Board of Directors 04 Group Managing Director’s Message 06 ...kingsmen.listedcompany.com/misc/ar2004.pdf · for DFS Venture, Adidas Singapore, Esprit Retail, Robinsons Group, Gucci,

A communications designand production group in Asia Pacific

Kingsmen Creatives LtdCo. Reg. No. 200210790Z

Kingsmen Creatives Centre3 Changi South LaneSingapore 486118

Tel (65) 688 000 88Fax (65) 688 000 [email protected]

www.kingsmen-int.com

Kin

gsm

en C

reatives An

nu

al Rep

ort 2004

••• making theDifference

Kingsmen CreativesAnnual Report 2004

Contents

Introduction 01Financial Highlights 02Board of Directors 04Group Managing Director’s Message 06Senior Management 08Integration Map 10Research & Design 12Project Management 14Fabrication/Production 16Logistics & Distribution 18Integrated Marketing Communications 20Our People 22Corporate Governance 24Corporate Information 30Financial Reports 31Statistics of Shareholdings 71Notice of Annual General Meeting 73

making the Difference

Kingsmen is a leading communications design and production group in Asia Pacific and The Middle East. With 15 strategically-located offices and full-service facilities across the region, we offer integrated total solutions in Exhibitions & Museums, Retail & Office Interiors, Research & Design, and Integrated Marketing Communications.

We aim to make the difference for our local and international clients by delivering effective solutions through design excellence combined with quality and cost-efficient services.

Our VisionDesign-led, Quality and Service-Driven

Our MissionTo be a leader in the Asia-Pacific

To be an active global player

To provide exciting and fulfilling career opportunities for all members through company expansion and invaluable staff education.

kingsmen creatives AR04 01

financial highlights

RevenueRevenue for FY2004 has increased by S$9.8 million to S$63.3 million as compared to S$53.5 million for FY2003. The increase in revenue is mainly contributed by the Exhibitions and Museums division and Intergrated Marketing Communications (“IMC”) division while revenue from the Interiors division has decreased slightly for FY 2004.

The recovery in the Exhibitions and Museums division was strong in both the first and second half of FY2004. Revenue for this division has increased by S$7.7 million from S$21.4 million in FY2003 to S$29.1 million in FY2004. This increase is also partly contributed by the newly acquired subsidiaries operating in Vietnam, (namely Kingsmen Indochina Pte Ltd and Kingsmen Vietnam Company Limited) which accounted for S$1.3 million for FY2004’s revenue in the Exhibitions and Museums division.

Some of the more significant exhibition projects/events which were completed in FY2004 include Asian Aerospace, CommunicAsia, Tax Free Asia Pacific, SIBOS, Tempus, Globaltronics, Label Expo, Asean Travel Fair, the STB stand for ITB Berlin 2004 and the National Day Parade. These exhibition projects/events contributed to a total of S$11.0 million to the revenue for FY2004. We have also completed museum projects totaling S$5.1 million for Science Centre, Sentosa, URA Gallery, Malay Heritage Centre and NTUC Awareness Centre, as well as a way-finding (signage) project for a new shopping centre in Malaysia for S$0.6 million.

Revenue from the Interiors division has been slow in the first half of FY2004. The second half saw the recovery of Interiors division of which 70% of the revenue from this division in FY2004 was derived from. Due to the slow first half, revenue for FY2004 was slightly lower than FY2003 by S$0.6 million (FY2004: S$28.6 million; FY2003: S$29.2 million). The newly acquired subsidiaries operating in Vietnam accounted for S$2.4 million of FY2004’s revenue in the Interiors division.

Some of the major interior jobs that were completed in FY2004 were for DFS Venture, Adidas Singapore, Esprit Retail, Robinsons Group, Gucci, Burberry, Harvey Norman, Nuance, Mohd Mustafa, Coffee Club, Osim, Hansgrohe, P&G, Brek Ristorante at Changi Airport, as well as various fit out projects for offices and a VIP lounge for an airline. The above projects contributed a total of approximately S$18.0 million to the revenue for FY2004. For the Vietnam operations, major jobs completed in FY2004 were for fitting out for Samsung and Suzuki shops/showrooms amounting to a total of S$2.1 million.

Revenue from the Research and Design division has remained relatively consistent (FY2004: S$2.0 million; FY2003: S$2.0 million). We continue to manage the roll-out for the design of Burberry boutiques throughout Asia and have completed 36 shop designs in FY2004.

Revenue from our Integrated Marketing Communications division has also increased by S$2.6 million to S$3.5 million in FY2004 as compared with S$0.9 million in FY2003. The increase is mainly due to the revenue contributed by the Vietnam operations, amounting to S$2.3 million in FY2004. Also, in Singapore, revenue contributed by this division has also improved by S$0.3 million.

Gross Profit Gross profit has increased by S$1.6 million or 11% to S$16.5 million in FY2004 as compared to S$14.9 million in FY2003. Gross profit margin has decreased to 26.0% as compared to 27.8% in FY2003.

In FY2003, especially during the first half, with the onset of the SARS epidemic and the threat of terrorism, we experienced a sharp decline

in volume of activities for our Exhibitions and Museums division. Several major event, were cancelled and most of our projects during this period were small jobs which typically have a slightly higher gross profit margin. During the earlier part of FY2004, some of the major exhibition events which we have completed contributed higher absolute gross profit, although the gross profit margin tends to be slightly lower for such projects. The above explains the higher GP margin for FY2003 and the slightly lower GP margin for FY2004.

Other IncomeOther income has decreased from S$1.0 million in FY2003 to S$0.8 million in FY2004 is mainly due to:-

a) project management fees billed to affiliated companies amounting to S$43,000 in FY2003 (FY2004: nil);b) write-back of trade payables of S$74,000 which has been unclaimed for more than 6 years in FY2003 (FY2004: nil); andc) lower corporate fees of S$475,000 in FY2004 as compared to S$532,000 in FY2003. (This is due to the corporate fees billed to Kingsmen Indochina Pte Ltd and Kingsmen Vietnam Company Limited, which has been eliminated upon consolidation in FY2004 after becoming subsdiaries of the Group in FY2004).

Operating Expenses Operating expenses increased by S$1.7 million to S$15.5 million for FY2004 as compared to S$13.8 million for FY2003 mainly due to the following: -a) Increase in operating expenses due to the inclusion of the results of the operations of Kingsmen Indochina Pte Ltd and Kingsmen Vietnam Company Limited amounting to S$1.0 million comprising mainly of the following expenses:-i) Rental of premises amounting to S$146,000ii) Directors’ remuneration and fees amounting to S$244,000iii) Staff costs amounting to S$344,000iv) General & administrative expenses amounting to S$194,000v) Other expenses amounting S$52,000

b) Increase in operating expenses of the Singapore and Malaysian subsidiaries of S$0.7 million (FY2004: S$14.5 million; FY2003: S$13.8 million) comprising:-i) increase in bad & doubtful debts from S$69,000 to S$159,000ii) increase in depreciation expenses from S$440,000 to S$516,000iii) increase in staff costs from S$6.7 million to S$7.3 millioniv) increase in general & administrative expenses from S$2.0 million to S$2.3 million offset by:-v) decrease in selling & marketing expenses from S$382,000 to S$224,000vi) provision for diminution in investment of S$100,000 in FY2003 (FY2004: nil)vii) decrease in directors’ remuneration and fees from S$2.6 million to S$2.4 million

Share of Results of Associates before taxationThis relates to the share of results before taxation of the associated companies, namely Ascend Computer Rental Pte Ltd (40%), Kingsmen (Korea) Limited (25%), and Kingsmen Nikko Limited (30%), which were acquired in FY2004.

Profit before TaxationProfit before taxation decreased by S$121,000 to S$2.0 million in FY2004 as compared with S$2.1 million for FY2003.

1

2

3

4

5

Year ended Period ended 31 Dec 04 31 Dec 03 Change S$’000 S$’000 %

Turnover 63,261 53,477 18Cost of sales (46,794) (38,597) 21Gross profit 16,467 14,880 11

Other Income 814 1,005 (19)Cost and expenses Selling & marketing expenses (239) (382) (37) Bad & doubtful debts (161) (70) 130 Depreciation expenses (544) (440) 24 Fixed assets written off (24) – n/m Provision for diminution in investment – (100) (100) Rental of premises (1,260) (1,097) 15 Rental of equipment & vehicles (234) (227) 3 Directors’ remuneration and fees (2,644) (2,572) 3 Staff costs (7,691) (6,747) 14 Stock obsolescence – (4) (100) Exchange loss (130) (104) 26 General & administrative expenses (2,569) (2,044) 26Total operating expenses (15,496) (13,787) 12

Profit from operating activities 1,785 2,098 (15)Financial expenses (82) (76) 8Financial income 34 104 (67)

Profit before share of results of associates 1,737 2,126 (18)Share of results of associates before taxation 268 – n/m

Profit before taxation 2,005 2,126 (6)Taxation - group companies (368) (547) (33) - associates (57) – n/m

Profit after taxation 1,580 1,579 0Minority interest (166) (51) 225Net profit for the year/period 1,414 1,528 (7)

n/m = not meaningful

The comparatives presented relate to the financial performance of the Group for the financial period from 16 December 2002 to 31 December 2003.

kingsmen creatives AR04 02 l 03

Turnover By Activities 2004 2003Revenue S$’000 % S$’000 %

Exhibitions and Museum 29,144 46.1 21,431 40.1Interiors 28,607 45.2 29,169 54.5Research and Design 1,988 3.1 2,006 3.8Integrated Marketing Communications 3,522 5.6 871 1.6 63,261 100.0 53,477 100.0

Turnover By Geographical Regions 2004 2003Revenue S$’000 % S$’000 %

Singapore 40,143 63.4 38,590 72.2Malaysia 5,188 8.2 4,307 8.1Asia 10,103 16.0 4,016 7.5Europe 3,717 5.9 2,069 3.9US 4,000 6.3 4,349 8.1Others 110 0.2 146 0.3 63,261 100.0 53,477 100.0

We have segmented our revenue based on the location of our clients except for site orders of booth accessories placed by customers for official trade shows which are based on location of the show.

Turnover By Activities

Turnover By Geographical Regions

Exhibitions and Museums 46.1%

Interiors 45.2%

Research and Design 3.1%

Integrated Marketing Communications 5.6%

Singapore 63.4%

Malaysia 8.2%

Asia 16.0%

Europe 5.9%

US 6.3%

Others 0.2%

1

2

5

3

4

board of directors

Opposite page from left to right:

Benedict SohGroup Managing Director

Benedict Soh is our Group Managing Director. He is responsible for the strategic planning and business development of our Group and oversees day-to-day management as well. Mr Soh has more than 30 years of experience in the design and production of interiors and exhibits. He is one of our founders and has contributed significantly to the growth of our Group. Mr Soh serves as the Chairman of the Exhibition Management Services Standards Working Committee of Spring Singapore. He is the chairman of the Research Committee of the Singapore Association of Convention & Exhibition Organisers & Suppliers and the co-director of Community Services, Rotary Club of Pandan Valley. Mr Soh was awarded a Master in Business Administration from the University of Hull in the United Kingdom.

Simon OngGroup Executive Director Simon Ong is our Group Executive Director. He is responsible for the strategic planning of our Group and the development of our Group’s image as well as creative standard. Mr Ong is one of the founders of our Group and has contributed significantly to the growth of our Group for the past 28 years. Mr Ong was the President of the Interior Designers Association, Singapore, from the years 1995 to1997, member of the Steering Committee, National Design Plan in 1997 organised by IE Singapore and Vice-Chairman of the Potong Pasir Community Club Management Committee from 1998 to 2003. In addition, he is also serving as a member of the Advisory Committee of Temasek Polytechnic (School of Design) and the International Design Forum. He is also a committee member and Chairman of the Design Development Committee of the Singapore Furniture Industrial Council. He was awarded a Master of Business Administration from the University of South Australia and a Master of Design from the University of New South Wales.


Lee Hock LyeIndependent Director

Lee Hock Lye was appointed as an Independent Director of our Group since August 2003. He is currently Managing Director of HSBC Private Bank (Suisse) SA and has been with the HSBC group in Singapore for over 30 years. He is an Associate of the Chartered Institute of Bankers, UK and a member of The Singapore Institute of Directors. Mr Lee graduated with a Bachelor of Social Sciences (Honours) degree in Economics from the University of Singapore.

Anthony ChongExecutive Director (Exhibitions & Museums)

Anthony Chong is our Executive Director. He is responsible for the sales and day-to-day operations and management of the Exhibitions and Museums division. Employed by our Group since 1981, he has had experience in project management of different disciplines of exhibitions, retail interiors and museums. From mid-1989, he was appointed Project Director to oversee the operations of our Exhibitions and Museums division. He then rose to his present position of Executive Director in 1999. Mr Chong is a committee member (training) of the Singapore Association for Convention and Exhibition Organizers and Suppliers. Mr Chong was awarded a Master of Business Administration from the Victoria University of Technology in Australia.

Prabhakaran N. NairIndependent Director

Prabhakaran Nayaranan Nair was appointed as an Independent Director of our Group since August 2003. He is an Advocate and Solicitor of Singapore and is currently a partner of a law firm, Messrs Ong Tan & Nair. He has been practising law in this law firm since 1986. Mr Nair is the Honorary Legal Advisor of the Singapore Judo Federation, Jurong Football Club and Mar Thoma Syrian Church. He obtained his law degree from the University of Singapore.

Khoo Ho TongNon-Executive Director

Khoo Ho Tong is our non-executive Director. He is currently a partner of Messrs H.T. Khoo & Company, a public accounting firm, and has been a practicing public accountant for over 20 years. Mr Khoo is also involved in a number of professional associations. He is a council member and member of various sub-committees of the Institute of Certified Public Accountants, Singapore and the treasurer of the Asean Federation of Accountants. He is also an Independent Director and non-executive director of various listed companies. Mr Khoo is a Fellow Certified Public Accountant in Singapore.

FY2004 was a year of consolidation at Kingsmen. The effects of SARS and terrorist threats of 2003, had made us realise that we needed to expand our operations base to become a truly regional player and minimise our exposure in the Singapore market. With a fresh perspective, we set about accelerating the acquisition of our regional affiliates and began looking for strategic partnerships that would add value to our operations and boost our capabilities.

In May, we found such a company in Ascend Computers, a locally established IT company specialising in the provision of advanced information technology equipment including network solutions to customers in niche markets, and took a 40 per cent stake. Its principal activities of rental and sale of audio-visual, computer and peripheral equipment as well as providing hardware and systems, are an ideal fit for our customers. It already has an established network and expertise in providing IT services and proficiency in setting up networks for conferences, seminars and exhibitions.

In line with our strategy to expand our operations base, we entered into two Share Acquisition Agreements to acquire shares of Kingsmen Nikko Ltd., Kingsmen (Korea) Limited and Kingsmen Indochina Pte Ltd from Kingsmen International Pte Ltd and Lim Hock Chye, Stephen in June. In addition, we expanded our operations in Malaysia in July by opening a new 30,000 sq ft production facility in Kuala Lumpur.

Financially, we achieved a total Group revenue of S$63.3 million for FY2004, up 18% from S$53.5 million previously. This was led by a strong recovery in our Exhibitions and Museums Division from the beginning of 2004, the newly acquired subsidiaries operating in Vietnam and a threefold jump in revenue contribution from our Integrated Marketing Communications Division, which saw revenue jump from S$0.9 million to S$3.5 million. Our Interiors Division however only saw a turnaround in the second half of the year. Our net profit was however, dragged down by the increase in operating expenses in Singapore and the Group’s Malaysian subsidiary, as well as operating expenses in Group’s operations for Kingsmen Indochina Pte Ltd and Kingsmen Vietnam Co., Ltd. As a result, net profit decreased by a marginal 7% to S$1.4 million in FY2004 as compared to S$1.5 million in the previous corresponding period.

Our AchievementsWe completed several prominent projects during the year. Some of the more significant exhibition projects include Asean Travel Fair, Asian Aerospace, CommunicAsia, Tax Free Asia Pacific, SIBOS, Globaltronics, Label Expo, National Day Parade,STB stand for ITB Berlin 2004 and The Hour Glass TEMPUS. In addition, we have also completed museum projects for the Malay Heritage Centre, NTUC Awareness Centre, Sentosa, Singapore Science Centre and URA Gallery.

group managing director’s message

Enlarging our presence – making a difference

We have worked together as a team. With our clients, partners, suppliers and ultimately our people, we have created some of the most compelling communications in Asia and this in turn has helped to fuel our ongoing business success.


Our Interiors division also completed several projects including those for Adidas Singapore, Burberry, Coffee Club, DFS Venture, Esprit Retail, Gucci, Hansgrohe, Harvey Norman, Marks & Spencer, Mustafa, Nuance, Osim, Brek Ristorante at Changi Airport, as well as various fit-out projects for offices and Qantas British Airways business lounge. In addition, our operations in Vietnam completed events and retail projects for Honda, Suzuki, Yamaha and Panasonic.

Outlook for FY2005 And BeyondAs the local business climate gets increasingly competitive, especially for the Interiors division – due to the maturing retail and office fit-out segment, growth in this area will be moderated. We therefore intend to reach out to the region, focusing more on our “roll-out programmes” where we offer services to cater to the regional needs of each client. We are also seeking export opportunities to the West, where our products, such as store fixtures, command a competitive advantage.

Going forward we are looking to the region for growth opportunities. We are confident that Vietnam will continue to provide development prospects for the Group, especially with the recent increase in investors’ confidence, growth in the tourism industry, new infrastructure projects planned by the Vietnamese government, as well as the anticipated boom in the retail and exhibition sectors.

group managing director’s message

Further down south, we are looking to Indonesia for growth and are currently in the initial stage of establishing an office there. With the establishment of a new production facility in Malaysia, we expect operations to improve significantly.

With these developments and our shift in focus towards the emerging markets within the region, we are more confident of achieving better results for FY2005.

A Word of ThanksOn behalf of the Board of Directors, we would like to take this opportunity to say a big “Thank You” to our staff and management for their unwavering commitment, customers, suppliers and business associates for their steadfast support. We look forward to your continued commitment.

Last but not least, on behalf of the Board of Directors, my most sincere appreciation to our shareholders. Thank you for your unfaltering support and confidence in us. We will continue with the hard work and focus on bringing our business to greater heights.

Mr Benedict SohGroup Managing DirectorMarch 21, 2005

Michael Ng Hung Chiao is a Director of Kingsmen Exhibits Pte Ltd. He is responsible for the day-to-day operations and leading and motivating the sales and operations team. He is also involved in expanding the clientele base and maintaining key accounts of both local and international clients. From 1975 to 1978, he was an Assistant Technician (Construction) in Jurong Town Corporation. From 1978 to 1980, he was a Marketing Executive in United Public M&E Pte Ltd. Thereafter he joined Item Pte Ltd as a Marketing Executive from 1981 to 1983. Michael Ng joined Kingsmen Exhibitions Builders Pte Ltd in 1984 as a Sales and Marketing Manager and was made the Director of Kingsmen Exhibits Pte Ltd in 1991. He received a Master in Business Administration from the University of Hull in the United Kingdom.

Yee Chee Kong is a Director of Kingsmen Projects Pte Ltd. He is responsible for the day-to-day operations, sales development and project management of Kingsmen Projects Pte Ltd. He joined our Group in 1989 as Project Executive where he was in charge of sales and project management. Thereafter, he held various positions including Senior Project Manager and Division Manager. He was appointed Project Director in 1999. Mr Yee studied Furniture Design and Production at the Baharuddin Vocation Institute and was awarded a certificate by the Industrial Training Board.

Alex Wee Huat Seng is a Director of Kingsmen Projects Pte Ltd. He is responsible for the day-to-day operations, business development, project management and management routine

of Kingsmen Projects Pte Ltd. He has been with Kingsmen Projects Pte Ltd since 1990 and has held various positions including Senior Project Manager and Division Manager. He was appointed Director in 2000. He was awarded a Certificate of Completion from the University of Newcastle in Australia for the Construction Economics and Quantity Surveying Program in 2000. He also received a Certificate in Interior Finishing Co-Ordination from BCA. In Year 2004, Mr. Wee graduated with a Bachelor (Honours) degree in Construction Management from University of Newcastle of Australia.

Ong Chin Kwan is our Creative Director. His responsibilities include charting creative directions for Kingsmen Design Pte Ltd and managing our team of over 30 designers and ensuring that all works produced by the team meet the aesthetic, functional and budgetary requirements of our clients. From 1981 to 1989, he was at Chhada Siembieda & Associates as senior draughtsman involved in mainly hospitality design. From 1989 to 1991, he was a senior designer in Tema Colleciones Pte Ltd. He worked as a freelance associate designer for our Group before joining our Group as a Senior Designer in July 1996. Mr Ong is a member of the Interior Design Association, Singapore. He received a Master of Design from the University of New South Wales.

Gerald Tay Kay Sock is our Design Director. He is responsible for the day-to-day operations and for the efficiency of the designers from the point of conceptualisation to implementation. He joined our Group in 1985 as a Designer

Mic

hael

Ng

Hun

g C

hiao

Fra

ncis

Yee

Che

e K

ong

Ale

x W

ee H

uat

Seng

Roy

Ong

Chi

n K

wan

Ger

ald

Tay

Kay

Soc

k

and was promoted to Senior Designer in 1988. He was then promoted to Design Director of Kingsmen Design Pte Ltd in 2000. He is experienced both in interior and exhibition projects. His first job from 1983 to 1985, was as a Designer at Yada Planners & Designers Pte Ltd. Mr Tay is a member of the Interior Designers’ Association, Singapore. He was awarded the Industrial Technician Certificate in Interior Design by the Vocation and Industrial Training Board in Singapore.

Tan Kwong Ngiap is the Director of I-Promo Events and Marketing Pte Ltd. His responsibilities include developing the business direction of I-Promo Events and Marketing Pte Ltd and formulating marketing strategies. From 1985 to 1994, he was the Vice President of Reed Exhibition Companies where he was in charge of sales and marketing and organising exhibitions and conferences in Asia. From 1995 to 1998, he joined RAI Exhibitions Singapore Pte Ltd as Managing Director and was in charge of setting up the Asian headquarters in Singapore. He was also involved in formulating, launching and managing exhibitions and conferences in Asia. In 2000, Mr Tan joined Suntec City Exhibition & Convention Centre as the Event Director and was responsible for the formulation, launch and management of the exhibitions, events and conferences taking place at the Suntec City Exhibition & Convention Centre. In 2001, he set up I-Promo Events and Marketing Pte Ltd with Kingsmen International Pte Ltd and he was appointed its director. He received a Master of Business Administration (Strategic Marketing) from the University of Hull in the United Kingdom.

Cheong Chai Keng is the Director of our Malaysia Operations. He is responsible for the day-to-day operations, marketing and financial matters of our Malaysian operations. Mr Cheong joined our Malaysia operations in 1983 as a Designer and was promoted to a Project Manager in 1985. He then became Director of the then Keb Systems Sdn Bhd in 1985. He obtained a diploma in Mechanical Engineering from the Federal Institute Technology.

Stephen Lim Hock Chye is a Director of Kingsmen Indochina Pte Ltd. He is currently responsible for the day-to-day operations; sales, marketing and financial matters of our Vietnam Operations. He has also been the General Director of Kingsmen Vietnam Co., Ltd, a wholly-owned subsidiary of Kingsmen Indochina Pte Ltd, since 1998. Mr Lim has more than 21 years experience in operations & project management in different disciplines of exhibitions, events and retail interiors. In 1992, he joined Kingsmen Indochina Pte Ltd as General Manager, with responsibilities for its overall operations in Vietnam. In 1994, he became a director of Kingsmen Indochina Pte Ltd. Mr Lim completed his secondary school education in 1973.

Judith Low Chu Li is our Financial Controller and is responsible for the overall management of our Group’s financial reporting, internal control and accounting processes. Before joining the Group, she was the Financial Controller of another listed company in Singapore and prior to that an Auditor with Ernst and Young. Ms Low obtained her Bachelor of Accountancy from Nanyang Technological University and is a Certified Public Accountant with the Institute of Certified Public Accountants of Singapore.

Ric

hard

Tan

Kw

ong

Ngi

ap

Che

ong

Cha

i Ken

g

Ste

phen

Lim

Hoc

k C

hye

sharedvision &philosophy

senior management


Jud

ith L

ow C

hu L

i

difference •••making the

of the processat every stage


throughcapabilities

acrossmarkets

Esprit, Singapore & Malaysia URA Gallery, Singapore

Aigner, Vietnam The Hour Glass TEMPUS, Singapore The Hour Glass TEMPUS, Singapore

Esprit, Singapore & Malaysia

making the difference through exceptional design

research & design

exceptional design comes through researching the market, creating a compelling concept & obsession with every detail.

We relentlessly work to provide our clients inspiring concepts. Our exceptional designs come from thorough market research, starting with compelling concepts and carrying these concepts through into practical, cost-effective solutions.


ST @ Asian Aerospace, SingaporeST @ Asian Aerospace, Singapore

Osim, Singapore

project management

a skill that makes the difference at every stage of the process


Our project management strategy coordinates the efforts of our designers, the needs of our clients and the multiple trade essentials for the completion of the project. Roll-out management, being one of our strengths, offers consistency in style and concept to our loyal clients.

Burberry, Thailand

IDA, CommunicAsia, Singapore Fort Siloso, Singapore IDA @ CommunicAsia, Singapore

making a difference, across a wide range of materials, disciplines and markets

fabrication/production

Implementing the design and construction plays a crucial role in the realization of a project. Having one of the largest production capabilities in Asia, we help bring dreams to reality by ensuring that all production and finishing works are completed according to our client’s requirements.


Lancome, South Korea

logistics & distribution

delivering on time and across multiple locations make a difference


Leveraging on our network of 15 full-service locations and affiliates worldwide, we provide “one-stop” shop services to clients around the globe. Our commitment to quality and on-time service helps us develop long-standing partnerships with our clients.

SK-II, Singapore & Indonesia

DFS Okinawa, Japan

providing touch points that are compelling for customers makes the difference

integrated marketing communications


Working beyond three dimensions, we offer an integrated approach to marketing communications to deliver total solutions that meet our client’s objectives. We bring together skills in branding, public relations, sponsorships and promotions to provide innovative marketing programmes.

Bloomberg @ Cable Television Fair, Japan

One Deed One Lifetime, Singapore

our people make the difference with the passion to get it right every time

our people

Making a difference to the communityWe share our success not only with our partners but also with the community. By taking part in community projects, we continuously look for ways to make a difference in the lives of the less fortunate and help them to realize their own talents.


Our strong commitment to excellent customer service lies in the hands of our Ambassadors – our people. We regard manpower as our greatest asset, hence, we continuously provide them training to enhance their skills and discover their potentials. Our staffs are trained to extend quality after-sales service thus, developing a healthy working relationship with our clients.

Challenge Run, SingaporeKids Fest,�Singapore

OBS, SingaporeProject Management Forum, Singapore Project Management Forum, Singapore

Kingsmen Creatives Ltd. (the “Company”) recognizes the importance and is committed to achieving a high standard of corporate governancewithin the Group. The Company has, since its listing on the SGX-ST Dealing and Automated Quotation System on 19 September 2003, put inplace various policies and practices that will safeguard the interests of shareholders and enhance the interest of all shareholders.

This Report on Corporate Governance describes the corporate governance practices of the Company with reference to the principles set out inthe Code.

1. Board Matters

Principle 1: The Board’s Conduct of Its AffairsThe Board of Directors effectively sets and directs the long-term vision and strategic direction of the Group.

The Board currently comprises:-

Executive DirectorsMr Benedict Soh Siak Poh, Group Managing DirectorMr Simon Ong Chin Sim, Group Executive DirectorMr Anthony Chong Siew Ling, Director

Non-Executive and Independent DirectorsMr Lee Hock Lye (Independent)Mr Prabhakaran Narayanan Nair (Independent)Mr Khoo Ho Tong (Non-executive)

The Board of Directors will meet at least three times a year and at other times as appropriate and is entrusted with the responsibility for the overall management and corporate affairs of the Group. Matters which specifically require the Board’s decision or approval are those involving:-• corporate strategy and business plans;• investment and divestment proposals;• funding decisions of the Group;• nominations of Board Directors and appointment of key personnel;• half year and full year results for announcements, the annual report and accounts; • material acquisitions and disposal of assets; and• all matters of strategic or material importance.

All other matters are delegated to committees whose actions will be monitored by the Board. These committees include the Audit Committee, the Nominating Committee and the Remuneration Committee, which operate within clearly defined terms of reference and functional procedures.

Newly-appointed Directors will be given an orientation program with materials provided to help them familiarise with the business and organisational structure of the Group. To get better understanding of the Group’s business, the Directors are also given the opportunity to visit the Group’s operational facilities and meet with Management staff.

corporate governance

02 Corp Goverance 04 FA 4/4/05 12:27 PM Page 24

kingsmen creatives AR04 24 | 25


The attendance of the directors at meetings of the Board and Board committees are as follows:

Board Audit Nominating Remuneration Meeting Committee Committee Committee

No. of No. of No. of No. of No. of No. of No. of No. ofMeeting Meeting Meeting Meeting Meeting Meeting Meeting Meeting

Name of Directors Held Attended Held Attended Held Attended Held Attended

Benedict Soh Siak Poh 5 5 – – 1 1 – –Simon Ong Chin Sim 5 5 – – 1 1 – –Anthony Chong Siew Ling 5 4 – – – – – –Lee Hock Lye 5 5 7 7 1 1 2 2Prabhakaran Narayanan Nair 5 5 7 7 1 1 2 2Khoo Ho Tong 5 5 7 7 1 1 2 2

Principle 2: Board Composition and BalanceThe independence of each Director is reviewed annually by the Nominating Committee (“NC”). The Company adopts the Code of Corporate Governance’s (“the Code”) definition of what constitutes an independent director in its review to satisfy that the Board consists of persons who, together, will provide core competencies necessary to meet the Company’s objectives. The NC is of the view that the non-executive Directors, Mr Lee Hock Lye and Mr Prabhakaran Narayanan Nair are independent.

The Board examines its size to satisfy that it is an appropriate size for effective decision making, taking into account the scope and nature of the operations of the Company. The NC is of the view that no individual or small group of individuals dominates the Board’s decision-making process.

Principle 3: Chairman and Chief Executive OfficerTaking into account the current structure and the scope of the Company’s operation, the Board of Directors is of the view that the separation of chairman and group managing director is not necessary.

Principle 4: Board MembershipThe NC was formed on 8 September 2003 with two independent Directors, Mr Prabhakaran Narayanan Nair and Mr Lee Hock Lye and our Group Executive Director Mr Simon Ong Chin Sim. The Chairman of the NC is Mr Prabhakaran Narayanan Nair. On 25 February 2004, two more directors were appointed to the NC namely, Mr Benedict Soh Siak Poh and Mr Khoo Ho Tong. The principal functions of the NC are as follows:-

• to re-nominate existing Directors, having regard to their contribution and performance;• to determine on an annual basis whether or not a Director is independent; and• to decide whether a Director is able to and has been adequately carrying out his duties as a Director of the Company, particularly when

the Director has multiple board representations.

Principle 5: Board PerformanceThe NC decides on how the Board’s performance is to be evaluated and to propose objective performance criteria, subject to the Board’s approval, which address how the Directors have enhanced long-term shareholder’s value. The performance evaluation takes into consideration a number of factors, including achieving of financial targets, performance of the Board, performance of individual directors vis-à-vis attendance and contributions during Board meetings, as well as other factors set out in the Code. The Board also considers implementing a process to be carried out by the NC for assessing the effectiveness of the Board as a whole and for assessing the contribution from each individual Director to the effectiveness of the Board. Each member of the NC shall abstain from voting on any resolution in respect of the assessment of his performance or re-nomination as a Director.



Principle 6: Access to InformationThe Company makes available to all Directors its monthly management accounts and other financial statements, together with all other relevant information. The Directors have also been provided with the contact details of the Company’s Senior Management and Company Secretary to facilitate separate and independent access.

The Company Secretary attends the Board meetings. Together with members of the Company’s Management, the Company Secretary is responsible for and to ensure that appropriate procedures are followed and that the requirements of the Companies Act, Chapter 50, and the provisions in the Listing Manual of the SGX-ST are complied with.

2. Remuneration Matters

Principle 7: Procedures for Developing Remuneration PoliciesThe Remuneration Committee (“RC”) was formed on 8 September 2003 and comprises two independent Directors, Mr Lee Hock Lye and Mr Prabhakaran Narayanan Nair, and one non-executive Director, Mr Khoo Ho Tong who is also the Chairman of the RC.

The role of the Remuneration Committee is to review and recommend to the Board, an appropriate and competitive framework of remuneration for the Board and key executives to ensure that the structure is competitive and sufficient to attract, retain and motivate senior management to run the company successfully in order to maximize shareholders’ value. The written terms of reference of the Remuneration Committee provides for a formal and transparent procedure for fixing the remuneration packages of individual directors, and no director is involved in deciding his own remuneration.

Principle 8: Level and Mix of RemunerationService AgreementsThe Company had, on 11 June 2003, entered into separate service agreements with Mr Benedict Soh Siak Poh and Mr Simon Ong Chin Sim. Each service agreement is valid for an initial period of three (3) years from 1 July 2003 and shall, upon expiry, be automatically renewed on a three-year basis on such terms and conditions as the parties shall agree.

Pursuant to the terms of the respective service agreements, both Benedict Soh and Simon Ong are each entitled to receive a fixed monthly salary and an annual variable and discretionary bonus of up to three months’ salary. In addition, they will also be paid an incentive bonus of three per cent (3%) of the consolidated PBT of the Group.

The Company will reimburse all expenses incurred by them in connection with their car and transport, such expenses include travelling expenses, petrol, car park charges, maintenance and repair expenses, road tax and insurance expenses.

Under the service agreements, the remuneration of Benedict Soh and Simon Ong are subject to review by the Board on the 1st day of July in each year of service. The Board shall review the terms of the service agreements when they are renewed upon expiry.

Other Incentive Bonus ArrangementsMr Anthony Chong Siew Ling, the Executive Director is entitled for an incentive bonus of 2.4% and 3% of PBT in Kingsmen Environmental Graphics Pte Ltd and Kingsmen Exhibits Pte Ltd, the subsidiaries of the Company. The incentive bonus will be paid within two weeks after the approval of the audited accounts by the board of the respective subsidiaries.

Independent and Non-executive DirectorsAll independent and non-executive Directors do not have service contracts with the Company. However, a fixed fee will be paid, which is determined by the Board, taking into account the effort, time spent and responsibilities of each independent or non-executive Director. The fees are subject to approval of the shareholders at each AGM.




Principle 9: Disclosure on RemunerationThe remuneration of directors and key executives are set out below:

Bonus/Fees Salary Incentives Benefits Total

% % % % %Remuneration band & name of director

$250,000 to below $500,000Benedict Soh Siak Poh 10% 74% 16% – 100%Simon Ong Chin Sim 9% 74% 17% – 100%

Below $250,000Anthony Chong Siew Ling 15% 73% 12% – 100%

A breakdown, showing the level and mix of top six key executives in FY2004 is as follows:-

Bonus/Fees Salary Incentives Benefits Total

% % % % %Remuneration of top 6 key executives (who are not directors)

$150,000 to below $200,000Stephen Lim Hock Chye 9% 56% 35% – 100%Ong Chin Kwan 3% 84% 12% – 100%

Below $150,000Tan Kwong Ngiap 4% 86% 10% – 100%Michael Ng Hung Chiao 4% 82% 14% – 100%Yee Chee Kong 4% 82% 14% – 100%Alex Wee Huat Seng 4% 82% 14% – 100%

* Ong Chin Kwan is an immediate family member of a director. Other than as disclosed, there are no other employees who are related to a director, whose remuneration exceeds S$150,000.

On 11 August 2003, the shareholders of the Company at an Extraordinary General Meeting had approved the Kingsmen Share Option Scheme (“the Scheme”). On 26 April 2004, the shareholders of the Company at an Extraordinary General Meeting approved the grant of options at a discount to the market price under the Scheme to cater to situations where the stock market performance has overrun the general market conditions. The Scheme provides an opportunity for directors and employees of our Group to participate in the equity of the Company. A summary of the Scheme was set out on pages 132 to 139 of the Company’s prospectus dated 9 September 2003. The Rules of the Scheme were set out on pages 201 to 218 of the Prospectus. The Scheme is administered by the Remuneration Committee.

The table below shows the participants who are either directors of the Company, controlling Shareholders or their Associates, or who receive 5% or more of the total number of options available under the Scheme:

Aggregate options Aggregate options Aggregategranted since exercised since options

Options granted commencement commencement outstanding during the of the Scheme to of the Scheme to as at end of

financial year end of financial year end of financial year financial year SubscriptionName of participant under review under review under review under review Price

Anthony Chong Siew Ling 200,000 200,000 – 200,000 $0.21Ong Chin Kwan 200,000 200,000 – 200,000 $0.25

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


During the financial year, 3,300,000 share options were granted and accepted by employees under the Scheme. All the aforesaid options granted during the financial year under review were granted at the exercise price of $0.21 per share (for the option period from 31 May 2005 to 31 May 2009), save for the 200,000 share options granted to Ong Chin Kwan at the exercise price of $0.25 (for the option period from 21 May 2005 to 21 May 2009).

Except for the above, no options to take up unissued shares of the Company or any subsidiary were granted and no shares were issued by virtue of the exercise of options to take up unissued shares of the Company or any subsidiary.

3. Accountability and Audit

Principle 10: AccountabilityIn line with continuous disclosure obligations of the Company and pursuant to the Listing Manual of the SGX-ST and the Companies Act, Chapter 50, the Board’s policy is that shareholders shall be informed of all major developments of the Company. Information is communicated to shareholders on a timely basis through SGXNET and the press.

Principle 11: Audit CommitteeThe Audit Committee (“AC”) was formed on 8 September 2003 and comprises two independent Directors, Mr Lee Hock Lye and Mr Prabhakaran Narayanan Nair, and one non-executive Director, Mr Khoo Ho Tong. Mr Lee Hock Lye is the Chairman of the AC.

Mr Lee Hock Lye is an Associate of the Chartered Institute of Bankers, UK and a member of the Singapore Institute of Directors. He is currently Managing Director at HSBC Private Bank (Suisse) SA. Mr Lee graduated with a Bachelor of Social Sciences (Honours) degree in Economics from the University of Singapore. Mr Prabhakaran Narayanan Nair is an Advocate and Solicitor of Singapore and is currently a partner of a law firm in Singapore, Messrs Ong Tan & Nair. He has been practicing law in this law firm since 1986 and obtained his law degree from the University of Singapore. Mr Khoo Ho Tong is a partner of a public accounting firm, Messrs H.T Khoo & Company, and has been a practicing public accountant for over 20 years. Mr Khoo is a Fellow Certified Public Accountant in Singapore. The Board is of the view that the AC has the necessary experience and expertise required to discharge its duties.

The AC has scheduled a minimum of three meetings in each financial year. The meetings shall be held, inter alia, for the following purposes:-

• reviewing the Company’s half year results announcements, the financial year statements of the Company and the consolidated financial statements of the group before their submission to the Board of Directors for approval of release of the results announcement to the SGX-ST;

• reviewing the audit plans and reports of the external auditors and to consider the effectiveness of the actions taken by Management on the auditors’ recommendations;

• reviewing the assistance and co-operation given by Management to the external auditors;• discussing problems and concerns, if any, arising from the interim and final audits;• nominating external auditors for re-appointment; and• reviewing interested person transactions, as defined in the Listing Manual of the SGX-ST.

The AC has reviewed the volume of non-audit services provided to the Company by the external auditors, and being satisfied that the nature and extend of such services will not prejudice the independence and objectivity of the external auditors, is pleased to confirm their re-nomination.

The AC annually reviews the independence of the external auditors.

In addition, the AC is given the task to commission investigations into matters where there is suspected fraud or irregularity, or failure of internal controls or infringement of any law, rule or regulation which has or is likely to have a material impact on the Company’s operating results or financial position, and to review its findings.

The AC will meet with the external auditors, without the presence of Management, when necessary, to review the adequacy of audit arrangement, with emphasis on the scope and quality of their audit, the independence, objectivity and observations of the auditors.

Principle 12: Internal ControlsThe Board believes that, in the absence of any evidence to the contrary, the system of internal controls maintained by Management and that was in place throughout the financial year and up to the date of this report is adequate to safeguard the shareholders’ investment and the Company’s assets and provides reasonable, but not absolute, assurance against material financial misstatements or loss, and include the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate





legislation, regulation and best practice, and identification and containment of business risk. The Board notes that no system of internal control could provide absolute assurance against the occurrence of material errors, poor judgement in decision-making, human error, losses, fraud or other irregularities.

Principle 13: Internal AuditAt present, the Company does not have in place an internal audit function. The Board is reviewing the necessity for this function and will be onsidering establishing this function in the current year.

4. Communication with Shareholders

Principle 14: Communication with ShareholdersPrinciple 15: Greater Shareholder ParticipationThe Company does not practise selective disclosure. Price sensitive information is first publicly released before the Company meets with any group of investors or analysts. Results and annual reports are announced or issued within the mandatory period and will also be made available to the public on the Company’s website.

The Company has an external public relations firm to assist in all matters of communication with its investors, analysts, and media as well as to attend to their queries.

All shareholders of the Company will receive the Company’s annual report and notice of AGM. At AGMs, shareholders will be given the opportunity and time to air their views and ask Directors or Management questions regarding the Company.

The Articles of Association of the Company allow members of the Company to appoint proxies to attend and vote on their behalf.

5. Dealings in SecuritiesThe Company has adopted policies in line with the Best Practices Guide set out in the Listing Manual of the SGX-ST on dealings in the Company’s securities.

The Company advises its officers against dealing in the Company’s shares on short-term considerations, and prohibits such dealings when they are in possession of unpublished price-sensitive information. They are also not allowed to deal in the Company’s shares during the period commencing one month before the announcement of the Company’s half-yearly or full year results and ending on the date of the announcement of the results.

6. Interest Person TransactionsThe Company has adopted an internal policy in respect of any transaction with interested person which set out the procedures for review and approval of such transactions.

All interested person transactions will be documented and submitted periodically to the AC for their review to ensure that such transactions are carried out at arm’s length basis and on normal commercial terms and are not prejudicial to the Company.

The AC reviewed the following significant transactions entered into by the Company with its interested persons for the year ended 31 December 2004 in accordance with its existing procedures.

The Board confirms that these interested person transactions were entered into at arm’s length basis and on normal commercial terms and were not prejudicial to the shareholders of the Company.

7. Risk Management and ProcessThe Company sets up and establishes risk management guidelines, policies and procedures for all divisions. As such, the Group is able to be consistent and put in place various control mechanisms.

In addition, all transactions undertake risk analysis whenever new projects are embarked and all necessary steps to manage risks in projects will be taken. The financial team also assists in risk management process by identifying and highlighting areas of concern while conducting financial checks.

8. The Best Practica GuideThe Company has complied with the Best Practices Guide issued by the SGX-ST.


corporate information

DirectorsBenedict Soh Siak Poh(Group Managing Director)

Simon Ong Chin Sim(Group Executive Director)

Anthony Chong Siew Ling(Executive Director)

Khoo Ho Tong(Non-executive Director)

Prabhakaran Narayanan Nair(Independent Director)

Lee Hock Lye(Independent Director)

Company SecretariesWee Woon Hong Judith Low Chu Li

Audit CommitteeLee Hock Lye (Chairman)Prabhakaran Narayanan NairKhoo Ho Tong

Nominating CommitteePrabhakaran Narayanan Nair (Chairman)Lee Hock LyeSimon Ong Chin SimBenedict Soh Siak PohKhoo Ho Tong

Remuneration CommitteeKhoo Ho Tong (Chairman)Lee Hock LyePrabhakaran Narayanan Nair

Share RegistrarLim Associates Pte Ltd10 Collyer Quay#19-08 Ocean BuildingSingapore 049315

Registered Office3 Changi South LaneSingapore 486118Tel 6880 0088Fax 6880 0038

AuditorsErnst & YoungCertified Public Accountants10 Collyer Quay#21-01 Ocean BuildingSingapore 049315Partner-in-charge: Max LohDate of appointment: 23 January 2003

BankersUnited Overseas Bank LimitedHongkong & Shanghai Bank CorporationThe Development Bank of Singapore Ltd


financial report

Contents

Report of the Directors 32Statement by Directors 36Auditors’ Report 37Profit and Loss Accounts 38Balance Sheets 39Statement of Changes in Equity 40Consolidated Statement of Cash Flows 41Notes to the Financial Statements 43


financial report

report of the directors

The directors are pleased to present their report to the members together with the audited financial statements of Kingsmen Creatives Ltd(“the Company”) and the consolidated financial statements of the Company and its subsidiaries (“the Group”) for the year ended 31December 2004.

DirectorsThe directors of the Company in office at the date of this report are:

Benedict Soh Siak PohSimon Ong Chin SimAnthony Chong Siew LingKhoo Ho TongPrabhakaran Narayanan NairLee Hock Lye

Issue of shares and debenturesDuring the financial year, the Company issued 1,093,690 new ordinary shares of par value of $0.075 each at an issue price of $0.21 pershare as part consideration to acquire 90% of the issued and paid up capital of Kingsmen Indochina Pte Ltd.

No debentures were issued by the Company or its subsidiaries during the financial year.

Acquisition and disposals of subsidiariesDuring the financial year, the Company acquired the following subsidiaries:

` Net tangibleName of subsidiaries Interest Consideration assets acquired

% $’000 $’000

Kingsmen Indochina Pte Ltd & its subsidiary 90 2,158 469

Pursuant to the Share Acquisition Agreements dated 24 June 2004 and 29 June 2004, the Company acquired Kingsmen Indochina Pte Ltdwith effect from 1 January 2004 through:

- a share-for-share exchange with a fair value of $230,000 for 10% of the issued and paid up capital of the company; and

- a cash payment of $1,928,000 for 80% of the issued and paid up capital of the company.

There were no disposals of subsidiaries during the financial year.

Arrangements to enable directors to acquire shares and debentures

Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement, to which the Companyis a party, whereby directors acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other bodycorporate, other than as disclosed under the “Kingsmen Share Option Scheme” in this report.

04 AR Financial FA 3/31/05 11:45 AM Page 32



Directors’ interests in sharesThe following directors who held office at the end of the financial year had, according to the register of directors’ shareholdingsrequired to be kept under Section 164 of the Companies Act, an interest in shares of the Company and related corporations (otherthan wholly-owned subsidiaries), as stated below:

Direct interest Deemed interestAt At At At At At

Name of director 1.1.2004 31.12.2004 21.1.2005 1.1.2004 31.12.2004 21.1.2005The Company Ordinary shares Ordinary shares Ordinary shares Ordinary shares Ordinary shares Ordinary sharesKingsmen Creatives Ltd of $0.075 each of $0.075 each of $0.075 each of $0.075 each of $0.075 each of $0.075 each

Benedict Soh Siak Poh 5,056,293 5,056,293 5,056,293 25,428,707 25,428,707 25,428,707Simon Ong Chin Sim 5,056,280 5,056,280 5,056,280 25,328,707 25,328,707 25,328,707Anthony Chong Siew Ling 3,123,174 3,123,174 3,123,174 – – –Khoo Ho Tong 50,000 50,000 50,000 – – –Prabhakaran Narayana Nair 100,000 100,000 100,000 – – –Lee Hock Lye – – – – – –

There was no change in any of the above-mentioned interests between the end of the financial year and 21 January 2005.

By virtue of Section 7 of the Companies Act, Benedict Soh Siak Poh and Simon Ong Chin Sim are deemed to have interests in all thesubsidiary companies held by the Company by virtue of their interests in more than 20% of the issued share capital of the Company.

Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options, warrants or debenturesof the Company, or of related corporations, either at the beginning of the financial year or date of appointment if later, or at the end of the financial year.

Directors’ contractual benefitsExcept as disclosed in the financial statements, during the financial year, no director of the Company has received or become entitled to receivea benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is amember, or with a company in which the director has a substantial financial interest.

OptionsThe Kingsmen Share Option Scheme (“the Scheme”) was approved by the members of the Company at an Extraordinary General Meeting held on 11August 2003. On 26 April 2004, the members of the Company approved the grant of incentive options at a maximum discount not exceeding 20% of themarket price under the Scheme. The Scheme, which forms an integral component of its compensation plan, is designed to acknowledge the contribution,which is essential to the well-being and prosperity of the Group, made by the eligible participants. The scheme is adopted to motivate the eligible participantsto greater dedication, loyalty and higher standards of performance, and to give recognition to those who have contributed to the success of the Companyand the Group.

Under the rules of the Scheme, all directors (including non-executive and independent directors) and employees of the Company and itssubsidiaries are eligible to participate in the Scheme. Controlling shareholders will not be eligible to participate in the Scheme.

The Scheme is administered by the Remuneration Committee comprising 3 board members, all of whom are non-executive directors. The RemunerationCommittee is charged with the administration of the Scheme in accordance with the rules of the Scheme. The members of the Remuneration Committee are:

Khoo Ho Tong (Chairman)Lee Hock Lye Prabhakaran Narayanan Nair

The Scheme has two categories of options, being the market price option and the incentive option. The exercise price for each share in respect ofwhich an option is exercisable shall be determined by the Remuneration Committee at its absolute discretion and fixed by the Remuneration Committee.

The total number of shares over which options may be granted shall not exceed 15% of the issued share capital of the Company.

Options GrantedAt an Extraordinary General Meeting held on 26 April 2004, a total of 3,300,000 options were granted under the Scheme. The options areexercisable 1 year after the date of grant.



Options (continued)The options were granted to an executive director of the Company and 25 employees of the Group, including an employee who is animmediate family member of a director of the Company. No options have been granted to the controlling shareholders of the Company.

The exercise price of the options is equal to the average of the last dealt prices for a share as determined by reference to the daily officiallist published by the SGX-ST for the five consecutive market days immediately preceding the offering date of that option.

The details of the options granted during the financial year and outstanding at the end of the financial year are as follows:

AggregateOptions Aggregate options granted options lapsed outstanding No. of holders

Date of grant during the during the as at as at Exerciseof options financial year financial year 31.12.2004 31.12.2004 price Exercise period

21.05.2004 200,000 – 200,000 1 $0.25 21.05.2005 – 21.05.2009

31.05.2004 3,100,000 – 3,100,000 25 $0.21 31.05.2005 – 31.05.20093,300,000 – 3,300,000 26

The options granted to an associate of the Company’s controlling shareholders and participants who received 5% or more of the totalnumber of options available under the Scheme are as follows:

Aggregate options Aggregate optionsOptions granted during lapsed during the outstanding as at

Name of participants the financial year financial year 31.12.2004

Executive director of the Company

Mr Anthony Chong Siew Ling 200,000 – 200,000

Associate of the Company’s controlling shareholders

Mr Ong Chin Kwan 200,000 – 200,000

Employees

Mr Gerald Tay Kay Sock 200,000 – 200,000Mr Goh Ting Meng 200,000 – 200,000Mr Michael Ng Hung Chiao 200,000 – 200,000Mr Anthony Ang Kwee Tong 200,000 – 200,000Mr Cheong Chai Keng 200,000 – 200,000Mr Alex Wee Huat Seng 200,000 – 200,000Mr Yee Chee Kong 200,000 – 200,000Ms Judith Low Chu Li 200,000 – 200,000

Except as disclosed above, no other options to take up unissued shares of the Company or its subsidiaries were granted and no shareswere issued by virtue of the exercise of options to take up unissued shares of the Company or its subsidiaries. No other options to take upunissued shares in the Company or its subsidiaries were outstanding as at the end of the financial year.




Audit committeeThe Audit Committee comprises 3 board members, all of whom are non-executive directors. The majority of the members areindependent. The members of the Audit Committee at the date of this report are:

Lee Hock Lye (Chairman)Prabhakaran Narayanan NairKhoo Ho Tong

During the year, the Audit Committee has held 7 meetings and performed the functions specified in the Companies Act.

In performing its functions, the Audit Committee reviewed the overall scope of the external audit and the assistance given by theCompany’s officers to the auditors. The Audit Committee met with the external auditors to discuss the results of their audit and theirevaluation of the Group’s system of accounting internal control. The Audit Committee also reviewed the financial statements of theCompany and the consolidated financial statements of the Group for the financial year ended 31 December 2004 as well as the externalauditors’ report thereon.

The Audit Committee has full access to and co-operation by the Company’s management and has full discretion to invite any director orexecutive officer to attend its meetings. The Financial Controller attends meetings of the Audit Committee. The auditors have unrestrictedaccess to the Audit Committee. The Audit Committee has reasonable resources to enable it to discharge its functions properly.

The Audit Committee recommends to the Board of Directors the nomination of Ernst & Young as external auditors at the forthcomingAnnual General Meeting of the Company.

AuditorsErnst & Young have expressed their willingness to accept re-appointment as auditors.

On behalf of the Board,

Benedict Soh Siak Poh Simon Ong Chin SimDirector Director

Singapore24 March 2005


We, Benedict Soh Siak Poh and Simon Ong Chin Sim, being two of the directors of Kingsmen Creatives Ltd, do hereby state that, in theopinion of the directors:

(i) the accompanying balance sheets, consolidated profit and loss account, consolidated statement of changes in equity and consolidated cash flow statement together with the notes thereto, set out on pages 38 to 70, are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2004 and of the results of the business, changes in equity and cash flows of the Group for the year then ended;

(ii) 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,

Benedict Soh Siak Poh Simon Ong Chin SimDirector Director


statement by directorspursuant to section 201(15)

statement by directors



auditors’ report

We have audited the accompanying financial statements of Kingsmen Creatives Ltd (“the Company”) and its subsidiaries (“the Group”)set out on pages 38 to 70 for the year ended 31 December 2004. These financial statements are the responsibility of the Company'sdirectors. 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 theaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statementpresentation. 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 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 31 December 2004 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 subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

ERNST & YOUNGCertified Public Accountants


auditors’ reportto the members of Kingsmen Creatives Ltd


financial report

Group1.1.2004 to 16.12.2002 to

Note 31.12.2004 31.12.2003$’000 $’000

Revenue 3 63,261 53,477Cost of sales (46,794) (38,597)

Gross profit 16,467 14,880

Other operating income 4 814 1,005Depreciation of property, plant and equipment (544) (440)Salaries and employee benefits 4 (10,087) (9,014)Other operating expenses (4,865) (4,333)

Profit from operations 4 1,785 2,098

Financial expenses 4 (82) (76)Financial income 4 34 104

Profit before share of results of associates 1,737 2,126

Share of results of associates 268 –

Profit before taxation 2,005 2,126

Taxation – group companies 6 (368) (547)– associates (57) –

Profit after taxation 1,580 1,579

Minority interests (166) (51)

Net profit for the year/period 1,414 1,528

Earnings per share (cents) 26Basic 1.41 1.78Diluted 1.41 1.78

The accounting policies and explanatory notes on pages 38 to 70 form an integral part of the financial statements.

consolidated profit and loss accountsfor the year ended 31 December 2004



financial report

balance sheetsas at 31 December 2004

Group CompanyNote 2004 2003 2004 2003

$’000 $’000 $’000 $’000

Non-current assetsProperty, plant and equipment 7 2,350 2,252 119 113Goodwill on consolidation 8 1,689 – – – Investment in subsidiaries 9 – – 7,677 5,519Investment in associates 10 1,682 – 1,471 – Other investments 11 381 381 381 381

Current assetsInventories 12 2 2 – – Contracts work-in-progress 13 756 1,541 – – Trade receivables 14 21,901 22,832 622 588Other receivables, deposits & prepayments 15 1,014 544 225 130Amount due from subsidiaries 16 – – 1,304 4,248Dividends receivable – – 1,138 1,290Fixed deposits 199 3,800 – – Cash on hand and at bank 3,161 1,664 89 161

27,033 30,383 3,378 6,417

Current liabilitiesProgress billings in excess of contracts work-in-progress 13 921 1,760 – – Trade payables 17 12,995 11,511 404 346Deferred income 18 325 1,145 – – Other payables and accruals 19 4,133 3,593 508 333Amount due to subsidiaries 16 – – 407 227Interest-bearing loans and borrowings 20 148 1,218 – – Provision for taxation 382 611 4 –

18,904 19,838 1,323 906

Net current assets 8,129 10,545 2,055 5,511

Non-current liabilitiesInterest-bearing loans and borrowings 20 305 308 – – Deferred taxation 21 133 103 – – Net assets 13,793 12,767 11,703 11,524

EquityShare capital 22 7,582 7,500 7,582 7,500Share premium 23 3,400 3,252 3,400 3,252Reserves 24 2,126 1,519 721 772

13,108 12,271 11,703 11,524Minority interests 685 496 – – Total equity and minority interests 13,793 12,767 11,703 11,524



financial report

Share Share Revenue TranslationGroup capital premium reserve reserve Total

$’000 $’000 $’000 $’000 $’000

Balance at 16 December 2002 # – – – #Issue of shares (Note 22) 7,500 – – – 7,500Share premium on issue of ordinary shares (Note 23) – 4,500 – – 4,500Share issuance cost (Note 23) – (1,248) – – (1,248)Net profit for the period – – 1,528 – 1,528Translation adjustment – – – (9) (9)

Balance at 31 December 2003 7,500 3,252 1,528 (9) 12,271

Issue of shares (Note 22) 82 – – – 82Share premium on issue of ordinary shares (Note 23) – 148 – – 148Dividend paid (Note 27) – – (750) – (750)Net profit for the year – – 1,414 – 1,414Translation adjustment – – – (57) (57)

Balance at 31 December 2004 7,582 3,400 2,192 (66) 13,108

# Nominal value of $2.


consolidated statement of changes in equityfor the year ended 31 December 2004



financial report

Group1.1.2004 to 16.12.2002 to31.12.2004 31.12.2003

$’000 $’000

Profit before taxation and minority interests 2,005 2,126Adjustment for :

Depreciation of property, plant and equipment 544 440Gain on disposal of property, plant and equipment – (14)Property, plant and equipment written off 24 – Provision for impairment in value of investment – 100Interest income (34) (104)Interest expense 82 76Share of profit before tax of associates (268) – Currency realignment (42) (7)

Operating profit before working capital changes 2,311 2,617Increase in contracts work-in-progress (net) (51) (1,087)Decrease in inventories – 17Decrease/(increase) in trade and other receivables 1,833 (408)Decrease in trade and other payables (68) (3,622)

Cash from/(used in) operations 4,025 (2,483)Interest paid (82) (76)Interest received 34 104Tax paid (695) (1,128)

Net cash from/(used in) operating activities 3,282 (3,583)

Cash flows from investing activitiesAcquisition of property, plant and equipment (490) (610)Proceeds from sales of property, plant and equipment 1 27Acquisition of subsidiaries, net of cash acquired (Note A) (1,463) 3,609Acquisition of associates (1,471) –

Net cash (used in)/from investing activities (3,423) 3,026

Cash flows from financing activitiesDividends paid on ordinary shares of the Company (750) – Dividends paid to minority shareholders of the subsidiaries (20) – Withdrawal/(placement) of fixed deposit (pledged) 1 (27)Proceeds from issuance of ordinary shares – 6,000Payment of share issuance costs – (1,248)Repayment of finance lease obligations (6) (13)Repayment of long term borrowings (92) (47)

Net cash (used in)/from financing activities (867) 4,665

Net (decrease)/increase in cash and cash equivalents (1,008) 4,108Cash and cash equivalents at beginning of year/period 4,108 –

Cash and cash equivalents at end of year/period (Note B) 3,100 4,108


consolidated statement of cash flowsfor the year ended 31 December 2004


consolidated statement of cash flows

Consolidated Statement of Cash Flows (continued)Notes to the Statement of Cash Flows

Note A: Summary of effects on acquisition of subsidiariesThe attributable assets and liabilities of subsidiaries acquired during the year and the cash flow effect of the acquisition are set out asfollows:

2004 2003$’000 $’000

Property, plant and equipment 81 2,101Trade and other receivables 1,372 22,968Inventories – 19Contracts work-in-progress (net) 3 (1,306)Trade and other payables (1,272) (19,871)Provision for taxation (128) (1,245)Deferred taxation – (50)Interest-bearing loans and borrowings – (430)Fixed deposits (pledged) – 173Cash and cash equivalents 465 3,609Minority interest (52) (449)

Net assets acquired 469 5,519Goodwill arising from the acquisition 1,689 –

Total purchase consideration 2,158 5,519Purchase consideration satisfied by issuance of new shares (230) (5,519)Cash and cash equivalents of subsidiaries acquired (465) (3,609)

Net cash outflow/(inflow) on acquisition of subsidiaries 1,463 (3,609)

Note B: Cash and cash equivalentsCash and cash equivalents included in the cash flow statement comprise the following:

2004 2003$’000 $’000

Cash and bank balances 3,161 1,664Fixed deposits 199 3,800Bank overdraft (Note 20) (61) (1,156)

3,299 4,308Less: fixed deposits (pledged) (199) (200)

Cash and cash equivalents 3,100 4,108

The fixed deposits bear an average effective interest rate of 3% (2003: 3%) per annum, and have an average maturity of 6 months to a year (2003: 6 months to a year).

The fixed deposits of $199,000 (2003: $200,000) are pledged to the banks for overdraft facilities granted to certain subsidiaries (Note 20).




notes to the financial statements

1. Corporate informationThe financial statements of Kingsmen Creatives Ltd (“the Company”) for the year ended 31 December 2004 were authorised for issue in accordance with a resolution of the directors on 24 March 2005.

The Company is a limited company domiciled and incorporated in Singapore. The address of the Company’s registered and principal place of business is 3 Changi South Lane, Singapore 486118.

The principal activity of the Company is that of investment holding. The principal acitivities of the subsidiaries are disclosed in Note 9 of the financial statements.

The Group and Company had 424 (2003: 222) and 18 (2003: 18) employees as of 31 December 2004 respectively.

2. Significant accounting policies

(a) Basis of preparationThe financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS) as required by the Companies Act. In previous years, the financial statements were prepared in accordance with Singapore Statements of Accounting Standard (SAS). The transition from SAS to FRS did not result in any significant change in accounting policies.

The financial statements have been prepared on a historical cost basis, and are presented in Singapore Dollars (SGD or $).

The accounting policies have been consistently applied by the Company and the Group, and are consistent with those used in the previous financial period.

(b) Change in accounting policies With effect from 1 January 2004, the Group has early adopted Financial Reporting Standard 103: Business Combinations (“FRS 103”). The early adoption of FRS 103 also requires the early adoption of revised Financial Reporting Standard 36: Impairment of Assets (“FRS 36”) and revised Financial Reporting Standard 38: Intangible Assets (“FRS 38”).

(c) Principles of consolidationThe consolidated financial statements comprise the financial statements of the Company and its subsidiaries, after elimination of all material intercompany transactions and balances and any unrealised profit or loss on intercompany transactions. The equity and net profit attributable to minority shareholders interests are shown separately in the consolidated balance sheet and consolidated profit and loss account respectively.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which the Group cease to have control of the subsidiaries. Acquisitions of subsidiaries are accounted for using the purchase method of accounting.

When a subsidiary or an associate is acquired, any excess or deficiency of the purchase consideration over the fair values of the Group’s share of the identifiable net assets acquired represents goodwill or negative goodwill.

FRS 103 requires goodwill acquired in a business combination to be measured at cost less any accumulated impairment losses. Impairment is tested annually, or more frequently if events or changes in circumstances indicate that the goodwill might be impaired.

Investments in associates are accounted for in the consolidated financial statements using the equity method. The Group’s share of the post-acquisition results of associates is included in the consolidated profit and loss account. The Group’s share of the post-acquisition accumulated profits and reserves of associates is included in the carrying value of the investment in the consolidated balance sheet. Unrealised gains arising from transactions with associates are eliminated to the extent of the Group’s interest in the associates, against the investment in associates.



2. Significant accounting policies (continued)(c) Principles of consolidation (continued)

Goodwill arising from the acquisition of associates is stated at cost less any accumulated impairment losses. Impairment is tested annually, or more frequently if events or changes in circumstances indicate that the goodwill might be impaired.

The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

(d) Subsidiaries A subsidiary is a company in which the Group directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

(e) Associates An associate is a company, not being a subsidiary, in which the Group has a long-term interest of between 20% and 50% of the equity and in whose financial and operating decisions the Group exercises significant influence.

In the Company’s separate financial statements, investments in associates are accounted for at cost less impairment losses.

(f) Other investmentsInvestment in unquoted shares is held on a long term basis for their investment potential and income, and is stated at cost. Provision is made for any impairment in values.

(g) Cash and cash equivalentsCash and cash equivalents comprise cash on hand and at bank, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to an insignificant risk of change in value. Cash on hand and in banks and short-term deposits which are held to maturity are carried at cost.

For the purposes of the cash flow statement, cash and cash equivalents are shown net of outstanding bank overdrafts, which are repayable on demand and which form an integral part of the Group’s cash management.

(h) Revenue recognitionRevenue 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. The following specific recognition criteria must also be met before revenue is recognised.

i) Project revenueWhen the contract outcome can be reliably measured :

Revenue is recognised by reference to the percentage of completion method. Percentage of completion is measured by reference to the percentage of costs incurred to date to the total estimated costs for each contract. Changes in job performance, job conditions and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and revenue and are recognised in the period in which the revisions are determined.

Where the contract outcome cannot be reliably measured :

Revenue is recognised only to the extent of the expenses recognised, which are recoverable.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the outcome of a contract cannot be estimated reliably, contract costs are recognised as an expense in the period in which they are incurred.




2. Significant accounting policies (continued)(h) Revenue recognition (continued)

ii) Subcontract income/rental of equipmentRevenue is recognised when the services are rendered.

iii) DividendsDividend income is recognised when dividends are declared.

iv) Management fees, corporate fee, rental income and interest incomeIncome is recognised on an accrual basis.

v) Sale of goodsRevenue is recognised upon the passing of title to the customer which generally coincides with delivery and acceptance of the goods sold.

(i) Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditure for additions, improvements and renewals are capitalised and expenditure for maintenance and repairs are charged to the profit and loss account. When the 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.

The carrying amounts, which are stated at cost, are reviewed at each balance sheet date to assess whether they are recorded in excess of their recoverable amount and if carrying values exceed this recoverable amount, assets are written down.

(j) DepreciationDepreciation is calculated on the straight line method to write off the cost of the property, plant and equipment over their estimated useful lives which are as follows :-

Leasehold building – 2%Office equipment and computers – 15% – 20%Furniture and fittings – 15%Machinery and exhibition equipment – 15%Motor vehicles – 15%Renovations – 15%

Fully depreciated assets are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these assets.

(k) BorrowingsBorrowing costs are expensed as incurred. Borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with borrowings.

(l) Finance leaseFinance leases, which effectively transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at amounts equal, at the inception of the lease, to the fair value of the leased item or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. Finance charges are charged directly to the profit and loss account.

Depreciation on the relevant assets is charged to the profit and loss account on the basis outlined in paragraph (j) above.



2. Significant accounting policies (continued)(m) Inventories

Stocks consists of materials for electrical wiring and installation. Stock is stated at the lower of cost and net realizable value. Cost is determined on a weighted average basis and includes the cost of purchases and all incidental costs incurred in bringing the stock to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

Provision is made for damaged, obsolete and slow-moving stocks.

(n) Contracts work-in-progressContracts work-in-progress are valued at cost plus attributable profits less progress billings and provision for foreseeable losses. Cost comprises direct materials and labour costs. Provision is made for all losses expected to arise on completion of contracts entered into at the balance sheet date.

(o) Related partiesParties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities.

(p) Operating leaseLeases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the profit and loss account on a straight-line basis over the lease term.

The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(q) Income taxesDeferred 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, except where the timing of the reversal of the temporary difference can be controlled 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 assets and 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, carry-forward of unused tax assets and unused tax losses 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.




2. Significant accounting policies (continued)(r) Employee entitlements

(i) Defined contribution plan

As required by law, the Group makes contributions to the state pension schemes in accordance with local regulatory requirements. The pension contributions are recognised as compensation expense in the same period as the employment that gives rise to the contribution.

(ii) Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for leave as a result of services rendered by employees up to balance sheet date.

(iii)Employee share incentive plan

The Company has an employee share incentive plan for granting of non-transferable options. No compensation cost is recognised upon granting or exercise of the options. When the options are exercised, the proceeds received net of any transaction costs are credited to share capital and share premium as appropriate.

(s) Foreign currency translationTransactions in foreign currencies are measured in SGD and recorded at exchange rates approximating those ruling at the transaction dates. Foreign currency monetary assets and liabilities are measured using the exchange rates ruling at balance sheet date. Non-monetary assets and liabilities are measured using the exchange rates ruling at the transaction dates or, in the case of items carried at fair value, the exchange rates that existed when the values were determined. All resultant exchange differences are recognised in the profit and loss account.

Assets and liabilities of foreign entities are translated into SGD equivalents at exchange rates ruling at balance sheet date. Revenues and expenses are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions. All resultant exchange differences are taken directly to equity. On disposal of a foreign entity, accumulated exchange differences are recognised in the profit and loss account as a component of the gain or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the acquiring entity and are recorded at the exchange rate at the date of the transaction.

(t) ProvisionsProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations 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.

(u) Trade and other receivablesTrade debtors, which generally have 30-90 day terms, are recognised and carried at original invoiced amount less an allowance for any uncollectible amounts, if any. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

(v) Trade and other payablesLiabilities for trade and other creditors, which generally are settled on 30-60 day terms, 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.

Payables to related parties are carried at cost.



2. Significant accounting policies (continued)(w) Impairment of assets

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. All impairment losses are recognised in the profit and loss account whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

An impairment loss is only reversed to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. All reversals of impairment are recognised in the profit and loss account.

3. RevenueGroup

1.1.2004 to 16.12.2002 to31.12.2004 31.12.2003

$’000 $’000

Contract revenue 61,432 51,494Sale of goods 701 1,015Subcontract income 949 902Rental of equipment 179 66

63,261 53,477

4. Profit before taxationProfit before taxation is stated after charging/(crediting) the following:

Group1.1.2004 to 16.12.2002 to31.12.2004 31.12.2003

$’000 $’000

Directors' fees:– Directors of the Company 195 225– Directors of the subsidiaries 53 80

Directors’ remuneration:– Directors of the Company 1,111 968– Directors of the subsidiaries 1,273 1,302

Auditors’ remuneration:– Auditors of the Company 109 95– Other auditors 17 15

Bad debt recovered (trade) (78) (7)Bad debt written off (trade) (Note 14) 11 28Provision for doubtful debts (trade) 244 66Write-back of provision for doubtful debts (trade) (16) (17)Provision for stock obsolescence – 4Property, plant and equipment written off 24 – Provision for impairment in value of other investment (Note 11) – 100Operating lease expenses 1,056 1,056Net foreign exchange loss 130 104




4. Profit before taxation (continued)

Group1.1.2004 to 16.12.2002 to31.12.2004 31.12.2003

$’000 $’000

Other operating income comprises:Administrative income 13 18Corporate fee income 475 532Gain on disposal of property, plant and equipment (2) 14Management fee income – 43Rental income 306 320Trade creditors written back – 74Others 22 4

814 1,005

Salaries and employee benefits (including directors’ remuneration) comprise:

Salaries, wages and bonuses 8,980 7,887Pension contribution 807 903Other employee benefits 276 232Provision for unutilised leave 24 (8)

10,087 9,014

Financial expenses comprise:Interest expense on:– hire purchase 2 1– term loan 29 39– bank overdraft 37 25– related parties 14 10– others – 1

82 76

Financial income comprises:-Interest income on:– fixed deposit 29 19– related parties 5 85

34 104

5. Directors’ remunerationNumber of directors of the Company in remuneration bands is as follows:

$500,000 and above – –$250,000 to $499,999 2 2Below $250,000 1 1

3 3



6. Taxation – group companiesGroup

1.1.2004 to 16.12.2002 to31.12.2004 31.12.2003

$’000 $’000

Current taxationCurrent year/period 343 506Overprovision in respect of previous years (5) (12)

338 494Deferred taxation (Note 21) 30 53

368 547

A reconciliation of the statutory tax rate to the Group’s effective tax rate applicable to the profit before taxation for the year/period ended 31 December was as follows:

Group1.1.2004 to 16.12.2002 to31.12.2004 31.12.2003

% %

Domestic statutory tax rate 20.0 22.0

Tax effect of temporary differences (recognised)/not recognised 0.1 (0.1)Tax effect of expenses not deductible for tax purposes 1.7 3.2Utilisation of tax losses and capital allowances brought forward (1.0) (0.2)Tax effect of exempt income (3.9) (2.3)Overprovision in respect of previous years – (0.2)Differences in tax rates of overseas subsidiaries (0.3) 0.2Others 2.3 3.1Effective tax rate 18.9 25.7

As at 31 December 2004, the Group has unutilised tax losses of approximately $58,000 (2003: $117,000) and unabsorbed capital allowances of $nil (2003: $5,000) that are available for offset against future taxable income, for which no deferred tax asset is recognized due to uncertainty to its recoverability.

The use of the tax losses and capital allowance is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate.




7. Property, plant and equipment

Machinery Officeand equipment Furniture

Leasehold exhibition and Motor andbuilding equipment computers vehicles fittings Renovations Total

The Group $’000 $’000 $’000 $’000 $’000 $’000 $’000

At costAt 1 January 2004 239 1,636 1,189 383 444 62 3,953Reclassifications – 13 (9) – (4) – – Arising from acquisition of subsidiaries – 426 125 111 8 6 676Additions – 113 279 101 64 53 610Disposals/written off – (1) (21) (3) – (18) (43)Translation differences (9) (1) (13) (9) (11) (1) (44)At 31 December 2004 230 2,186 1,550 583 501 102 5,152

Accumulated depreciationAt 1 January 2004 46 605 662 203 166 19 1,701Reclassifications – 7 (8) – 1 – – Arising from acquisition of subsidiaries – 419 103 59 8 6 595Charge for the financial year 2 242 186 56 42 16 544Disposals/written off – (1) (13) (1) – (3) (18)Translation differences (1) (1) (8) (7) (2) (1) (20)At 31 December 2004 47 1,271 922 310 215 37 2,802

Charge for 2003 2 224 139 40 22 13 440

Net book valueAt 31 December 2004 183 915 628 273 286 65 2,350At 31 December 2003 193 1,031 527 180 278 43 2,252

During the year, the Group acquired plant and equipment with an aggregate fair value of $120,000 (2003: $nil) by means of finance leases. The net book value of plant and equipment held under finance leases at the end of the financial year was $123,000 (2003: $8,000).

The leasehold building of the subsidiary in Malaysia, with a net book value of $184,000 (2003: $193,000) is pledged to banks as security for banking facilities granted (Note 20).



7. Property, plant and equipment (continued)

Officeequipment & Motor

computers vehicles TotalThe Company $’000 $’000 $’000

At costAt 1 January 2004 139 2 141Additions 35 6 41Disposals – (2) (2)At 31 December 2004 174 6 180

Accumulated depreciationAt 1 January 2004 27 1 28Charge for the financial year 33 1 34Disposals – (1) (1)At 31 December 2004 60 1 61

Depreciation for 2003 27 1 28

Net book valueAt 31 December 2004 114 5 119At 31 December 2003 112 1 113

8. Goodwill on consolidation

Group2004 2003$’000 $’000

Goodwill on consolidation 1,689 –

Goodwill on consolidation represents the excess of the cost of acquisition of the subsidiary over the fair value of the Group’s share of the identifiable net assets acquired.




9. Investment in subsidiaries

Company2004 2003$’000 $’000

Unquoted shares, at cost 7,677 5,519

Details of subsidiaries are as follows:

Percentage ofName of Company equity held by Cost of(Country of the Group investmentincorporation 2004 2003 2004 2003and business) Principal activities % % $’000 $’000

At costKingsmen Exhibits Pte Ltd Advertising contractors and 100 100 1,562 1,562& its subsidiary* agents; design and production(Singapore) of exhibitions, decorations

and museums

Kingsmen Projects Pte Ltd* Design and production of 100 100 2,121 2,121(Singapore) architectural interiors,

decorations and museums

Kingsmen Design Pte Ltd* Design consultancy, 100 100 839 839(Singapore) planning management

Hi-Light Electrical Pte Ltd* Electrical engineering 80 80 301 301(Singapore)

I-Promo Events & Interactive promotion services 70 70 171 171Marketing Pte Ltd*(Singapore)

Kingsmen Indochina Pte Ltd Design and production of 90 – 2,158 –& its subsidiary* architectural interiors,(Singapore) decorations and museums

Kingsmen Sdn Bhd & its Design and production of 71 71 525 525subsidiaries** interiors, exhibitions,(Malaysia) decorations and museums

7,677 5,519

Subsidiary owned by Kingsmen Exhibits Pte Ltd

Kingsmen Environmental Graphic design and productions 80 80 – –Graphics Pte Ltd*(Singapore)



9. Investment in subsidiaries (continued)


At costSubsidiary owned by Kingsmen Indochina Pte Ltd

Kingsmen Vietnam Design and production of 100 100 – –Co., Ltd*** interiors, exhibitions,(Vietnam) decorations and museums

Subsidiaries owned by Kingsmen Sdn Bhd

Keb Designers & Producers Design and production of 100 100 – –Sdn Bhd** interiors, exhibitions,(Malaysia) decorations and museums

Kingsmen-Keb Systems Design and production of 100 100 – –Sdn Bhd** interiors, exhibitions,(Malaysia) decorations and museums

Kingsmen Environmental Design and production of 80 80 – –Graphics Sdn Bhd** interiors, exhibitions,(Malaysia) decorations and museums

* Audited by Ernst & Young, Singapore** Audited by Ernst & Young, Malaysia*** Audited by Auditing and Consulting Joint Stock Company, Vietnam

During the financial year, the Company acquired 90% of the voting shares of Kingsmen Indochina Pte Ltd with effect from 1 January 2004. Kingsmen Indochina Pte Ltd is a private limited company incorporated in Singapore, and its principal activities are the design and production of architectural interiors, decorations and museums.

The Company paid cash of $1,928,000 and issued 1,093,690 new ordinary shares at par value of $0.075 each at an issue price of $0.21 per share to acquire 90% of the issued and paid up capital of Kingsmen Indochina Pte Ltd. The acquisition was accounted for using the purchase method of accounting.




9. Investment in subsidiaries (continued)

The effect of the acquisition of Kingsmen Indochina Pte Ltd and its subsidiary on the financial position of the Group at 31 December 2004 and its results for the year is shown below:

Acquisition$’000

Total assets at 31 December 2004 2,370

Total liabilities at 31 December 2004 1,662

Contributions to the Group for the year:– turnover 5,848– profit before tax 867– profit after tax 690

10. Investment in associates

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Unquoted shares, at cost 1,471 – 1,471 – Share of post-acquisition reserves 211 – – –

1,682 – 1,471 –

Investment in associates include the following goodwill:Group

2004 2003$’000 $’000

Goodwill on acquisition 829 –

Details of associates are as follows:


At cost

Ascend Computer Rental Renting and selling audio-visual, 40 – 367 –Pte Ltd & its subsidiary# computer and peripheral equiment(Singapore)

Kingsmen Korea Limited## Design and production of 25 – 541 –(Korea) architectural interiors,

decorations and museums



10. Investment in associates (continued)


At costKingsmen Nikko Limited## Advertising contractors and agents; 30 – 563 –(Japan) design and production of exhibitions,

decorations and museums1,471 –

# Audited by C Y Ng & Company, Singapore## Not required to be audited by law of country of incorporation

11. Other investments

Group and Company2004 2003$’000 $’000

Unquoted shares, at cost 481 481Less:Provision for impairment (100) (100)

381 381Movements in provision for impairment:

At beginning of the year/period 100 –Provision for the year/period (Note 4) – 100At end of the year/period 100 100

12. Inventories

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Finished goods– At net realisable value 2 2 – –

Finished goods are stated after deducting provision for obsolescence 32 32 – –




13. Contracts work-in-progress

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Contracts work-in-progress in excess of progress billings:– costs 3,046 1,406 – – – attributable profits 260 162 – – – progress billings received and receivable (2,550) (27) – –

756 1,541 – –

Progress billings in excess of contracts work-in-progress:– costs 1,428 1,274 – – – attributable profits 133 83 – – – progress billings received and receivable (2,482) (3,117) – –

(921) (1,760) – –

14. Trade receivables

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Related parties 815 1,076 454 542Director of the Company 83 – – – Associates 339 – 156 – External parties 21,598 22,649 12 46

22,835 23,725 622 588Less :Provision for doubtful debts (934) (893) – –

21,901 22,832 622 588

Trade receivables of the Group include an amount of $83,000 (2003: $nil) arising from sales to a director of the Company.

Movements in provision for doubtful debts during the financial year are as follows:

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

At beginning of year/period 893 – – –

Arising from acquisition of subsidiaries 37 874 – – Provision for the year/period 244 66 – – Write-back for the year/period (16) (17) – – Bad debts written off against provision (224) (30) – –

At end of year/period 934 893 – –

Bad debts written off to profit and loss account (Note 4) 11 28 – –



15. Other receivables, deposits and prepayments

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Other receivables 306 232 18 18Deposits 285 115 – –Prepayments 168 87 26 26Tax recoverable 255 110 181 86

1,014 544 225 130

Included in other receivables of the Group are amounts due from related parties of $49,000 (2003: $nil).

16. Amounts due from/(to) subsidiaries

Company2004 2003$’000 $’000

Amount due from subsidiaries– Non-trade 1,304 4,248

Amount due to subsidiaries– Trade (18) (73)– Non-trade (389) (154)

(407) (227)

The amounts due from/(to) subsidiaries are unsecured, bear interest at 5% per annum and have no fixed terms of repayment.

17. Trade payables

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Related parties 668 1,020 288 346Associates 122 – – – External parties 12,205 10,491 116 –

12,995 11,511 404 346

18. Deferred income

This refers to advance billings to customers for projects to be commenced in the next financial year.




19. Other payables and accruals

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Accruals 3,427 3,114 307 254Deposits received 20 27 – – Other payables 442 238 182 58Provision for unutilised leave 244 214 19 21

4,133 3,593 508 333

Included in other payables of the Group are an amount due to a director of the subsidiaries and amounts due to related parties of $106,000 (2003: $nil) and $162,000 (2003: $nil) respectively.

Included in other payables of the Company are amounts due to related parties of $157,000 (2003: $nil).

20. Interest-bearing loans and borrowings

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

CurrentLease liability (Note 25) 30 2 – – Bank overdraft 61 1,156 – – Term loan 57 60 – –

148 1,218 – –

Non-currentLease liability (Note 25) 90 4 – – Term loan 215 304 – –

305 308 – –

Bank overdraft of the Group is secured by fixed deposits pledged to the banks, by personal guarantees given by certain directors of the Company and its subsidiaries, and by debenture deeds which provide for first fixed and floating charges over the present and future undertakings and assets of certain subsidiaries. The weighted average interest rate for the bank overdraft is 8.05% (2003: 6.00%) per annum.

Bank term loan is secured by the following:

(a) A first legal mortgage on the leasehold building (Note 7); and(b) The joint and several personal guarantees of certain directors of the Company and its subsidiaries.

The bank loan matures in 2009, and the weighted average interest rate for the bank loan is 8.9% (2003: 9.45%) per annum.



21. Deferred taxation

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

At beginning of year/period 103 – – –

Arising from acquisition of subsidiaries – 50 – –

Provision during the year/period (Note 6) 30 53 – – At end of year/period 133 103 – –

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Deferred taxation at 31 December relates to the following:-Deferred tax liabilitiesDifferences in depreciation 177 125 – – Others 1 34 – –

178 159 – –Deferred tax assetsUnutilised leave 44 40 – – Others 1 16 – –

45 56 – –Net deferred tax liabilities 133 103 – –

22. Share capital


(a) Authorised ordinary share capitalAt beginning of year/date of incorporation266,666,667 (2003: 100,000) ordinary shares of $0.075 (2003: $1) each 20,000 100

Increase in nil (2003: 19,900,000) ordinary shares of $0.075 (2003: $1) each – 19,900

Consolidation of 20,000,000 ordinary shares of $1 each into 3,333,333 ordinary share of $6 each in 2003 – –

Sub-division of 3,333,333 ordinary shares of $6 each to 266,666,667 ordinary shares of $0.075 each in 2003 – –

At end of year/period266,666,667 (2003: 266,666,667) ordinary shares of $0.075 each 20,000 20,000




22. Share capital (continued)


(b) Issued and fully paid ordinary share capitalAt beginning of year/date of incorporation100,000,000 (2003: 2) ordinary shares of $0.075 (2003: $1) each 7,500 #

Issue of 5,999,998 ordinary shares pursuant to the restructuring exercise in 2003 – 6,000

Consolidation of 6,000,000 ordinary shares of $1 each into 1,000,000 ordinary share of $6 each in 2003 – –

Sub-division of 1,000,000 ordinary share of $6 each to 80,000,000 ordinary shares of $0.075 each in 2003 – –

Issue of 20,000,000 ordinary shares of $0.075 each pursuant to initial public offering in 2003 – 1,500

Issue of 1,093,690 ordinary shares of $0.075 each pursuant to the acquisition of a subsidiary in 2004 82 –

At end of year/period101,093,690 (2003: 100,000,000) ordinary shares of $0.075 each 7,582 7,500

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share.

# 2 ordinary shares of $1 each

(c) Share optionsThe Kingsmen Share Option Scheme (“the Scheme”) was approved by the members of the Company at an Extraordinary General Meeting held on 11 August 2003. The Scheme, which forms an integral component of its compensation plan, is designed to acknowledge the contribution, which is essential to the well-being and prosperity of the Group, made by the eligible participants.

At an Extraordinary General Meeting held on 26 April 2004, a total of 3,300,000 options were granted under the Scheme. The options are exercisable 1 year after the date of grant.

The options were granted to an executive director of the Company and 25 employees of the Group, including an employee who is an immediate family member of a certain director of the Company. No options have been granted to the controlling shareholders of the Company.

The exercise price of the options is equal to the average of the last dealt prices for a share as determined by reference to the daily official list published by the SGX-ST for the five consecutive market days immediately preceding the offer date of that option.



22. Share capital (continued)(c) Share options (continued)

The details of the options granted during the financial year and outstanding at the end of the financial year are as follows:

AggregateOptions Aggregate options granted options lapsed outstanding No. of holders

Date of grant during the during the as at as at Exerciseof options financial year financial year 31.12.2004 31.12.2004 price Exercise period

21.05.2004 200,000 – 200,000 1 $0.25 21.05.2005 – 21.05.2009

31.05.2004 3,100,000 – 3,100,000 25 $0.21 31.05.2005 – 31.05.20093,300,000 - 3,300,000 26

23. Share premium


At beginning of year/period 3,252 – Arising from the issue of 1,093,690 (2003: 20,000,000) ordinary shares of $0.075 (2003: $0.075)

each at a premium of $0.135 (2003: $0.225) per share 148 4,500Issuance cost – (1,248)At end of year/period 3,400 3,252

As at 31 December 2003, issuance cost include professional fees of $192,000 paid to the auditors of the Company, acting as Reporting Accountants in respect of the initial public offering of the Company’s shares.

The share premium account may be applied only for the purposes specified in the Companies Act.

24. Reserves

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Revenues reserveAt beginning of year/period 1,528 – 772 – Net profit for the year/period 1,414 1,528 699 772Dividends paid (750) – (750) – At end of year/period 2,192 1,528 721 772

Foreign currency translation reserveAt beginning of year/period (9) – – – Net movement during the year/period (57) (9) – – At end of year/period (66) (9) – –

Total reserves 2,126 1,519 721 772




25. Finance lease

The future minimum lease payments under finance leases, together with the present value of the net minimum lease payments are as follows :-

GroupPresent Present

Minimum value of Mininum value ofpayment payment payment payment

2004 2004 2003 2003$’000 $’000 $’000 $’000

Due within one year 37 30 3 2Due within two to five years 95 77 6 4Due after five years 16 13 – –

Total minimum lease payments 148 120 9 6

Less: amounts representing finance charges (28) – (3) – 120 120 6 6

Finance lease liabilities of the Group are secured by the rights to the leased motor vehicles (Note 7). Lease term range from 3 to 7 years. The average discount rate implicit in the finance leases is 5.11% (2003: 6.00%) per annum.

26. Earnings per share

Basic earnings per share

Earnings per share is calculated by dividing the net profit for the year of $1,414,000 (2003: $1,528,000) attributable to ordinary shareholders by the weighted average number of ordinary shares of 100,234,000 (2003: 85,753,000) of $0.075 each in issue during the year.

Group2004 2003$’000 $’000

Issued ordinary shares at beginning of year/period 100,000 80,000Weighted average number of ordinary shares of $0.075 each issued during the year/period 234 5,753Weighted average number of issued ordinary shares at end of year/period 100,234 85,753

Diluted earnings per share

The weighted average number of ordinary shares is adjusted for the effect of all dilutive potential ordinary shares when computing the diluted earnings per share. The number of unissued shares under options granted under the Kingsmen Share Option Scheme and their exercise prices are set out in the Directors’ Report and Note 22 to the financial statements.

As the options vest one year after the date of grant, there is no adjustment to the weighted average number of ordinary shares outstanding arising from dilutive potential ordinary shares during the year.



27. Dividends

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Final dividends paid in respect of the previous financial year/period 750 – 750 –

The directors propose that a final dividend of 0.70 cents (2003: 0.75 cents) per ordinary shares tax-exempt, amounting to $708,000 (2003: $750,000) be paid in respect of the financial year ended 31 December 2004, subject to approval by Shareholders at the Annual General Meeting of the Company.

28. Operating lease commitments

The Group has entered into a lease agreement for office premises with a related party. Lease teams do not contain restrictions on the Group’s activities concerning dividends, additional debts or further leasing.

Future minimum lease payments under non-cancellable operating leases are as follows as of 31 December:

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Within one year – 1,056 – 1,026

Subsequent to the year-end, the Company entered into a lease agreement for office premises with a related party, with a non-cancellable lease term of two years amounting to $2,230,000.

29. Performance guarantees

Group Company2004 2003 2004 2003$’000 $’000 $’000 $’000

Performance guarantees given to customers secured by the joint and several guarantees of certain directors of the Company and its subsidiaries 926 2,216 – –




30. Related party transactions

The Group have the following significant intercompany transactions which took place on terms agreed between the parties during the financial year/period:

Group2004 2003$’000 $’000

Associates:Sales (345) –Purchases 859 – Corporate fee income (190) –

Director of the Company:Sales (79) –

Related partiesSales (425) (333)Purchases 643 804Corporate fee income (285) (532)Rental expense – Premises 1,056 1,056Rental expense – Others 177 177Interest income (3) – Interest expense 13 10Administrative fees (12) (18)Purchase of property, plant and equipment – 129

31. Segment information

The Group’s primary format for reporting segment information is business segments, with each segment representing a strategic business segment that offers different products/services.

Segment revenue and expensesExhibits and MuseumsThis relates to the production of exhibition displays for trade shows and promotional events, as well as, the production of interiors and displays for museums and visitor centers.

InteriorsThis relates to the provision of interior fitting-out services to commercial and retail properties.

Research and DesignThis relates to design works for upmarket specialty stores, departmental stores, eateries, museums, visitors centers, corporate offices, showrooms, trade shows, events, promotional functions and festivals.

Integrated Marketing CommunicationThis relates to event management and branding consultancy services.



31. Segment information (continued)Corporate and othersThis relates to general corporate income and expense items.

Segment assetsSegment assets relate to property, plant and equipment, trade receivables, inventories and contracts work-in-progress.

Segment liabilitiesSegment liabilities relate to trade payables, deferred income and progress billings in excess of contracts work-in-progress.

Segment informationSegment accounting policies are the same as the policies described in Note 2. The Group generally accounts for inter-segment sales and transfers as if the sales or transfers were to third parties at current market prices.

Business segments 2004

Exhibitions Research Integrated Corporateand and Marketing and

Museums Interiors Design Communication others Elimination Consolidated$’000 $’000 $’000 $’000 $’000 $’000 $’000

Segment revenueSales to external customers 29,144 28,607 1,988 3,522 – – 63,261Intersegment sales 1,435 1,628 48 17 – (3,128) –

30,579 30,235 2,036 3,539 – (3,128) 63,261

Segmental results 1,052 738 18 537 (560) – 1,785

Financial expenses (82)Financial income 34

1,737Share of profits of associates before taxation 268

Profit before taxation 2,005

Taxation – group companies (368)– associates (57)

Profit after taxation 1,580

Minority interest (166)

Net profit 1,414




31. Segment information (continued)Corporate and others (continued)

Business segments2004



Segment assets 9,380 13,692 581 664 741 – 25,058Unallocated assets 8,077

Total assets 33,135

Segment liabilities 5,436 8,069 41 299 – – 13,845Unallocated liabilities 5,497

Total liabilities 19,342

Other segment information

Capital expenditure 283 236 49 1 41 – 610Depreciation 362 81 49 18 34 – 544Non-cash expense 94 83 2 6 – – 185



31. Segment information (continued)Corporate and others (continued)

Business segments2003



Segment revenueSales to external customers 21,431 29,169 2,006 871 – – 53,477Intersegment sales 1,744 1,975 10 32 – (3,761) –

23,175 31,144 2,016 903 – (3,761) 53,477

Segmental results 1,326 1,287 71 31 (617) – 2,098

Financial expenses (76)Financial income 104

Profit before taxation 2,126

Taxation (547)

Profit after taxation 1,579

Minority interest (51)

Net profit 1,528

Segment assets 11,232 13,853 551 291 702 – 26,629Unallocated assets 6,387

Total assets 33,016

Segment liabilities 6,868 7,137 15 52 – – 14,072Unallocated liabilities 6,177

Total liabilities 20,249

Other segment information

Capital expenditure 416 41 8 3 142 – 610Depreciation 335 40 26 11 28 – 440Non-cash expense 38 20 17 – 2 – 77Provision for impairment invalue of other investments – – – – 100 – 100




31. Segment information (continued)

Geographical segments

Turnover is based on the location of customers, except for site orders of booth accessories placed by customers for official trade shows which are based on location of the shows. Assets and additions to property, plant and equipment are based on the location in which the assets are booked.

Company2004 2003$’000 $’000

Sales by geographical markets are as follows:

Singapore 40,143 38,590Malaysia 5,188 4,307Asia 10,103 4,016Europe 3,717 2,069US 4,000 4,349Others 110 146

63,261 53,477

Carrying amount of segment assets by geographical market is as follows:

Singapore 27,335 29,673Malaysia 4,085 3,343Vietnam 1,715 –

33,135 33,016

Additions to fixed assets by geographical market are as follows:

Singapore 385 362Malaysia 207 248Vietnam 18 –

610 610



32. Financial risk management objectives and policiesThe main risks arising from the Group's financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below:

Interest rate riskThe Group obtains additional financing through bank borrowings and leasing arrangements. Information relating to the Group’s interest rate exposure is disclosed in the notes on the Group’s borrowings and leasing obligations. Surplus funds are placed with reputable banks.

Liquidity riskLiquidity risk arises from the possibility that customers may not be able to settle obligations to the Group within the normal terms of trade. Due to the dynamic nature of the underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit lines available.

Foreign currency riskThe Group incurs foreign exchange risk on sales and purchases that are denominated in a currency other than Singapore dollars.

The Group does not have any formal hedging policy against foreign exchange fluctuations. However, management continuously monitors the exchange rates of the major currencies and will consider hedging material foreign currency exposure should the need arise. It is the Group’s policy not to trade in derivative contracts.

Credit riskThe Group has no significant concentration of credit risk, whereas the majority of the Company’s trade receivables are from related parties.

It is the Group’s policy to transact with credit worthy counterparties. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

The carrying amount of cash and cash equivalents, trade and other receivables represent the Group’s maximum exposure to credit risk in relation to financial assets. No other financial asset carries a significant exposure to credit risk.

Fair valuesThe aggregate net fair values of financial assets and liabilities of the Group are carried at fair values in the balance sheet.

In the director’s opinion, it is not practicable to determine the fair values of unquoted investments held as long-term investments. The expected cash flows from these investments are believed to be in excess of their carrying amounts.

The carrying amounts of receivables, cash and cash equivalents, payables and current portion of term loan and finance leases approximate their fair values due to their short-term nature.

The carrying amounts of the non-current portion of term loan and finance leases approximate fair values as these financial instruments bear interest at variable rates.



Authorised Share Capital : S$20,000,000Issued and Fully Paid-Up Capital : S$7,582,026.75Number of Shares : 101,093,690Class of Shares : Ordinary Share of S$0.075 eachVoting Rights : One Vote Per Share

Distribution of Shareholdings

No. of No. ofSize of Shareholdings Shareholders % Shares %1–999 – – – –1,000–10,000 392 52.48 2,154,000 2.1310,001–1,000,000 343 45.92 18,831,894 18.631,000,001 and above 12 1.60 80,107,796 79.24

Total 747 100.00 101,093,690 100.00

Twenty Largest Shareholders

Name No. of Shares %

1 Islanda Pte Ltd 25,328,707 25.052 O-Vest Pte Ltd 25,328,707 25.053 Soh Siak Poh, Benedict 5,056,293 5.004 Ong Chin Sim, Simon 5,056,280 5.005 Ng Hung Chiao, Michael 3,223,173 3.196 Chong Siew Ling 3,123,174 3.097 Wee Huat Seng, Alex 2,827,733 2.808 Yee Chee Kong 2,827,733 2.809 Ong Chin Kwan 2,407,947 2.3810 Chong Fook Seng, Patrick 2,276,000 2.2511 Cheong Chai Keng 1,528,359 1.5112 Lim Hock Chye, Stephen 1,123,690 1.1113 Tay Kay Sock, Gerald 950,413 0.9414 Kim Eng Securities Pte. Ltd. 854,000 0.8415 Goh Ting Meng 667,760 0.6616 OCBC Securities Private Ltd 535,000 0.5317 Lim & Tan Securities Pte Ltd 505,000 0.5018 DBS Nominees Pte Ltd 461,000 0.4619 Phillip Securities Pte Ltd 429,000 0.4220 Citibank Consumer Nominess Pte Ltd 340,000 0.34

Total 84,849,969 83.92

statistics of shareholdingsas at 10 March 2005


statistics of shareholdings

Substantial Shareholders(As recorded in the Register of Substantial Shareholders as at 10 March 2005)

Distribution of Shareholdings

Name of Shareholders Direct interest Deemed interest No. of Shares % No. of Shares %

Benedict Soh Siak Poh 5,056,293 5.00 25,428,707 25.15Png Geok Choo Rose 100,000 0.10 25,328,707 25.05Soh E-Ling Marianne – – 25,328,707 25.05Simon Ong Chin Sim 5,056,280 5.00 25,328,707 25.05Vera Ong Lim Guek Noi – – 25,328,707 25.05Ong Ai Lin Tabitha – – 25,328,707 25.05Islanda Pte Ltd 25,328,707 25.05 – –O-Vest Pte Ltd 25,328,707 25.05 – –

Notes:1. Mr Benedict Soh Siak Poh’s deemed interests include 100,000 shares held by Mdm Png Geok Choo Rose (wife) and 25,328,707 shares held by Islanda Pte Ltd by virtue of

Sections 164(15) and 7 of the Companies Act, Cap. 50 respectively.

2. Mdm Png Geok Choo Rose’s deemed interests refer to 25,328,707 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

3. Ms Soh E-Ling Marianne’s deemed interests refer to 25,328,707 shares held by Islanda Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

4. Mr Simon Ong Chin Sim’s deemed interests refer to 25,328,707 shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

5. Mdm Vera Ong Lim Geok Noi’s deemed interests refer to 25,328,707 shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

6. Ms Ong Ai Lin Tabitha’s deemed interests refer to 25,328,707 shares held by O-Vest Pte Ltd by virtue of Section 7 of the Companies Act, Cap. 50.

Shareholding in the Hands of Public20.8% of the Company’s shares are held in the hands of public. Accordingly, the Company has complied with Rule 723 of the ListingManual of the SGX-ST.



NOTICE IS HEREBY GIVEN that the Second Annual General Meeting of KINGSMEN CREATIVES LTD. will be held at 3 Changi South LaneSingapore 486118 on Monday, 25 April 2005 at 11.00 a.m. for the following purposes:-

AS ORDINARY BUSINESS:-

1. To receive and adopt the Directors’ Report and the Audited Accounts for the year ended 31 December 2004 together with the Auditors’ Report thereon. (Resolution 1)

2. To declare a first and final tax exempt dividend of 0.70 cents per ordinary share for the year ended 31 December 2004. (Resolution 2)

3. To re-elect the following Directors retiring pursuant to Article 107 of the Company’s Articles of Association:-Mr Simon Ong Chin Sim (Resolution 3)Mr Prabhakaran Narayanan Nair (Resolution 4)

Mr Prabhakaran Narayanan Nair will, upon re-election as a Director of the Company remain a member of Audit Committee and will be considered independent for the purpose of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited.

4. To approve the payment of Directors’ fees of S$160,000.00 for the year ended 31 December 2004. (Resolution 5)

5. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 6)

6. To transact any other ordinary business that may be properly transacted at an Annual General Meeting.

AS SPECIAL BUSINESS:-

To consider and, if thought fit, to pass the following Ordinary Resolutions:-7. Authority to allot and issue shares up to 50 per centum (50%) of issued share capital

That pursuant to Section 161 of the Companies Act, Cap. 50 and the Listing Manual of the Singapore Exchange Securities Trading Limited, authority be and is hereby given to the Directors of the Company to allot and issue Shares or convertible securities from time to time (whether by way of rights, bonus or otherwise) and upon such terms and conditions and for such purposes and to such person as the Directors may in their absolute discretion deem fit, provided that the aggregate number of Shares and convertible securities issued pursuant to such authority shall not exceed 50% of the issued share capital of the Company, of which the aggregate number of Shares and convertible securities issued other than on a pro-rata basis to the existing Shareholders of the Company shall not exceed 20% of the issued share capital of the Company (the percentage of issued share capital being based on the issued share capital at the time such authority is given after adjusting for new shares arising from the conversion of convertible securities or employee share options on issue at the time such authority is given and any subsequent consolidation or subdivision of shares) and, unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion of the Company’s next Annual General Meeting. [see Explanatory Note (i)] (Resolution 7)

8. Authority to allot and issue shares under the Kingsmen Share Option SchemeThat pursuant to Section 161 of the Companies Act, Cap. 50, the Directors be authorised and empowered to allot and issue shares in the capital of the Company to all the holders of options granted by the Company, whether granted during the subsistence of this authority or otherwise, under the Kingsmen Share Option Scheme (“the Scheme”) upon the exercise of such options and in accordance with the terms and conditions of the Scheme established by the Company. [see Explanatory Note (ii)] (Resolution 8)

9. Renewal of Shareholders’ Mandate for Interested Person TransactionsThat :-(a) approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual of the SGX-ST (“Chapter 9”), for the Company,

its subsidiaries and associated companies that are entities at risk (as that term is used in Chapter 9), or any of them, to enter into any of the transactions falling within the types of interested person transactions describes in the letter to shareholders dated 6 April 2005 (the “Letter”) with any party who is of the class of interested persons described in the Letter, provided that such transactions are made on normal commercial terms and in accordance with the guidelines and review procedures for such interested person transactions;

notice of annual general meeting


notice of annual general meeting

(b) the approval given in paragraph (a) above (“the Shareholders’ Mandate”) shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and

(c) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary or in the interests of the Company to give effect to the Shareholders’ Mandate and/or this Resolution.” [see Explanatory Note (iii)] (Resolution 9)

BY ORDER OF THE BOARD

Judith Low Chu LiWee Woon HongCompany SecretariesSingapore6 April 2005

EXPLANATORY NOTES:(i) The Ordinary Resolution 7 proposed in item 7 above, if passed, will empower the Directors of the Company from the date of the above Meeting until the next Annual

General Meeting to allot and issue shares and convertible securities in the Company up to an amount not exceeding in total fifty per cent (50%) of the issued share capital of the Company for such purposes as they consider would be in the interest of the Company, provided that the aggregate number of shares to be issued other than on a pro-rata basis to existing shareholders pursuant to this Resolution shall not exceed twenty per cent (20%) of the issued capital of the Company. The percentage of issued capital is based on the Company’s issued capital at the time the proposed Ordinary Resolution is passed after adjusting for (a) new shares arising from the conversion of convertible securities or employee share options on issue at the time the proposed Ordinary Resolution is passed and (b) any subsequent consolidation or subdivision of shares. This authority will, unless previously revoked or varied at a General Meeting, expire at the next Annual General Meeting of the Company.

(ii) The Ordinary Resolution 8 proposed in item 8 above, if passed, will empower the Directors of the Company from the date of the above Meeting until the next Annual General Meeting, to allot and issue shares in the Company subject to the maximum number of shares prescribed under the terms and conditions of the Scheme.

(iii) The Ordinary Resolution 9 proposed in item 9 above relates to the renewal of a mandate given by shareholders to the Company on 11 August 2003, and modified and renewed by the Company on 26 April 2004, allowing the Company, its subsidiaries and associated companies that are entities at risk (as the term is used in Chapter 9), or any of them, to enter into transactions with interested persons as defined in Chapter 9. Please refer to the letter to shareholders dated 6 April 2005 for details.

NOTES:(i) A member of the Company entitled to attend and vote at the above Meeting may appoint not more than two proxies to attend and vote instead of him.

(ii) Where a member appoints two proxies, he shall specify the proportion of his shareholding to be represented by each proxy in the instrument appointing the proxies. A proxy need not be a member of the Company.

(iii) If the member is a corporation, the instrument appointing the proxy must be under its common seal or the hand of its attorney or a duly authorised officer.

(iv) The instrument appointing a proxy must be deposited at the Registered Office of the Company at 3 Changi South Lane Singapore 486118 not less than 48 hours before the time appointed for holding the above Meeting.

Notice of Books Closure

NOTICE IS HEREBY GIVEN that the Share Transfer Books and Register of Members of Kingsmen Creatives Ltd. (the "Company") will be closedon 4 May 2005 for the preparation of dividend warrants.

Duly completed registrable transfers received by the Company's Share Registrar, Lim Associates (Pte) Ltd at 10 Collyer Quay #19-08 OceanBuilding, Singapore 049315 up to 5.00 p.m. on 3 May 2005 will be registered to determine shareholders' entitlements to such dividend.

Members whose Securities Accounts with The Central Depository (Pte) Limited are credited with shares as at 5.00 p.m. on 3 May 2005 willbe entitled to the proposed dividend.

Payment of the dividend, if approved by shareholders at the Annual General Meeting to be held on 25 April 2005, will be made on 12 May 2005.

BY ORDER OF THE BOARD

Judith Low Chu LiWee Woon HongCompany SecretariesSingapore6 April 2005


KINGSMEN CREATIVES LTD.

(Incorporated in the Republic of Singapore)

I/We, (Name)

of (Address)

being a member/members of KINGSMEN CREATIVES LTD. (the “Company”) hereby appoint:

Proportion of

Name Address NRIC/Passport No. Shareholdings (%)

Proportion of

Name Address NRIC/Passport No. Shareholdings (%)

as my/our proxy/proxies to vote for me/us on my/our behalf, at the Annual General Meeting (“AGM”) of the Company, to be held on Monday, 25 April 2005 at 11.00

a.m., and at any adjournment thereof. I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated hereunder. If no specific

directions as to voting is given or in the event of any other matter arising at the AGM and at any adjournment thereof, the proxy/proxies will vote or abstain from voting at his/

their discretion.

No. Resolutions relating to: For* Against*1 Directors’ Report and Audited Accounts for the year ended 31 December 2004

2 Payment of proposed first and final tax exempt dividend

3 Re-election of Mr Simon Ong Chin Sim as a Director

4 Re-election of Mr Prabhakaran Narayanan Nair as a Director

5 Approval of Directors’ fees amounting to S$160,000.00

6 Re-appointment of Messrs Ernst & Young as Auditors

7 Authority to allot and issue new shares

8 Authority to allot and issue shares under the Kingsmen Share Option Scheme

9 Approval for renewal of Shareholders’ Mandate for Interested Person Transactions

*Please indicate your vote “For” or “Against” with a tick (√) within the box provided.

Dated this day of ,2005.

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

Important: Please read NOTES overleaf

kingsmen creatives annual report 2004

proxy form

Plea

se g

lue

and

seal

alo

ng t

he e

dge Please glue and seal along the edge

Total number of shares in: No. of shares

(a) CDP Register(b) Register of Members

Important:1 For investors who have used their CPF monies to buy the

Shares, this report is forwarded to them at the request of their CPF Approved Nominees and is sent soley FOR INFORMATION ONLY.

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

and/or (delete as appropriate)


First Fold

Second Fold

Third Fold

The SecretaryKingsmen Creatives LtdKingsmen Creatives Centre3 Changi South LaneSingapore 486118

AffixPostage Stamp

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 proportion of the shareholding to be represented by each proxy shall be specified in this proxy form. If

no proportion is specified, the Company shall be entitled to treat the first named proxy as representing the entire shareholding and any second named proxy as an alternate to the first named or at the Company’s option to treat this proxy form as invalid.

3. A proxy need not be a member of the Company.4. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in section 130A of

the Companies Act, Cap. 50 of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members of the Company, you should insert that number of shares. If you have shares entered against your name in the Depository Register and registered in your name in the Register of Members, you should insert the aggregate number of shares. If no number is inserted, this proxy form will be deemed to relate to all the shares held by you.

5. This proxy form must be deposited at the Company’s registered office at 3 Changi South Lane Singapore 486118 not less than 48 hours before the time set for the Meeting.

6. This proxy form must be under the hand of the appointor or of his attorney duly authorised in writing. Where this proxy form 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 this proxy form 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 this proxy form, failing which this proxy form shall 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 notascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Companymay 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 beforethe time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.


Contents

Introduction 01Financial Highlights 02Board of Directors 04Group Managing Director’s Message 06Senior Management 08Integration Map 10Research & Design 12Project Management 14Fabrication/Production 16Logistics & Distribution 18Integrated Marketing Communications 20Our People 22Corporate Governance 24Corporate Information 30Financial Reports 31Statistics of Shareholdings 71Notice of Annual General Meeting 73

A communications designand production group in Asia Pacific

Kingsmen Creatives LtdCo. Reg. No. 200210790Z

Kingsmen Creatives Centre3 Changi South LaneSingapore 486118

Tel (65) 688 000 88Fax (65) 688 000 [email protected]

www.kingsmen-int.com

Kin

gsm

en C

reatives An

nu

al Rep

ort 2004

••• making theDifference

Kingsmen CreativesAnnual Report 2004

Documents

Board of Directors 04 Group Managing Director’s Message 06 ...kingsmen.listedcompany.com/misc/ar2004.pdf · for DFS Venture, Adidas Singapore, Esprit Retail, Robinsons Group, Gucci,