the business of craftsmanshipcountry’s aircraft retrofitting market. jackspeed is an approved...

The Business of Craftsmanship

A n n u a l R e p o r t 2 0 0 7

®

V I S I ON

To be a leading organisation in the manufacturing and supply of accessories, products and services in the transportation industry.

M I S S I ON

To continuously bring about innovations and quality products in order to ensure customer loyalty andpride, and to achieve customer expansion.

To build a Jackspeed community that provides opportunities for growth through continuous personal development and training.

To safeguard all stakeholders’ interests and maximise returns through enhancement of values.

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About Jackspeed

Letter to Shareholders

Financial Highlights

Board of Directors

Key Management

Operations Review

Corporate Information

Financial Contents

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CONTENTS

Jackspeed Corporation Limited (“Jackspeed” or “the Group”) is a specialist manufacturer and supplier of quality leather trim and accessories for the automobile sector and the aerospace sector. Headquartered in Singapore, we have manufacturing facilities spread across Singapore, Malaysia, Thailand and Indonesia and our customers include renowned international automotive manufacturers such as Ford Asia and General Motors.

Established in 1993, Jackspeed is a specialist manufacturer of custom-fit automotive leather trim for seats, and a supplier of leather wrapping for interior automotive parts such as steering wheels, consoles and shift knobs. Capitalising on our technical strength and expertise and our keen attention to details, the Group was able to penetrate the niche market of leather, polyvinyl chloride and fabric seat customisation. Jackspeed is recognized in Southeast Asia for quality automotive leather trim. Our commitment to customer satisfaction is the cornerstone of Jackspeed’s growing brand premium and is the foundation to our continued success in this highly competitive market.

In 2006, Jackspeed leveraged on its experience in the leather trim business and broadened its product portfolio into the automotive accessories sector, supplying, assembling and installing automobile products and non-factory fitted accessories. With our extended product portfolio, we now provide our customers with a comprehensive and complementary one-stop range of automotive accessories products and services.

Jackspeed also supplies leather upholstery to specialised aerospace and marine industries such as private jets, commercial planes, helicopters and pleasure crafts. Riding on Singapore’s establishment as a regional Aviation Maintenance Repair and Overhaul hub, the Group has made inroads into the country’s aircraft retrofitting market. Jackspeed is an Approved Vendor of ST Aerospace Engineering Pte Ltd, a Preferred Partner of Hawker Pacific Asia Pte Ltd and an Authorised Vendor for AirAsia Berhad.

Accredited by international agencies, Jackspeed has received numerous quality certifications including ISO/TS 16949, the 14th Europe Award for quality, ISO 14001 (for environmental management), OHSAS 18001 certification (for occupational health and safety management system) and TUV Kraftfahrt Gmbh (for air bag safety).

ABOUT JACKSPEED

1Jackspeed Corporation Limited // Annual Report 2007

Dear Shareholders,

We are pleased to present to you the Annual Report for Jackspeed Corporation Limited (“Jackspeed” or our “Group”) for the financial year ended 28 February 2007 (“FY2007”).

The year under review was one of challenges, during which we embarked on strategic initiatives to enhance our foothold in the European automobile accessories market, strengthen our competitive edge in the Thailand automotive industry and widen our customer base.

The year was marked by several milestones, beginning with the maiden contribution to the Group’s performance by Jackson Vehicle Holdings Pte Ltd (“JVH”), a specialty manufacturer of automotive accessories which our Group acquired in March 2006 as part of our strategy to expand our product portfolio and consolidate the Group’s position within the regional automotive market. This was followed by two joint ventures with our strategic partner in Thailand, AAPICO Hitech Public Co., Ltd (“AAPICO”) – a leading original equipment manufacturer (“OEM”) of automobile parts, car assembly jigs and chassis frames — and the steady growth of the Group’s aviation business.

Group revenue rose 37.5% to S$43.7 million for FY2007 from S$31.8 million in FY2006, on the strength of the substantial S$18.0 million contribution from JVH and higher sales from our aviation business. However, we were affected by the conclusion of a supply contract from a Thailand OEM customer which hindered an otherwise good year of growth.

Net profit attributable to shareholders increased 12.6% to S$2.9 million in FY2007 compared to S$2.6 million a year ago riding on additional contributions of S$1.5 million from our new automotive accessories business. It was partially lowered by lower contribution from the leather trim business.

We are pleased that the revenue growth reflects the success of our strategy to expand our product portfolio and widen our earnings base. We believe JVH will continue to pave the way for the Group to capitalise on the booming Thailand OEM industry, widen our regional marketing footprint and usher in more business opportunities during and beyond FY2008.

In line with higher sales from the Thailand market, which increased 170% to S$11.9 million in FY2007, and its strong growth potential, our Group embarked on two joint ventures with AAPICO.

In June 2006, we entered into a joint venture with AAPICO and Coryor (S) Pte. Ltd. (“Coryor”), an accessories trader, to incorporate Katsuya International Pte Ltd (“Katsuya International”) in Singapore. Katsuya International – which is 51% owned by Jackspeed, specialises in providing dip-printing services and manufacture of fabric-sprays to automotive OEM markets in countries such as Thailand. Riding on AAPICO’s extensive industrial network and reputation, Katsuya International will be able to jumpstart its market penetration into the automotive OEM markets in Thailand and other parts of Asia and contribute to Jackspeed’s future performance.

LETTER TO SHAREHOLDERS

Yeap Swee Chuan Chairman

Liew Ham ChowChief Executive Officer

2 Jackspeed Corporation Limited // Annual Report 2007

Another significant development in June 2006 was the incorporation of an associate company, AAPICO Jackspeed Co., Ltd (“AAPICO Jackspeed”), in which Jackspeed has a 40% stake. Our Group will use AAPICO Jackspeed as a vehicle to penetrate the global car accessories market, starting with the manufacture and supply of automobile parts. Production commenced in the first quarter of FY2008 and AAPICO Jackspeed is now a “second-tier supplier” for Ford Thailand. Through this joint venture, our Group has received fresh impetus to secure a bigger slice of the increasingly competitive Thailand automotive market in FY2008.

Europe is the largest automotive region in the world and remains a core market for Jackspeed’s distribution business. Our Group has established a significant presence there through our sales office in Belgium. Mindful of a possible slowdown in car sales for this region in FY2008, we have adopted a prudent expansion policy in this geographical market for our leather trim business. The successful integration of JCL and JVH has paved the way for the Group to make inroads into Europe’s car accessories market.

The Group’s aviation business took off this year and recorded robust growth in FY2007. Revenue from this sector grew by 143.6%, driven by Singapore’s establishment as a regional hub for Aviation Maintenance Repair and Overhaul (“MRO”). Jackspeed will continue to lay the foundations for future expansion in the regional aviation sector by setting up a seat repair station in FY2008. When completed, the repair station will allow the Group to provide specialised services to commercial air carriers and further expand our earnings base.

Financial Position and Dividends

The Group closed the year with a stronger balance sheet, as net asset value per share increased to 16.96 Singapore cents as at 28 February 2007 compared to 15.69 Singapore cents a year ago. The Group also increased its cash and cash equivalents balance by 48.3% to S$11.2 million as at 28 February 2007 from S$7.6 million a year earlier.

To reward our loyal shareholders for their continued support, the Board of Directors is pleased to propose a final exempt (one-tier) dividend of 0.7 Singapore cents per share to be approved at the upcoming Annual General Meeting. Together with the interim exempt (one-tier) dividend of 0.3 Singapore cents per share announced earlier, the total exempt (one-tier) dividend of 1.0 Singapore cents for FY2007 represents a gross yield of around 6% based on closing share price as at 27 April 2007.

Acknowledgements

Jackspeed has been able to achieve growth in both revenue and net profit for FY2007 despite the challenges faced. This would not be possible without the continued support from our shareholders, our customers, our business partners, and the hard work and diligence from our management and staff. On the Board’s behalf, please accept our heartfelt appreciation and thanks.

Yeap Swee Chuan Chairman

Liew Ham ChowChief Executive Officer


Consistency in Quality

FINANCIAL HIGHLIGHTS

Profit before tax $’ million

Profit for the year $’ million

3.8

3.5 3.5

2.6

03 04 05 06

3.8

07

Revenue

Profit before tax

Profit for the year

23.7

3.8

2.8

26.9

2.6

2.0

32.8

3.5

2.5

43.7

3.8

2.9

$’million 2003 2004 2005 2007

31.8

3.5

2.6

2006

2.9

2.62.5

2.0

2.8

03 04 05 06 07

43.7

31.832.8

26.9

23.7

03 04 05 06 07

Revenue$’ million


BOARD OF DIRECTORS

YEAP SWEE CHUAN was appointed the Group’s Non-Executive Chairman on 7 July 2006 and helms the development of Jackspeed’s future business and expansion plans within the region and beyond. With over two decades of experience in the regional automotive industry, Mr Yeap brings to the Group a wealth of regional management and operating experience and a strong network of close working relationships with international car manufacturers. Considered to have played an important role in Thailand’s emergence as the “Detroit of the East”, Mr Yeap was the founder of AAPICO Hitech Public Co., Ltd (“AAPICO”) – the first Malaysian-Thailand automotive parts company listed on the Thailand Stock Exchange. Under his leadership, AAPICO grew to become one of the largest automotive parts company in Thailand. He is currently the director of Goodyear (Thailand) Public Co., Ltd, Chairman of the Malaysian-Thailand Chamber of Commerce, and sits on the Board of Trade of Thailand as director. Mr Yeap has a Bachelor of Technology degree from New Zealand.

LIEW HAM CHOW, JACKSON has been our Executive Director since 1994 and Chief Executive Officer since 2003. In July 2006, Mr Liew relinquished his role as Chairman and Mr Yeap Swee Chuan was appointed the Group’s Non-Executive Chairman. As CEO, he charts and reviews our corporate direction and business strategies and is responsible for the Group’s strategic operations and overall performance. Mr Liew has been involved in the automotive industry through the incorporation of Jackson Vehicle Service Centre in 1983 and Jackspeed Automobile Service Centre in 1986 as workshops for the repair and maintenance of motor vehicles. As one of our founding shareholders, Mr Liew was pivotal in the development of the Group’s automotive leather trim business from a small-medium enterprise with nine employees to a recognised brand name in the region for quality automotive leather trim with 750 staff and manufacturing facilities in Singapore, Malaysia, Thailand and Indonesia. Mr Liew has an honorary Bachelor of Science (Business Administration) from Kennedy-Western University, Cheyenne, Wyoming, the USA. Mr Liew was awarded the title of “The Entrepreneur of the Year” in 2003 by the Rotary Club of Singapore and the Association of Small and Medium Enterprises (ASME).

VOO JUN HING, VINCENT was appointed as an Executive Director of the Group on 11 October 2004. With over 15 years of experience in finance and management, Mr Voo is responsible for the Group’s finance, accounts, statutory compliance and overall corporate governance. Mr Voo joined our Group in 2000 as our Administration and Human Resource Manager and was promoted to General Manager of our Malaysia subsidiary and subsequently General Manager of Singapore operations, before assuming his present appointment. Prior to joining our Group, Mr Voo worked at a Malaysia licensed tax firm, Taxplan Management Services Sdn Bhd as a senior tax supervisor from 1989 to 1992. Mr Voo has a Diploma in Business Studies from Southern College, Johor Bahru, Malaysia and a Higher Stage Group Diploma in Accounting from London Chamber of Commerce and Industry, and is an Accounting Administrator of the Malaysian Association of Accounting Administrators.

HO CHOON MENG, SIMON was appointed an Executive Director of the Group on 7 July 2006 and oversees Jackspeed’s accessories arm as well as the development of the Group’s business and expansion plans. A founding member of JVH and having risen through the ranks from a sales manager to become its Chief Operating Officer, Mr Ho brings with him more than ten years of experience in sales and business development. He is well versed in the business of car accessories and continues to spearhead JVH’s development in the car accessories business, including sourcing, production, engineering, sales and marketing.


LEE SENG JEOW, ANDREW was appointed an Executive Director of the Group on 7 July 2006. He is responsible for the management of the sales and marketing division and supports in the Group’s operational and expansion initiatives. Mr Lee has over 15 years of experience in the automotive industry and an in-depth understanding of the region’s operating environment. Prior to joining our Group, Mr. Lee was a founding member of JVH as its Deputy Chief Executive Officer, and was tasked with directing the company’s business and expansion strategies. He had also served as Senior Manager for Tan Chong International Ltd where he led a highly motivated and enthusiastic sales force, and with Premium Automobiles as General Manager for Sales and Marketing, where he formulated and implemented the company’s marketing and business strategies. Mr Lee has a Diploma in Production Engineering from the Singapore Polytechnic and graduated with a Bachelor degree in Social Sciences from the University of Calgary, Canada in 1991.

ANG KIAN LEE was appointed as an Executive Director of the Group on 7 July 2006 and is responsible for the development of new business ventures of the Group. Prior to this appointment, Mr Ang was appointed our Non-Executive Director on 8 December 2005. Mr Ang has 20 years of management experience as director of the Lion Group of Companies in Indonesia, including listed PT Lion Metal Works and worked as a Bank Inspector with the Monetary Authority of Singapore from 1974 to 1979. He is currently a director of Raeco Pte Ltd – a company dealing with financial investments and he is also a commissioner of P.T. Djabesmen Indonesia. He graduated from the Nanyang University of Singapore with a Bachelor of Commerce (Honours) degree in 1974.

CHANG YEH HONG was appointed as an Independent Director of the Group on 9 October 2003. He is currently the managing director of Nordic Corporation Pte Ltd and its related companies. Prior to this appointment, Mr Chang was an executive director of Technics Group Holdings Ltd, in charge of finance and corporate development. He has over 18 years of experience in banking with Standard Chartered Bank and Citibank, holding local, regional and global positions. Prior to 2002, he was the regional managing director of Asia Pacific with Citibank and global head of a product group with Standard Chartered Bank. Mr Chang holds a Bachelor of Arts degree majoring in Economics from the National University of Singapore and has completed the International Executive Management Programme in INSEAD Fontainebleau, France and the Business Financial Management Programme with Manchester Business School, UK.

LEE KIM LIAN, JULIANA was appointed as an Independent Director of the Group on 30 September 2005. She is a director of Aptus Law Corporation (formerly known as Chui, Sim, Goh & Lim, Advocates and Solicitors). Ms Lee has more than 15 years of experience in legal practice and currently heads the corporate practice of Aptus Law Corporation. Her main areas of practice are corporate law, corporate finance, mergers and acquisitions and venture capital. She is currently also an independent director of FM Holdings Ltd and Lee Metal Group Ltd. She graduated with a Bachelor of Laws (Honours) degree from the National University of Singapore.


LIEW SAN CHOW is our General Manager in charge of our Indonesia operations, covering administration, human resource and production functions. He joined our Group in 1996 as a Production Manager in charge of the daily operations in the production of automotive leather trim. Prior to joining our Group, he worked in Jackspeed Automobile Service Centre as a manager supervising the daily operations for the repair and servicing of cars.

PANG PUI FUN is our General Manager in charge of Singapore operations. Ms Pang joined the Group in 1995 as an Administrative Assistant and through her exemplary efforts progressed within the Group. Prior to her present appointment, Ms Pang was the Assistant General Manager of Singapore operations from 2005 and the Group Purchasing Manager from 2003, responsible for the entire Group’s procurement function and logistic management. Ms Pang was a quality assurance auditor in an electronics company, from 1992 to 1994. Ms Pang has a Bachelor of Science in Business Management from Management Development Institute of Singapore.

LIM KIAN KOK is our General Manager in charge of Malaysia operations. Mr Lim joined the Group in 2001 as a Marketing Executive for our Malaysia factory. In 2004, he was made the Quality Assurance Manager of Malaysia operations and Group’s management representative for Quality, Environmental, Occupational Health and Safety management systems, responsible for the Group’s quality control procedures and continued compliance with ISO/TS 16949, ISO 14001 and OHSAS 18001 standards. He was promoted in 2005 to Assistant General Manager in charge of Malaysia operations. Mr Lim has a Bachelor in Business Administration from National Cheng Chi University, Taipei and was the Branch Officer-in-charge at Hong Leong Assurance Bhd when he left in December 2000.

PHAU SOEK CHING is our General Manager in charge of Thailand operations. Ms Phau joined the Group in 2004 as the Personal Assistant to the CEO. In 2005, she assumed the position of Assistant General Manager in charge of the Thailand operations. Prior to joining the Group, Ms Phau was assistant to the Managing Director for Pan Asian Metal Pte Ltd and was seconded to China from 1999 to 2004. Ms Phau worked as a dealer for OUB Securities Pte Ltd from 1994 to 1998 and possesses the necessary cross-border exposure and knowledge to ensure the continued success of our Thailand operations. Ms Phau has a Bachelor of Arts and Social Sciences, majoring in Economics and Chinese Studies from the National University of Singapore.

KHOO SOO FANG is our Financial Controller responsible for overseeing and supervising the Finance Department as well as monitoring the performance of our subsidiaries. Prior to joining us in 2001, Ms Khoo was an audit assistant at Messrs Foo, Kon & Tan from 1990 to 1991. She joined Coop international Pte Ltd as an accountant in 1991 and Glenn Industries (Asia) Pte Ltd as an accountant in 1994. She was the finance manager for Yenom Holdings Pte Ltd from 1997 to 2001. Ms Khoo has a Bachelor of Accountancy from the Nanyang Technological University and is a member of the Institute of Certified Public Accountants of Singapore.

NG CHONG JIN is our Head of Corporate Affairs in charge of identifying and evaluating new business opportunities such as mergers, acquisitions and general business expansion. Mr Ng joined the Group in 2005 bringing with him a wealth of investment and financial experience. Prior to his joining, Mr Ng was a senior credit and marketing officer in United Overseas Bank Limited. He joined Joo Cheong Co Pte Ltd as its Business Development Manager in 1997, and was the Chief Executive Officer of Pivota.com Sdn Bhd from 2000. He was also the Investment and Business Development Manager for Ng Chong Geng & Sons Sdn Bhd from 2001. Mr Ng has a Bachelor of Science majoring in Banking and Finance from the University of Missouri-Columbia, USA.

KEY MANAGEMENT


Mastery of Innovation

OPERATIONS REVIEW

Financial Performance

FY2007 saw Jackspeed expanding its product portfolio beyond the leather trim business. We successfully added a new dimension, the automotive accessories business, through our investment in our newly acquired subsidiary, Jackson Vehicle Holdings (“JVH”), which has resulted in significant returns.

Group revenue was 37.5% higher at S$43.7 million in FY2007 compared to S$31.8 million in FY2006, boosted mainly by the maiden contribution of the automotive accessories business and strong revenue growth from our aviation business. Revenue from the Group’s leather trim business on the other hand, was affected by the conclusion of a major supply contract in June 2006 and a slowdown in sales from our Malaysian market where car production volume has fallen. This resulted in relatively lower revenue contributions from the leather trim business as compared to the previous year.

Profit attributable to shareholders increased 12.6% to S$2.9 million for FY2007 from S$2.6 million for FY2006. The higher profit was attributable mainly to the Group’s new automotive accessories business which contributed S$1.5 million to the profit, but this was partially offset by lower contribution from the leather trim business.

Net profit margin however declined to 6.7% in FY2007 from 8.2% in FY2006, due mainly to lower utilisation of the Group’s production capacity, amortisation of intangibles and share of loss in associates which amounted to S$0.41 million.

Financial Position

The Group closed the year with a strengthened financial position. On an enlarged share capital, net asset value per share increased to 16.96 Singapore cents (on 174,666,667 shares) as at 28 February 2007 compared to 15.69 Singapore cents (131,000,000 shares) a year earlier.

This was backed by a stronger cash and cash equivalent balance held of S$11.2 million as at 28 February 2007, an increase of S$3.6 million or 48.3% from S$7.6 million as at 28 February 2006. The increase came about as cash flow from financing activities increased to S$5.4 million for FY2007 from an outflow of S$3.8 million for FY2006, mainly due to the proceeds from the share placement during the year. This was offset by lower cash from operating activities from S$3.0 million for FY2006 to S$1.4 million for FY2007 and an increase in cash used in investing activities to S$3.3 million for FY2007 from

S$0.1 million for FY2006 due mainly to the investments in JVH and associate companies.

Segmental Contribution

Distributor market

The distributor market continues to be the main contributor to the overall revenue of the Group, accounting for S$21.6 million or 49.3% of total revenue for FY2007. The S$4.2 million or 24.4% increase in revenue from S$17.4 million for FY2006 was mainly due to the maiden contribution of the newly added automotive accessories business. The leather trim distributor market had a challenging year and recorded S$16.8 million in sales revenue for FY2007 compared to S$17.3 million a year ago. While significant potential exists within the segment, our leather trim business was affected by the end of production life-cycles for certain car models which resulted in lower sales to a distributor in Singapore and smaller increases in orders from other customers.

OEM market

The OEM market accounted for S$17.2 million or 39.2% of Group revenue for FY2007 compared to S$11.4 million for FY2006. The S$5.8 million increase was attributable mainly to the revenue from the automotive accessories business that was newly added in FY2007. The OEM market for the leather trim business struggled during the year as a supply contract to a customer in Thailand with whom the Group has been contracted for leather trim assembly since 2002, expired in June 2006 and sales of Malaysian automobile also experienced an unusual dip during the year. These affected revenue contributions from the leather trim business which declined to S$5.4 million in FY2007 from S$11.4 million in FY2006.

Retail, after-market and non-automotive

Retail, after-market and non-automotive generated S$5.0 million or 11.4% of Group revenue for FY2007 compared to S$3.1 million for FY2006. Retail and after-market grew in tandem with the Group’s focus on expanding its presence in this segment. The automotive segment, which includes our aviation business, benefited from Singapore’s emergence as a regional aviation Maintenance, Repair and Overhaul hub (“MRO”) and its revenue grew as it secured more retrofitting jobs in FY2007.


Business Outlook

The global automotive industry grew 3% in 2006 with over 50 million passenger cars produced. While the traditional automotive markets – Europe and the US – have experienced a slowdown, the Southeast Asian automotive industry continues to grow due to the lower operating costs which led many renowned car makers to shift their production bases to the region. Riding on this trend, the automotive industries in Thailand and Malaysia – countries where Jackspeed’s plants are based – will continue to experience significant growth in the near future.

We expect the market conditions for our leather trim business to remain challenging in FY2008 as the rise in leather material prices will have an impact on gross margins. To moderate the price increase of leather, our Group has initiated discussions with our customers to increase our selling prices and is sourcing for alternative leather-based material to reduce raw material cost. We will intensify our marketing efforts to expand our customer base and we will continue to explore additional co-operation opportunities with other automotive manufacturers.

Having widened our earnings base into the automotive accessories and aviation businesses, we will continue to build and strengthen our presence in the market. We will endeavour to grow our market share of the automotive accessories both in Europe and the Southeast Asia, particularly in the highly competitive Thailand automotive industry where we have our newly formed joint venture, AAPICO Jackspeed, an alliance with AAPICO Hitech Public Co., Ltd who is one of Thailand’s biggest suppliers of car parts.

The Group is optimistic about the growth opportunities of its aviation business, particularly in Singapore, which has established itself as the regional hub for Aviation MRO, and we will continue to lay the foundation for expansion into the regional aviation sector.

At the same time, we will continue to seek out new opportunities to expand into or invest in regions and businesses with strong growth potential.


CORPORATE INFORMATION

BOARD OF DIRECTORS

Yeap Swee Chuan(Non-Executive Chairman)Liew Ham Chow(Executive Director and Chief Executive Officer)Voo Jun Hing(Executive Director)Lee Seng Jeow(Executive Director)Ho Choon Meng (Executive Director)Ang Kian Lee (Executive Director)Chang Yeh Hong(Independent Director)Lee Kim Lian Juliana (Independent Director)

JOINT COMPANY SECRETARIES

Low Mei Mei Maureen, ACIS, LLB (Hons) (London)Khoo Soo Fang, CPA

REGISTERED OFFICE

47 Loyang DriveSingapore 508955Tel: (65) 6788 2088Fax: (65) 6789 0020Website: www.jackspeed.comEmail: [email protected]

SHARE REGISTRAR AND SHARE TRANSFER OFFICE

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

AUDITORS

RSM Chio Lim(member of RSM International)18 Cross Street #09-01Marsh & McLennan CentreSingapore 048423

PRINCIPAL BANKERS

Malayan Banking BerhadDBS Bank LimitedUnited Overseas Bank LimitedHong Leong Bank Berhad


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Corporate Governance Report

Report of the Directors

Statement of Directors

Independent Auditors’ Report

Balance Sheets

Consolidated Income Statement

Statements of Changes in Equity

Consolidated Cash Flow Statement

Notes to Financial Statements

Statistics of Shareholdings

Notice of Annual General Meeting

Proxy Form

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FINANCIAL CONTENTS


CORPORATE GOVERNANCE REPORT

The Board and Management of Jackspeed Corporation Limited (the “Company”) is committed to achieving high

standards of corporate governance for the sustainability and stability of the Group’s performance.

This Report describes the Company’s corporate governance framework and practices with specifi c reference made

to each of the principles of the Code of Corporate Governance 2005 (“the Code”). Where otherwise indicated, the

Company believes that it has and will remain compliant with the Code.

Principle 1 – The Board’s Conduct Of Its Affairs

The Board consists of eight members, comprising a Non-Executive Chairman, two Non-Executive Independent

Directors and fi ve Executive Directors. Together, the Directors bring a wide range of business, legal and fi nancial

experience relevant to the Group.

The Board sets the overall business direction, provides guidance on the Company’s strategic plans with particular

attention paid to growth and fi nancial performance and oversees the management of the Company. The principal

functions of the Board include:

(a) Approving policies, strategies and fi nancial objectives of the Company and monitoring the performance of

Management;

(b) Overseeing the processes for evaluating the adequacy of internal controls, risk management, fi nancial reporting

and compliance;

(c) Approving nominations of Board Directors, committee members and key personnel; and

(d) Approving annual budgets, funding requirements, expansion programme, capital investment, major acquisitions

and divestments proposals.

To ensure smooth and effective running of the Group and to facilitate decision making, the Board has delegated

some of its powers and functions to various Committees, such as the Audit Committee, Nominating Committee and

Remuneration Committee which are headed by Independent Directors. These Committees operate within their own

written terms of reference.

The Board meets regularly to discuss and address Board matters. The Company’s Articles of Association provide for

the Board to convene meetings via teleconferencing and electronic means. During the fi nancial year, the Board met 5

times. The number of Board Meetings held and the attendance of each Board member at the meetings for the fi nancial

year ended 28 February 2007 are disclosed below:

Name of DirectorNumber of meetingsheld while a member

Number of meetingsattended

Yeap Swee Chuan (1)

Non-Executive Chairman2 2

Liew Ham Chow

Executive Director and Chief Executive Offi cer

5 4

Voo Jun Hing

Executive Director

5 5

Chang Yeh Hong

Independent Director

5 5

Lee Kim Lian, Juliana

Independent Director

5 5

Ang Kian Lee

Executive Director

5 5

Ho Choon Meng (1)

Executive Director

2 2

Lee Seng Jeow, Andrew (1)

Executive Director

2 2

(1) Messrs Yeap Swee Chuan, Ho Choon Meng and Lee Seng Jeow, Andrew, were appointed as Directors on 7 July 2006.



The Company has adopted internal guidelines setting forth matters that require Board’s approval. Matters that

specifi cally require Board’s approval are those involving, annual budget, major funding and investment proposals,

mergers and acquisition transactions, release of results announcements and any other announcements, appointment

of Directors and key personnel and all other matters of material importance. The Board will review the guidelines on a

periodical basis to ensure their relevance to the operations of the Company.

Board members are also encouraged to attend seminars and receive training to improve themselves in the discharge

of their duties as Directors. The Company works closely with professionals to provide its Directors with changes to

relevant laws, regulations and accounting standards.

Principle 2 - Board Composition And Guidance

The Company endeavours to maintain a strong and independent element on the Board and will continue to review the

Board size to ensure that it is appropriate and effective to facilitate decision making.

The Independent Directors have confi rmed that they do not have any relationship with the Company or its related

companies or its offi cers that could interfere, or be reasonably perceived to interfere, with the exercise of the Director’s

independent business judgement. The Nominating Committee (“NC”) has reviewed and determined that the said

Directors are independent. The independence of each Director is reviewed annually by the NC.

The Board will review its current size to ensure that it is appropriate and effective to facilitate decision making, taking

into account the nature and scope of the Company’s operations.

Together, the Board members possess a balanced fi eld of core competencies to lead the Company. Details of the

Board members’ qualifi cations and experience are presented in this Annual Report under the heading “Board of

Directors”.

Principle 3 - Chairman And Chief Executive Offi cer

The Chairman and Chief Executive Offi cer (CEO) functions are assumed by different individuals. The Chairman, Mr

Yeap Swee Chuan, is a Non-Executive Director, while Mr Liew Ham Chow is an Executive Director and CEO. The clear

division of responsibilities between the Chairman and the CEO ensures proper balance of power and authority in the

Company.

The CEO is the most senior executive in the Company and assumes executive responsibility for the Company’s

business, while the Chairman assumes the responsibility for the management of the Board. The Chairman ensures

that regular Board meetings are held and ad-hoc meetings are convened when necessary. The Chairman ensures that

the Board members are provided with complete, adequate and timely information.

Principle 4 - Board Membership

The Nominating Committee (“NC”) comprises three members, a majority of whom including the Chairman are Non-

Executive Independent Directors.

Chairman : Lee Kim Lian, Juliana

Member : Chang Yeh Hong

Member : Liew Ham Chow

The NC is established for the purposes of ensuring that there is a formal and transparent process for all board

appointments. It has adopted written terms of reference defi ning its membership, administration and duties. The NC

met twice during the year and was attended by all members.

The duties of the NC are as follows:

(a) To make recommendations to the Board on all board appointments;

(b) To re-nominate Directors having regard to the director’s contribution and performance;

(c) To determine annually whether or not a director is independent; and



(d) To make recommendation to the Board the performance criteria and appraisal process to be used for the

evaluation of the individual Directors as well as the effectiveness of the board as a whole, which criteria and

process shall be subject to board’s approval

The Articles of Association of the Company currently require one-third of the Directors to retire and subject themselves

to re-election by the shareholders in every Annual General Meeting. In addition, all Directors of the Company shall

retire from offi ce at least once every three years.

The dates of fi rst appointment and last election of each director, together with their directorship in other listed

companies are set out below:

Name of Director AppointmentDate of fi rst appointment

Date of lastre-election

Directorships in other listed companies

Yeap Swee Chuan Non-Executive Chairman 7 July 2006 – Aapico Hitech Public Co.,

Ltd

Goodyear (Thailand) Public

Co., Ltd

Liew Ham Chow Executive Director 15 January 1993 28 February 2005 –

Voo Jun Hing Executive Director 11 October 2004 28 February 2005 –

Ang Kian Lee Non-Executive Director

re-designated as

Executive Director

8 December 2005

7 July 2006

28 February 2006 –

Ho Choon Meng Executive Director 7 July 2006 – –

Lee Seng Jeow, Andrew Executive Director 7 July 2006 – –

Chang Yeh Hong Independent Director 9 October 2003 28 February 2006 Union Steel Holdings Ltd

Lim Kim Lian, Juliana Independent Director 30 September 2005 28 February 2006 FM Holdings Ltd

Lee Metal Group Ltd

The details of the Board members’ qualifi cations and experience including the year of initial appointment and election

are presented in this Annual Report under the heading “Board of Directors”.

Principle 5 - Board Performance

The NC evaluates the performance of the Board as a whole as well as the contributions made by each director to the

effectiveness of the Board. The NC will consider the attendance, participation and contribution of individual Directors

at Board and Committee meetings and those factors set out in the Code of Corporate Governance to evaluate the

individual director’s performance.

Principle 6 - Access To Information

The Board is furnished with board papers prior to any Board meeting. These papers are issued in suffi cient time to

enable the Directors to obtain additional information or explanations from the Management, if necessary.

The Directors may communicate directly with the Management team and the Company Secretary on all matters

whenever they deem necessary. The Company Secretary attends Board meetings and is responsible for recording of

the proceedings.

The appointment and removal of the Company Secretary is a matter for the Board as a whole.

The Company currently does not have a formal procedure for Directors to seek independent and professional advice

for the furtherance of their duties. However, Directors may, on a case-to-case basis, propose to the Board for such

independent and professional advice, the cost of which may be borne by the Company.



Principle 7 - Procedures For Developing Remuneration Policies

The Remuneration Committee (“RC”) comprises three members, a majority of whom including the Chairman are Non-

Executive Independent Directors.

Chairman : Chang Yeh Hong

Member : Lee Kim Lian, Juliana

Member* : Liew Ham Chow

* In line with the Code that the RC should comprise entirely of Non-Executive Directors, Mr Yeap Swee Chuan will be

appointed a member of the RC in place of Mr Liew Ham Chow subject to his re-election at the AGM to be held in June

2007.

The RC is established for the purposes of ensuring that there is a formal and transparent procedure for fi xing the

remuneration packages of individual Directors. The overriding principle is that no Director should be involved in

deciding his own remuneration. It has adopted written terms of reference that defi nes its membership, roles and

functions and administration. The RC met twice during the year and was attended by all members.

The duties of the RC are as follows:

(a) To review and recommend to the Board a framework of remuneration for Executive Directors, Chief Executive

Offi cer (“CEO”) and key executives of the Company;

(b) To review the remuneration packages of all managerial staff that are related to any of the Executive Directors or

CEO; and

(c) To recommend to the Board in consultation with senior Management and the Chairman of the Board, the

Executive’s and Employees’ Share Option Schemes or any long-term incentive scheme when applicable.

Principle 8 - Level and Mix of Remuneration

The RC determines the remuneration packages for each Executive Director based on the performance of the Company

and the individual. The remuneration of the Executive Directors is based on service agreements.

The Independent Directors and Non-Executive Directors are paid an annual director’s fee. In determining the quantum

of directors’ fees, factors such as effort and time spent, and responsibilities of the Directors are taken into account.

The RC ensures that none of the Non-Executive Directors are over-compensated to the extent that their independence

may be compromised. The Directors’ fees are subject to shareholders’ approval at the Annual General Meeting.

The remuneration policies for key executives is based largely on the Company’s performance and the responsibilities

and performance of each individual key executive. The RC recommends the remuneration packages of key executives

to the Board for approval.



Principle 9 - Disclosure on Remuneration

The remuneration of Directors for the year ended 28 February 2007 is set out below:

Remuneration Band and Name of Director

Salary and Other Benefi ts

PerformanceBonus(2)

Directors’ Fees(3)

% % %

$250,000 to below $500,000

Liew Ham Chow 90 10 –

Below $250,000

Yeap Swee Chuan (1) – – 100

Voon Jun Hing 91 9 –

Chang Yeh Hong – – 100

Lee Kim Lian, Juliana – – 100

Ang Kian Lee 100 – –

Ho Choon Meng (1) 86 14 –

Lee Seng Jeow, Andrew (1) 86 14 –

(1) Messrs Yeap Swee Chuan, Ho Choon Meng and Lee Seng Jeow, Andrew, were appointed as Directors on 7 July 2006.

(2) Performance bonus will be paid in June 2007

(3) Directors’ fees are subject to Shareholder’s approval at the AGM to be held in June 2007.

The range of gross remuneration of the top six executives (executives who are not Directors) of the Company is as

follows:

Remuneration Band No of Executives

$250,000 and above Nil

Below $250,000 6

There are no immediate family members of a Director or Substantial Shareholder whose remuneration exceeds

$150,000 for the fi nancial year ended 28 February 2007.

Principle 10 - Accountability

The Board is accountable to the shareholders while Management is accountable to the Board.

As defi ned in the Code, the Board presents to shareholders a balanced and understandable assessment of the

Company’s performance, position and prospect. The Management provides all Board members with management

reports and accounts which represent balanced, understandable assessment of the Company’s performance, position

and prospect on a regular basis.

It is the Board’s policy to provide the shareholders with all important and price sensitive information. These are done

through the SGXNET during half-yearly announcements and as and when necessary.



Principle 11 - Audit Committee

The Audit Committee (“AC”) comprises three members, the majority of whom are Non-Executive Independent

Directors.

Chairman : Chang Yeh Hong

Member : Lee Kim Lian, Juliana

Member* : Voo Jun Hing

* Mr Ang Kian Lee will step down as an Executive Director and become a Non-Executive Director after the conclusion of the AGM to

be held in June 2007. In line with the Code that the AC should comprise entirely of Non-Executive Directors, Mr Ang will be appointed

as a member of the AC in place of Mr Voo Jun Hing.

The AC is established to assist the Board with discharging its responsibility to safeguard the Company’s

assets, maintain adequate accounting records and develop and maintain effective systems of internal control.

The Board is of the opinion that the members of the AC possess the necessary qualifi cations and experience

in discharging their duties. The details of the Board member’s qualifi cations and experience are presented in

this Annual Report under the heading “Board of Directors.”

The terms of reference of the AC are as follows:

(a) To review the audit plan, system of internal controls and the audit report in conjunction with both the internal

and external auditors;

(b) To review the assistance given by the Company’s offi cers to both the internal and external auditors;

(c) To review the independence and objectivity of the external auditors annually;

(d) To nominate external auditors for re-appointment;

(e) To review the fi nancial statements of the Company including half-year and full-year results and the respective

announcements before submission to the Board of Directors;

(f) To give due consideration to the requirements of Stock Exchange Listing Rules; and

(g) To review interested person transactions.

In discharging the above duties, the AC confi rms that it has full access to and co-operation from management and is

given full discretion to invite any Director or Executive Director to attend its meetings. In addition, the AC has also been

given reasonable resources to enable it to perform its functions properly.

The AC has conducted an annual review of the volume of non-audit services to satisfy itself that the nature and extent

of such services will not prejudice the independence and objectivity of the auditors before recommending their re-

nomination to the Board.

The Company has adopted a Whistle Blowing Policy with the objective of providing a process for staff to raise, in

confi dence and without fear of retaliation, incidents of possible improprieties in matters of fi nancial reporting or other

matters to the Chairman of the AC.

During the year, the AC met twice and the details of attendance are as follows:

Number of meetingsheld while a member

Number of meetingsattended

Chang Yeh Hong 2 2

Lee Kim Lian, Juliana 2 2

Voo Jun Hing 2 2



Principle 12 - Internal Controls

The Board believes that, in the absence of any evidence to the contrary, the system of internal controls maintained

by the Company’s management provides reasonable assurance against material fi nancial misstatements or loss

and includes the safeguarding of assets, the maintenance of proper accounting records, the reliability of fi nancial

information, compliance with appropriate legislation, regulation and best practice and the identification and

management of business risks.

The Board notes that no system of internal control can provide absolute assurance against the occurrence of material

errors, poor judgment in decision-making, human error, fraud or other irregularities.

Principle 13 - Internal Audit

The Company outsourced its internal audit function to Nexia Tan & Sitoh Certifi ed Public Accountants, to carry out

internal audit review using a risk-based approach. The internal auditors report to the AC and are independent of the

activities it audits.

The internal auditors assist the AC to independently review the system of internal control as established by the

Management of the Company and its subsidiaries which provides the Board with much assurance it requires regarding

the adequacy and integrity of the Group’s system of internal control. The internal auditors review the internal controls

in the key activities of the business based on a three-year internal audit strategy and a detailed internal audit plan

approved by the AC. The internal auditors adopt a risk-based approach and prepare its audit strategy and plan based

on the risk profi les of the Group. Recommendations for improvements noted by the internal auditors are followed up

for implementation by the Management.

During the fi nancial year ended 28 February 2007, the internal auditors carried out two cycles of internal audit to test

the existence and effectiveness of the system of internal control of the Company as well as its subsidiaries.

The AC considers the report from internal auditors before reporting and making recommendations to the Board in

strengthening risk management, internal control and governance system.

Principle 14 - Communication With Shareholders

The Company endeavours to communicate regularly, effectively and fairly with its shareholders.

The Board ensures that materials and information helpful to shareholders is released on a timely basis. All

announcements are communicated to the shareholders through SGXNET.

Principle 15 - Greater Shareholder Participation

The Annual General Meeting is the principal forum for dialogue with shareholders. There is an open question and

answer session at which shareholders may raise questions or share their views regarding the proposed resolutions and

the Company’s businesses and affairs.

In addition, the Chairman of the respective Committees and Management will be present at the AGM to address any

queries from the shareholders. The Company’s external auditors are also invited to attend the AGM and are available

to assist the Directors in addressing any relevant queries by the shareholders relating to the conduct of the audit and

the preparation and content of their auditors’ report. The Board values shareholders’ feedback and input.



SECURITIES TRANSACTIONS

The Company has set out guidelines to the Directors and key employees of the group to prohibit dealings in the

Company’s securities while in possession of price sensitive information and during the period commencing one month

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

the results.

All Directors and Executives of the Company are also advised to observe insider trading laws at all times even when

dealing in the Company’s securities within the permitted trading period.

INTERESTED PERSON TRANSACTIONS

The Company has set out procedures governing all interested person transactions to ensure that they are carried out

on an arm’s length basis, on normal commercial terms and will not be prejudicial to the interests of the Company and

its shareholders.

For the fi nancial year under review, the Group entered into interested person transactions with Jackspeed Automobile

(S) Pte Ltd.

Name of Interested Person Aggregate value of all interested person transactions during the

fi nancial year under review (excluding transactions less than S$100,000

and transactions conducted under shareholders’ mandate pursuant to Rule 920)

Aggregate value of all interested person transactions conducted under shareholders’ mandate

pursuant to Rule 920 (excluding transactions less than

S$100,000)

Jackspeed Automobile (S) Pte Ltd – –

BUSINESS RISK MANAGEMENT

The Group has expanded our potential market segment into the aviation business, where previously, majority of our

revenue comes from the automobile market.

We further expect the establishment of new offi ces and factories in strategic locations and endeavour to continuously

seek opportunities to expand both our markets, products and services.

The Management seeks to identify areas of signifi cant business risks and will consider the appropriate measures to be

taken to control and mitigate these risks. The Management reviews all signifi cant control policies and procedures and

highlights all signifi cant matters to the AC.

INVENTORY RISK MANAGEMENT

The Group’s sales still comprise a signifi cant portion to the car distributor market, where sales of our products are

dependent of the consumer demand of our customer’s vehicles, amongst other factors.

In order to manage our inventory risk, we seek to understand our car distributor market customers well, by evaluating

the markets they operate in, and their modus operandi. We will be able to manage the inventory by having the most

practicable level of inventory for certain customers, and at times, we will only place orders for raw materials upon fi rm

orders from customers.



HUMAN RESOURCE MANAGEMENT

The Company recognises the importance of people and employees’ morale within the organization. It has in place a

systematic process in ensuring that the employees are competitively rewarded and incentives and bonus are accorded

based on the performance of the companies within the Group and the grade of the employees.

PRODUCTION AND QUALITY RISK

The Group adopts the ISO/TS16949 standards and has in place, a production process that will minimize errors and

ensure the delivery of quality products to our customers.

We have also a training system and methods in place for new production workers to ensure that they are qualifi ed to

adhere to our stringent standards.

SAFETY AND EMERGENCY RISK MANAGEMENT

The Group places strong emphasis on the fi re and safety aspects in our daily operations. We have a fi re and safety

committee that ensure proper prevention and at the same time, the readiness of staff from various departments in

handling emergencies.

In addition to the ISO14001 certifi cation, we have in place the OHSAS 18001 management system as a tool for all

staff.

MATERIAL CONTRACTS

During the fi nancial year under review, the Company and its subsidiaries did not enter into any material contract

involving the interests of the Directors and controlling shareholders except that the Company had : -

(a) on 14 February 2006, entered into a sale and purchase of shares agreement with Liew Ham Chow, Liew Nyuk

Ngoh, Ho Choon Meng and Lee Seng Jeow for the sale and purchase of 10,000 shares in the capital of Jackson

Vehicle Holdings Pte Ltd (“JVH”). Pursuant to the Share Purchase Agreement, the Company will acquire 100%

of issued and paid-up capital of JVHPL and on completion, JVHPL will be a wholly-owned subsidiary.

JVH became a wholly-owned subsidiairy of the Company with effect from 1 March 2006.

(b) On 15 February 2006, entered into a subscription agreement with AAPICO Hitech Public Co., Limited

(“AAPICO”) and Mr Ang Kian Lee (who is an Executive Director of the Company). They have agreed to subscribe

and pay for an aggregate of up to 43,666,667 new ordinary shares in the capital of the Company, constituting

an aggregate of 25% of the increased number of shares in the Company at the price of S$ 0.18 for each new

share. The new shares, when issued and fully paid, will rank pari passu in all respect with the existing ordinary

shares of the Company.

On 7 July 2006, the Company allotted an aggregate of 43,666,667 shares to AAPICO Investment Pte Ltd, a

wholly owned subsidiary of AAPICO, and Mr Ang Kian Lee.



FINANCIAL RISK MANAGEMENT

(a) Foreign Exchange Risk

The Group enters into foreign currency forward contracts in the normal course of business to manage its

exposure against foreign currency fl uctuations on sale and purchase transactions denominated in foreign

currencies.

(b) Credit Risk

Credit risks arise from terms with our customers. The Group monitors the exposure of our credit risks on an

on going basis and we have in place, a system that will manage the customer’s credit risk exposure. Advance

payments and cash terms are requested for new customers while customers with good credit standing do enjoy

some terms.

Credit Risk on balances of cash and cash equivalents is low as they are placed with reputable fi nancial

institutions.

(c) Liquidity Risk

The Group’s fi nancing activities are managed centrally by maintaining an adequate level of cash and cash

equivalents to fi nance the Group’s operations. Long term borrowing is a preferred source of fi nancing to ensure

continuity of funding. The Group also ensures availability of bank credit lines to address any short term funding

requirement.

The Group’s surplus funds are also managed centrally by placing with reputable fi nancial institutions.

(d) Interest Rate Risk

The Group’s exposure to the risk of changes in interest rates arises mainly from the Group’s bank borrowings,

lease commitments and cash deposits placed with fi nancial institutions. For interest income from cash deposits,

the Group managed the interest rate risks by placing cash deposits with reputable fi nancial institutions on

varying maturities and interest rate terms. For interest expenses on the Group’s borrowings, the Group mitigates

interest exposure by fi xing interest rates over longer duration through long term borrowings.

24

REPORT OF THE DIRECTORS

Jackspeed Corporation Limited // Annual Report 2007

The Directors of the Company are pleased to present their report together with the audited fi nancial statements of the

Company and of the Group for the fi nancial year ended 28 February 2007.

1 Directors

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

Executive DirectorsLiew Ham Chow

Voo Jun HingAng Kian Lee (Appointed as Non-Executive Director on 8 December 2005 and

re-designated as Executive Director on 7 July 2006)Ho Choon Meng (Appointed on 7 July 2006)Lee Seng Jeow (Appointed on 7 July 2006)

Non-Executive DirectorYeap Swee Chuan (Appointed on 7 July 2006)

Non-Executive Independent DirectorsChang Yeh HongLee Kim Lian Juliana

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the fi nancial year nor at any time during the fi nancial year did there subsist any

arrangement whose object is to enable the Directors of the Company to acquire benefi ts by means of the

acquisition of shares or debentures in the Company or any other body corporate except as disclosed in Notes

16 and 23 to the fi nancial statements.

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The Directors of the Company holding offi ce at the end of the fi nancial year had no interests in the share capital

of the Company and related corporations as recorded in the register of directors’ shareholdings kept by the

Company under section 164 of the Companies Act, Cap 50 except as follows:

Direct interest Deemed interest

Name of Directors and companies in which interest are held

At beginning of year or date of appointment

if later At end of year

At beginning of year or date of appointment

if later At end of year

Jackspeed Corporation Limited Number of shares of no par value

Liew Ham Chow 35,645,600 35,645,600 16,000,000 16,000,000

Voo Jun Hing 980,000 980,000 – –

Chang Yeh Hong 200,000 200,000 – –

Ho Choon Meng 151,000 151,000 – –

Lee Seng Jeow 190,000 190,000 – –

Ang Kian Lee 8,733,333 8,733,333 – –

Aapico Investment Pte Ltd.

Yeap Swee Chuan – – 34,933,334 34,933,334

By virtue of section 7 of the Companies Act, Cap. 50, Yeap Swee Chuan and Liew Ham Chow are deemed to

have an interest in all the related corporations of the Company.

The Directors’ interests as at 21 March 2007 were the same as those at the end of the year.

25



4 CONTRACTUAL BENEFITS OF DIRECTORS

Since the beginning of the fi nancial year, no director of the Company has received or become entitled to receive

a benefi t which is required to be disclosed under section 201(8) of the Companies Act, Cap 50, by reason

of a contract made by the Company or a related corporation with the director or with a fi rm of which he is a

member, or with a Company in which he has a substantial fi nancial interest.

5 OPTIONS TO TAKE UP UNISSUED SHARES

During the fi nancial year, no option to take up unissued shares of the Company or any corporation in the group

was granted.

6 OPTIONS EXERCISED

During the fi nancial year, there were no shares of the Company or any corporation in the Group issued by virtue

of the exercise of an option to take up unissued shares.

7 UNISSUED SHARES UNDER OPTION

At the end of the fi nancial year, there were no unissued shares of the Company or any corporation in the Group

under option.

8 AUDIT COMMITTEE

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

Chang Yeh Hong (Chairman of audit committee and Non-Executive Independent Director)

Lee Kim Lian Juliana (Non-Executive Independent Director)

Voo Jun Hing (Executive Director)

The audit committee performs the functions specifi ed by section 201B(5) of the Companies Act. Among others,

it performed the following functions:

• Reviewed with the independent external auditors their audit plan;

• Reviewed with the independent external auditors their evaluation of the Company’s internal accounting

control, and their report on the fi nancial statements and the assistance given by the Company’s offi cers

to them;

• Reviewed with the internal auditors the scope and results of the internal audit procedures;

• Reviewed the fi nancial statements of the Group and the Company prior to their submission to the

Directors of the Company for adoption; and

• Reviewed the interested person transactions (as defi ned in Chapter 9 of the Listing Manual of SGX).

Other functions performed by the audit committee are described in the report on corporate governance included

in the annual report. It also includes an explanation of how independent auditor objectivity and independence is

safeguarded where the independent auditors provide non-audit services.

The audit committee has recommended to the Board of Directors that the auditors, RSM Chio Lim, be

nominated for re-appointment as independent auditors at the next annual general meeting of the Company.

26



9 INDEPENDENT AUDITORS

The independent auditors, RSM Chio Lim, have expressed their willingness to accept re-appointment.

10 DEVELOPMENTS

There are no signifi cant developments subsequent to the release of the Group’s and Company’s preliminary

fi nancial statements, as announced on 27 April 2007, which would materially affect the Group’s and the

Company’s operating and fi nancial performance as of the date of this report.

ON BEHALF OF THE DIRECTORS

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

Liew Ham Chow

Director

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

Voo Jun Hing

Director

28 May 2007

27

STATEMENT OF DIRECTORS


In the opinion of the Directors, the fi nancial statements set out on page 29 to 67 are drawn up so as to give a true and

fair view of the state of affairs of the Group and of the Company as at 28 February 2007 and the results, changes in

equity and cash fl ows of the Group and of the changes in equity of the Company for the year ended on that date and

at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as

and when they fall due.

The Board of Directors authorised the issue of these fi nancial statements.

ON BEHALF OF THE DIRECTORS

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

Liew Ham Chow

Director

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

Voo Jun Hing

Director

28 May 2007

28

INDEPENDENT AUDITORS’ REPORT

To the Members of Jackspeed Corporation Limited


We have audited the accompanying fi nancial statements of Jackspeed Corporation Limited and its subsidiaries

(the Group) set out on pages 29 to 67, which comprise the balance sheets of the Group and the Company as at 28

February 2007, and the income statement, statement of changes in equity and cash fl ow statement of the Group, and

statement of changes in equity of the Company for the year then ended, and a summary of signifi cant accounting

policies and other explanatory notes.

Directors’ Responsibility for the Financial Statements

The Company’s directors are responsible for the preparation and fair presentation of these fi nancial statements in

accordance with the provisions of the Singapore Companies Act, Cap. 50 (“the Act”) and Singapore Financial

Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant

to the preparation and fair presentation of fi nancial statements that are free from material misstatement, whether due

to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are

reasonable in the circumstances.

Independent Auditor’s Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in

accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial

statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of

material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the

auditor considers internal control relevant to the entity’s preparation and fair presentation of the fi nancial statements

in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by directors, as well as evaluating the

overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit

opinion.

Opinion

In our opinion,

(a) the consolidated fi nancial statements of the Group and the balance sheet of the Company are properly drawn

up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give

a true and fair view of the state of affairs of the Group and of the Company as at 28 February 2007 and the

results, changes in equity and cash fl ows of the Group and the changes in equity of the Company for the year

ended on that date; and

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

incorporated in Singapore of which we are the independent auditors have been properly kept in accordance

with the provisions of the Act.

RSM Chio Lim

Certifi ed Public Accountants

Singapore

28 May 2007

Partner in charge of audit: Paul Lee Seng Meng

Effective from fi nancial year ended 28 February 2003

29

BALANCE SHEETS

As at 28 February 2007


Group CompanyNotes 2007 2006 2007 2006

$’000 $’000 $’000 $’000

ASSETSCurrent assets:Cash and cash equivalents 4 11,196 7,551 5,386 5,208

Assets classifi ed as held for sale 5 1,311 – – –

Trade and other receivables 6 8,892 5,682 6,665 6,024

Inventories 7 6,713 5,195 1,375 1,665

Total current assets 28,112 18,428 13,426 12,897

Non-current assets:Investment in associates 8 799 – 338 –

Investment in subsidiaries 9 – – 12,651 2,952

Property, plant and equipment 10 7,728 7,709 2,797 2,789

Intangible assets 11 6,455 151 – –

Total non-current assets 14,982 7,860 15,786 5,741

Total assets 43,094 26,288 29,212 18,638

LIABILITIES AND EQUITYCurrent liabilities:Short-term borrowings 12 51 161 − 161

Trade and other payables 13 6,561 4,159 2,886 2,774

Current tax payable 413 688 – 573

Current portion of long-term borrowings 14 98 309 − 309

Current portion of fi nance leases 15 107 143 38 47

Total current liabilities 7,230 5,460 2,924 3,864

Non-current liabilities:Deferred tax liabilities 21 520 162 25 25

Other payable 13 3,837 – 3,837 –

Long-term borrowings 14 852 − − −

Finance leases 15 180 107 97 86

Total non-current liabilities 5,389 269 3,959 111

Total liabilities 12,619 5,729 6,883 3,975

Equity:Share capital 16 21,832 14,483 21,832 14,483

Other reserves 168 (3) – –

Retained earnings 7,618 6,079 497 180

29,618 20,559 22,329 14,663

Minority interest 857 – – –

Total equity 30,475 20,559 22,329 14,663

Total liabilities and equity 43,094 26,288 29,212 18,638

See accompanying notes to fi nancial statements.

30

CONSOLIDATED INCOME STATEMENT

Year Ended 28 February 2007


Group Notes 2007 2006

$’000 $’000

Revenue 17 43,738 31,804

Financial income 18 816 295

Financial expense 18 (249) (113)

Changes in inventories 1,518 (1,143)

Raw materials purchases and sub-contractors charges (25,035) (15,226)

Employee benefi ts expense 19 (10,739) (7,766)

Depreciation and amortisation (1,521) (1,024)

Other expenses (4,675) (3,273)

Other credits / (charges) 20 70 (27)

Share of loss of associates (106) –

Profi t before tax 3,817 3,527

Income tax expense 21 (947) (915)

Profi t for the year 2,870 2,612

Attributable to:Equity holders of the Company 2,941 2,612

Minority interest (71) –

2,870 2,612

Earnings per share (cents) 29

Basic 1.84 1.99

Diluted 1.84 1.99


31

STATEMENTS OF CHANGES IN EQUITY



Minorityinterest

TotalequityAttributable to equity holders of the Company

Foreigncurrency

translationreserve$’000

Sharecapital$’000

Sharepremium

$’000

Retainedearnings

$’000

Assetrevaluation

reserve$’000

Group Total$’000 $’000 $’000

Balance at 1 March 2005 7,860 6,636 4,410 316 (441) 18,781 – 18,781

IPO expenses – (13) – – – (13) – (13)

Exchange differences on

translating foreign

subsidiaries – – – – 122 122 – 122

Net income recognised

directly in equity – (13) – – 122 109 – 109

Profi t for the year – – 2,612 – – 2,612 – 2,612

Total recognised net income

for the year – (13) 2,612 – 122 2,721 – 2,721

Dividends paid (Note 24) – – (943) – – (943) – (943)

Transfer to share capital

(Note 16) 6,623 (6,623) – – – – – –

Balance at 28 February 2006 14,483 – 6,079 316 (319) 20,559 – 20,559

(a) (a)

Balance at 1 March 2006 14,483 – 6,079 316 (319) 20,559 – 20,559

Exchange differences on

translating foreign

subsidiaries – – – – 171 171 7 178

Net income recognised

directly in equity – – – – 171 171 7 178

Profi t for the year – – 2,941 – – 2,941 (71) 2,870

Total recognised net income

for the year – – 2,941 – 171 3,112 (64) 3,048

Issue of share capital

(Note 16) 7,860 – – – – 7,860 – 7,860

Share issue expenses (511) – – – – (511) – (511)

Dividends paid (Note 24) – – (1,402) – – (1,402) – (1,402)

Minority interest contribution

to capital – – – – – – 921 921

Balance at 28 February 2007 21,832 – 7,618 316 (148) 29,618 857 30,475

(a) (a)

(a) Unrealised and not available for distribution as cash dividends


32

STATEMENTS OF CHANGES IN EQUITY



Share Share RetainedCompany capital premium earnings Total

$’000 $’000 $’000 $’000

Balance at 1 March 2005 7,860 6,636 1,030 15,526

IPO expenses – (13) – (13)

Profi t for the year – – 93 93

Dividends paid (Note 24) – – (943) (943)

Transfer to share capital (Note 16) 6,623 (6,623) – –

Balance at 28 February 2006 14,483 – 180 14,663

Balance at 1 March 2006 14,483 – 180 14,663

Issue of share capital (Note 16) 7,860 – – 7,860

Share issue expenses (511) – – ( 511)

Profi t for the year – – 1,719 1,719

Dividends paid (Note 24) – – (1,402) (1,402)

Balance at 28 February 2007 21,832 – 497 22,329


33

CONSOLIDATED CASH FLOW STATEMENT



2007 2006$’000 $’000

Cash fl ows from operating activities:Profi t for the year 2,870 2,612

Adjustments for:

Depreciation and amortisation 1,521 1,024

Gain on disposal of plant and equipment (81) (20)

Income tax expense 947 915

Fair value adjustment on fi nancial liabilities 163 –

Interest income (268) (133)

Interest expense 78 113

Share of loss of associates 106 –

Operating profi t before working capital changes 5,336 4,511

Restricted cash – 9

Trade and other receivables 443 (1,981)

Inventories (605) 178

Trade and other payables (2,057) 1,166

Cash generated from operations 3,117 3,883

Income tax paid (1,669) (863)

Net cash from operating activities 1,448 3,020

Cash fl ows from investing activities:Interest received 268 133

Proceeds from disposal of plant and equipment 264 192

Purchase of plant and equipment (Note 4) (617) (419)

Acquisition of subsidiary net of cash acquired (Note 23) (2,373) –

Investment in associates (873) –

Net cash used in investing activities (3,331) (94)

Cash fl ows from fi nancing activities:Dividends paid (1,402) (943)

Increase in borrowings (951) (2,347)

Interest paid (78) (113)

Capital contribution from minority shareholders of subsidiary 921 –

Proceeds from share issue, net of expenses 7,349 –

Decrease in fi nance lease (446) (391)

Net cash from (used in) fi nancing activities 5,393 (3,794)

Exchange rate changes in consolidating foreign subsidiaries 135 4

Net increase/(decrease) in cash and cash equivalents 3,645 (864)

Cash and cash equivalents at beginning of year 7,551 8,415

Cash and cash equivalents at end of year (Note 4) 11,196 7,551


34

NOTES TO FINANCIAL STATEMENTS

28 February 2007


1. GENERAL

The Company is incorporated in Singapore with limited liability. The fi nancial statements are presented in

Singapore dollars. They are drawn up in accordance with the provisions of the Companies Act, Cap. 50 and

the Singapore Financial Reporting Standards (“FRS”) and they cover the parent and the group entities. The

Company’s fi nancial statements have been prepared on the same basis, and as permitted by the Companies

Act, Cap. 50, no income statement is presented for the Company. The fi nancial statements were approved and

authorised for issue by the Board of Directors on 28 May 2007.

The principal activities of the Company are those of investment holding and the manufacture and sale of leather

seat covers. The principal activities of the subsidiaries are disclosed in Note 9 to the fi nancial statements.

The Company is listed on the Singapore Exchange Securities Trading Limited (SGX-ST).

The registered offi ce address of the Company is: 47 Loyang Drive Singapore 508955. The Company is domiciled

in Singapore.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING CONVENTION – The fi nancial statements are prepared under the historical cost convention

except where an FRS require or allow an alternative treatment (such as fair values or revaluation of property) as

disclosed where appropriate in these fi nancial statements.

BASIS OF PRESENTATION – The purchase accounting method is used for the consolidated fi nancial

statements that include the fi nancial statements made up to the balance sheet date each year of the Company

and its subsidiaries. Consolidated fi nancial statements are the fi nancial statements of the Group presented

as those of a single economic entity. The consolidated fi nancial statements are prepared using uniform

accounting policies for like transactions and other events in similar circumstances. All signifi cant intragroup

balances and transactions, including income, expenses and dividends, are eliminated in full on consolidation.

The equity accounting method is used for associates in the Group fi nancial statements. The results of the

investees acquired or disposed of during the fi nancial year are accounted for from the respective dates of

acquisition or up to the dates of disposal. On disposal the attributable amount of goodwill if any is included in

the determination of the gain or loss on disposal.

BASIS OF PREPARATION OF FINANCIAL STATEMENTS – The preparation of fi nancial statements in

conformity with generally accepted accounting principles requires the management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and

liabilities at the date of the fi nancial statements and the reported amounts of revenues and expenses during

the reporting period. Actual results could differ from those estimates. The estimates and assumptions are

reviewed on an ongoing basis. Apart from those involving estimations, management has made judgements

in the process of applying the entity’s accounting policies. The areas requiring management’s most diffi cult,

subjective or complex judgements, or areas where assumptions and estimates are signifi cant to the fi nancial

statements, are disclosed at the end of this footnote, where applicable.

CASH AND CASH EQUIVALENTS – Cash and cash equivalents include bank and cash balances and any highly

liquid debt instruments purchased with an original maturity of three months or less. Cash for the cash fl ow

statement includes cash and cash equivalents less bank overdrafts payable on demand that form an integral

part of cash management and cash subject to restriction.

TRADE RECEIVABLES – After initial recognition at fair value, trade receivables are measured at amortised

cost using the effective interest method except that short-duration receivables with no stated interest rate are

normally measured at original invoice amount unless the effect of imputing interest would be signifi cant. Trade

receivables are stated after provision for impairment. The amount of the provision for impairment is recognised

in the income statement. A trade receivable amount is regarded as impaired if there is objective evidence of

impairment as a result of one or more events that occurred after the initial recognition and that loss event has

an impact on the estimated future cash fl ows of the fi nancial asset that can be reliably estimated. The carrying

amounts of trade receivables are assumed to approximate their fair value. Normally no interest is charged on

trade receivables.

35


28 February 2007


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

LOANS AND RECEIVABLES – Loans and receivables are non-derivative fi nancial assets with fi xed or

determinable payments that are not quoted in an active market, other than: (a) those that the entity intends to

sell immediately or in the near term and are classifi ed as held for trading, and those that the entity upon initial

recognition designates as at fair value through profi t or loss; (b) those that the entity upon initial recognition

designates as available for sale; or (c) those for which the holder may not recover substantially all of its initial

investment, other than because of credit deterioration and are classifi ed as available for sale. After initial

recognition such fi nancial assets, including derivatives that are assets, are measured at their fair values, without

any deduction for transaction costs that may be incurred on sale or other disposal, except for the non-current

fi nancial assets that are loans and receivables which are measured at amortised cost using the effective interest

method less provision for impairment. These items are included in the balance sheet in loans and receivables as

current assets or as non-current assets where the maturities are greater than 12 months after the balance sheet

date.

INVENTORIES – Inventories are measured at the lower of cost (fi rst in fi rst out method) and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs

of completion and the estimated costs necessary to make the sale. A write down on cost is made for where

the cost is not recoverable or if the selling prices have declined. Cost includes all costs of purchase, costs of

conversion and other costs incurred in bringing the inventories to their present location and condition. In the

case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based

on normal operating capacity.

SUBSIDIARIES – A subsidiary is an entity including unincorporated and special purpose entity that is controlled

by the Group. Control is the power to govern the fi nancial and operating policies of an entity so as to obtain

benefi ts from its activities accompanying a shareholding of more than one half of the voting rights or the ability

to appoint or remove the majority of the members of the board of directors or to cast the majority of votes

at meetings of the board of directors. The existence and effect of potential voting rights that are currently

exercisable or convertible are considered when assessing whether the Group controls another entity. In the

Company’s own separate fi nancial statements, the investments in subsidiaries are stated at cost less any

provision for impairment in value. Impairment loss recognised in profi t or loss for a subsidiary is reversed only

if there has been a change in the estimates used to determine the asset’s recoverable amount since the last

impairment loss was recognised. The net book values of the subsidiaries are not necessarily indicative of the

amounts that would be realised in a current market exchange.

ASSOCIATES – An associate is an entity including an unincorporated entity in which the investor has a

substantial fi nancial interest (usually not less than 20% of the voting power), signifi cant infl uence and that is

neither a subsidiary nor a joint venture of the investor. Signifi cant infl uence is the power to participate in the

fi nancial and operating policy decisions of the investee but is not control or joint control over those policies.

The investments in associates are carried in the Group balance sheet at cost plus post-acquisition changes in

the Group’s share of net assets of the associate, less any impairment in value. The income statement refl ects

the Group’s share of the results of operations of the associate. The Group’s investment in its associate includes

goodwill on acquisition, which is treated in accordance with the accounting policy for goodwill stated below

for business combinations. Goodwill is not amortised but is tested for impairment annually, or more frequently

if events or changes in circumstances indicate that it might be impaired. An impairment loss in respect of

goodwill is not reversed. Profi ts and losses resulting from transactions between the Group and an associate

are recognised in the fi nancial statements only to the extent of unrelated investors’ interests in the associate.

Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset

transferred. Accounting policies of associates have been changed where necessary to ensure consistency with

the policies adopted by the group. In the Company’s own separate fi nancial statements, the investments in

associates are stated at cost less any provision for impairment in value. Impairment loss recognised in profi t or

loss for an associate is reversed only if there has been a change in the estimates used to determine the asset’s

recoverable amount since the last impairment loss was recognised. The net book values of the associates are

not necessarily indicative of the amounts that would be realised in a current market exchange.

36


28 February 2007



BUSINESS COMBINATIONS – Business combinations are accounted for by applying the purchase method.

The cost of a business combination includes the fair values, at the date of exchange, of assets given, liabilities

incurred or assumed, and equity instruments issued by the acquirer, in exchange for control of the acquiree;

plus any costs directly attributable to the business combination. Any excess of the cost over the acquirer’s

interest in the net fair value of the identifi able assets, liabilities and contingent liabilities so recognised

is accounted for as goodwill. The excess of acquirer’s interest in the net fair value of acquiree’s identifi able

assets, liabilities and contingent liabilities over cost is accounted for as “negative goodwill”. The acquiree’s

identifi able assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 103

are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that

are classifi ed as held for sale in accordance with FRS 105 Non-Current Assets Held for Sale and Discontinued

Operations, which are recognised and measured at fair value less costs to sell. After initial recognition, goodwill

is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is tested for

impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired.

An impairment loss in respect of goodwill is not reversed. For negative goodwill a reassessment is made of the

identifi cation and measurement of the acquiree’s identifi able assets, liabilities and contingent liabilities and the

measurement of the cost of the business combination and any excess remaining after this reassessment is

recognised immediately in profi t and loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and

liabilities of the foreign entity and translated at the closing rate.

MINORITY INTERESTS – Any minority interest in the acquiree (subsidiary) is initially measured at the minority’s

proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

ASSETS CLASSIFIED AS HELD FOR SALE – Identifi able assets, liabilities and contingent liabilities and

disposal groups are classifi ed as held for sale if their carrying amount is to be recovered principally through a

sale transaction rather than through continuing use. It includes a subsidiary acquired exclusively with a view

to resale. Assets that meet the criteria to be classifi ed as held for sale are measured at the lower of carrying

amount and fair value less costs to sell and are presented separately on the face of the balance sheet.

Impairment losses on initial classifi cation of the balances as held for sale are included in the income statement,

even when there is a revaluation. The same applies to gains and losses on subsequent remeasurement. The

depreciation on depreciable assets is ceased.

PROPERTY, PLANT AND EQUIPMENT – Depreciation is provided on a straight-line basis to allocate the gross

carrying amounts less their residual values over their estimated useful lives of each part of an item of property,

plant and equipment. The annual rates of depreciation are as follows:

Freehold land and buildings – 2%

Leasehold land and buildings – Over the term of the lease that is 2%

Plant and equipment – 16.67% to 100%

An asset is depreciated when it is available for use until it is derecognised even if during that period the item is

idle. Fully depreciated assets still in use are retained in the fi nancial statements.

Leasehold land and buildings, property, plant and equipment are carried at cost less any accumulated

depreciation and any accumulated impairment losses except for the revalued items as described below. The

residual value and the useful life of an asset is reviewed at least at each fi nancial year end and, if expectations

differ from previous estimates, the changes are accounted for as a change in an accounting estimate, and

the depreciation charge for the current and future periods are adjusted. The gain or loss arising from the

derecognition of an item of property, plant and equipment is determined as the difference between the net

disposal proceeds, if any, and the carrying amount of the item and is recognised in the income statement.

Cost also includes acquisition cost, any cost directly attributable to bringing the asset to the location and

condition necessary for it to be capable of operating in the manner intended by management. Subsequent

cost are recognised as an asset only when it is probable that future economic benefi ts associated with the item

will fl ow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are

charged to the income statement when they are incurred.

37


28 February 2007



If fair value can be measured reliably, after the initial recognition as an asset at cost, an item of property, (such

land, property, buildings, etc) is carried at a revalued amount, being its fair value at the date of the revaluation

less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations

are made with suffi cient regularity to ensure that the carrying amount does not differ materially from that which

would be determined using fair value at the balance sheet date and the entire class of property, plant and

equipment to which that asset belongs is revalued. When an asset’s carrying amount is increased, the increase

is credited directly to equity except that the revaluation is recognised in the income statement to the extent

that it reverses a revaluation decrease of the same asset previously recognised in the income statement. When

an asset’s carrying amount is decreased, the decrease is recognised in the income statement except that a

revaluation decrease is debited directly to equity under the heading of revaluation surplus to the extent of any

credit balance existing in the revaluation surplus in respect of that asset. The revaluation surplus included in

equity is transferred directly to retained earnings when the asset is derecognised.

When an item of property, plant and equipment is revalued, any accumulated depreciation at the date of the

revaluation is restated proportionately with the change in the gross carrying amount of the asset so that the

carrying amount of the asset after revaluation equals its revalued amount.

INTANGIBLE ASSETS – An intangible asset that is an identifi able non-monetary asset without physical

substance is recognised at acquisition cost if it is probable that the expected future economic benefi ts that

are attributable to the asset will fl ow to the entity and the cost of the asset can be measured reliably. After

initial recognition, an intangible asset with fi nite useful life is carried at cost less any accumulated amortisation

and any accumulated impairment losses. An intangible asset with an indefi nite useful life is not amortised. An

intangible asset is regarded as having an indefi nite useful life when, based on an analysis of all of the relevant

factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash infl ows

for the entity. The amortisable amount of an intangible asset with fi nite useful life is allocated on a systematic

basis over the best estimate of its useful life from the point at which the asset is ready for use. The useful lives

are as follows:

Customer base – 10 years

IMPAIRMENT OF NON-FINANCIAL ASSETS – At each full year balance sheet date an assessment is made

whether there is any indication that a depreciable or amortisable asset may be impaired. If any such indication

exists, an estimate is made of the recoverable amount of the asset. Irrespective of whether there is any

indication of impairment, an annual impairment test is performed at the same time every year on an intangible

asset with an indefi nite useful life or an intangible asset not yet available for use. The impairment loss is the

excess of the carrying amount over the recoverable amount and is recognised in the income statement unless

the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation

decrease. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs

to sell and its value in use. In assessing value in use, the estimated future cash fl ows are discounted to their

present value using a pre-tax discount rate that refl ects current market assessments of the time value of money

and the risks specifi c to the asset. For the purposes of assessing impairment, assets are grouped at the lowest

levels for which there are separately identifi able cash fl ows (cash-generating units). At each reporting date non-

fi nancial assets other than goodwill with impairment loss recognised in prior periods are assessed for possible

reversal of the impairment. An impairment loss is reversed only to the extent that the asset’s carrying amount

does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if

no impairment loss had been recognised.

However, an impairment loss on a revalued asset is recognised directly against any revaluation surplus for the

asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that

same asset.

IMPAIRMENT OF FINANCIAL ASSETS – All fi nancial assets except those measured at fair value through profi t

or loss are subject to review for impairment. A fi nancial asset or a group of fi nancial assets is impaired and

impairment losses are incurred if there is objective evidence of impairment as a result of one or more events

that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an

impact on the estimated future cash fl ows of the fi nancial asset or group of fi nancial assets that can be reliably

estimated. Losses expected as a result of future events, no matter how likely, are not recognised.

38


28 February 2007



FINANCIAL LIABILITIES – Financial liabilities at fair value through profi t or loss when recognised initially are

measured at fair value. Financial liabilities not at fair value through profi t or loss are measured at fair value

plus transaction costs that are directly attributable to the acquisition or issue of the fi nancial liability. After initial

recognition fi nancial liabilities at fair value through profi t or loss, including derivatives that are fi nancial liabilities,

are measured at fair value. Other fi nancial liabilities not at fair value through profi t or loss are measured at

amortised cost and any difference between the proceeds (net of transaction costs) and the redemption value

is recognised in the income statement over the period of the borrowings using the effective interest method.

Financial liabilities including bank and other borrowings are classifi ed as current liabilities unless there is an

unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Items

classifi ed within trade and other payables are not usually re-measured, as the obligation is usually known with a

high degree of certainty and settlement is short-term.

LIABILITIES AND PROVISIONS – A liability or provision is recognised when there is a present obligation (legal

or constructive) as a result of a past event, it is probable that an outfl ow of resources embodying economic

benefi ts will be required to settle the obligation and a reliable estimate can be made of the amount of the

obligation. These include trade and other payables and where the effect of the time value of money is material,

the amount recognised is the present value of the expenditures expected to be required to settle the obligation

using a pre-tax rate that refl ects current market assessments of the time value of money and the risks specifi c

to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

FINANCIAL GUARANTEE – A fi nancial guarantee contract requires that the issuer makes specifi ed payments

to reimburse the holder for a loss when a specifi ed debtor fails to make payment when due. Financial

guarantee contracts are initially recognised at fair value and are subsequently measured at the greater of (a) the

amount determined in accordance with FRS 37 and (b) the amount initially recognised less, where appropriate,

cumulative amortisation recognised in accordance with FRS 18.

LEASES AS A LESSEE – A fi nance lease is a lease that transfers substantially all the risks and rewards

incidental to ownership of an asset. At the commencement of the lease term, a fi nance lease is recognised

as an asset and as liability in the balance sheet at amounts equal to the fair value of the leased asset or, if

lower, the present value of the minimum lease payments, each determined at the inception of the lease. The

discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit

in the lease, if this is practicable to determine; if not, the lessee’s incremental borrowing rate is used. Any initial

direct costs of the lessee are added to the amount recognised as an asset. The excess of the lease payments

over the recorded lease liability are treated as fi nance charges which are allocated to each period during

the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Contingent rents are charged as expenses in the periods in which they are incurred. The assets are depreciated

as owned depreciable assets. Leases where the lessor effectively retains substantially all the risks and benefi ts

of ownership of the leased assets are classifi ed as operating leases. For operating leases, lease payments are

recognised as an expense in the income statement on a straight-line basis over the term of the relevant lease

unless another systematic basis is representative of the time pattern of the user’s benefi t, even if the payments

are not on that basis. Lease incentives received are recognised in the income statement as an integral part of

the total lease expense.

SHARE CAPITAL – Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issue

of new shares or options are shown in equity as a deduction from the proceeds. Where the Company reacquires

its own equity instruments as treasury shares, the consideration paid, including any directly attributable

incremental cost is deducted from equity attributable to the Company’s equity holders until the shares are

cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration

received, net of any directly attributable incremental transaction costs and the related income tax effects, is

included in equity attributable to the Company’s equity holders and no gain or loss is recognised in the income

statement.

FAIR VALUE OF FINANCIAL INSTRUMENTS – The carrying values of current fi nancial assets and fi nancial

liabilities including cash, accounts receivable, short-term borrowings, accounts payable approximate their fair

values due to the short-term maturity of these instruments. The fair values of non-current fi nancial instruments

are not disclosed unless there are signifi cant items at the end of the year and in the event the fair values are

disclosed in the relevant notes. Disclosures of fair value are not made when the carrying amount is a reasonable

approximation of fair value. The maximum exposure to credit risk is the fair value of the fi nancial instruments at

the balance sheet date.

39


28 February 2007



REVENUE RECOGNITION – The revenue amount is the fair value of the consideration received or receivable

from the gross infl ow of economic benefi ts during the year arising from the course of the ordinary activities

of the entity and it is shown net of related tax, estimated returns, discounts and volume rebates. Revenue

from sale of goods is recognised when signifi cant risks and rewards of ownership are transferred to the buyer,

there is neither continuing managerial involvement to the degree usually associated with ownership nor effective

control over the goods sold, and the amount of revenue and the costs incurred or to be incurred in respect

of the transaction can be measured reliably. Revenue from rendering of services that are of short duration is

recognised when the services are completed. Rental revenue is recognised on a time-proportion basis that

takes into account the effective yield on the asset. Dividends on equity instrument are recognised in profi t or

loss when the entity’s right to receive payment is established.

FOREIGN CURRENCY TRANSACTIONS – The functional currency is the Singapore dollar as it refl ects the

primary economic environment in which the entity operates. Transactions in foreign currencies are recorded in

the functional currency at the rates ruling at the dates of the transactions. At each balance sheet date, recorded

monetary balances and balances measured at fair value that are denominated in foreign currencies are reported

at the rates ruling at the balance sheet and fair value dates respectively. All realised and unrealised exchange

adjustment gains and losses are dealt with in the income statement. The presentation is in the functional

currency.

FOREIGN CURRENCY FINANCIAL STATEMENTS – The foreign entities determine the appropriate functional

currency as it refl ects the primary economic environment in which the entities operate. In translating the fi nancial

statements of a foreign entity for incorporation in the consolidated fi nancial statements the assets and liabilities

denominated in currencies other than the functional currency of the Company are translated at year end rates

of exchange and the income and expense items are translated at average rates of exchange for the year. The

resulting translation adjustments (if any) are accumulated in a separate component of equity until the disposal of

the foreign entity. The presentation is in the functional currency.

BORROWING COSTS – All borrowing costs that are interest and other costs incurred in connection with the

borrowing of funds are recognised as an expense in the period in which they are incurred except for borrowing

costs that are directly attributable to the acquisition, construction or production of a qualifying asset that

necessarily take a substantial period of time to get ready for their intended use or sale are capitalised as part

of the cost of that asset until substantially all the activities necessary to prepare the qualifying asset for its

intended use or sale are complete. The interest expense is calculated using the effective interest rate method.

INCOME TAX – The income taxes are accounted using the asset and liability method that requires the

recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the

future tax consequence of events that have been recognised in the fi nancial statements or tax returns. The

measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or

substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Income

tax expense represents the sum of the tax currently payable and deferred tax. Deferred tax assets and liabilities

are offset when they relate to income taxes levied by the same income tax authority. The carrying amount of

deferred tax assets is reviewed at each balance sheet date and is reduced, if necessary, by the amount of

any tax benefi ts that, based on available evidence, are not expected to be realised. A deferred tax amount

is recognised for all temporary differences, unless the deferred tax amount arises from (a) goodwill for which

amortisation is not deductible for tax purposes; or (b) the initial recognition of an asset or liability in a transaction

which (i) is not a business combination; and (ii) at the time of the transaction, affects neither accounting profi t

nor taxable profi t (tax loss). A deferred tax liability is not recognised for all taxable temporary differences

associated with investments in subsidiaries and associates, because (a) the Company is able to control the

timing of the reversal of the temporary difference; and (b) it is probable that the temporary difference will not

reverse in the foreseeable future.

EMPLOYEE BENEFITS – Contributions to defi ned contribution retirement benefi t plans are recorded as an

expense as they fall due. The entity’s legal or constructive obligation is limited to the amount that it agrees

to contribute to the fund. This includes the government managed retirment benefi t plan such as the Central

Provident Fund in Singapore. For employee leave entitlement the expected cost of short-term employee

benefi ts in the form of compensated absences is recognised in the case of accumulating compensated

absences, when the employees render service that increases their entitlement to future compensated absences;

and in the case of non-accumulating compensated absences, when the absences occur. A liability for bonuses

is recognised where the entity is contractually obliged or where there is constructive obligation based on past

practice.

40


28 February 2007



SEGMENT REPORTING – A business segment is a distinguishable component of an enterprise that is

engaged in providing an individual product or service or a group of related products or services and that is

subject to risks and returns that are different from those of other business segments. A geographical segment

is a distinguishable component that is engaged in providing products or services within a particular economic

environment and that is subject to risks and returns that are different from those of components operating in

other economic environments.

CRITICAL JUDGEMENTS, ASSUMPTIONS AND ESTIMATION UNCERTAINTIES

The critical judgements made in the process of applying the entity’s accounting policies that have the most

signifi cant effect on the amounts recognised in the fi nancial statements and the key assumptions concerning

the future, and other key sources of estimation uncertainty at the balance sheet date, that have a signifi cant risk

of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year

are discussed below:

Critical accounting judgements:

DEFERRED INCOME TAXES – Management judgment is required in determining the provision for income taxes,

deferred tax assets and liabilities and the extent to which deferred tax assets can be recognised. A deferred tax

asset is recognised if it is probable that suffi cient taxable income will be available in the future against which the

temporary differences and unused tax losses can be utilised. Management also considers future taxable income

and tax planning strategies in assessing whether deferred tax assets should be recognised. The amount at the

balance sheet date was $122,000.

CONSOLIDATION OF THAILAND ENTITY AS SUBSIDIARY – The paid up share capital of the subsidiary

acquired on 1 March 2006, J.V. (Thailand) Co., Ltd. (“JVT”), is made up of Baht 10 million of ordinary shares and

Baht 10.41 million of preference shares. The Group holds an effective interest of 49% through holding all of the

ordinary shares with voting rights. A local Thai national holds the remaining 51% through preference shares with

no voting rights. The preference shareholder is entitled to a fi xed dividend of 5% of the preference shares value

per year. Accordingly, Management considers JVT a subsidiary and the Group has exercised its judgement and

consolidated 100% of the profi ts of JVT (net of the preferential dividends) into the Group’s fi nancial statements

for the fi nancial year just ended.

PURCHASE CONSIDERATION OF SUBSIDIARIES – Based on the Share Purchase Agreement, the purchase

consideration is calculated based on the net profi ts for 2007 and 2008. The profi t guarantee by the vendors for

2007 and 2008 were $1.5 million and $2.0 million respectively and the net profi ts for 2007 and 2008 are capped

at $3.0 million each year for the purpose of purchase consideration calculation. Accordingly the purchase

consideration as disclosed in Note 23 is calculated based on the audited net profi t for the fi nancial year ended

28 February 2007 and forecasted net profi t for the fi nancial year ended 28 February 2008 of $1.54 million and

$2.0 million respectively. In the event that the audited net profi t for 2008 differs from $2.0 million, the purchase

consideration would be adjusted.

Critical assumptions and estimation uncertainties:

ALLOWANCES FOR DOUBTFUL ACCOUNTS – An allowance is made for doubtful accounts for estimated

losses resulting from the subsequent inability of the customers to make required payments. If the fi nancial

conditions of the customers were to deteriorate, resulting in an impairment of their ability to make payments,

additional allowances may be required in future periods. Management specifi cally analyses accounts receivables

and analyses historical bad debt, customer concentrations, customer creditworthiness, current economic trends

and changes in customer payment terms when evaluating the adequacy of the allowance for doubtful accounts.

At the balance sheet date, the receivables are measured at fair value and their fair values might change

materially within the next fi nancial year but these changes would not arise from assumptions or other sources of

estimation uncertainty at the balance sheet date.

INVENTORY RELATED ALLOWANCES – A review is made periodically on inventory for excess inventory,

obsolescence and declines in net realisable value below cost and record an allowance against the inventory

balance for any such declines. These reviews require Management to estimate future demand for the products.

Possible changes in these estimates could result in revisions to the valuation of inventory. The amount at the

balance sheet date was $6.71 million.

41


28 February 2007



PROPERTY, PLANT AND EQUIPMENT – The Group has properties, plant and equipment stated at carrying

value of $7.73 million. An assessment is made at each reporting date whether there is any indication that

the asset may be impaired. If any such indication exists, an estimate is made of the recoverable amount of

the asset. The recoverable amounts of cash-generating units have been determined based on value-in-use

calculations. These calculations require the use of estimates. If the revised estimated gross margin is less

favourable than that used in the calculations there would be a need to provide for impairment. It is impracticable

to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that

outcomes within the next fi nancial year that are different from assumptions could require a material adjustment

to the carrying amount of the balances affected. The carrying amount of the specifi c asset (or class of assets)

affected by the assumption is $7.73 million.

USEFUL LIVES OF PLANT AND EQUIPMENT – The estimates for the useful lives and related depreciation

charges for plant and equipment is based on commercial and production factors which could change

signifi cantly as a result of technical innovations and competitor actions in response to severe market conditions.

The depreciation charge is increased where useful lives are less than previously estimated lives, or the carrying

amounts written off or written down for technically obsolete or non-strategic assets that have been abandoned

or sold. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on

existing knowledge, that outcomes within the next fi nancial year that are different from assumptions could

require a material adjustment to the carrying amount of the balances affected. The carrying amount of the

specifi c asset (or class of assets) affected by the assumption is $7.73 million.

FAIR VALUE OF FINANCIAL LIABILITIES – Certain fi nancial liabilities have been fair valued based on the

expected cash fl ows discounted at current rates applicable for items with similar terms and risk characteristics.

The valuation requires management to make estimates about future cash fl ows and discount rates, and hence

they are subject to uncertainty. The fair value of relevant fi nancial liabilities at 28 February 2007 was $5.59

million.

ESTIMATED IMPAIRMENT OF SUBSIDIARY OR ASSOCIATE – When a subsidiary or associate is in net

equity defi cit and or has suffered operating losses a test is made whether the investment in the investee

has suffered any impairment, in accordance with the stated accounting policy. This determination requires

signifi cant judgement. An estimate is made of the future profi tability of the investee, and the fi nancial health of

and near-term business outlook for the investee, including factors such as industry and sector performance,

and operational and fi nancing cash fl ow. The amount of the relevant investment is $1.62 million at the balance

sheet date. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based

on existing knowledge, that outcomes within the next fi nancial year that are different from assumptions could

require a material adjustment to the carrying amount of the asset or liability affected. The carrying amount of

the specifi c asset affected by the assumption is $1.62 million.

ESTIMATED IMPAIRMENT OF GOODWILL – An assessment is made annually whether goodwill has suffered

any impairment loss, based on the recoverable amounts of the cash generating units (“CGU”). The recoverable

amounts of the CGUs was determined based on value in use calculations and these calculations require the

use of estimates in relation to future cash fl ows and suitable discount rates as disclosed in Note 11. Actual

outcomes could vary from these estimates. If the actual gross margin and the pre-tax discounted rate had been

more favourable than management’s estimates, the Group would not be able to reverse any impairment losses

that arose on goodwill because reversal is not permitted by FRS 36. It is reasonably possible, based on existing

knowledge, that outcomes within the next fi nancial year that are different from assumptions could require a

material adjustment to the carrying amount of the balances affected. The carrying amount of the specifi c asset

(or class of assets) affected by the assumption is $3.76 million.

RISK MANAGEMENT POLICIES FOR FINANCIAL INSTRUMENTS

GENERAL RISK MANAGEMENT PRINCIPLES – The fi nancial instruments comprise borrowings, some cash

and liquid resources, and various other items, including trade and other receivables, trade and other payables.

The main purpose of these fi nancial instruments is to raise fi nance for the entity’s operations. The main risks

arising from the entity’s fi nancial instruments are credit risk, interest risk, liquidity risk, foreign currency risk and

market price risk comprising interest rate and currency risk exposures. The management reviews and monitors

policies for managing each of these risks and they are summarised below.

42


28 February 2007



CREDIT RISK ON FINANCIAL ASSETS – Financial assets that are potentially subject to concentrations of credit

risk and failures by counterparties to discharge their obligations consist principally of cash, cash equivalents

and trade and other accounts receivable. Credit risk on cash balances and derivative fi nancial instruments is

limited because the counter-parties are banks with high credit ratings. An ongoing credit evaluation is performed

of the debtors’ fi nancial condition and a loss from impairment is recognised in the income statement. There is

no signifi cant concentration of credit risk, as the exposure is spread over a large number of counter-parties and

customers unless otherwise disclosed in the notes to the fi nancial statements.

OTHER RISKS ON FINANCIAL INSTRUMENTS – The main risks arising from the entity’s fi nancial instruments

are interest risk, liquidity risk and foreign currency risk. The operations are fi nanced through a mixture of

retained earnings and borrowings. Borrowings are in the desired currencies at both fi xed and fl oating rates of

interest. The policy is to retain fl exibility in selecting borrowings at both fi xed and fl oating rates interest. There

is exposure to interest rate price risk for fi nancial instruments with a fi xed interest rate and to interest rate or

cash fl ow risk for fi nancial instruments with a fl oating interest rate that is reset as market rates change. Interest

rate swaps are not used to generate the desired interest profi t and to manage the exposure to interest rate

fl uctuations. There is also exposure to liquidity. As regards to liquidity, the policy has been to ensure continuity

of funding and where necessary a certain percentage of the borrowings should mature in two to fi ve years.

Short-term fl exibility is achieved by overdraft facilities. There is also exposure to changes in foreign exchange

rates arising from foreign currency transactions and balances and changes in fair values. These exposures and

changes in fair values from time to time are monitored and any gains and losses are included in the income

statement unless otherwise stated in the notes to the fi nancial statements. There is no policy to reduce currency

exposures through forward currency contracts, derivatives transactions or other arrangements. From time to

time, the Group enters into foreign currency forward contracts in the normal course of business to manage

its exposure against foreign currency fl uctuations on sale and purchase transactions denominated in foreign

currencies.

3. RELATED PARTY TRANSACTIONS

A related party is an entity or person that directly or indirectly through one or more intermediaries controls,

is controlled by, or is under common or joint control with, the entity in governing the fi nancial and operating

policies, or that has an interest in the entity that gives it signifi cant infl uence over the entity in fi nancial and

operating decisions. It also includes members of the key management personnel or close members of

the family of any individual referred to herein and others who have the ability to control, jointly control or

signifi cantly infl uence by or for which signifi cant voting power in such entity resides with, directly or indirectly,

any such individual. This includes parents, subsidiaries, fellow subsidiaries, associates, joint ventures and post-

employment benefi t plans, if any.

3.1 Related companies

There are transactions and arrangements between the Company and members of the Group and the

effects of these on the basis determined between the parties are refl ected in these fi nancial statements.

The current intercompany balances are unsecured without fi xed repayment terms and interest unless

stated otherwise. For non-current balances an interest is imputed based on the cost of borrowing less

the interest rate if any provided in the agreement for the balance. The guarantees are provided by the

guarantor without charge but for the fi nancial statements fair values are imputed and are recognised

accordingly where no charge is paid. The transactions were not signifi cant.

Intragroup transactions and balances that have been eliminated in these consolidated financial

statements are not disclosed as related party transactions and balances below.

3.2 Other related parties

There are transactions and arrangements between the Company and related parties and the effects

of these on the basis determined between the parties are refl ected in these fi nancial statements. The

current related party balances are unsecured without fi xed repayment terms and interest unless stated

otherwise. For non-current balances an interest is imputed based on the prevailing market interest rate

for similar debt less the interest rate if any provided in the agreement for the balance.

Saved as disclosed elsewhere in these fi nancial statements, there are no signifi cant related party

transactions for the years ended 28 February 2006 and 2007.

43


28 February 2007


3. RELATED PARTY TRANSACTIONS (Cont’d)

3.3 Key management compensation

Group

2007 2006

$’000 $’000

Salaries and other short-term employee benefi ts 2,102 1,007

Ex-gratia payments – 50

2,102 1,057

The above amounts are included under employee benefi ts expense. Included in the above amounts are

following items:

Group

2007 2006

$’000 $’000

Remuneration of Directors of the Company 943 525

Fees to Directors of the Company 73 64

Further information about the remuneration of individual directors is provided in the Report on Corporate

Governance Report.

Key management personnel are directors and those persons having authority and responsibility for

planning, directing and controlling the activities of the Company, directly or indirectly. The above amounts

for key management compensation are for all the directors and other key management personnel.

3.4 Other receivables from and other payables to related parties

The trade transactions and the trade receivables and payables balances arising from sales and

purchases of goods and services are disclosed elsewhere in the notes to the fi nancial statements.

The movements in other receivables from and other payables to related parties (before provision for

impairment) are as follows:

GroupAssociates

CompanySubsidiaries

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Other receivables:

Balance at beginning of year – net debit/(credit) – – 2,635 3,033

Amounts paid out during the year 257 – 1,272 33

Amount received during the year – – (1,387) (411)

Amount paid/(received) on behalf – – 37 (45)

Interest income – – – 25

Balance at end of year – net debit/(credit) 257 – 2,557 2,635

44


28 February 2007


3. RELATED PARTY TRANSACTIONS (Cont’d)

3.4 Other receivables from and other payables to related parties (Cont’d)

GroupRelated parties

2007 2006

$’000 $’000

Other receivables:

Balance at beginning of year – net debit/(credit) – –

Amounts paid out during the year 724 –

Amount received during the year (619) –

Balance at end of year – net debit/(credit) 105 –

4. CASH AND CASH EQUIVALENTS

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Not restricted in use 11,196 7,551 5,386 5,208

11,196 7,551 5,386 5,208

Analysis of above amount denominated in foreign currency:

Euro 359 – – –

Malaysian Ringgit 3,062 1,681 – –

Sterling Pounds 481 – – –

United States Dollar 2,562 845 2,046 772

Interest earning balances 8,017 5,136 4,513 4,201

The effective rate of interest for the cash on interest earning accounts is between 1.80% to 5.16% per annum

(2006: 0.88% to 3.06% per annum).

Non-cash transactions – During the year, there were acquisitions of plant and equipment with a total cost of

$352,000 (2006: $17,000) acquired by means of fi nance leases.

45


28 February 2007


5. ASSETS CLASSIFIED AS HELD FOR SALE

Group

2007 2006

$’000 $’000

Assets held for sale:

Leasehold land and building (Note 10) 1,311 –

Cost 1,372 –

Accumulated depreciation (61) –

Net book value 1,311 –

A leasehold land and building is presented as held for sale following the decision of management at year end to

sell the property. A sale is expected within twelve months from the fi nancial year end.

6. TRADE AND OTHER RECEIVABLES

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Trade receivables:Outside parties 6,311 4,288 1,418 804

Less : Provision for impairment (4) (4) (4) (4)

Subsidiaries (Notes 3 and 9) – – 3,133 2,209

Less : Provision for impairment – – (30) (30)

Related parties (Note 3) – 4 – 3

Other receivables and prepayments:Deposits to secure services 290 78 26 22

Deposits pursuant to proposed acquisition (a) – 600 – 600

Other receivables 798 514 48 242

Associate (Notes 3 and 8) 257 – – –

Related parties (Note 3) (b) 724 – 59 –

Prepayments 197 202 39 110

Tax recoverable 319 – 29 –

Subsidiaries (Notes 3 and 9) – – 2,623 2,744

Less : Provision for impairment – – (676) (676)

8,892 5,682 6,665 6,024

Provision for impairmentMovements in above provision:

Balance at beginning of year 4 4 710 4

Charge for subsidiaries’ trade receivables to income

statement included in fi nancial expense – – – 30

Charge for subsidiaries’ other receivables to income

statement included in fi nancial expense – – – 676

Balance at end of year 4 4 710 710

46


28 February 2007


6. TRADE AND OTHER RECEIVABLES (Cont’d)

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000


British Pound 295 1,086 – –

Euro 232 – – –

Malaysian Ringgit 1,428 1,526 – 1,432

Thai Baht 3,193 572 – –

United States Dollar 3,260 138 3,191 1,960

Concentration of trade receivable customers:

Top 1 customer 1,874 1,315 2,388 1,346

Top 2 customers 3,208 2,357 3,063 1,879

Top 3 customers 3,775 2,594 3,630 2,176

The average credit period generally granted to non-related trade receivable customers of the Group and

Company is about 30 to 60 days (2006: 30 to 60 days).

Current receivables with a short duration are not discounted and the carrying amounts are assumed to be a

reasonable approximation of fair values.

(a) The deposit pursuant to proposed acquisition in 2006 was in relation to the acquisition of Jackson

Vehicle Holdings Pte Ltd and subsidiaries which was legally completed in July 2006.

(b) Included in other receivables owing from related parties is a loan amounting to $465,000 (2006: Nil)

which bears interest at 3% per annum. The loan is on a non-recourse basis except for the security held.

The loan is secured by 104,100 shares of 100 Baht per preference share of the subsidiary, J.V. (Thailand)

Co., Ltd.

7. INVENTORIES

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Finished goods and goods for resale 1,310 897 278 306

Work in progress 121 594 18 14

Raw material, consumables and supplies 5,282 3,704 1,079 1,345

6,713 5,195 1,375 1,665

Inventories are stated after provision for stock obsolescence.

Movements in provision:

Balance at beginning of year 360 409 215 270

Charge to income statement included in changes in inventories 105 47 20 24

Used (95) (96) (95) (79)

Balance at end of year 370 360 140 215

The write-downs of inventories charged to income statement

included in other credits/(charges) 11 47 – –

47


28 February 2007


8. INVESTMENT IN ASSOCIATES

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Unquoted equity shares at cost* 873 – 338 –

Share of other reserves of associates 32 – – –

Share of post acquisition losses (106) – – –

799 – 338 –


Thai Baht 799 – 338 –

Share of net book value of associates 799 – 357 –

*Goodwill included in unquoted equity shares at cost 269 – – –

The audited fi nancial statements at 31 December 2006 of the associates have been used for equity accounting

purposes. The fi nancial year end of the associates is 31 December.

The associates held by the Company and a subsidiary are listed below:

Name of associates, country of incorporation, place of operations Percentage of equity

held by the Group

and principal activities 2007 2006

% %

Aapico Jackspeed Co., Ltd (a) (Incorporated on 23 June 2006) 40 –

Thailand

Manufacturing of automotive accessories

Katsuya Thailand Co., Ltd (b) (Acquired on 1 August 2006) 23 –

Thailand

Film surfacing on gadgets or automotive parts

(a) Other independent auditors. Audited by Ruchanee Lorcharoenkit, a fi rm of accountants other than a

member fi rm of RSM International of which RSM Chio Lim in Singapore is a member.

(b) Audited by RSM Nelson Wheeler (Thailand) Limited, a member fi rm of RSM International of which RSM

Chio Lim in Singapore is a member.

The summarised fi nancial information, not adjusted for the percentage ownership held by the group, on the

associates for year ended 31 December 2006, which were audited are as follows:

Assets Liabilities Revenue Loss

$’000 $’000 $’000 $’000

Aapico Jackspeed Co., Ltd (Thailand) 1,058 166 – –

Katsuya Thailand Co., Ltd (Thailand) 1,326 942 138 (235)

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Share of capital commitments incurred for purchase of

property, plant and equipment 6 – 6 –

Share of operating lease commitments 26 – 26 –

48


28 February 2007


9. INVESTMENT IN SUBSIDIARIES

Company

2007 2006

$’000 $’000

Unquoted equity shares at cost 12,651 3,083

Less: provision for impairment – (131)

12,651 2,952

Net book value of subsidiaries 14,267 8,114


Australian Dollar – 131

United States Dollar 92 92

Malaysian Ringgit 1,868 1,868

Thai Baht 771 771

Euro 121 121

Movements in provision for impairment:

Balance at beginning of year 131 –

Charge to income statement included in other credits / (charges) – 131

Used (131) –

Balance at end of year – 131

The subsidiaries held by the Company and its subsidiaries are listed below:-

Name of subsidiaries, country of incorporation, place of operations and principal activities

Cost of investments

Percentage ofequity held

by the Group

2007 2006 2007 2006

$’000 $’000 % %

Jackspeed Leather Special Manufacturer (M) Sdn. Bhd.(1)

Malaysia

Production and sale of automotive leather trim

1,868 1,868 100 100

Jackspeed Aviation Pte Ltd(2)

(‘formerly known as Jackspeed Aviation and Marine Pte Ltd’)

Singapore

Production and sale of leather and fabrics covers and interior

refurbishment for use in aviation and marine industries

500 100 100 100

Jackspeed Australia Pty Ltd

(Deregistered from 15 January 2007)(3)

Australia

– 131 – 100

Jackspeed Leather Manufacture (Thailand) Co. Ltd. (4)(5)

Thailand


771 771 100 100

Jackspeed Europe NV (6)(7)

Belgium

Marketing of automotive leather trims and accessories

121 121 100 100

49


28 February 2007


9. INVESTMENT IN SUBSIDIARIES (Cont’d)

Name of subsidiaries, country of incorporation, place of operations and principal activities

Cost of investments

Percentage ofequity held

by the Group

2007 2006 2007 2006

$’000 $’000 % %

Jackson Vehicle Holdings Pte Ltd(8) (Acquired on 1 March 2006)

Singapore

Investment holding

8,789 – 100 –

Katsuya International Pte Ltd(2) (Incorporated on 21 June 2006)

Singapore

Investment holding

510 – 51 –

PT JLS Indonesia(10)

Indonesia


92 92 99.5 99.5

Held by subsidiariesJackspeed Industries Sdn. Bhd(1)(8)

Malaysia


158 158 100 70

Jackson Vehicle (Singapore) Pte Ltd(2)(9) (Acquired on 1 March 2006)

Singapore

Supply and manufacture of automotive accessories

1,708 – 100 –

J. V. (Thailand ) Co., Ltd(4)(9) (Acquired on 1 March 2006)

Thailand

Manufacture, assembly and supply of automobile component parts

1,082 – 100 –

(1) Audited by Horwath, Malaysia, a member fi rm of Horwath International of which Chio Lim & Associate in Singapore was

a member until 10 January 2006. RSM Chio Lim is now a member of RSM International.

(2) Audited by RSM Chio Lim, Singapore.

(3) The subsidiary was deregistered during the year at the date shown.

(4) Audited by RSM Nelson Wheeler (Thailand) Limited, a member fi rm of RSM International of which RSM Chio Lim in

Singapore is a member.

(5) 6 ordinary shares of 100 Thai Baht each in Jackspeed Leather Manufacture (Thailand) Co. Ltd. are held in trust by

certain Directors and employees of the group respectively.

(6) 1 share of 1 Euro in Jackspeed Europe NV is held in trust by a director of a subsidiary.

(7) Not audited as it is not considered material.

(8) This subsidiary is held by Jackspeed Leather Special Manufacturer (M) Sdn. Bhd.

(9) This subsidiary is held by Jackson Vehicle Holdings Pte Ltd.

(10) Audited by Drs. Sukimto Sjamsuli, Indonesia, a fi rm of accountants other than member fi rms of RSM International.

50


28 February 2007


10. PROPERTY, PLANT AND EQUIPMENT

Group

Freeholdland &

buildings

Leasehold land &

buildingsPlant and

equipment Total

$’000 $’000 $’000 $’000

Cost or valuation:

At 1 March 2006 2,311 3,799 6,074 12,184

Arising from acquisition of subsidiaries – 1,309 445 1,754

Additions – 14 955 969

Disposals – – (498) (498)

Reclassifi cation to asset held for sale – (1,372) – (1,372)

Foreign exchange adjustments (4) (8) (21) (33)

At 28 February 2007 2,307 3,742 6,955 13,004

Accumulated depreciation:

At 1 March 2006 256 273 3,946 4,475

Charge for the year 35 102 1,084 1,221

Disposals – – (316) ( 316)

Reclassifi cation to asset held for sale – (61) – (61)

Foreign exchange adjustments (1) (2) (40) (43)

At 28 February 2007 290 312 4,674 5,276

Net book value:

At 28 February 2007 2,017 3,430 2,281 7,728

Represented by:

Cost – 3,430 2,281 5,711

Valuation 2,017 – – 2,017

Total 2,017 3,430 2,281 7,728

Carrying amounts of assets that would have been

included in the fi nancial statements had the assets

been carried at cost less depreciation 1,649 3,430 2,281 7,360

51


28 February 2007


10. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

Group

Freeholdland &

buildings

Leasehold land &

buildingsPlant and

equipment Total

$’000 $’000 $’000 $’000

Cost or valuation:

At 1 March 2005 2,259 3,769 5,983 12,011

Additions – – 436 436

Disposals – – (401) (401)

Foreign exchange adjustments 52 30 56 138

At 28 February 2006 2,311 3,799 6,074 12,184


At 1 March 2005 203 199 3,245 3,647

Charge for the year 48 74 901 1,023

Disposals – – (229) (229)

Foreign exchange adjustments 5 – 29 34

At 28 February 2006 256 273 3,946 4,475

Net book value:

At 28 February 2006 2,055 3,526 2,128 7,709

Represented by:

Cost – 3,526 2,128 5,654

Valuation 2,055 – – 2,055

Total 2,055 3,526 2,128 7,709

Carrying amounts of assets that would have been

included in the fi nancial statements had the assets

been carried at cost less depreciation 1,679 3,526 2,128 7,333

The freehold land and buildings was revalued by Chan Eng Choy, who is a registered valuer of Param &

Associates, in January 2005 based on the comparison approach to refl ect the actual market state and

circumstances as of the balance sheet date and not as of either a past or future date. Revaluations are made

with suffi cient regularity such that the carrying amount does not differ materially from that which would be

determined using fair value at the balance sheet date and the entire class of property, plant and equipment to

which that asset belongs is revalued. The surplus on revaluation, net of deferred tax liabilities, of $316,000 was

credited to asset revaluation reserve.

52


28 February 2007


10. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

Leaseholdland &

buildingPlant andequipment TotalCompany

$’000 $’000 $’000

Cost:

At 1 March 2006 2,428 1,942 4,370

Additions – 432 432

Disposals – (418) (418)

At 28 February 2007 2,428 1,956 4,384


At 1 March 2006 234 1,347 1,581

Charge for the year 47 216 263

Disposals – (257) (257)

At 28 February 2007 281 1,306 1,587

Net book value:

At 28 February 2007 2,147 650 2,797

Cost:

At 1 March 2005 2,428 1,715 4,143

Additions – 266 266

Disposals – (39) (39)

At 28 February 2006 2,428 1,942 4,370


At 1 March 2005 188 1,166 1,354

Charge for the year 46 209 255

Disposals – (28) (28)

At 28 February 2006 234 1,347 1,581

Net book value:

At 28 February 2006 2,194 595 2,789

i) Certain items are under hire purchase or fi nance lease agreements (see Note 15).

ii) Motor vehicle with a net book value of $308,000 (2006: $130,000) is registered in the name of a director who holds the

asset in trust for the Company.

iii) A motor vehicle with a net book value of $68,000 (2006: Nil) was sold to a director of the Company, for $66,000. The

net book value approximates the fair value.

iv) A property of a subsidiary with a carrying value of $1,277,000 (2006: Nil) is mortgaged to a bank to secure bank

facilities. (Note 14)

53


28 February 2007


11. INTANGIBLE ASSETS

Group Goodwill

Intangibles - customer

base Total

$’000 $’000 $’000

Cost:At 1 March 2006 151 – 151Arising from acquisition of subsidiaries 3,604 3,000 6,604

At 28 February 2007 3,755 3,000 6,755

Accumulated amortisation:At 1 March 2006 – – –Amortisation for the year – 300 300

At 28 February 2007 – 300 300

Net book value:At 28 February 2007 3,755 2,700 6,455

Cost:At 1 March 2005 (129) – (129)Change in accounting policy (Note 32) 280 – 280

At 1 March 2005, as restated 151 – 151

At 28 February 2006 151 – 151

Negative goodwill released to income statement:At 1 March 2005 67 – 67Change in accounting policy (Note 32) (67) – (67)

At 1 March 2005, as restated – – –

At 28 February 2006 – – –

Net book value:At 28 February 2006 151 – 151

The goodwill and intangibles are allocated to cash-generating units for the purpose of impairment testing. Each

of those cash-generating units represents the Group’s investment in each subsidiary as follows:-

Goodwill Intangibles Total Goodwill

2007 2007 2007 2006$’000 $’000 $’000 $’000

Jackspeed Leather Manufacture (Thailand) Co. Ltd. 151 - 151 151Jackson Vehicle Holdings Pte Ltd and subsidiaries 3,604 2,700 6,304 –

3,755 2,700 6,455 151

The goodwill was tested for impairment at the end of the year. An impairment loss is the amount by which the

carrying amount of an asset or a CGU exceeds its recoverable amount. The recoverable amount of an asset or

a CGU is the higher of its fair value less costs to sell or its value in use. The recoverable amounts of CGU have

been determined based on the value in use method.

The value in use was determined by Management. The key assumptions for the value in use calculations are

those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during

the period. Management estimates discount rates using pre-tax rates that refl ect current market assessments

of the time value of money and the risks specifi c to the CGUs. The growth rates are based on industry growth

forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future

changes in the market.

54


28 February 2007


11. INTANGIBLE ASSETS (Cont’d)

The Group prepares cash fl ow forecasts derived from the most recent fi nancial budgets approved by

Management for the next fi ve years. Management forecast using the most conservative cash fl ow forecast with

a growth rate of 0% (2006: 0%) for fi ve years and a discount rate of 7.3% (2006: 8.12%) has been used to

discount the forecast cashfl ow. The calculated recoverable amount exceeds the carrying value.

12. SHORT-TERM BORROWINGS

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Bills payable to banks (secured) 51 161 – 161


United States Dollar 51 138 – 138

All the short-term borrowings are interest bearing. The carrying values approximate fair values. The range of

fl oating interest rates paid was between 5.25% to 6.25% per annum (2006: 4.5% to 6.25% per annum). The

exposure of the borrowings to interest rate changes and the contractual repricing dates at the balance sheet

dates are below 6 months. Certain of the bank loans, overdrafts and other credit facilities are covered by:

(a) joint and several guarantees by certain Directors of the Company as well as certain Directors of a

subsidiary;

(b) corporate guarantees from the Company and a subsidiary;

(c) a fi rst open legal mortgage over the subsidiary’s leasehold property; and

(d) negative pledges in respect of any assets (except stock in trade).

13. TRADE AND OTHER PAYABLES

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Trade payables:Outside parties and accrued liabilities 4,143 4,157 1,007 2,287

Subsidiaries (Notes 3 and 9) – – 65 376

Related parties (Note 3) 51 2 – 2

Other payables:Amount owing to the vendors (Note 23) 1,748 – 1,748 –

Subsidiaries (Notes 3 and 9) – – 66 109

Related parties (Note 3) 619 – – –

Total trade and other payables - current 6,561 4,159 2,886 2,774

Other payable-non current:Amount owing to the vendors (Note 23) 3,837 – 3,837 –

55


28 February 2007


13. TRADE AND OTHER PAYABLES (Cont’d)

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000


Malaysian Ringgit 920 1,082 – –

Thai Baht 1,102 321 – –

United States Dollar 1,156 1,165 406 1,290

The average credit period taken by the Group and Company to settle trade payables is about 60 days (2006: 60

days). The other payables – current are with short-term durations. The carrying amounts are assumed to be a

reasonable approximation of fair values.

Amount owing to the vendors relate to the balance consideration to be paid by shares to the original

shareholders at $0.18 per ordinary share for the acquisition of Jackson Vehicle Holdings Pte Ltd and

subsidiaries (Note 23).

14. LONG-TERM BORROWINGS

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Bank loan (secured) 950 309 – 309

The borrowing is repayable as follows:

Amount due within a year 98 309 – 309

Non-current portion 852 – – –

950 309 – 309

The non-current portion is repayable as follows:

Due within 2 to 5 years 432 – – –

After 5 years 420 – – –

Total non-current portion 852 – – –

The exposure of the borrowings to interest rate changes and the contractual repricing dates at the balance

sheet date are as follows:

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Within 6 to 12 months 893 309 – 309

Within 1 to 5 years – – – –

No exposure (fi xed interest rates) 57 – – –

Total borrowings 950 309 – 309

56


28 February 2007


14. LONG-TERM BORROWINGS (Cont’d)

The long-term borrowing for 2006 was denominated in Singapore dollars, unsecured, repayable over 2 years

from June 2004 and interest bearing. This loan was fully repaid in 2007.

The long-term borrowing for 2007 is denominated in Singapore dollars, interest bearing and secured by a

mortgage on a subsidiary’s leasehold land and building, personal guarantees from certain Directors and negative

pledges on the subsidiary’s plant and equipment. It is repayable by equal monthly instalments over ten years

from October 2005.

The carrying value of the long-term borrowings approximates the fair value. The fi xed interest rates were 3.25%

(2006: 3.25%) per annum. The effective interest rate is not signifi cantly different from the fi xed rates. The long-

term borrowing has a fi xed interest rate for the fi rst 24 months and a variable interest rate thereafter.

15. FINANCE LEASE LIABILITIES

Minimumpayments

Financecharge

Present value

$’000 $’000 $’000

Group2007Minimum lease payments payable:

Due within one year 120 (13) 107

Due within 2 to 5 years 204 (24) 180

Total 324 (37) 287

Net book value of plant and equipment under fi nance leases 510

Group2006Minimum lease payments payable:



Total 273 (23) 250


Company2007Minimum lease payments payable:



Total 150 (15) 135


Company2006Minimum lease payments payable:



Total 151 (18) 133


57


28 February 2007


15. FINANCE LEASE LIABILITIES (Cont’d)

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Analysis of above net present value by currency:Euro Dollars 26 – – –

Malaysian Ringgit 33 107 – –

Singapore Dollar 207 133 135 133

Thai Baht 21 10 – –

It is the Group’s policy to lease certain of its plant and equipment under fi nance leases. The average lease

term is 1-6 years. The rate of interest for fi nance leases is about 2.85% to 7.07% (2006: 2.35% to 8.26%) per

year. There is an exposure to fair value interest risk because the interest rates are fi xed at the contract date.

All leases are on a fi xed repayment basis and no arrangements have been entered into for contingent rental

payments. The obligations under fi nance leases are secured by the lessor’s charge over the leased assets, and

a guarantee and indemnity by the Company for a subsidiary’s fi nance leases.

16. SHARE CAPITAL

Group and Company

Numberof

shares

Issuedsharecapital

’000 $’000

Ordinary shares of no par value:At 1 March 2005 131,000 7,860

Transfer from share premium account – 6,623

At 28 February 2006 131,000 14,483

Issue of share capital 43,667 7,860

Share issue expenses – (511)

At 28 February 2007 174,667 21,832

With the changes to the Companies Act, Cap 50, effective from 30 January 2006, there is the removal of the

concept of par value and authorised capital and there is no share premium account. The Company had a share

premium account balance of $6,623,000 at the end of the fi nancial year 2006. This amount has been included in

share capital as required by the changes to the Companies Act.

The ordinary shares of no par value carry no right to fi xed income and are fully paid. The Company is not

subject to any externally imposed capital requirements.

During the fi nancial year, the Company issued 34,933,334 ordinary share for cash at S$0.18 each to AAPICO

Investment Pte Ltd, a wholly-owned subsidiary of AAPICO Hitech Public Company Limited (“AAPICO”),

benefi cially owned by a director, Mr Yeap Swee Chuan, pursuant to the subscription agreement between

AAPICO and the Company dated 15 Febuary 2006 and 8,733,333 ordinary shares for cash at S$0.18 each to

Mr Ang Kian Lee (“Mr Ang”) a director of the Company, pursuant to the subscription notice between Mr Ang

and the Company dated 15 February 2006. The proceeds from the share issue were used for acquisition of

subsidiaries, working capital and future investments.

As disclosed in paragraph 1.5 of the circular to Shareholders dated 9 June 2006, both AAPICO and Mr Ang

have further agreed to subscribe for all (and not some only) of their entitlement to additional new shares of the

Company so as to maintain their shareholding interest at 20% and 5% of the total number of issued shares

of the Company respectively. Such entitlement to additional new shares of the Company shall be consequent

upon the issue of the Consideration Shares (Note 23) in relation to the acquisition of the JVH Group.

58


28 February 2007


17. REVENUE

Group

2007 2006

$’000 $’000

Sales of goods 42,842 31,797

Rendering of service 465 –

Sundry income 431 7

43,738 31,804

18. FINANCIAL INCOME AND (EXPENSE)

Group

2007 2006

$’000 $’000

Bad debts written off from trade receivables (8) –

Foreign exchange transaction gains 548 162

Fair value adjustment on fi nancial liabilities (163) –

Interest income 268 133

Interest expense (78) (113)

567 182

Presented in the income statement as:

Financial income 816 295

Financial expense (249) (113)

Financial income and (expense) net 567 182

19. EMPLOYEE BENEFITS EXPENSE

Group

2007 2006

$’000 $’000

Employee benefi ts expense including Directors’ remuneration 9,676 6,918

Contributions to defi ned contribution plan 420 373

Other benefi ts 643 475

Total employee benefi ts expense 10,739 7,766

20. OTHER CREDITS / (CHARGES)

Group

2007 2006

$’000 $’000

Gain on disposal of plant and equipment 81 20

Inventories written off (11) (47)

70 (27)

59


28 February 2007


21. INCOME TAX EXPENSE

Group

2007 2006

$’000 $’000

Current tax expense 1,129 917

Deferred tax credit (182) (2)

Total income tax expense 947 915

The income tax expense varied from the amount of income tax expense determined by applying the Singapore

income tax rate of 18% (2006: 20%) to profi t before tax as a result of the following differences:

Group

2007 2006

$’000 $’000


Income tax expense at statutory rate 687 706

Higher tax rate in other countries 181 163

Non-allowable items 118 65

Tax exemptions (74) (66)

Deferred tax asset valuation allowance 20 18

Under/(over) provision of income tax in prior years (26) 29

Foreign withholding tax expense 36 –

Other items less than 3% 5 –

Income tax expense 947 915

The net deferred tax amount in the balance sheet is as follows:

Balance sheetNet change in

income statement

2007 2006 2007 2006

$’000 $’000 $’000 $’000

GroupDeferred tax liabilities:

Excess of net book value of property, plant and equipment (33) (39) (6) (2)

Revaluation reserve – recognised in equity (123) (123) – –

Intangible asset arising from acquisition of subsidiaries (486) – (54) –

Total deferred tax liabilities (642) (162) (60) (2)

Deferred tax assets:

Excess of tax written down value of property, plant and equipment – – – 8

Tax loss carryforwards 330 167 (163) (2)

Unabsorbed capital allowances 16 37 21 (24)

Deferred tax asset valuation allowance (224) (204) 20 18

Total deferred tax assets 122 – (122) –

Net deferred tax liabilities (520) (162) (182) (2)

60


28 February 2007


21. INCOME TAX EXPENSE (Cont’d)

Balance sheetNet change in

income statement

2007 2006 2007 2006

$’000 $’000 $’000 $’000

CompanyDeferred tax liabilities:

Excess of net book value of property, plant and equipment (25) (25) – –

Total deferred tax liabilities (25) (25) – –

An allowance is made to the extent that it is not probable that taxable profi t will be available against which

the unused tax loss carryforwards can be utilised. The realisation of the future income tax benefi ts from

tax loss carryforwards and temporary differences from capital allowances is available for an unlimited future

period subject to the conditions imposed by law including the retention of majority shareholders as defi ned.

Where provision for deferred tax arising from temporary differences has been offset against the above tax loss

carryforwards, such provision for deferred tax will be required to be set up when the tax losses are utilised in

the future.

At the balance sheet date, the aggregate amount of temporary differences associated with investments in

subsidiaries and associates for which deferred tax liabilities have not been recognised is insignifi cant.

There are no income tax consequences of dividends to shareholders of the Company.

22. ITEMS IN THE INCOME STATEMENT

In addition to the charges and credits disclosed elsewhere in the notes to the fi nancial statements, the income

statement includes the following charges:-

Group

2007 2006

$’000 $’000

Other fees to auditors:

– Company’s auditors 20 20

– Other auditors 4 4

23. ACQUISITION OF SUBSIDIARIES The Group acquired 100% equity interest of Jackson Vehicle Holdings Pte Ltd and subsidiaries (“JVH Group”)

with effect from 1 March 2006, at an estimated consideration of $8.54 million, based on the audited net profi t

for the fi nancial year ended 28 February 2007 and forecasted net profi t for the fi nancial year ended 28 February

2008. The consideration paid as at 28 February 2007 amounted to $3.11 million. The remaining amount is

payable by way of issue of shares (“Consideration Shares”), to be issued in two tranches within one month

after the completion of the audit of JVH Group for each of the fi nancial years ending 28 February 2007 and 28

February 2008. The balance consideration is payable in FY2008, at S$1.75 million, and FY2009, at $3.95 million.

The deferred consideration is stated at fair value at the date of acquisition and at amortised cost thereafter and

has been classifi ed as “Trade and Other Payables - Current” and “Other Payable - Non Current” respectively in

the balance sheet at 28 February 2007.

The vendors include certain directors of the Company, namely Liew Ham Chow, Ho Choon Meng and Lee Seng

Jeow, and an associate of Liew Ham Chow.

61


28 February 2007


23. ACQUISITION OF SUBSIDIARIES (Cont’d)

The transaction was accounted for by the purchase method of accounting. The fair value of the identifi able

assets and liabilities of the subsidiaries acquired and the effect thereof as at the date of acquisition were as

follows:-

Recognised on acquisition

Carrying amountbefore combination

$’000 $’000

Cash 740 740Trade and other receivable 3,653 3,653Inventories 913 913Property, plant and equipment 1,754 1,754Intangible assets 3,000 –Trade and other payables (2,711) (2,458)Current tax payable (265) (265)Deferred tax liability (540) –Finance lease (131) (131)Short term borrowings (437) (437)Long term borrowings (1045) (1,045)

Net identifi able assets 4,931 2,724

Goodwill arising on consolidation 3,604

Consideration - cost of the acquisition excluding transaction costs

of $253,000* 8,535Less consideration payable by shares (5,422)

Cash consideration 3,113Less cash acquired (740)

Net cash outfl ow on acquisition 2,373

The revenue and the net profi t of the subsidiaries for the period as though the acquisition date for all business

combinations effected during the year had been the beginning of the year were $17.0 million and $1.54 million

respectively.

The goodwill arising on the acquisition of the subsidiaries is attributable to the anticipated profi tability of the

distribution of the Group’s products in the new markets and the anticipated future operating synergies from the

combination.

*Included in this amount are other fees of $40,000 and $32,000 paid to the Company’s auditors and other

auditors respectively.

24. DIVIDENDS

Group and Company

2007 2006

$’000 $’000 Interim exempt one-tier dividend of 0.3 cents (2006: 0.24 cents net of tax

at 20%) per share 524 314Special dividend of 0.12 cents (2006: Nil) per share, net of tax at 20% 157 – Final exempt one-tier dividend of 0.55 cents (2006: 0.48 cents net of tax at 20%)

per share 721 629

1,402 943

The Directors propose a fi nal exempt one-tier dividend of 0.7 cents per share in respect of the year ended 28

February 2007. This dividend is subject to approval by shareholders at the annual general meeting and has not

been included as a liability in these fi nancial statements. The proposed dividend for 2007 is payable in respect

of all shares in issue at the book closure date.

62


28 February 2007


25. CAPITAL COMMITMENTS

Estimated amounts committed at the balance sheet date for future capital expenditure but not recognised in the

fi nancial statements are as follows:

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Commitments in respect of property, plant and equipment – 79 – –

26. BANK FACILITIES

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Letter of credits – secured (Note 12) 260 1,864 260 1,864

27. OPERATING LEASE PAYMENTS COMMITMENTS

At the balance sheet date the total of future minimum lease payments under non-cancellable operating leases

are as follows:

Group Company

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Not later than one year 345 225 48 46

Later than one year and not later than fi ve years 783 480 193 186

Later than 5 years 1,597 642 544 569

Rental expense for the year 358 194 48 46

Operating lease payments mainly represent rentals payable by the Group for its leasehold premises, offi ce

and production facilities and license fees for its showroom located at 47 Loyang Drive, Singapore 508955, 45

Loyang Drive Singapore 508954, Kompleks Hijrah Industrial Blok F No.1, and 2 Batam Centre 29432, Indonesia,

229/126 Moo. 1, Taparak Road, Bangsaothong Sub-district, King Ampur Bangsaothong District, Samutraprakarn

10540, Thailand, 229/111 Moo 1, Taparak Road Tambol Bangsaothong Bangsaothong sub-district Samutprakarn

10540 and Wiedauwkaai 81 in Ghent respectively. The lease from Jurong Town Corporation is for 30 years

from 1 June 1993 with an entitlement of a further term of 29 years from 1 June 2023. The lease term will be

negotiated on 1 June 2024 to a rate based on the market rent on the date of negotiation. Rentals are subject to

an escalation clause but the amount of the rent increase is not to exceed a certain percentage. Such increases

are not included in the above amounts. The lease for offi ce and production facilities at Batam is for 3 years from

1 January 2005 to 1 January 2008. Rentals are not subjected to an escalation clause. The lease for offi ce and

production facilities at Thailand is for 3 years from 1 March 2006 to 28 February 2009. Rentals are not subjected

to an escalation clause. The lease for offi ce facilities at Belgium is for 9 years from 1 March 2006 to 28 February

2015. Rentals are subjected to a readjustment clause but the amount of the rent increase or decrease is not to

exceed a certain percentage. Such increases or decreases are not included in the above amounts.

63


28 February 2007


28. CONTINGENT LIABILITIES

The Company has issued corporate guarantees to banks in respect of bank facilities extended to certain

subsidiaries amounting to $6,241,000 (2006: $3,070,000).

A subsidiary has issued a corporate guarantee in respect of banking facilities grented to a fellow subsidiary

amounting to $2,233,000 (2006: Nil).

29. EARNINGS PER SHARE

The earnings per share is calculated by dividing the Group’s profi t attributable to shareholders by the weighted

average number of shares of no par value in issue during the year.

2007 2006

$’000 $’000

The calculation of the earnings per share is based on the following:

Profi t for the year attributable to the equity holders of the Company

for the purposes of basic and diluted earnings per share 2,941 2,612

Number Number

’000 ’000

Number of sharesWeighted average number of ordinary shares for the purpose of basic earnings

per share 131,000 131,000

Weighted average number of new ordinary shares issued 29,111 —

160,111 131,000

The denominators used are the same as those detailed above for both basic and diluted earnings per share.

30. SEGMENTAL INFORMATION

The Group’s operating businesses are currently organised according to their nature of activities. These are

grouped into the following four market segments and form the basis on which the Group reports its primary

segment information:-

(a) Distributor segment. This segment comprises sales to car distributors and dealers both in Singapore and

overseas;

(b) Original Equipment Manufacturer (“OEM”) segment. This segment comprises sales to automobile

manufacturers;

(c) Retail and After Market (“R&A”) segment. This segment comprises sales to retail customers, parallel

importers and car traders in Singapore and overseas; and

(d) Non Automobile (“Non Auto”) segment. This segment relates to the extension of the Group’s design and

manufacture of leather trim and other interior accessories services to the non-automobile industry that

includes the marine and aviation sector.

64


28 February 2007


30. SEGMENTAL INFORMATION (Cont’d)

Segment information about these businesses is presented below:

Distributor OEM R&A Non Auto Grand total

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

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

Revenue:–

External sales 21,581 17,353 17,157 11,370 3,916 2,636 1,084 445 43,738 31,804

Results:–

Segment results 2,620 2,564 (30) 528 488 280 208 – 3,286 3,372

Financial income 816 295

Financial expense (249) (113)

Other credits/(charges) 70 (27)

Share of loss of associates (106) –


Income tax expense (947) (915)

Profi t for the year 2,870 2,612

Other information:–

Depreciation and

amortisation 750 559 597 366 136 85 38 14 1,521 1,024

Capital additions – – 3,000 – – – – – 3,000 –

Unallocated 4,573 436

Total capital additions 7,573 436

Segment assets 1,898 1,716 3,481 2,126 714 247 214 178 6,307 4,267

Unallocated assets 36,787 22,021

Total assets 43,094 26,288

Segment liabilities-

unallocated 12,619 5,729

Total liabilities 12,619 5,729

65


28 February 2007


30. SEGMENTAL INFORMATION (Cont’d)

Geographical segments

The Group’s main operations are located in Singapore, Malaysia, Thailand and Indonesia.

The following table provides an analysis of the Group revenue by geographical market, irrespective of the origin

of the goods and services:-

2007 2006

$’000 $’000

Singapore 13,625 8,786

Europe(1) 11,558 9,663

Malaysia 5,143 7,074

Thailand 11,897 4,407

Others(2) 1,515 1,874

43,738 31,804

(1) Europe comprises mainly the UK.

(2) Others include mainly Japan and Vietnam.

The following is an analysis of the carrying amount of segment assets and additions to property, plant and

equipment and intangibles analysed by the geographical area in which the assets are located:-

Carrying amountof segment assets

Additions to property, plant and equipment

and intangibles

2007 2006 2007 2006

$’000 $’000 $’000 $’000

Singapore 20,065 12,826 7,080 271

Malaysia 13,361 11,578 74 93

Thailand 6,401 1,210 246 59

Others(1) 3,267 674 173 13

43,094 26,288 7,573 436

(1) Others include mainly Indonesia.

66


28 February 2007


For the year ended 28 February 2007 the following new or revised Singapore Financial Reporting Standards

were adopted for the fi rst time. The new or revised standards did not require any modifi cation of the

measurement method or the presentation in the fi nancial statements.

FRS No. Title

FRS 1 Presentation of Financial Statements

FRS 16 Property, Plant and EquipmentFRS 19 Employee Benefi ts – Amendments relating to actuarial gains and losses, group plans and

disclosures(*)

FRS 21 The Effects of Changes in Foreign Exchange Rates – Amendments relating to net investment in

a foreign operationFRS 24 Related Party DisclosuresFRS 32 Financial Instruments: Disclosure and PresentationFRS 37 Provisions, Contingent Liabilities and Contingent AssetsFRS 38 Intangible AssetsFRS 39 Financial Instruments: Recognition and Measurement – Amendments relating to cash fl ow

hedge accounting of forecast intragroup transactions Amendments relating to fi nancial

guarantee contracts(*)

FRS 101 First-time Adoption of Financial Reporting Standards – Amendments relating to comparative

disclosures for FRS 106 Exploration for and Evaluation of Mineral Resources(*)

FRS 101 Implementation Guidance(*)

FRS 104 Insurance Contracts(*)

FRS 104 Implementation Guidance(*)

FRS 106 Exploration for and Evaluation of Mineral Resources(*)

INT FRS 104 Determining whether an Arrangement contains a Lease(*)

INT FRS 105 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation

Funds(*)

INT FRS 107 Applying the Restatement Approach under FRS 29 Financial Reporting in Hyperinfl ationary

Economies(*)

INT FRS 108 Scope of FRS 102INT FRS 109 Reassessment of Embedded Derivatives(*)

INT FRS 110 Interim Financial Reporting and Impairment

(*) Not relevant to the entity.

32. CHANGES IN ACCOUNTING POLICIES

GOODWILL – The Group adopted FRS 103 Business Combinations prospectively with effect from 1 March

2005, more fully disclosed in Note 2 to these fi nancial statements. FRS 103 prohibits the amortisation of

goodwill acquired in a business combination and instead requires the goodwill to be tested for impairment

annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired,

in accordance with FRS 36 Impairment of Assets. In previous years goodwill was amortised on the straight-line

method over 10 years and negative goodwill arising from the acquisition of Jackspeed Leather Manufacturer

(M) Sdn Bhd on 1 March 2002 was released to the income statement on the straight-line method over 10 years.

The amortisation expense for the year ended 28 February 2005 was $18,000 and negative goodwill released to

income statement was $24,000. Accordingly there is no amortisation expense for the year ended 28 February

2005 and the net book value of goodwill is the new carrying cost. In accordance with FRS 103, the negative

goodwill balance of $214,000 is transferred to retained earnings at 1 March 2005. The accounting policy is

applied prospectively and there is no restatement of the fi gures for prior years. There was no signifi cant impact

to the Group’s net losses before tax and basic earnings per share from the adoption of FRS 103 and revised

FRS 36.

67


28 February 2007


33. FUTURE CHANGES IN ACCOUNTING STANDARDS

The following new or revised Singapore Financial Reporting Standards that have been issued will be effective in

future. The transfer to the new or revised standards from the effective dates is not expected to have a material

impact on the fi nancial statements.

FRS No. Title

Effective date for periods

beginningon or after

FRS 1 Presentation of Financial Statements – Amendments relating to capital disclosures 1.1.2007

FRS 10 Events after the Balance Sheet Date 1.1.2007

FRS 12 Income Taxes 1.1.2007

FRS 14 Segment Reporting 1.1.2007

FRS 17 Leases 1.1.2007

FRS 19 Employee Benefi ts 1.1.2007

FRS 32 Financial Instruments: Presentation 1.1.2007

FRS 33 Earnings per Share 1.1.2007

FRS 39 Financial Instruments: Recognition and Measurement 1.1.2007

FRS 39 Implementation Guidance 1.1.2007

FRS 40 Investment Property(*) 1.1.2007

FRS 101 First-time Adoption of Financial Reporting Standards(*) 1.1.2007

FRS 101 Implementation Guidance(*) 1.1.2007

FRS 102 Share-based Payment 1.1.2007

FRS 103 Business Combinations 1.1.2007

FRS 104 Insurance Contracts(*) 1.1.2007

FRS 104 Implemetation Guidance – Revisions relating to FRS 107 Financial Instruments:

Disclosures(*)

1.1.2007

FRS 107 Financial Instruments: Disclosures – Implementation Guidance(*) 1.1.2007

FRS 108 Operating Segments 1.1.2009

INT FRS 105 Rights to Interests arising from Decommissioning, Restoration and Environmental

Rehabilitation Funds(*)

1.1.2007

INT FRS 111 FRS102 - Group and Treasury Share Transactions(*) 1.3.2007

INT FRS 112 Service Concessions Arrangements(*) 1.1.2008

(*) Not relevant to the entity.

34. SUBSEQUENT EVENT

On 10 May 2007, the Company incorporated a wholly-owned subsidiary, Jackspeed China Development Pte.

Ltd. with an issued and paid up capital of $2.

68

STATISTICS OF SHAREHOLDINGS

As at 18 May 2007


No of Issued Shares - 174,666,667

Voting rights - On a show of hands : One vote for each member

On a poll : one vote for each ordinary share

ANALYSIS OF SHAREHOLDINGS

Range of Shareholdings No. of Shareholders % No. of Shares %

1 - 999 0 0.00 0 0.00

1,000 - 10,000 392 45.58 2,214,000 1.27

10,001 - 1,000,000 449 52.21 31,478,000 18.02

1,000,001 and above 19 2.21 140,974,667 80.71

860 100.00 174,666,667 100.00

Based on information available to the Company as at 18 May 2007, approximately 40.82% of the issued ordinary

shares of the Company is held by the public and therefore Rule 723 of the Listing Manual is complied with.

TOP 20 SHAREHOLDERS

No. Name No. of Shares %

1 Aapico Investment Pte. Ltd. 34,933,334 20.00

2 Liew Ham Chow 33,145,600 18.98

3 Maybank Nominees (S) Pte Ltd 14,000,000 8.02

4 Ang Kian Lee 8,733,333 5.00

5 Liew San Chow 6,536,000 3.74

6 Waterworth Pte Ltd 6,500,000 3.72

7 Chua Poh Chuan 5,909,400 3.38

8 DBS Nominees Pte Ltd 4,714,000 2.70

9 United Overseas Bank Nominees Pte Ltd 3,741,000 2.14

10 Morgan Stanley Asia (S) Secs Pte Ltd 3,709,000 2.12

11 Kim Eng Securities Pte. Ltd. 3,168,000 1.81

12 Merrill Lynch (S) Pte Ltd 3,135,000 1.79

13 CIMB-GK Securities Pte. Ltd. 2,448,000 1.40

14 OCBC Securities Private Ltd 1,982,000 1.13

15 UOB Kay Hian Pte Ltd 1,890,000 1.08

16 Hong Leong Finance Nominees Pte Ltd 1,886,000 1.08

17 Gan Cheong Or @ Ngan Chong Hoo 1,684,000 0.96

18 Daiwa Securities SMBC Singapore Pte Ltd 1,632,000 0.93

19 Citibank Consumer Nominees Pte Ltd 1,228,000 0.70

20 United Malayan Pineapple Growers & Canners Pte Ltd 1,000,000 0.57

141,974,667 81.25

SUBSTANTIAL SHAREHOLDERS

No. of Shares%Direct Interests Deemed Interests

Liew Ham Chow(1) 33,145,600 18,500,000 29.57

Aapico Investment Pte. Ltd 34,933,334 – 20.00

Ang Kian Lee 8,733,333 – 5.00

(1) 18,500,000 shares are held in the names of nominees.

69

NOTICE OF ANNUAL GENERAL MEETING


NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Shareholders of the Company will be held at 47

Loyang Drive Singapore 508955 on Monday, 25 June 2007 at 10:00 a.m. to transact the following businesses:

ORDINARY BUSINESS:

1. To receive and consider the Directors’ Report and Audited Accounts for the fi nancial year

ended 28 February 2007 and the Auditors’ Report thereon.

2. To approve the payment of Directors’ fees of S$73,000 for the fi nancial year ended 28

February 2007. (2006: S$64,200)

3. To declare a fi nal exempt (one-tier) dividend of 0.7 cents per ordinary share for the fi nancial

year ended 28 February 2007.

4(a) To re-elect Mr Liew Ham Chow, who is retiring by rotation in accordance with Article 107 of

the Company’s Articles of Association, as Director of the Company.

4(b) To re-elect Mr Voo Jun Hing, who is retiring by rotation in accordance with Article 107 of the

Company’s Articles of Association, as Director of the Company.

[Mr Voo Jun Hing will, upon re-election as a Director of the Company, remain as a member

of the Audit Committee. Mr Voo Jun Hing, an Executive Director will not be considered

independent for the purpose of Rule 704(8) of the Listing Manual of The Singapore Exchange

Securities Trading Limited.]

4(c) To re-elect Mr Yeap Swee Chuan, who is retiring by rotation in accordance with Article 117

of the Company’s Articles of Association, as Director of the Company.

4(d) To record the retirement of Mr Ho Choon Meng, a Director retiring in accordance with Article

117 of the Company’s Articles of Association who does not wish to seek re-election.

4(e) To record the retirement of Mr Lee Seng Jeow, a Director retiring in accordance with Article

117 of the Company’s Articles of Association who does not wish to seek re-election.

5. To re-appoint Messrs RSM Chio Lim as Auditors and to authorise the Directors to fi x their

remuneration.

SPECIAL BUSINESS :

To consider and, if thought fi t, to pass with or without any modifi cations, the following resolution as Ordinary

Resolution:

6. Ordinary Resolution: Authority to allot and issue shares up to fi fty per centum (50%) of the issued shares in the capital of the Company

“That pursuant to Section 161 of the Companies Act, Cap. 50 and subject to Rule 806 of

the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”),

authority be and is hereby given to the Directors of the Company to allot and issue shares

and convertible securities in the capital of the Company (whether by way of rights, bonus

or otherwise) at any time and upon such terms and conditions and for such purposes and

to such persons as the Directors may in their absolute discretion deem fi t provided always

that the aggregate number of shares and convertible securities to be issued pursuant to

this Resolution does not exceed 50% of the issued shares of the Company, of which the

aggregate number of shares and convertible securities to be issued other than on a pro rata

basis to existing shareholders does not exceed 20% of the issued shares of the Company

(the percentage issued shares being based on the issued shares in the capital of the

Company at the time this Resolution is passed after adjusting for new shares arising from

the conversion or exercise of any convertible securities or share options or vesting of share

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

Resolution 8

70



awards which are outstanding at the time this Resolution is passed and any subsequent

consolidation or sub-division of shares) and unless revoked or varied by the Company

in general meeting, such authority shall continue in force until the conclusion of the next

Annual General Meeting or the expiration of the period within which the next Annual General

Meeting of the Company is required by law to be held, whichever is the earlier.”

[Explanatory Note (i)]

7. To transact any other business which may be properly transacted at an Annual General

Meeting.

Explanatory Notes:

(i) Resolution 8 if passed, will empower the Directors from the date of the above Meeting

until the date of the next Annual General Meeting, to allot and issue shares and convertible

securities in the Company. The number of shares which the Directors may allot and issue

under this Resolution would not exceed 50% of the issued shares of the Company at the

time of passing this Resolution. For allotment and issue of shares and convertible securities

other than on a pro-rata basis to all shareholders of the Company, the aggregate number of

shares to be allotted and issued shall not exceed 20% of the issued shares of the Company.

This authority will, unless previously revoked or varied at a general meeting, expire at the

next Annual General Meeting.

NOTICE OF BOOKS CLOSURE

NOTICE IS HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed on

3 July 2007, for the purpose of determining members’ entitlements to the fi nal exempt (one-tier) dividend of 0.7 cents

per ordinary share (the “Final Dividend”) to be proposed at the Annual General Meeting of the Company to be held on

25 June 2007.

Duly completed registrable transfers in respect of the shares in the Company received up to the close of business

at 5:00 p.m. on 2 July 2007 by the Company’s Share Registrar, M&C Services Private Limited, 138 Robinson Road,

#17-00 The Corporate Offi ce, Singapore 068906 will be registered to determine members’ entitlements to the Final

Dividend. Members whose Securities Accounts with The Central Depository (Pte) Ltd are credited with shares in the

Company as at 5:00 p.m. on 2 July 2007 will be entitled to such proposed Final Dividend.

The proposed Final Dividend, if approved at the Annual General Meeting will be paid on 13 July 2007.

BY ORDER OF THE BOARD

Koh Ai Lin Avelina

Low Mei Mei Maureen

Company Secretaries

Date : 8 June 2007

71



Proxies:

1. A member of the Company entitled to attend and vote at the above Meeting may appoint not more than two

proxies to attend and vote instead of him.

2. Where a member appoints two proxies, he shall specify the proportion of his shareholding to be represented by

each proxy in the instrument appointing the proxies. A proxy need not be a member of the Company.

3. If the member is a corporation, the instrument appointing the proxy must be under seal or the hand of an offi cer

or attorney duly authorized.

4. The instrument appointing a proxy must be deposited at the Registered Offi ce of the Company at 47 Loyang

Drive Singapore 508955 not less than 48 hours before the time set for the Annual General Meeting.

JACKSPEED CORPORATION LIMITEDRegistration No: 199300300W

PROXY FORM

I/We

of

being a member/members of Jackspeed Corporation Limited (the “Company”) hereby appoint

Name Address NRIC /

Passport Number

Proportion of

Shareholdings (%)

and/or (delete as appropriate)

Name Address NRIC /

Passport Number

Proportion of

Shareholdings (%)

as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll at the

Annual General Meeting of the Company to be held at 47 Loyang Drive Singapore 508955 on Monday, 25 June 2007

at 10:00 a.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the

resolutions as set out in the Notice of Annual General Meeting. In the absence of specifi c directions, the proxy/proxies

will vote or abstain as he/they may think fi t, as he/they will on any other matter arising at the Annual General Meeting.)

No. Resolutions For Against

ORDINARY BUSINESS

1 To receive and consider Directors’ and Auditors’ Reports and Audited Accounts

2 To approve payment of Directors’ fees of S$73,000

3 To approve payment of a fi nal exempt (one-tier) dividend

4 To re-elect Director – Mr Liew Ham Chow (Article 107)

5 To re-elect Director – Mr Voo Jun Hing (Article 107)

6 To re-elect Director – Mr Yeap Swee Chuan (Article 117)

7 To re-appoint Auditors and authorise the directors to fi x their remuneration

SPECIAL BUSINESS

8 To authorise the directors to allot and issue shares

Dated this day of 2007

Signature(s) of member(s) or common seal

IMPORTANT: PLEASE READ NOTES OVERLEAF

Total number of Shares held

IMPORTANT

1. For investors who have used their CPF monies to buy the Company’s

shares, this Annual Report is forwarded to them at the request of

their CPF Approved Nominees and is sent solely FOR INFORMATION

ONLY.

2. This Proxy Form is not valid for use by CPF investors and shall be

ineffective for all intents and purposes if used or purported to be

used by them.

NOTES :

1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register

(as defi ned in Section 130A of the Companies Act, Chapter 50), you should insert that number of shares. If you have shares

registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered

against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert

the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all the shares held by

you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two

proxies to attend and vote on his behalf. A proxy need not be a member of the Company.

3. Where a member appoints more than one proxy, he shall specify the proportion of his shareholding to be represented by each

proxy.

4. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing.

Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common

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

5. A corporation which is a member of the Company may authorise by resolution of its directors or other governing body such

person as it thinks fi t to act as its representative at the Annual General Meeting, in accordance with its Articles of Association

and Section 179 of the Companies Act, Chapter 50.

6. The instrument appointing a proxy or proxies, together with the power of attorney or other authority (if any) under which it

is signed, or notarially certifi ed copy thereof, must be deposited at the registered offi ce of the Company at 47 Loyang Drive

Singapore 508955 not less than 48 hours before the time set for the Annual General Meeting.

7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed

or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifi ed in

the instrument appointing a proxy or proxies. In addition, in the case of members of the Company whose shares are entered

against their names in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if

such members are not shown to have shares entered against their names in the Depository Register at least 48 hours before

the time appointed for holding the Annual General Meeting as certifi ed by The Central Depository (Pte) Limited to the Company.

®

JACKSPEED CORPORATION LIMITED

Registration No: 199300300W47 Loyang Drive, Singapore 508955Tel: (65) 6788 2088Fax: (65) 6789 0020Website: www.jackspeed.comEmail: [email protected]

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