Annual Report 2013 Tung Lok 2000 Restaurants

7/28/2019 Annual Report 2013 Tung Lok 2000 Restaurants

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6 Tai Seng Street #02-01, Singapore 534057el: 62707998 Fax: 62727120 www.tunglok.comompany Registraton No. 200005703N

Tung

LokRestaurants(2000)Ltd

AnnualReport2013

Annual Report 2013 I ended 31 m


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This annual report has been reviewed by the Companys sponsor, SAC Capital Private Limited, or compliance with the relevant rules o the SingaporeExchange Securities Trading Limited (Exchange). The Companys Sponsor has not independently veriied the contents o this annual report.

This annual report has not been examined or approved by the Exchange and the Exchange assumes no responsibility or the contents o this annualreport, including the correctness o any o the statements or opinions made or reports contained in this annual report.

The details o the contact person or the Sponsor are: -Name: Mr Ong Hwee Li (Registered Proessional, SAC Capital Private Limited)Address: 1 Robinson Road, #21-02 AIA Tower, Singapore 048542Tel: 6221 5590

Contents

Chairmans Statement 2

Corporate Inormation 4

Historical Financial Summary 5

Board o Directors 6

Management Team 8

Corporate Governance Report 9

Report o the Directors 24

Statement o Directors 27

Independent Auditors Report 28

Statements o Financial Position 29

Consolidated Statement o Comprehensive Income 30

Statements o Changes in Equity 31

Consolidated Statement o Cash Flows 32

Notes to Financial Statements 35Statistics o Shareholdings 84

Notice o 13th Annual General Meeting 86

Appendix to Notice o Annual General Meeting 90

Proxy Form 109


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Chairmans Statement

Dear Shareholders,

The nancial year ended 31 March 2013 (FY13) was a challengingyear or Tung Lok Restaurants (2000) Ltd (Tung Lok or the Group).

The competitive landscape o the ood and beverage (F&B)

industry in Singapore, manpower shortage, rising operating costs

due to infation and cautious consumer spending had combined a

detrimental impact on the business and the nancial results or the

year under review.

FINANCIAL PERFORMANCE

Revenue or FY13 decreased by S$5.1 million to S$81.5 million rom

S$86.6 million or the year ended 31 March 2012 (FY12). This was

mainly due to closure o six outlets in FY12, a year when these same

outlets had contributed S$16.2 million to the Groups revenue. Three

o these six outlets were key revenue contributors and were closed

as the premises had been earmarked or redevelopment. However,

this was partially oset by increase in revenue contributions by

new outlets opened during FY12 and FY13 as well as improved

perormance rom other existing outlets and catering sales.

Tung Lok has managed to maintain a gross prot margin o 71.6%

in FY13. However, gross prot decreased by S$3.6 million to S$58.4

million in FY13 rom S$62.0 million in FY12, in line with the decline

in revenue.

The Group reported a net loss o S$3.6 million in FY13 compared toa net loss o S$2.3 million in FY12. The bottom-line was impacted

by start-up costs incurred by ve new outlets opened during FY12

and FY13 which are still in gestation period. The Group would have

reported a net loss o S$0.9 million i these ve outlets had not been

included.

Administrative expenses, mainly related to manpower, declined by

S$0.8 million or 2% to S$30.1 million in FY13 rom S$30.9 million

in FY12. The number o employees over the comparative periods

has been reduced by 14% due to the closure o several outlets and

ongoing manpower shortages. However, the average manpower cost

per head rose 14% in FY13 compared to FY12 due to increases in

salaries, oreign worker levies and Central Provident Fund rates.

Other operating expenses lowered by S$0.2 million or 0.5% to

S$34.6 million in FY13 rom S$34.8 million in FY12, mainly due

to the S$0.3 million reduction in rental expenses resulting rom the

closure o several outlets, the lower impairment loss o plant and

equipment by S$1.0 million and lower loss on disposal o plant and

equipment o S$0.2 million. These were oset by higher depreciation

expenses o S$0.8 million rom acquisitions o new assets during

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the year, higher credit card commissions o S$0.1 million, and

penalty o S$0.4 million arising rom early lease termination.

Share o associates results has reversed rom a loss o S$0.4

million in FY12 to a prot due to improved perormance o these

associates, while share o joint ventures prot increased 25% to

S$0.2 million.

The Groups total assets increased by S$1.5 million to S$35.4

million in FY13 rom S$33.9 million in FY12 mainly due to

increase in property, plant and equipment amounting to S$2.9

million, higher trade and other receivables o S$0.4 million,

oset by lower cash and bank balances o S$1.8 million.

Total liabilities increased by S$5.0 million to S$30.9 million in

FY13 rom S$25.9 million in FY12 as a result o additional bankborrowings o S$2.2 million, higher trade and other payables

o S$3.4 million, oset by decrease in deerred tax liabilities o

S$0.6 million.

Tung Loks cash and cash equivalents stood at S$9.3 million as

at 31 March 2013, S$1.9 million lower than S$11.2 million as

at 31 March 2012. The reduction o the cash and bank balance

is mainly due to lower sales revenue and higher cash outlays or

acquisition o plant and equipment or new outlets and oce in

FY13.

The Group registered loss per share o 2.26 Singapore cents inFY13 compared to loss per share o 1.28 cents in FY12 while

net asset value per share decreased to 2.99 cents as at 31 March

2013 compared to 5.25 cents as at 31 March 2012.

OPERATIONS

As o 31 March 2013, the Group operated a total o 38 outlets

comprising 25 o the Groups own restaurants, 7 at associate

or joint-venture level and 6 others under management. These

include the three newly opened outlets Modern Asian Diner,

Tung Lok XiHe Peking Duck and Ming - Dine and Chill.

During the year under review, the Group won several GoldAwards in the 7th World Championship o Chinese Cuisine 2012

organised by the highly regarded World Association o Chinese

Cuisine. Tong Le Private Dining was also awarded the Best New

Restaurant (Asian) in the G Restaurant Awards. Tung Lok also

won the Singapore Prestige Brand Award or Regional Brand

2012.

OUTLOOK AND FORWARD STRATEGY

Tung Lok expects the F&B industry to remain challenging bothlocally and overseas, however, we believe that opportunities

will continue to present themselves. We will capitalise on our

strong brand name and solid experience to put it in good stead to

withstand the various challenges.

As we continue to strengthen our existing portolio o restaurants

and expand prudently by increasing our global presence and

ootprint through partnering with reputable international players,

we are also constantly seeking to improve operational eciency

and maintain high standards o service through innovations such

as e-menu ordering and continuous sta training.

We aim to create strong brand loyalty by delivering an unparalleled

customer service and dining experience to our patrons.

The Group intends to strengthen its catering businesses whereby

reliance in labour are lower, in response to rising costs and wages

and manpower shortage issues.

BOARD AND MANAGEMENT APPOINTMENTS

On 31 May 2013, Dr Tan Eng Liang, who is currently an

Independent Director and the Audit and Risk Committee

Chairman o the Company, was appointed as the Lead

Independent Director o the Company.

We would like to extend our gratitude to Mr Ricky Ng who

stepped down as Chie Operating Ocer on 26 June 2013, or

his invaluable support and contributions during his tenure with

the Company. We wish him the best in his uture endeavours as

he pursues other career opportunities.

ACKNOWLEDGEMENTS AND APPRECIATION

On behal o the directors, I would like to thank the management

and sta or their commitment and hard work. I extend my sincere

appreciation to all our valued shareholders, bankers, customers,

partners and colleagues or your continuing support.

Andrew Tjioe

Executive Chairman

27 June 2013

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Corporate Information

BOARD OF DIRECTORS

Mr Tjioe Ka Men

Executive Chairman

Ms Tjioe Ka In

Executive Director

Dr Ker Sin Tze

Independent Director

Dr Tan Eng Liang

Lead Independent Director

Mr Chng Jit Koon

Independent Director

Mr Wee Kheng Jin

Non-Independent and Non-Executive

Director

Mr Goi Seng Hui

Non-Independent and Non-Executive

Director

AUDIT AND RISK COMMITTEEDr Tan Eng Liang (Chairman)

Dr Ker Sin Tze

Mr Chng Jit Koon

Mr Wee Kheng Jin

Mr Goi Seng Hui

NOMINATING COMMITTEE

Dr Ker Sin Tze (Chairman)

Dr Tan Eng Liang

Mr Chng Jit Koon

Mr Goi Seng HuiMr Tjioe Ka Men

REMUNERATION COMMITTEE

Mr Chng Jit Koon (Chairman)

Dr Tan Eng Liang

Dr Ker Sin Tze

Mr Wee Kheng Jin

COMPANY SECRETARY

Chan Wai Teng Priscilla

REGISTERED OFFICE

1 Sophia Road #05-03

Peace Centre

Singapore 228149

Tel: 6337 1712

Fax: 6337 4225

SHARE REGISTRAR AND SHARE TRANSFER OFFICE

M & C Services Private Limited

112 Robinson Road #05-01

Singapore 068902

AUDITORS

Deloitte & Touche LLP

6 Shenton Way Tower Two #32-00

Singapore 068809

Partner in charge: Cheng Ai Phing

Date o appointment: 23 July 2010

PRINCIPAL BANKERS

United Overseas Bank Ltd

Standard Chartered Bank

The Hong Kong and Shanghai Banking Corporation Limited

Development Bank o Singapore Limited



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Historical Financial Summary

OPERATING RESULTS FOR THE GROUP

S$000 FY2009Restated*

FY2010 FY2011 FY2012 FY2013

Turnover 73,428 81,343 94,304 86,640 81,545

Prot/(Loss) beore tax and share o prot/(loss) o joint ventures

& associates228 1,416 4,294 (1,883) (4,515)

Share o prot/(loss) o joint ventures & associates (2,481) (136) 394 (265) 190

Taxation (323) (555) (748) (163) 717

Prot/(Loss) ater taxation but beore non-controlling interests (2,576) 725 3,940 (2,311) (3,608)

Prot/(Loss) attributable to owners o the company (2,685) 650 4,060 (1,795) (3,169)

FINANCIAL POSITION FOR THE GROUP

S$000 31 Mar2009

Restated*

31 Mar2010

31 Mar2011

31 Mar2012

31 Mar2013

Property, plant and equipment 11,194 13,639 12,103 14,872 17,773

Other intangible asset 52 32 12 - -

Goodwill on consolidation 204 - - - -Current assets 13,808 20,246 22,467 15,769 15,003

Other non-current assets 1,976 2,168 3,051 3,227 2,631

Total assets 27,234 36,085 37,633 33,868 35,407

Current liabilities 18,608 23,421 21,837 18,990 24,302

Non-current liabilities 2,634 5,916 5,375 6,918 6,669

Shareholders equity 4,855 5,714 9,862 7,342 4,179

Non-controlling interests 1,137 1,034 559 618 257

Total liabilities and equity 27,234 36,085 37,633 33,868 35,407

NTA per share (cents) 3.29 4.06 7.04 5.24 2.99

NOTE

* The restated nancials in 2009 was due to the implementation o INT FRS 113 - Customer Loyalty Programmes in 2010.



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Board of Directors

ANDREW TJlOE KA MEN was appointed to the Board on 28

September 2000, and is a Member o the Nominating Committee.

In July 2006, he was appointed as Executive Chairman, andcontinues to spearhead the Groups overall direction. He ounded

Tung Lok Sharks Fin Restaurant Pte Ltd in 1984. He has since

established a chain o reputable restaurants in Singapore,

Indonesia, Japan, China and India, and continues to lead the

Group rom strength to strength.

In 2006, Mr Tjioe was named the Hospitality Entrepreneur o the

Year in the Hospitality Asia Platinum Awards Singapore Series

2006-07. In 2008, he was honoured with the International Star

Diamond Lietime Achievement Awardrom the New York-based

American Academy o Hospitality Sciences, which is regarded asthe Oscars o the service sector. At the World Gourmet Summit

Awards o Excellence 2011, Mr Tjioe was named Restaurateur o

the Year (Regional Category). He was the winner oErnst & Youngs

Entrepreneur O The Year Award 2011 (Liestyle category), and

also the recipient o the Epicure Excellence Award 2013.

Mr Tjioe is currently the President o the Restaurant Association o

Singapore (RAS); a member o the Board o Directors o the SHATEC

Institute, which is the educational institute o the Singapore

Hotel Association (SHA); as well as a committee member o the

Franchising and Licensing Association o Singapore.

Mr Tjioe is a graduate in Business Administration rom Oklahoma

State University, USA.

TJIOE KA IN was appointed to the Board on 1 March 2001 and

was last re-elected on 30 July 2012. She joined Tung Lok Group

in 1988 and is currently the Executive Director o the Group. Her

primary responsibilities include strategic planning and ensuring

smooth operations o Tung Lok restaurants.

Ms Tjioe is instrumental in the operations o Tung Loks Central

Kitchen, which concentrates on the production o gourmet dimsum and snacks or both local and export markets, premium

mooncakes and estive goodies such as nian gao and Chinese

pastries. Her responsibilities include product development and

planning. Ms Tjioe is also a certied trainer in several industry

related courses and contributes actively towards industry training.

Ms Tjioe holds a Bachelor o Science Degree in Hotel and

Restaurant Management rom Oklahoma State University, USA.

She is presently a member o the Ulu Pandan Community Club

Management Committee.

DR TAN ENG LIANG was appointed as an Independent Director

o our Company on 1 March 2001 and was last re-appointed

on 30 July 2012. He is the Chairman o the Audit and Risk

Committee and also a Member o the Nominating Committee

and Remuneration Committee. Dr Tan was appointed the Lead

Independent Director on 31 May 2013. Dr Tan was a Member

o Parliament rom 1972 to 1980, the Senior Minister o State or

National Development rom 1975 to 1978 and Senior Minister

o State or Finance rom 1978 to 1979. He also served as the

Chairman o the Urban Redevelopment Authority, Singapore

Quality & Reliability Association and the Singapore Sports

Council. Dr Tan has a Doctorate rom Oxord University, England.

Dr Tan was awarded the Public Service Star (BBM), Public Service

Star (BAR) and the Meritorious Service Medal by the Singapore

Government. Dr Tan is also a director o the ollowing public listed

companies: Sunmoon Food Company Ltd, Progen Holdings Ltd,

Sapphire Corporation Limited, United Engineers Ltd, Hartawan

Holdings Limited, HG Metal Manuacturing Limited and UE E&C

Limited.

DR KER SIN TZE was appointed as an Independent Director

on 1 March 2001 and was last re-elected on 29 July 2011. He

will seek re-election at the orthcoming Annual General Meeting.He is the Chairman o the Nominating Committee, and also a

Member o the Audit and Risk Committee and Remuneration

Committee. He holds a Bachelor o Commerce degree rom

Nanyang University, M.A. (Economics) and Ph.D (Economics)

degree rom the University o Manitoba, Canada. He lectured at

the then University o Singapore rom 1974 to 1980. He joined

Liang Court Pte Ltd as Managing Director in 1980 until September

1991. In September 1990, he was appointed as the Executive

Chairman o Superior Multi-Packaging Limited (ormerly known

as Superior Metal Printing Limited), a public listed company. In

August 1991, Dr Ker was elected to Parliament. He resigned rom

Liang Court Pte Ltd and Superior Multi-Packaging Limited at the

end o 1991 to take up his appointment as Minister o State or

Inormation and the Arts and Minister o State or Education in

January 1992. He resigned rom his government posts and returned

to the private sector in September 1994. He served as Member

o Parliament (1991-2001), Trade Representative o Singapore in

Taipei (2002-2007) and Consul-General o Singapore Consulate

in Hong Kong (2008-2012).



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CHNG JIT KOON was appointed as an Independent Director

o our Company on 20 December 2002 and was last re-appointed

on 30 July 2012. He is the Chairman o the Remuneration

Committee and is also a Member o the Audit and Risk Committee

and the Nominating Committee. Mr Chng also serves in several

other public listed companies in Singapore such as PanUnited

Corporation Ltd, Ho Bee Investment Limited, Progen Holdings

Ltd and Santak Holdings Limited. Mr Chng was a Member

o Singapore Parliament rom 1968 to 1996. He was holding

the post o Senior Minister o State when he retired in January

1997. Mr Chng currently serves in several voluntary community

organizations.

WEE KHENG JINwas appointed as a Non-Executive Directoro our Company on 1 September 2010 and was last re-elected on

30 July 2012. He is a Member o the Audit and Risk Committee

and Remuneration Committee. Mr Wee is currently an Executive

Director o Far East Organization. He holds a Bachelor o

Accountancy rom the University o Singapore. Prior to joining

Far East Organization in February 2000, he worked in various

positions in Citigroup or 16 years including several years as

its Country Financial Controller and board member o Citicorp

Investment Bank Singapore Limited. He is currently on the board

o Yeo Hiap Seng Limited and Parkson Retail Asia Limited. He also

holds directorship in several other private companies involved inreal estate related activities and hospitality services.

GOI SENG HUI was appointed as a Non-Executive Director

o our Company on 23 June 2011 and was last re-elected

on 29 July 2011. He will seek re-election at the orthcoming

Annual General Meeting. He is a Member o the Audit and Risk

Committee and Nominating Committee. Mr Goi is currently

the Executive Chairman o Tee Yih Jia Group (a global ood and

beverage group with operations in Singapore, Malaysia, USA,

Europe and China), and Yangzhou Junhe Real Estate Group (a

growing property development company in China). Apart rom

these core businesses, Mr Goi has investments across a range o

listed and private entities in numerous industries, such as ood

and beverage, consumer essentials, recycling, mobile and web

solutions, distribution and logistics. Mr Goi also serves on the

board o other Mainboard-listed companies as Non-Executive

Chairman o GSH Corporation Limited, Vice-Chairman o Super

Group Limited, Vice-Chairman o Etika International Holdings

Ltd, and Vice-Chairman o JB Foods Limited.

Mr Goi is also the Enterprise 50 Clubs Honorary Past President

and Vice Chairman o IE Singapores Network China Steering

Committee, Regional Representative or Fuzhou City and FujianProvince, council member o the Singapore-Zhejiang Economic

& Trade Council, as well as Senior Consultant to Su-Tong Science

& Technology Park. He is currently the Honorary Chairman or the

International Federation o Fuqing Association, and a member o

the Singapore University o Technology and Design (SUTD) Board

o Trustees, and Chairman o Dunman High School Advisory

Committee and Ulu Pandan Citizens Consultative Committee.



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Management Team

TIONG HENG TEEChie Financial Ofcer

Heng Tee, a Certied Public Accountant with The Institute oCertied Public Accountants o Singapore (ICPAS), joined the

Group in 2012. Armed with more than 16 years o post-graduation

experience in both private and public-listed companies in

Singapore, he is responsible or providing strategic direction or

the nance team and oversees all key nancial matters o the

Group. Heng Tee holds a Bachelor o Accountancy rom Nanyang

Technological University o Singapore.

JOCELYN TJIOESenior Vice President, Administration

A diploma graduate in Business Studies rom Ngee Ann

Polytechnic, Jocelyn is armed with many years o experience inpurchasing and administration. In her current capacity as Senior

Vice President, Jocelyn ensures the constant and prompt supply

o quality products and materials crucial to the operations o the

restaurants. She also oversees the Administrative unction o the

Group.

VINCENT PHANGSenior Vice President, Event and Catering

Vincent joined the Group in 1998. With a career spanning o 26

years, he had worked in various hotels rom Boulevard Hotel to

Le Meridien Singapore, as well as Fort Canning Country Club. In

his current capacity, Vincent is responsible or the overall event

and catering operations o the Group. A graduate rom SHATEC,

he also holds various certicates rom the American Hotels &

Motels Association, Premier Sales & Marketing or hospitality

proessionals rom Asia Connect & HSMAI Asia Pacic and

More Sales Thru Service Excellence rom the Marketing Institute

o Singapore. At the Singapore Excellent Service Award 2004

organised by Spring Singapore and Singapore Tourism Board,

Vincent was presented with the Star Award or his outstanding

contribution and commitment to providing top quality service.

CAROLYN TANSenior Vice President, Marketing & Corporate Communications

Carolyn joined the Group in 2002 as Marketing CommunicationsManager. Armed with years o experience in the marketing

communications eld, mainly rom the hotel industry, her past

employments include top hotel chains such as Westin, Hyatt,

Holiday Inn, Rafes and Millennium & Copthorne International.

In 2003, she was promoted to Director o Marketing, and in

2007, was appointed Vice President - Marketing & Corporate

Communications. In her current capacity as Senior Vice

President, she is in charge o the Marketing, Communications,

Loyalty Programme, and Graphics Design teams, spearheading

the marketing, promotional, public relations, and membership

activities o the Group. She is also responsible or strategising

plans to maintain the corporate and brand identity o the Group,as well as handling Special Projects. Carolyn holds a Bachelor o

Arts in Mass Communications rom the Royal Melbourne Institute

o Technology.

CHUA POH YORKSenior Vice President, Operations

Poh York joined the Group in 1985 as Assistant Manager o Tung

Lok Restaurant. Subsequently, she became General Manager

o Paramount Restaurant in 1993. In her current capacity as

Senior Vice President, Operations, she manages and oversees

the daily operations o Tung Lok Seaood and Shin Yeh, as well

as spearheads the implementation o the 5-S system to improve

workplace organization in the Groups restaurants, and mentoring

younger managers.

SHERINE TOH

Senior Vice President, Human Resource & Training

Sherine joined the Group in 2012 taking care o Human Resource

and Training. She brought along with her more than 20 years

o experience in the proessional eld o Human Resource

and People Development. Prior to joining the Group, her past

employers include City Developments Limited, Jurong Port, and

The Singapore Technologies Group. A veteran in human resource,

strategic planning and organisation development; she has rich

experience and strength in the human capital practices. Sherineholds a Bachelor o Commence degree by National University o

Ireland and a Master o Science in Human Resource Management

conerred by The Rutgers, State University o New Jersey.

WOODY ACHUTHAN

Senior Vice President, Customer Relationship

Woody re-joined the Group in April 2013 handling customer

relationship management and service excellence. Prior to

joining the Group, he was with United Airlines as its Onboard

Services-Chie Purser and Instructor based in Singapore. During

his teen years service with United Airlines, he taught trainees

on service excellence, ood and beverage presentation skills,onboard marketing, and product oering, amongst other training

programmes. His personal achievements include the Five Star

Diamond Award, Most Valuable Player Corporate Award, as

well as Employee o the Year 1998.



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Corporate Governance ReportTUNG LOK RESTAURANTS (2000) LTD (the Company) is committed to ensure and maintain a high standard o corporate

governance with a view o enhancing corporate transparency and saeguarding interests o the shareholders, and seeks to comply

with the Code o Corporate Governance 2005 (the Code) wherever easible. The Company is reviewing the recent revisions to the

Code as issued by the Monetary Authority o Singapore on 2 May 2012 and will take steps to comply with the revised Code, where

applicable. This report describes the corporate governance ramework and practices o the Company or the inancial year ended31 March 2013 (FY 2013) with speciic reerence made to the principles and guidelines o the Code.

Principle 1: The Boards Conduct of Affairs

Every company should be headed by an eective Board to lead and control the company. The Board is collectively responsible or the

success o the company. The Board works with Management to achieve this and the Management remains accountable to the Board.

Guidelines of the Code Tung Loks Corporate Governance practices

1.1 The Boards role The Board is accountable to the shareholders and oversees the overall management o the businessand aairs o the Group, including providing leadership and supervision to the management o theGroup so as to protect and enhance long-term value and returns or its shareholders.

Besides carrying out its statutory responsibilities, the Boards principal responsibilities include:

(1) guide the ormulation o strategic directions, inancial plans and major corporate policies;(2) monitor and review Groups inancial and operating perormance;(3) oversee the process o evaluating adequacy o internal controls (comprising internal inancial

controls, operational and compliance controls) and risk management policies and systems;(4) approve major investment and divestment proposals, material acquisitions and disposals o

assets (exceeding S$200,000/-), corporate or inancial restructuring and share issuances;(5) assume responsibilities or good corporate governance practices; and(6) approve the release o the inancial results and annual report o the Group to shareholders.

1.2 Board to objectively take

decisions in the interests o the

Company

The Board is obliged to act in good aith and objectively take decisions in the interest o theCompany.

1.3 Delegation o authority

on certain Board mattersTo acilitate eective management, certain unctions have been delegated to various BoardCommittees, namely the Nominating Committee (NC), Remuneration Committee (RC) andAudit and Risk Committee (ARC), each o which has its own deined scope o duties and writtenterms o reerence setting out the manner in which it is to operate. The Chairman o the respectiveCommittees will report to the Board the outcome o the committee meetings. Minutes o theBoard Committee meetings are made available to all Board members. The terms o reerence andcomposition o each Board Committee can be ound in this report. The eectiveness o each BoardCommittee is also constantly reviewed by the Board.

1.4 Board to meet regularly The Board conducts regular scheduled meetings. Additional or ad-hoc meetings are convened incircumstances deemed appropriate by the Board members. Board papers incorporating suicientinormation rom management are orwarded to the Board Members in advance o a Board Meetingto enable each member to be adequately prepared.

The Companys Articles o Association (the Article) allow a board meeting to be conducted by wayo tele-conerence or by means o a similar communication equipment through which all personsparticipating in the meeting can communicate with each others simultaneously and instantaneously.

At the Board meeting, the directors are ree to discuss and openly challenge the views presented byManagement and the other directors.

In lieu o physical meetings, written resolutions are circulated or approval by members o the Board.

The requency o meetings and attendance o each director at every board and board committeemeeting or the inancial year ended 31 March 2013, are disclosed below:-



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Corporate Governance ReportATTENDANCE AT BOARD & BOARD COMMITTEE MEETINGS

Board Audit Nominating Remuneration

Directors

No. of

Meetings Attendance

No. of

Meetings Attendance

No. of

Meetings Attendance

No. of

Meetings+ AttendanceTjioe Ka Men 4 4 NA NA 1 1 NA NA

Tjioe Ka In 4 4 NA NA NA NA NA NA

Tan Eng Liang # 4 4 4 4 1 1 1 1

Ker Sin Tze 4 4 4 4 1 1 1 1

Chng Jit Koon * 4 4 4 4 1 1 1 1

Goi Seng Hui 4 3 4 3 1 1 NA NA

Wee Kheng Jin 4 4 4 4 NA NA 1 1

NA not applicable.

# Dr Tan Eng Liang was appointed as Lead Independent Director on 31 May 2013.

* Mr Chng Jit Koon (Mr Chng), an Independent Non-Executive Director, who retires at the conclusion o the AGM to be held on 30 July2013 pursuant to Section 153(6) o the Companies Act, Cap. 50, and although eligible, has indicated that he is not oering himsel or re-appointment. Accordingly, Mr Chng shall ipso acto cease as the Chairman o the Remuneration Committee and a member o the Audit &Risk Committee and Nominating Committee. The Board is currently actively sourcing or an Independent Non-Executive Director to ill thevacancies in the Board and the respective committees which will arise ollowing Mr Chngs retirement.

1.5 Matters requiring Board

approvalMatters which are speciically reserved or decision by the ull Board include those involving

material acquisitions and disposals o assets, corporate or inancial restructuring and share issuance,

interim dividends and other returns to shareholders, and substantial transactions which have a

material eect on the Group. Speciic Board approval is required or any investments or expenditure

exceeding S$200,000/-.

1.6 and 1.7 Directors to

receive appropriate training;

Formal letter to be provided

to directors, setting out

duties and obligations upon

appointment

New directors, upon appointment, are brieed on the Groups structure, businesses, governance

policies and regulatory issues. The Executive Chairman ensures that Board members are provided

with complete, adequate and timely inormation on a regular basis to enable them to be ullycognizant o the aairs o the Group.

From time to time, the Companys internal and external auditors, legal advisors, inancial advisors

and the Company Secretary will advise the directors or i necessary, conduct brieings to the

directors on relevant regulations, new accounting standards and corporate governance practices

as well as updates on any changes in the Companies Act and the Singapore Exchange Securities

Trading Limited (SGX-ST) Listing Manual. Directors also have the opportunities to visit the Groups

operation acilities in order to have a better understanding o its business operations.

1.8 First-time directors to

receive training in areas such

as accounting, legal and

industry speciic knowledge

The Company has available budget or directors to receive urther relevant training in connection

with their duties. Relevant courses include programmes conducted by the Singapore Institute o

Directors or other training institutions. Directors and senior executives are encouraged to undergo

relevant training to enhance their skills and knowledge, particularly on new laws and regulations

aecting the Groups operations.

Principle 2: Board Composition and Balance

There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate aairs

independently, in particular, rom Management. No individual or small group o individuals should be allowed to dominate the

Boards decision making.



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Corporate Governance Report2.1 Independent directors

to make up one-third o the

Board

The Board comprises seven (7) directors, o whom two (2) are executive directors, three (3) areindependent and non-executive directors and two (2) are non-independent and non-executivedirectors. As at the date o this report, the Board comprises the ollowing members:

- Mr Tjioe Ka Men (Executive Chairman)- Ms Tjioe Ka In (Executive Director)- Dr Tan Eng Liang (Independent and Non-Executive Director)- Dr Ker Sin Tze (Independent and Non-Executive Director)- Mr Chng Jit Koon (Independent and Non-Executive Director)- Mr Wee Kheng Jin (Non-independent and Non-Executive Director)- Mr Goi Seng Hui (Non-independent and Non-Executive Director)

Currently, the Board has a strong and independent element as three out o seven board members(or 43%) are independent. This enables the Board to exercise independent judgement on corporateaairs and provide Management with a diverse and objective perspective on issues.

2.2 Board to explain when

it deems a non-independent

director as independent

The independence o each director is reviewed annually by the NC. The NC adopts the Codesdeinition o what constitutes an independent director in its review and is o the view that theindependent directors are independent o the Companys management and urther no individual orsmall group o individuals dominate the Boards decision making process.

2.3 Appropriate size o Board The size and composition o the Board are reviewed rom time to time by the NC to ensure that thesize o the Board is conducive to eective discussion and decision-making and that the Board has anappropriate balance o independent directors. The Board is o the view that the current board sizeand composition is appropriate, taking into account the nature and scope o the Groups operationsand the Board as a whole.

2.4 Board to comprise

directors with core

competencies

The Board comprises respected individuals rom dierent backgrounds and who as a group providescore competencies, such as business management experience, industry knowledge, inancial andstrategic planning experience and customer-based knowledge that are extensive and critical tomeet the Groups objectives. Together, the directors bring a wide and diverse range o experiencesthat will provide eective governance and stewardship or the Group. Please reer to the Board oDirectors section o the Annual Report or the directors proile.

2.5 Role o non-executive

directors

The Board comprises ive non-executive directors who review managements perormance and monitor

the reporting o perormance. They constructively challenge and help develop proposals on strategy.2.6 Meetings o non-

executive directorsWhere warranted, non-executive directors meet without the presence o management or executivedirectors to review any matter that may be raised privately.

Principle 3: Chairman and Chief Executive Officer (CEO)

There should be a clear division o responsibilities at the top o the company the working o the Board and the executiveresponsibility o the companys business which will ensure a balance o power and authority, such that no one individual

represents a considerable concentration o power.

3.1 Chairman and CEO

should be separate persons;

division o responsibilities

should be clearly established

Mr Tjioe Ka Men is the Executive Chairman o the Company. He manages the overall business othe Group and is responsible or setting the strategic direction and vision o the Group. Mr Tjioebears the responsibility or the workings o the Board and, together with ARC, ensures the integrityand eectiveness o the governance process o the Board. All major inancial decisions made by himare also reviewed by the ARC. Mr Tjioes perormance and appointment to the Board are reviewedperiodically by the NC and his remuneration package is governed by the recommendation o theRC. As there is a suiciently strong independent element on the Board to enable independentexercise o objective judgment on corporate aairs o the Group by members o the Board, theBoard believes that there are adequate saeguards in place against an uneven concentration opower and authority in a single individual.

The Board is o the view that, given the scope and nature o the operations o the Group andthe strong element o independence o the Board, it is not necessary to separate the unctions oExecutive Chairman and Chie Executive Oicer.



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Corporate Governance Report3.2 Chairmans role Mr Tjioe Ka Mens duties as Executive Chairman includes:

(1) Leading the Board to ensure its eectiveness on all aspects o its role and set its agenda;(2) Ensuring that the directors receive accurate, timely and clear inormation;

(3) Ensuring eective communication with the shareholders;(4) Encouraging constructive relations between the Board and Management;(5) Facilitating the eective contribution o non-executive directors;(6) Encouraging constructive relations between executive directors and non-executive directors;

and(7) Promoting high standards o corporate governance and ensuring that procedures are

introduced to comply with the Code.

3.3 Appointment o leadindependent director (LID)where the Chairman andCEO is the same person,Chairman and CEO arerelated by close amily tiesor where the Chairman andCEO are both part o the

executive management team

Dr Tan Eng Liang, who is currently an Independent Non-Executive Director, the Chairman o theAudit and Risk Committee and a member o the Nominating and Remuneration Committees o theCompany, was appointed as the Lead Independent Director on 31 May 2013.

Principle 4: Board Membership

There should be a ormal and transparent process or the appointment o new directors to the Board.

4.1 NC to compriseat least three directors,majority o whom areindependent; NC Chairmannot associated with asubstantial shareholder; NCshould have written termso reerence that describe

the responsibilities o itsmembers

The Companys NC comprises o ive directors (including the Chairman o the NC) o whom threeare independent and non-executive directors, one is an executive director and one is a non-independent and non-executive director as ollows:

- Dr Ker Sin Tze (Chairman)- Dr Tan Eng Liang- Mr Chng Jit Koon

- Mr Tjioe Ka Men- Mr Goi Seng Hui

The Chairman o the NC is not associated with any o the substantial shareholders o the Company.

The responsibilities o the NC are described in its written terms o reerence. The NCs principalresponsibilities include the ollowing:-

(1) make recommendations to the Board on all Board appointments;(2) propose to re-nominate existing directors, having regard to the directors contribution and

perormance (e.g. attendance, preparedness, participation and candour) including, iapplicable, as an independent director;

(3) assess annually whether or not a director is independent;(4) assess whether or not a director, who has multiple board representations, is able to and has

been adequately carrying out his duties as a director;(5) propose objective perormance criteria to evaluate the Boards perormance, subject to the

approval o the Board; and(6) assess the eectiveness o the Board as a whole and the contribution by each individual

director to the eectiveness o the Board, and to decide how the Boards perormance may beevaluated.

4.2 NC responsible or re-nomination o directors; alldirectors should be requiredto submit themselves or re-nomination and re-electionat regular intervals and atleast every three years

The NC recommends re-appointments o directors to the Board.

In accordance with Article 91 and 97 o the Companys Articles o Association, all directors (excepta Managing Director) shall retire rom oice once at least in each three years by rotation and allnewly appointed directors will have to retire at the next Annual General Meeting (AGM) ollowingtheir appointments. The retiring directors are eligible to oer themselves or re-election.



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Corporate Governance ReportThe NC has nominated the directors retiring by rotation, Dr Ker Sin Tze and Mr Goi Seng Hui, orre-election pursuant to Article 91 and the re-appointment o Dr Tan Eng Liang pursuant to Section153(6) o the Companies Act, Cap. 50 at the orthcoming AGM. These nominations have beenapproved by the Board.

Mr Chng Jit Koon (Mr Chng), an Independent Non-Executive Director, who retires at theconclusion o the AGM to be held on 30 July 2013 pursuant to Section 153(6) o the CompaniesAct, Cap. 50, and although eligible, has indicated that he is not oering himsel or re-appointment.Accordingly, Mr Chng shall ipso acto cease as the Chairman o RC and a member o ARC andNC. The Board is currently actively sourcing or an Independent Non-Executive Director to illthe vacancies in the Board and the respective committees which will arise ollowing Mr Chngsretirement.

In considering the nomination, the NC took into account the contribution o the directors withreerence to their attendance and participation at Board and other Board committee meetings as wellas the proiciency with which they have discharged their responsibilities.

4.3 NC to determinedirectors independenceannually

The NC has reviewed the independence o each director in accordance with the Codes deinition oindependence and is satisied that 43% o the Board comprised independent directors.

4.4 NC to decide i adirector who has multipleboard representationsis able to and has beenadequately carrying out his/her duties as a director o thecompany. Internal guidelinesshould be adopted thataddress the competing timecommitments that are acedwhen directors serve onmultiple board

Notwithstanding that some o the directors have multiple board representations, the NC is satisiedthat each director is able to and has been adequately carrying out his duties as director o theCompany. The Board is o the view that such multiple board representations did not hinder themrom carrying out their duties as directors. These directors would widen the spectrum o experienceo the Board and give it a broader perspective.

4.5 Description oprocess or selection

and appointment o newdirectors, including thesearch and nominationprocess, should be disclosed

The search and nomination process or new directors, i any, will be through search companies,contacts and recommendations to cast its net as wide as possible or the right candidate. The NC

determines the selection criteria in consultation with the Board and identiies candidates with theappropriate expertise and experience or the appointment as new director. The NC will shortlistcandidates or interview beore nominating the most suitable candidate to the Board or approval.

4.6 Key inormationregarding directors shouldbe disclosed in the annualreport o the Company

Other key inormation o the directors who held oice during the year up to the date o this reportare disclosed in the Board o Directors section o the Annual Report.

Principle 5: Board Performance

There should be a ormal assessment o the eectiveness o the Board as a whole and the contribution by each director to theeectiveness o the Board.

5.1 Board to implementprocess to assess boardperormance as a whole andor assessing the contributionby each individual directorto the eectiveness o theBoard. Assessment processshould be disclose in theannual report

The NC has established review process to assess the perormance and eectiveness o the Board as

a whole as well as to access the contribution o each individual directors to the eectiveness o the

Board.

The NC will critically evaluate the Boards perormance on collective and individual basis by means

o questionnaires that deal with matters such as development o strategy, inormation to the board,

board procedures, board accountability and the standards o conduct etc. The objective o the

perormance evaluation exercise is to uncover strengths and challenges so that the Board is in a

better position to provide the required expertise and oversight.



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Corporate Governance Report5.2 and 5.3 NC should decidehow the Boards perormancemay be evaluated and proposeobjective perormance

criteria; Perormance criteriashould address how theBoard has enhanced longterm shareholders value andshould consider companysshare price perormance andbenchmark index o industrypeers

The NC has conducted a ormal assessment o the eectiveness o the Board on collectiveand individual basis or the inancial year ended 31 March 2013. The NC is satisied with theeectiveness o the Board as a whole and also the contribution by each director to the eectivenesso the Board. The Board, as a group, also possesses the necessary core competencies to direct the

Company and Management to perorm eiciently and eectively.

5.4 Individual evaluation toassess directors eectivenessin contributions andcommitment to the role;Chairman should act on theresults o the perormanceevaluation, and where

appropriate, propose newmembers to be appointedto the Board or seek theresignation o directors, inconsultation with the NC

NC, in considering the re-election or re-appointment o any director, will evaluate the perormanceo the director. The assessment o each directors perormance is undertaken by the NC Chairman.The criteria or assessment include but not limited to attendance record at meetings o the Boardand board committees, intensity o participation at meetings, quality o discussions, maintenance oindependence and any special contributions.

5.5 Other perormancecriteria may be used

The inancial indicators including return on total assets (ROTA), return on equity (ROE), returnon investment (ROI) and economic value added (EVA) as set out in the Code as a guide orthe evaluation o the Board and its directors, may not be appropriate as these are more o ameasurement o Managements perormance and thereore less applicable to directors.

Principle 6: Access To Information

In order to ulill their responsibilities, Board members should be provided with complete, adequate and timely inormation prior to

Board meetings and on an on-going basis.

6.1 Board members to beprovided with completeand adequate inormationin timely manner; Boardto have separate andindependent access to thesenior management

Board members are provided with adequate and timely inormation prior to Board meetings and

committee meetings, and on an on-going basis. Requests or inormation rom the Board are dealt

with promptly by Management. Board interaction with, and independent access to, the Management is

encouraged. Whenever necessary, senior management sta will be invited to attend the Board meetings

and committee meetings to answer queries and provide detailed insights into their areas o operations.

The Board is inormed o all material events and transactions as and when they occur.

6.2 To include backgroundand explanatory inormation

The Board is provided with quarterly management reports, and papers containing relevantbackground or explanatory inormation required to support the decision making process on an on-going basis.

Proposals to the Board or decision or mandate sought by management are in the orm o memo or

board papers that give the acts, analysis, resources needed, expected outcome, conclusions andrecommendations.

However, sensitive matters may be tabled at the meeting itsel or discussed without papers beingdistributed.

6.3 Directors to have accessto Company Secretary; Roleo Company Secretary

The Directors have separate and independent access to senior management and the CompanySecretary. The Company Secretary attends all Board and ARC meetings o the Company. TheCompany Secretary also assists the Chairman and the Board to ensure that Board procedures areollowed and that applicable rules and regulations (in particular the Companies Act, Cap. 50 andSGX-ST Listing Manual Section B: Rules o Catalist (Rules of Catalist) are complied with.



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Corporate Governance Report6.4 Appointment andremoval o the CompanySecretary should be a matteror the Board as a whole

The appointment and removal o the Company Secretary are subject to the Boards approval.

6.5 Procedure or directors,in the urtherance o theirduties, to take independentproessional advice, inecessary, at the companysexpense

The directors, whether as a group or individually, may seek or obtain legal and other independentproessional advice, concerning any aspect o the Groups operations or undertakings in order toulill their roles and responsibilities as directors. The cost o obtaining such proessional advice willbe borne by the Company.

Principle 7: Procedures for Developing Remuneration Policies

There should be a ormal and transparent procedure or developing policy on executive remuneration and or ixing theremuneration packages o individual directors. No director should be involved in deciding his own remuneration.

7.1 RC to consist entirelyo non-executive directors.

Majority including RCChairman should beindependent

7.2 RC to recommenda ramework oremuneration or eachdirector and the CEO;Recommendationsshould be submitted orendorsement by the entireBoard; RC to reviewremuneration o seniormanagement

The RC comprises our members, o whom three (3) are independent and non-executive directors andone (1) is a non-independent and non-executive director. The members o the RC are:-

- Mr Chng Jit Koon (Chairman)- Dr Tan Eng Liang- Dr Ker Sin Tze- Mr Wee Kheng Jin

The RC is regulated by its terms o reerence. The duties o the RC include the ollowing:-

(a) to review and recommend to the Board in consultation with management and the Chairman othe Board:-(i) a ramework o remuneration and to determine the speciic remuneration packages and

terms o employment or each o the executive directors/key executives;(ii) a ramework o remuneration and speciic remuneration packages or non-executive

directors; and(iii) remuneration o employees related to the executive directors and controlling

shareholders o the Group.(b) to recommend to the Board, in consultation with management and the Chairman o the Board,the Executives/Employees Share Option Schemes or any long term incentive schemes whichmay be set up rom time to time and to do all acts necessary in connection therewith.

(c) to carry out its duties in the manner that it deemed expedient, subject always to any regulationsor restrictions that may be imposed upon the RC by the Board o Directors rom time to time.

7.2 RC should cover allaspects o remuneration,including but not limitedto directors ees, salaries,allowances, bonuses,options, and beneits inkind

The Company sets remuneration packages to ensure it is competitive and suicient to attract, retainand motivate Directors and key executives o the required experience and expertise to run the Groupsuccessully.

As part o its review, the RC shall ensure that:

(a) all aspects o remuneration, including directors ees, salaries, allowances, bonuses, options andbeneits-in-kinds should be covered or each director and key executives;

(b) the remuneration packages should be comparable within the industry and comparablecompanies and shall include a perormance-related element coupled with appropriateand meaningul measures o assessing individual executive directors and key executivesperormances; and

(c) the remuneration package o employees related to executive directors and controllingshareholders o the Group are in line with the Groups sta remuneration guidelines andcommensurate with their respective job scopes and levels o responsibilities.

No director is involved in deciding his own remuneration.

7.3 RC should seek expertadvice, i necessary

Where necessary, the RC shall seek expert advice inside and/or outside the company on remunerationo all directors.



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Corporate Governance ReportPrinciple 8: Level and Mix of Remuneration

The level o remuneration should be appropriate to attract, retain and motivate the directors needed to run the companysuccessully but companies should avoid paying more than is necessary or this purpose. A signiicant proportion o executivedirectors remuneration should be structured so as to link rewards to corporate and individual perormance.

8.1 Package should alignexecutive directors interestswith shareholders interest;Appropriate and meaningulmeasures to assess executivedirectors perormance

In determining the level o remuneration, the RC shall:

givedueconsiderationtotheCodesprinciplesandguidancenotesonthelevelandmixofremuneration so as to ensure that the level o remuneration is appropriate to attract, retainand motivate directors needed to run the Company successully;

ensurethataproportionoftheremunerationislinkedtocorporateandindividualsperformance;and

ensurethattheremunerationpackagesisdesignedtoaligninterestofexecutivedirectorswiththose o shareholders.

Annual review are carried out by the RC to ensure that the remuneration o the executive directorscommensurate with the Companys and their perormance, giving due regard to the inancial andcommercial health and business needs o the Group. The perormance o the Executive Chairmanis reviewed periodically by the RC and the Board. The Board will respond to any queries raisedat AGMs pertaining to such policies. Accordingly, it is the opinion o the Board that there is nonecessity or such policies to be approved by the shareholders.

8.2 Remuneration or non-executive directors shouldbe appropriate to level ocontribution, eort, timespent and responsibilities

The non-executive directors do not have any service contracts. They are paid a basic ee andadditional ees or serving on any o the Board Committees. The RC and Company ensures thatthe non-executive directors are not over-compensated to the extent that their independence iscompromised. These ees are subject to approval by shareholders as a lump sum payment at theAnnual General Meeting o the Company.

8.3 and 8.6 Fixedappointment period orexecutive director stated inservice contract which shouldnot be excessively long orwith onerous removal clauses;

RC to review compensationor early termination; Noticeperiod in service contractsshould be set at a period o sixmonths or less

The Company had entered into a service agreement (Service Agreement) with the ExecutiveChairman, Mr Tjioe Ka Men.

The Service Agreement may be terminated by not less than 6 months notice in writing served byeither party and does not contain onerous removal clauses.

8.4 Long term incentiveschemes are generallyencouraged

The Company does not have any employee share option scheme or other long-term incentiveschemes or directors at the moment.

8.5 Company shouldbe aware o pay andemployment conditionswithin the industry and incomparable companieswhen setting remuneration

packages

The Company shall review the pay and employment conditions within the industry and those o thepeer companies to ensure that directors and key executives are adequately remunerated.

Principle 9: Disclosure on Remuneration

Each company should provide clear disclosure o its remuneration policy, level and mix o remuneration, and the procedure orsetting remuneration in the companys annual report. It should provide disclosure in relation to its remuneration policies to enableinvestors to understand the link between remuneration paid to directors and key executives, and perormance.



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Corporate Governance Report9.1 & 9.2 Remuneration odirectors and at least thetop 5 key executives (whoare not directors) shouldbe reported to shareholdersannually

Directors Remuneration

There are both ixed and variable components to executive directors remuneration. The variablecomponents are tied to Group perormance.

A breakdown showing the level and percentage mix o each individual directors remuneration paid/payable or FY 2013 are as ollows:

Remuneration

Band Salary & Fees

%

Performance

Related

Income/

Bonuses

%

Other Benefits

%

Total

Remuneration

%

Executive Directors

Tjioe Ka Men A 96 4 - 100

Tjioe Ka In B 96 4 - 100

Non-Executive DirectorsTan Eng Liang B 100 - - 100

Ker Sin Tze B 100 - - 100

Chng Jit Koon B 100 - - 100

Wee Kheng Jin B 100 - - 100

Goi Seng Hui B 100 - - 100

Remuneration Band A = >S$250,000 but


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Corporate Governance ReportPrinciple 10: Accountability

The Board should present a balanced and understandable assessment o the companys perormance, position and prospects.

10.1 Boards responsibilityto provide balanced and

understandable assessment

o companys perormance,

position and prospects

The Board is accountable to the shareholders and is mindul o its obligations to urnish timelyinormation and to ensure ull disclosure o material inormation to shareholders in compliance withstatutory requirements and the Rules o Catalist.

The Board provides shareholders with hal-year and annual inancial reports. Hal-year resultsare released to shareholders within 45 days o the end o the period. Annual results are releasedwithin 60 days o the inancial year-end. In our inancial result announcements to shareholders,the Board aims to provide shareholders with a balanced and understandable assessment o theGroups perormance, position and prospects. Price sensitive inormation will be publicly releasedeither beore the Company meets with any group o investors or analysts or simultaneously withsuch meetings.

10.2 Management should

provide Board with

management accounts on a

monthly basis

Management provides the executive directors with monthly inancial reports. Weekly meetings areconducted involving the senior management and the business units heads. Additional or ad-hocmeetings are conducted, when required.

Management makes presentation to the Board on a quarterly basis on the inancial perormance othe Group.

Principle 11: Audit & Risk Committee

The Board should establish an Audit & Risk Committee (ARC) with written terms o reerence which clearly set out its authorityand duties.

11.1 ARC should comprise at

least three directors, all non-

executive, and the majority

o whom including the

Chairman, are independent

The ARC comprises ive (5) non-executive directors, majority o whom including the Chairman, areindependent. The members o the ARC are:-

- Dr Tan Eng Liang (Chairman)

- Dr Ker Sin Tze- Mr Chng Jit Koon- Mr Wee Kheng Jin- Mr Goi Seng Hui

The proile o the ARC members is set in the Board o Directors Section o the Annual Report.

11.2 Board to ensure ARC

members are appropriately

qualiied to discharge their

responsibilities

The Board considers that the members o the ARC are qualiied to discharge the responsibilities othe ARC as two members o the ARC, including the Chairman, have accounting or related inancialmanagement expertise or experience. Please reer to the proile in the Board o Directors Section othe Annual Report.

11.3 ARC to have explicit

authority to investigate and

have ull access and co-

operation by management,

and reasonable resources to

discharge its unctions

The ARC is authorised by the Board to investigate into any activity within its terms o reerence. Ithas unrestricted access to inormation relating to the Group, to both internal & external auditorsand has ull discretion to invite any director or executive oicer to attend its meetings. The ARC

has expressed power to commission investigations into any matter, which has or is likely to havematerial impact on the Groups operating results and/or inancial position. The ARC has adequateresources to enable it to discharge its responsibilities properly.



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Corporate Governance Report11.4 Duties o ARC The ARC is regulated by its terms o reerence and meets at least three times a year and as warranted

by circumstances, to perorm the ollowing unctions:-

(1) review signiicant inancial reporting issues and judgements;(2) review with the internal and external auditors the audit plan and their evaluation o the

systems o internal controls;(3) review with the external auditors the scope and results o the audit and its cost eectiveness;(4) review the co-operation given by management to the external auditors;(5) review and discuss with the external auditors any suspected raud or irregularity, or suspected

inringement o any law, rules or regulations, which has or is likely to have a material impacton the Company or the Groups results or inancial position and managements responses;

(6) review the Groups inancial results, external auditors reports and the result announcementsbeore submission to the Board or approval;

(7) nominate external auditors or re-appointment and reviews their independence and objectivity;(8) make recommendations to the Board on the appointment and removal o the external

auditors and to approve the remuneration and terms o engagement o the external auditors;(9) review interested person transactions, i any, and potential conlict o interests;(10) review the adequacy o the Groups material internal controls (compliance, inancial and

operational) and risk management policies and systems, as well as the eectiveness o theGroups internal audit unction;

(11) review arrangements by which sta o the Group may, in conidence raise concerns about

possible improprieties in matters o inancial reporting or other matters, so as to ensurethat arrangements are in place or the independent investigation o such matters and orappropriate ollow up action;

(12) review o the assessment and monitoring o all key operational, inancial and compliancerisks o the Group and the eectiveness o internal compliance and control systems andprocedures to manage risk;

(13) recommend to the Board in relation to risk management strategy and policy ramework; and(14) consider and reporting to the Board on any material changes to the risk proile o the Group.

Minutes o the ARC meetings are regularly submitted to the Board or its inormation and review.

11.5 ARC to meet internaland external auditors, withoutpresence o management, atleast annually

For FY 2013, the ARC met with the external auditors once without the presence o the managementor the purpose o acilitating discussion o the responses by management on audit matters. The ARChas reviewed the indings o the auditors and the assistance given to the auditors by management.

11.6 ARC to review

independence o externalauditors annually

The ARC has received the requisite inormation rom the external auditors evidencing the lattersindependence.

The ARC has noted that there are no non-audit related work carried out by the external auditorsduring FY 2013 and is satisied with the independence and objectivity o the external auditors.

The audit ees paid to the external auditors o the Company or FY2013 was approximatelyS$236,000/-. There was no non-audit ee paid to the external auditors.

The ARC had recommended and the Board had approved the nomination to re-appoint Messrs Deloitte& Touche LLP as the Companys external auditors or the next inancial year ending 31 March 2014.The Group has complied with Rules 712 and 715 o the Rules o Catalist in relation to the auditors.

11.7 ARC to reviewarrangements or sta to raiseconcerns about possibleimproprieties to ARC

The Group has in place, a whistle-blowing policy where employees o the Group can raise, inconidence, concerns about possible improprieties. Such a policy serves to encourage and providea channel or sta to report in good aith and without ear o reprisals, concerns about possibleimproprieties in inancial reporting or other matters to the Chairman o ARC, Executive Chairman orthe Head o Human Resource.

Details o the whistle-blowing policies and arrangements have been made available to all employees.

11.8 Disclose the details othe ARCs activities in thecompanys annual report

In FY 2013, the ARC has reviewed with the Management and the external auditors, the results o theGroup beore submitting them to the Board or its approval and announcement o the inancial results.The ARC also reviewed and monitored the Groups inancial condition, internal and external audits,exposure to risks and the eectiveness o the Groups system o accounting and internal controls.

The ARC also monitors proposed changes in accounting policies, reviews the internal audit unctions anddiscusses accounting implications o major transactions including signiicant inancial reporting issues.

In review o the inancial statements or the year ended 31 March 2013, the ARC is o the view that theinancial statements are airly presented in conormity with the relevant Singapore Financial ReportingStandards in all material aspects.



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Corporate Governance ReportPrinciple 12: Risk Management and Internal Controls

The Board should ensure that the Management maintains a sound system o internal controls to saeguard the shareholdersinvestments and the companys assets. The terms o reerence o the ARC were revised to include risk management; it was approvedand adopted by the ARC and the Board on 12 November 2012.

12.1 ARC to reviewadequacy o internalinancial controls,operational andcompliance controls andrisk management policiesand systems establishedby management at leastannually

The Group has in place a system o internal control and risk management policies and systems orensuring proper accounting records and reliable inancial inormation, as well as management obusiness risks with a view to saeguard shareholders investments and the Companys assets. The riskmanagement ramework provides or systematic and structured review as well as reporting on theassessment o the degree o risk, evaluation and eectiveness o controls in place to mitigate them.

In September 2012, the Board granted approval or the Audit Committee to assume the role o RiskManagement and changed the name o Audit Committee (AC) to Audit and Risk Committee(ARC). In line with the change, the ACs Terms o Reerence have been revised and renamed Auditand Risk Committee Terms o Reerence, which incorporate both terms or Audit Committeeunctions and Risk Management unctions.

The Board, assisted by the ARC, has oversight o the risk management system, process and structureo the Group. The process o risk management is undertaken by the Executive Chairman and seniormanagement under the purview o the ARC and the Board.

During the current inancial year 2013, the Company, with the support rom consultants, Ernst& Young Advisory Pte Ltd (Ernst & Young), has ormalised a structured Enterprise Risk Management(ERM) Framework to acilitate the Board in identiying and assessing key operational, inancialand compliance risks (including inormation technology) with reerence to the business goals,strategies and critical success actors o the Group. Under the ERM Framework, which is developedwith reerence to the ISO 31000:2009 Risk Management Principles and Guidelines, Committeeo Sponsoring Organisations o the Treadway Commission (COSO) Model and Risk GovernanceGuidance or Listed Board 2012, management o all levels are expected to constantly reviewthe business operations and the environment that we operate in to identiy risk areas and ensuremitigating measures are promptly developed to mitigate these risks. The ERM Framework outlines theGroups approach to managing enterprise-wide risks and sets out a systematic process or identiying,evaluating, monitoring, managing and reporting risks aced by the Group.

Ernst & Young had assisted in the ormalisation o the ERM Manual, acilitated a risk workshopand carried out discussions with the Board, ARC as well as senior management o the Group onthe results o the risk assessment sessions. In the process, the Board has determined the Groupslevels o risk tolerance and risk policies, and provides oversight o Management in the design,implementation and monitoring o the ERM system and process.

Management regularly reviews the Groups business and operational activities to identiy areas osigniicant business risks as well as appropriate measures to control and mitigate these risks withinthe Groups policies, strategy as well as risk appetite. Management is accountable to the ARC orensuring the eectiveness o risk management and adherence to risk appetite limits. On a day-to-day basis, business units have primary responsibility or risk management. The various businessunits provide senior management with a timely assessment o key risk exposures and the associatedmanagement responses. These units also recommend risk appetite and control limits.

A risk monitoring, review and reporting ramework has been established to deine the on-goingmonitoring tools and processes o the Group which includes monitoring o risk score changes,on-going assessment o risk treatment action plans and quarterly ERM reporting to the ARC.Management reviews all signiicant control policies and procedures and highlights all signiicantmatters to the ARC and the Board.

The Groups risk actors and management are set out in the notes to the inancial statements in thisAnnual Report.



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Corporate Governance ReportThe Group has an in-house internal audit unction. During the inancial year, the Company hasalso appointed one o the big 4 Certiied Public Accounting irm to carry out an independentinternal audit review on the Groups key operational processes in Singapore. The Companys externalauditors, Deloitte & Touche LLP, have also in the course o their annual audit carried out a review o

the eectiveness o the Groups material internal controls over inancial reporting as laid out in theiraudit plans. Any material non-compliance and internal control weakness noted during the auditsand auditors recommendations are reported to the ARC. The Companys in-house internal auditorollows up on the recommendations so as to strengthen the Groups internal controls and practices.

The auditors had also evaluated the eectiveness o the inancial, operational, compliance andinormation technology internal controls implemented to manage the identiied risks based on theresults o the ERM process executed.

12.2 Boards commenton the adequacy o theinternal controls, includinginancial, operational andcompliance controls, andrisk management systems inthe companys annual report

During the inancial year, the ARC has reviewed the internal and external audit reports. Management hasalso taken appropriate and timely countermeasures to remedy the internal control weaknesses identiiedand sought ways to continuously enhance the Groups internal control systems.

Based on the reports submitted by the auditors, and the various management controls/improvements putin place by management and the Board, the Board with the concurrence o the ARC, is o the view that

the Groups internal controls, addressing inancial, operational, compliance and inormation technologyrisks are adequate. While acknowledging their responsibility or the system o internal controls, the Boardis aware that such a system is designed to manage, rather than eliminate all risks, and thereore cannotprovide an absolute assurance in this regard, or absolute assurance against the occurrence o materialerrors, losses, poor judgement in decision making, human errors, raud or other irregularities.

The Board has also received assurance rom the Executive Chairman and the Chie Financial Oicerthat the inancial records have been properly maintained and the inancial statements give a true andair view o the Groups operations and inances; and regarding the eectiveness o the companys riskmanagement and internal control systems.

Principle 13: Internal Audit

The company should establish an internal audit (IA) unction that is independent o the activities it audits.

13.1, 13.2 and 13.3 IAunction to report to ARCChairman, and to CEOadministratively; IA meetstandards set by national orinternationally recognisedproessional bodies; ARCto ensure IA unction isadequately resourced

The Company has an in-house internal audit team that primarily reports to the Chairman o the ARC,and also to the Chie Financial Oicer on administrative matters.

Biennially, the Group will outsource its internal audit unction to an independent auditing irmor independent review on internal controls and practices. The engagement o the auditing irm issubjected to ARC approval.

The ARC has ull access to and the cooperation o the management and internal auditors, andensures that the internal audit unction is adequately resourced and has appropriate standing withinthe Company to perorm its unction.

13.4 ARC to ensureadequacy o internal auditunction

The Groups internal control are designed to provide reasonable assurance with regard to thekeeping o proper accounting records, integrity and reliability o inancial inormation, and physicalsaeguard o assets.

The in-house internal auditor plans its internal audit plan annually, ollowing a risks assessmentexercise, in consultation with, but independent o management. The internal audit plan is submittedto the ARC or approval prior to the commencement o the internal audit.

Internal audit reports are distributed to and discussed with the ARC. The ARC ensures thatappropriate and timely measures are taken by the Management to implement improvements requiredon internal control weaknesses identiied.

The ARC has the ability to commission an independent audit on internal controls or its assurance,or where it is not satisied with the systems o internal control.

An annual review o the in-house internal audit unction is carried out. The ARC is satisied that theinternal audit unction is adequately resourced and has appropriate standing within the Group.



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Corporate Governance ReportPrinciple 14: Communication with Shareholders

Companies should engage in regular, eective and air communication with shareholders.

14.1 and 14.2 Company toregularly convey pertinentinormation; inormationshould be disclosed ontimely basis

The Board is mindul o the obligation to keep shareholders inormed o all major developmentsthat aect the Group in accordance with the SGX-STs Listing Manual. Price sensitive inormation ispublicly released via SGXNET.

Inormation is communicated to shareholders on a timely and non-selective basis through:

annualreportsthatarepreparedandissuedtoallshareholderswithinthemandatoryperiod; half-yearandfull-yearfinancialstatementscontainingasummaryofthefinancialinformation

and aairs o the Group or the period, released via SGXNET; publicannouncementsviaSGXNET; pressreleasesonmajordevelopments; Companys corporate website at www.tunglok.com at which shareholders can access

inormation on the Group; and noticesofshareholdersmeetingsadvertisedinanewspaperinSingapore.

Principle 15: Greater Shareholder Participation

Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicatetheir views on various matters aecting the company.

15.1 and 15.3 Shareholdersshould be allowed to votein person or in absentia;presence o ARC, NC, RCchairpersons and auditors atAGMs

Participation o shareholders is encouraged at the Companys general meetings. The Board(including the Chairman o the respective Board Committees), Management, as well as the externalauditors are invited to attend the Companys AGM to address any questions that shareholders mayhave.

Shareholders are encouraged to attend the general meetings to ensure high level o accountabilityand to stay appraised o the Groups strategy and goals.

The Companys Articles o Association allows a member o the Company to appoint up to twoproxies to attend and vote in place o the member.

15.2 Separate resolutions atgeneral meetings on eachsubstantially separate issue

Each item o special business included in the notice o the general meetings is accompanied, whereappropriate, by an explanation or the proposed resolution. Separate resolutions are proposed oreach separate issue at the meeting.

15.4 Companies areencouraged to amend Articlesto avoid imposing limit onthe number o proxies ornominee companies

While the Company does not have a speciic limit in the Articles on the number o proxy votes ornominee companies, there is a limit or the number o proxies or all shareholders to two.

15.5 Companies areencouraged to prepareminutes/notes on discussionsand make them availableupon request

All minutes o general meetings, and a summary o the questions and answers raised at generalmeetings are available to shareholders upon their requests.

Internal Code on Dealing in Securities

Catalist Rule1204 (19) In line with Catalist Rule 1204(19), the Company has adopted an internal Code o Best Practices ondealing in the Companys securities. All Directors and oicers o the Group are not allowed to dealin the Companys shares during the period commencing one month beore the announcement o theCompanys hal-year and ull year results and ending on the date o the announcement o the results.

In addition, all Directors and employees o the Group are required to observe insider trading lawsat all times and are prohibited rom dealing with the Companys shares whilst in possession ounpublished price-sensitive inormation o the Group. They are also discouraged rom dealing in theCompanys shares on short-term considerations.



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Corporate Governance ReportMaterial Contracts

Catalist Rule 1204 (8) No material contracts to which the Company or its subsidiary is a party and which involve interestso directors or controlling shareholders subsisted at the end o the inancial year or have beenentered into since the end o the previous inancial year except or three subsidiaries that haveentered into rental contracts with one o its controlling shareholder as announced by the Companyon 5 September 2012 and 25 October 2012.

Interested Person Transaction (IPT) Policy

Catalist Rule 907 The Company adopted an internal policy in respect o any transactions with interested person andhas established procedures or review and approval o the interested person transactions enteredinto by the Group. The ARC has reviewed the rationale and terms o the Groups interested persontransactions and is o the view that the interested person transactions are on normal commercialterms and not prejudicial to the interests o the Company and minority shareholders.

The aggregate value o interested person transactions or FY 2013 are as ollows:-

Name of Interested Persons and Transactions

Aggregate value of all interestedpersons transactions during theperiod under review (excluding

transactions less than S$100,000and transactions conducted undershareholders mandate pursuant

to Rule 920)

Aggregate value of all interestedperson transactions conductedunder shareholders mandate

pursuant to Rule 920 (excludingtransactions less than S$100,000)

S$000 S$000

T & T Gourmet Cuisine Pte Ltd-Sales o ood items toTee Yih Jia Food Manuacturing Pte Ltd

- 600

T & T Gourmet Cuisine Pte Ltd-Sales o ood items toChinatown Food Corporation Pte Ltd

- 15

T & T Gourmet Cuisine Pte Ltd-Food items purchase

rom Tee Yih Jia Food Manuacturing Pte Ltd

- 16

Tung Lok Group-Food items purchase romTee Yih Jia Food Manuacturing Pte Ltd

- 96

Tung Lok Group-Food items purchase rom ChinatownFood Corporation Pte Ltd

- 28

Tung Lok Group-Food items purchase romT & T Gourmet Cuisine Pte Ltd

- 252

Tung Lok Group-Mooncakes purchase romT & T Gourmet Cuisine Pte Ltd

- 715

Far East Hospitality Real Estate Investment Trust* 3,335 -

Orchard Central Pte Ltd* 1,373 -

The Group conirms that there were no other disclosable interested person transactions during FY 2013 pursuant to Catalist Rule907.

*These are interested person transactions that are categorized as transactions under Catalist Rule 916(1), which are in connection with leaseso certain commercial units owned by related companies o our controlling shareholder, Goodview Properties Pte.Ltd. Please reer to ourannouncements dated 5 September 2012 and 25 October 2012.

Sponsorship

The Company is currently under the SGX-ST Catalist sponsor-supervised regime. The continuing sponsor o the Company duringthe inancial year is SAC Capital Private Limited (Sponsor) which replaced KW Capital Pte. Ltd with eect rom 1 May 2012.There is no non-sponsor ee paid to the Sponsor.



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Report of the Directors

The directors present their report together with the audited consolidated inancial statements o the group and statement o

inancial position and statement o changes in equity o the company or the inancial year ended March 31, 2013.

1 DIRECTORS

The directors o the company in oice at the date o this report are:

Tjioe Ka Men

Tjioe Ka In

Tan Eng Liang (Dr)

Ker Sin Tze (Dr)

Chng Jit Koon

Goi Seng Hui

Wee Kheng Jin

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS

BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES

Neither at the end o the inancial year nor at any time during the inancial year did there subsist any arrangement whose

object is to enable the directors o the company to acquire beneits by means o the acquisition o shares or debentures in

the company or any other body corporate.

3 DIRECTORS INTERESTS IN SHARES AND DEBENTURES

The directors o the company holding oice at the end o the inancial year had no interests in the share capital and

debentures o the company and related corporations as recorded in the register o directors shareholdings kept by thecompany under Section 164 o the Singapore Companies Act except as ollows:

Shareholdings registered

in name o director

Shareholdings in which directors are

deemed to have an interest

At beginning At end At beginning At end

o year o year o year o year

The company Ordinary shares

Tjioe Ka Men 226,000 226,000 54,679,000 54,679,000

Tjioe Ka In 54,000 54,000 53,200,000 53,200,000Goi Seng Hui - - 20,999,000 25,018,000

By virtue o Section 7 o the Singapore Companies Act, Mr Tjioe Ka Men and Ms Tjioe Ka In are deemed to have an interest

in the company and all the related corporations o the company.

The directors interests in the shares o the company at April 21, 2013 were the same at March 31, 2013.


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Report of the Directors

4 DIRECTORS RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS

Since the beginning o the inancial year, no director has received or become entitled to receive a beneit which is requiredto be disclosed under Section 201(8) o the Singapore Companies Act, by reason o a contract made by the company or

a related corporation with the director or with a irm o which he is a member, or with a company in which he has a

substantial inancial interest except or salaries, bonuses and other beneits as disclosed in the inancial statements. Certain

directors received remuneration rom related corporation in their capacity as directors and/or executives o those related

corporation.

5 SHARE OPTIONS

(a) Option to take up unissued shares

During the inancial year, no option to take up unissued shares o the company or any corporation in the group was

granted.

(b) Option exercised

During the inancial year, there were no shares o the company or any corporation in the group issued by virtue o

the exercise o an option to take up unissued shares.

(c) Unissued shares

Documents

Annual Report 2013 Tung Lok 2000 Restaurants