hoo Hock isset out in the letter to members dated 14 October 2003, which is enclosed with this Annual Report.

13. “That the Directors of the Company be and are hereby authorised pursuant to and in accordance with the SinSoon Huat Share Option Scheme (the “Scheme 2003”), to offer and grant to Mr Lim Oh Ann (who has abstainedfrom voting) within one month from the date of the Annual General Meeting of the Company held on 31October 2003, options (which shall be Discounted Options, as defined in the Scheme 2003) to subscribe for110,000 ordinary shares of $0.01 each in the capital of the Company (“Shares”) under the Scheme 2003 at asubscription price for each Share of $0.065, representing a discount of 20 per cent. to the average of the lastdealt prices for a Share, as determined by reference to the daily official list or any other publication publishedby the Singapore Exchange Securities Trading Limited (“SGX-ST”), for the three consecutive days during whichthe SGX-ST was opened for trading in securities immediately preceding 30 September 2003, being the latestpracticable date prior to the printing of the letter to members dated 14 October 2003, subject to any adjustmentsas may be made in accordance with the Scheme 2003, and to allot and issue Shares pursuant to the exercise ofsuch options.”

Note: This resolution, if passed, will empower the Directors to offer and grant options to Mr Lim Oh Ann inrespect of 110,000 ordinary shares of $0.01 each in the capital of the Company at a discounted subscriptionprice of $0.065, within one month from the date of the Annual General Meeting held on 31 October2003, and to issue such shares to him pursuant to his exercise of such options under the Sin Soon HuatShare Option Scheme (the “Scheme 2003”). Mr Lim Oh Ann is the nephew of Mr Lim Geok Seng, theManaging Director and a Controlling Shareholder (as defined in the Scheme 2003) for the purposes ofthe Scheme 2003. The justification and rationale for the grant of such options to Mr Lim Oh Ann is setout in the letter to members dated 14 October 2003, which is enclosed with this Annual Report.



14. “That the Directors of the Company be and are hereby authorised pursuant to and in accordance with the SinSoon Huat Share Option Scheme (the “Scheme 2003”), to offer and grant to Mdm Lim Swee Ling (who hasabstained from voting) within one month from the date of the Annual General Meeting of the Company heldon 31 October 2003, options (which shall be Discounted Options, as defined in the Scheme 2003) to subscribefor 80,000 ordinary shares of $0.01 each in the capital of the Company (“Shares”) under the Scheme 2003 at asubscription price for each Share of $0.065, representing a discount of 20 per cent. to the average of the lastdealt prices for a Share, as determined by reference to the daily official list or any other publication publishedby the Singapore Exchange Securities Trading Limited (“SGX-ST”), for the three consecutive days during whichthe SGX-ST was opened for trading in securities immediately preceding 30 September 2003, being the latestpracticable date prior to the printing of the letter to members dated 14 October 2003, subject to any adjustmentsas may be made in accordance with the Scheme 2003, and to allot and issue Shares pursuant to the exercise ofsuch options.”

Note: This resolution, if passed, will empower the Directors to offer and grant options to Mdm Lim Swee Lingin respect of 80,000 ordinary shares of $0.01 each in the capital of the Company at a discounted subscriptionprice of $0.065, within one month from the date of the Annual General Meeting held on 31 October2003, and to issue such shares to her pursuant to her exercise of such options under the Sin Soon HuatShare Option Scheme (the “Scheme 2003”). Mdm Lim Swee Ling is the niece of Mr Lim Geok Seng, theManaging Director and a Controlling Shareholder (as defined in the Scheme 2003) for the purposes ofthe Scheme 2003. The justification and rationale for the grant of such options to Mdm Lim Swee Ling isset out in the letter to members dated 14 October 2003, which is enclosed with this Annual Report.

By Order of the Board

Au Yeong Kok CheeCompany Secretary

Singapore,14 October 2003

A member of the Company entitled to attend and vote at this meeting is entitled to appoint one or two proxies toattend and vote instead of him and such proxy need not be a member of the Company.

The instrument appointing a proxy must be deposited at the Registered Office of the Company at 19 Jurong PortRoad, Singapore 619093 not less than 48 hours before the time appointed for the holding of the meeting oradjourned meeting.



SIN SOON HUAT LIMITED(Incorporated in the Republic of Singapore)

ANNUAL GENERAL MEETINGPROXY FORM

IMPORTANT1. For investors who have used their CPF monies to buy Sin Soon Huat

Limited’s shares, this Annual Report is sent to them at the request oftheir CPF Approved Nominees solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall beineffective for all intents and purposes if used or purported to be usedby them.

I/WE .........................................................................................................................................................................................(BLOCK LETTERS)OF.................................................................................................................................................................................................................being a member/members of the abovenamed Company, hereby appoint

Name Address NRIC/Passport Proportion OfNumber Shareholdings (%)

and/or (delete as appropriate)

as my/our proxy/proxies to vote for me/us on my/our behalf, at the Annual General Meeting of the Company, to beheld on 31st October 2003 at 10.30 am, and at any adjournment thereof. I/We direct my/our proxy/proxies to vote foror against the resolutions to be proposed at the Meeting as indicated hereunder. If no specific direction as to votingis given, the proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matterarising at the Meeting.

To be used on To be used ina show of hands the event of Poll

No. Resolutions Relating To: * For * Against ** For ** Against1. Adoption of Reports and Accounts2. Approval of Directors’ Fees3. Re-election of the following Directors retiring by rotation

a) Mr Lim Geok Sengb) Mr Yeh Jin Sien @ Yap Jin Hienc) Mr Lim Teck Seng

4. Re-appointment of the following Directors under Section 153(6)of the Companies Act, Cap. 50a) Mr Lee Khoon Choyb) Mdm Tan Bee Eng

5. Re-appointment of Auditors6. Authority for Directors to issue shares7. Authority for Directors to issue shares relating to the SSH

Executives’ Share Option Scheme8. Authority for Directors to grant options and issue shares relating

to the Sin Soon Huat Share Option Scheme (“Scheme 2003”)9. Authority for Directors to grant discounted option to Mdm Lim

Lay Choo under the Scheme 200310. Authority for Directors to grant discounted option to Mdm Lim

Lay Pheng under the Scheme 200311. Authority for Directors to grant discounted option to Mdm Lim

Lay Hwee under the Scheme 200312. Authority for Directors to grant discounted option to Mr Lim

Hoo Hock under the Scheme 200313. Authority for Directors to grant discounted option to Mr Lim

Oh Ann under the Scheme 200314. Authority for Directors to grant discounted option to Mdm Lim

Swee Ling under the Scheme 2003

* Please indicate your vote “For” or “Against” with a “�” within the box provided.

** If you wish to exercise all your votes “For” or “Against”, please indicate with a “�” within the box provided.Alternatively, please indicate the number of votes as appropriate.

Total Number of Shares Held

Dated this _________ day of __________ 2003.

__________________________________Signature(s) of Member(s)/Common Seal of Corporate Member

IMPORTANT: PLEASE READ NOTES OVERLEAF

✃

NOTES

1. This proxy, duly completed (together with the power of attorney, if any, under which it is signed or a certifiedcopy thereof) must be deposited at the Registered Office of the Company at 19 Jurong Port Road, Singapore619093, not less than 48 hours before the time appointed for the holding of the Meeting or adjourned Meeting.

2. This proxy must be signed by the member or his duly authorised attorney or, if the member is a body corporate,signed under its common seal or by its attorney or duly authorised officer of the corporation.

3. A member of the Company entitled to attend and vote at this Meeting is entitled to appoint up to two proxiesto attend and vote instead of him, and such proxy need not be a member of the Company.

4. When a member appoints two proxies the appointments shall be invalid unless he specifies the proportions ofhis holdings to be represented by each proxy.

5. The Company may reject this proxy if it is improperly completed or illegible. For a member who is a DirectAccount Holder or Depository Agent with the Central Depository (Pte) Limited (“CDP”) the Company mayreject the proxy if such member is not shown in the records of the CDP as certified by CDP to the Company, tohave the Company’s shares entered against his/her name in the Depository Register as at 48 hours before thetime appointed for the Meeting or adjourned Meeting.

Sin Soon Huat Limited

Annual Report

2003

sin soon huat limited - morningstar, inc

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