Notes to the Financial Statements - Stamford Tyres Corporation Ltd

An inside focus on Stamford Tyres' Operations

contents

Blueprint for the Future How will Stamford Tyres resume its growth?

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Evolution is the answer. The Group must tap on its strengths for opportunities as they unfold.

Regulars

Stamford Tyres conducted its operations over FY2005 with a long-term strategy in mind. The objective is to better serve its business partners and customers. The result is to integrate and augment its operations and services to meet customers' needs.

01 Letter to Shareholders – Right on Track 03 Five Year Financial Highlights 04 Board of Directors

Leveraging on its strength, the business activities of Stamford Tyres has evolved into two core segments – integrated concept with value-added services and manufacturing activities.

06 Key Executives 20 Stamford in the News

This is the story of Stamford Tyres' evolution for the future – to build a strong and robust enterprise that adds value to their customers and business partners.

Features 10 People Make the Difference 11 Rewarding Shareholders

11

11 At a Glance

Review 12 Our Products – Major Brands, Proprietary Brands, and Major Subsidiaries

Cover Story – Behind the Blueprint 14 Integrated Concept with Value-Added Services 18 Manufacturing Activities

Also in this issue 

Corporate Governance



Financial Statements 2005

10

08

Corporate Information Board of Directors Chairman Executive Directors

Non-executive Director Independent Directors

Audit Committee Chairman Members

Chua Kim Yeow Wee Kok Wah (President) Dawn Wee Wai Ying (Executive Vice President) Kwok Weng Fai Tay Puan Siong Sam Chong Keen Goh Chee Wee Michael David Nesbitt Tay Puan Siong Chua Kim Yeow Sam Chong Keen

Remuneration Committee Chairman Chua Kim Yeow Members Sam Chong Keen Goh Chee Wee

Share Registrar Lim Associates (Pte) Ltd 10 Collyer Quay #19-08 Ocean Building Singapore 049315

Nominating Committee Chairman Sam Chong Keen Members Tay Puan Siong Michael David Nesbitt

Principal Bankers United Overseas Bank Limited Malayan Banking Berhad Overseas-Chinese Banking Corporation Limited DBS Bank Limited BNP Paribas

Auditors Ernst & Young 10 Collyer Quay #21-01 Ocean Building Singapore 049315 Audit Partner: Yen Heng Fook (Since the financial year ended 30 April 2001) Company Secretary Chuang Sheue Ling

Registered Office 19 Lok Yang Way Jurong Singapore 628635 Tel : (65) 6268 3111 Fax : (65) 6264 0148 / 6264 4708 Email : [email protected] Website : www.stamfordtyres.com

LETTER TO SHAREHOLDERS

Right on Track Stamford Tyres gathers momentum for growth Dear Shareholders, When I wrote to you last year, I said that we intended to embark on several initiatives to lay the groundwork for our next phase of growth. This is an important undertaking to position the Group for the future. During the past year, we made several significant commitments towards this goal. I am happy to report to you on what we did and how we anticipate these undertakings will shape the fortunes of the Group.

More focused and responsive business model Over the past few years, my management team and I I am pleased to have observed and report that the evaluated the significance commitment and of the rising affluence and rapid economic growth in resolve of my South East Asia and China. colleagues and staff In these territories, we noted have spurred us to the rise in demand for truck accomplish our goals and passenger car tyres. and to deliver results There was also a growing as targeted for the demand for Off-The-Road (OTR) tyres rising from the financial year under boom in the mining industry. review. All these developments have directed us to sharpen our – Mr Wee Kok Wah business focus to develop a more responsive business model that will meet the needs of our customers with flexibility and efficiency in the years to come. The result is a business and operating model that focuses on two core segments of our business activities – an integrated concept with value-added services and manufacturing activities.

Integrated concept with value-added services The integrated concept with value-added services segment comprises our international distribution network, retail chain operations and fleet and mining tyre management services. Though separate and with their unique inherent strengths, these business units can support each other to provide an integrated whole that will offer our customers the level of value-added services that they demand.

In order to respond quickly to market needs, we realigned our distribution structure from a central warehousing system in Singapore to direct shipment to our overseas operations. This initiative has enhanced our position to be closer to our dealer-retail network. We continue to value-add to our existing major international tyre brands – Falken, Dunlop, Continental and Toyo – by focusing on wider and deeper market penetration through our integrated concept in the territories that we operate. We expect to benefit from the consistent organic growth from this business activity.

Manufacturing activities Rapid increases in industrial and commercial activities contribute to higher economic growth. Higher economic growth translates to rising affluence and higher disposable income. Recognising these developments in the territories that we operate, it is evident that we should leverage on the strengths in our international distribution network to pursue opportunities in manufacturing that will allow the Group to develop our own proprietary brands – Sumo Firenza, Sumo, Firenza and Stamford Sport Wheels (SSW). This will broaden our product range for global distribution. Our manufacturing business segment comprises the manufacturing of our proprietary brand, SSW light alloy wheels and tyre outsource contract manufacturing of our proprietary brands.

continues on pg 02...

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

01

Our SSW wheel plant in Thailand commenced operation in the first half of FY2005. It broke-even after six months of operations. Based on the success of the first production line, we added a second line in May 2005. With the additional capacity, our annual output is expected to range between 350,000 and 400,000 pieces. My team and I recognised that in order to drive growth in our distribution business, we have to increase our tyre supply. Due to the rapid economic growth in China and South East Asia countries, tyre manufacturers have ramped up their production capacity. However, demand exceeds supply. This prompted us to explore the tyre outsource contract manufacturing that would enable us to create our own proprietary tyre brands to meet demands from customers and to better manage the supply situation in the future. Also, with less geographical restrictions, we can widen the market coverage for our proprietary products . We have since commenced production for Sumo Truck Bus Radial (TBR) tyres in May 2005, and stepped up ongoing arrangements for the supply of Sumo Truck Bus Bias (TBB) tyres and Passenger Car Radial (PCR) tyres from manufacturers in China.

Outlook for FY2006 The management team and I are confident that the new business model and the initiatives undertaken in FY2005, will put Stamford Tyres in a stronger position and propel us to achieve our next level of growth. The seeds have been planted and FY2006 will be the year of harvest. We expect organic growth from our existing major brands and incremental sales from our proprietary brands through the manufacturing activities. Collectively, all these activities will contribute to a double-digit growth in our FY2006 revenue. The Group expects the results for FY2006 to be better than FY2005.

Rewarding shareholders

Duty to our shareholders

We expect organic growth from our existing major

In appreciation of your loyalty and continued confidence in Stamford Tyres, the Board is pleased to propose a final dividend of 1.25 Singapore cents per ordinary share and a special dividend of 0.75 Singapore cents per ordinary share for FY2005. The total dividend of two cents per share translates into a gross dividend rate of 20 percent.

Major undertakings brands and incremental sales from our proprietary brands of these magnitudes through the manufacturing activities. – Mr Wee Kok Wah require meticulous planning, vigilance in its execution and short-term sacrifices Appreciation especially when our profit trend was on the rise till FY2004. Unforeseen developments and the lack of vigilance can invite These achievements in FY2005 would not have been possible undesirable outcome. Mindful of the consequences, I felt duty without the guidance of the Board, support from management bound to inform you of the outlook as forecasted by management and staff, who have worked tirelessly to help to sow the seeds for FY2005. for the next phase of growth. Their sacrifices are often personal. I want to record our appreciation to them and their families. Accordingly, in the 2004 annual report I had guided that, “we expect profit for FY2005 to be lower than FY2004 due to the startup costs for our alloy wheel plant, as well as additional investment in infrastructure to improve our overseas distribution network. However, earnings are expected to remain above the healthy level that was recorded in FY2003.” I am pleased to report that the commitment and resolve of my colleagues and staff have spurred us to accomplish our goals and to deliver results as targeted for the financial year under review. For FY2005, we delivered a net profit of S$8.61 million and revenue of S$191.29 million. Our focus on higher value-added products and services, continuous efforts to improve the product mix of our major international and proprietary brands, and optimisation of business opportunities through our international distribution network, enabled us to maintain our gross margin at 26.8 percent in FY2005.

02

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

The confidence of our suppliers, bankers and business associates in us is also crucial. My team and I could not ask for better partners. Finally, as we look forward to a better FY2006, I want to thank you, our shareholders, for standing by us during this year of consolidation. I look forward to meeting you at our coming annual general meeting to be held on Friday, 26 August 2005.

Yours sincerely, Wee Kok Wah President Stamford Tyres Corporation Limited

Five Year Financial Highlights For the Year ended 30 April 2005 Group Turnover

(S$'000)

Profit Before Tax (S$'000) Profit After Tax (S$'000) Total Assets (S$'000) Shareholders' Funds (S$'000) Basic Earnings per Share

(cents)

Gross Dividend per Share

(cents)

Return on Shareholders' Equity (%)

2005

2004

2003

2002*

2001*

191,293

189,779

163,443

120,058

119,083

11,563

14,348

9,655

5,186

2,814

8,670

11,560

8,196

2,754

1,666

199,470

182,117

145,386

132,632

132,764

68,225

63,357

49,282

42,726

40,671

4.15

6.23

5.43

1.83

1.20

2.00

2.00

1.40

1.00

1.00

13.08

20.47

17.79

6.59

4.52

* Group turnover and total assets for FY2001 to FY2002 do not include the Group’s proportionate share of the joint venture company’s results as the joint venture company’s results were accounted for using equity method in FY2001 to FY2002.

Group Turnover

Profit Before Tax

(S$ Million)

(S$ Million)

Profit After Tax (S$ Million)

200

20

20

150

15

15

100

10

10

50

5

5

0

0

0

2001

2002

2003

2004

2005

2001

2002

2003

2004

2005

2001

2002

2003

2004

2005

$2.8

$5.2

$9.7

$14.3

$11.6

$1.7

$2.8

$8.2

$11.6

$8.7

$119.1 $120.1 $163.4 $189.8 $191.3

Basic Earnings per Share

Gross Dividend per Share

Return on Shareholders’ Equity

(Cents)

(Cents)

(%)

20

2.0

40

15

1.5

30

10

1.0

20

5

0.5

10

0

0

0

2001

2002

2003

2004

2005

2001

2002

2003

2004

2005

2001

2002

2003

2004

2005

$1.2

$1.8

$5.4

$6.2

$4.2

1.0

1.0

1.4

2.0

2.0

4.5%

6.6%

17.8%

20.5%

13.1%

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

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Top (left to right): Mr Chua Kim Yeow, Mr Wee Kok Wah, Mrs Dawn Wee Wai Ying Middle (left to right): Dr Kwok Weng Fai, Mr Tay Puan Siong, JP, Mr Sam Chong Keen Bottom (left to right): Mr Goh Chee Wee, Mr Michael David Nesbitt

Board of Directors Mr Chua Kim Yeow Non-Executive Chairman Mr Chua is a well-respected individual to many circles and a trusted adviser to Stamford Tyres. A part of the Stamford Tyres family since 3 April 1991, he served as Chairman of the Company and Audit Committee up to 28 October 1994. From then, he was chairman of the Stock Exchange of Singapore Limited (SGX) until 3 January 2000, concurrently serving as Adviser to the Stamford Tyres Board. Upon retirement from SGX, he was reappointed as independent director and non-executive chairman of Stamford Tyres until 28 September 2001. On 13 December 2002, he was appointed as member of the Stamford Tyres Audit Committee and Remuneration Committee. His most recent appointment as non-executive chairman has been held since 9 January 2002.

A Fellow Member of the Institute of Certified Public Accountants of Singapore, Mr Chua has previously held numerous key posts. He was the Accountant-General with the Ministry of Finance, a Board Member of the Monetary Authority of Singapore, President of the Development Bank of Singapore (now known as DBS Bank Limited), Executive Chairman of the Post Office Savings Bank, and Chairman of the Securities Industry Council.

Mr Wee Kok Wah President Behind Mr Wee's down-to-earth and personable nature is a remarkably astute business mind. Both a visionary leader and entrepreneur who some fondly say has "tyre dust" in his blood,

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Mr Wee has propelled Stamford Tyres forward as its CEO since the 1970s. Mr Wee has steered Stamford Tyres to become a public listed company which its global stakeholders trust, rely on, and wish to grow with in the future. His passion for and dedication to the business shows clearly through his hands-on working style, endearing him to partners, colleagues and staff alike. Always one to actively seek out and tap on business opportunities, Mr Wee never fails to deliver and maximise value for both the business and stakeholders. In 2004, Mr Wee was nominated and selected as a finalist for the Ernst & Young Entrepreneur of the Year under the category of Services and Business Products. Mr Wee holds a Bachelor of Social Science in Economics and Law from the then University of Singapore.

Mrs Dawn Wee Wai Ying Executive Vice President Mrs Wee is a warm and sincere people person, well known in the business for being a resourceful organiser and capable administrator. She has been on the Stamford Tyres Board since 1982, playing a key role in the Group's operations. She currently oversees the Group's supporting functions, which effectively complement its operating functions. A firm, fair and competent decision maker, she has been instrumental in the Group's decades of achievement.

companies. Mr Tay graduated from the University of Singapore with a Bachelor of Business Adminstration degree in 1971, attended the Havard Business School Program for Management Development in 1984 and is a member of the Chartered Institue of Logistics and Transport. Previously, he was Executive Deputy Chairman of L&M Group Investments Ltd and Executive Vice President of Singapore Bus Service Ltd. Mr Tay is a Justice of the Peace.

Mr Sam Chong Keen Independent Director Following his invaluable contributions while on the Board when Comfort Group Ltd was a substantial shareholder, Mr Sam was appointed as Independent Director of Stamford Tyres in December 1994. A member of the Audit Committee and Remuneration Committee, he is also Chairman of the Nominating Committee. The co-founder and CEO of Megatalk Pte Ltd, Mr Sam holds a Bachelor of Arts(Hons) from the University of Oxford and a Diploma from the Institute of Marketing, UK. He also has a wealth of management experience, having worked at senior positions in the Singapore Government Administration Service, National Trades Union Congress (NTUC), Intraco Ltd, Comfort Group Ltd, VICOM Ltd, Lion Asiapac Ltd and Lion Teck Chiang Ltd. He was also the Political Secretary to the Minister for Education between 1988 to 1991, and served on various government boards and committees, including the Central Provident Fund Board, and the National Cooperative Federation.

Brimming with ideas, Mrs Wee leads and challenges her staff to think out-of-the box, encouraging them to excel in all that they do.

Mr Goh Chee Wee Independent Director

Prior to joining Stamford Tyres, she worked as an officer in a major local bank for eight years. Mrs Wee holds a Bachelor of Social Science (Honours) in Economics from the then University of Singapore.

Appointed as a nominated director of substantial shareholder Comfort Group Ltd on 29 October 1998, Mr Goh has since joined Stamford Tyres, on 10 April 2003, as an Independent Director. He is also a member of the Remuneration Committee. Besides directorships in a number of public-listed companies, Mr Goh is Director of the Singapore Labour Foundation. The former Member of Parliament, Minister of State, and CEO of Comfort Group Ltd also has strong ties with the National Trades Union Congress (NTUC). He holds chairmanship of the NTUC Board of Trustees, NTUC Foodfare Co-operative Ltd, and NTUC Childcare Co-operative Ltd, and is a consultant to the NTUC Fairprice Co-operative Ltd.

Dr Kwok Weng Fai Non-Executive Director Dr Kwok joined the Board in 1982 as one of its pioneering directors. Since then, he has lent his unwavering support and valuable advice to the Group. A Colombo Plan Scholar, his qualifications include a Bachelor of Medicine and a Bachelor of Surgery from Sydney University. Before setting up his own private medical practice, he was a medical practitioner in various government hospitals for eight years. Presently, he is the senior partner of a group medical practice.

Mr Tay Puan Siong, JP Independent Director Mr Tay has been an independent Director of Stamford Tyres since 1994 and is Chairman of the Audit Committee and a member of the Nominating Committee. He is a Director of 3 other public

Mr Michael David Nesbitt Independent Director Mr Nesbitt is no stranger to Stamford Tyres. A business associate of the Group since the mid-1970s, he was appointed to the Board as an Independent Director since September 2002. With 32 years of valuable experience as Founder and Chairman of Australian enterprise, Marathon Tyres, Mr Nesbitt brings to the Board extensive knowledge of the tyre distribution business, especially in fleet tyre management and maintenance services. Mr Nesbitt is also a member of the Nominating Committee.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

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Key Executives Roger Chang Toon Weng

Clare Law Lay Kian

Conson Tiu Sia

Lim Gek Choon

Roger Chang Toon Weng, 48 Senior Vice President and CEO for Stamford Sport Wheels (SSW) Roger is a strategist with a keen eye for opportunities and the foresight and drive to act upon them. With Stamford Tyres for over 20 years, he has held various key marketing positions within the Group and has been instrumental towards establishing the Group's retail chain. Roger's strong leadership skills and passion for car wheels has made him an obvious choice to helm the SSW operations in Thailand. He also assists in business development and management strategies of the Group, leveraging off his intimate market knowledge and experiences to achieve the Group's profit and growth objectives.

Conson Tiu Sia, 38 Senior Vice President and Group CFO Accounting-trained with a sound business acumen, Conson has been a boon to the Group since joining Stamford Tyres in 1993. He began his career as an Auditor with Ernst and Young, Philippines and was in charge of the Group's Philippines operations prior to his appointment as Group Finance Manager in 1999. Today, the Certified Public Accountant excels in his role as a Senior Vice President in the Group, overseeing the financial operations and conducting risk management analysis to ensure the Group's businesses conform to the statutory regulations and corporate governance. As a member of the management team, this mild-mannered but determined executive plays an important role in sustaining the profitability and growth of the Group.

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Clare Law Lay Kian, 37 Vice President, Head of Supply Chain Management Clare joined the Group's Supply Chain Management Department in 1994 and has been operationally active in establishing the core competencies of the Supply Chain Management System of the Group. Currently, she is responsible for the Group's pricing policies, implementation of the Group's Supply Chain Management System and handling of major negotiation issues with the Group's major suppliers and contract manufacturers worldwide. Responsible, dedicated, focused and infinitely capable, Clare helps ensure the Group always has what it takes to meet customers' needs. She holds a Bachelor of Business Degree in Transport from the Royal Melbourne Institute of Technology in Australia.

Lim Gek Choon, 53 Vice President, Head of Singapore Distribution With 30 years of "track" record and experience, Choon is respectfully known as "Lao Da" (Big Brother) in the local tyre scene. He passionately understands the business of tyres and is currently responsible for product distribution in the Singapore and Brunei markets. This recognised tyre veteran joined the Group in 1985 and is presently the Chairman of the Singapore Motor Tyre Dealers Association, a position held since 1998.

continues on pg 07...

Brian U ren

Patricia Danker

Michael Paul McCarthy

Kelvin Lam Mun Kong

Brian U ren, 38 Assistant Vice President, Head of International Distribution Since joining the Group in 1993, he has been exposed both locally and internationally to various business units within the Group. He possesses strong and intimate knowledge of the Group's International Distribution business. This world-watching globetrotter helps ensure the smooth running and profitability of his division. His customers span the Asian, African, American and European continents. Literallyspeaking, Brian merticulously monitors the world at his fingertips. Brian has a Bachelor of Arts from the National University of Singapore.

Michael Paul McCarthy, 53 Senior Manager, Head of Mining and Fleet Tyre Management "Mickey" handles the Group's mining and fleet divisions. The affable Irishman joined Stamford Tyres in 1993, bringing with him over 20 years of international experiences in Off-The-Road tyres and fleet tyre management expertise. His technical know-how and handson approach make him a welcome partner in the tyre management of major mining companies in South East Asia. He sets high professional standards for the Group’s fleet tyre management teams in Singapore, Malaysia, Indonesia, Thailand and China.

Patricia Danker, 43 Senior Manager, Head of Retail (Singapore) Patricia leads those who serve. With the Group for over 20 years, Patricia has held various key roles within the Group in Administration, International Distribution, Warehouse and Retail operations. Currently as Retail Manager for Singapore, this resourceful executive manages a team of over 100 personnel with the objective of achieving sales targets and total customer satisfaction. A people person with a friendly disposition, she ensures the exceptional service and professionalism of Stamford Tyres' retail chain, as well as plans for its business development.

Kelvin Lam Mun Kong, 36 Senior Manager, Head of Finance Kelvin joined the Group in 2004. He started his career 10 years ago as an Auditor with Deloitte & Touche and is currently Group Finance Manager. He and his team proactively monitor every aspect of the Group's finances; a no mean feat considering the scope and depth of Stamford Tyres' business today. His team also facilitates the Group's expansion by evaluating and providing vital analysis on its business proposals and growth strategies across all continents the Group has a presence in. Kelvin holds a Masters of Business Administration from Nanyang Technological University in Singapore and is a Certified Public Accountant with the Institute of Certified Public Accountants of Singapore. continues on pg 08...

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

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Key Executives

Cham Soon Kian

Jason Goh Sim Leng

Ler Hwee Tiong

Colin Choo Nee Ann

Cham Soon Kian, 37 CEO of Malaysia

Jason Goh Sim Leng, 29 General Manager of Indonesia

Soon Kian, has proven to be a capable leader by substantially growing the Group's Malaysian operations since he took the helm in 1992. Under his stewardship, Soon Kian has evolved the Malaysian operations from a primarily wholesale activity to an integrated business set-up with value-added services including retail, fleet tyre management and retreading facilities. He has an easy-going management style which belies an astute business mind with a strong determination to succeed. An ASEAN scholar, Soon Kian holds a Bachelor of Accountancy degree. Well-known in the Malaysian tyre trade, he is active as a member of the Selangor & Federal Territory Tyre Dealers and Retreaders Association.

Jason joined the Group in 2000 and has distinguished himself as a driven and dedicated individual. Trained in the Group’s Retail Department, he developed a passion for High Performance Radial tyres and car wheels. With his creative marketing skills, he was able to penetrate the complex Indonesian market and establish the Stamford Tyres brand name firmly. He is a member of the Indonesian Imported Tyres and Traders Association.

Ler Hwee Tiong, 34 CEO of North Asia Ler joined the Group in 2000 and brought along with him years of trade knowledge and experiences in the tyre business. His capability is perhaps best demonstrated by the challenges the Group entrusts him with. He is responsible for carving a niche for Stamford Tyres in the competitive China, Hong Kong and Korea markets, something which he has already made substantial advancements in since being posted there. A deep thinking strategist, Ler holds a Degree of Bachelor of Arts from the National University of Singapore.

Colin Choo Nee Ann, 33 General Manager of Thailand Colin began his career with the Group at the Thailand operations in 2002. He has since immersed into the local culture and business environment. Currently, he is the General Manager of the Thailand branch and is responsible for its overall operations. He is highly principled and leads by example a skilled and energetic team. Colin has a Bachelor of Accounting degree from the International Islamic University, Malaysia and is a member of the Malaysian Institute of Accountants.

continues on pg 09...

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

John Ang Sze Hian

Lionel Leow Soon Meng

Hanifah Abu Bakar

Michael Yiew Keng Leong

John Ang Sze Hian, 30 General Manager of Australia and New Zealand

Lionel Leow Soon Meng, 34 Senior Manager, Management Information Systems

There are "no worries" for the Group's Australian operations with John managing it. As a graduate of Curtin University of Technology in Western Australia, John is familiar with his environment. He is fast making inroads into building up a strong distribution base "down-under". A dynamic and committed individual, John actively promotes the Group’s proprietary brands with his earnest young team.

Lionel joined the Group in 1999 and has since helped the Group systematically streamline and computerise its business operations. He and his competent team harnesses the latest Information Technology to achieve synergy and effectiveness in the operation aspects of the Group's various business units across the world. A creative systems professional, Lionel holds a Bachelor of Science Degree in Management from the University of London.

Hanifah Abu Bakar, 47 CEO of USA and Latin America In over two decades with Stamford Tyres, Hanifah has amassed a wealth of knowledge of the international tyre industry. She utilises this to the Group's advantage as CEO of its USA and Latin American markets. This highly energised and efficient lady is constantly on the move marketing the Group’s proprietary brands as well as managing the operations in Miami. The markets under her care are highly competitive and volatile but Hanifah takes up every challenge bravely and effectively.

Michael Yiew Keng Leong, 35 Manager, Human Resource Michael joined the Group in 2004 and has been instrumental in establishing and spearheading Human Resource policies and guidelines in accordance to statutory and corporate requirements. He is also proactive in the recruitment of key personnel ensuring that the Group has the “talent” for its next phase of growth. This HR professional is key in implementing the Group's professional development and technical training programmes. He holds a Master of Business Administration from Swinburne University in Australia.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

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People Make the Difference Stamford Tyres believes excellent service and exceptional value are what will distinguish it as a trusted global distributor and retailer of a full range of tyres, wheels and car services. And these traits are evident in the people that make up the Group. Whether it's the Group's President or a mechanic, the Group's foremost priority is its dedication to serving the customer. This includes technical expertise from its fleet and tyre management specialists, extensive product knowledge sharing from its retail staff, and marketing and sales support from its international distribution division. The core businesses of tyre and wheel distribution, retail and fleet tyre management and maintenance offer to customer, services that are fully integrated. Supplying tyres and wheels is but one aspect of the Stamford Tyres commitment. As tyre and wheel specialists, the Group is determined to help its customers, dealers and partners grow their business, generate sales, increase their consumer base, and remain profitable. It is an unflagging commitment. The Winning People Factor • Expert Tyre Technical Advisors • Knowledgeable Wheel Specialists • Experienced Sales Representatives • Dedicated Export Sales Managers • Friendly Retail Service Staff

Helping People Help Customers Stamford Tyres regularly conducts product training for it’s sales team, keeping them updated on the latest tyre and wheel offerings. By doing so, they are in turn able to support the dealers and customers with the appropriate product knowledge and expertise when needed. To ensure that our customers receive the highest form of service at our retail outlets, our retail service staff, technicians and mechanics undergo training and development sessions regularly. During these sessions, the retail service staff are taught team-building skills, leadership skills and customer service techniques.

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Rewarding Shareholders FY2005 was a year in which the Group invested for the future to sustain growth, and shareholders who believed in the Group's vision were rewarded. The Group is proposing a final dividend of 1.25 cents per share and a special dividend of 0.75 cents per share, which translates into a gross dividend rate of 20%.

Group President, Mr Wee Kok Wah commented, "The dividend is the least we can do for our shareholders, who believe in us, our vision and our merits. This is how we say 'thank you', for their unwavering support." As Stamford Tyres heads into the next phase of growth, it is doing so with the intention of ensuring a continuing and incremental growth in rewarding shareholders.

At a Glance Singapore — Stamford Tyres’ Central Hub Singapore continued to remain as the Group's largest revenue earner in FY2005, contributing 49.8% of total turnover. But in FY2004, it was 54.3%. The lower contribution to the total turnover for FY2005 was the result of realignment of the business model for Passenger Car Tyres (PCR) from central warehousing to direct shipments. There was higher demand for OTR and commercial tyres from the region's booming mining and transport industry in FY2005 making the contribution only marginally lower. The Singapore unit continues to tap on its well-established logistic facilities to serve the growing markets in the region.

FY2004 FY2005

South East Asia — The Growing Markets Higher turnover in FY2005 as compared to FY2004 was achieved in this region arising from strong commercial vehicle tyre and higher SSW rim sales. Distribution points in Indonesia continue to increase beyond Jakarta, bringing Stamford Tyres closer to its dealers and customers. The Group is also expanding its retail network and fleet tyre management services in Thailand and Indonesia.

FY2004 FY2005

North Asia — Consolidating for Growth Turnover from this region decreased to S$30.3 million as a result of stiff price competition in the Hong Kong market and an oversupply of passenger car tyres in the China market. During the year, the Group established its fleet tyre management services in Shanghai. This adds on to the Group's existing operations in China. Moving forward, the Group intends to set up its retail presence in Guangzhou.

FY2004 FY2005

The newly established branch in Korea continues to experience an increase in turnover.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

11

Our Products Major Brands

Proprietary Brands

Falken

Stamford Sport Wheels (SSW)

A brand renowed for its high performance passenger car tyres produced by Sumitomo Rubber Industries Co. Ltd, a major Japanese manufacturer. The brand also includes a full range of 4x4 tyres, light truck radial tyres as well as truck and bus radial tyres. Sumitomo Rubber Industries Co. Ltd also participates in an array of auto races, providing tyres to entrants in competitions around the world, including rallies held in Singapore and Malaysia. We distribute Falken tyres in South East Asia, China and the Indian Sub-Continent.

SSW is Stamford Tyres’ own brand of light alloy wheels that are designed and produced by our wheel plant in Thailand. They are also contract manufactured in Taiwan. SSW alloy wheels are manufactured using the latest Japanese Tilting Casting method and under stringent quality control to ensure the best balance of aesthetics and performance. All wheels are manufactured in accordance to internationally recognised quality standards (VIA/JWL). SSW alloy wheels are tailored for passenger cars and 4x4 vehicles with rim sizes ranging from 13” to 22”.

Continental A high-end range of tyres engineered in Germany that consists of passenger car radials, light truck radials, truck and bus radials, military, agricultural and industrial solid tyres for commercial vehicles. Continental AG is also involved in supplying tyres for original equipment manufacturers (OEM). They are the OEM suppliers for both passenger cars and commercial vehicles for Porsche, BMW, Mercedes-Benz, Volkswagen and DAF. We market Continental tyres in Singapore, Malaysia, Thailand, Brunei, Indonesia, Korea and China.

Toyo Tires A well-known brand produced by a full line Japanese manufacturer with the capacity to produce off-the-road tyres for mining and construction equipment. They also produce industrial tyres for port use, light truck radial tyres and truck bus radial tyres for commercial vehicles. We represent Toyo commercial and mining tyres in Singapore, Brunei, Malaysia and Indonesia.

Major Subsidiaries Singapore Stamford Tyres International Pte Ltd 19, Lok Yang Way, Jurong, Singapore 628635 Tel: (65) 6268 3111 Fax: (65) 6264 0148 / 6264 4708 Email: [email protected]

Malaysia Stamford Tyres (M) Sdn Bhd 16 Jalan Juru Nilai, U1/20 Section U1, Hicom Glenmarie Industrial Park 40150 Shah Alam, Malaysia Tel: (60) 3 5567 2601/606 Fax: (60) 3 5569 3096 Email: [email protected] Website: www.stamfordtyres.com.my

Thailand Stamford Tires Distributor Co., Ltd 2210/16-17 Narathiwas Rachanakharin Road, Chongnonsi, Yannawa, Bangkok 10120, Thailand Tel: (66) 2 678 2355 Fax: (66) 2 678 2351 Email: [email protected]

12

Sumo Firenza The Sumo Firenza line is a new range of truck and bus radial tyres covering tube type and tubeless type. The Sumo Firenza Truck Radial tyre comes in both Standard and Extra Load specifications. The Standard Load tyres are intended for the American and European markets, while the Extra Load tyres are designed for South East Asian and Middle Eastern markets where operating conditions are more demanding. Contract manufactured in Asia, the tyres provide superior, long-lasting quality even on the toughest roads.

Sumo Tire Sumo Tire is a selection of light truck tyres, truck and bus tyres, agricultural tyres and off-the-road tyres of Asian origin. These are our own designs and are constructed to meet different operating conditions. The tyres are manufactured according to Tyre and Rim Association (TRA) standards and are well-received by customers internationally.

Firenza Firenza is a series of ultra high performance passanger radial tyres contracted manufactured by our principal supplier in Japan. It provides us with a wider area of distribution coverage and are very popular in Australia, Taiwan, Hong Kong and Middle East. Stamford Tyres is committed to make this brand a success.

Stamford Sport Wheels Company Limited 111/2, 5 Moo 2, Highway 340, Suphanburi Road, Tambon Saiyai, Amphur Sainoi, Nonthaburi 11150 Thailand Tel: (66) 2 985 5701 Fax: (66) 2 985 5374 Email: [email protected]

Indonesia

Australia

PT Stamford Tyres Distributor Indonesia

Stamford Tyres (Australia) Pty Ltd 81 Market Street, Smithfield, NSW 2164, Australia Tel: (61) 2 9604 1908/0590 Fax: (61) 2 9756 0375 Email: [email protected]

China/Hong Kong

PT. Stamford Tyres Indonesia Jl. Kuala Kuningan, L.I.P. Kuala Kencana, Timika – PAPUA 99920, Indonesia Tel: (62) 901 301889 Fax: (62) 901 301889 Email: [email protected]

Stamford Tyres Korea Ltd 57-3, Munjung-Dong, Songpa-Gu, Seoul 138200, Korea Tel: (82) 2 400 0063 Fax: (82) 2 400 0013 Email: [email protected]

Africa

Philippines

Stamford Tyres (Africa) (Proprietary) Limited Unit 6, 36 Victoria Avenue, Hout Bay 7806, Cape Town, South Africa Tel: (27) 21 790 1302 Fax: (27) 21 790 0017 Email: [email protected]

Stamford Tyres Philippines, Inc. Room G, #11 Taurus Street, Pamplona Park Subd., Pamplona, Las Pinas City 1740, Philippines Tel: (63) 2 872 7330 Fax: (63) 2 872 7330 Email: [email protected]

USA / Latin America

Joint Venture Company

Stamford Tyres (China) Limited Unit A, Floor 2, Yuen Long Hi-Tech Centre, #11 Wang Yip Street West, Yuen Long, N.T., Hong Kong SAR Tel: (852) 2406 2381 Fax: (852) 2406 7100 Email: [email protected] Stamford Tyres (Guangzhou) Limited Rm. B, 10/F., San Xin Building, #33 West Huang Pu Ave., Tian He Area, Guangzhou City, Guang Dong Province, China Tel: (86) 020 3366 5804 Fax: (86) 020 3820 1896 Stamford Tyres (Shanghai) Limited Rm. D, 7/F., Kai Li Building, #432 Huai Hai Xi Road, Shanghai City, China Tel: (86) 21 6122 4849 Fax: (86) 21 6122 4850

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Jl. Boulevard Raya PA 19 No. 4-5 Kelapa Gading Permai Jakarta 14240 Indonesia Tel: (62) 21 450 4388 Fax: (62) 21 450 4384 Email: [email protected]

Stamford Tires (Latin America), Inc. 9398 NW 101st Street, Medley, Florida 33178, United States of America Tel: (1) 305 888 8010 Fax: (1) 305 888 7871 Email: [email protected]

Korea

China/Hong Kong Tyre Pacific (HK) Limited 13th Floor, Sandoz Centre, 178/182 Texaco Road, Tsuen Wan, N.T., Hong Kong SAR Tel: (852) 2407 8268 Fax: (852) 2407 5020 Email: [email protected]

Behind the Blueprint: An Inside Focus on Stamford Tyres’ Operations

Integrated Concept With Value-Added Services This business segment draws on the strength of each division from distribution, retail, fleet and tyre management, and supporting manufacturing functions, combining them into an integrated whole. The integrated concept will provide the capabilities for the Group to widen its markets in the international arena and deepen the value-added chain to meet the needs of its customers. Expanding the Business Horizon of our International Distribution

INTERNATIONAL DISTRIBUTION

The logic is simple. The Group should capitalise on its strength in international distribution to expand its business horizon for growth.

S$152m For Stamford Tyres, this means that its flagship tyre and wheel distribution businesses will go beyond its established network of business links in over 30 countries. The Group has firm working relationships with Sumitomo Rubber Industries Co. Ltd of Japan, Continental AG of Germany and Toyo Tire & Rubber Co. Ltd of Japan. The Group's strong presence in Asia Pacific makes Stamford Tyres their strategic partner in distributing the major brands of Falken, Dunlop, Continental and Toyo. Sales from these major brands will contribute to the organic growth of the Group. With its proprietary Stamford Sport Wheels, Sumo, Firenza and Sumo Firenza brands, the Group stretches its reach to customers worldwide. Leveraging on the existing international network, as well as new

S$157m

potential markets, these brands will pave the way for incremental sales for the Group During the financial year under review, the Group made significant inroads into new markets in India as well as the Middle East and Europe. Sales for both international and proprietary brands were aided by focused marketing efforts through participation in international trade shows and exhibitions. Personal interactions between our sales personnel and customers in both new and existing markets fostered business activities. All these efforts generated increased brand awareness and encouraged stronger market acceptance. The cumulative result of all these activities for FY2005 was a tyre and wheel distribution turnover of S$157 million. This marked an FY2004 increase of 3.1% from S$152 million in FY2004. FY2005 The Group expects a double-digit percentage increase in turnover from the distribution business in the coming financial year. This is achievable because of their established global distribution network, which is continually expanding, as well as organic growth in sales from its major brands together with incremental sales from its proprietary brands. continues on pg 16...

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

18

Retail Chains — The Vital Link

Going the Extra Mile with Total Tyre Management Services

The retail chain operation is a vital part of this integrated concept. It allows the Group to maintain direct contact with the consumers, understand the changing dynamics of the market and to respond appropriately as trends evolve.

To the commercial fleet vehicle owners in Singapore, Malaysia, Indonesia and China, Stamford Tyres is no stranger. The Group offers them fleet and mining tyre management services, which is part of the Group's integrated concept of value-added services.

This operation was instrumental in showcasing its international brands to end-users. It complements the Group's distribution and manufacturing activities. More importantly, this valueadded activity serves to enhance the RETAIL AND FLEET Group's overall profit margins. As a public listed company, it also builds up the Stamford Tyres image making it a "household" name in the tyre and wheel market.

These value-added services provide them with expert consultancy and maintenance services for their tyres. By leveraging on the Group's competence in tyres, fleet owners are able to reduce the cost per kilometre of tyre travelled thereby lowering their operating cost.

S$37m

S$34m

With 26 retail marts located across South East Asia and North Asia, customers are able to experience a "One-Stop Auto Service Centre" that caters to all their tyre and motoring needs. At these retail facilities, customers enjoy a choice of a full range of tyres, wheels and accessories as well as car servicing and repair. Customers are also rewarded through the "In-Tune" Club loyalty programme. The loyalty programme currently has close to 30,000 members. These members enjoy special privileges at Stamford Tyres outlets, regular car and tyre maintenance information, as well as professional advice on matters pertaining to tyres through the Group's online portal. In addition, members also benefit from discounts on magazine subscriptions and dining places. This is another example of how the Group harnesses on its strength and engages in joint marketing activities with partners in other industries for mutual benefits.

Following the success of their retail chains in Singapore and Malaysia, tyre marts were established in Thailand, Indonesia and China.

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Complementing this service are the Group's retreading plants located in Singapore, Malaysia and Indonesia. Retreading extends the life span of tyres, which means further cost savings. In Singapore, satisfied fleet vehicle customers include the Port of Singapore Authority (PSA), SembWaste and Colex. Overseas clients like PT Inco, a major mining company in South Sulawesi Indonesia, and other clients from Malaysia, Thailand and China are similarly supported by the Stamford Tyres' technically competent commercial fleet team. With the boom in the mining industry, supply of Off-the-Road (OTR) tyres remained tight. Despite this, Stamford Tyres was able to successfully meet customers' demand and address the negative impact of an OTR tyre shortage in FY2005. This resulted in a commendable increase in turnover from S$11.7 million to S$19.8 million for this sector. While the OTR tyre shortage is expected to prevail till 2007, Stamford Tyres is working to expand its OTR tyre supply capacity. This will complement the Group's tyre management services – another example of how the Group draws on its strength and taps on new opportunities for growth.

Mega Marts Jurong Mega Mart 19 Lok Yang Way, Jurong Singapore 628635 Tel: 6262-3355, fax 6262-1494 Changi Mega Mart 31 Loyang Way Singapore 508729 Tel: 6542-23355, Fax: 6542-3066 Hougang Mega Mart 120 Hougang Avenue 2 Singapore 538858 Tel: 6286-3355, Fax: 6286-6553

East Coast Tyre Mart 355 East Coast Road Caltex Service Station Singapore 428972 Tel: 6342-0981, Fax: 6342-0978 Dunearn Tyre Mart 130 Dunearn Road Caltex Service Stqtion Singapore 309436 Tel: 6251-6055, Fax: 6251-6544 Tyre Workshops in Car Distribution Centres Kah Motor Company Sdn Bhd (Honda) 370 Ubi Road 3 Singapore 408651 Tel: (65) 6840 6734

MacPherson Mega Mart 455 MacPherson Road Singapore 368173 Tel: 6841-33355 Fax: 6742-8167

Regent Motors Ltd (Ford) 1 Ubi Road 4 Singapore 408607 Tel: (65) 6746 8880

Leng Kee Mega Mart 5 Chang Charn Road Singapore 159634 Tel: 6475-3355, Fax: 6475-5275

Performance Motors Ltd (BMW) 315 Alexandra Road #01-01 Performance Centre Singapore 159944 Tel: (65) 6319 0270

Woodlands Mega Mart 10 Admiralty Street #01-85 Northlink Building Singapore 757695 Tel: 6555-3355, Fax: 6853-3145

Performance Motors Ltd (Kampong Arang) (BMW) 80 Kampong Arang Road, East Coast Centre, Singapore 438180 Tel: (65) 6319 0888

Bukit Batok Mega Mart 50 Bukit Batok Street 23 #02-19 Midview Building Singapore 659578 Tel: 6261-3355, Fax: 6567-1870 Tyre Marts Balestier Tyre Mart 207 Balestier Road #01-13 Balestier Tower Singapore 329683 Tel: 6256-3337, Fax: 6256-8467 Jalan Ahmad Ibrahim Tyre Mart 400 Jalan Ahmad Ibrahim Caltex Service Station Singapore 619595 Tel: 6262-0489 Thomson Tyre Mart 553 Upper Thomson Road Esso Service Station Singapore 574416 Tel: 6752-8769, Fax: 6452-2532

Komoco Pte Ltd (Hyundai) 253 Alexandra Road #01-01 Singapore 159936 Tel: (65) 6475 8888 Tan Chong & Sons Motors (Nissan) 911 Bukit Timah Road Singapore 589622 Tel: (65) 6463 4132 Mazda Motors Singapore Pte Ltd, PDC (Pre-Delivery Centre) (Mazda) Blk 167, Pasir Panjang Road, #01-17, Pasir Panjang Distripark Singapore 118500 Tel: (65) 6276 7798 Tyre Pluz Hoe Tyres 10 Braddell Road Singapore 359899 Tel: (65) 6282 8735 Hock Hua Hin Tyre Service 319 Braddell Road Singapore 579707 Tel: (65) 6268 7077 Tyre House #01-176 Tyrwhitt Road Singapore 207576 Tel: (65) 6286 7002

Behind the Blueprint: Manufacturing Activities I

The Wheel Deal

Since the wheels were introduced into the market in early 2005, SSW is gaining market acceptance as one of the more popular high-end wheel choices. With close to a year since SSW was rolled from its spanking high tech factory in Thailand, the Group has already commissioned two production lines with an estimated total commercial production of 35,000 to 40,000 alloy wheels per month. All equipment in the factory is automated and computerised, and each production step closely monitored and controlled by a team of engineers from Singapore, Taiwan and Japan. The Group is also working together with SIMTech (Singapore Institute of Manufacturing Technology), a research institute of A*STAR (Agency for Science, Technology and Research, Singapore) to ensure that the wheels were manufactured to exacting standards. As a result, the Group has obtained numerous quality accreditations from Japan and Europe for these wheels.

The design of the wheels is an important element to the success of SSW. The SSW team travels extensively to monitor and understand market design trends. This research was translated into over 30 wheel designs that were introduced globally through the Group's retail chain and international distribution network. In addition, an in-depth understanding of the wheel design trends helped the Group to anticipate demand. To minimise the risk of over-production, the small-lot production strategy adopted by SSW allows them to respond quickly to changing market needs. There is strong indication to suggest a quick success for SSW. It holds promise to be a strong revenue source for the Group.

Behind the Blueprint: Manufacturing Activities II

The Power of Tyre Contract Manufacturing By entering into tyre outsource contract manufacturing, it provides Stamford Tyres the opportunity to develop its own proprietary brands. This provides a wider product range for the Group to offer its customers. Also, it opens up new markets. This is yet another example of the evolution process. Through tyre outsource contract manufacturing with dependable manufacturers, Stamford Tyres will leverage on its decades of tyre expertise, experience and product knowledge to build quality tyre products under the Group's proprietary Sumo, Sumo Firenza and Firenza brands. Stamford Tyres' In-house tyre technical advisers and tyre engineers also research, design and develop the ideal tyre that cater to individual market requirements therefore ensuring there is no compromise. These tyres are distributed through the Group's established international network to meet the needs of the market, especially in developed countries for radial tyres, developing countries for its bias tyres and for multiple markets across the globe. This is an effective way to mimimise the Group's capital expenditure commitment and a better alternative to owning and operating a tyre manufacturing facility but not compromising on quality.

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

 TheEdge Singapore | Monday, May 30, 2005





Stamford in the News





The Business Times | Thursday, December 9, 2004

The Business Times | Wednesday, June 29, 2004



The Business Times | Wednesday, December 1, 2004

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

21

Stamford in the News



The Business Times | Saturday-Sunday, April 2-3, 2005

The Business Times | Wednesday, December 1, 2005

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005



 Vol. 258 Shares Investment Facts & Figures 11/07/2005 to 24/07/2005

 STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

23

We provide the best service and technical advice on off-the-road tyres to port authorities, mining, logging and construction companies throughout the region.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

STAMFORD TYRES CORPORATION LIMITED AND SUBSIDIARY COMPANIES

FINANCIAL REPORT Page 26–92

26 Report on Corporate Governance 34 Report of the Directors 37 Statement by Directors 38 Auditors’ Report 39 Consolidated Profit and Loss Account 40 Balance Sheet 41 Consolidated Statement of Changes in Equity 42 Consolidated Statement of Cash Flow 43 Notes to the Financial Statements 82 List of Major Properties 83 Statistics of Shareholdings 84 List of Substantial Shareholders 85 Statistics of Warrantholdings 86 Notice of Annual General Meeting 89 Proxy Form

Corporate Governance Report

Stamford Tyres Corporation Limited The Company is committed to high standards of corporate governance. Good corporate governance establishes and maintains a legal and ethical environment in which the Group strives to preserve the interest of all stakeholders. This Report describes the Company’s corporate governance practices with specific reference to the Code of Corporate Governance (“Code”), pursuant to Rule 710(2) of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”). Board Matters Principle 1 : Board’s Conduct of its Affairs The Board oversees the business affairs of the Group, approves the Group’s strategic plans, key business initiatives, major investment and funding decisions. It also monitors and evaluates the Group’s operations and financial performance. These functions are carried by the Board directly or through committees of the Board which have been set up to support its functions. The Board met 4 times during the financial year to review, consider and approve strategic, operational and financial matters, as well as to supervise senior management. In between the meetings, important matters concerning the Group are put to the Board for its decision by circulating resolution-in-writing for the directors’ approval. Directors are briefed on regulatory changes, especially those on the Company’s or director’s disclosure obligations. In order to ensure that the Board is able to fulfil its responsibilities, prior to the Board meetings, the Management provides the Board with information containing relevant background or explanatory information required to support the decision-making process. Newly-appointed directors will be given briefings by the Management on the business activities of the Group and its strategic directions as well as its corporate governance practices. Principle 2 : Board’s Composition and Balance The Board comprises : Non-executive directors Chua Kim Yeow Chairman Dr Kwok Weng Fai Tay Puan Siong Sam Chong Keen Goh Chee Wee Michael David Nesbitt Executive directors Wee Kok Wah President Dawn Wee Wai Ying Executive Vice President The Board considers the Board’s present size and composition appropriate taking into account the nature and scope of the Group’s operations, the depth and breadth of knowledge, expertise and business experiences of the directors to govern and manage the Group’s affairs and that two-thirds of the Board is independent. The Board has no dissenting view on the President’s Letter to Shareholders for the financial year in review.

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Corporate Governance Report (cont’d)

Principle 3 : Chairman and President The roles of Chairman and President are separate. The Chairman assumes the responsibilities of scheduling and preparing agendas for Board meetings and exercises control over the quality, quantity and timeliness of information flow between the Board and Management. The President provides overall vision and strategic guidance and bears full executive responsibility for the Group’s operations. Principle 4 to 5 : - Board Membership - Board Performance The Nominating Committee comprises : Sam Chong Keen Chairman Tay Puan Siong Michael David Nesbitt The Nominating Committee recommends all appointments and re-nominations of directors to the Board and Board committees. The Company’s Articles of Association provide for one-third of the directors, to retire by rotation and be subject to re-election at every Annual General Meeting. A newly appointed director must also subject himself for retirement and re-election at the annual general meeting immediately following his appointment. The Nominating Committee also determines the independence of directors and evaluates and assesses the effectiveness of the Board taking into consideration appropriate performance criteria. The Board, through the delegation of its authority to the Nominating Committee, has used its best efforts to ensure that directors appointed to the Board possess the background, experience and knowledge in technology, business, finance and management skills critical to the Group’s businesses and that each director, through his unique contributions, brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made. Principle 6 : Access to Information Directors are given full access to the management team and company secretary, all Board and Board committees’ minutes and all approval and information papers. Where a decision has to be made before a formal Board meeting is scheduled, a circulating Directors Resolution is done in accordance with the Company’s Articles of Association and all necessary information is provided. The Company supports the directors, either individually or as a group, if they require independent professional advice in furthering their duties to the Company. The company secretary attends Board meetings of the Company.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

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Corporate Governance Report (cont’d)

Remuneration Matters Principle 7 to 9 : - Procedures for Developing Remuneration Policies - Level and Mix of Remuneration - Remuneration Committee The Remuneration Committee comprises : Chua Kim Yeow Chairman Sam Chong Keen Goh Chee Wee This committee reviews the remuneration packages needed to retain and motivate the Group’s employees. It also administers the Company’s employee share option scheme. No member of the committee shall be involved in any deliberation or decision making in respect of any compensation to be offered or granted to him/her. The review of specific remuneration packages includes fees, salaries, bonuses and incentives. Executive directors have service contracts which include terms for termination under appropriate notice. Non-executive directors are remunerated based on basic fees for serving on the Board and Board committees. Such fees are recommended for approval by shareholders as a lump sum payment at the Annual General Meeting. The Remuneration Committee has access to expert professional advice on remuneration matters whenever there is a need to obtain such advice. Details of the Company’s Employee Share Option Scheme is provided in the Report of the Directors. Breakdown of directors’ remuneration (in percentage terms) :

Chua Kim Yeow Wee Kok Wah Dawn Wee Wai Ying Dr. Kwok Weng Fai Tay Puan Siong Sam Chong Keen Goh Chee Wee Michael David Nesbitt

Fixed Performancesalary related and benefits bonuses % %

– 52 73 – – – – –

– 48 27 – – – – –

Director’s fees %

Total %

100 – – 100 100 100 100 100

100 100 100 100 100 100 100 100

Number of directors in remuneration bands : Executive directors 2005 2004

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

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Non-executive directors 2005 2004

1 1 –

2 – –

– – 6

– – 6

2

2

6

6

Corporate Governance Report (cont’d)

Number of key management in remuneration bands : The Code requires the remuneration of at least the top 5 key executives who are also not directors to be disclosed. The Group believes that such information is confidential and could be disadvantageous to its business interest. The Group has instead presented the remuneration of the top 5 executives in bands of $250,000 as below : $250,000 to $499,999 Below $250,000

2005

2004

– 5

– 5

5

5

Immediate family members of directors : Number of employees who are immediate family members of the Chairman and President in remuneration bands : $500,000 to $749,999 Below $250,000

2005

2004

– 2

– 2

2

2

Accountability and Audit Principle 10 to 13 : -

Accountability Audit Committee Internal Controls Internal Audit

The Audit Committee comprises: Tay Puan Siong Chairman Sam Chong Keen Chua Kim Yeow In the course of the financial year, the Committee held 4 meetings and performed, inter-alia, the following functions : 1. 2. 3. 4. 5. 6. 7.

review the audit plan with the external auditor; review with the external auditor their evaluation of internal financial controls with Management’s response thereon; review the assistance given by the Company’s officers to the external and internal auditors; review the scope and results of internal audit procedures; review the financial statements of the Company and the Group before their submission to the Board, together with the external auditor’s report thereon; nomination of external auditor; and review of interested person transactions.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

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Corporate Governance Report (cont’d)

Half year and full year results are reviewed by the Audit Committee prior to their submission to the Board as are interested person transactions. The Audit Committee has full access to and co-operation by the Company’s management and the internal and external auditors and has full discretion to invite any director or executive officer to attend its meetings. The auditors have unrestricted access to the Audit Committee. Provision is made at least once annually for the Audit Committee to meet with the external and internal auditors without the presence of Management. The Audit Committee has reasonable resources to enable it to discharge its functions properly. The Audit Committee may examine whatever aspects it deems appropriate of the Group’s financial affairs, its internal and external audits and its exposure to risks of a regulatory or legal nature. It keeps under review the effectiveness of the Company’s system of accounting and internal financial controls, for which the directors are responsible. It also keeps under review the Company’s programme to monitor compliance with its legal, regulatory and contractual obligations. The Audit Committee overseas the internal audit function of the Group, which has been outsourced to an external professional firm. The primary line of reporting is to the Chairman of the Audit Committee. The Audit Committee reviews and approves the internal audit plan proposed by the internal auditors. The Group’s system of internal control is designed to manage the risk of internal to achieve business objectives. The review of the Group’s system of internal control is a continuing process. Based on the internal audit reports reviewed by the Audit Committee and management controls in place, the Audit Committee is satisfied that there are adequate internal control systems within the Group. The Board acknowledges its overall responsibility for ensuring that there is a sound system of internal control and is satisfied that there is no significant weaknesses in the system of internal control of the Group that may result in material loss to the Group. Having undertaken a review of non-audit services rendered by the external auditors during the financial year, the Audit Committee is satisfied with the independence and objectivity of the external auditors and recommends to the Board the reappointment of Messrs Ernst & Young as the external auditors. Risk Management Policies The Group has set up objectives to manage the risks that arise from the normal course of its operations. The significant risks are summarised below : (i) General business risk The Group’s major business is distribution of tyres and wheels. The Group is reliant on a few key suppliers for the supply of certain major brand of tyres. Some of these suppliers have granted exclusive distribution rights. Although we have a strong relationship with the principals (some exceeding 30 years), there is no assurance that the principals will continue to appoint us as their exclusive distribution agent in the future. Should any of the major principals decide to discontinue the distribution rights in the future, the Group could lose some of its market share and this could then have adverse financial impact on the Group. To mitigate this risk, the Group has been focusing in developing its own range of ‘in-house’ brands like SSW, Sumo, Firenza and Sumo-Firenza to become less reliant on its principals.

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Corporate Governance Report (cont’d)

As in any other business environment, the Group’s assets are exposed to various risk arising from normal operations and natural disasters. Especially, our inventory is highly flammable and susceptible to the risk of fire. It is the Group’s practice to annually assess these risks and/or exposure to ensure that the Group is protected from potential monetary loss. In addition to other preventive measures, the Group ensures that adequate insurance coverage is maintained at all times to mitigate such risk except where the cost of insuring the asset is considered prohibitive in relation to the risks identified. (ii) Product liability claims The Group is exposed to claims from its customers from products sold by the Group which contain defects or found to be unfit for their intended use. The Group may be required to make financial compensation to its customers in such circumstances. The Group’s principals are well established in the market place and their products are usually tested for safety before being marketed. The Group continues to spend considerable effort in ensuring the quality of its products and services. The Group provides its employees with relevant trainings, on a regular basis, to uphold the quality of services provided to its customers. The Group has no history of any significant claim made by its customers. (iii) Credit and inventory risk The Group faces normal business risks associated with collection of trade receivables and inventory obsolescence. The Group’s exposure to credit risks arises mainly from sales made to distributors and retailers in various geographical locations. The Group has tight credit control policies and procedures to evaluate the credit worthiness of customers before credit is granted and to prevent significant concentration of credit risk. The Group also has adequate policies and procedures to minimise the risk of inventory obsolescence. The risk of inventory obsolescence may arise from change in consumer preference and technology. It is the Group’s policy to maintain optimum inventory level at all times. Inventory level is monitored regularly and slow moving inventories are quickly identified for early disposal. The Group has also put in place a ‘supply chain management’ system to procure inventories in an effective manner to prevent excess inventories on hand. The financial risk management objectives and policies are discussed in Note 34 to the financial statements. Communication with Shareholders Principle 14 to 15 : - Communication with Shareholders - Greater Shareholder Participation The Company believes that a high standard of disclosure is key to raise the level of corporate governance. Accordingly, the Company adopts a policy of giving full disclosure in all public announcements, press releases and annual report. Shareholders are kept informed of the developments in the Group’s businesses and operations through announcements via SGXnet as well as through the annual report. Announcements are made as soon as possible to ensure timely dissemination of the information to shareholders and the public.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

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Corporate Governance Report (cont’d)

The participation of shareholders is encouraged at the Company’s general meetings. The Board and Management are on hand at these meetings to address any question that shareholders may have concerning the Company. The external auditors are also present to assist the Board in answering the relevant shareholders’ queries. To facilitate voting by shareholders, the Company’s Articles allow shareholders to vote by proxies. Proxy forms can be sent to the Company by mail. At the annual general meetings, each distinct issue is voted via separate resolutions. Internal Code on Dealings with Securities Besides the Board of Directors, Audit Committee and Remuneration Committee, the Company has also put in place an internal code on dealings with securities, (“Code”). This “Code” has been issued to directors and employees setting out the implications on insider trading. The Code prohibits the dealings in securities of the Company by directors and employees while in possession of price-sensitive information, and during the period beginning one month before the announcement of the annual and half yearly results, and ending on the date of announcement. It also discourages dealings on short-term considerations. Directors are required to report securities dealings to the company secretary who will assist to make the necessary announcements. Interested Person Transactions There were no significant interested person transactions conducted during the current financial year.

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Board Composition

Chua Kim Yeow Wee Kok Wah Dawn Wee Wai Ying Kwok Weng Fai Tay Puan Siong Sam Chong Keen Goh Chee Wee Michael David Nesbitt

Board

Audit Committee

Nominating Committee

Remuneration Committee

Chairman President Executive Vice President Member Member Member Member Member

Member – – – – Chairman Member – –

– – – – – Member Chairman – Member

Chairman – – – – – Member Member –

Directors’ Attendance at Board & Committee Meetings held since May 2004 Board of Directors No. of No. of Meetings Meetings Held* Attended

Chua Kim Yeow Wee Kok Wah Dawn Wee Wai Ying Kwok Weng Fai Tay Puan Siong Sam Chong Keen Goh Chee Wee Michael David Nesbitt

4 4 4 4 4 4 4 4

2 4 4 4 3 4 4 4

Audit Committee No. of No. of Meetings Meetings Held* Attended

4 – – – 4 4 – –

2 – – – 3 4 – –

Nominating Committee No. of No. of Meetings Meetings Held* Attended

– – – – 1 1 – 1

– – – – 1 1 – 1

Remuneration Committee No. of No. of Meetings Meetings Held* Attended

1 – – – – 1 1 –

1 – – – – 1 1 –

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33

Report of the Directors

The directors have pleasure in presenting their report together with the audited financial statements of Stamford Tyres Corporation Limited (the “Company”) and its subsidiary companies (the “Group”) for the financial year ended 30 April 2005. Directors of the Company The names of the directors of the Company in office at the date of this report are : Chua Kim Yeow Chairman Wee Kok Wah President Dawn Wee Wai Ying Executive Vice President Dr Kwok Weng Fai Tay Puan Siong Sam Chong Keen Goh Chee Wee Michael David Nesbitt The following directors who held office at the end of the financial year had, according to the register required to be kept under Section 164 of the Singapore Companies Act, Cap. 50, (the “Act”) an interest in shares of the Company, as stated below : Direct Interest At beginning of At end of financial year financial year Name of director

Chua Kim Yeow Wee Kok Wah Dawn Wee Wai Ying Dr Kwok Weng Fai

Deemed Interest At beginning of At end of financial year financial year

Ordinary shares of $0.10 each

– 9,107,353 3,887,567 2,778,810

– 13,210,252 11,887,567 2,778,810

230,000 57,051,319 62,271,105 –

230,000 57,051,319 58,374,004 –

– 18,334,367 –

– 14,231,468 –

Warrant 2007

Wee Kok Wah Dawn Wee Wai Ying Dr Kwok Weng Fai

18,334,367 – 1,250

14,231,468 – 1,250

There was no change in any of the abovementioned interests between the end of the financial year and 21 May 2005. By virtue of Section 7 of the Act, Wee Kok Wah and Dawn Wee Wai Ying are deemed to have an interest in the ordinary shares of all the subsidiary companies at the beginning and at the end of the financial year. No other director who held office at the end of the financial year had an interest in shares or debentures of the Company’s subsidiary companies.

34

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Report of the Directors (cont’d)

Except as disclosed in the financial statements, since the end of the previous financial year, no director has received or has become entitled to receive benefits under contracts required to be disclosed by Section 201(8) of the Act. Except as disclosed above, neither at the end of the financial year, nor at any time during the financial year, did there subsist any arrangements, to which the Company is a party, whereby directors might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Share options and warrants to subscribe for ordinary shares (i)

Share options On 22 June 2001, the shareholders approved the STC Share Option Scheme 2001 (the “Scheme”). The Scheme is open to full-time confirmed employees, executive and non-executive directors, but not controlling shareholders or their associates of the Company, and entitles the option holders to exercise their options and subscribe for new ordinary shares in the Company either at the market price or at a price set at a discount not exceeding 20% of the market price. Market price is equal to the average last dealt price of the share for 3 consecutive trading days immediately preceding the offer date. Options granted with the exercise price set at market price may be exercised after the first anniversary of the offer date. Options granted with the exercise price set at a discount to market price may only be exercised after the second anniversary of the offer date. Executive options granted under the Scheme are exercisable for a period of 10 years whereas non-executive options are exercisable for a period of 5 years from the offer date. The total number of shares that may be issued shall not exceed 15% of the issued share capital of the Company. The Scheme is administered by members of the Company’s Remuneration Committee. During the financial year, the Company issued 25,000 ordinary shares of $0.10 each upon the exercise of 25,000 share options at exercise prices of $0.126 per share. There were no outstanding share options as at 30 April 2005. None of the directors and controlling shareholders of the Company has been granted options under the Scheme and none of the employees who participated in the Scheme has received 5% or more of the total number of options available under the Scheme.

(ii) Warrant 2007 Warrant 2007 were issued pursuant to an Abridged Prospectus dated 28 January 2002. During the financial year, the Company issued 7,389,399 ordinary shares of $0.10 each upon the exercise of 7,389,399 Warrant 2007 at the exercise price of $0.10 per share. As at 30 April 2005, the holders of the warrants are entitled to subscribe for 19,900,868 new ordinary shares of $0.10 in the Company at an exercise price of $0.10 per share at any time up to 21 February 2007. The above options and warrant do not allow the holders to participate in any share issue of any other company in the Group.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

35

Report of the Directors (cont’d)

Material contracts of the Company and its subsidiary companies There were no material contracts (or loans) entered into by the Company and/or its subsidiary companies with the directors or chief executive officer or substantial shareholders of the Company which were still subsisting at the end of the financial year under review, or if not then subsisting, entered into since the end of the previous financial year. Audit Committee The Audit Committee performed the functions specified in the Act. The functions performed are detailed in the Report on Corporate Governance. Auditors The auditors, Ernst & Young, Certified Public Accountants, have expressed their willingness to accept re-appointment.

On behalf of the Board,

Wee Kok Wah Director

Dawn Wee Wai Ying Director Singapore 15 July 2005

36

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Statement by Directors Pursuant to Section 201(15) of the Singapore Companies Act, Cap. 50. We, Wee Kok Wah and Dawn Wee Wai Ying, being two of the directors of Stamford Tyres Corporation Limited, do hereby state that, in the opinion of the directors : (a) the accompanying balance sheets, consolidated profit and loss account, consolidated statement of changes in equity and consolidated statement of cash flow together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of Stamford Tyres Corporation Limited (the “Company”) and its subsidiary companies (the “Group”) as at 30 April 2005, and of the results of the business, changes in equity and cash flows of the Group for the year then ended; and (b) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the Board,

Wee Kok Wah Director

Dawn Wee Wai Ying Director Singapore 15 July 2005

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

37

Auditors’ Report

to the Members of Stamford Tyres Corporation Limited

We have audited the accompanying financial statements of Stamford Tyres Corporation Limited (the “Company”) and its subsidiary companies (the “Group”) set out on pages 39 to 81 for the financial year ended 30 April 2005. These financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, (a) the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 April 2005, and the results, changes in equity and cash flows of the Group for the financial 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 subsidiary companies incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

ERNST & YOUNG Certified Public Accountants Singapore 15 July 2005

38

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Consolidated Profit and Loss Account for the year ended 30 April 2005

Note

2005 $’000

2004 $’000

3 4

191,293 288

189,779 226

Total revenue

191,581

190,005

Less : Costs and expenditure Cost of raw materials and goods sold Salaries and employees benefits Marketing and promotion Utilities, repairs and maintenance Amortisation and depreciation Operating lease rentals Other operating expenses

138,811 15,473 5,579 4,583 4,424 1,783 5,779

138,805 14,409 5,374 4,027 3,647 1,287 5,646

(176,432)

(173,195)

15,149 (2,944) (642)

16,810 (2,453) (9)

11,563 (2,893)

14,348 (2,788)

Profit after taxation Minority interests

8,670 (62)

11,560 (16)

Profit for the financial year attributable to the shareholders of the Company

8,608

11,544

4.15

6.23

3.82

5.19

(In Singapore dollars)

Revenue Other revenue

Total expenditure Profit from operating activities Finance costs Share of losses of an associated company Profit before taxation Taxation

Earnings per share : – basic (cents) – diluted (cents)

5 6

7

8

The accounting policies and explanatory notes on pages 43 to 81 form an integral part of the financial statements.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

39

Balance Sheets as at 30 April 2005

(In Singapore dollars)

Non-current assets Property, plant and equipment Subsidiary companies Joint venture company Associated companies Intangible assets Other non-current asset Deferred tax assets

Current assets Inventories Trade receivables Other receivables Marketable securities Cash and bank balances

Less : Current liabilities Trade payables Trust receipts (secured) Other payables Short-term loans (secured) Hire purchase liabilities Provision for taxation

Group 2005 $’000

2004 $’000

2005 $’000

2004 $’000

9 10 11 12 13 14 24

51,417 – – 1,642 28 41 1,424

45,735 – – 2,306 26 53 440

– 39,374 1,571 72 – – –

– 35,252 1,571 72 – – –

54,552

48,560

41,017

36,895

62,338 63,804 4,944 15 13,817

52,657 56,669 3,398 5 20,828

– – 1,568 – 124

– – 4,154 – 541

144,918

133,557

1,692

4,695

24,916 39,176 9,497 8,829 255 3,849

19,192 46,355 10,646 4,615 279 4,239

– – 468 – – 140

– – 386 – – 66

86,522

85,326

608

452

58,396

48,231

1,084

4,243

526 43,246 724

546 32,100 616

– – –

– – –

(44,496)

(33,262)

–

–

68,452

63,529

42,101

41,138

21,082 47,143 68,225 227

20,341 43,016 63,357 172

21,082 21,019 42,101 –

20,341 20,797 41,138 –

68,452

63,529

42,101

41,138

15 16 17 18

19 20 21 22

Net current assets Non-current liabilities Hire purchase liabilities Long-term loans (secured) Deferred tax liabilities

Equity Share capital Reserves Minority interests

Company

Note

22 23 24

25

The accounting policies and explanatory notes on pages 43 to 81 form an integral part of the financial statements.

40

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Consolidated Statement of Changes in Equity for the year ended 30 April 2005

(In Singapore dollars) Share capital $’000

Share premium $’000

Capital reserve $’000

Revenue reserve $’000

15,295

9,857

759

23,555

5,046

148

–

–

– –

384 –

–

–

–

Balance at 30 April 2004 Issue of ordinary shares on exercise of share options and Warrant 2007 (Note 25) Transfer from capital reserve as a result of exercise of Warrant 2007 (Note 28) Dividend (Note 29) Profit for the financial year attributable to the shareholders of the Company Translation adjustments arising on consolidation Balance at 30 April 2005

Group Balance at 1 May 2003 Issue of ordinary shares on exercise of share options and Warrant 2007 (Note 25) Transfer from capital reserve as a result of exercise of Warrant 2007 (Note 28) Dividend (Note 29) Profit for the financial year attributable to the shareholders of the Company Translation adjustments arising on consolidation

Foreign currency translation reserve $’000

(184)

Total $’000

49,282

–

5,194

– (2,107)

– –

– (2,107)

–

11,544

–

11,544

–

–

–

(556)

20,341

10,389

375

32,992

(740)

741

1

–

–

– –

63 –

(63) –

– (3,304)

– –

– (3,304)

–

–

–

8,608

–

8,608

–

–

–

–

(1,178)

(1,178)

21,082

10,453

312

38,296

(1,918)

68,225

(384) –

–

(556) 63,357 742

The details of the movement in reserves of the Company are set out in Note 26 to the financial statements.

The accounting policies and explanatory notes on pages 43 to 81 form an integral part of the financial statements.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

41

Consolidated Statement of Cash Flow for the year ended 30 April 2005 (In Singapore dollars)

Cash flows from operating activities : Profit from operating activities Adjustments for : Depreciation of property, plant and equipment Property, plant and equipment written off Impairment reversal on property, plant and equipment Gain on disposal of property, plant and equipment Provision for diminution on other investment Amortisation of intangible assets Gain on disposal of marketable securities Loss arising from acquisition of a subsidiary company Interest income Foreign currency translation adjustment

2005 $’000

2004 $’000

15,149

16,810

4,384 – – (193) 11 40 – 146 (81) (255)

3,361 109 (166) (40) – 286 (5) – (101) (49)

Operating profit before reinvestment in working capital Increase in inventories Increase in receivables Increase in payables

19,201 (9,681) (8,767) 4,120

20,205 (12,225) (8,984) 3,538

Cash generated from operations Interest received Interest paid Income tax paid

4,873 81 (2,854) (4,159)

2,534 101 (1,918) (2,239)

Net cash used in operating activities

(2,059)

(1,522)

Cash flows from investing activities : Additions to property, plant and equipment Proceeds from disposal of marketable securities Proceeds from disposal of property, plant and equipment Additions to intangible assets Investment in associated companies Additions to marketable securities Net cash flow from the acquisition of a subsidiary company, net of cash acquired (Note 30)

(10,631) – 416 (42) – (10) 5

(8,969) 15 414 (2) (2,046) – –

Net cash used in investing activities

(10,262)

(10,588)

(306) (1,678) (7,179) 14,126 742 (3,304)

(344) (6,847) 20,050 3,966 5,194 (2,107)

2,401

19,912

(9,920) 18,699 (3)

7,802 11,080 (183)

8,776

18,699

Cash flows from financing activities : Repayment of hire purchase liabilities Repayment of long-term loans (Repayment of)/proceeds from trust receipts Proceeds from long-term loans Proceeds from issue of shares Dividend paid Net cash provided by financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year (Note 30) Exchange rate adjustment to cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year (Note 30)

The accounting policies and explanatory notes on pages 43 to 81 form an integral part of the financial statements.

42

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements 30 April 2005 (In Singapore Dollars)

1.

Corporation information Stamford Tyres Corporation Limited is a limited liability company incorporated in Singapore. Its registered office is at 19 Lok Yang Way, Singapore 628635. The principal activity of the Company is that of an investment holding company and the principal activities of the subsidiary companies consist of wholesale and retail of tyres and wheels, tyre retreading, equipment trading, the servicing of motor vehicles and manufacturing and sale of aluminium alloy wheels. The Group operates in 9 countries and had 653 employees (2004 : 430) as at 30 April 2005. The Company had no employees as at 30 April 2005 and 2004.

2.

Summary of significant accounting policies (a) Basis of preparation The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (“FRS”) as required by the Singapore Companies Act, Cap. 50 (the “Act”). The accounting policies have been consistently applied by the Company and Group and are consistent with those used in the previous year. The financial statements have been prepared on a historical cost basis and are presented in Singapore Dollars ($). (b) Basis of consolidation The financial statements of the Group incorporate the audited financial statements of the Company, its subsidiary companies and the joint venture company to the end of the financial year except for those subsidiary companies that are not required to be audited under the laws of their country of incorporation. In such cases, the unaudited financial statements are used for the purposes of consolidation into the financial statements of the Group. The results of subsidiary companies acquired or disposed of during the financial year are included in or excluded from the respective dates of acquisition or disposal as applicable. Inter-company balances and transactions and the resulting unrealised profits are eliminated in full on consolidation. Assets, liabilities and results of overseas subsidiary companies are translated into Singapore dollars on the basis outlined in Note 2(u).

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

43

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(c) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured : –

Revenue from sale of goods is recognised upon passage of title to the customers, which generally coincides with their delivery and acceptance, net of goods and services tax, and sales returns. Revenue from the provision of services is recognised when the services have been performed. Revenue from the rental of tyres is recognised based on the usage of tyres by customers.

–

Volume rebates from suppliers for purchases made during the financial year is deducted from the cost of inventory if the goods remain unsold at the balance sheet date or credited against cost of goods sold in the profit and loss account if the goods have been sold at the balance sheet date.

–

Advertising and promotional rebates from suppliers are recognised as follows : –

those that are determined based on the amount of purchases made during the financial year are credited against marketing and promotion expenses in the profit and loss account; and

–

those that are reimbursed at the discretion of the suppliers are credited against marketing and promotion expenses in the profit and loss account when these are received.

–

Dividend income is recorded gross in profit and loss account in the financial year in which the Company and/or the Group’s right to receive payment has been established.

–

Interest income is recognised on time proportion basis based on the principal outstanding and at the rates applicable.

(d) Depreciation of property, plant and equipment Depreciation is calculated so as to write off the cost of the assets on a straight line basis over the expected useful lives of the assets concerned. The principal rates used for this purpose are : Leasehold land and buildings Leasehold improvements Motor vehicles Plant and equipment Computer hardware and software

– – – – –

over their lease period, ranging from 1.7% to 5.0% per annum 10% per annum 20% per annum 5% to 10% per annum 331/3 % per annum

No depreciation is provided on freehold land. No depreciation is provided for construction-in-progress until it is completed and put into use.

44

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(d) Depreciation of property, plant and equipment (cont’d) A full year’s depreciation is charged in the financial year of acquisition. No depreciation is charged in the financial year of disposal. Fully depreciated assets are retained in the financial statements until they are no longer in use. The useful life and depreciation method are reviewed annually to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. During the financial year, a subsidiary company changed the period of depreciation for a leasehold building from 64 years to 50 years and for office furniture and equipment from 10 years to 8 years to reflect more accurately the expected consumption pattern of economic benefits from these assets. The changes have resulted in an additional depreciation charge of $294,000 for the financial year. (e) Borrowing costs Interest on borrowings to finance the construction of properties and plants is capitalised. Interest is capitalised from the date work starts on the property to the date when substantially all the activites that are necessary to get the property ready for use are completed. Interest on other borrowings are recognised as expense in the period in which they are incurred. Interest differentials under interest rate swap arrangements are accrued and recorded in the profit and loss account as adjustments to the interest expense. The interest prepaid on term loan is charged to the profit and loss account over the term of the loan. (f) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. All items of property, plant and equipment are initially recorded at cost. The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use, any trade discounts and rebates are deducted in arriving at the purchase price. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance and overhaul costs, is normally charged to the profit and loss account in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditure is capitalised as an additional cost of property, plant and equipment. When assets are sold or retired, their cost and accumulated depreciation are removed from the financial statements and any gain or loss resulting from their disposal is included in the profit and loss account. (g) Subsidiary companies In the financial statements of the Company, investments in subsidiary companies are stated at cost less provision for any diminution in value. Acquisition of subsidiary companies are accounted for using the purchase method of accounting. Details of the subsidiary companies are set out in Note 36.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

45

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(h) Joint venture company Entities in which the Group holds an interest on a long-term basis and are jointly controlled by the Group with one or more parties under a contractual agreement are treated as joint ventures. The Group’s interest in the joint venture company is included in the consolidated balance sheet and profit and loss account using the proportionate consolidation method, whereby the Group’s share of the joint venture company’s assets, liabilities, income and expenses are combined on a line by line basis with similar items in the consolidated financial statements. In the financial statements of the Company, investment in joint venture company is stated at cost less provision for any diminution in value. Details of the joint venture company are set out in Note 36. (i) Associated companies An associated company is defined as a company, not being a subsidiary company, in which the Group has a long-term interest of not less than 20% of the equity and in whose financial and operating policy decisions the Group exercises significant influence. The Group’s share of the results of associated companies is included in the consolidated profit and loss account. The Group’s share of the post-acquisition reserves of associated companies is included in the investments in the consolidated balance sheet. When the Group’s share of post-acquisition losses exceeds the carrying amount of the respective investment, the investment is reported at nil value and recognition of losses is discontinued except to the extent of the Group’s commitment. Where the audited financial statements of these associated companies are not co-terminous with those of the Group, the share of profits is arrived at from the last audited financial statements available and unaudited management financial statements to the end of the accounting period. In the financial statements of the Company, investments in associated companies are stated at cost less provision for any diminution in value. Details of the associated companies are set out in Note 36. (j) Intangible assets (i)

Computer software Software are stated at cost less accumulated amortisation and any impairment loss. The cost is amortised on a straight line basis over 3 years from the date the software is made available for use.

(ii) Goodwill Goodwill represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets of subsidiary, joint venture and associated companies when acquired. Positive goodwill is amortised through the consolidated profit and loss account on a straight line basis over its useful economic life up to a maximum of 20 years, determined on individual basis. Goodwill which is assessed as having no continuing economic value is written off to the consolidated profit and loss account.

46

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(j) Intangible assets (cont’d) (iii) Others Preliminary, pre-operating expenses and research and development costs are expensed as incurred, except for development costs which are expected to generate future economic benefits. Such development expenses are capitalised and amortised through the profit and loss account on a straight line basis over a period of 5 years upon commencement of operations. (k) Other non-current asset Investment in club memberships are stated at cost less any impairment loss. (l) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average cost method and includes all costs in bringing the inventories to their present location and condition. In the case of manufactured and retread products, and work-in-progress, cost includes all direct expenditure and production overheads based on normal level of activity. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the costs of realisation and, where appropriate, the cost of conversion from the existing state to a finished condition. Tyres rented to customers (“inventories held for rental”) are stated at cost less an accumulated charge for their consumption. The consumption charge is calculated to write off the cost of the tyres based on the actual running hours of usage by the customer in relation to the estimated life of the rental tyres of between 2,000 and 5,000 running hours depending on the model of tyres. An allowance is made where necessary for obsolete, slow moving and defective inventories. (m) Trade and other receivables Trade and other receivables are recognised and carried at original invoiced amount less an allowance for doubtful receivables. An allowance for doubtful receivables is made when collection of the full amount is no longer probable. Bad debts are written off to the profit and loss account as incurred. Receivables from related parties are recognised and carried at cost less allowance for doubtful receivables, if any. (n) Marketable securities Quoted short-term investments are stated at the lower of cost and market value, which are determined on an individual basis. Any decrease in carrying amount is included in the profit and loss account.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

47

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(o) Impairment of assets Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in the profit and loss account. Reversal of impairment losses recognised in previous financial years is recorded when there is an indication that the impairment losses recognised for the asset no longer exist or have decreased. The reversal is recorded in the profit and loss account. However, the increased carrying amount of an asset due to a reversal of an impairment loss is recognised to the extent it does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for that asset in previous financial years. (p) Trade and other payables Trade and other payables are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group. (q) Loans and borrowings All loans and borrowings are initially recognised at cost, being the fair value of the consideration received and including acquisition charges associated with the borrowing/loan. (r) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) where as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. (s) Leased assets (i)

Hire purchase liabilities Where assets are financed by hire purchase agreements that give rights approximating to ownership, the assets are capitalised under property, plant and equipment as if they had been purchased outright at the values equivalent to the present values of the total rental payable during the periods of the hire and the corresponding hire purchase commitments are included under liabilities. The excess of the hire purchase payments over the recorded lease obligations is treated as finance charges, which are amortised over each hire term to give a constant rate of charge on the remaining balance of the obligation. Depreciation on the relevant assets is charged to profit and loss account on the basis outlined in Note 2(d).

48

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(s) Leased assets (cont’d) (ii) Operating lease Leases where substantially all the risks and benefits of ownership of the lease effectively remains with the lessor are classified as operating leases. Rental expenses pursuant to operating leases are charged to the profit and loss account on a straight line basis. (t) Income taxes Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date. Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiary, associated and joint venture companies, except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax losses and unabsorbed capital allowances, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised. Deferred tax is charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

49

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(u) Foreign currencies (i)

Foreign currency transactions Transactions arising in foreign currencies during the financial year are translated and recorded into the measurement currency at rates closely approximating those ruling on the transaction dates. Foreign currency monetary assets and liabilities at the balance sheet date are translated into the measurement currency at the exchange rates ruling at that date. All exchange differences arising from such translations are included in the profit and loss account.

(ii) Foreign entities For inclusion in the consolidated financial statements, all assets and liabilities of foreign subsidiary and joint venture companies are translated into Singapore dollars at exchange rates ruling at the balance sheet date and the results of foreign subsidiary companies, associated and joint venture companies are translated into Singapore dollars at the weighted average exchange rates for the financial year. Exchange differences due to such currency translations are included in foreign currency translation reserve. On disposal of a foreign subsidiary and joint venture company, such foreign currency translation reserves are recognised in the profit and loss account as a component of the gain or loss on disposal. Exchange differences arising from long-term inter-company balances which are effectively part of net investments are included in the foreign currency translation reserve. (iii) Forward contracts Gains and losses arising from forward contracts on foreign currencies for the purpose of hedging against currency fluctuations in connection with payments to overseas suppliers and receipts from overseas customers are recognised in the profit and loss account on the maturity date of the respective contracts. (v) Cash and cash equivalents Cash and cash equivalents consist of cash at bank and in hand less bank overdrafts and short-term loans in the form of revolving credit facilities. (w) Employee benefits (i)

Executives’ Share Option Scheme The Company has in place the STC Share Option Scheme 2001 (the “Scheme”) for the granting of share options to eligible employees of the Group to subscribe for ordinary shares in the Company. When the options are exercised, the nominal value of the shares subscribed for is credited to the share capital account and the balance of the proceeds, net of any transaction costs, is credited to the share premium account. Details of the Scheme are disclosed in Note 27.

50

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

(w) Employee benefits (cont’d) (ii) Defined contribution/benefit plans As required by law, the Group’s companies in Singapore make contributions to the state pension scheme, the Central Provident Fund (“CPF”). Certain of the Group’s companies outside Singapore make contributions to their respective countries’ pension scheme. Such contributions are recognised as compensation expense in the same period as the employment that gives rise to the contribution. (iii) Employee entitlements Liabilities for paid leave are recognised and are measured as the amount unpaid at the balance sheet date at current pay rates in respect of employees’ services up to that date. (x) Share capital, share premium and reserves Ordinary shares are classified as equity and recorded at the fair value of the consideration received by the Company. Dividends on ordinary shares are accounted for in the shareholders’ equity in the period in which they are declared payable. Proceeds from the issuance of warrants are credited to the capital reserve. When the warrants are exercised, the value of such warrants exercised standing to the credit of the capital reserve account will be transferred to the share premium account. At the expiry of the warrants, the balance in the capital reserve will be transferred to the revenue reserve. 3.

Revenue Group

Tyres and wheels : – Wholesale and distribution – Retail and fleet Servicing of motor vehicles

2005 $’000

2004 $’000

157,191 34,022 80

152,005 37,692 82

191,293

189,779

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

51

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

4.

Other revenue Group

Interest income from bank deposits Sundry income Rental income

5.

2005 $’000

2004 $’000

81 205 2

101 90 35

288

226

Profit from operating activities Group 2005 $’000

2004 $’000

1,752 191 955

2,429 185 642

Profit from operating activities is stated after charging/(crediting) : Directors’ remuneration : – directors of the Company – other directors of subsidiary companies Contribution to CPF and other similar funds Non-audit fees : – auditors of the Company – other auditors Gain on disposal of property, plant and equipment Foreign exchange gain Loss arising from acquisition of a subsidiary company (Note 30) Provision for diminution on other investment (Note 14) Gain on disposal of marketable securities Property, plant and equipment written off Impairment reversal on property, plant and equipment 6.

25 9 (193) (285)

21 44 (40) (223)

146 11 – – –

– – (5) 109 (166)

Finance costs Group

Interest expense on : – bank overdrafts, trust receipts and hire purchase liabilities – long-term loans Amortisation of interest prepaid on a term loan

52

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

2005 $’000

2004 $’000

1,331 1,523 90

1,105 913 435

2,944

2,453

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

7.

Taxation Group

Provision for taxation in respect of profit for the financial year : – Current taxation – Deferred taxation (Note 24)

Overprovision in respect of previous financial years : – Current taxation – Deferred taxation (Note 24)

2005 $’000

2004 $’000

3,816 (416)

4,283 (361)

3,400

3,922

(47) (460)

(983) (151)

(507)

(1,134)

2,893

2,788

The income tax expense on the results of the Group differ from the amount of tax determined by applying the Singapore statutory rate of income tax of 20% (2004 : 20%) to the profit before taxation due to the following factors : 11,563

14,348

Taxation at statutory tax rate of 20% (2004 : 20%) Adjustments : – expenses not deductible for income tax purposes – income not subject to tax – higher tax rates in other countries – deferred tax assets in respect of allowances for stock obsolescence and doubtful receivables not recognised – utilisation of previously unrecognised tax losses – effect of change in statutory tax rate – overprovision in respect of previous financial years – others

2,313

2,870

Taxation

2,893

Profit before taxation

774 (7) 255

608 (38) 325

263 (145) – (507) (53)

158 (37) (84) (1,050) 36 2,788

As at 30 April 2005, the Group, primarily through its subsidiary companies in Thailand, has unutilised tax losses of approximately $332,000 (2004 : $907,000) which may, subject to the agreement with the relevant tax authorities, be carried forward and utilised to set-off against future taxable profits. The potential tax benefit of approximately $100,000 (2004 : $245,000) arising from the unutilised tax losses has not been recognised in the financial statements due to the uncertainty of its recoverability.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

53

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

8.

Earnings per share The calculation of earnings per share (“EPS”) is based on the following figures : Group

Group earnings used for the calculation of EPS : Profit for the financial year attributable to the shareholders of the Company

2005 $’000

2004 $’000

8,608

11,544

’000

’000

Number of shares used for the calculation of basic and diluted EPS : Weighted average number of ordinary shares in issue used for the calculation of basic EPS Adjustment for outstanding share options and Warrant 2007

207,403 18,122

185,168 37,316

Adjusted weighted average number of ordinary shares used for the calculation of diluted EPS

225,525

222,484

Basic EPS is calculated on the Group’s profit for the financial year attributable to the shareholders of the Company divided by the weighted average number of ordinary shares in issue during the financial year. Diluted EPS is calculated on the Group’s profit for the financial year attributable to the shareholders of the Company divided by the weighted average number of ordinary shares in issue during the financial year which have been adjusted for the effects of all dilutive potential ordinary shares, being the outstanding share options and Warrant 2007 (Notes 27 and 28). The number of outstanding share options and Warrant 2007 included in the calculation of diluted EPS has been determined based on the average number of days they were outstanding during the financial year.

54

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

9.

Property, plant and equipment Freehold land $’000

Leasehold land and buildings $’000

Plant equipment $’000

Motor vehicles $’000

2,636

34,666

9,985

3,719

Group Cost : At beginning of financial year Foreign currency translation adjustment Additions Disposals Reclassification At end of financial year

(73) – – – 2,563

(386) 345 (125) 2,368

(110) 4,270 (262) 4,606

(23) 582 (498) –

Leasehold Constructionimprovements in-progress $’000 $’000

4,239 (25) 498 – –

Total $’000

5,899

61,144

(151) 5,198 – (6,974)

(768) 10,893 (885) –

36,868

18,489

3,780

4,712

3,972

70,384

5,091

5,605

2,545

2,060

–

15,301

108

–

–

–

–

108

Accumulated depreciation and impairment : At beginning of financial year : – Accumulated depreciation – – Accumulated impairment loss – Foreign currency translation adjustment – Charge for the financial year – Disposals –

(57)

(72)

(13)

(22)

–

(164)

1,151 (32)

2,353 (140)

442 (490)

438 –

– –

4,384 (662)

At end of financial year

–

6,261

7,746

2,484

2,476

–

18,967

Charge for last financial year

–

968

1,531

486

376

–

3,361

At end of financial year

2,563

30,607

10,743

1,296

2,236

3,972

51,417

At beginning of financial year

2,636

29,467

4,380

1,174

2,179

5,899

45,735

Net book value :

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

55

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

9.

Property, plant and equipment (cont’d) The Group’s property, plant and equipment with a total net book value of $35,797,000 as at 30 April 2005 (2004 : $36,668,000) are subject to legal mortgages referred to in Notes 19, 21 and 23. Additions to property, plant and equipment for the financial year includes $262,000 (2004 : $428,000) acquired under hire purchase agreements. Interst on borrowings amounting to $67,000 (2004 : nil) was capitalised during the financial year and included in the cost of plant and machinery. The Group has motor vehicles and plant and equipment acquired under hire purchase agreements with a total net book value of $832,000 as at 30 April 2005 (2004 : $1,028,000).

10. Subsidiary companies

Company 2005 $’000

Unquoted equity shares, at cost (Note 36) Less : Provision for diminution in value

Loan to a subsidiary company (unsecured) Amounts due from subsidiary companies (non-trade) Amounts due to subsidiary companies (non-trade)

Less : Allowance for doubtful non-trade receivable from a subsidiary company

2004 $’000

25,833 (3,424)

21,296 (2,991)

22,409

18,305

13,767 6,862 (3,150)

13,767 4,125 (945)

17,479

16,947

(514)

–

16,965

16,947

39,374

35,252

During the financial year, the Company increases its interest in an associated company, Stamford Tyres Philippines, Inc. (“STP”) from 40% to 100%. With this increase, STP became a wholly-owned subsidiary company of the Company. The loss of $146,000 arising from this acquisition has been charged to the profit and loss account (Note 30). Other than this loss, the acquistion of additional interest in STP does not have any significant impact on the result and financial position of the Group for the financial year. The loan to a subsidiary company is unsecured, bears interest at 2.89% (2004 : 2.89%) per annum, with no fixed term of repayment and is not expected to be repaid within the next 12 months. The subsidiary company cannot repay this loan to the Company until the subsidiary company has repaid a term loan it obtained from a bank (Note 23). The non-trade amounts due from and to subsidiary companies are unsecured, have no fixed terms of repayment and not expected to be repaid within the next 12 months, and interest-free except for an amount of $422,000 (2004 : $379,000) due from a subsidiary company which bears interest at 7.00% (2004 : 7.00%) per annum. Details of the subsidiary companies are set out in Note 36. 56

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

11. Joint venture company Company

Unquoted equity shares, at cost

2005 $’000

2004 $’000

1,571

1,571

Details of the joint venture company are set out in Note 36. The Group’s share of the assets and liabilities of the joint venture company comprise : Group 2005 $’000

2004 $’000

5,098 12,042 (6,043) (6)

6,054 8,786 (4,155) (20)

11,091

10,665

15,491 (14,152)

15,810 (13,570)

Profit before taxation Taxation

1,339 (331)

2,240 (353)

Profit after taxation

1,008

1,887

Non-current assets Current assets Current liabilities Non-current liabilities

The Group’s share of the profits of the joint venture company comprise : Revenue Expenditure

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

57

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

12. Associated companies Group 2005 $’000

Company 2004 $’000

2,266 114 (74)

72 – –

220 – –

1,642

2,306

72

220

–

–

–

(148)

1,642

2,306

72

72

Preliminary and pre-operating Goodwill expenses $’000 $’000

Deferred expenditure $’000

Computer software $’000

Total $’000

Unquoted equity shares, at cost Share of post-acquisition reserves Foreign currency translation adjustment

Less : Provision for diminution in value

2005 $’000

2004 $’000

2,118 (311) (165)

Details of the associated companies are set out in Note 36. 13. Intangible assets

58

Group Cost : At beginning of financial year Foreign currency translation adjustment Additions

61 – –

408 – –

342 – –

595 (2) 42

1,406 (2) 42

At end of financial year

61

408

342

635

1,446

Accumulated amortisation : At beginning of financial year Foreign currency translation adjustment Amortisation for the financial year

61 – –

408 – –

342 – –

569 (2) 40

1,380 (2) 40

At end of financial year

61

408

342

607

1,418

Amortisation for last financial year

–

–

–

286

286

Net book value : At end of financial year

–

–

–

28

28

At beginning of financial year

–

–

–

26

26

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

14. Other non-current asset

Group 2005 $’000

Investment in transferable club memberships, at cost Less : Provision for diminution in value (Note 5) Foreign currency translation adjustment

53 (11) (1)

54 – (1)

41

53

15. Inventories

Inventories for sale : – at cost – at net realisable value Inventories held for rental, at cost less accumulated amount charged to the profit and loss account Raw materials, at cost Work-in-progrss – aluminium alloy wheels

Inventories for sale are stated after deducting allowance for obsolescence of

Group 2005 $’000

2004 $’000

51,346 3,730

45,875 4,262

2,890 3,888 484

1,977 543 -

62,338

52,657

6,278

4,913

16. Trade receivables

Group 2005 $’000

External parties Less : Allowance for doubtful trade receivables

Bad external trade debts written off directly to the profit and loss account

2004 $’000

2004 $’000

69,065 (5,261)

61,147 (4,478)

63,804

56,669

1

7

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

59

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

17. Other receivables 2005 $’000

Group 2004 $’000

2005 $’000

Company 2004 $’000

Amounts due from : – subsidiary companies – joint venture company – shareholders of subsidiary companies – shareholders of associated companies Sundry receivables Loans and deposits to suppliers Deposits Taxes recoverable Staff loans Prepayments Interest prepaid on a term loan

– 25 – 16 851 1,628 986 751 112 643 –

– 28 – 230 850 – 1,108 909 154 259 90

– 263 1,298 16 – – – – – 7 –

2,582 274 1,298 230 – – – – – – –

Less : Allowance for doubtful receivables

5,012 (68)

3,628 (230)

1,584 (16)

4,384 (230)

4,944

3,398

1,568

4,154

The non-trade amounts due from the subsidiary and joint venture companies, and shareholders of subsidiary and associated companies are unsecured, interest-free and are repayable on demand. The loans and deposits to suppliers are unsecured and interest-free. The loans are deductible against the amount payable on purchase of tyres from these suppliers. The deposits are refundable at the end of the manufacturing contracts with duration up to 2 years. Staff loans are unsecured, bear interest at rates ranging from 4.5% to 9.0% (2004 : 4.7% to 8.7%) per annum and repayable in fixed monthly instalments not exceeding 5 years from the date of grant of the loan. The interest prepaid on a term loan is charged to the profit and loss account over 30 months commencing on 12 February 2002. The interest has been fully charged to the profit and loss account as at 30 April 2005.

60

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

18. Marketable securities

Group 2005 $’000

2004 $’000

Quoted equity shares, at cost

15

5

Market value at end of financial year

15

5

19. Trust receipts (secured) Trust receipts have maturity dates of up to 6 (2004 : 6) months and are secured by corporate guarantees from the Company, a negative pledge over the assets excluding its leasehold buildings of Stamford Tyres International Pte Ltd. These facilities are subject to compliance with certain financial covenants. 20. Other payables

Amounts due to associated companies Payroll and staff related expenses Sundry payables Accrued operating expenses Retention amount payable in relation to construction-in-progress

2005 $’000

Group 2004 $’000

2005 $’000

Company 2004 $’000

89 2,774 3,223 3,274

89 3,269 3,272 3,485

89 – – 379

89 – – 297

137

531

–

–

9,497

10,646

468

386

The non-trade amounts due to the associated companies are unsecured, interest-free and are repayable on demand.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

61

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

21. Short-term loans (secured) Group

Short-term loans (revolving credit facilities) Long-term loans - current portion (Note 23)

2005 $’000

2004 $’000

5,041 3,788

2,129 2,486

8,829

4,615

The short-term loans are secured by negative pledge over the assets of certain overseas subsidiary companies excluding hire purchase assets, and corporate guarantees from the Company. The short-term loans bear interest at rates ranging from 2.75% to 4.80% (2004 : 2.75% to 3.25%) per annum. 22. Hire purchase liabilities The future minimum payments under hire purchase agreements to acquire motor vehicles and plant and equipment are as follows :

Minimum payments 2005 $’000

Within one year After one year but not more than five years More than five years

Total minimum hire purchase payments Less : Amounts representing finance charges Present value of minimum hire purchase payments

62

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Group Present value Minimum payments payments 2005 2004 $’000 $’000

Present value payments 2004 $’000

291 599 17

255 515 11

319 560 69

279 488 58

616

526

629

546

907 (126)

781 –

948 (123)

825 –

781

781

825

825

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

23. Long-term loans (secured) Group 2005 $’000

2004 $’000

29,000 2,769 3,248 645 399 5,839 705 1,000

21,777 2,895 1,419 678 388 3,065 786 –

43,605

31,008

692 1,366 1,371

741 1,416 1,421

3,429

3,578

Less : Current portion (Note 21)

47,034 (3,788)

34,586 (2,486)

Long-term portion of loans

43,246

32,100

Loans from banks : – Loan A – Loan B – Loan C – Loan D – Loan E – Loan F – Loan G – Loan H Loans from a finance company : – Loan I – Loan J – Loan K

Long A bears interest at rates ranging from 2.93% to 3.47% (2004 : 2.79% to 3.12%) per annum. The loan is repayabe in semi-annual instalments amounting between $1,000,000 and $3,000,000 per instalment with a bullet repayment of $13,000,000 at the final repayment date on 8 August 2009. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. This loan is subject to compliance with certain financial covenants by Stamford Tyres International Pte Ltd and the Company, and Stamford Tyres International Pte Ltd shall not repay the loan from the Company until Loan A is repaid (Note 10). Stamford Tyres International Pte Ltd has also entered into an interest rate swap transaction with the lending bank to fix the interest rate on a portion of $10,000,000 (2004 : $12,000,000) of Loan A at 3.47% (2004 : 3.06%) per annum for the period from 11 February 2005 to 12 February 2007.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

63

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

23. Long-term loans (secured) (cont’d) Loan B bears interest at rates ranging from 2.50% to 5.50% (2004 : 5.25%) per annum and is repayable in 240 equal monthly instalments commencing March 2001. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. Loan C includes two loans which bear interest at rates ranging from 7.25% to 7.50% (2004 : 7.50%) per annum, and is repayable in 120 equal monthly instalments commencing January 1998 and August 2004. The loans are secured by a mortgage on the land and building of STC Tyres (Malaysia) Sdn Bhd and a corporate guarantee from the Company. Loan D bears interest at rates ranging from 2.50% to 5.50% (2004 : 5.00% to 5.50%) per annum and is repayable in 240 equal monthly instalments commencing November 2000. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. Loan E bears interest at 7.00% (2004 : 7.00%) per annum and is repayable in 360 equal monthly instalments commencing May 2002. The loan is secured by a mortgage over a freehold property of Stamford Tires (Latin America), Inc. Loan F includes two loans which bear interest at rates ranging from 3.12% to 4.58% (2004 : 3.12% to 4.50%) per annum and repayable in equal quarterly instalments commencing 18 months from the drawdown in February 2004 and October 2004. The loans are secured by a mortgage over the land and building, and plant and equipment of Stamford Sport Wheels Company Limited and a corporate guarantee from the Company. Loan G bears interest rates ranging from 3.25% to 3.75% (2004 : 3.25%) per annum and is repayable in 117 equal monthly instalments commencing March 2004. This loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. Loan H bears interest at 4.41% (2004 : nil) per annum and are repayable over 4 quarterly instalments commencing March 2005. The loan is secured by a corporate guarantee from the Company. Loan I bears interest ranging from 3.75% to 4.00% (2004 : 3.75% to 4.63%) per annum and is repayable in 180 equal monthly instalments commencing October 2001. The loan is secured by a mortgage over a leasehold building of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company. Loans J and K bear interest at 4.00% (2004 : 3.75%) per annum and are repayable in 240 equal monthly instalments commencing June 2003. The loans are secured by mortgage over certain leasehold buildings of Stamford Tyres International Pte Ltd and a corporate guarantee from the Company.

64

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

24. Deferred taxation

(a) Deferred tax assets : At beginning of financial year Foreign currency translation adjustment Acquisition of a subsidiary company (Note 30) Addition for the financial year (Note 7) Underprovision in respect of the previous financial years (Note 7) At end of financial year The deferred tax assets arise as a result of : (i) Excess of net book value over tax written down value of property, plant and equipment (ii) Allowances for doubtful receivables and stock obsolescence, and accrued operating expenses

(b) Deferred tax liabilities : At beginning of financial year Foreign currency translation adjustment Addition/(reversal) for the financial year (Note 7) Overprovision in respect of the previous financial years (Note 7)

Group 2005 $’000

2004 $’000

440 (18) 20 604 378

190 (10) – 130 130

1,424

(29)

440

(10)

1,453

450

1,424

440

616 2 188 (82)

868 – (231) (21)

At end of financial year

724

616

The deferred tax liabilities arises as a result of : (i) Excess of net book value over tax written down value of property, plant and equipment (ii) Allowances for doubtful receivables and stock obsolescence, and accrued operating expenses

918

966

(194)

(350)

724

616

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

65

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

25. Share capital Number of Shares 2005 ‘000

Group and Company Share Number of capital shares 2005 2004 $’000 ‘000

Share capital 2004 $’000

Authorised : 500,000

50,000

500,000

50,000

203,412

20,341

61,181

15,295

25

2

2,074

519

7,389

739

13,925

3,481

7,414

741

15,999

4,000

Total before sub-division of every 2 existing shares of $0.25 each into 5 new shares of $0.10 each Increased by sub-division

210,826

21,082

77,180

19,295

–

–

115,770

–

Ordinary shares of $0.10 (2004 : $0.10) each Issued during the financial year : Ordinary shares of $0.10 each for cash on the exercise of options (2004 : $0.10) Ordinary shares of $0.10 each for cash on the exercise of Warrant 2007 (2004 : $0.10)

210,826

21,082

192,950

19,295

–

–

267

27

–

–

10,195

1,019

–

–

10,462

1,046

210,826

21,082

203,412

20,341

Ordinary shares of $0.10 (2004 : $0.10) each Issued and fully paid : At beginning of financial year : Ordinary shares of $0.10 (2004 : $0.25) each Issued during the financial year : Ordinary shares of $0.10 (2004 : $0.25) each for cash on the exercise of options Ordinary shares of $0.10 (2004 : $0.25) each for cash on the exercise of Warrant 2007

At end of financial year : Ordinary shares of $0.10 (2004 : $0.10) each

At the Extraordinary General Meeting of the Company held on 19 September 2003, the shareholders approved the sub-division of every two existing ordinary shares of par value $0.25 each into five new ordinary shares of par value $0.10 each. The holders of the ordinary shares are entitled to receive dividends as and when declared by the Company. Each ordinary share carry one vote without restriction.

66

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

25. Share capital (cont’d) Unissued shares under share options and warrants as at 30 April 2005 comprise : (i)

There are nil (2004 : 25,000) options entitling holders to subscribe at any time during the exercise period for the same number of ordinary shares in the Company at the exercise price of $0.126 (2004 : $0.126 to $0.130) per share. The details of the share options are discussed in Note 27.

(ii) 19,900,868 (2004 : 27,290,267) Warrant 2007 entitling holders to subscribe at any time up to 21 February 2007 for the same number of ordinary shares in the Company at an exercise price of $0.10 per share. The details of the Warrant 2007 are discussed in Note 28. The holders of the share options and Warrant 2007 have no right to participate by virtue of these options in any share issue of any other company in the Group. The dilutive effects of the outstanding share options and Warrant 2007 were considered in the computation of earnings per share (Note 8). 26. Reserves

Share premium At beginning of financial year Issue of ordinary shares on exercise of share options and Warrant 2007 (Note 25) Transfer from capital reserve upon exercise of Warrant 2007 (Note 28) At end of financial year Capital reserve At beginning of financial year Transfer to share premium account upon exercise of Warrant 2007 (Note 28) At end of financial year

Company 2005 $’000

2004 $’000

10,389

9,857

1

148

63 10,453

384 10,389

232

616

(63) 169

(384) 232

Revenue reserve At beginning of financial year Profit for the financial year attributable to the shareholders of the Company Dividends (Note 29) At end of financial year

10,176

8,027

3,525 (3,304) 10,397

4,256 (2,107) 10,176

Total

21,019

20,797

The details of the movements in reserves of the Group are set out in the Consolidated Statement of Changes in Equity.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

67

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

26. Reserves (cont’d) (a) Share premium This represents cash proceeds received in excess of the par value of the shares issued by the Company less issue expenses. The utilisation of the share premium account is governed by Section 69 – 69F of the Singapore Companies Act, Cap. 50. (b) Capital reserve This mainly represents the net proceeds received on the issuance of Warrant 2007. (c) Foreign currency translation reserve This comprises foreign exchange differences arising from the translation of the financial statements of overseas subsidiary, associated and joint venture companies and from the translation of long-term inter-company advances which are effectively part of net investments in the subsidiary companies. (d) Revenue reserve This represents the accumulated profits less distributions made to the shareholders of the Company. 27. Share options The Group has granted share options to eligible employees under its STC Share Option Scheme 2001 that was approved by the members of the Company at an Extraordinary General Meeting held on 22 June 2001 (the “Scheme”). The Scheme replaced the Stamford Tyres Employees’ Share Option Scheme (the “Old Scheme”). The termination of the Old Scheme does not affect the rights of the holders of the outstanding option issued under that scheme and the options granted under the Old Scheme remain valid and exercisable until their expiry dates. The Scheme is open to full-time confirmed employees, executive and non-executive directors, but not controlling shareholders or their associates of the Company, and entitles the option holders to exercise their options and subscribe for new ordinary shares in the Company either at the market price or at a price set at a discount not exceeding 20% of the market price. Market price is equal to the average last dealt price of the share for 3 consecutive trading days immediately preceding the offer date. Options granted with the exercise price set at market price may be exercised after the first anniversary of the offer date. Options granted with the exercise price set at a discount to market price may only be exercised after the second anniversary of the offer date. Executive options granted under the Scheme are exercisable for a period of 10 years whereas non-executive options are exercisable for a period of 5 years from the offer date. The total number of shares that may be issued shall not exceed 15% of the issued share capital of the Company.

68

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

27. Share options (cont’d) Information with respect to the total number of options granted under the Scheme and the Old Scheme are as follow : Date of grant

At beginning of financial year

Exercised

23.6.2001

25,000

(25,000)

Forfeited

At end of financial year

Exercise price

Exercise date From

–

–

$0.126

24.6.2003 – 23.6.2011

To

Nil (2004 : 25,000) options are exercisable as at the financial year end. 28. Warrant 2007 The net proceeds relating to the Warrant 2007 and included in the capital reserve are as follows : Group and Company

At beginning of financial year : 27,290,267 (2004 : 72,297,499) warrants at an issue price of $0.012 per warrant, net of issue expenses Less : Transfer to share premium account upon exercise of 7,389,399 (2004 : 45,007,232) warrants At end of financial year : 19,900,868 (2004 : 27,290,267) warrants at an issue price of $0.012 per warrant, net of issue expenses

2005 $’000

2004 $’000

232

616

(63)

(384)

169

232

In financial year 2002, the Company made a renounceable rights issue of 75,015,000 warrants (“Warrant 2007”) at an issue price of $0.012 per warrant carrying the right to subscribe for new ordinary shares of $0.10 each in the capital of the Company at an exercise price of $0.10 per share. The proceeds arising from the exercise of Warrant 2007 have been assigned to a bank in connection with a term loan granted to a subsidiary company (Note 23).

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

69

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

29. Dividend

Group and Company 2005 $’000

2004 $’000

Final dividend of 1.25 (2004 : 1.25) cents, less income tax at 20% (2004 : 20%), per share in respect of the previous financial year Special dividend of 0.75 (2004 : 0.75) cents, less income tax at 20% (2004 : 20%), per ordinary share in respect of the previous financial year

2,065

1,505

1,239

602

Dividend paid during the year

3,304

2,107

The directors have proposed a first and final dividend of 1.25 cents (2004 : 1.25 cents) per ordinary share, less income tax at 20% (2004 : less income tax at 20%), amounting to $2,108,426 (2004 : $2,064,962) and a special dividend of 0.75 cents (2004 : 0.75 cents) per ordinary share, less income tax of 20% (2004 : less income tax at 20%), amounting to $1,265,056 (2004 : $1,238,977) be paid in respect of the financial year ended 30 April 2005. The dividend will be recorded as a liability on the balance sheet of the Company and Group upon approval by the shareholders of the Company at the next Annual General Meeting of the Company. 30. Notes to consolidated statement of cash flow (i) Net cash flow from the acquisition of a subsidiary company As described in Note 10, during the financial year the Company increased its interest in STP from 40% to 100% through the surrender of the shares in STP by the other shareholder to whom the Group has advanced as amount of $214,000 in the previous years. An allowance for this amount was made in the previous year. The net cash flow from this acquisition is as follows: Group $’000

70

Other receivables Deferred tax asset (Note 24) Cash and bank balance Other payables

4 20 5 (455)

Total net liability Loss recognised in prior years in the consolidated financial statements Loss in acquisition : – loss attributable to other shareholder – allowance on advance made to the other shareholder written back

(426) 280 360 (214) 146

Consideration paid Cash and cash equivalent acquired

5

Cash inflow on acquisition

5

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

30. Notes to consolidated statement of cash flow (cont’d) (ii) Cash and cash equivalents Cash and cash equivalents included in the consolidated statement of cash flow comprise the following balance sheet amounts : Group

2005 $’000

Cash and bank balances Short-term loans Cash and cash equivalents

2004 $’000

13,817 (5,041)

20,828 (2,129)

8,776

18,699

31. Commitments (i) Operating lease commitments As at financial year end, commitments for minimum rental payments under non-cancellable leases with a term of more than one year are as follows : Group

Within one year Within two to five years After five years

2005 $’000

2004 $’000

721 1,828 9,631

916 2,135 10,037

12,180

13,088

The Group leases office premises, warehousing facilities and retail outlets under operating leases. The leases typically run for an initial period of 2 to 30 years, with an option to renew the leases after that date. Lease rentals are usually adjusted during the renewals to reflect market rentals. (ii) Capital commitments

Commitments in respect of contracts placed for the purchase of property, plant and equipment Other amounts approved by directors but not contracted for the purchase of property, plant and equipment

Group 2005 $’000

2004 $’000

651

491

3,929

4,944

4,580

5,435

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

71

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

31. Commitments (cont’d) (iii) Other commitments Forward contracts As at financial year end, the Group has the following outstanding foreign exchange forward contract commitments for the purpose of hedging against currency fluctuations in connection with payments to overseas suppliers and receipts from overseas customers : Range of forward exchange rates 2005 2004

To buy : – United States Dollars – Euro – Japanese Yen

To buy Euro with Hong Kong Dollars To sell : – United States Dollars – Euro – British Pound – Thai Baht – Australian Dollars

To sell Australian Dollars for United States Dollars

Group 2005 $’000

2004 $’000

16,941 1,048 –

13,411 3,748 240

17,989

17,399

9.513

–

18

1.619 - 1.656 1.673 - 1.714 2.124 - 2.128 2.009 - 2.060 3.115 2.997 - 3.007 0.041 –

26,180 963 93 1,201

20,335 4,984 300 –

1.619 - 1.656 1.675 - 1.724 2.128 - 2.150 1.997 - 2.138 – 0.015

–

–

–

1.237

0.764 - 0.780 0.757 - 0.762

28,437

25,681

2,099

1,036

Unrealised foreign exchange loss not accounted for in the financial statements as at end of financial year

(58)

32. Contingent liabilities

Guarantees issued for bank facilities granted to subsidiary companies

Group

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

(59)

Company

2005 $’000

2004 $’000

2005 $’000

2004 $’000

–

–

89,132

79,912

The above indicates amounts utilised by subsidiary companies as at balance sheet date.

72

62

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

33. Related party transactions In addition to the information on related parties shown elsewhere in the notes to the financial statements, the Group has significant transactions with related parties on terms agreed between the parties as follows : Group

Income from services rendered to a joint venture company Management fee paid to other shareholder of a joint venture company Rental of premises paid to a company in which a director of an overseas subsidiary company has an interest Professional fee paid to a company in which a director of an overseas subsidiary company has an interest

2005 $’000

2004 $’000

81

83

193

375

42

44

115

94

34. Financial risk management objectives and policies The main risks faced by the Group and Company are foreign currency risk, interest rate risk, credit risk and liquidity risk that arise through its normal operations. Foreign currency risk Foreign exchange risk arises from a change in foreign currency exchange rate, which is expected to have adverse effect on the Group in the current reporting period and in future years. The Group operates in several countries and subsidiary, associated and joint venture companies within the Group maintain their books and records in their respective functional currencies. The Group’s accounting policy is to translate the results of overseas subsidiary, associated and joint venture companies using the weighted average exchange rates. Net assets denominated in foreign currencies and held at the financial year end are translated into Singapore dollars, the Group’s reporting currency, at year end exchange rates. Fluctuations in the exchange rate between the functional currencies and Singapore dollar will therefore have an impact on the Group. It is the Group’s policy not to hedge exposures arising from such translations. The Group’s strategy is to fund overseas operations with borrowings denominated in their functional currency as a natural hedge against overseas assets. The Company is exposed to the volatility in the foreign currency cash flows related to repatriation of the investments and advances to its subsidiary, associated and joint venture companies. The Company does not hedge exposures arising from such risks. The Group’s trading subsidiary companies are exposed to movements in foreign currency rates arising from the purchases of goods from manufacturers and sales made to customers located in several countries. Whenever necessary, foreign exchange forward contracts are used by the subsidiary companies to manage the foreign currency exposure arising from their trading activities. The outstanding foreign exchange forward contracts at financial year end are disclosed in Note 31.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

73

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

34. Financial risk management objectives and policies (cont’d) Interest rate risk Interest rate risk is the risk that changes in interest rates will have an adverse financial effect on the Group’s financial conditions and/or results. The primary source of the Group’s interest rate risk is its borrowings from banks and other financial institutions in Singapore, Malaysia, Thailand, Hong Kong and the United States of America. The Group ensures that it obtains borrowings at competitive interest rates under the most favourable terms and conditions. Where appropriate, the Group uses interest rate swaps to hedge its interest rate exposure for specific underlying debt obligations (Note 23), Information relating to the interest rate is disclosed in Notes 21 and 23. Credit risk Credit risk is the risk that entities and individuals will be unable to meet their obligations to the Group resulting in financial loss to the Group. It is the Group’s policy to enter into transactions with a diversity of credit worthy parties to mitigate any significant concentration of credit risk. The Group ensures that sales of products and services are rendered to customers with appropriate credit history and has internal mechanisms to monitor the granting of credit and management of credit exposures. The Group has made allowances for potential losses on credits extended. The Group’s maximum exposure to credit risk in the event the parties fail to perform their obligations in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in the balance sheet. As at financial year end there were no significant concentration of credit risk to the Group or Company. Surplus funds are placed with reputable financial institutions. Liquidity risk The Group monitors its daily and monthly projected and actual cash inflows and outflows to ensure that funding needs are identified and managed in advance. The Group actively manages its debt maturity profile, operating cash flows and availability of committed credit facilities to ensure that all refinancing, repayment and funding needs are met. The Group strives to maintain a sufficient level of banking facilities to meet its funding requirements and utilise trust receipts, revolving credit facilities, loans and hire purchase contracts for this purpose. The credit facilities provided by the banks and finance companies are subject to certain financial covenants, and terms and conditions which are summarised in Notes 19, 21, 22 and 23. Derivative financial instruments The Group does not hold or issue derivative financial instruments for trading purposes.

74

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

34. Financial risk management objectives and policies (cont’d) Fair value of financial assets and financial liabilities The fair value, determined based on the market price, of the investment in the marketable securities is disclosed in Note 18. In the opinion of the directors, it is impractical to determine the fair value of the unquoted equity shares in the subsidiary, associated and joint venture companies, and the longterm advances to subsidiary companies as they do not have repayment terms. The fair values of other financial assets and liabilities are not materially different from their carrying values as at 30 April 2005 due to the relatively short-term maturity of these instruments, except for the hire purchase liabilities and certain long-term bank loans which bear interest at fixed rates. Their fair values of these items at the balance sheet date determined by discounting the relevant cash flows using current interest rates for similar instruments are :

Group Hire purchase liabilities Long-term loans

Carrying amount 2005 $’000

Estimated fair value 2005 $’000

Carrying amount 2004 $’000

Estimated fair value 2004 $’000

781 47,034

846 46,958

825 34,586

887 34,575

The notional amount and fair value of the interest rate swap (Note 23) is $10,000,000 and $45,000 respectively, as at 30 April 2005. The fair value is determined using a rate quoted by the lending bank to terminate the contract at the balance sheet date. 35. Segment information The Group operates on the wholesale and retail of tyres and wheels, tyre retreading and equipment trading, and manufacturing and distribution of aluminium alloy wheels. Its operating businesses are organised and managed separately based on geographical areas, representing a strategic business unit that serves different markets. The following tables present revenue and profit information regarding geographical segments for the financial years ended 30 April 2005 and 2004 and certain assets and liabilities information regarding geographical segments as at 30 April 2005 and 2004. The unallocated revenue and expenses comprise general corporate income and expense items. Segment accounting policies are the same as the policies described in Note 2 to the financial statements. Revenues are attributed to geographical areas based on the location of the assets producing the revenues. The Group companies use a cost plus basis for inter-segment pricing for the sale and purchase of goods between the transacting parties. Segment information relating to the manufacturing of aluminium alloy wheels have not been shown separately as the amount is not significant for the financial year ended 30 April 2005.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

75

76

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

South Asia1 2005 2004 $’000 $’000

Elimination 2005 2004 $’000 $’000

Consolidated 2005 2004 $’000 $’000

8,983

3,827 4,115

2,163 4,024

348

508 16,431

17,630

–

8,608 11,544

(9)

Profit for the financial year attributable to the shareholders of the Company

(642)

11,563 14,348 (2,893) (2,788) (62) (16)

(9)

Profit before taxation and minority interests Taxation Minority interests

(642)

15,149 16,810 (2,944) (2,453) (642) (9)

Profit from operating activities Finance costs Share of losses of an associated company

101 (921)

81 (1,363)

Add : Unallocated revenue Less : Unallocated expenses

– 16,431 17,630

10,093

Segment result

101 191,581 190,005

81

6,326 246,382 234,547 (54,882) (44,643) 191,500 189,904

Total of segments 2005 2004 $’000 $’000

135,825 140,135 67,259 55,264 30,386 32,822 12,912

Others3 2005 2004 $’000 $’000

6,227 191,293 189,779 – – 191,293 189,779 – 54,882 44,643 (54,882) (44,643) – – 99 207 125 – – 207 125

North Asia2 2005 2004 $’000 $’000

47,924 30,343 32,595 12,919 7,392 – 156 – (52) 43 71 (7)

95,344 103,033 52,687 40,478 37,095 14,404 3 7 168

Singapore 2005 2004 $’000 $’000

Total revenue

Unallocated revenue

Revenue External revenue Inter-segment revenue Other revenue

35. Segment information (cont’d)

30 April 2005 (In Singapore Dollars)

Notes to the Financial Statements (cont’d)

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

77

68

–

–

Allowance for obsolete inventories

Impairment reversal on Property, plant and equipment

Bad external trade debts written off directly to profit and loss account

Note : 1 Includes Malaysia, Philippines, Thailand and Indonesia 2 Includes Hong Kong and China and South Korea 3 Includes Latin America, Australia and South Africa

(28)

2,589

Significant non-cash expenses : Amortisation and depreciation

Allowance/(reversal) for doubtful trade receivables

2,534 39

–

–

1,144

737

2,538

2,498 –

1

–

462

241

960

7,978 3

7

(166)

126

282

844

6,649 –

17,868 16,987

–

–

13

580

179

289 –

2,517

–

–

628

(21)

183

124 –

2,187

–

–

717

628

66

54 –

882

882 –

Other segment information Capital expenditure : - property, plant and equipment - intangible assets

9,818

2,187 –

12,680

2,517 –

Total liabilities

17,868 16,987 – –

12,680 –

Segment liabilities Unallocated liabilities 9,818 –

98,093 107,095 62,202 43,330 25,604 23,051 12,025

Total assets

Total of segments 2005 2004 $’000 $’000

–

–

(24)

200

82

1

–

1,260

1,421

3,794

126 10,855 2 42

7

(166)

1,874

1,198

3,647

9,397 2

460 33,947 29,452

460 33,947 29,452 – – –

7,632 197,924 181,108

7,632 196,282 178,802 – 1,642 2,306 – – –

Others3 2005 2004 $’000 $’000

21,015 12,025 2,036 – – –

North Asia2 2005 2004 $’000 $’000

61,870 43,060 24,294 332 270 1,310 – – –

South Asia1 2005 2004 $’000 $’000

98,093 107,095 – – – –

Singapore 2005 2004 $’000 $’000

Other information Segment assets Associated companies Unallocated assets

35. Segment information (cont’d)

30 April 2005 (In Singapore Dollars)

Notes to the Financial Statements (cont’d)

–

– –

–

– – –

Consolidated 2005 2004 $’000 $’000

1

–

1,260

1,421

3,794

10,855 42

7

(166)

1,874

1,198

3,647

9,397 2

– 131,019 118,588

– 33,947 29,452 – 97,072 89,136

– 199,472 182,117

– 196,282 178,802 – 1,642 2,306 – 1,548 1,009

Elimination 2005 2004 $’000 $’000

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

36. Subsidiary, associated and joint venture companies The subsidiary, associated and joint venture companies as at 30 April 2005 are :

Name of company (Country of incorporation)

Principal activities (Place of business)

Cost of investment 2005 2004 $’000 $’000

Percentage of equity held by the Group 2005 2004 % %

Subsidiary companies Held by the Company : Stamford Tyres International Pte Ltd1 (Singapore)

Wholesale and retail of tyres and wheels, and retreading of tyres (Singapore)

11,000

11,000

100

100

Stamford Tyres (M) Sdn Bhd2 (Malaysia)

Wholesale of tyres and wheels (Malaysia)

580

580

100

100

STC Tyres (Malaysia) Sdn Bhd2 (Malaysia)

Property holding company (Malaysia)

458

458

50

50

Stamford Tyre Mart Sdn Bhd2 (Malaysia)

Retail of tyres and wheels (Malaysia)

@

@

100

100

#

Stamford Tires Distributor Co., Ltd3 (Thailand)

Wholesale of tyres and wheels (Thailand)

625

625

49

49

#

STC Tyres Limited3 (Thailand)

Inactive (Thailand)

288

288

49

49

#

Stamford Auto Mart Limited3 (Thailand)

Inactive (Thailand)

21

21

49

49

Stamford Tyres (China) Limited4 (Hong Kong)

Wholesale of tyres (Hong Kong and China)

1,040

1,040

100

100

Boon Tyre Holdings Limited5 (Hong Kong)

Investment holding (Hong Kong)

@

@

100

100

14

14

100

100

#

## Stamford Tires (Latin America), Inc. Wholesale of tyres and (United States of America) wheels (Latin America)

78

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

36. Subsidiary, associated and joint venture companies (cont’d) Name of company (Country of incorporation)

Principal activities (Place of business)

Cost of investment 2005 2004 $’000 $’000

Stamford Tyres (Africa) Wholesale of tyres (Proprietary) Limited6 (South Africa) (South Africa)

Percentage of equity held by the Group 2005 2004 % %

1,127

1,127

100

100

## PT Stamford Tyres Indonesia (Indonesia)

Wholesale and retail of tyres and retreading of tyres (Indonesia)

726

726

100

100

## PT Stamford Tyres Distributor Indonesia (Indonesia)

Wholesale of tyres and wheels (Indonesia)

530

530

100

100

Green Tyre Singapore Pte Ltd1 (Singapore)

Inactive (Singapore)

@

@

100

100

Stamford Auto City Pte Ltd1 (Singapore)

Inactive (Singapore)

200

200

100

100

Wahsan Trading Pte Ltd1 (Singapore)

Inactive (Singapore)

218

218

100

100

8,251

4,075

100

100

322

322

100

100

Stamford Sport Wheels Company Manufacture aluminium Limited3 (Thailand) alloy wheels (Thailand) + Stamford International Trading ## (Tianjin) Co. Ltd. (People’s Republic of China)

Inactive (People’s Republic of China)

## Stamford Tyres Australia Pty Limited7 (Australia)

Wholesale of tyres and wheels (Australia)

@

@

100

100

## Stamford Tyres Korea Ltd (South Korea)

Wholesale of tyres and wheels (South Korea)

72

72

100

100

361

–

100

40

25,833

21,296

Stamford Tyres Philippines, Inc.8 (Philippines)

Inactive (Philippines)

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

79

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

36. Subsidiary, associated and joint venture companies (cont’d) Name of company (Country of incorporation)

Principal activities (Place of business)

Percentage of equity held by the Group 2005 2004 % %

Subsidiary companies Held by Stamford Tyres (China) Limited : Stamford Tyres (Shanghai) Limited (China)4

Wholesale of tyres and wheels (China)

100

–

Stamford Tyres (Guangzhou) Limited (China)4

Wholesale and retail of tyres and wheels (China)

100

–

Procurement of tyres (Singapore)

100

100

Wholesale of tyres (Hong Kong and China)

50

50

Inactive (Thailand)

49

49

Wholesale of tyres (China)

20

20

Held by Boon Tyre Holdings Limited : Raffles Resources Singapore Pte Ltd1 (Singapore) Joint venture company Held by the Company : ++ Tyre Pacific (HK) Limited9 (Hong Kong) Associated companies Held by the Company : ## Stamford Tyres (Thailand) Co., Ltd (Thailand) Held by Tyre Pacific (HK) Limited : +

SRITP Limited (British Virgin Islands) @ #

Cost of investment at one hundred units of local currency or less. The company is considered as a subsidiary company and included in the consolidated financial statements as the Group has the power to control, by agreement, the financial and operating policies of the management of the company. ## Not required to be audited under the laws of the country of incorporation. Unaudited financial statements have been used for the preparation of the consolidated financial statements of the Group. + Statutory year end is 31 December. A limited review of the financial statements has been performed for the purpose of the preparation of the consolidated financial statements of the Group. ++ Statutory year end is 31 December. An audit has been performed by KPMG, Hong Kong, on the financial statements for the financial period from 1 May 2004 to 30 April 2005.

80

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Notes to the Financial Statements (cont’d) 30 April 2005 (In Singapore Dollars)

36. Subsidiary, associated and joint venture companies (cont’d) Audited by : 1 2 3 4 5 6 7 8 9

Ernst & Young, Singapore, Certified Public Accountants Ernst & Young, Malaysia, Chartered Accountants Ernst & Young Office Limited, Thailand, Certified Public Accountants Tony Nedderman & Co, Hong Kong, Certified Public Accountants Ernst & Young, Hong Kong, Certified Public Accountants IC Mackay & Associates, South Africa, Chartered Accountants Felsers, Australia, Chartered Accountants Manuel Valdez, Ngo & Associates, Philippines, Certified Public Accountants KPMG, Hong Kong, Certified Public Accountants

37. Comparative figures The Group reclassified the trust receipts in the cash flow statement from operating activities to financing activities to better reflect its nature. The following comparative figures in the cash flow statement have been reclassified to provide a proper and meaningful comparison with current financial year’s presentation : 2004 (Restated) $’000

Net cash (used in)/generated from operating activities Net cash used in investing activities Net cash generated from/(used in) financing activities Net increase in cash and cash equivalents

2004 (Previously reported) $’000

(1,522) (10,588) 19,912

18,528 (10,588) (138)

7,802

7,802

38. Authorisation of financial statements for issue These financial statements were authorised for issue in accordance with a resolution of the directors on 15 July 2005.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

81

List of Major Properties

Location

Tenure of Lease

SINGAPORE 19 Lok Yang Way, Jurong Singapore 628635

36 years lease from 2000

18,024.7

21 Lok Yang Way, Jurong Singapore 628636

60 years lease from 1973

7,352.6

Warehouse

21-A Lok Yang Way, Jurong Singapore 628637

60 years lease from 1978

5,769.5

Truck service centre with showroom, retreading plant and warehouse

207 Balestier Road #01-13 Balestier Towers Singapore 329683

Freehold

143.0

Tyre retail centre and showroom

455 Macpherson Road Singapore 368173

63 years lease from 2001

951.0

Tyre retail centre with showroom

50 Bukit Batok Street 23 #02-19 Midview Building Singapore 659578

55 years lease from 2002

276.0

Tyre retail centre with showroom

10 Admiralty Street #01-85 56 years lease North Link Building Singapore 757695 from 2003

689.0

Tyre retail centre with showroom

16 years lease from 2004

2,510.4

Tyre retail centre with showroom

Freehold

6,968.0

Corporate office, tyre retail and service centre with showroom and warehouse

Freehold

7,740.0

Wheel factory with showroom and warehouse

31 Loyang Way Singapore 508729 MALAYSIA 16 Jalan Juru Nilai U1/20 Section U1 Hicom Glenmarie Industrial Park 40150 Shah Alam, Selangor THAILAND 111/2, 5 Moo 2, Highway 340, Suphanburi Road, Tambon Saiyai, Amphur Sainoi, Nonthaburi 11150 Thailand INDONESIA Kelapa Gading Boulevard Blok PA 19 No. 4-5 Pegangsaan Dua Kelapa Gading, Jakarta Utara Indonesia 14250

82

Area (sqm)

Description

Corporate office, tyre retail and service centre with showroom and warehouse

7 years lease from 2003

144.0

Office with warehouse

Jalan Sukarjo Wiryopranoto Block 4 GG-GH Kebon Kelapa, Gambir Jakarta Central Indonesia

28 years lease from 2004

484.0

Tyre retail and service centre with showroom and warehouse

Lot D-4, Jalan Kuala Kuningan Kuala Kencana, Light Industrial Park Tembagapura, Mimika Baru Papua, Indonesia

10 years lease from 2004

12,558.0

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Truck service centre with retreading plant

Statistics of Shareholdings As at 15 July 2005

Authorised Share Capital Issued and Paid Up Class of Shares Voting Rights

: : : :

$50,000,000.00 $21,120,563.10 Ordinary shares of $0.10 each 1 vote per share

Distribution of Shareholdings No. of Shareholders

%

No. of Shares

%

- 999 - 10,000 - 1,000,000 and above

89 2,054 1,491 20

2.44 56.21 40.80 0.55

21,469 13,243,250 67,461,931 130,478,981

0.01 6.27 31.94 61.78

TOTAL :

3,654

100.00

211,205,631

100.00

Size of Shareholdings

1 1,000 10,001 1,000,001

Based on the information available to the Company as at 15 July 2005, approximately 50.80% of the issued ordinary shares of the Company is held by the public and hence, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with. Twenty Largest Shareholders No.

Name

No. of Shares

%

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

LIM & TAN SECURITIES PTE LTD MAYBAN NOMINEES (S) PTE LTD WEE KOK WAH WAH HOLDINGS PTE LTD KWOK WAI YING DAWN SINGAPORE NOMINEES PTE LTD TEO CHENG TUAN DONALD HSBC (SINGAPORE) NOMINEES PTE LTD SOUTHERN NOMINEES (S) SDN BHD KWOK WENG FAI UNITED OVERSEAS BANK NOMINEES PTE LTD ING NOMINEES (S’PORE) PTE LTD DBS NOMINEES PTE LTD TAN CHAW @ TAN KOW TEE HL BANK NOMINEES (S) PTE LTD OCBC SECURITIES PRIVATE LTD UOB KAY HIAN PTE LTD CHIA KEE KOON DBS VICKERS SECURITIES (S) PTE LTD KWEE LIONG TEK

30,057,500 20,640,000 13,210,252 12,413,752 11,887,567 7,625,000 6,445,000 3,000,000 3,000,000 2,828,810 2,555,000 2,510,000 2,137,500 2,009,000 1,988,000 1,842,100 1,733,500 1,564,000 1,522,000 1,510,000

14.23 9.77 6.25 5.88 5.63 3.61 3.05 1.42 1.42 1.34 1.21 1.19 1.01 0.95 0.94 0.87 0.82 0.74 0.72 0.71

130,478,981

61.76

TOTAL :

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

83

List of Substantial Shareholders

As at 15 July 2005 as recorded in the Register of Substantial Shareholders

Name of Substantial Shareholders

Direct Interest No of Shares %

Deemed Interest No of Shares %

Wee Kok Wah Dawn Wee Wai Ying Wah Holdings Pte Ltd Lim & Tan Securities Pte Ltd

13,210,252 11,887,567 12,413,752 29,829,000

57,051,319 58,374,004 23,500,000 –

6.25% 5.63% 5.87% 14.12%

27.01% 27.64% 11.13% –

Note: Mr Wee Kok Wah is deemed to have an interest in the shareholdings of Mrs Dawn Wee Wai Ying and vice versa by virtue of their relationship as husband and wife. By virtue of Section 7 of the Singapore Companies Act, cap 50, Mr Wee Kok Wah and Mrs Dawn Wee Wai Ying are deemed to have an interest in the shares owned by Wah Holdings Pte Ltd. Mr Wee Kok Wah is deemed to be interested in the shares held as follows:Shares registered in names of Singapore Nominees Pte Ltd Shares owned by Mrs Dawn Wee Wai Ying: – registered in name of Dawn Wee Wai Ying – registered in name of HL Bank Nominees (S) Pte Ltd Shares owned by Wah Holdings Pte Ltd: – registered in Wah Holdings Pte Ltd – registered in name of Southern Nominees (S) Sdn Bhd – registered in name of Mayban Nominees (S) Pte Ltd

Mrs Dawn Wee Wai Ying is deemed to be interested in the shares held as follows:Shares registered in names of HL Bank Nominess (S) Pte Ltd Shares owned by Mr Wee Kok Wah: – registered in name of Wee Kok Wah – registered in name of Singapore Nominees Pte Ltd Shares owned by Wah Holdings Pte Ltd: – registered in name of Wah Holdings Pte Ltd – registered in name of Southern Nominees (S) Sdn Bhd – registered in name of Mayban Nominees (S) Pte Ltd

84

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

7,500,000 11,887,567 1,750,000 12,413,752 3,000,000 20,500,000 57,051,319

1,750,000 13,210,252 7,500,000 12,413,752 3,000,000 20,500,000 58,374,004

Statistics of Warrantholdings As at 15 July 2005

Distribution of Warrant Holdings

No. of Warrant Holders

%

No. of Warrants

%

- 999 - 10,000 - 1,000,000 and above

19 111 119 1

7.60 44.40 47.60 0.40

6,752 592,975 4,690,673 14,231,468

0.03 3.04 24.03 72.90

TOTAL :

250

100.00

19,521,868

100.00

Size of Warrant Holdings

1 1,000 10,001 1,000,001

Twenty Largest Warrant Holders No. Name

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

No. of Warrants

%

WEE KOK WAH CHEONG HOCK LAI TAN KOK HIANG LIM TECK CHEONG LEE PUI CHEE WONG WAI FONG PANG FUI NAM CHEW CHONG KEE HON WONG YUEN NEE GIANG CHON CHIANG SIEW JONG PHILLIP SECURITIES PTE LTD UOB KAY HIAN PTE LTD LEE MUN YEAN DBS VICKERS SECURITIES (S) PTE LTD LEE PEK LOK TANG AH MOY LAI CHEE TUCK KIM ENG SECURITIES PTE. LTD. EASTPOINT INTERNATIONAL MARKETING PTE LTD SEAH CHEONG LENG

14,231,468 705,000 213,000 212,500 200,000 200,000 110,000 102,500 90,000 77,500 72,822 72,500 66,000 52,000 50,000 50,000 47,500 46,000 43,750 43,750

72.90 3.61 1.09 1.09 1.02 1.02 0.56 0.53 0.46 0.40 0.37 0.37 0.34 0.27 0.26 0.26 0.24 0.24 0.22 0.22

TOTAL :

16,686,290

85.47

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

85

Notice of Annual General Meeting Company Registration No: 198904416M

NOTICE IS HEREBY GIVEN that the Sixteenth Annual General Meeting of the shareholders of the Company will be held on Friday, 26 August 2005 at 3.00 p.m. at 19 Lok Yang Way Singapore 628635 to transact the following businesses:ORDINARY BUSINESS

86

1.

To read, consider and adopt the balance sheet, the report of the Directors and Auditors and other accounts and documents required to be annexed to the balance sheet for the financial year ended 30 April 2005. Resolution 1

2.

To approve the proposed Directors’ fees of $228,500. (2004 : $243,000)

3.

To declare and approve a first & final dividend of 1.25 cents per share of 10 cents each less income tax of 20% for the financial year ended 30 April 2005. Resolution 3

4.

To declare and approve a special dividend of 0.75 cent per share of 10 cents each less income tax of 20% for the financial year ended 30 April 2005. Resolution 4

5.

To re-elect Mrs. Dawn Wee Wai Ying pursuant to Article 99 of the Articles of Association.

6.

To re-elect Mr Goh Chee Wee pursuant to Article 99 of the Articles of Association [see Explanatory Note (a)]. Resolution 6

7.

To pass the following resolution pursuant to Section 153(6) of the Companies Act, Cap. 50:“That pursuant to Section 153(6) of the Companies Act, Cap. 50, Mr. Chua Kim Yeow be re-appointed as a Director of the Company to hold office until the next Annual General Meeting.” [see Explanatory Note (b)]. Resolution 7

8.

To re-appoint Messrs Ernst & Young as auditors for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 8

9.

To transact any other business of the Company which may properly be transacted at an Annual General Meeting.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Resolution 2

Resolution 5

Notice of Annual General Meeting (cont’d)

SPECIAL BUSINESS To consider and if thought fit to pass the following as Ordinary Resolutions: 10. “That pursuant to Section 161 of the Companies Act, Cap. 50 and the listing rules of the Singapore Exchange Securities Trading Limited, the Directors be and are hereby authorised to issue shares in the Company (whether by way of bonus issue, rights issue 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 fit provided that: (i)

the aggregate number of shares to be issued pursuant to this Resolution does not exceed 50% of the issued share capital of the Company, of which the aggregate number of shares to be issued other than on a pro-rata basis to existing shareholders of the Company does not exceed 20% of the Company’s issued share capital;

(ii) for the purpose of determining the aggregate number of shares that may be issued under (i) above, the percentage of issued share capital shall be based on the issued share capital of the Company at the time this Resolution is passed, after adjusting for: (a) new shares arising from the conversion or exercise of any convertible securities or employee share options that are outstanding when this Resolution is passed, and (b) any subsequent consolidation or subdivision of shares; and (iii) unless revoked or varied by the Company in the general meeting, such authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.” [see Explanatory Note (c)]. Resolution 9 11. “That pursuant to Section 161 of the Companies Act, Cap. 50, the directors be and are hereby authorised to allot and issue from time to time such number of shares as may be required to be issued pursuant to the exercise of the Options under the STC Share Option Scheme 2001 (“the Scheme 2001”) provided always that (a) the aggregate number of shares to be issued pursuant to the Scheme 2001 shall not exceed fifteen (15) per cent. of the total issued share capital of the Company from time to time and that, subject to such adjustments as may be made in accordance with the Scheme 2001; (b) the total number of shares in respect of which Options may be granted to any one of the Grantees shall not exceed ten (10) per cent. of the total number of shares available under the Scheme 2001; and (c) the total number of shares in respect of which Options may be granted to any one of the nonExecutive Directors shall not exceed 50,000.” [see Explanatory Note (d)] Resolution 10 Notice is hereby given that the Transfer Books and Register of Members of the Company will be closed on 15 September 2005 to 16 September 2005 for the preparation of dividend warrants.

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

87

Notice of Annual General Meeting (cont’d)

Duly completed transfers received by the Company’s Registrar, Messrs Lim Associates (Pte) Ltd of 10 Collyer Quay #19-08 Ocean Building Singapore 049315, up to the close of business at 5.00 p.m. on 14 September 2005 will be registered to determine shareholders’ entitlement to the proposed dividends. The dividends if approved, will be paid on 30 September 2005 to shareholders registered in the books of the Company on 14 September 2005. In respect of shares in security accounts with the Central Depository (Pte) Limited (“CDP”), the said dividends will be paid by the Company to CDP which will in turn distribute the dividend entitlements to holders of shares in accordance with its practice. By Order Of The Board Chuang Sheue Ling Company Secretary 10 August 2005 Explanatory Notes: (a) Mr. Goh Chee Wee, an independent director, if re-elected, will remain as the member of Remuneration Committee . (b)

The effect of Ordinary Resolution 7 proposed in item 7 above is to re-appoint the Director who is over 70 years of age. Section 153(6) of the Companies Act, Cap. 50, provides that this resolution has to be passed by an Ordinary Resolution at the Annual General Meeting of the Company.

(c)

The proposed ordinary resolution 9 above, if passed, will empower the Directors from the date of the Annual General Meeting until the date of the next Annual General Meeting to issue further shares in the Company. The maximum number of shares, which the Directors may issue under this resolution, shall not exceed the quantum set out in the resolution.

(d)

The proposed ordinary resolution 10 above, if passed, will empower the Directors to issue shares in the Company pursuant to the STC Share Option Scheme 2001 (“the Scheme 2001”), duly approved at the Extraordinary General Meeting of the Company held on 22 June 2001.

Note: 1. A member, entitled to attend and vote at this meeting, is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company. 2. If a proxy is to be appointed, the form must be deposited at the registered office of the Company, at 19 Lok Yang Way Singapore 628635 not less than 48 hours before the meeting. 3. The form of proxy must be signed by the appointor or his attorney duly authorised in writing. 4. In case of joint shareholders, all holders must sign the form of proxy.

88

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

Proxy Form

Important 1. For investors who have used their CPF monies to buy Stamford Tyres shares, this Annual Report is sent to them at the request of their CPF Approved Nominees solely FOR INFORMATION ONLY.

ANNUAL GENERAL MEETING STAMFORD TYRES CORPORATION LIMITED (Incorporated in Singapore)

2. This Proxy Form is FOR USE ONLY BY MEMBERS whose shares in Stamford Tyres are registered in their names. It is not valid for use by CPF investors and persons whose shares are not registered in their own names, and shall be ineffective for all intents and purposes if used or purported to be used by them.

I/We of

(Name) (Address)

being a member/members of STAMFORD TYRES CORPORATION LIMITED hereby appoint:Name

Address

NRIC/Passport Number

Proportion of shareholdings (%)

NRIC/Passport Number

Proportion of shareholdings (%)

and/or (delete as appropriate) Name

Address

or failing whom, the Chairman of the Meeting, as my/our proxy/proxies to vote for me/us on my/our behalf, at the Annual General Meeting of the Company to be held on Friday, 26 August 2005 at 3 p.m. and at any adjournment thereof. I/We have indicated with an “✓“ in the appropriate box below how I/we wish my/our proxy/proxies to vote. If no specific direction as to voting is given, my/our proxy/proxies will vote or abstain from voting at his/their discretion, as he/they will on any other matter arising at the Meeting. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Resolutions Adoption of Directors’ Reports and Accounts. Approval of Directors’ Fees. Declaration of First & Final Dividend. Declaration of Special Dividend. Re-election of Mrs Dawn Wee Wai Ying as Director. Re-election of Mr Goh Chee Wee as Director. Re-appointment of Mr Chua Kim Yeow pursuant to Section 153(6) Re-appointment of Auditors. Authority to issue additional shares pursuant to Section 161 Authority to issue shares pursuant to Share Option Scheme

Dated this

day of

For

Against

2005

Signature(s) of Member(s)/Common Seal

Total No. of Shares Held

IMPORTANT: PLEASE READ NOTES OVERLEAF

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

89

NOTES 1.

A member entitled to attend and vote at the Meeting is entitled to appoint one or two proxies to attend and vote in his stead.

2.

Where a member appoints more than one proxy, the appointments shall be invalid unless he specifies the proportion of his holding (expressed as a percentage of the whole) to be represented by each proxy.

3.

A proxy need not be a member of the Company.

4.

A member should insert the total number of shares held. If the member has shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), he should insert that number of shares. If the member has shares registered in his name in the Register of Members of the Company, he should insert that number of shares. If the member has shares entered against his name in the Depository Register and registered in his name in the Register of Members, he should insert the aggregate number of shares. If no number is inserted, this form of proxy will be deemed to relate to all shares held by the member.

5.

The instrument appointing a proxy or proxies must be deposited at the Company’s registered office at 19 Lok Yang Way Singapore 628635 not less than 48 hours before the time set for the Meeting.

6.

The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its common seal or under the hand of its attorney or a duly authorised officer.

7.

Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

GENERAL The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

90

STAMFORD TYRES CORPORATION LIMITED Annual Report 2005

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STAMFORD TYRES CORPORATION LIMITED Annual Report 2005